Category: Article

A Comment on the Proposed 2014 State Aid Guideline Changes within the EU’s Aviation Sector

Robert Miklós Babirad

 

1        Introduction

 On July 3, 2013, the European Commission invited public comments concerning the adoption of new guidelines for the application of State aid within the EU’s aviation sector.[1]  The criteria upon which State aid will be assessed by the Commission with regard to its application to airlines and airports within the European Union is offered by the proposed guidelines.[2]  Mr. Joaquín Almunia, Vice President of the European Commission responsible for Competition Policy has suggested that the new 2014 guidelines will also represent a constituent element of the continued development of the State aid modernisation agenda (SAM)[3] in their application.[4]  One of the key underlying objectives of the proposed guidelines as well as the State Aid Modernisation Agenda’s influence is that State aid should only be provided where economic development is enhanced by its provision and where common goals of European interest are furthered by providing the aid.[5]

The issue is whether the changes being proposed to the existing 1994 and 2005 guidelines will be helpful in furthering a more beneficial and effective application of State aid within the EU’s aviation sector.  Additionally, it must be assessed whether EU citizens will be able to more effectively benefit under these new arrangements from the continued liberalisation of the air transport sector, with regard to an enhancement of services that are responsive to their needs, as well as the providing of greater regional connectivity throughout the European Union.[6]

This article will begin by discussing the general principles surrounding State aid in the EU’s aviation sector as well as existing challenges, which have brought forth the need for the new guidelines.  Key changes being proposed for the 2014 guidelines will then be offered.  The article will continue by assessing the helpfulness of these proposed changes and whether they represent a more effective overall application of State aid within the EU’s aviation sector.

 

 

 2        State Aid Guidelines in the Aviation Sector and Existing Challenges

 The rules concerning State aid under Article 107 TFEU are only applicable to “undertakings,” which will be the recipients qualifying for the aid within the aviation sector.[7]  This provision also sets forth the conditions concerning the aid that “shall” or “may” demonstrate compatibility with regard to the EU’s internal market and is not otherwise prohibited as an unlawful distortion of competition.[8]  Additionally, it is important to note that the concept of “undertakings” is given a broad definition by the EU courts and will extend to those entities involved in the pursuit of activities of an economic nature without regard to the entity’s legal status, financing or its ownership.[9]

In this context, the ECJ has stated in Aéroports de Paris that providing airport facilities to both providers of services as well as airlines in exchange for compensation will be considered an activity of an economic nature.[10]  The State aid provisions under Article 107 TFEU are subsequently applicable.  The proposed guidelines also cite the General Court’s judgment in Leipzig-Halle airport[11]for the principle that an airport’s operation as well as the building of its infrastructure have been found to constitute an “economic activity” for purposes of determining the applicability of State aid.[12]  However, activities of a non-economic nature within an airport such as customs or police, which are also in receipt of public funding, will not be considered as activities subject to State aid control.[13]

The new guidelines reflect a concern with the challenge of an ineffective allocation of capacity within the European Union’s aviation sector.[14]  A concern is present regarding inefficiently used or unused regional airports as well as the presence of difficulties within larger airport hubs with regard to congestion.[15]  A new market has also developed concerning airport activities of a non-aeronautical nature, which have the potential to constitute half of an airport’s revenue.[16]  Additionally, privately run companies have expanded their respective control over this revenue, which is the product of an airport’s non-aeronautical activities, raising increased concerns with regard to competition and the application of State aid within this sector.[17]

The proposed guidelines subsequently attempt to address the challenge of providing State aid within the aviation sector only with regard to situations where needed infrastructure and services fail to be supplied by the market itself.[18]  A predominant objective is to foster European competitiveness and ensure that the distribution of State aid only occurs where needed.[19]  The guidelines also address the challenge of preventing airports that are unprofitable from being duplicated, restricting the establishing of capacity which fails to be used, and the prevention of State aid being distributed to create connections, which agents of a private nature would instead be able to finance without depending upon public resources.[20]

The guidelines attempt to direct their efforts at creating a “level playing field” with regard to airlines and airports and to serve in their applicability without regard to the business model underlying the airline or airport’s financing.[21]  Finally, the objective of preventing overcapacity at airports within the EU is pursued in the new guidelines in an effort to hinder the enabling of airlines to “shop around” seeking favourable subsidies through the use of alternative facilities.[22]

  


3        Proposed Changes for 2014 Guidelines

 A revision of existing rules for State aid with regard to airline start-ups is at issue in the new guidelines as well as the provisioning of public financing for airports.[23]  The 1994 and 2005 applicable guidelines in the EU’s aviation sector will be replaced by the proposed 2014 guidelines.[24]  Additionally, an emphasis is placed on establishing guidelines with a progression that is more “market-oriented” in its approach.[25]

A key aspect is that if a “genuine transport need” is present, with regard to public financing being essential for providing access to a particular region, State aid may be made available for an investment in the infrastructure of an airport.[26]  However, dispersing State aid will mandate a transport demand being present and this demand will be negated by the presence of other forms of available transport, which provide for adequate access to a region.[27]

The existing guidelines fail to provide guidance with regard to the intensity of the investment aid that may be applied.[28]  An airport’s size will now determine the availability of maximum aid intensity and airports that are smaller will benefit from a greater likelihood of being able to avail themselves of the ability to receive State aid.[29]  Where an airport’s volume of passengers is in excess of five million for the year, State aid for investment will fail to be considered as meeting the requirement of being considered compatible with the EU’s single market.[30]  A key idea underlying the new guidelines is that the costs associated with operating airports and airlines should not be subsidised, but rather recovered from passengers and airlines who take advantage of the services provided by the airport.[31]

An existing prohibition with regard to airport operating aid provided under the present guidelines in effect will also be altered.[32]  Aid may now be provided to airlines for the starting up of a new air route with the stipulation that the time period in which this aid is granted be of a limited duration.[33]  A ten year period of transition will be considered compatible with the dispersing of operating aid.[34]  At this time, it has been determined that the complete removal of subsidies for airport operating costs constitutes a proposition that would be unworkable in its application.[35]  Therefore, a transitional period of ten years is provided, leading to a point where small airports serving a particular regional area will be able to receive assistance, until they reach a “steady state,” which does not necessitate the continued dispersing of subsidies.[36]

However, it is important to note that an exception to the rules concerning the granting of State aid subsidies will be provided where there is evidence of a “genuine public service need” present.[37]  A degree of State aid may be offered where the region served by the airport would be otherwise isolated without the facility’s operation.[38]  Additionally, State aid will not be available under the new guidelines where a private investor would be in acceptance of a proposed arrangement between an airline and an airport under market conditions that are normal.[39]

The proposed guidelines have also been adapted to reflect current developments and “streamlined” with regard to the conditions for start-up aid, which will subsequently be considered compatible with the EU’s single market.[40]  The State Aid Modernisation Agenda[41] is also embodied by the new guidelines.[42]  The goal of the Commission’s Agenda is reflected with regard to directing the use of State aid more effectively toward rectifying failures in the market, furthering economic expansion, and the fostering of shared European goals within the aviation sector.[43]  Additionally, the guidelines seek to inhibit the granting of aid, which has the ability to distort competition as well as aid that does not contribute to creating actual value within the Single Market.[44]

 


4        Helpfulness of Proposed Changes

An approach that is more “market oriented” will be helpful for increasing European competitiveness and economic efficiency if it doesn’t come at the expense of preventing aid being available when and where it may be needed with regard to airports and airlines.[45]  The continued availability of State aid if a “genuine transport need” is evident serves as a helpful aspect of the new guidelines.[46]  However, concerns arise over how a “genuine transport need” will be defined and under what specific conditions State aid will subsequently be made available.[47]

The size of an airport as a determining factor with regard to the granting of State aid is a positive aspect of the new guidelines as well as the potential beneficial aspects that smaller airports in greater need of aid can expect to obtain from this approach.[48]  The underlying idea that costs connected with the operation of airports and airlines should be recovered from those using these services is also a helpful foundational concept offered by the new guidelines.[49]  Establishing a ten year transitional period will also be beneficial with regard to the starting up of new air routes in which State aid will continue to be attainable while at the same time providing a more economically efficient model for applying State aid.[50]

However, there is a danger that this ten year transitional period will be too rigidly enforced at the expense of needed State aid being provided where it is still essential for the continued development of a new air route.  The manner for determining the conditions for establishing a “genuine public service need” could also pose a challenge and lead to a failure in aid being provided where it is needed.[51]  The incorporation of the State Aid Modernisation Agenda’s objectives as well as the continued working toward the goal of preventing aid being dispersed that has the potential to distort competition also emerges as a positive aspect of the proposed guidelines.[52] Additionally, the provision of aid being made available in the new guidelines where there is a “genuine public service need” will in all likelihood be beneficial in its application.[53]

The key danger is that State aid may not be available when and where it is needed if the proposed guidelines are ineffectually interpreted, and applied in a manner that focuses predominantly on moving toward an approach that is more market oriented and with an emphasis on increasing European competitiveness, at the exclusion of additional and equally important public service objectives with regard to airports and airlines.  The new guidelines do appear to contain appropriate safeguards such as a “genuine public service need” enabling the continued granting of State aid, but the actual effectiveness of the guidelines in practice can only be evaluated based upon their future application in practice within the EU’s aviation sector.[54]

 

 

 5        Conclusion

The Commission’s 2014 proposed guidelines for the provision of State aid to airlines and airports have the potential to increase economic efficiency, enhance European competitiveness and positively impact EU citizens by providing services that are more responsive to their needs while minimizing the unnecessary and ineffective application of State aid.  However, the actual effectiveness of the guidelines and the safeguards being provided, such as that of the presence of a transport demand, a “genuine public service need” or a ten year transitional period in which aid may continue to be provided, can only be determined based upon how these provisions are interpreted and applied with regard to their practical application in the forthcoming years when the guidelines are put into effect.

