This Week and Last Week in Luxembourg

The biggest case this week is probably Joined Cases Libert et al. v. Flemish Government and All Projects & Developments NV et al. v. Flemish Government, where the Court (Judge Tizzano) answered a number of questions coming from the Belgian Constitutional Court. (There's 12 of them, and I honestly don't know what the common thread is supposed to be.) Most notably, it declared the Flemish system for controlling who gets to buy immovable property incompatible with the Common Market.

A Nigerian student studying for his doctorate in Edinburgh may still have the right to have his Nigerian mother in the country with him – his own right of residence rests on art. 12 of Regulation 1612/68, given that his father is an EU citizen – but only if he can convince the national court that he “remains in need of the presence and care of [his mother] in order to be able to continue and to complete his (…) education”. Alarape and Tijani v. Secretary of State for the Home Department

In a related case, the Court (also by Judge Silva de Lapuerta) paid lip service to the genuine enjoyment doctrine while reiterating the holding of Dereci and McCarthy that Member States can all but do as they like to their own citizens who have never exercised their right to free movement. Ymeraga et al. v. Ministre du Travail, de l’Emploi et de l’Immigration


On the day that the Netherlands traded in its formidable Queen for a lightweight King, AG Cruz-Villalón opined that the City of Hilversum was not allowed to include a price regulation term in the contract of sale it concluded with UPC for the city’s cable television network. He argued that the 2002 telecoms package applies to this kind of regulation, and that the contract term in question is contrary to art. 13 of the Access Directive. Only art. 106(2) TFEU might save the city’s regulations. UPC v. Municipality of Hilversum (NL, DE, FR) Cf. e-comm blog

On the same day, AG Bot concluded that International Jet Management, which carries out flights from Russia and Turkey to, amongst others, Germany, can do so using its Austrian license without needing a German license as well. The German rule to the contrary is contrary to art. 18 TFEU. International Jet Management (NL, DE, FR)

A week later that same AG proposed slapping down a plainly discriminatory rule regarding which kinds of certificates of origin (cf. art. 5 of Directive 2001/77) are accepted for the purposes of a renewables quota in Flanders. More through inaction than anything else, the Flemish wound up accepting only Flemish certificates, which is obviously not OK. Essent Belgium v. Vlaamse Reguleringsinstantie voor de Elektriciteits‑ en Gasmarkt (NL, DE, FR) Cf. GAVC Law Blog

AG Bot was more supportive, however, of the Walloon system for promoting biomass energy, even though it might be considered as discriminating between generation from wood and generation from other biomass. Industrie du bois de Vielsalm & Cie (IBV) SA v. Walloon Region (DE, FR)

AG Kokott did a bit of insolvency law, arguing that honouring an obligation “for the benefit of a debtor” in art. 24 of Regulation 1346/2000 includes a case where a bank pays a debt on behalf of a bankrupt account holder. Christian van Buggenhout en Ilse van de Mierop (liquidators of Grontimmo SA) v. Banque Internationale à Luxembourg (NL, DE, FR)

This Week in Luxembourg

The Grand Chamber (Judge Ilešič) slapped down the appeal by Laurent Gbagbo and his friends against the General Court’s order dismissing their action for annulment of their asset freeze as manifestly unfounded. The problem was that the applicants were out of time. The Court discussed the general theory of binding time limits before concluding that Gbagbo c.s. hadn’t argued anything specific to substantiate their appeal to force majeure. Gbagbo et al. v. Council

The Romanian gay rights NGO Accept decided to go for broke. They brought an employment discrimination case under Directive 2000/78 against Steaua Bucharest. If that wasn’t ambitious enough, the factual basis of the claim was an interview given by Gigi Becali, the main shareholder and “patron” of the club, which may or may not be enough to consider his statements as representing the club. All three answers of the court favour the applicant. Asociaţia ACCEPT v. Consiliul Naţional pentru Combaterea Discriminării Cf. Journal du Marché Intérieur Blog

In Jyske Bank Gibraltar v. Administración del Estado, Gibraltar banking secrecy clashed with Spanish and EU legislation to combat money laundering (specifically, Directive 2005/60) and the war on money laundering won.

Because Galileo is organised, under Regulation 876/2002 as a Joint Undertaking, i.e. an EU-level PPE, the EU’s staff regulations do not apply. Bark v. Galileo Joint Undertaking

(There was also a whole stack of boring and easy infringement cases.)

In the General Court, the baby seals won in the suit brought by the Canadian fur producers. The ban on seal products was lawfully enacted on the basis of art. 95 EC. The General Court rejected art. 133 EC as an additional legal basis by relying on the titanium dioxide case. The Court also spent some time on proportionality & subsidiarity, on art. 1 P1 and on the United Nations Declaration on the Rights of Indigenous Peoples, but to no avail. Inuit Tapiriit Kanatami v. Commission Cf. European Law Blog

Wifi (2)

Last month, those b*stards at the Dutch Supreme Court ruined one of my favourite legal stories - the one I discussed in this blog post from 2011. What had happened is that the Court of Appeals in The Hague had decided that you couldn't - legally - hack a router, because a router was not sufficiently similar to a computer to qualify under the relevant provision of the Penal Code. The fact that the router at issue in the case was protected with a password was irrelevant. The defendant was (partially) acquitted.

Obviously, this is awesome on countlessly many levels, which is why I've used this case from time to time pour encourager les autres. Especially in criminal law, where the principle of nulla poena sine lege reigns surpreme, the law must be interpreted carefully, based first and foremost on the (plain) meaning of the words used by the legislator. Just because something is, in the words of the Court of Appeals, "socially undesireable", that doesn't mean the Court should therefore stretch the meaning of the law beyond its plain meaning.

