The period under review (January 2010 – June 2012) has been a time of consolidation (or exhaustion) for the Union generally, as the Lisbon changes are allowed to bed in. The competition sphere is no exception. There has been limited initiative, certainly nothing ambitious to come out of the Commission over the period. At the same time a new Commission took up office—three months late, and by a little-remarked constitutional sleight of handFootnote 1—in 2010, and with it came a new Commissioner for Competition (Mr Almunia) and with him a new Director-General of DG Competition (Mr Italianer—Dutch notwithstanding the name), which event sometimes, but not always, marks a reorientation of Union competition policy. Both are economists which, again, may or may not influence the direction of policy. At the same time the Union has been buffeted by a financial crisis not wholly of its own making in which the competition rules must have a significant role to play.
A. The Economic Crisis
Having in the early days of the crisis remained on the sidelines, in October 2008 the Ecofin Council resolved that a common Union response to the economic crisis was necessaryFootnote 2 and a month later Mrs Kroes, then Commissioner for Competition, declared the crisis to be ‘systemic’ and that adherence to the competition rules was ‘part of the solution, not part of the problem’.Footnote 3 In particular, the integrity of the internal market required to be re-entrenched and protected. This could, and should, be prosecuted on a number of fronts.
1. Article 101
The Commission has not always set itself resolutely against crisis cartels, or ‘industrial restructuring agreements’ marked by efforts to reduce production capacity in a crisis industry: it had in the past smiled upon them occasionally, finding infringement of Article 101 but granting an exemption under Article 101(3).Footnote 4 Similar generosity could be a flexible means of allowing firms in difficulty to cope with the fallout of the crisis and the credit squeeze. But more recently the Court of Justice found a crisis cartel in the Irish beef market to be a restriction of competition by object.Footnote 5 This does not mean that Article 101(3)—a matter no longer exclusively for the Commission—cannot apply,Footnote 6 but it makes it all the more difficult. The Commission moved to submit amicus curiae observations under Article 15(2) of Regulation 1/2003Footnote 7 to the Irish High Court when it was considering the issue of Article 101(3) justificationFootnote 8 and it has indicated general lack of enthusiasm elsewhere.Footnote 9 It appears that undertakings seeking mutual accommodation from the crisis may expect limited respite from the Commission in the context of Article 101.
However, it does appear to be easing up in the ferocity of its fines in competition matters. It is true that the third, sixth and seventh heaviest cartel fines ever imposed by the Commission—in, respectively, the air freight cartel (€799.4 million),Footnote 10 the liquid crystal display (LCD) panels cartel, involving exclusively Korean and Taiwanese firms (€648.9 million),Footnote 11 and the bathroom fittings cartel (€622.3 million)Footnote 12—were imposed in 2010. But these were egregious cartels and matters already in the pipeline. Total cartel fines were annually, from 2006 to 2010, €1,850 million, €3,340 million, €2,238 million, €1,540 million and €3,056 million. In 2011 they were (merely) some €614 million and €372 million in the first half of 2012. Whilst this is not to anticipate gentleness in the Google case, not a cartel but an Article 102 investigation, for, it is claimed, lowering the ranking of competing services in its search engine results and imposing exclusivity obligations upon its advertising partners,Footnote 13 and which, if the infringement is made out, could put all previous fines in the shade, it seems clear that the Commission's avarice is diminishing. Whether this marks a sensitivity to the economic crisis, or Mr Almunia is of gentler disposition than Mrs Kroes, or it is merely a coincidence is difficult to say. Certainly inability to pay (‘ITP’) is recognized as a ground to be taken into account by the Commission in ‘exceptional cases’ in setting a fine,Footnote 14 and although Mr Italianer has recently confirmed that fines ‘should be punitive’Footnote 15 it seems the Commission is taking some note of the hard times we are in.