It is also interesting to note additional ongoing investigations concerning the application of State aid within the EU’s aviation sector.  One such investigation by the European Commission concerns the Niederrhein-Weeze and Altenburg-Nobitz airports in Germany, the Pau airport in France and the Västerås airport in Sweden with regard to arrangements of a financial nature between these airports and public authorities.[55]  The Commission will assess marketing and rebate arrangements between selected airlines using the aforementioned airports and the compatibility of these arrangements with EU rules on State aid in the aviation sector.[56]

Subsidies relating to an investment in infrastructure within the aviation sector may be considered compatible with the State aid aviation sector guidelines where the subsidies are “necessary, proportionate, pursue an object of general interest, ensure non-discriminatory access for all users and do not unduly affect trade in the internal market.”[57] However, here the Commission has not negated the possibility of incompatible State aid being present and the existence of uneven advantages with regard to these airports and their respective airlines.[58]

An additional State aid investigation in the EU’s aviation sector, which is being pursued by the Commission concerns the extension of a 2002 investigation relating to Ryanair’s provision of services at Charleroi airport and possible advantages of which Ryanair was the recipient.[59]  The Commission has also proceeded with new investigations concerning financing received by Angoulême and Dortmund airports as well as their respective airlines and is considering whether  unfair competitive advantages have been established, which fail to be compatible with the EU’s single marketplace.[60]

Additionally, the European Commission has pursued an investigation relating to arrangements of a financial nature between France’s La Rochelle airport and public officials.[61]  The Commission has called into question whether distributed subsidies for the financing of projects relating to infrastructure at the airport are compliant with the guidelines on State aid within the EU’s aviation sector.[62]

The Commission’s assessment will consider whether contracts for marketing support and airport charge discounts relating to new airline routes would have been entered into by a “market economy investor” and whether those benefiting from the subsidies have received an advantage of an economic nature, which is unfair and not otherwise afforded to their marketplace competitors.[63]

 

 

[1] Almunia, J, Introductory Remarks on New State Aid Rules for Airports and Airlines, Speech /13/606, 3 July 2013, p. 1. <http://europa.eu/rapid/press-release_SPEECH-13-606_en.htm> Accessed 31st of July 2013.

[2] Ibid.

[3] Commission Communication of 8 May 2012, EU State Aid Modernisation (SAM) COM (2012) 0209 final. <http://eurlex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:52012DC0209:EN:NOT> Accessed 31st of July 2013.

[4] Almunia, J, Introductory Remarks on New State Aid Rules for Airports and Airlines, Speech /13/606, 3 July 2013, p. 1. <http://europa.eu/rapid/press-release_SPEECH-13-606_en.htm> Accessed 31st of July 2013.

[5] Ibid.

[6] Ibid., p. 2.

[7] Commission Communication of 3 July 2013, Draft EU Guidelines on State aid to airports and airlines, p. 7. <http://ec.europa.eu/competition/consultations/2013_aviation_guidelines/index_en.html> Accessed 31st of July 2013.

[8] Ibid.

[9] Ibid.

[10] Case T-128/98 Aéroports de Paris v Commission of the European Communities [2000] ECR II-3929, confirmed by Case C-82/01 [2002] ECR I-9297, para. 78; Commission Communication of 3 July 2013, Draft EU Guidelines on State aid to airports and airlines, p. 7. <http://ec.europa.eu/competition/consultations/2013_aviation_guidelines/index_en.html> Accessed 31st of July 2013.

[11] Case T-455/08 Flughafen Leipzig-Halle Gmb H and Mitteldeutsche Flughafen AG v Commission, [2011] ECR I-00000.

[12] Commission Communication of 3 July 2013, Draft EU Guidelines on State aid to airports and airlines, p. 7. <http://ec.europa.eu/competition/consultations/2013_aviation_guidelines/index_en.html> Accessed 31st of July 2013.

[13]Ibid., p. 9.

[14] Almunia, J, Introductory Remarks on New State Aid Rules for Airports and Airlines, Speech /13/606, 3 July 2013, p. 2. <http://europa.eu/rapid/press-release_SPEECH-13-606_en.htm> Accessed 31st of July 2013.

[15] Ibid.

[16] Ibid.

[17] Ibid.

[18] Ibid.

[19] Ibid.

[20] Ibid.

[21] Ibid.

[22] Ibid.

[23] Commission Press Release of 3 July 2013, State aid: Commission consults on new State aid rules for airports and airlines, IP/13/644, p. 1. <http://europa.eu/rapid/press-release_IP-13-644_en.htm> Accessed 31st of July 2013.

[24] Commission Communication of 3 July 2013, Draft EU Guidelines on State aid to airports and airlines, p. 7. <http://ec.europa.eu/competition/consultations/2013_aviation_guidelines/index_en.html> Accessed 31st of July 2013.

[25] Ibid., p. 6.

[26] Ibid., p. 1.

[27] Almunia, J, Introductory Remarks on New State Aid Rules for Airports and Airlines, Speech /13/606, 3 July 2013, p. 2. <http://europa.eu/rapid/press-release_SPEECH-13-606_en.htm> Accessed 31st of July 2013.

[28] Commission Press Release of 3 July 2013, State aid: Commission consults on new State aid rules for airports and airlines, IP/13/644, p. 1. <http://europa.eu/rapid/press-release_IP-13-644_en.htm> Accessed 31st of July 2013.

[29]Ibid.

[30] Commission Communication of 3 July 2013, Draft EU Guidelines on State aid to airports and airlines, p. 6. <http://ec.europa.eu/competition/consultations/2013_aviation_guidelines/index_en.html> Accessed 31st of July 2013.

[31] Almunia, J, Introductory Remarks on New State Aid Rules for Airports and Airlines, Speech /13/606, 3 July 2013, p. 2. <http://europa.eu/rapid/press-release_SPEECH-13-606_en.htm> Accessed 31st of July 2013.

[32] Commission Press Release of 3 July 2013, State aid: Commission consults on new State aid rules for airports and airlines, IP/13/644, p. 1. <http://europa.eu/rapid/press-release_IP-13-644_en.htm> Accessed 31st of July 2013.

[33] Ibid.

[34] Commission Communication of 3 July 2013, Draft EU Guidelines on State aid to airports and airlines, p. 6. <http://ec.europa.eu/competition/consultations/2013_aviation_guidelines/index_en.html> Accessed 31st of July 2013.

[35] Almunia, J, Introductory Remarks on New State Aid Rules for Airports and Airlines, Speech /13/606, 3 July 2013, p. 2. <http://europa.eu/rapid/press-release_SPEECH-13-606_en.htm> Accessed 31st of July 2013.

[36] Ibid.

[37] Ibid.

[38] Ibid.

[39] Ibid.

[40] Ibid., p. 1.

[41] Commission Communication of 8 May 2012, EU State Aid Modernisation (SAM) COM (2012) 0209 final. <http://eurlex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:52012DC0209:EN:NOT> Accessed 31st of July 2013.

[42] Commission Press Release of 3 July 2013, State aid: Commission consults on new State aid rules for airports and airlines, IP/13/644, p. 1. <http://europa.eu/rapid/press-release_IP-13-644_en.htm> Accessed 31st of July 2013.

[43] Commission Communication of 3 July 2013, Draft EU Guidelines on State aid to airports and airlines, p. 3. <http://ec.europa.eu/competition/consultations/2013_aviation_guidelines/index_en.html> Accessed 31st of July 2013.

[44] Commission Press Release of 3 July 2013, State aid: Commission consults on new State aid rules for airports and airlines, IP/13/644, p. 1. <http://europa.eu/rapid/press-release_IP-13-644_en.htm> Accessed 31st of July 2013.

[45] Commission Communication of 3 July 2013, Draft EU Guidelines on State aid to airports and airlines, p. 6. <http://ec.europa.eu/competition/consultations/2013_aviation_guidelines/index_en.html> Accessed 31st of July 2013.

[46] Commission Press Release of 3 July 2013, State aid: Commission consults on new State aid rules for airports and airlines, IP/13/644, p. 1. <http://europa.eu/rapid/press-release_IP-13-644_en.htm> Accessed 31st of July 2013.

[47] Ibid.

[48] Ibid.

[49] Almunia, J, Introductory Remarks on New State Aid Rules for Airports and Airlines, Speech /13/606, 3 July 2013, p. 3. <http://europa.eu/rapid/press-release_SPEECH-13-606_en.htm> Accessed 31st of July 2013.

[50] Commission Press Release of 3 July 2013, State aid: Commission consults on new State aid rules for airports and airlines, IP/13/644, p. 1. <http://europa.eu/rapid/press-release_IP-13-644_en.htm> Accessed 31st of July 2013.