For what follows, however, it should be noted that the statute in question is not exactly a paragon of clarity. For the Dutch readers, it says the following:

Art. 138a lid 1 (oud) Sr
Met gevangenisstraf van ten hoogste een jaar of geldboete van de vierde categorie wordt, als schuldig aan computervredebreuk, gestraft hij die opzettelijk en wederrechtelijk binnendringt in een geautomatiseerd werk of in een deel daarvan. Van binnendringen is in ieder geval sprake indien de toegang tot het werk wordt verworven:
a. door het doorbreken van een beveiliging,
b. door een technische ingreep,
c. met behulp van valse signalen of een valse sleutel, of
d. door het aannemen van een valse hoedanigheid.

Art. 80sexies Sr
Onder geautomatiseerd werk wordt verstaan een inrichting die bestemd is om langs elektronische weg gegevens op te slaan, te verwerken en over te dragen.

I'm not even going to attempt a translation. Suffice it to say that the list in the end is clear enough. It lists four things that at least qualify as hacking. The problem, both generally and for this case, is the term "geautomatiseerd werk", which I've never heard or seen anywhere else before or since, and which is clearly meant to refer to computers and such like without actually using the word computer or any other word that might be meaningful to the average Dutch speaker. Hence the problem of working out whether a router qualifies. Even the definition of art. 80sexies, which says that a "geautomatiseerd werk" is a tool used for storing, processing and transferring data electronically doesn't help as much as one might like.

Therefore, the Court of Appeals, like a good Continental court, looked at the legislative history and found that the intention of the legislature was particularly to protect "those who, by using security measures, have indicated that they wished to shield their data from nosy intruders". Given that a router doesn't hold data, the court argued that the legislative history supported the view that they don't count.

Last December, Advocate-General Vellinga had fairly little difficulty supporting this view. After summing up the history of the case and the law, he simply noted that courts are allowed to base their interpretation of the law on statements made in parliament at the time the law was enacted and, citing the same passage from the parliamentary transcripts as the Court of Appeals, he concluded that that court had been correct.

(Interesting side-note: the Attorney-General's appeal brief and the Advocate-General's opinion on this point were both formulated in terms of the Rechtsgut that was allegedly protected by art. 138a Sr. That's a topic I encountered only a few days ago talking about the possibility of a criminal prosecution of Thilo Sarrazin in Germany on the Volokh Conspiracy.)

The High Council (= Supreme Court), however, quoted more generously from the legislative history, focusing particularly on the word "inrichting", which I translated loosly as "tool" earlier. The Court deduced from the transcripts it quoted that the law was intended to protect not only separate devices, but also networks and parts of networks. In other words, while the three activities of storing, processing and transferring data are cumulative, they do not have to be met by each and every single potentially hackable device, only by the totality of the network or group of devices that the device in question belongs to. It follows that routers, too, can be hacked.

While this is a plausible reading, I still think that the Court of Appeals' approach is less forced. After all, the High Council did not address the Rechtsgut problem: Which interests, exactly, was art. 138a Sr enacted to defend? Just because the High Council quoted legislative history does not mean that they engaged in teleological interpretation. They didn't, because they didn't say a word about the intentions of the lawmaker. In fact, if I had to categorise their approach with one of the classic models of legislative interpretation, the only thing I can think of is plain textualist interpretation, except that they used the legislative history instead of a dictionary to discover the meaning of "inrichting". That, I would think, is not something we would want to encourage. If we are going to focus on the meaning of the words in the statute, we should rely on the meaning that ordinary Dutch speakers give those words, or the meaning that can be found in a dictionary. If the legislature wants to deviate from the normal meaning of words, they should write a definition into the law. The fact that they did so here, but not very well, should be no concern of the courts.

Moreover, I think this result violates the principle of in dubio pro reo. Given that there were two plausible interpretations of the statute, the Court should have preferred the one that favoured the defendant. When in doubt, no one goes to jail.

P.S. To clarify: Given that using your neighbour's unsecured wifi does not involve doing any of the four things specifically listed in art. 138a (oud) Sr, nor anything comparable, I would imagine it is still legal. That said, you should consult your lawyer before engaging in anything that is potentially a crime, just to be sure.

This Week in Luxembourg

The Grand Chamber handed down two big cases this week:

On the one hand, it decided not to shoot down the European Patent Court a second time. (Cf. Opinion 1/09) Curiously, Spain and Italy tried to use art. 3(1)(b) TFEU to argue that the EPC deals with an exclusive Union competence and that the EPC somehow didn’t promote integration because it excluded two Member States. More sensibly, but also unsuccessfully, they relied on the last resort requirement and the reasoning of Opinion 1/09 (par. 89-94). Joined Cases Spain and Italy v. Council Cf. IPKat (1, 2) and Verfassungsblog

On the other hand, it crushed the tentative Belgian language peace by forbidding a Flemish rule that required all employment contracts to be drafted in Dutch. Las v. PSA Antwerp Cf. the blog Journal du marché intérieur and Euractiv Cf. Eutopia Law Blog and Außenwirtschaftslupe

Following their fairly poor results in the first batch of railway infringement judgements in February (cf. Commission v. Germany here), the Commission will be pleased with its (partial) win against France. The Court (Judge Borg Barthet, of course) found against France with regard to capacity allocation and the absence of mandatory performance elements in the access charges. Commission v. France

Two appearances of the principle of effectiveness this week: In Irimie v. Administraţia Finanţelor Publice Sibiu the Court (Judge Ilešič) insisted that Romania should not let procedure get in the way of recovering all of an unlawfully levied tax, and in L v. M the Court (Judge Bay Larsen) protected the Environmental Impact Assessment Directive 2001/42 against some German procedural problems.

