CLIMATECASECHART.COM

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Greenpeace and Others v. Commission
Filing Date: 2023
Reporter Info: T-214/23
Status: Pending
At Issue: Whether the inclusion by the Commission of gas and nuclear in the Taxonomy Regulation is unlawful

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clientearth v ebs

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  clientearth v sosbis   

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  Clientearth stories

 

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clientearth v fca

ClientEarth lawyers say the FCA’s failure to spot this omission is particularly problematic, given the conflict between the company’s intention to develop new fossil fuel assets intended to operate for decades to come – including Cambo and Rosebank – and the consensus that developing new fossil fuel infrastructure is incompatible with the 1.5°C temperature goal set out in the Paris Agreement.

Such new oil and gas projects pose risks to companies and investors in terms of carbon lock in and stranded assets.

The case also argues that failing to provide investors with a meaningful indication of how Ithaca’s business and finances might be affected by full or even partial achievement of the Paris Agreement goal deprives them of the information necessary to make an informed assessment of the company’s financial position, which is a breach of prospectus requirements that the FCA should have identified.

ClientEarth Accountable Finance Lawyer Robert Clarke said: “One of the financial regulator’s main duties is to protect investors. A key way it does that is by ensuring companies that apply to list on the London Stock Exchange adequately disclose the risks associated with their activities, including climate-related risks, in the prospectus as required by law.

“In the case of Ithaca’s listing, we believe the regulator has failed when it comes to this fundamental function by ultimately waving through Ithaca’s prospectus even though legal requirements have not been met. 

“The company’s plans for new oil and gas appear to be fundamentally incompatible with global climate goals and the massive risks associated with its activities have not been properly explained in its prospectus. Without this vital information, investors will not be able to assess how Ithaca might be affected by the global net zero transition.”

Prior to Ithaca’s listing, ClientEarth wrote to the FCA twice to raise concerns about the inadequate disclosure of climate-related risk in Ithaca’s prospectus.

Although Ithaca’s final prospectus contained some further information on the climate risk associated with its activities, and the FCA proceeded to approve the prospectus, ClientEarth lawyers say that the additions were not sufficient to meet prospectus regulation requirements or to make the approval lawful.

Clarke added: “Worryingly, this comes just a year after the Government announced at COP26 its ambition for the UK to become the world’s first net zero-aligned financial centre. The FCA’s prospectus approval in this case raises serious questions about what this ambition means.

“If anything, the regulator’s failure sets up a situation where financial markets are working against climate change goals and obscuring long-term risk for investors. Full and transparent disclosure of climate-related risk enables investors to make informed financial decisions and is essential to ensuring that financial flows can shift to support net zero.

“We welcome the FCA’s recent moves to introduce new disclosure rules on climate but it’s absolutely vital that it applies and enforces existing rules too, especially during the listing process.”

ClientEarth lawyers have filed the claim as a judicial review case against the FCA – and it is now up to the High Court to decide whether to grant permission to bring the claim.

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CLIENTEARTH v SHELL

On 2023, NGO ClientEarth sued all eleven members of the board of directors of Shell plc before the English High Court, for allegedly failing to take steps to protect Shell against climate-change-related risks … alert memorandum of 2023

On May 17, 2023, the Court refused to continue the claim. ClientEarth requested reconsideration, and was granted an oral hearing

The lawsuit is one of the first cases of its kind in Europe…. ClientEarth alleged that the directors had breached their statutory duties to protect Shell, and sought a mandatory injunction requiring the directors to (1) adopt and implement a strategy to manage climate risk; and (2) comply immediately with the May 2021 judgment of the District Court in The Hague (the “2021 Shell Judgment”), which ordered that Shell cut its greenhouse gas emissions by 45% by 2030 compared to 2019 levels, in line with the Paris Agreement.

Since its establishment in 2007, London-based NGO ClientEarth has been an active environmental litigant, with 170 lawsuits pending against governments and large corporates, and initiatives spanning more than 50 countries.

Section 260 of the UK CA 2006 permits a shareholder to bring a claim on behalf of the company against its directors for breach of the directors’ duty of care towards the company. The claim is brought for the benefit of the company (rather than the individual shareholders).