2. Mergers
The first merger prohibited by the Commission under the new (2004) merger regulationFootnote 16 was the proposed acquisition of Aer Lingus by Ryanair in 2007.Footnote 17 There have now been two more:
• a proposed merger consisting in the acquisition by the owners of Aegean Airlines of majority control of Olympic Airways, which would have led to a ‘quasi-monopoly’ in the markets for flights between Athens and Thessaloniki and between Athens and eight island airports.Footnote 18 This was not dissimilar to the issues raised, mutatis mutandis, in Ryanair/Aer Lingus, but it cannot be taken as natural Commission antipathy to airline mergers, for six months prior to Olympic/Aegean it approved the merger (into the International Airlines Group) of British Airways and Iberia,Footnote 19 and a year later it allowed IAG to acquire British Midlands (from Lufthansa),Footnote 20 albeit at the cost of a quarter of BMI's London slots and access of some of BA's competitors to its network of internal connecting flights from Heathrow.Footnote 21
• a merger of Deutsche Börse and NYSE Euronext which would create another quasi-monopoly in the area of European financial derivatives traded globally on exchanges, the two taken together controlling more than 90 per cent of global trade in these products and no new market entry likely.Footnote 22
The prohibition of three mergers since the new merger regulation entered into force in 2004 and 22 in total since the start in 1990 suggests a light touch, and one not perceptibly altered since the onset of the economic crisis, in which a failing firm criteria might be expected to attract greater sympathy. But this is of course heavily misleading, for most contentious mergers are cleared by the Commission only with conditions (‘commitments’).Footnote 23 The Commission views commitments as an important part of its merger control armoury, for there is in Union law no post-merger control save for enforcing compliance with commitments made, or the general application of Article 102. Parties to a merger are of course aware of this, so frequently offering remedies at an early stage of discussion so that problems are pre-empted. In other words, the 22 prohibitions are only the tip of the merger iceberg.
Whilst having nothing to do with the economic crisis, it is worth noting that although Germany has long championed the dominance test in merger control, in Spring 2012 the federal government proposed the adoption instead of the ‘significant impediment to effective competition’ (SIEC) test.Footnote 24 The proposal was welcomed by the BundeskartellamtFootnote 25 and is, at the time of writing, before the Bundestag. If adopted it will bring German law tightly into line with Union law. The holdouts which prefer the ‘significant lessening of competition’ (SLC) test, Ireland and the United Kingdom, having each come to it only in 2002,Footnote 26 show no enthusiasm to depart from it. (And whilst on this detour it is also worth noting, for it has no natural home elsewhere in this comment, that Portugal has adopted a comprehensive new competition law, bringing Portuguese law into close alignment with Union law.Footnote 27)
3. State aid
The Commission continues to scrutinize new aids swiftly and generously, and not only under Article 107(3)(c) (facilitating the development of certain economic activities or regions) but Article 107(3)(b) (remedying a serious disturbance in the economy of a member state),Footnote 28 a category more malleable and previously available only sparingly. It has set out parameters on its approach to guarantees covering the liabilities, recapitalization, controlled winding up of, and other forms of liquidity assistance to, financial institutions, so long as ‘undue distortions’ to competition are avoided, and has adopted a number of ‘temporary’ communications as an aid to the (gentle) application of the state aid rules in favour of banks and financial institutions reeling from the financial crisis, on:
• the application of state aid rules to measures taken in relation to financial institutions in the context of the current global financial crisis (the Banking Communication);Footnote 29
• recapitalization of financial institutions in the current financial crisis: limitation of the aid to the minimum necessary and safeguards against undue distortions of competition (the Recapitalisation Communication);Footnote 30
• the treatment of impaired assets in the Community banking sector (the Impaired Asset Communication);Footnote 31 and
• the return to viability and the assessment of restructuring measures in the financial sector in the current crisis (the Restructuring Communication).Footnote 32
There is also a temporary framework for state aid measures to support access to finance in the current financial and economic crisis,Footnote 33 revised in 2011,Footnote 34 and another to support measures, from January 2012, in favour of banks in the context of the financial and sovereign debt crises.Footnote 35
Aid to the financial sector is now generally reckoned to be about €1.6 billion (sic).