The Court (Judge Tizzano) followed AG Cruz Villalón and held that the dispute between Systran and the Commission is contractual, rather than tort. As such, it belongs in Luxembourg court. Commission v. Systran

Levi’s is trying to prevent another jeans manufacturer from attaching red labels to its jeans by using a number of its trademarks. As far as I can tell, they won. Colloseum Holding v. Levi Strauss & Co (Judge Juhász) Cf. IPKat

The somewhat creative Dutch Essent privatisation litigation has, predictably, ended up in Luxembourg. AG Jääskinen argued that the ban on privatisation is shielded under art. 345 TFEU and therefore OK. As to the ban on TSOs being part of wider energy conglomerates, the AG concluded that this was a justified limitation of the free movement of capital. The Netherlands v. Essent, Eneco and Delta (NL, DE, FR)

AG Wahl has a nice case where the place where the place where the work is habitually carried out is not the place most closely connected to the contract. (Cf. art. 2 and 6 Rome Convention) Schlecker v. Boedeker

In Martin y Paz Diffusion v. Depuydt and Fabriek van Maroquinerie Gauquie AG Cruz Villalón discussed the case of a trademark owner who was naughty in a way that may or may not have been illegal. The plaintiff withdrew his consent for the defendants to use his trademark in a way that the AG concluded was (probably) OK; consent cannot be irrevocable and abuse of right law cannot provide a permanent remedy here. Cf. art. 5(1) of Directive 89/104.

Even though the Commission is already litigating as a victim in Belgian court, the appeal of one of the elevator cartel cases is still pending. AG Kokott recommended this week that Schindler should lose its appeal. (Its complaint was about the way the Commission and the General Court had treated it like a single entity for competition law purposes.) Schindler Holding v. Commission (DE, FR)

AG Kokott is also potentially saying something interesting about public procurement law & structural funds in a case about a Club Med village on Martinique. The Commission had taken the tough approach, and the AG now proposes annulling the General Court’s decision that sided with the Commission. Now let’s see what the Court does. France v. Commission (NL, DE, FR)

Germany v. Puid is one of those cases that give lawyers a bad name. According to AG Jääskinen, an asylum seeker does not have an enforceable claim for a Member State to use its authority under the first sentence of art. 3(2) of Regulation 343/2003 to examine a claim it doesn’t have to. However, when “a national court cannot be unaware” of the deficiencies of the asylum system of the country that is supposed to examine the claim, it is still required to suspend the transfer of asylum seekers to that country under N.S. and M.E. Sounds right to me…

Anonymity

In a recent judgment, the Supreme Court of the Netherlands held against “The Board of the District Court of [A]”. I would humbly submit that that was taking anonymisation several steps too far.

Discussing the question of anonymity in court documents with my friends on the Volokh Conspiracy, I have generally defended the way the balance is struck in the Netherlands between privacy and transparency. Free speech is not an issue: there is no law forbidding anyone from publishing the names of people convicted of a crime. There is merely an agreed upon custom among the press that people’s surnames are not mentioned. Courts, in their judgments, also don’t mention the names of the individuals before them – although they do mention company plaintiffs and defendants by name – but that is not a free speech problem. Free speech does not require that the government give you information to talk about.

So that leaves transparency. The logic here is essentially the same as for Access to Documents legislation. As the EU legislature put it in recital 2 of Regulation 1049/2001:

Openness enables citizens to participate more closely in the decision-making process and guarantees that the administration enjoys greater legitimacy and is more effective and more accountable to the citizen in a democratic system. Openness contributes to strengthening the principles of democracy and respect for fundamental rights as laid down in Article 6 of the EU Treaty and in the Charter of Fundamental Rights of the European Union.

Specifically in the context of court judgments, it is claimed that transparency allows citizens to know which of their fellow citizens have done wrong, and that it allows them to scrutinise the work of the court better. Against this we put the privacy rights of criminals, and more generally of parties to litigation. We have abolished the pillory as a form of punishment, and it does not do to recreate it in the press.

Based on these considerations, I have generally argued that the right balance is struck by giving the press and the general public free access to the court room – absent special considerations requiring confidentiality of proceedings – and thus allowing them to see and report trials in a non-anonymous way. If the public interest requires that the names of litigants are reported, the press will know these names, and will be free to make that decision, but I can’t just Google my neighbour to see if he’s ever been convicted of anything just because I’m nosy.

The reason why I was thinking of this is the rather curious case of Karel Knip. (His alleged misconduct is at several removes from the case I’m interested in, so there’s no reason not to mention his name.) Karel Knip wrote about the Trafigura case, and did so in a way that noticeably favoured the company in the middle of what was generally highly bad press. While this might lead the neutral observer to question his integrity, the District Court in Amsterdam, in handing down its judgment in the Trafigura case, went well beyond that and took the highly unusual step of mentioning this journalist – who, mind, was not a party to the case – in its judgment. They wrote:

6.10. (...) Trafigura toont daarmee dat zij geen enkel vertrouwen heeft in de rol van de media en de oprechtheid van de journalisten, zij het dat zij één uitzondering maakt en dat is voor de journalist [naam 46]. Hij is de enige die het begrijpt en die - naar de rechtbank moet aannemen met behulp van informatie van Trafigura - tijdens deze strafzaak en nà het pleidooi van Trafigura nog eens komt met een artikel waarin de relatieve onschuld van de slops wordt beschreven.

My translation:

6.10. (…) Trafigura shows in this way that it has no confidence whatsoever in the role of the media and the sincerity of journalists, be it that it makes one exception, for the journalist [name 46]. He is the only one who understands and who – as the court is supposed to assume with the aid of information provided by Trafigura – during this criminal trial and after the concluding remarks of Trafigura brings an article that describes the relative innocence of the slops in question.

(The brackets are the court’s, of course. A slop is technical jargon for a chemical spill.)

The daily newspaper Trouw noticed this, and reported about what the court had said. Paraphrasing the judgment, the newspaper said that the court had questioned Mr. Knip’s integrity. Predictably, he did not like this characterisation, so he took action against the paper before the Press Council, an independent body tasked by the Dutch press with enforcing journalistic best practice. (Note that it is emphatically not a public law body. Even in the Netherlands we like to avoid litigating press stories.)

This is where we get to the second unusual event in this saga. The Council, in examining the complaint, got in touch with the court, asking it whether the newspaper’s interpretation of the judgment was correct. The clerk of the court answered that it was a reasonable interpretation. Upon receiving this answer, Mr. Knip abandoned his case before the Press Council.