Plaintiff shs need Permission to proceed in derivative claims because they are an exception to one of the most basic principles of company law: a company should determine whether or not to pursue a cause of action available to it, rather than the shareholders.

to give permission to proceed, the court must be satisfied that the shareholder has established a good prima facie case (PFC), which is a “a higher test than a seriously arguable case”. The court applied the rigorous test that ClientEarth must show directors could not reasonably concluded that their actions were in the interests of Shell.

If a prima facie case is not established, permission should not be given, but the claimant can ask (within seven  days) for an oral hearing to reconsider the decision.

The statutory general duties owed by directors to the company pursuant to s.170 of CA 2006:

• -the duty in good faith to promote the success of the Company for the benefit of its members as a whole,  and
• the duty to exercise reasonable care, skill and diligence (s.174 of CA 2006).

Incidental duties

ClientEarth argued the duties extend to “necessary incidents” of the statutory duties including to:

• -make judgments regarding climate risk that are based upon a reasonable consensus of scientific opinion;
• -accord appropriate weight to climate risk;
• -implement reasonable measures to mitigate risks to long-term financial profitability and resilience of Shell in the transition to a global energy system aligned with the Paris Agreement;
• -adopt strategies reasonably likely to meet Shell’s climate risk mitigation targets;
• -ensure strategies adopted are reasonably in the control of (both existing and future) directors; 
• -take reasonable steps to comply with legal obligations.
• The court denied the incidental duties, on the basis that they would impose specific obligations on the directors, against the principle that it is for the directors to determine how best to promote the success of a company for the benefit of its members.

ClientEarth also pleaded that under the common law, a director who is aware of a court order (UK or foreign) is under a duty to ensure that is obeyed.

Shell argued there was no duty owed by directors to a company to ensure they comply with the orders of a foreign court. The court agreed with Shell in this.

The alleged breaches

• -A failure by the board to set an appropriate emissions target.  ClientEarth’s position is that an absolute emissions target to be met before 2050 is required, and the directors’ decision to set Carbon Intensity Targets is inadequate. In particular ClientEarth argues that the directors have failed to ensure that Shell has a measurable and realistic pathway to meeting the NZ target;
• -The directors’ strategy as regard management of climate risk does not establish a reasonable basis for achieving the NZ target and are not aligned with the Paris Agreement; and
• -The directors have failed to comply with the 2021 Shell Judgment. Client Erath alleges that although the 2021 Shell Judgment determined that Dutch law imposed a 45% emission reduction obligation on Shell to be achieved by 2030, the Directors have not prepared a plan to ensure timely compliance.

The court held that ClientEarth’s allegations do not establish a PFC because:

• -1. ClientEarth failed to prove that the directors are managing Shell’s business risks unreasonably.
• -2. ClientEarth failed to prove that there is a universally accepted methodology as to the means by which Shell might be able to achieve the reductions referred to in its Energy Transition Strategy (“ETS”). The law respects the autonomy of decision making of directors and their judgments on how best to achieve results which are in the best interests of their members as a whole.
• -3.ClientEarth’s case ignores that the management of a business of the size and complexity of Shell will require the directors to take into account a range of competing considerations.
• -4.As to the alleged breach to comply with the 2021 Shell Judgment, the court considered that the Dutch Court had accepted that Shell was not at the time acting unlawfully and that it was a matter for Shell as to how it exercises its discretion to comply with the obligations imposed by Dutch law. This, it was held, cuts across the suggestion that the directors are under a duty to comply with the 2021 Shell Judgment in any manner other than compliance with their duties to do what would promote the success of the company.

Relief sought

the orders sought by ClientEarth, to implement strategies to manage climate risk and comply with the 2021 Shell Judgment, are insufficiently precise to allow enforcement.

Refusal of permission

The court held: ClientEarth had not established a PFC, and refused ClientEarth permission to continue the claim….ClientEarth only holds 27 shares in Shell implies that its real interest is not how best to promote the success of Shell for the benefit of its members but that, instead, ClientEarth seeks a collateral motive.

