Pfleiderer Decision: Potentially Grave Impact on EU Cartel Enforcement

Pfleiderer Decision: Potentially Grave Impact on EU Cartel Enforcement

The ECJ Judgement in Pfleiderer : A Tension more Imaginary than real

By Dr. Frank L. Fine

Summary: On June 14, 2011, the European Court of Justice handed down a ruling which will have negative repercussions for cartel enforcement for Germany and for the EU as a whole. Pfleiderer dealt with the interests of aggrieved victims of cartels in obtaining damages and of competition authorities in protecting the confidentiality of statements and documents submitted by leniency applicants. The ECJ has weakened an essential tool of cartel enforcement.

ARTICLE: On June 14, 2011, the European Court of Justice ("ECJ" or the "Court") handed down a ruling which will have negative repercussions for cartel enforcement for Germany and for the EU as a whole. Pfleiderer v. Bundeskartellamt 1 dealt with the interests of aggrieved victims of cartels in obtaining damages in civil actions for losses caused by the cartel, and of competition authorities in protecting the confidentiality of statements and documents submitted by leniency applicants. In this ruling, however, the ECJ found that in Germany, and implicitly in other Member States, the need for confidentiality of leniency statements and documents may be subordinated to the interest of civil claimants in obtaining access to such documents. In so doing, the ECJ has weakened an essential tool of cartel enforcement, which could only hinder the investigations and decision-making of the national authorities, thereby dampening the likelihood of follow-on litigation.

I. BACKGROUND

Pfleiderer arose from a Bundeskartellamt decision of 2008, pursuant to Article 81 of the EC Treaty (now Article 101 TFEU), imposing fines of €62 million on three European manufacturers of décor paper and on five individuals. In anticipation of a civil action for damages, a purchaser of décor paper, Pfleiderer, applied to the Bundeskartellamt for full access to its file in the cartel matter, including the leniency statements and documents submitted pursuant to the Bundeskartellamt's Leniency Program. The Bundeskartellamt refused to divulge these materials to Pfleiderer on the basis of Paragraph 22 of its Leniency Program, which states:

"Where an application for immunity or reduction of a fine has been filed [,] the Bundeskartellamt shall use the statutory limits of its discretionary powers to refuse applications by private third parties for file inspection or the supply of information, insofar as the leniency application and the evidence provided by the applicant are concerned."

Pfleiderer then requested an order from the local court (the "Amtsgericht Bonn") compelling the Bundeskartellamt to allow Pfleiderer access to these confidential materials. On February 3, 2009, the local court handed down a decision ordering the Bundeskartellamt to provide such access. The decision was based on German procedural rules, 2 according to which victims of criminal and administrative offenses may be entitled to inspect evidence held by the court or administrative authority, as the case may be, where the victim demonstrates a "legitimate interest." The court held that Pfleiderer, a victim of a cartel who suffered harm and wished to claim damages, demonstrated a legitimate interest.

However, the Amtsgericht Bonn stayed its decision while applying for a preliminary ruling from the ECJ as to the decision's compatibility with EU law. Specifically, the question before the Court was:

"Are the provisions of Community competition law - in particular Articles 11 and 12 of Regulation No 1/2003 and the second paragraph of Article 10 EC, in conjunction with Article 3(1)(g) EC - to be interpreted as meaning that parties adversely affected by a cartel may not, for the purposes of bringing civil-law claims, be given access to leniency applications or to information and documents voluntarily submitted in that connection by applicants for leniency which the national competition authority of a Member State has received, pursuant to a national leniency programme, within the framework of proceedings for the imposition of fines which are (also) intended to enforce Article 81 EC?"

Importantly, if the Bundekartellamt decision had been taken under the relevant provisions of German cartel law, that is, Sections 1 and 2 GWB, the request for a preliminary ruling arguably would not have arisen at all. In that event, it would have been for a higher German court to decide, under German law, whether, and in what circumstances, cartel victims, in the context of follow-on litigation, may obtain access to leniency statements and documents filed with the Bundeskartellamt.

On the other hand, if the underlying administrative proceeding under Article 101 had been conducted by the European Commission, rather than by the Bundeskartellamt, and the leniency statements and documents were filed with the Commission, the latter would not have considered itself subject to German rules of procedure relied upon by the Amtsgericht Bonn. Rather, the Commission has issued rules on access to its own files-and those rules permit such access only to recipients of a Statement of Objections. 3 Moreover, the Commission states in its Leniency Notice that corporate (leniency) statements filed in the context of Commission investigations are not accessible to other parties, such as complainants.

II. ANALYSIS...

FRANK L. FINE has been practicing EC competition law in Brussels since 1986. He is currently the Director of EC Competition Law Advocates in Brussels, which is engaged in the representation of companies and governments in competition law proceedings and litigation. He is a member of the California and D.C. Bars, as well as member of the Law Society of England and Wales. He obtained his J.D. in 1982 from Loyola Law School of Los Angeles, where he served as Editor-in-Chief of the Loyola International & Comparative Law Journal. Mr. Fine has LL.M. and Ph.D. degrees from the University of Cambridge in EC competition law. He is the author of The EC Competition Law on Technology Licensing (2005, Sweet & Maxwell) and of Mergers and Joint Ventures in Europe: The Law and Policy of the EEC (2nd ed, 1994; Kluwer International), and is the General Editor of European Competition Laws (2010, LexisNexis, Inc.). He is on the ABA Antitrust Section Task Force on Civil Redress and is Vice-Chair of the Section's Cartel and Criminal Practice Committee. Mr. Fine is a Fellow of the American Bar Foundation. He is also EU competition law advisor to SAI Global and is a member of the Advisory Boards of the Northwestern Journal of International Law & Business, The Antitrust Counselor and the Corporate Counsel's International Adviser.

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