[51] Almunia, J, Introductory Remarks on New State Aid Rules for Airports and Airlines, Speech /13/606, 3 July 2013, p. 2. <http://europa.eu/rapid/press-release_SPEECH-13-606_en.htm> Accessed 31st of July 2013.

[52] Commission Press Release of 3 July 2013, State aid: Commission consults on new State aid rules for airports and airlines, IP/13/644, p. 1. <http://europa.eu/rapid/press-release_IP-13-644_en.htm> Accessed 31st of July 2013.

[53] Almunia, J, Introductory Remarks on New State Aid Rules for Airports and Airlines, Speech /13/606, 3 July 2013, p. 2. <http://europa.eu/rapid/press-release_SPEECH-13-606_en.htm> Accessed 31st of July 2013.

[54] Ibid.

[55] Commission Press Release of 25 January 2012, State aid: Commission opens in-depth investigations in air transport sector in France, Germany and Sweden, IP/12/44, p. 1. <http://europa.eu/rapid/press-release_IP-12-44_en.htm?locale=en> Accessed 27th of August 2013.

[56] Ibid.

[57] Ibid.

[58] Ibid.

[59] Commission Press Release of 21 March 2012, State aid: Commission opens in-depth investigations in air transport sector in Belgium, France and Germany, IP/12/265, p. 1. <

http://europa.eu/rapid/press-release_IP-12-265_en.htm> Accessed 27th of August 2013.

[60] Ibid.

[61] Commission Press Release of 8 February 2012, State aid: Commission investigates potential state aid at La Rochelle airport in France, IP/12/108, p. 1. <http://europa.eu/rapid/press-release_IP-12-108_en.htm> Accessed 27th of August 2013.

[62] Ibid.

[63] Ibid.

The EU Law of Evidence – Development and Challenges for National Criminal Procedure System

Teresa Bedulskaja

MA in Law, Vilnius University

 

Introduction

It has to be admitted that the modern reality forces states to cooperate and even to join various international organizations. Meanwhile, international organizations working on their tasks pass binding legal acts that affect the law of their contracting states.

For a long time criminal law remained out of the scope of international law as it was considered to be the cornerstone of state sovereignity. Nowadays, also the criminal law is widely internationalised. This is especially true about the European Union (EU): criminal law of the EU Member States is quite significantly affected by norms enacted by the EU.

One might notice that modern EU criminal law is developing in two ways. First of all, the minimum requirements for criminalisation and penalties are established by the EU institutions. This is so-called vertical harmonization as criminal law norms are directly imposed by the EU on national criminal law systems. Secondly, in accordance with the principles of mutual recognition and mutual trust, norms regulating legal cooperation are passed (horizontal harmonization).

The multi-level character of European criminal procedure is, generally speaking, not as apparent as in the field of substantive criminal law,[1] but still significantly interferes with national legal systems. Unlike the rules in the field of substantive criminal law, the legal acts enacted in the field of criminal procedure in many occasions might have direct application and do not require further implementation.[2] This article will look at mutual recognition of evidence and the following approximation of criminal procedures in the EU Member States as well as discuss the impact of such an imposed recognition on national law.

 

 1. EU competence in the area of evidence law

The current legislative competences of the Union in the field of criminal procedure are shaped by Article 82 TFEU. On the basis of this provision, directives establishing minimum rules are adopted, aiming to facilitate mutual recognition of judgments and judicial decisions, as well as police and judicial co-operation in criminal matters. The abovementioned legal acts relate inter alia to mutual admissibility of evidence between Member States.

We should also be reminded that not only the EU legal acts, which are adopted in the area of criminal procedure, deal with evidence law. Some provisions can be found in other legislation such as the Directive on trafficking in human beings.[3] The Directive lists measures which should be applicable while investigating trafficking in humans (interception, covert surveillance, including electronic monitoring).

This article will only target the legal acts dealing with evidence law directly, leaving other related legislation aside. But firstly, a short look at the principles of EU evidence law.

 

 2. Principles of evidence law in the EU

The judicial cooperation in criminal matters within the EU is based on two basic principles – mutual legal assistance and mutual recognition. Mutual legal assistance follows a forum regit actum philosophy when the evidence received due to interstate cooperation as the result of the judicial cooperation is intended to be sent back to the requesting forum state. The mutual recognition philosophy, on the other hand, requires Member States to accept foreign decisions and execute them “as if they were their own”. Therefore, execution is strictly locus regit actum.[4] The objective of mutual recognition is to remove the possibility of political involvement and to avoid a second examination as to the substantive merits of the case. It may be possible to verify that a certain authority in another Member State has taken a decision, but the merits of that decision should, in principle, be beyond review.

It should be mentioned in this context that it is not always the domestic decision of Member State that has to be recognized, i.e. in case of mutual recognition of judicial decision, a court decision would be subject to recognition, however, if the European Arrest or Evidence Warrant would be issued on the basis of above-mentioned decision, the Warrant itself has to be recognised.[5] As legal scholars point it out, mutual legal assistance still dominates while dealing with supranational evidence law with some exceptions as regarding mutual recognition of evidence warrants[6].

 

 3. EU legal acts in the area of evidence law

Due to the fact that the EU was denied competence in the field of criminal law for quite a while, the usual forms of cooperation between Member States were applied and the legal acts typically used in international law were enacted. This is why first legal documents in the field of cross-border gathering and handling of evidence, the EU Convention from 2000[7] and its Protocol from 2001[8], were based on mutual legal assistance.

The Framework decision on freezing assets and evidence[9] constituted the next important step towards improving the free movement of evidence in the EU. Its features, such as the abolition of the double criminality requirement for the list of so-called “32 offences” and limitation of grounds for refusal to accept the freezing order definitely signified progress in the international cooperation. However, some legal scholars doubted whether the list of “32 offences” did not amount to breach of constitutional provisions: it concerned the equality issues, as not all offences on this list were covered by national criminal law.[10]

It should be mentioned that the said “32 offences” might be divided into three groups: (i) offences under international law, (ii) the so-called common offences which can be found in the criminal law of all the states, and (iii) the offences, which EU requires to criminalise. Thus, it is clear, that similar criminal activity is or must be punishable under the law of all Member States of the EU. The application of this measure with regard to similar but not identical criminal activity, on the other hand, may not constitute a breach of principle of equality in itself. If the collection and freezing of evidence would take place under national law, it would not require all the features of criminal offence definition established, it only would be necessary that the act committed would be punishable under criminal law.

Still, the scope of this Framework decision was not broad enough to cover all aspects of evidence law. The purpose of the act was to prevent evidence from destruction, transformation, moving, transfer and disposal of it. It did not regulate the matters of transmission of evidence between the Member States, thus, in order to get the frozen evidence from other Member State it was necessary to apply other legal acts such as Convention on mutual legal assistance[11] or bilateral or multilateral international agreements.

Such a system did not answer the needs of prosecutorial authorities or courts, and it also negatively affected defendants’ rights, such as the right to trial within a reasonable time. The situation had to be changed. In 2003, the Commission announced that several steps would be taken with respect to transmission of evidence. The European Evidence Warrant (EEW), which made it possible obtaining the already existing evidence, was meant to be the first step. Next, the legal acts on evidence, which does not exist but is directly accessible, and evidence, which does exist but is not accessible without using scientific methods, had to be adopted. The last step was meant to be the unification act, which would apply to all features of evidence law and repeal the former provisions.[12]

The first step towards improving free movement of evidence was already completed as the Framework Decision on European Evidence Warrant[13] was adopted in December 2008. It had to be transposed into Member States’ national law by January 2011. The European Evidence Warrant enables Member State authorities to issue decisions, which require the executing Member State to obtain objects, documents or data necessary and proportionate for the purposes of criminal proceedings, which could be used in proceedings, were they to be found on the territory of the issuing Member State.

Under Article 7(a) of the Framework decision, an EEW may only be issued if the objects, documents or data sought are necessary and proportionate to the purpose of the proceedings, and if they can be obtained under the law of the issuing State in a comparable case if they were available on the territory of the issuing State, even though different procedural measures might be used. Some authors argue, that no safeguards protecting human rights exist, as no challenge may be brought on such grounds in the executing State.[14] It is probably undeniable, that application of this measure does to some extent limit the rights of the persons involved. Still, parallels can be drawn with the national rules. For example, the Lithuanian Code of Criminal Procedure[15] contains some provisions which enable the investigating officers or the court to request the corresponding officials in other state district to apply some investigative measures in order to avoid unnecessary delay or expenses.[16]  These investigative measures may not be challenged in the district court of delegation. Such system also limits the rights of persons. Of course, there is a difference between the other district of a state and the other state. However, in both situations, there exists a possibility to challenge the way the evidence is collected or the evidence itself. This can be achieved by applying to the destination state or district court, so the rights of individuals are protected. As new technologies are introduced into court process, challenging evidence and its collection becomes even more accessible.

Shortly after the adoption of the European Evidence Warrant, some Member States called for further improvement of transfer of evidence. This resulted in the Proposal for the Directive on European Investigation Order.[17] The objective of the proposed directive is to create single, efficient and flexible instrument for obtaining evidence located in another Member State in the framework of criminal proceedings.[18] The newly adopted directive should replace both the provisions of convention on mutual legal assistance and above-mentioned framework decisions. The main focus of this legal act is to cover all the investigative measures.