Also, the court noted the strength of sh support for the directors’ strategic approach to climate change risk (Shell’s ETS was supported by 80% of the votes at the 2022 AGM). By comparison, the support which ClientEarth had received for its claim from shs amounted only to “a very small proportion

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• CL is addressed to “undertakings” – i.e., companies, pbs, associations etc
• Fundamental rights (FR).eg. HRL are addressed to individuals, legal or natural.

is now possible to rely on FR, in competition cases, since the eu *Charter became a binding element of EU constitutional law…thus, now the Court may be persuaded to annul a decision….but is best to also rely on CL 

* The eu Charter is the lighthouse sending a guiding light on ec’s  decisions

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The Treaties give the eu courts the power to review [ Article 263 TFEU](ec/cmas decisions) in both the law and the facts: to assess the evidence, to annul the contested decision and to alter the amount of a fine[ unlimited jurisdiction on fines: Article 31 of Regulation No 1/2003]

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Article 7 of the EU charter:  Everyone has the right to respect for private and family life, home and communications…..this fr, applies to competition cases wrt “dawn raids” under Article 20 Regulation 1/2003

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Article 8 Charter:  on the protection of personal data [is a type of right to privacy] 

Article 7 and 8 of Charter =  Article 8 ECHR <>  the exception clause in Article 52 Charter.

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most relevant judgments on the right to privacy 

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Silec Cable

in its appeal to the ECJ, Silec Cable contended that the GC had infringed its fr to the protection of confidential information enshrined in Article 7 Charter and Article 8 ECHR, through the publication of a communication between Silec Cable and another undertaking in the judgment. ec had accepted Silec Cable’s claim for confidential treatment of that communication, and any reference to it had been redacted from the non-confidential (published) version

The ECJ rejected the argument presented by Silec Cable, unless silec could prove that the disclosure [of purportedly confidential information], had “ an effect on the outcome of the case” before the GC

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České dráhy

České dráhy, the Czech state-owned railway operator, challenged ec’s decision ordering it to submit to a dawn raid on suspicion of predatory pricing, and also challenging an ec decision based on evidence obtained during the dawn raid.

České dráhy argued that ec breached their fr guaranteed by Article 7 Charter and Article 8 ECHR and failed to meet the conditions which would justify such interference – namely, to pursue a legitimate aim, considering the lack of reasonable grounds to suspect an infringement

The GC found that:

– since the inspection decision had been adopted on the basis of Article 20(4) Regulation 1/2003, the interference was “provided for by law”. 

– because the Commission’s powers under Article 20 Regulation 1/2003 are for ensuring compliance with cl, the inspection decision met the objectives of general interest,  specifically, under Regulation 1/2003 

– Where an inspection decision is to enable ec to assess whether the Treaty has been infringed, such a decision is not contrary to the principle of proportionality [art.5.4 tfeu]

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Nexans

Nexans is a company which, along with Deutsche Bahn, has vigorously contested the Commission’s approach to on-site investigations with some success. Nexans invoked Article 7 Charter in its appeal against ec’s inspection decision

Nexans argued that, “copying ‘en masse’ material not been examined by ec beforehand did not fall within the scope of the Commission’s powers under Regulation No 1/2003”, its removal during an inspection amounted to an “arbitrary and disproportionate” intervention in Nexans’ rights protected by Article 7 Charter. 

 the GC held that the Commission had not reached beyond the powers conferred by Regulation 1/2003. 

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Evonik Degussa

Evonik first appealed the decision to the GC, arguing that the ec decision infringed Article 8 ECHR and Article 7 Charter, and then appealed the GC findings to the ECJ.

the GC held:

-the information provided by applicants in a leniency statement lost its confidential status after five years and was therefore not protected by any right to privacy.

– a person cannot rely on Article 8 [ECHR] to complain of a loss of reputation which is the foreseeable consequence of his own actions

 Evonik:

– such information still constituted “essential elements of its commercial position” since “its publication could cause it serious harm”

– ec had illegally used merger information, when such information is private

-because those statements were made under the leniency programme, their disclosure could not have been regarded as a foreseeable consequence of participating in the cartel, for which they should be protected under the right to privacy

The ECJ:

– information secret or confidential of at least five years old, has lost its secret or confidential nature, unless the applicant shows that that information “still constitutes essential elements of its commercial position.” ….   here, evonik won.

 -Evonik failed to show that the disclosure could not be considered “a foreseeable consequence of its participation in the cartel”. Evonik also failed to indicate the consequences of the disclosure for its right to private life. 

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Goldfish

Goldfish appealed ec decision, to gc, finding it liable for cartel conduct in North Sea shrimps.