As regards state aid more generally, in Spring 2012 the Commission adopted a communication on state aid modernisation (SAM),Footnote 36 intending to draw the state aid regime more effectively (‘actively and positively’) into the Europe 2020 programme. The three ‘pillars’ of the initiative are more focused and better-quality aid, simplification, and shifting of the focus to a more structured policy approach. As a first step it has launched a review of the (four-year-old) general block exemption regulation (GBER)Footnote 37 with a view to proposing a revised version in 2013.
B. Services of General Economic Interest
In 2005 the Commission adopted a decision (under Article 106(3)) on the application of Article 106 to state aid in the form of public service compensation granted to undertakings providing services of general economic interest (SGEIs).Footnote 38 It was replaced in early 2012 with a new comprehensive ‘package’ on the application of state aid rules to SGEIs.Footnote 39 Exempted from any obligation to notify is subvention for the running of social services, more specifically health and long-term care, childcare, access to and reintegration in the labour market, social housing and the care and social inclusion of vulnerable groups.Footnote 40 Other services (other than transport and transport infrastructure) receiving public compensation are exempted up to a cap of €15 million per year.Footnote 41 A communication sets out the manner in which the Commission will analyse cases falling outwith the decision and notified to it.Footnote 42 The final element of the package is a de minimis regulation for SGEIs, exempting from the prohibition of Article 107 subvention of up to €500,000 over a given three-year period.Footnote 43
C. Enforcement
1. Commission enforcement
Fines imposed under Regulation 1/2003 are still nominally administrative, not criminal, penalties,Footnote 44 but this is a view coming increasingly under serious challenge.Footnote 45 Even the Court of Justice is wavering: Advocate-General Kokott finds the enforcement mechanisms of Regulation 1/2003 combined with the severity of fines which may be imposed to be ‘an issue which is time and again the subject of discussion and currently … of increasing attention’Footnote 46 and believes the Union regime of sanctions to mean that ‘the area is at least akin to criminal law’,Footnote 47 whilst Advocate-General Sharpston speaks of the ‘de facto’ and ‘ongoing’ ‘‘‘criminalisation’’ of competition law’.Footnote 48 In all cases it has ramifications for the procedural safeguards afforded by Article 6 of the European Convention on Human Rights, but which sets stricter standards in the criminal arena. However, as Ms Sharpston allows, ‘[t]he requirements a system of judicial review must meet to comply with Article 6(1) ECHR have yet to be fully clarified, but it is uncertain whether the existing system of EU competition law enforcement, including judicial review, meets those requirements’.Footnote 49 With Lisbon the Union is required to accede to the Convention,Footnote 50 and perhaps with this in mind there is now before the Court a number of challenges to the machinery and review of Commission fines. According to the Court of Human Rights Article 6 requires the Union judicature to exercise ‘full jurisdiction, including the power to quash in all respects, on questions of fact and of law, the challenged decision’.Footnote 51 This it does vigorously in other contexts,Footnote 52 and there is no question it has the power to do so under Article 261 TFEU and Article 31 of Regulation 1/2003 (at least where a decision has imposed a fine or a periodic penalty payment), but there are doubts as to whether it discharges this jurisdiction adequately. Given the Union's judicial architecture it is a task which falls primarily to the General Court; but that Court's articulation of its proper role in Microsoft Footnote 53 is one which seems to fall short of the mark. There were hopes in some quarters that the Court of Justice would take a robust stand in the KME casesFootnote 54 and in Chalkor Footnote 55 but they were dashed in late 2011, the Court finding no affront in Union procedure to the right to effective judicial review and, implicitly, to Article 6 ECHR. Recent indications from Strasbourg suggest the Court of Human Rights might not, now, disagree.Footnote 56 There remain other high-profile cases in the pipeline,Footnote 57 but it is difficult to see how the General Court can now, even were it minded to do so, say otherwise.
Yet the matter is not closed. Here is Advocate-General Bot, in an appeal against a judgment of the General Court confirming a fine of €38 million imposed upon E.ON for breaking a seal in the course of a Commission investigation:Footnote 58
‘I am inclined to think that the General Court did not fully exercise its unlimited jurisdiction.