The newly proposed measure is harshly criticized by some legal scholars. For example, Peers points that “Although it is certainly desirable to consolidate the complex legal framework in this area, and some of the provisions of the proposed Investigation Order are unobjectionable, many of the changes proposed to the current legal framework would constitute a reduction in human rights protection and even […] an attack on the national sovereignty of Member States.”[19]

However, it is hard to agree that the proposed act constitutes such a threat. First of all, the protection of a person’s rights is ensured by granting the executing Member State discretion to apply another investigative measure which would achieve the same result as the measure provided for in the European Investigation Order by less coercive means (paragraph 10 of the preamble, art. 9).  This provision also shows that the state sovereignty is not so limited.

Secondly, although it is true that the wording of the directive contains no grounds to refuse an order on the basis of ne bis in idem, it should be borne in mind that various provisions of the Directive contain referral to the protection of fundamental rights (e.g. paragraph 17 of the preamble, paragraph 3 of art. 1). Lastly, there is a provision for refusal to recognise the order on the basic of immunity or a privilege under the law of the executing State (paragraph 1 of art. 10), which does include the possibility to take into account the principle of ne bis in idem.

 

Conclusions

As one might notice, the EU competence in the criminal procedure is shifting from traditional means of interstate cooperation towards a new legal order. This shift is clearly visible in the area of evidence law. Still, the aim to improve cooperation cannot always be achieved due to various impediments related to EU institutional structure and will of Member States. The proposed stages of harmonization of evidence law are excessive and duplicate each other. In the light of legal economy it would be more appropriate to adopt one legal act covering all the aspects of transmission of evidence, since the more legal acts implemented into national law, the more expensive it is, from the reprint of legal acts and new forms of legal documents and up to the principle of legal certainty.

 

[1] Klipp, A. European Criminal Law. An integrative approach. 2nd edition. Intersentia. 2012. p 225.

[2] Ibid

[3] Directive 2011136/EU of the European Parliament and of the Council of 5 April 2011 on preventing and com­bating trafficking in human beings and protecting its victims, and replacing Council Framework Decision 2002/629/JHA. [2011] OJ 110111. This directive replaced Council Framework Decision 2002/629/JHA of 19 July 2002 on combating trafficking in human beings.  OJ L20311.

[4] EU cross-border gathering and use of evidence in criminal matters. Towards mutual recognition of investigative measures and free movement of evidence? IRCP-series. Volume 37.

[5] Miettinen, S.  Criminal Law and Policy in the European Union. New York: 2013 p. 177.

[6] Krzysztofiuk, G. Europejski nakaz dochodzeniowy // Prokuratura i prawo. 2012. No 2. p. 81- 106.

[7] Council Act of 29 May 2000 establishing in accordance with Article 34 of the Treaty on European Union the Convention on Mutual Assistance in Criminal Matters between the Member States of the European Union.  OJ C 197, 12.7.2000, p. 1–23;

[8]  Council Act of 16 October 2001 establishing, in accordance with Article 34 of the Treaty on European Union, the Protocol to the Convention on Mutual Assistance in Criminal Matters between the Member States of the European Union. OJ C 326, 21.11.2001, p. 1–1.

[9] Council Framework Decision 2003/577/JHA of 22 July 2003 on the execution in the European Union of orders freezing property or evidence. OJ L 196, 2.8.2003, p. 45–55. 

[10] Švedas, G. Tarptautinė teisinė pagalba baudžiamosiose bylose. Baudžiamojo persekiojimo perdavimas ir kitos savitarpio teisinės pagalbos baudžiamosiose bylose formos. Vilnius, 2008, p. 140.

[11] Council Act of 29 May 2000 establishing in accordance with Article 34 of the Treaty on European Union the Convention on Mutual Assistance in Criminal Matters between the Member States of the European Union.  OJ C 197, 12.7.2000, p. 1–23;

[12] Proposal for a Council Framework Decision on the European Evidence Warrant for obtaining objects, documents and data for use in proceedings in criminal matters, COM (2003) 688 final, p. 10.

[13] Council Framework Decision 2008/978/JHA of 18 December 2008 on the European evidence warrant for the purpose of obtaining objects, documents and data for use in proceedings in criminal matters. OJ L 350, 30.12.2008, p. 72–92.

[14] Irvin, G. The European Evidence Warrant: an Introduction. ECBA Spring Conference, Potsdam, April 2007. P.  3.

[15] Lietuvos Respublikos Baudžiamojo proceso kodeksas. Valstybės Žinios, 2002. Nr. 37-1341, with further amendments.

[16] Art. 175, para 1. Separate orders.When investigative activities  have to be carried out in another place, the prosecutor or the investigating officer may undertake it or delegate to do this to the appropriate prosecutor or the investigating body. […]

[17] European Investigation Order in criminal matters. Initiative Belgium, Bulgaria, Estonia, Spain, Austria, Slovenia and Sweden. 2010/0817(COD).

[18] Proposal for a Directive of the European Parliament and the Council regarding the European Investigation Order in criminal matters. Explanatory Memorandum.

[19] Peers, S. The proposed European Investigation Order: attack on human rights and national sovereignty. © Statewatch ISSN 1756-851X. P. 1.

Democratic Oversight for Counter-terrorism Sanctions in the EU

Alexander Kolev

4th Year LLB student, University of Aberdeen

 

This article examines the legal framework for the adoption of restrictive measures against individuals in the European Union, specifically in the context of the Union’s Common Foreign and Security Policy and its counter-terrorism agenda. Economic sanctions like trade bans, prohibition of capital and service transactions, and interdiction of transport and communications are widely used by countries to exercise pressure and produce a change in the political behavior of another state or group of states.[1] ‘Smart’ or ‘targeted’ sanctions, on the other hand, have as their objective specific natural or legal persons rather than the population as a whole and can vary from sectoral embargoes and visa bans to the freezing of financial assets. Such sanctions have not been limited in their use to the exercise of pressure on a state but have also been deployed as a primary tool to combat terrorist groups.[2]

 

The European Union has fully adopted these trends in international sanctions but the regime has been under attack in the EU courts for the past 8 years in the Kadi litigation.[3] One of the most contentious issues has been whether there exists a legal basis in the Treaties that permits such measures in the Union. In other words, have the Union’s institutions, and most significantly the Council of Ministers, acted outside their jurisdiction on the international scene and infringed the values of democracy and the rule of law that are the building blocks of the EU?[4]

 

Introduction

The Kadi cases have been the most prominent external actions cases at the EU courts in the past decade. They trace back to 1999 when the Security Council (SC) imposed ‘smart’ sanctions on individuals and private entities associated with Bin Laden, Al-Qaida, and the Taliban.[5] In order to implement the ‘targeted’ sanctions system in the EU, the Council of Ministers adopted Regulation 881/2002, which has been contested on multiple grounds in the courts in Luxembourg (the latest and final judgment in Kadi II was delivered on July 18th).[6]

 

An intriguing aspect of the cases concerns what the legal basis is (the Article(s) in the Treaties) for the adoption of restrictive measures because it largely determines the decision-making process for the legislation.[7] Consequently, this has a direct bearing on the level of inter-institutional scrutiny and review of these sanctions. Throughout the life of the Kadi saga, the question has ultimately boiled down to how measures against terrorists should be understood – are they a matter of international security and foreign relations or are they a tool to defend the internal security of the EU? I will explain this point in more detail below.

 

The regime for economic sanctions prior to the Lisbon Treaty

The European Union operates under a rule of law, which means that any action for the adoption of a given policy must have a legal basis in the Treaties.[8] This ensures that the law-creation process is founded in texts that have been approved voluntarily and democratically by all EU member countries. The rationale for the choice of the legal basis of Regulation 881/2002 was the matter of departing considerations by the General Court, Advocate General Maduro, and the CJEU in the Kadi I cases.[9]

 

The sanctions regime under the Maastricht Treaty, which applied at the time the measures were implemented against Mr. Kadi, did not include any specific provisions for the adoption of ‘smart sanctions’ against individuals. Therefore, the regime was developed on the basis of Article 301(1) EC and 60(1) EC. Together they provided that the interruption or reduction of economic sanctions with third countries in the framework of the Common Foreign and Security Policy (CFSP) is to be decided by the Council on a proposal from the Commission.[10] However, the two provisions only allowed for measures to be taken against entities or persons, who physically controlled part of the territory or effectively controlled the government apparatus.

 

By January 2002 the Taliban regime had fallen, which meant that the sanctions were levied on individuals who were not part of the ruling government and in direct control of the territory. The already very expansive reading of Articles 301 and 60 EC could not accommodate this crucial factor without becoming even more obscure and uncertain.