He did wonder, as well he might, why on earth the clerk of the court replied to this question. So he made a complaint with the President of the District Court, who backed the clerk, and with the Council for the Judiciary, the governing body of the Dutch court system. The latter replied that this was not a question of judicial misconduct, but one of alleged misconduct in the management of the courts, and therefore someone else’s problem.

Given that this is not a very satisfactory answer, Mr. Knip decided to bring out the big guns by bringing a complaint under art. 13a of the Judiciary Act (Wet op de Rechterlijke Organisatie), a new procedure that was only created in 2011. This involves asking the Procureur-General at the Supreme Court, a magistrate whose independence is guaranteed in the same way as the independence of judges, and whose job includes, in theory, bringing prosecutions against members of the government for abuse of office, to petition the Supreme Court asking that Court to investigate the matter. (Since there has never been a prosecution against a Minister, the Procureur-General normally spends his days as the boss of the Advocates-General at the Supreme Court, joining them in advising the Supreme Court about the best resolution of the cases before it.)

The Procureur-General granted the request and brought his petition, and the Supreme Court heard the Amsterdam court at a hearing in January. (This being a civil law country, there were no spectacular Law & Order theatrics. Instead, the Amsterdam court made a statement via counsel, and Mr. Knip declined to make an appearance.)

Last month, the Supreme Court handed down its judgment in this case, and it was a doozy. The Amsterdam court was reprimanded severely for having allowed the clerk to respond to the Press Council’s question, and for supporting the clerk’s decision afterwards. Judges speak through their judgments, and if any commentary is necessary there is a judge-spokesperson for every court. And the Supreme Court stressed that even that person, who is himself a judge, should be careful not to create the impression that his statements are in any way authoritative. The way the Amsterdam District Court handled this matter could not have been more wrong.

There is just one odd thing about the Supreme Court’s judgment. At the top, it is styled: “Judgment in the matter of the complaint brought by [complainant] against the Board of the District Court of [A]”, and that same style is maintained throughout. The fact that Mr. Knip’s name was removed is entirely normal, and in line with Dutch court practice. The fact that the reference to Amsterdam was also removed is less normal, and also much less defensible. Not only would the custom with regard to companies suggest differently, but so would the underlying first principles. If ever there is a strong case for transparency, it is when the judiciary is trying to clean its own house.

As it happens, there is only one District Court that starts with an A, making this case of anonymisation particularly silly. (There used to be more, but several District Courts were merged in recent years.) While the board of the court is strictly speaking a group of individuals, the same goes for the board of a corporation, such as the board of Trafigura who ended up with their company name printed for all to see in the jurisprudence. As long as the judges in question don’t end up with their names printed in the judgment, I don’t see how the normal rules for anonymisation require that the name of the court be removed from the judgment.

Even if, applying the normal rules, one were to say that this is a borderline case, surely the public interest in observing how the judiciary polices itself is greater than the public interest in transparency normally would be? In other words, the Supreme Court should have erred on the side of naming the board of the Amsterdam District Court.

In order to remedy that omission, I will take the liberty of naming the current members of the board. Board members for courts are appointed for six year terms, so I cannot be sure that these judges were already on the board at the relevant time, but it will have to do. They are:

• Mrs. C.T.E. Eradus, President of the Court and chairwoman of the Board;
• Mrs. E. de Rooij, judge-member.
• Mr. Hans Janssen, non-judge member appointed as of 1 April 2013.

This blog post is based on this Dutch-language story by Hugo Arlman on NJBlog.nl. The opinions expressed here are, of course, my own.

Today in Luxembourg

The case of Mindo v. Commission (judge Arabadijev) gave the Court the opportunity to explore the consequences of joint and several liability for competition fines when one of the persons liable is bankrupt. It held that the General Court was wrong to ask Mindo to prove that the other creditor, AOI, actually intended to recover part of the fine from Mindo. More embarrassingly for the General Court, the main focus of the judgment was the failure of the GC to state adequate reasons.

In the Aarhus case of R. (Edwards and Pallikaropoulos) v. Environment Agency et al., the Court (judge Bonichot) tried to give some usable guidance as to the rule that judicial proceedings in this area of the law should not be “prohibitively expensive”. It concluded that the applicant’s ability to pay is not the only criterion. It also listed:

• The reasonableness of the costs in isolation;
• “The situation of the parties concerned”;
• The claimant’s “prospect of success”;
• “The importance of what is at stake for the claimant and for the protection of the environment”;
• “The complexity of the relevant law and procedure”;
• “The potentially frivolous nature of the claim at its various stages”;  and
• “The existence of a national legal aid scheme or a costs protection regime”.

It turns out that the fact that the claimant has not, in fact, been deterred is not dispositive. Also, the criteria have be consistently applied regardless of the stage of proceedings at which the question is considered. Cf. UK Human Rights Blog

For prof. Heldeweg, if he still has time for such things, the Court (judge Arestis) has a case on the precautionary principle and the Habitats Directive. Sweetman et al. v. An Bord Pleanála

The Court (judge Toader) held that Regulation 44/2001 is applicable to a claim for recovery of a sum unduly paid by a public entity in the context of Nazi-era reparations. The Court also devoted some attention to the question of whether it is necessary for various co-defendants to live outside Germany. Land Berlin v. Sapir et al.

Berger v. Bavaria dealt with food that was unfit for human consumption but not a health risk. The Court (judge Bay Larsen) interpreted art. 10 of Regulation 178/2002 to permit national legislation that allowed for intervention in these circumstances. Note the – somewhat hypothetical – question 2 posed by the national court, which the Court unfortunately ignored.

In Jeltes, Peeters and Arnold v. UWV, the Court (judge Fernlund) held that its judgement in Miethe v. Bundestanstalt für Arbeit was no longer good law in light of the enactment of Regulation 883/2004.  The plaintiffs were all atypical frontier workers in the sense of Miethe because they lived in Belgium or Germany while maintaining a professional and social life almost entirely in the Netherlands.

