ECHR – its Growing Influence on Substantive Competition Law
To date, the impact of the European Convention on Human Rights (EHCR) on competition law has mostly been confined to procedural matters. For example, Article 6 provisions in ECHR that recite a number of fundamental rights of defence, have often been invoked by companies that have been found guilty of competition law infringements on the grounds that these rights were ignored by the EC Commission. Although these challenges have generally been unsuccessful, it is now accepted that Article 6 rights apply not only to criminal proceedings in the classic sense, but can be used by companies subjected to regulatory fines.
However, ECHR has had some impact on substantive law as well and this may be set to increase. For example in 2010, the European Court of Justice made it clear that the principle of legal certainty (referred to in Article 49 of the Charter of Fundamental Rights and Article 7 ECHR) meant that the test for “margin squeezing” (selling below retail costs by a vertically integrated dominant company) cannot be based on an assessment by the dominant company of the retail costs of a competitor (rather than its own retail costs) because the dominant company would not know its competitor’s costs and could not find them out legitimately. This finding, which the EC Commission somehow reserves the right to disregard in certain cases, is a significant limiting factor in the application of Article 102 – as was confirmed very recently by the UK’s Competition Appeal Tribunal decision in the B SkyB/Ofcom case.
Even more recently, (last month), the European Court of Justice has applied ECHR principles to substantive competition law – this time in relation to Article 101. It held that the presumption of innocence contained in Article 6 ECHR prevented the EC Commission defining “concerted practices” in such a way as to require the defendants to show that parallel behaviour in the market place was not the result of an unlawful “concerted practice” between them. Interestingly, this presumption of innocence was held to apply to the definition of the infringement even though no fine was actually imposed; this was because a mere finding of “concerted practices” was something that would cause reputational damage to a dominant company. This is a major extension of Article 6 ECHR by the European Court of Justice.
Are these decisions just two straws in the wind or does the application of the ECHR principles have further scope for growth as far as substantive competition law is concerned?
To answer this question, it should be borne in mind that Article 102 requires a dominant company to exercise some special responsibility for competition in its market and to act as if it were not dominant. As a result, it cannot enter into agreements which are perfectly acceptable for companies that are non-dominant. This test for breach of Article 102 is notoriously uncertain; particularly bearing in mind that the possession of a dominant position is itself legal.
The enjoyment of property rights, which is protected under Article 1 of the Protocol to ECHR, is subject to a number of qualifications, but this recent case suggests that ECHR does provide a way in to attack substantive competition law findings. ECHR is therefore likely to be exploited by companies found to have infringed Article 102 in the future as well.
This guide is for general information and interest only and should not be relied upon as providing specific legal advice. If you require any further information place contact the author or call 0207 404 0606 and ask for your usual Goodman Derrick contact.