 

This is why the European Commission proposed to rely on Article 308 EC (now 352 TFEU). Article 308 EC offered valuable legislative power where the Union did not have express authority to create laws. This provision was an easy solution to complement the limited express provisions on external relations in the early stages of the European integration process.[11] Weiler argues that only a radical and creative reading of the article could justify its usage and that its wide reading, in which all the institutions took part, meant that it was virtually impossible to find an activity that could not be brought within the objectives of the Treaty.[12] Nonetheless, Article 308 EC was regularly used to significantly develop the power of the Union in fighting the war on terrorism by permitting the Council of Ministers to make sanctions decisions. Both the General Court and the CJEU in Kadi I agreed that EU had the competence to adopt ‘smart’ sanctions on the joint basis of Articles 60, 301 and 308 EC.[13]

 

The regime for economic sanctions after the Lisbon Treaty

The legal basis disputes in the Kadi I litigation foreshadowed numerous reforms in the EU’s external action that were introduced by the Lisbon Treaty. Article 75 TFEU now explicitly allows the EU to freeze the funds of individuals in order to prevent and combat terrorism and attain the objectives of Article 67 TFEU, which states that, ‘The Union shall constitute an area of security, freedom and justice with respect for fundamental rights and the different legal systems and traditions of the Member State’. Such measures must be adopted under an ordinary legislative procedure, which includes the European Parliament – the only democratically-elected EU institution – and the Council of Ministers. Alternatively, under Article 215(2) TFEU, the Council can implement measures, ‘for the interruption or reduction, in part or completely, of economic and financial relations with one or more third countries’. This power is exercised only in the context of the CFSP and the Council of Ministers can adopt a unanimous decision on a joint proposal from the High Representative and the Commission. Notably, the European Parliament is merely informed about a Regulation imposing ‘targeted’ sanctions under Article 215(2) TFEU.

 

What is evident from the wording of the provisions is that the legislator took pains to differentiate between two factual situations. On the one hand, Article 75 TFEU specifically relates to combating terrorism through the freezing of funds. It confers to the Parliament and the Council to take measures to protect the citizens of the EU and their fundamental freedoms. On the other hand, Article 215 TFEU is vague as to its objectives and relates primarily to the monetary relations between the Union and third countries. A year after the Lisbon Treaty came into force, the Parliament brought an action for the annulment of Regulation 881/2002, which was based on Article 215 TFEU.

 

In that case, Parliament v Council, the CJEU explicitly considered the level of institutional scrutiny and review that should be provided when implementing ‘smart’ sanctions on EU level. The Parliament argued that since the entry into force of the Treaty of Lisbon, the EU can adopt measures concerning fundamental rights only under the ordinary legislative procedure or with the consent of the Parliament, ‘The Treaty of Lisbon reflects the intention of the Member States to enhance the democratic nature of the European Union. It responds to an urgent need to provide for parliamentary scrutiny of listing practices’.[14] The Council argued that the Parliament’s argument is contradicted by Article 215(3) TFEU, which provides that any acts under the provisions ‘shall’ include legal safeguards, which is a clear indication that such acts can also interfere with fundamental rights. Advocate General Bot held that the Parliament’s involvement in CFSP matters relating to imposing ‘smart’ sanctions is not critically obliterated if the Council decides to take the matters in the area of CFSP. In particular, she pointed to the obligations of the High Representative to, ‘regularly consult the (…) Parliament on the main aspects and the basic choices of the CFSP and inform it of how those policies evolve. He shall ensure that the views of the (…) Parliament are duly taken into consideration’. Ultimately, she argued that ‘the importance of combating terrorism is such that every legal instrument available to the European Union under the Treaties must be mobilized’. The Advocate General’s opinion was another manifestation of the continued spirit of extension on the powers of authorities to tackle terrorism, even at the cost of overlooking the democratic review of such sanctions.

 

In that same spirit, The CJEU said, ‘Given that terrorism constitutes a threat to peace and international security, the object of actions undertaken by the Union in the sphere of the CFSP (…) can be to combat terrorism’. Thus, it was held that terrorism is the exclusive domain of the CFSP and the regulation was rightly adopted on the basis of Article 215(2) TFEU. The CJEU admitted that participation by the Parliament in the legislative process is the reflection of the fundamental democratic principle that the people should participate in the exercise of power through the intermediary of a representative assembly. However, the differences in the Parliament’s involvement are the result of the express choice made by the framers of the Treaty of Lisbon to confer it a more limited role.

 

The judgment highlighted how eager the CJEU was to recognize the new expansions of authority that the Lisbon Treaty conferred to the EU’s external actions policy framework, at the same time disregarding the Parliament. One gets easily overwhelmed by the multiple cross-references and broad interpretations that the Court and Advocate General invoke to codify counter-terrorism measures as laying in the province of the Union’s CFSP, despite there being no mention of ‘terrorism’ in Article 215(2) TFEU. Other issues that were left unanswered are, for example, in what cases does terrorism fall outside the CFSP, and accordingly Article 215(2), and within the ambit of Article 75 TFEU. In other words, in what situations was Article 75 TFEU designed to kick in? Even more worryingly, it remained unclear what legal basis would purely EU-internal terrorist groups attract.

 

Advocate General Bot’s opinion in Kadi II

Advocate General Bot’s opinion in Kadi II demonstrated how the ‘war on terrorism’ agenda that the CJEU embraced in European Parliament v Council could be naturally taken one step further to limit further the level of review of ‘smart’ sanctions but this time targeting the judiciary instead. Advocate General Bot stated that the fight against terrorism cannot lead democracies to disregard the rule of law and yet, they should be able to make changes to such fundamental principles.[15] She argued that there are exceptions to the doctrine of full judicial review in the EU and that measures taken to assist the fight against terrorism should be left outside the scope of the EU courts. Finally, she stated that the Union’s judiciary must not become a forum for appeals against decisions taken by the UN Sanctions Committee and that the most effective way to balance the objective of combating terrorism and optimal protection of the fundamental rights of listed person is to develop cooperation between the EU and the UN.

 

In the final chapter of the Kadi saga, the CJEU dismissed the appeals by the Commission and Council in Kadi II and declared that the EU courts have the power to conduct a full judicial review of SC sanctions.[16] It thus dismissed Bot’s opinion that it should restrict its review in ‘smart’ sanctions cases or in fact any cases that deal with the Union’s CFSP policy and program on the war on terrorism. The court repeated to a great extent the mantra of its supremacy and the existence of the, ‘constitutional guarantee in a Union based on the rule of law [of] judicial review of the lawfulness of all European Union measures’. It can only observed at this point how little of the Court’s vigor to re-ascertain its own institutional powers was ever employed to protect the other values the Union is founded on like democratic decision-making for instance.

 

Conclusion

The list of countries, whose individuals’ assets have been frozen by the EU is currently 45.[17] Only in Syria, there are 179 people and 54 companies under the ‘smart’ sanctions regime.[18] Each person on these lists might potentially have suffered from the same breaches of human rights as Mr. Kadi – the rights to be heard, to effective judicial review, and the right to respect for property. Placing the enactment of such regulations within the ambit of the CFSP has circumvented the European Parliament in order to ensure a swift procedure to react to urgent developments. It has undoubtedly provided the EU with the tools to effectively penalize hostile regimes around the world. However, asset freezing is considered by many a ‘civil death penalty’, destroying the lives and reputation of individuals, turning them into outlaws with no rights and no means to defend themselves. In their efforts to tackle terrorism and ascertain the EU as a strong player on the international scene, the Commission and the Council of Ministers have been ready to found such destructive powers on ambiguous provisions, acting against the rule of law and democracy pillars these same institutions were created to protect and enforce.

 

[1] P Koutrakos, Trade, Foreign Policy & Defence in EU Constitutional Law (Oxford, 2011) 50.

[2] See most recently Council Decision 2013/395 of 25 July 2013, which added the military wing of Hezbollah to the list of designated terrorist organizations and asset freezing list.

[3] Case C-584/10 Commission v Kadi (General Court, 30 September 2010)

[4] Consolidated Version of the Treaty on European Union [2008] OJ C115/13, Article 2.

[5] United Nations Sanctions 1267 (Security Council), S/RES/1267 (1999), <http://www.un.org/ga/search/view_doc.asp?symbol=S/RES/1267(1999)> (accessed May 25, 2013).

[6] Council Regulation (EC) 881/2002 of 27 May 2002 imposing certain specific restrictive measures directed against certain persons and entities associated with Usama bin Laden, the Al-Qaida network and the Taliban [2002] OJ L139/9. For a history of all the cases see Joris Larik, ‘Two Ships in the Night or in the Same Boat Together: How the ECJ Squared the Circle and Foreshadowed Lisbon in its Kadi Judgment’ (2010) 13 Yearbook of Polish European Studies 149.

[7] Joint Cases C-402/05 and C-415/05 Kadi and Al Barakaat v Council and Commission [2008] ECR I-06351.

[8] Case 242/87, Commission v. Council (ERASMUS) [1989] ECR 1425, 1452.

[9] C-415/05 Kadi and Al Barakaat v Council and Commission [2008] ECR I-06351, Opinion of AG Maduro.

[10] Case T-315/01 Kadi v Council and Commission [2005] ECR II-03649, para 6.

[11] Peter Van Elsuwege, ‘The Adoption of “Targeted Sanctions” and the Potential for Inter-institutional Litigation after Lisbon’ (2011) 7(4) Journal of Contemporary European Research 488, at p.491.

[12] J. H. H. Weiler, ‘The transformation of Europe’ (1991) 100(8) The Yale Law Journal 2403, at p.2445.

[13] See above (note vi), paras 123-133 in the General court; para 212 in the CJEU.