This week, the Czech Republic gives us a particularly egregious case of gender discrimination by having a law that lets women retire younger than men, and making their retirement age dependent on how many children they’ve raised. Soukupová v. Ministerstvo zemědělství

In his opinion in Commission v. the Netherlands (NL, DE, FR), AG Wathelet offered not one but two reasons why the Commission should lose. The boring one is that the case concerns a purchase of land, not an award of a concession. More interestingly, he discussed the applicability ratione temporis of Directive 2004/18 to this case, which concerned decisions taken at various moments before and after the enactment and the entry into force of that directive.

While Regulation 44/2001 does not apply to Denmark, there is a parallel international agreement between the EU and Denmark that brings it back in through the back door. AG Kokott did some legal interpretation ninja to explain why the Danish court is allowed to ask a prejudicial question notwithstanding the text of the agreement before arguing that the Regulation applied to the case at bar. Her Majesty’s Revenue & Customs v. Sunico et al.

AG Cruz Villalón argues that, for once, the Turkish plaintiff should lose in an EU-Turkey association agreement case. Specifically, he argues that the passive freedom to provide services is not covered by the Agreement, and in the alternative he argued that the plaintiff’s reliance on that freedom was too speculative, given that she only really wanted to get around the visa requirement in order to visit her family in Germany. Demirkan v. Germany Cf. European Law Blog

AG Mengozzi disentangled a case where Germany refused a visa on the grounds that the applicant was likely to overstay. Cf. art. 21(1) Visa Code. Koushkaki v. Germany (NL, DE, FR)

In other news, I came across the Commission’s notification letter concerning its decision to open an art. 108(2) procedures against a number of Dutch football clubs, including PSV.

The Plague Reaches EUObserver

Repeat after me: Not being able to win a referendum is not "undemocratic". The are many things that you'd never win a referendum on. Taxes. Piers Morgan. Quantum Physics. But that doesn't make any of these things undemocratic. Instead, we have democratically elected legislatures, the marketplace and scientific consensus to decide on these things instead, respectively. Can we please, please, please stop pandering to the electorate by pretending that referendums are the only form of true democracy, or even the best kind?

P.S. I should emphasise that the Ph.D. thesis by Jens Peter Paul that is discussed in this article does not suffer from the same problems, which is actually rather important given that it deals with the theory of democracy (and its practice). Without having read the whole thing, the statement of results (p. 248-252) seems to imply the following assumptions about a well-functioning democracy, which seem correct:

1. In a healthy democracy, there is a (high-quality) public discourse about important decisions, in the form of newspaper articles, interviews in talkshows, etc.
2. In a healthy democracy, members of the legislature do not feel obligated to rule out one or more alternatives.
3. In a healthy democracy, parties position themselves in the debate based on their substantive preferences rather than power-seeking behaviour.
4. In a democracy, election results can only be said to legitimate decisions taken in the previous legislative period to the extent that those decisions were prominent in the election campaign.
5. -
6. In a healthy democracy members of the legislature are not exposed to undue pressure.

Comparing these ideals to what actually happened, the qualification "undemocratic" might not be that far off the mark. However, that's not a conclusion you can draw based on what the article says, which focuses mainly on what Kohl said - being interviewed by the author of the thesis - about the unpopularity of the euro.

(Referendums don't play a prominent part at all in the thesis - the word on appears a handful of times in the main body. Funny how reporting on science works...)

This Week in Luxembourg

The Grand Chamber (Judge Arabadijev) annulled the General Court’s state aid judgment in French Republic et al. v. Commission. Siding with the Commission, the Court criticised the General Court’s standard for the connection between the state resource and the advantage at issue, as well as its analysis of the nature of the alleged advantage. The case now goes back to the General Court so that it can deal with France’s other arguments. Bouygues Télécom and Commission v. France Cf. e-comm blog and The Antitrust Hotch Potch

Belgium created a new and innovative fee for mobile telecoms operators, and the Court (Judge Jarašiūnas) approved. The operators’ challenge under art. 3 and 12-14 of the Authorisation Directive was rejected. Belgacom et al. v. Belgium

As expected, the Court (Judge Bonichot) shot down the Hungarian rule for counting the number of days a 3^rd country national spends in the EU under the local border traffic Regulation. The Court held that every time a person crosses the border the count starts anew. Szabolcs-Szatmár-Bereg Megyei Rendőrkapitányság Záhony Határrendészeti Kirendeltsége v. Shomodi

The Court rejected an Austrian attempt to exempt small airport extensions from the rules on environmental impact assessments. Salzburger Flughafen v. Umweltsenat

In RWE Vertrieb v. Verbraucherzentrale Nordrhein-Westfalen, the Court (Judge Safjan) had some fun trying to figure out the interplay between the unfair consumer contracts directive and the sectoral regulation for the gas sector. Can an energy company just unilaterally increase your prices? The Court concluded that it can, as long as the whole thing is transparent, based on clear principles, etc. Cf. Recent Developments in European Consumer Law

AG Bot levelled significant criticism at the General Court’s handling of the second Kadi case in 2010, concluding for a variety of reasons that that judgment should be annulled, and that the General Court should have taken a more modest approach in its judicial review, both when it comes to the intensity of scrutiny, and to the scope of law involved. Commission et al. v. Kadi Cf. Eutopia Law Blog, Verfassungsblog and one of Kadi's lawyers on the brand new European Sanctions Blog

AG Kokott considered the doctrine of standing under art. 263 TFEU in the Spanish state aid case of Telefonica v. Commission (NL, DE, FR, ES). The General Court had dismissed the case by order on the grounds that the plaintiff was not individually concerned while this case was not caught by the new exception for regulatory acts which do not entail implementing measures. The AG agrees that Telefonica does not have standing, but only because a state aid decision requires implementing measures.