Goldfish contended that the secret recordings of telephone conversations made by a competitor constituted an unlawful means of proof, and the Commission should not have relied on them as evidence, as being contrary to the Article 8 ECHR case law, the ECtHR’s and the ECJ’s case law, as well as the law of the Netherlands, where the recordings were made, and other Member States. 

The GC : rejected the applicant’s argument. the EU Courts have, on occasion, agreed to admit documents not obtained by proper means.

Referring to the ECtHR in Popescu v. Romania, the GC found that the use of evidence obtained in breach of Article 8 ECHR does not in itself breaches the principle of fairness in Article 6(1) ECHR, provided the applicant was not deprived of his rights of defence and the evidence was not the only proof relied on for a conviction. 

the GC considered that the evidence had been lawfully collected by the Commission (the recordings seem to have been made with a view to a leniency application by a competitor company, and were seized in a dawn raid of that company)…also, the recordings had an “immediate and direct link to the subject matter” of the investigation and were thus “particularly valuable items of evidence”. 

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Deutsche Bahn

Deutsche Bahn challenged an ec decision to carry out an on-site inspection. It argued that the lack of prior judicial authorisation for the inspection constituted an infringement of Article 7 Charter and Article 8 ECHR.  The GC rejected this argument, and Deutsch Bahn appealed to the ECJ, claiming that the GC had disregarded the ECtHR’s judgment in Société Colas Est and Others v. France, by holding that the absence of a prior judicial authorisation is only one of the factors considered by the ECtHR when deciding on an infringement of Article 8 ECHR. 

The ECJ partially allowed the appeal

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Art. 48 eu charter [poi = presumpofinnocence] <>

Article 41 EU Charter – Right to good administration

Article 41.2: 

(a) the right of every person to be heard, before any individual measure which would affect him or her adversely is taken;

(b) the right of every person to have access to his or her file, while respecting the legitimate interests of confidentiality and of professional and business secrecy;

(c) the obligation of the administration to give reasons for its decisions.

 

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Recent Cases referring to Article 41 Charter

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Icap

Icap is an example of the novel procedural issues that arise from hybrid cartel proceedings [where at least one of the parties decides not to settle]

 Icap, a trader, was fined by ec for “facilitating” infringements in the “LIBOR” (YIRD) cartel. Icap decided not to settle….ec issued a settlement fine against other financial institutions. The Commission then took its decision against Icap. Icap appealed saying ec had breached its right to good administration and the presumption of innocence contrary to Article 41 Charter.

The GC: ec’s position on the illegality of Icap’s conduct and its liability, could be inferred from the ec decision. Accordingly, the Commission breached icap’s poi…Also, the ec breach [of icap’s poi] had a direct impact on the legality of the ec decision…thus,  the ec decision is annuled because the ec’s breach [of icaps’ poi] was so significant, that the ec decision would have been different in the absence of such breach.   icap won.

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Pometon

Pometon also involved hybrid cartel settlement decisions, this time in the steel abrasives cartel. Pometon withdrew from the settlement discussions and became subject to a ec decision, whilst the other companies reached a settlement agreement with ec.

Pometon argued on the basis of Articles 41, 47 and 48 Charter that its rights of defence, the poi and the principle of impartiality were infringed due to the Commission’s preceding reference to it in the settlement decision against the other steel abrasives producers.  It maintained that, due to the inherent time lag in hybrid cases, the Commission should have refrained from giving any unnecessary information regarding Pometon in assessing the guilt of the settling undertakings. 

the GC concluded that the mention of Pometon in the settlement decision did not mean that the Commission had established guilt in relation to Pometon.  Hence, the GC found that the Commission had not infringed the poi sufficient to justify annulment….Pometon is currently under appeal. 

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HSBC Holdings

another hybrid cartel case…..HSBC claimed that its right to good administration was infringed by the Commission having adopted the contested decision subsequent to a settlement decision where the Commission had already adopted a position on HSBC’s participation in the infringement at issue….Along with its rights of defence and right to the presumption of innocence (both Article 48 Charter), HSBC argued that the settlement decision prejudged its liability and impaired its right to have its case handled impartially.

 GC :  did any lack of objective ec impartiality from the alleged ec’s poi infringement, when the settlement decision was adopted, impacted the lawfulness of the ec decision?

no, because the ec’s breach [of hsbc’ poi] was not so significant, that the ec decision would have been different in the absence of such breach.   thus, GC upheld only HSBC’s plea that ec failed to adequately state its reasoning for fine calculation. The case is currently on appeal.