Indeed, I consider that the Court should not have merely asserted … that ‘contrary to what the applicant maintains, a fine of EUR 38 million cannot be regarded as disproportionate to the infringement, in the light of the particularly serious nature of a breach of seal, the size of the applicant and the need to ensure that the fine has a sufficiently deterrent effect’.
Although [that assertion] must obviously be read in the light of [previous] paragraphs, the fact remains that the Court did not, in my opinion, act like an appeal court examining and taking possession of the case as from the beginning, as required by Article 6 ECHR.
First of all, I think that the General Court's appraisal was not sufficiently independent of that of the Commission.
In the present case, the question was whether the fine of EUR 38 million imposed by the Commission was a just penalty for the appellant's alleged conduct. Did a fine of that amount make it possible to penalise the applicant's unlawful conduct effectively, in a manner which is not negligible and which remains sufficiently deterrent? On that point I have a feeling that the General Court did not form its own opinion, relying on the amount fixed in a rather general way by the Commission.’Footnote 59
and so recommends that the judgment be set aside and the case remitted back to the General Court for proper (‘unlimited jurisdiction’) consideration. If the Court follows him it could re-open the issues of the effective (Article 6) judicial protection in the matter of fines, if not of the procedures of Regulation 1/2003 more generally.
2. Settlement
The settlement procedure introduced in 2008,Footnote 60 providing for settlement of cartel cases through a simplified procedure involving acknowledgement of cartel involvement and liability for it in return for a 10 per cent reduction in a fine, was used for the first time in 2010Footnote 61 and, as of June 2012,Footnote 62 has been used six times. Settlement can be reached in a ‘hybrid’ case, involving settlement with some but not all undertakings.Footnote 63
3. Block exemption
The year 2010 saw the natural death of almost all the block exemptions in force and their replacement. The insurance block exemption was replaced,Footnote 64 as were the motor vehicle block exemptionFootnote 65 and the ‘horizontal’ block exemptions on research and development and specialization agreements.Footnote 66 Of widest application and interest, a new vertical agreements block exemption applies from June 2010 (until June 2022).Footnote 67 None of them marked a significant change in style, that having occurred with their predecessors and the incorporation of a ‘more economic approach’ which marked them out from their own predecessors. The exercise was thus one more of renewal than of replacement. One significant change in the vertical agreements block exemption, the exclusion of its benefits to suppliers with greater than a 30 per cent market share is extended to apply equally to buyers,Footnote 68 whereas previously this was so only for agreements containing exclusive supply obligations.Footnote 69 This is of course recognition that a buyer may also have and exert market power. The previous extension of exemption to non-reciprocal vertical agreements between competing undertakings on condition that the buyer has a total annual turnover not exceeding €100 millionFootnote 70 has disappeared. There is also recognition that the regulation must apply to online sales,Footnote 71 which have the capacity to imperil the integrity of traditional selective (and exclusive) distribution systems, they traditionally turning significantly upon geographic contract territory. This has now been considered in detail by the Court of Justice.Footnote 72
The 2004 technology transfer block exemptionFootnote 73 is scheduled to expire in Spring 2014; at the end of 2011 the Commission initiated a public consultation in order to air suggestions for its amendment and renewal.
4. Decentralization
Following the 2005 Green PaperFootnote 74 and the 2008 White PaperFootnote 75 the Commission continues to champion the cause of private enforcement, but sotto voce. The 2009 ‘phantom’ directive on actions for damages,Footnote 76 surfacing in the sunset of Mrs Kroes's term as Commissioner for competition, sunk without a trace. It was in any event a damp squibFootnote 77 and failed to address a number of questions now coming to the fore.