That AG also argued that the Spanish special tax on the windfall profits associated with the free allocation of emissions rights was permissible under the relevant Directive, Directive 2003/87, unless it acted to disincentivise energy efficiency. Iberdrola v. Administración del Estado

For reasons to do with their opt-in, the UK are challenging the legal basis of the Council’s Decision establishing a mandate for the EU in the EEA Joint Committee, so that Regulation 883/2004 might be extended to the EEA. The “procedural legal basis” is, undisputedly, art. 218(9) TFEU, but the UK is challenging the choice of art. 48 TFEU as the “substantive” legal basis. Instead of the free movement of workers law, the UK prefers immigration law as a basis. AG Kokott disagrees. UK v. Council

AG Mengozzi considered a Belgian case where the plaintiff tried to use Directive 2006/114 on misleading advertising to go after an arguable case of domain name hijacking. The AG proposed, not very helpfully, that registering such a domain was not captured by the directive, but that using it might be, and that the national court should sort out the rest. Belgian Electronic Sorting Technology v. Peelaers and Visys (NL, DE, FR)

AG Mengozzi also handed down an opinion in the case of K. (It’s not otherwise very interesting, but the way in which the Finnish method for citing cases resulted in the most Kafkaesque of case names proved impossible to resist.)

In Alopka et al. v. Ministre du Travail, de l’Emploi et de l’Immigration (FR), AG Mengozzi reaffirmed the Ruiz Zambrano line of case law. Unlike in many other genuine enjoyment cases, where the plaintiff was unsuccessful because Ruiz Zambrano was distinguished, here it looks like the precedent is directly on point.

In the state aid case of HGA et al. v. Commission, AG Bot said that the General Court got it wrong to attach as much importance as it did to the question of the aid was requested by a given recipient. However, he argues that the judgment should nonetheless be upheld, because the remaining reasoning is sufficient to bear the conclusion that the Commission’s decision is correct. Joined Cases Regione autonoma della Sardegna (T-394/08), SF Turistico Immobiliare Srl (T-408/08), Timsas Srl (T-453/08) and Grand Hotel Abi d’Oru SpA (T-454/08) v European Commission

Following the recent decisions on the merits by the General Court in the first REACH cases against the European Chemicals Agency (ECHA), AG Cruz Villalon now handed down the first opinions in appeals against the General Court orders dismissing other REACH suits. He concluded that the General Court was wrong to hold that the suits were not aimed at a challengeable act, that they were out of time and that that belatedness was not the consequence of an excusable error. Polyelectrolyte Producers Group and SNS v. ECHA

AG Sharpston took the Aarhus issues regarding the distinction between legislative and administrative acts, first discussed in Flachglas Torgau (where she also wrote the opinion), to the next level. I’m not sure what the logic of her proposed answer is, except that it seems to turn the Solange rule back on Germany. Deutsche Umwelthilfe v. Germany

Everyone’s favourite MEP, Sophie in ‘t Veld, achieved a small win against the Commission. She sued over the Commission’s refusal to give her all the documents relating to the draft international Anti-Counterfeiting Trade Agreement (ACTA) that she asked for, and the General Court (Judge Dehousse) now granted her access to some of the missing ones. In ‘t Veld v. Commission Cf. EU Law Blog

ITER may well be the single coolest thing going on in Europe right now, and today it was on the receiving (and winning) end of a public procurement suit. It turns out you cannot ask for the annulment of “tous les actes adoptés subséquemment” (par. 48-50), and otherwise nothing very interesting seems to have happened; the applicant’s bid was quite rightly thrown out in pre-screening. Nexans France v. Entreprise commune européenne pour ITER et le développement de l’énergie de fusion (FR)

Following some creativity with import licenses for bananas, the Commission allowed a remission of duties in respect of the customs agent, who had not obviously erred, but not in respect of the trader, the applicant, who were held to have been negligent. The General Court (Judge Schwarcz) now annulled that decision, holding that insufficient evidence as to negligence had been adduced. Van Parys v. Commission (yes, that Van Parys)

Today in Luxembourg

While I missed it in the email version of this post, the big case is apparently the Spanish evictions case of Aziz v. Caixa d’Estalvis de Catalunya, Tarragona i Manresa (Catalunyacaixa), where the Court (Judge Tizzano) held that the way in which many Spanish mortgage loan contracts arrange for enforcement is unfair under Directive 93/13, meaning that hundreds of thousands of Spanish people have been evicted unlawfully. Cf. Coulisses de Bruxelles

In competition law, there is evidence of a worrying trend towards competition authorities preferring to examine whether an agreement is anticompetitive “by object” before moving on to an effects based test, rather than the other way around, as legal and economic commentators would generally prefer it. In Allianz Hungária et al. v. Gazdasági Versenyhivatal the Court (Judge Ilešič) gives some guidance on the meaning of “by object” in a case that should easily pass any effects-based test. Cf. Hans Vedder on European Law Blog

In environmental law, the Supreme Court of Austria checked with the Court (Judge Bay Larsen) whether an Environmental Impact Assessment under Directive 85/337 is meant to assess impacts to the “substance” of assets or to their value. The result is a fun bit of sparring with what economists call value in use and value in trade. In reply to the second question, the Court explains that a failure to do an EIA does not automatically give rise to civil liability of the state. Leth v. Austria Cf. UK Human Rights Blog, European Law Blog and ECJBlog

Even though managers and owners of SMEs don’t usually deal with banks “in the course of their trade or profession”, they still don’t qualify as consumers for the purposes of articles 5(1)(a) and 15(1) of Regulation 44/2001. Česká spořitelna, a.s. v. Feichter Cf. Recent Developments in European Consumer Law Blog

In the copper fittings cartel case, the appeal of Viega was rejected. Viega v. Commission (DE, FR)


Most interesting for me is this week’s opinion by AG Jääskinen in ÖBB-Personenverkehr, although ultimately the case is less about railway regulation than about the effect of Regulations in EU law. The Regulation in question is Regulation 1371/2007 on passenger rights. The Austrian regulator, the Schienen-Kontrol Kommision, found that ÖBB’s compensation terms were not compliant, and substituted its own scheme. The AG now argues that they were not allowed to do that absent national law authorisation, given that other national law remedies exist.