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general conclusion: in the future, ec must ensure that its decision’s references to a non-settling party, should not pre-judge the outcome for that party.

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Saint- Gobain

Relying on Article 41(2)(c) Charter and Article 296 TFEU, Saint-Gobain claimed that the Commission had not stated the sales figures on the basis of which the fine was calculated.  More specifically, the applicant accused the Commission of not having provided evidence to establish whether the sales figures used were a result of an accurate or a flawed calculation. 

The GC rejected the plea. wrt Article 41(2)(c) Charter, it noted that Article 296 TFEU was now “supplemented” by this Article. The GC defined the obligation to state reasons to enable the EU Courts “to review the legality of the decision and to provide the person concerned with sufficient information to make it possible to ascertain whether the decision is well founded or whether it is vitiated by a defect which may permit its legality to be contested”.

The GC then, on the facts, held that ec’s decision was not vitiated by flawed or insufficient reasoning.  

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Article 48 EU Charter – POI and ROI (right of defence)

= Article 6 ECHR….. minimum rights:

-to be informed promptly, in a language which they understand and in detail, of the nature and cause of the accusation against them;

-to have adequate time and facilities for the preparation of their defence;

-to defend themselves in person or through legal assistance of their own choosing or, if they lack sufficient means to pay for legal assistance, to be given it free when the interests of justice so require;

-to examine or have examined witnesses against them and to obtain the attendance and examination of witnesses on their behalf under the same conditions as witnesses against them;

-to have the free assistance of an interpreter if they cannot understand or speak the language used in court.

–the privilege against self-incrimination; the right to be heard; the right to be assisted by legal counsel and granted LPP; and the right to good administration. 

Post Treaty of Lisbon, 55 GC cases contained Article 48 arguments, and six were successful.

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United Parcel Service – ups

In 2013, the ec blocked ups attempted takeover of TNT Express. UPS challenged this decision before the GC, claiming its rod were infringed, as the ec econometric analysis materially differed from all the other analysis  used during the [administrative procedure = the cma/ec procedure leading to a decision]. The GC annulled the ec decision, and this was recently upheld by the ECJ….thus, the merger went ahead.

The GC:  the right to a fair hearing, which forms part of the rod, is infringed if undertakings are not afforded the opportunity, during the administrative procedure, to make known their views….thus, ec should have communicated the final econometric analysis model to ups, before adopting the decision …Accordingly, UPS’ rods were infringed, and the contested decision was annulled

ecj: the rod (i.e., Article 48 Charter) are an emanation of the rga (right to good administration = Article 41 Charter)….thus, ec’s decision should be annulled (struck down) on the basis that UPS would have better defended itself, if it had received the analysis model [prior to the ec decision]

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Article 49 Charter – Principles of legality and proportionality of criminal offences and penalties

1. No one shall be held guilty of any criminal offence on account of any act or omission which did not constitute a criminal offence at the time when it was committed. Nor shall a heavier penalty be imposed than the one that was applicable at the time the criminal offence was committed. If, subsequent to the commission of a criminal offence, the law provides for a lighter penalty, that shall be applicable.
2. The severity of penalties must not be disproportionate to the criminal offence.

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In all three cases below, Article 49 was invoked in relation to the principle of proportionality and without reference to the ECHR.

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Infineon

Infineon argued that, by imposing on it a disproportionate fine, the Commission and the GC infringed Article 49 Charter. according to infineon [appellant], the GC made a manifest error of assessment in failing to take into account Infineon’s limited participation in the infringement, which then resulted in an incorrect calculation of the turnover for determining the amount of the fine. 

The ECJ found that, since the GC did not “review the proportionality of the amount of the fine imposed in relation to the number of contacts found against the appellant” and did not state the reasons for it, the GC made an error of law.  The ECJ set aside the judgment of the GC, and referred the case back to the GC.

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Article 50 Charter– Ne bis in idem principle [nbiip]

Right not to be tried or punished twice [in criminal proceedings] for the same criminal offence….. resjudicata [rj] is the civil brother of nbiip

Only in the post-Lisbon judgments was Article 50 Charter invoked. none of the arguments was successful:

Marine Harvest

The appeal sought the annulment of a decision fining the applicant for “gun jumping” in breach of the EU Merger Regulation. 