In particular the Court of Justice has opened a can of worms in Pfleiderer.Footnote 78 In 2008 the Bundeskartellamt imposed significant fines upon a number of décor paper manufacturers for price fixing and capacity closure agreements contrary to both Article 101 TFEU and § 1 GWB.Footnote 79 Having purchased more than €60 million worth of paper and other items from the cartel, Pfleiderer AG launched a civil claim for damages, in the course of which it applied to the Bundeskartellamt for full access to its file, including documents submitted to it under the (German) leniency programme. The Bundeskartellamt refused, a decision challenged by Pfleiderer in the Amtsgericht Bonn. Referred to it under Article 267 TFEU, the Court of Justice said that the Commission leniency programme had no binding effect upon national courts, the matter was not covered by EU rules, the effectiveness of the leniency programme could be undermined if documents were to be disclosed to prospective damage claimants for the cartelist would thus be deterred from engaging and cooperating with the competent administrative authorities, but a right to damages was well established Union law which is itself a powerful deterrent to anticompetitive behaviour, and so it was for the national courts to determine whether leniency documents ought to be disclosed, weighing up these various interests.
The judgment raises complex problems for the coexistence of leniency and civil action, or, put otherwise, public and private enforcement of the competition rules. Certainly it may have a chilling effect upon the (considerable) success of the Commission's leniency programme, a cartelist likely to be wary of seeking (or assisting) leniency if the documentation and information it supplies becomes easily available to any party injured by the cartel, so leading to liability in damages which may many times outstrip the costs of an administrative fine. At the least it is likely very carefully to sift any information it provides, and may be less than frank and forthright with the more inculpatory material. And, like many of the problems with civil enforcement, it is likely to lead to variations from Member State to Member State: in the event the Amtsgericht decided against disclosure,Footnote 80 but in a follow-on claim in the UK under Section 47A of the Competition Act stemming from the gas insulated switchgear cartel,Footnote 81 Mr Justice Roth in the High Court found the Pfleiderer rule to apply to the Commission as well as national leniency programmes and, applying it, ordered disclosure of a number of leniency documents in the defendants' possession.Footnote 82 The issue is again before the Court in a reference from the Oberlandesgericht in Vienna,Footnote 83 and it may wish to take the opportunity to provide greater clarity if not security. It is worth noting a Hungarian solution to the problem, whereby any party granted immunity under the leniency programme gains also immunity from civil liability, the liability borne by other parties to the cartel.Footnote 84
In fact the whole body of Union law on confidentiality of documents is in a state of confusion and flux. The Union rule on the privilege adhering to lawyer–client communications dates from the AM&S judgment in 1982,Footnote 85 conferring the benefit of confidentiality only upon ‘outside’ legal advice, and not upon communications from ‘enrolled in house lawyers’Footnote 86 within a firm's legal department. It being a rule distilled from the principles applying generally throughout the Member States, this was an uncommonly narrow construction. The Court had the opportunity of altering it in Akzo Nobel Chemicals Footnote 87 but despite spirited urging to do so it declined, the reasoning beingFootnote 88 that the in-house lawyer does not enjoy the same degree of independence from his or her employer and is less able to deal effectively with conflicts between professional obligations and employer's interests. It is not certain this view could withstand a challenge under the European Convention. The Court is traditionally far more generous with the Union institutions, finding that public policy requires the advice of their legal services to be afforded confidentiality, even to the extent that the advice of the Council legal service, obtained unofficially by an applicant, must be removed from the case file and any direct reference to it deleted from the application.Footnote 89 But the mood is changing, perhaps a function of the new (Lisbon) commitment to transparency and openness.Footnote 90 An undertaking dissatisfied with a Commission decision taken under the merger regulation has a right of access to neither documents relating to the administrative procedure in the course of the Commission investigation nor to the opinion of the legal service.Footnote 91 However, on the same day the Court said, also in a merger case, that the opinion of the legal service does not enjoy immunity from disclosure where all issues of the case have become res judicata.Footnote 92 As a general rule advice to the Commission from its legal service is not necessarily privileged and the Commission must make the case that it meets the necessary tests if it wishes to withhold it.Footnote 93 Nor is authorization of a Member State necessary for the Commission to allow access to documents produced by the Member State in the course of enforcement proceedings (under Article 258 TFEU) which have been closed.Footnote 94 Of especial relevance to civil enforcement of the competition rules, the interests of a cartelist in avoiding follow-on civil damages claims does not constitute a legitimate commercial interest meriting protection from disclosure.Footnote 95
In the matter of civil enforcement generally the Member States will, in the absence of firmer direction, be obliged to go their own way. A few recent examples: the collective redress favoured by the CommissionFootnote 96 cannot be comfortably accommodated in English law.Footnote 97 The passing-on defence is now recognized as legitimate and to be admitted in German civil procedure.Footnote 98 As for quantification of injury, the Hungarians have introduced legislation whereby, if a hardcore cartel agreement is shown to exist, there is a presumption, which may be rebutted by proof to the contrary, that the infringement increased prices by a factor of 10 per cent;Footnote 99 the UK government proposes following suit but setting the figure at 20 per cent.Footnote 100 The Gerechtshof in Amsterdam found that Commission fines imposed under Regulation 1/2003 are not deductible from taxable profits.Footnote 101 Pending legislative intervention from the Council and/or Commission this babel of civil rules and remedies is likely to grow only more diverse and complex.