AG Bot is OK with the Bulgarian approach to handling disputes that arise under Regulation 73/2009, the CAP procedure Regulation. It is permissible for Bulgaria to have them all handled in Sofia, as long as this does not create an excessive burden on (potential) plaintiffs. Agrokonsulting-04-Velko Stoyanov v. Izpalnitelen direktor na Darzhaven fond „Zemedelie” Razplashtatelna agentsia (NL, DE, FR)


In the General Court, President Jaeger granted an order suspending the operation of the Commission’s Decision in the Carglass cartel case until the General Court has decided whether the Commission had erred in declining to keep certain information confidential. Pilkington Group v. Commission

In other cartel news, the General Court (Judge Martins Ribeiro) upheld the Commission’s decision in the bananas cartel case against Dole, whereas Fresh Del Monte had its liability reduced from € 14,7 million to € 8,82 million. (The total fine for Internationale Fruchtimport Gesellschaft Weichert & Co is still € 14,7 but Fresh Del Monte is only jointly and severally liable for € 8,82 million of it.)

Tacit Collusion

Nicolas Petit’s new(-ish) article on tacit collusion is a wonderful piece of scholarship. Unfortunately, it is also wrong. To be clear, it is not the economics that I have a problem with. The author’s understanding of the relevant industrial organisation literature seems to be more or less unimpeachable. In fact, it’s not even really the legal analysis that is problematic. Instead, the key flaw is in the paper’s essential policy assumption. All the other problems of the article proceed from that one flaw.

The flaw in question is one that we might plausibly dub The MEP’s Fallacy, because it is Members of the European Parliament who suffer from it more than anyone else. The Fallacy is the thought that: a) there is a problem, and b) I can fix it, lead inevitably to the conclusion that: c) I should fix it.

Not all problems that can be fixed at the EU level should be fixed there.

Something similar goes for competition law: Not all problems that can be resolved through competition law, should be. This is not just a question of the goals of competition law, but also one of its suitability for pursuing various goals, not to mention wider legal principles.

In this  particular case, I’m afraid I have to join the other side of the debate discussed by Nicolas (I’ve never met him in person, but we’ve been in touch in various ways, so I feel confident that he’d be OK with me calling him that): I am fundamentally uneasy with the notion of using art. 101 TFEU for types of collusion that are not in some sense based on an agreement. It appears to me that "agreement” is the core actus reus of that provision,  just like “abuse” is for art. 102. It is the overt act that - in this case non-criminal - liability attaches to.

That reminds me, as an aside: How can the Dutch competition authority give six people a fine of € 120.000 each without having to satisfy the standard of art. 6 ECHR? We all know that the normal competition enforcement procedure - as used by the Commission and by most Member States - only barely satisfies that provision, and that is when it is applied to companies. (Let's face it: every company that brings an action for annulment against a competition decision adressed to it will argue that the whole procedure is in violation of art. 6. We all know that those arguments never succeed, but we also know that that is more for pragmatic and stare decisis reasons than for reasons of honest merit.)

Saying that competition fines are not criminal only gets you so far. At some point that just isn't  credible anymore, and as far as I'm concerned that line lies somewhere between giving Microsoft a € 561 million fine and giving a private person a fine of € 120.000, and perhaps even on the other side of that Microsoft fine.

Anyway, too much creativity with the actus reus is equivalent to prosecuting someone for manslaughter because they drove 150 kph and someone might well have died. Much as there is some room for creativity with regard to intent, by including dolus eventualis, there has to be a link to someone dying or almost dying. Without that, the charge would just be completely unmoored from the actual offence.

In competition law, the issue is not usually one of intent. But there is some scope for creativity with regard to the "agreement"-element. Art. 101 already suggests as much, by listing as possible acti rei:

• - agreements between undertakings,
• - decisions by associations of undertakings, and
• - concerted practices

As Nicolas explains, however, the Court of Justice drew some clear lines here. These lines are - contrary to his assertion - in no way unintelligible or regrettable as long as one bears in mind that the problem is how to prove a concerted practice, rather than what kind of concerted practice falls within the scope of art. 101. After all, the word "concerted" implies some meeting of minds, which is enough - conceptually - to make concerted practices similar in nature to explicit agreements and decisions by associations; the actus reus is clearly the same in all cases. But as prof. Posner pointed out in the passage quoted in fn. 140, the proof is categorically different. There would normally be no "smoking gun". Instead, the relevant proof would focus on what decision makers knew and expected about each other's decisions. (Note the similarity here with the Cournot and Bertrand models. In fact, despite Nicolas' analysis I am still not entirely clear why a Cournot market would not imply tacit collusion.) Because of this proof problem, it might be safer to limit concerted practices to those cases where, evidence-wise, the balance between Type-I and Type-II errors is not too eggregious. And that is all the Court seems to have done.

In Posner's words:

The biggest problem in applying [art. 101] to tacit collusion is that of proof: How can the existence of noncompetitive pricing be established without any proof of acts of agreement, implementation, or enforcement? Without denying that these will be extremely difficult cases, one can point to several types of evidence that should convince the trier of fact that sellers are guilty of tacit collusion as that term is used here.

The Court in Suiker-Unie et al. v. Commission (1975):

173. THE CRITERIA OF COORDINATION AND COOPERATION LAID DOWN BY THE CASE-LAW OF THE COURT, WHICH IN NO WAY REQUIRE THE WORKING OUT OF AN ACTUAL PLAN, MUST BE UNDERSTOOD IN THE LIGHT OF THE CONCEPT INHERENT IN THE PROVISIONS OF THE TREATY RELATING TO COMPETITION THAT EACH ECONOMIC OPERATOR MUST DETERMINE INDEPENDENTLY THE POLICY WHICH HE INTENDS TO ADOPT ON THE COMMON MARKET INCLUDING THE CHOICE OF THE PERSONS AND UNDERTAKINGS TO WHICH HE MAKES OFFERS OR SELLS.

