On 10 March 2016, in four almost identical decisions, the Court of Justice of the European Union annulled a request for information that the European Commission (“Commission”) had addressed to several cement makers in a cartel probe. These judgments set additional boundaries to the powers of the Commission to request information in cartel investigations, and thus strengthen the rights of defense of companies under investigation.
The Commission carried out inspections at the premises of several cement companies in November 2008 and September 2009. Thereafter, on 6 December 2010, it initiated a proceeding for alleged infringements of Article 101 TFEU—the conspiracy provision-- against several of the companies under investigation. According to the Commission, the infringements consisted of market-sharing, price coordination, and related anticompetitive practices in the cement market and related product markets.
During its investigation, the Commission had sent a number of requests for information (“RFIs”) to the various companies under investigation. These RFIs were made by simple request, as the Commission customarily does. As some of the responses to the RFIs were found to have been incomplete, on 30 March 2011, the Commission sent an extensive RFI to the companies concerned. This RFI was in the form of a formal EC decision (the “contested decision”) and not a simple request as the Commission’s earlier RFIs. In issuing the contested decision, the Commission relied upon Article 18 (1) and (3) of Council Regulation (EC) No 1/2003 (together,“Article 18”).1
The contested decision consisted of a 94 page long questionnaire comprised of 11 sets of questions. The companies were given 12 weeks to answer the first 10 sets of questions, and a further 2 weeks to respond to the 11th question. The Commission also set out a mandatory specific format in which the information had to be presented.
Seven of the companies under investigation (together, “the Companies”), brought actions for the annulment of the contested decision before the General Court. Their primary contention was that the Commission had failed to adequately describe the alleged infringements, their geographic scope, the products concerned, and the purpose to the request (“statement of reasons”). Furthermore, they criticized the contested decision for imposing a disproportionate burden with regards to the volume of information requested and to the format of the response that was required.
By judgment of 14 March 2014, however, the General Court upheld the decision, finding that its statement of reasons was adequate.2
The Companies subsequently appealed the judgment to the Court of Justice, bringing several separate grounds of appeal, including that the General Court:
- misapplied the provisions of Article 18 when dismissing the allegation that the Commission had failed its obligation to give an adequate statement of reasons in the contested decision (the “first plea”);
- erred in law in applying the requirement of necessity under Article 18 in that it failed to examine whether the Commission had already been in possession, before the contested decision, of sufficient material to support the suspicion of an alleged infringement (the “second plea”);
- erred in its interpretation of the application of Article 18 when it accepted that the Commission was entitled to strictly instruct the recipient of a decision to submit the requested information according to a specific format (the “third plea”); and
- failed to censure the vagueness of certain questions included in the contested decision (the “fourth plea”).
II. Judgment of the Court of Justice
On 10 March 2016, the Court of Justice set aside the judgment of the General Court on the ground that it had made an error in the law in finding that the contested decision was adequately reasoned.
The Court of Justice acknowledged that the Commission does have wide discretion when requesting information, and is not required to share all the information at its disposal with the undertakings that are being investigated.3 Nevertheless, the Court noted that the Commission, as all other EU institutions, has to state reasons when adopting measures, as required by Article 296 (2) TFEU.4
In case of an RFI, this requires the Commission to identify the alleged infringement. An enterprise can only assess whether the requirement of Article 18 that it has to provide “all necessary information” is met if the purpose of the RFI is sufficiently precise.5 In the case of the contested decision, the Court of Justice held that the Commission had not sufficiently disclosed in a clear and unequivocal manner the suspected infringement. The Court specifically held that the reasons given in the contested decision were excessively brief, vague and generic. The Commission was therefore held to have failed to justify why the contested decision was being adopted, which made it impossible for the Companies to assess the necessity of the information requested.6
Notably, the Court of Justice pointed out, that in assessing the sufficiency of a statement of reasons, it is important not merely to look at the wording, but also to the context in which such a statement was made. In doing so, the Court addressed some of aspects of the second plea regarding necessity. According to the Court of Justice, the Commission might have been forgiven for providing such a vague and generic statement of reasons had it not been for the fact that the contested decision was made more than two years after the first inspections, subsequent to several other RFIs having been made, and therefore at a point in time when the Commission “already had information that would have allowed it to present more precisely the suspicions of the infringement by the companies involved.”7
Having set aside the General Court’s decision primarily on the basis of the first plea, the Court of Justice did not believe it necessary to examine the other pleas submitted by the Companies. Those pleas, however, were analyzed in some detail by Advocate General Wahl in his Opinion to the Court of Justice, delivered on 15 October 2015 (the “AG Opinion”). While not binding on the Court of Justice, the AG is a part of the Court, and the Court of Justice tends to follow an AG Opinion. Accordingly, a review of AG Opinion in this case is of use, since it offers some indication of how the Court might have dealt with the issues raised in the other pleas and, perhaps more crucially, how courts might address similar issues in the future.
With regards to the necessity of the information requested under Article 18, the AG Opinion provides some deeper insights than the Court of Justice’s judgment itself. AG Wahl warned against too lax an interpretation of ‘necessity’, arguing that the information must be more than merely relevant or related to a Commission investigation. Rather, there must be a sufficiently close correlation between the information requested and the presumed infringement.8 By the same token, Article 18 does not allow the Commission to adopt decisions requesting information on a mere speculative basis without having actual suspicions of specific infringements (such requests should instead be made under Article 17 of Council Regulation (EC) No 1/2003).9
The AG Opinion also provides some useful insights with respect to the format of the information requested under Article 18. AG Wahl acknowledged that an undertaking being investigated by the Commission has a duty to cooperate with that investigation. However, he indicated that such a duty does not imply that an undertaking must, in effect, spend time and resources presenting the information in such a certain specified format so as to effectively do the Commission’s own work for it. Instead, the Commission itself should assess the information during the course of the investigation. While this will be somewhat dependent on the nature of the particular investigation, the Commission should not be permitted to essentially outsource the construction of a case against an undertaking to the undertaking itself.
Finally, in relation to the vagueness of the questions set out in the contested decision, AG Wahl opined that the Commission had erred its assessment and had, to a large degree, contradicted itself. On the one hand, the Commission admitted that the wording of some of the questions in the contested decision were vaguely formulated. Yet, on the other, it contended that they were not “vague enough” for the contested decision as a whole to be deemed so ambiguous as to breach the principle of legal certainty.10 In AG Wahl’s opinion, the General Court should have regarded individual questions as distinct from the contested decision as a whole, thereby allowing itself to strip the vague questions out of the contested decision. Instead, it cornered itself into a false dichotomy where, despite its own reservations as regards the clarity of all of the questions, it believed it was only able to either annul the contested decision as a whole, or else affirm it in its entirety.
The Court of Justice’s judgment in the Cement cartel matter limits the Commission’s powers to request information during cartel investigations. While the Commission’s spokesperson has stated that “the implications of the judgments are likely to be confined to the present case, as the ECJ pronounced itself only on the issue of reasoning,” the judgment will have more general implications. The judgment makes it clear that the Commission cannot go on mere fishing expeditions, but has to be specific in indicating the subject of its investigation and the alleged infringements. As such, the judgments in the cement cartel follow a recent line of Court of Justice decisions strengthening the rights of defense of companies under investigation.11 Interestingly, the Court of Justice’s judgment will have no effect on the cement investigation itself; the Commission had already closed its investigation in July 2015 – notably, for lack of sufficiently conclusive evidence.