5. Rights of defence
In 2011 the General Court sustained the Commission in the lift/escalator cartel case almost completely.Footnote 102 The judgments have been appealed to the Court of Justice.Footnote 103 In the meanwhile the Commission, acting for the Community, had already raised an action in the Rechtbank van koophandel te Brussel seeking damages from those four companies (which had installed and serviced lifts and escalators in various of its buildings around Brussels) of €7,061,688. It raises not only the constitutional issue of who acts for the Community/Union in civil proceedingsFootnote 104 but, in the competition sphere, knotty issues of (presumed) Commission reliance in a private action upon information it had itself gathered in the course of an investigation (in principle to be used only ‘for the purpose for which it was acquired’),Footnote 105 of judicial independence protected by Article 47 of the Charter of Fundamental Rights and of the principle of equality of arms in civil proceedings, the latter one recognized by both the European ConventionFootnote 106 and Union law.Footnote 107 The Rechtbank has referred these issues to the Court of JusticeFootnote 108 which affords it the opportunity of fixing more firmly the rights of defence in the competition constellation. In the meantime, the Ombudsman found errors in the Commission's investigation in the Intel caseFootnote 109 amounting to maladministrationFootnote 110 but made no finding as to whether it infringed Intel's rights of defence. Doubtless that will be aired before the General Court.
6. Criminal enforcement
The momentum in enforcement of competition law by means of criminal sanctions has stalled. Following successful prosecutions in Ireland for price fixing by FordFootnote 111 and CitroënFootnote 112 motor dealers, the last prosecution in the Galway heating oil cartel concluded in May 2012, the accused (individual) convicted and sentenced to a term of two years' imprisonment (suspended) and a fine of €30,000.Footnote 113 Otherwise the Irish courts are resting. In the United Kingdom, following first convictions secured (albeit following guilty pleas) and custodial sentences imposed for commission of a cartel offence under Section 188 of the Enterprise Act 2002 in Whittle,Footnote 114 the criminal guns of the Office of Fair Trading were brought to bear upon four British Airways executives following its transatlantic price fixing cartel in fuel surcharges with Virgin Atlantic, for which BA was fined £121.5 million by the Office of Fair Trading (OFT)Footnote 115 and $300 million by the US Department of Justice.Footnote 116 But the criminal trial collapsed spectacularly in Spring 2010, the OFT prosecutors having failed in the rudimentary duty to disclose key documents to the defence and having, perhaps, relied overmuch upon the evidence supplied by Virgin in exchange for immunity. The OFT subsequently more than halved the fine it had imposed (which BA had not challenged) to £58.5 million ‘in light of subsequent cooperation’, which is as much an admission of its own mishandling of the case and perhaps also recognition of the disapproval it meets frequently for the Competition Appeal Tribunal in the matter of penalties. It raises serious questions about the OFT's competence as a criminal prosecutor, and maybe the very legitimacy of the cartel offence. As the OFT retires to lick its wounds it is thought unlikely to raise further criminal proceedings in their present guise—it has not touched the air freight cartel notwithstanding a Commission fine of €799.4 million,Footnote 117 a settlement with the American Department of Justice by BA of a class action claim for $89.5 million, and its Heathrow-based senior manager for cargo sales and marketing (Mr Keith Packer) fined $20,000 and sentenced to eight months' imprisonment in a Florida prisonFootnote 118—and the threat of imprisonment for would-be cartelists, and its deterrent effect, are thus lifted.