[14] Case C-130/10 European Parliament v Council of the European Union (CJEU, 19 July 2012), Opinion of AG Bot, para 44.

[15] Case C-584/10 Commission v Kadi (General Court, 30 September 2010), Opinion of AG Bot, para 6.

[16] Case C-584/10 Commission v Kadi (Court of Justice of the EU, 18 July 2013), not yet published.

[18] <http://www.hm-treasury.gov.uk/d/syria.htm> accessed 21 May 2013.

Competition Policy, Globalisation & The International Competition Network: A comment to Almunia’s speech at the twelfth annual conference of the International Competition Network

Robert Miklós Babirad

J.D. Masters Diploma candidate in EU Law, King’s College London; Post Graduate Diploma in EU Law (Merit); Member of the New York Bar

 

1          Introduction

On April 24, 2013, Mr Joaquín Almunia, Vice President of the European Commission responsible for Competition Policy delivered a speech entitled “The Evolutionary Pressure of Globalisation on Competition Control”[1] at the twelfth annual conference of the International Competition Network (ICN) in Warsaw, Poland.  Mr. Almunia’s speech reflects his view of the International Competition Network’s critical role in fostering open global markets, promoting the exchange of information between competition agencies worldwide and establishing greater convergence with regard to global competition practices.[2]

Although the speech calls for greater convergence and open markets, there is a failure to sufficiently evaluate underlying national policy concerns, which have led to what Mr. Almunia views as national “trade barriers” and “misguided regulations.”[3]  The speech does not effectively demonstrate that his views with regard to global competition practices will sufficiently address difficulties concerning convergence, existing practices, and the disclosure of information on a global level in competition cases.

The term “policy” is used in this article to refer to a potentially diverse array of external objectives that may need to be reflected in any consideration regarding disclosure and its prospective limits with regard to competition cases by global competition authorities.  Policy may embody broad “non-economic objectives” and their consideration may be necessitated in applying the competition rules as has been suggested by Dr. Townley.[4]  The concept of policy could also be directly related to objectives similar to those suggested under the Treaty such as providing for “an area of freedom, security and justice without internal frontiers,” protecting the environment, and the encouraging of development that is of a sustainable nature.[5]  Policy concerns may also reflect, but are not limited to the protection afforded to certain interests from disclosure under the Transparency Regulation such as those of a commercial nature, the “privacy and integrity of the individual,” relations between countries, and concerns relating to national defence.[6]

This article will begin by briefly discussing the role of the International Competition Network.  Changes to competition policy will then be presented, particularly with regard to globalisation.  The challenges presently being faced by the ICN and both EU as well as global competition agencies will then be addressed and evaluated as well as Mr. Almunia’s position with regard to the best practices for global competition. The article will conclude by suggesting that it may be difficult to refer to national “obstacles,” “practical gaps” and regulations as “misguided” or flawed without a more critical evaluation of existing practices and concerns involving competition related objectives both within the EU and abroad, particularly if better compromises and more effective global competition practices are to be subsequently formulated.[7]

 

2          The International Competition Network

Mr. Almunia’s speech calls for continued investment and a renewal of commitment with regard to the International Competition Network.[8]  The ICN operates as a network of an informal nature with the objective of promoting the enforcement of antitrust on a global scale in order to increase effectiveness as well as efficiency with regard to businesses as well as consumers.[9]  The focus of the ICN is concentrated upon competition law and has established frameworks for analysis, tools relating to “best practices” with regard to competition, and various recommendations that have been put forth to enhance cooperation between competition agencies from differing jurisdictions.[10]  The ICN has the objective of enhancing convergence as well as cooperation when necessary, and minimising the danger of enforcement that is less than optimal as well as outcomes that are inconsistent with regard to competition.[11]

Mr. Almunia refers to the guidance provided by the ICN as “very useful” and its success as representative of the expanding relevance on a global scale of competition law’s enforcement.[12]  It is noted that the enforcement of competition law must also be cognisant of the challenges presently being encountered by the world’s societies and economies.[13]  However, the speech does not sufficiently provide instructive guidance as to how competition law enforcement may be implemented in a manner that demonstrates that it is effectively cognisant of and responsive to these challenges.  The speech notes that the ICN is closely connected with globalisation in that its objective in being created was to foster a spirit of cooperation between various global competition agencies, which would also encompass those agencies from developing and emerging nations.[14]  Encouraging cooperation between the world’s competition agencies is a positive objective of the ICN and its recognition by Mr. Almunia’s speech is instructive.

 

3          Changes to Competition Policy

Changes to the instruments and priorities of competition policy are noted and particularly that of a growth in liberalisation, expansion of the service industry, network industry privatisation, changes in technology, growth of the digital economy and a critical impact on traditional industry, because of the growing importance of climate change as well as the development of strategies to counteract its effects.[15]  However, the change of greatest importance in Mr. Almunia’s view is that of a global expansion of integration with regard to economics.[16]

Mr. Almunia notes that globalisation’s greatest effect may be seen with regard to critical, new economic players on the global level.[17]  An important point is made with regard to the close links now present between “new trading partners and competitors” as well as concerning the shared interests and investments resulting from this global economic interaction.[18]  The speech notes that a benefit of globalisation has been more affordable goods in the global marketplace as well as the extrication of millions of individuals from poverty.[19]  It is also stated that an increase in global trade has developed international cooperation, confidence and the expansion of growth.[20]  These positive attributes of globalisation are importantly noted.  However, it is not clarified as to how globalisation’s positive attributes may be reconciled with those which are negative in a manner that would enable it to be effectively used as a tool in the eventual resolution of the global financial crisis.

 

4          Challenges

Mr. Almunia does acknowledge that globalisation has brought difficulties and challenges, and suggests that an evaluation of both its positive and negative aspects should occur.[21]  However, he fails to engage in this sort of balanced evaluation in his speech.  An important statement is made in suggesting that the European Union reflects an effort at globalisation’s management and is “the only workable experiment in regional integration.”[22]  In Mr. Almunia’s view, the European Union has itself become a project, which amongst its various other objectives and goals, also embodies that of globalisation’s management, but there is a lack of elaboration upon this theory in the speech.[23]  Additionally, he suggests that the ICN is also demonstrative of this effort being directed at globalisation’s management.[24]

It is acknowledged that an increasing amount of competition cases concern undertakings, which are conducting business on a global level.[25]  It is therefore suggested that greater exchanges on a multilateral and bilateral level must occur for the facilitating of competition control under conditions that are optimal.[26]  Exchanging information regarding competition on a global level becomes increasingly important under these conditions, but concerns regarding the scope of disclosure, degree of convergence, and relevant policy considerations, which will be inherently different based upon the competition agency at issue, fail to be sufficiently accounted for or assessed.  It is suggested that international competition agencies must continue to work together and effectively exchange information.[27]  However, international competition agencies have had difficulties with regard to information of a confidential nature being exchanged where signed waivers are unavailable. [28]  Additionally, restrictions or the exemption of particular agencies may be present even where a signed waiver is available.[29]

Another obstacle to the exchange of information between global competition authorities cited is that of “blocking statutes.”[30]  These statutes require national undertakings to secure approval prior to responding to the requesting of information by foreign competition agencies.[31] Additionally, in some situations national law also prohibits a voluntary response by these undertakings.[32]  Mr. Almunia calls for continued efforts in improving confidential information being exchanged between global competition authorities, but does not discuss the necessary protection or confidentiality, which must also be afforded and subsequently balanced against any interest in disclosure.  It is stated that the ICN has a critical position in overcoming these obstacles to what are in Mr. Almunia’s view, better global competition practices.[33]  The speech advocates the importance of “open markets, vibrant competition, and a global level playing field,” but this view may not be an accurate representation of the present situation nor actual practices either within the EU or abroad.[34]

Under the EU’s competition system, “obstacles” are also present that would prevent disclosure and convergence with regard to other global competition authorities as well as within the EU itself, differing from the position otherwise advocated by Mr. Almunia’s speech.  Article 339 TFEU provides an example by prohibiting Union officials from releasing information, which is found to be protected by “the obligation of professional secrecy” and particularly “information about undertakings, their business relations or their cost components.”  Under the Transparency Regulation, the EU’s institutions may refuse to release documents in competition related matters where disclosure would hinder the protecting of “the public interest” or the “privacy and the integrity of the individual.”[35]  Additionally, refusal of access to documents may occur where the “commercial interests of a natural or legal person, including intellectual property” may be endangered.[36]

Access to documents concerning competition cases continues to be a source of difficulty within the EU, although this is not acknowledged in Mr. Almunia’s speech.  An example is that of EnBW Energie Baden-Württemberg AG, a company impacted by the prohibited anti-competitive conduct of a cartel, which sought access under the Transparency Regulation to Commission documents relating to the cartel’s activities.[37]  Access to the documents was refused by the Commission under the Transparency Regulation’s exceptions permitting non-disclosure.[38]  One of the grounds on which the General Court annulled the Commission’s decision denying access, was due to a failure by the Commission regarding its duty to “undertake a concrete, individual examination of the documents covered by the request” in applying the Transparency Regulation’s exceptions permitting non-disclosure.[39]  The case is presently being appealed,[40] which reflects the continuing difficulties still present with regard to interpreting the scope and limits of information disclosure even under the EU’s competition system.