174. ALTHOUGH IT IS CORRECT TO SAY THAT THIS REQUIREMENT OF INDEPENDENCE DOES NOT DEPRIVE ECONOMIC OPERATORS OF THE RIGHT TO ADAPT THEMSELVES INTELLIGENTLY TO THE EXISTING AND ANTICIPATED CONDUCT OF THEIR COMPETITORS, IT DOES HOWEVER STRICTLY PRECLUDE ANY DIRECT OR INDIRECT CONTACT BETWEEN SUCH OPERATORS, THE OBJECT OR EFFECT WHEREOF IS EITHER TO INFLUENCE THE CONDUCT ON THE MARKET OF AN ACTUAL OR POTENTIAL COMPETITOR OR TO DISCLOSE TO SUCH A COMPETITOR THE COURSE OF CONDUCT WHICH THEY THEMSELVES HAVE DECIDED TO ADOPT OR CONTEMPLATE ADOPTING ON THE MARKET.

And, 13 years later in Woodpulp II, the Court was even more cautious with regard to these evidentiary problems:

71 In determining the probative value of those different factors, it must be noted that parallel conduct cannot be regarded as furnishing proof of concertation unless concertation constitutes the only plausible explanation for such conduct. It is necessary to bear in mind that, although [art. 101] prohibits any form of collusion which distorts competition, it does not deprive economic operators of the right to adapt themselves intelligently to the existing and anticipated conduct of their competitors (see the judgment in Suiker Unie, cited above, paragraph 174).

"Regarded" and "plausible" suggest that this is a statement about how cases are to be brought and proved, not about the underlying concepts. Conceptually, I would argue that any kind of "conscious parallelism" is captured by art. 101 TFEU. (Contrary to Nicolas, I regard "conscious parallelism" as an eminently useful label, because more than "tacit collusion" it neatly makes clear what exactly the offending action is. The elements are: a) parallel behaviour that is, b) consciously so. In the term "tacit collusion", the word "collusion does all the work, thus begging the question what that word actually means.) I would define conscious parallelism, conceptually, as any kind of behaviour that succeeds in reducing competition by taking advantage of each decision maker's understanding of every other decision maker's reasoning. Clearly, this is essentially the same as Nicolas's tacit collusion. (Cf. his very helpful diagram on p. 24.) However, in collusion cases as in abuse of dominance cases, competition law doctrine has to be developed with an eye to the relative probability of Type-I and Type-II errors, and their relative cost to society. When it comes to tacit collusion, we want to avoid mistaking success for monopolisation, or a social-welfare enhancing coordination for a collusion-facilitating agreement. For this reason, the Court's approach seems quite sensible, although I would have preferred it if they had not been quite so categorical in ruling out the possibility of a successful tacit collusion case under art. 101 TFEU.

Relying on art. 102 TFEU, on the other hand, seems highly problematic from a conceptual point of view, because it is difficult to see how a single oligopolistic firm is "dominant", while I have no idea what "collective dominance" means outside the context of "groups of firms that were legally distinct, but subject to a unified economic management, including vertically related companies (mother and subsidiaries)", i.e. “undertakings [that] present themselves on the market as a single entity and not as individuals”. (These quotes are taken originally from an article by prof. Joliet from 1974 and from the Commission's Decision in the Italian Flat Glass case, respectively.) In other words, while there is some room for creativity with respect to the concept of "one or more undertakings" which hold(s) a single "position" in the market, I would think that this concept cannot be stretched to the point where it includes companies that are clearly perceived as competitors by their customers.

And much as dr. Petit seems to think that the mere fact that tacit collusion ought to be subject to regulatory intervention means that either art. 101 or art. 102 has to give way, as noted above that is not the case. He is completely right to reject what he calls "moral justifications" for tacit collusion (p. 19 of his article). Competition authorities and regulators are rarely confronted with anything other than regulatory subjects who engage in rational market conduct, and this has never been held to undermine the moral case for intervention, although it might impact the question of the size of penalties. However, this does not mean that existing competition law should be extended past its breaking point.

Instead, there are two solutions that should be preferred for those cases that cannot reasonably be brought within existing law. On the one hand, there are the market investigations that he mentions, as they are carried out in the UK by the Competition Commission under part 4 of the Enterprise Act 2002. S. 131(1) says:

The OFT may, subject to subsection (4), make a reference to the Commission if the OFT has reasonable grounds for suspecting that any feature, or combination of features, of a market in the United Kingdom for goods or services prevents, restricts or distorts competition in connection with the supply or acquisition of any goods or services in the United Kingdom or a part of the United Kingdom.

(Ministers have the same power under s. 132.)

When an adverse effect on competition has been established by the CC, it can take any of a wide range of measures - at a sector-wide level - to remedy the problem. It seems eminently advisable to create such a power for the Commission as well, if necessary with a veto power for the Council and the Parliament through comitology. As far as I can tell, Nicolas agrees.

To the extent that this is still not enough, there is only one option remaining: sectoral regulation through the legislature. (What Bergqvist calls "industrial policy". His article offers a more in-depth discussion of the interaction between competition law and sector-specific legislation.) It seems to me that under the general common market rules, the EU legislature has wide-ranging powers to create a sector-specific framework to enhance social welfare by combating tacit collusion. This power may not reach as far as structural remedies, but it certainly suffices to go after any number of facilitating factors. This road seems by far preferable to the competition law path, not only because it is more legitimate, but also because it allows for more sector-specific knowledge to be brought to bare on the problem, and because it avoids the problem of a regulator working within an artificial, and artificially narrow framework. Instead, in this way the solution can be designed on a blank sheet.

To a hammer, all problems look like a nail. Let's make sure that the same isn't true for the carpenter.