However, the cartel offence may acquire a new lease of life. Since its creation it is a statutory requirement that a constituent component of the offence is one of ‘dishonesty’, recognized by the Court of Appeal as a difficult and ‘plainly very significant’ hurdle.Footnote 119 The UK government proposes now to drop the requirement.Footnote 120 It was suggested from some quarters that another qualifier—the ‘secret’ cartel or the ‘furtive’ cartel—ought to take its place, but the government seems resolved simply to remove it entirely. If it does so, it cannot but make the securing of a conviction significantly easier. At the same time the OFT took another drubbing from the Competition Appeal Tribunal, its finding of a ‘price matching’ cartel amongst two tobacco companies and ten retailers for which it imposed a (record) total fine of £225 million,Footnote 121 set aside for faulty reasoning based upon inadequate evidence,Footnote 122 and so requiring the OFT to repay the fines and leaving it liable for very substantial costs. This is one more factor leading to the reorganization of UK competition authorities, the merging the OFT and the Competition Commission into a single ‘Competition and Markets Authority’ by Spring 2014. It is unlikely we shall see developments of much significance in the UK before then.
D. Microsoft
The Microsoft saga has finally ground to a close. The original bicephalous breach of Article 102 found by the Commission in 2004Footnote 123 was upheld by the General Court in 2007Footnote 124 and, unexpectedly to many, not appealed. The Commission had imposed in the initial decision a behavioural remedy, requiring Microsoft to make available its interoperability information on reasonable terms to interested competitors.Footnote 125 Taking the view a year later that Microsoft failed in this obligation, the Commission ordered it to comply by mid-December 2005, failing which it would become liable for a periodic penalty payment of €2 million per day.Footnote 126 For (partial) non-compliance the Commission six months later fixed the penalty payment at €280.5 million and upped the ante for continuing disobedience to €3 million per day.Footnote 127 Finally satisfied that Microsoft complied in October 2007, the Commission fixed a second tranche penalty payment at €899 million,Footnote 128 and this was challenged by Microsoft. In what it must hope is its last Microsoft business for a while, in June 2012 the General Court found for the Commission essentially throughout.Footnote 129 Pleas challenging the (alleged) inclarity of the obligation, errors of calculation of remuneration and innovative technology, reliance upon the monitoring trustee's reports, infringement of rights of defence and excessive and disproportionate penalties came to naught. Unfortunately (for the onlooker) the argument could not go to the legality of the behavioural remedy ordered by the Commission, which had been canvassed (although not fully) in the Court's order refusing Microsoft interim relief from those remedies.Footnote 130 Nor was there discussion of the differences between periodic penalty payments under Regulations 17 and 1/2003: the latter allows a penalty not exceeding 5 per cent of average daily turnoversFootnote 131 so that the 488 days addressed in the 2008 decision could have meant a penalty payment, for Microsoft, of €1.423 thousand million;Footnote 132 had Regulation 17 still been in force, the penalty could have been fixed at no higher than €488,000.Footnote 133 The only crumb for Microsoft was a finding that an infelicitous letter sent by the Commission which, combined with subsequent conduct, led Microsoft reasonably to follow a course of conduct for which it was now being criticized, so that the Court, in light of its unlimited jurisdiction in the matter of fines, knocked €39 million (roughly 4.5 per cent) off the fine. It is, finally, comforting to have recognition from the Court that Articles 101 and 102 ‘are themselves drawn up using imprecise legal concepts, such as distortion of competition and ‘‘abuse’’ of a dominant position’,Footnote 134 something the rest of us have always known.