Marine acquired a 48.5 % share in another company, followed by a public offer for the remaining shares. After the end of the public offer, the applicant formally notified the concentration to ec, and it was cleared…. But ec then issued a decision fining the Applicant €10 million for failing to notify the acquisition of de facto control, in breach of Article 4(1) Merger Regulation, and a further €10 million for implementing the concentration in breach of the standstill obligation laid down in Article 7(1) Merger Regulation. The applicant argued that the nbiip, prevented ec from imposing separate fines

The ECJ: found, on the wording of the Merger Regulation , that the double fines were justified.

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THIRD party intervention gives cocoo.uk standing in court to raise concerns/arguments, that are wider or different to the ones raised by the parties. cocoo’s concerns/arguments will be based on either of these violations:

a. constitutional or treaty

b. HRL

b. wpi:  EL

d. AL

e. CL

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(a) Can you add value?

to see if cocoo should intervene, we must read the : claim and defence; grounds for appeal and a reply, for example…. The easiest and quickest way to get a copy of these, is to ask the solicitors in the case, explaining your interest.

How relevant is your work and experience to the court’s consideration of the case?..to what extent cocoo can add value for the court over and above the submissions and evidence the parties?…..an application to intervene is allowed only if:

(i) raises one or more issues of public importance; and

(ii) there is a risk that this public interest may not be sufficiently well-addressed by the submissions of the parties alone…cocoo submissions would provide the court with information, evidence or submissions that they would not otherwise obtain. eg:

(a) could cocoo provide evidence from in an expert witness statement?

(b) Does cocoo you have something to say about how any comparative law/caselaw could influence the development of the law in this case? You may wish to consider instructing counsel to make legal submissions on your behalf on any comparative practice that may be relevant to the court’s decision.

(c) Are there international law standards relevant to the case? Does cocoohave experience or expertise on the application of those standards?

(d) Legal expertise? Does your organisation have particular legal expertise which will make your submissions on the interpretation of the law valuable to the court? Does that expertise mean that you can make an important legal argument not likely to be raised by the parties, but that is relevant to the public interest?

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(b) Should cocoo intervene?…or just support one of the parties eg via expert witness statements?

How relevant is this case to cocoo’s charitable objectives or immediate strategy?

Is it likely to impact cocoo’s users or beneficiaries? Is the case likely to significantly change an area of law which is important to cocoo’s work? Do other ngos have greater expertise?

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(c) is cocoo’s intervention kept under ongoing review? ….. if the circumstances of the case change, value that cocoo could bring may shift. eg. may be the issues are already being addressed fully by the main parties or other interveners. if so, cocoo needs to change its strategy, or withdraw its intervention….ow, costs risk.

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(d) does cocoo’s contribution outweigh the costs risk? Is there any risk that your intervention would result in a worse outcome for your beneficiaries, or a risk that cocoo may be associated with an unwelcome change in law, policy or practice? Are you ready to deal with any publicity?

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Securing legal advice

When an intervention is pursued in the pi, specialist solicitors/barristers may assist on a pro bono basis….Many firms, like Freshfields, have a pro bono or a Corporate Social Responsibility (CSR) team 

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intervention must be in the wpi:

Supreme Court Rules 26. – (1) After permission to appeal is granted, or a notice of appeal filed, any person [eg ngo, public body, private person etc] seeking to make submissions in the public interest, may apply to the Court for permission to intervene in the appeal.

applications to intervene in courts [other than the supreme court=house of lords], must generally be made in the public interest, to be successful.

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how to find cases to intervene?

-register of pending judicial review claims in the Administrative Court?

-the Supreme Court publishes on its website a register of upcoming cases[permission of appeal granted , or notice of appeal filed]…BUT is often only published weeks before a case is due to be heard. but, an application to intervene must be made promptly, well before these details are available online…..thus, careful monitoring [of multiple cases] is necessary to ensure that an application for permission to intervene is made quickly enough.