The Court of Justice of the European Union (CJEU) also held in Pfleiderer AG v Bundeskartellamt[41] that an individual “adversely affected by an infringement of European Competition law and is seeking to obtain damages from being granted access to documents relating to a leniency procedure involving the perpetrator of that infringement” will not be prevented from doing so under Regulation 1/2003 or the EU’s law with regard to cartels.[42]  However, ambiguity is also created by the Court’s judgment with regard to accessing this information, because the individual EU Member State tribunals and courts will be the arbiters of this access and deciding based upon each Member State’s respective national law, “the conditions under which such access must be permitted or refused by weighing the interests protected by European Union law.”[43]

It is also interesting to note the statement of Alexander Italianer, Director-General for Competition in a letter to a New York Court regarding the Air Cargo Antitrust Litigation, which opposes the view of openness and convergence suggested by Mr. Almunia’s speech.  Mr. Italianer has stated that permitting US discovery proceedings to access “documents that are strictly confidential under European competition law” would have the result of being “highly detrimental to the sovereign interests and public policies of the European Union” and consequently “substantially undermine the Commission’s ability to detect and punish unlawful cartel activity in the European Union.”[44]

Additionally, in a U.S. proceeding relating to investigations performed by EU competition authorities, a motion to compel discovery of European competition related documents was denied in favor of the Commission’s position, which had argued for the documents at issue to be non-discoverable in U.S. litigation proceedings, confidential and protected by the doctrine of international comity.[45]  It is subsequently difficult to argue that clarity and convergence with regard to the disclosure of information relating to competition cases is presently or likely to become a reality in the near future either within the EU or abroad.

Mr. Almunia states that restrictions on competition are not the answer to resolving the crisis, but rather that there are “other ways to bring relief to households and firms.”[46]  However, this point is not sufficiently elaborated upon.  The speech concludes by advocating that global competition agencies must “unleash the power of the markets,” particularly during these times of economic difficulty.[47]  However, current practices reflect a very different view, which reflects ambiguity and the presence of various restrictions with regard to cooperation and the disclosure of information in competition cases, both within the EU and abroad.

 

5          Conclusion

Unfortunately, Mr. Almunia’s speech fails to adequately address existing practices regarding a failure to disclose information and a lack of convergence concerning competition cases by both EU and global competition authorities.  Additionally, the speech does not effectively assess how these issues may be resolved more effectively within the framework of the ICN.  Additionally, the negative implications of globalisation are not sufficiently presented nor why open markets and strong global competition policies will effectively counter these otherwise negative effects while still being responsive to national policy concerns including, but not limited to the appropriate degree of convergence and confidentiality in competition cases.

The need for certain regulations and restrictions, which in Mr. Almunia’s view are “misguided,” as well as matters concerning the protection of confidentiality from disclosure in competition cases are also dismissed rather than being adequately addressed.[48]  Additionally, the EU’s position concerning the disclosure of documents in competition cases remains uncertain and fails to be effectively evaluated by Mr. Almunia’s speech.

[1] Almunia, J, The Evolutionary Pressure of Globalisation on Competition Control, International Competition Network 12th Annual Conference, Speech/13/360, 24 April 2013. <http://europa.eu/rapid/press-release_SPEECH-13-360_en.htm> Accessed 30th of April 2013.

[2] See Ibid., pps. 4-5.

[3] Ibid., p. 5.

[4] Townley, C. Article 81 EC and Public Policy (Hart Publishing, Oxford 2009), p. 5.

[5] Article 3(2)-(3) TEU.

[6] Regulation (EC) No. 1049/2001 of the European Parliament and of the Council of 30 May 2001 regarding public access to European Parliament, Council and Commission documents (Transparency Regulation) OJ 2001, L 145/43, art. 4(1)-(2).

[7] See Almunia, pps. 4-5.

[8] Almunia, p. 6.

[9] International Competition Network, The ICN Factsheet and Key Messages, April 2009, p. 1.

< http://www.internationalcompetitionnetwork.org/uploads/library/doc608.pdf> Accessed 30th of April 2013.

[10] Ibid.

[11] Ibid.

[12] Almunia, p. 2.

[13] Ibid.

[14] Ibid.

[15] Ibid., p. 3.

[16] Ibid.

[17] Ibid.

[18] Ibid.

[19] Ibid.

[20] Ibid.

[21] Ibid.

[22] Ibid.

[23] Ibid.

[24] Ibid.

[25] Ibid., p. 4.

[26] Ibid.

[27] Ibid.

[28] Ibid.

[29] Ibid.

[30] Almunia, p. 4.

[31] Ibid.

[32] Ibid.

[33] Ibid.

[34] Ibid.

[35] Transparency Regulation, art. 4(1)(a)-(b).

[36] Transparency Regulation, art. 4(2).

[37] Case T-344/08 EnBW Energie Baden-Württemberg AG v European Commission [2012], paras 1, 3.

[38] Ibid., paras. 5-12.

[39] Ibid., paras. 110-111.

[40] Case C-365/12 P Commission v EnBW Energie Baden-Württemberg [2012].

[41] Case C-360/09 Pfleiderer AG v Bundeskartellamt [2011] ECR I-05161.

[42] Ibid., para. 32.

[43] Ibid.

[44] Letter from Alexander Italianer (Director General for Competition) to the Honorable Viktor v. Pohorelsky, In re Air Cargo Shipping Services Antitrust Litig. No. 1:06-md-01775-JG-VVP (E.D.N.Y Oct. 12, 2011).  See also, De Stefano, G. Access of Damage Claimants to Evidence Arising Out of EU Cartel Investigations: A Fast-evolving Scenario (2012) 3 Global Competition Litigation Review 95, pps. 99-100.

[45] In Re Payment Card Interchange Fee and Merchant Discount Antitrust Litigation No. 05-MD-1720-JG-JO (E.D.N.Y Aug. 27, 2010) (Loislaw, NY Caselaw) pps. 2-3.

[46] Almunia, p. 5.

[47] Ibid.

[48] See Ibid.

Enlarging the EU ‘Club’: Dobrodošla Hrvatska!

Dr. Agne Limante

MA candidate in EU Law at King’s College London

 

Today, the 1st of July, right in the mid-summer heat, Croatia will become the 28th member of the European Union. It will happen 22 years and just few days after Croatia declared its independence[1] and disintegration of Yugoslavia began bringing to the region war, genocide and ethnic cleansing.

This article will take a brief look at Croatia’s accession process, highlighting its main challenges and reminding of the EU accession conditionality applied towards aspiring countries in the Western Balkans.

 

Croatia’s path

The relations between Croatia and the EU began developing after Croatia’s international recognition (15 January 1992). However, by the end of 1990s, Croatia was still a state with a nationalist-pattern government that did not always comply with the EU conditions the way it was expected to.[2] It was especially hard to persuade Croatia to cooperate with the International Criminal Tribunal for the former Yugoslavia (ICTY), a United Nations court of law dealing with war crimes that took place during the conflicts in the Balkans in the 1990s.

Hence, once elected in 2000, the moderate government received pressure from the EU to change the line of politics of their predecessors. The EU openly stressed the importance of extraditing war criminals and the need to encourage repatriation of refugees. Croatia started implementing those requests.

Proceeding further, in October 2001, Croatia signed the Stabilization and Association Agreement with the EU and on 21 February 2003 presented its application for membership. The following year in June 2004, the European Council granted Croatia candidate status. Accession negotiations were started only later in October 2005.

Almost six years later, in June 2011, the last four chapters of accession negotiations were closed and in December 2011 the Accession Treaty[3] was signed. After the positive outcome of the referendum in Croatia where 66.27% of voters supported Croatia’s accession to the European Union,[4] the process of ratification of the Accession Treaty by the EU Member States began. Last month, with the German Bundestag ratifying Croatia’s Accession Treaty the process was finalised,[5] opening the door to accession on 1 July 2013.

 

Cooperation with the ICTY and Croatia’s case

Ensuring that Croatia and other Western Balkan states[6] cooperated with ICTY[7] was part of the international community’s (US, NATO, EU) overall strategy in the Western Balkans. Nevertheless as noted earlier, it was not easy.

For the majority of people living in Croatia, the war was recent, memories were vivid and the indicted war criminals were perceived as respected war heroes who won independence for their countries.[8] Under President Tuđman, cooperation with the ICTY was not supported at all. Only after his death it started being widely discussed and a question of ethnic cleansing featured in political discourse.[9]

Unwilling to give up, the EU was strict, threatening that failure to cooperate fully with the ICTY could ‘seriously jeopardise’ rapprochement to the EU.[10] This threat appeared to be real – when Croatia was slow to arrest those indicted by the ICTY, especially General Ante Gotovina (who was indicted on a number of war crimes and crimes against humanity committed during the Croatian War for Independence), insufficient cooperation with the ICTY was used as a ground to suspend Croatia’s accession talks.[11] Such strategy appeared to be effective and in 2005 Croatia finally arrested Gotovina. Interesting to note, in November 2012 he was acquitted on all charges by the appeals panel at the ICTY and the Croatian government plane flew the general home, where he was treated like a hero.[12]

 

Accession negotiations

The negotiations with Croatia were divided into 35 negotiating chapters (31 was in case of earlier enlargements) – some new, some just result of the re-structure.

The list of chapters to be negotiated by Croatia for the first time (with Turkey) included ‘judiciary and fundamental rights’. Such a novelty highlighted that fundamental rights is no longer regarded solely as an eligibility condition, but forms an integral part of EU acquis.[13]

This new chapter, including judiciary, the fight against corruption and organised crime, fundamental rights and the already discussed ICTY co-operation, also appeared to be the toughest of the negotiating chapters. EU Commissioner Viviane Reding in 2011 called the chapter of judiciary the “last stumbling block” of Croatia’s accession. She praised the progress, admitting that “in one year, they have completely reformed their judiciary system and have made it irreversible”.[14]

When closing the negotiations, EU officials seemed very excited. Commission President Jose Manuel Barroso said he wanted “to applaud the Croatian authorities, in particular the current government, for their hard work over the last years”. EU Enlargement Commissioner Stefan Fuele, meanwhile, stated that Croatia had changed “tremendously” during the EU accession negotiations, morphing into a “mature democracy based on the rule of law and into a functioning market economy”.[15]

Despite the applause, however, critics still claimed that Croatia’s reform efforts were far from sufficient. The positive attitude of the EU, they argued, represented strong pressure from Member States such as Hungary, Germany, Austria, Poland and the Czech Republic to allow Croatia to join.[16] This ‘friends and enemies trump real progress’ attitude is quite widespread in the Balkans. Adding this to the fact that Bulgaria and Romania are often seen as examples of accession with insufficient progress, this seems to further downgrade the importance of EU conditionality towards acceding countries.

 

Western Balkans on the rocky road into Europe’s club

The other Western Balkan States are still waiting at the EU’s door. They understand that since 1990s the EU enlargement process became much harder for the candidate states. The road to the EU is clearly marked by signs asking to jump through many hurdles and over many rocks.

It is widely accepted that in respect of the states that acceded to the EU in the 2004 and 2007 enlargement rounds, the EU imposed much more stringent accession conditions than it used to impose. However, due to bloody wars related to the fall of Yugoslavia and post-war challenges, the EU conditionality set for the Western Balkan states is even more of a multi-level phenomenon than before.

Firstly, Western Balkan countries are subject to the accession criteria set out in Articles 2 and 49 of the Treaty on European Union (TEU)[17] and the Copenhagen criteria laid down at the European Council meeting in Copenhagen in 1993.[18] Article 49 TEU constitutes the legal basis for accession to the EU. It states that any European state which respects the values referred to in Article 2 and is committed to promoting them may apply to become a member of the Union. [19] The Copenhagen criteria, meanwhile, is much more precise and require from any country wishing to join the EU to abide by the certain accession conditions, including political and economic criteria as well as acceptance of the EU acquis. [20]

Secondly, in the case of the Western Balkans, the EU significantly complemented the Copenhagen criteria by extending political conditionality and adding region-specific conditions encapsulated in the Regional Approach[21], the Stability Pact[22] and the Stabilization and Association process,[23] as well as the peace agreements and political deals. The EU listed additional conditionality including full cooperation with the ICTY, respect for human and minority rights, creation of real opportunities for refugees and internally displaced persons to return and a visible commitment to regional cooperation.[24]

Thirdly, extending the Copenhagen and Madrid Criteria, the Stabilisation and Association Agreements’ concluded with the Western Balkan states require “respect for democratic principles, human rights and the rule of law; the establishment of a free trade area with the EU; and the achievement of rights and obligations, in areas such as competition and state aid rules, that allow the economies to integrate with the EU”.[25]

In such a way, when knocking at the EU’s door, Croatia, together with other Western Balkan states, was presented with an extensive list of conditions it needed to fulfil to be able to join the club. With ups and downs discussed above, it proceeded and, as we witness today, successfully reached the goal attaining this exclusive club’s membership card.

 

A happy ending?

As noted by Hillion, Croatia’s accession to the EU illustrates that the Union is a polity that continues to attract, that it is helping to turn one of the darkest pages of Europe’s recent history, and that it sticks to its commitments.[26] Indeed, admitting Croatia to the EU is a significant step towards Europe’s reconciliation and important for still continuing peace building in the Balkans.

However, apparently the Croatians do not seem to be too enthusiastic anymore. Two and a half months before Croatia joined the EU, just 21% of voters bothered to cast ballots in 14 April 2013 election of 12 new MEPs.[27] On the other hand, considering the falling turnout in EU MEPs elections in the older EU Member states where voting is not compulsory,[28] one might say that this is simply typically European.

[1] Slovenia and Croatia declared their independence on 25 June 1991. Slovenia, which did not have a considerable Serb minority, managed to secede without getting engaged into Balkan wars. Due to this reason it was faster to develop and joined the EU with the 2004 ‘big-bang’ enlargement group.

[2] See further M.A. Vachudova, “Strategies for Democratization and European Integration in the Balkans” in The Enlargement of the European Union, ed. M. Cremona (Oxford University Press, 2003), p. 120.

[3] Treaty of Accession of Croatia. OJ L 112, 24.4.2012.

[4] Data of the State Electoral Commission of Croatia. Available at http://www.izbori.hr/2012Referendum/rezultati/rezultati.html.

[5] The table with details of the ratification process is available at: http://www.delhrv.ec.europa.eu/?lang=en&content=3935.

[6] The term ‘Western Balkans’ is used as including Albania, Bosnia and Herzegovina, Croatia, the Republic of Macedonia, Montenegro, Serbia, as well as Kosovo under UNSC Resolution 1244/99. See, for example, Communication from the Commission to the European Parliament and the Council “Western Balkans: Enhancing the European perspective”. COM(2008) 127 final.

[7] The list of ICTY indictees contained 94 Serbs, 29 Croats, 9 Albanians, 9 Bosniaks, 2 Macedonians and 2 Montenegrins.

[8] M. Braniff, Integrating the Balkans. Conflict Resolution and the Impact of EU Expansion (I.B. Tauris, 2011), p. 108.

[9] See further M. Braniff, Integrating the Balkans. Conflict Resolution and the Impact of EU Expansion (I.B. Tauris, 2011), p. 108-113.

[10] 2533rd Council meeting (External relations), Luxembourg, 13 October 2003, 13099/03 (Presse 292).

[11] 2649th Council Meeting (General Affairs and External Relations), Bussels, 16 March 2005, 6969/05 (Presse 44). Symbolically, this EU decision coincidence with 10th anniversary of the Srebrenica massacre.

[12] See Balkan Insight “Croats Celebrate Acquittal of Gotovina and Markac”, 16 November 2012. Available at: http://www.balkaninsight.com/en/article/croatians-celebrate-acquittal-of-gotovina-and-markac

[13] For more extensive analysis see ‘Editorial comments: Fundamental rights and EU membership: Do as I say, not as I do!’ (2012) 49 Common Market Law Review, Issue 2, pp. 481–488; Gráinne de Búrca, Beyond the Charter: How Enlargement Has Enlarged the Human Rights Policy of the European Union, 27 Fordham International Law Journal (2003), p. 679.

[15] See EU Observer, “Croatia gets EU green light, despite lack of reforms” http://euobserver.com/enlargement/32474.

[16] See EU Observer, “Croatia gets EU green light, despite lack of reforms” http://euobserver.com/enlargement/32474.

[17] OJ C 326, 26.10.2012.

[18] Copenhagen European Council, 21-22 June 1993, SN 180/1/93.

[19] The values of Article 2 include respect for human dignity, freedom, democracy, equality, the rule of law and respect for human rights, including the rights of persons belonging to minorities.

[20] (i) stability of the institutions guaranteeing democracy, the rule of law, human rights and respect for and protection of minorities (political criteria); (ii) the existence of a functioning market economy as well as the capacity to cope with competitive pressure and market forces within the Union (economic criteria); (iii) the ability to take on the obligations of membership, including adherence to the aims of political, economic and monetary union (acceptance of the Community acquis).

[21] Council conclusions and simultaneously adopted Declaration on former Yugoslavia. Bulletin EU 1/2-1996.

[22] See http://www.stabilitypact.org/default.asp. In 2008 the Stability Pact has been superseded by the Regional Co-operation Council, which up until now oversees regional co-operation in SEE and supports the European and Euro-Atlantic integration of the WB.

[23] Conclusions of the General Affairs Council of 21 June 1999, based on the Commission Communication to the Council and the European Parliament on the Stabilisation and Association process for countries of South Eastern Europe COM(99) 235 of 26.5.99.

[24] Council Conclusions of 29 Apr. 1997, Bulletin EU 4-1997, pt 2.2.1

[25] European Commission, The Stabilisation and Association Process for South East Europe: First Annual Report, COM(2002) 163 final, Brussels, 3 Apr. 2002.

[26] ‘Editorial comments: Fundamental rights and EU membership: Do as I say, not as I do!’ (2012) 49 Common Market Law Review, Issue 2, p. 481–488.

[27] See EU Observer, “Abysmal turnout in Croatia’s EU vote”: http://euobserver.com/political/119799.

[28] The turnout in the 2009 European elections was the lowest ever since direct elections for the Parliament started thirty years ago, with Slovakia getting the lowest turnout for the second time in a row. See European Election Database: http://www.nsd.uib.no/european_election_database/election_types/ep_elections/.