-Applications to intervene [in the echr] are only allowed in the 12 week period after a case is ‘communicated’ to the United Kingdom or any other State respondent. all communicated cases are published on the court’s  [echr] website

– online/social media reports….For example wpi cases can be tracked via Google Alerts [ at 9am an email alert arrives]

-contacts with specialist organisations. For example, the Housing Law Practitioners Association and the Immigration Law Practitioners Association are active in monitoring developments in the law; they and their members have been involved in a number of crucial interventions in the public interest.

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Where a number of different organisations are interested in intervening in a case, they may want to consider a joint intervention….ow, there will be Multiple, non joint Interveners

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it is very likely that the intervention will give more support to one party than the other, and, for that reason, lawyers for such party will be keen to discuss strategy with interveners and co-ordinate legal submissions…Also, is important to ensure that cocoo submissions do not simply duplicate party submissions…thus, Some contact and co-ordination with both parties is essential

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intervention timing

cocoo [if not an intervener on the original case] may still make written submissions [in support or against, a party’s permission for appeal, or for jr]…No application is required to make such court submissions, nor is the consent of any main party required (although should be served on the main parties)

…. cocoo can later decide whether to make an application for permission to intervene

applications to intervene tend to be made after permission to apply for judicial review, or to appeal, has been granted, and before the first case management conference…in any case, the application to intervene should be made promptly = when they do not delay the hearing or prejudice the parties.

In higher courts, an application for permission to intervene will normally be made following the grant of permission to appeal…eg In the Supreme Court, applications for permission to intervene in the appeal should be filed at least 6 weeks before the date of hearing of the appeal.

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Counsel for the intervener should attend the hearing, making oral submissions (if permission to do so has been granted) or to answer any questions the court may have regarding its written submissions.

In its written or oral submissions to the court, the intervener (or any of the other parties) may request that the national court makes a preliminary reference to the (ecj=CJEU) on a point of EU law.

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The Supreme Court :

any person can make applications to intervene in any kind of appeal before the UK Supreme Court, and “in particular” any of the following:

(a) any official body or NGO seeking to make submissions in the public interest;

(b) any person with an interest in proceedings by way of judicial review; 

(c) any person who was an intervener in the court below or whose submissions were taken into account in the application to the Supreme Court for leave to appeal.

an organisation that intervened at an earlier stage of proceedings is required to re-apply to the Supreme Court, and must be notified of any application for permission to appeal by the appealing party.

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Documents required to make an application to intervene

(a) an application notice;

(b) an annex to the application notice (or a witness statement) setting out the grounds for the application to intervene; 

  (c) a draft Order granting the intervener permission to intervene in the form requested.

There is no special court form for applications to intervene in the High Court, Court of Appeal, Privy Council or in any tribunal. Therefore, the standard application form should be used.

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Witness statements

Where a prospective intervener is not well-known, a witness statement from a senior employee (a legal or policy director/manager, or Chief Executive) can provide a credible source of information to the court…… I, as solicitor,  will provide a witness stat. to cocoo

a witness statement can also be used to explain the reasons for any potential delay in making the intervention application (e.g. organisational constraints, late awareness of the matter).  Providing a false statement of truth constitutes contempt of court, which is a criminal offence.

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Grounds and intervention

The grounds for the intervention (whether in a witness statement or otherwise) should provide details on:

(a) The claim: identify the case in which you wish to intervene and very briefly summarise the status of the proceedings so far.

(b) The issues in the application: this should very briefly summarise the claimant and defendant’s submissions to the extent relevant to identify the issues in the case on which your organisation wishes to intervene.

(c) The intervener: provide a description of your organisation and why it has expertise that may assist the court in relation to the issues on which it wishes to intervene. Relevant expertise may take a variety of forms, such as the intervener’s ability to:

(i) adduce evidence (e.g. empirical studies or grassroots testimony of persons liable to be affected by a particular administrative decision);

(ii) make submissions on the relevant law (e.g. comparative material on equivalent provisions in other jurisdictions); or

(iii) provide the insight of an organisation with particular expertise that is relevant to the case at hand (e.g. an NGO that works with people with disabilities)…If your organisation has successfully intervened on similar issues before, you should provide a brief summary of your history as an intervener.

(d) The reason for the application: describe the public interest issues at stake, their impact upon the public generally and provide an indication of the arguments that the intervention will address. It is not necessary to go into the arguments in depth – that is reserved for the substance of the intervention itself ….For example, the grounds may submit that a particular piece of legislation or case-law should be interpreted more narrowly or more broadly than has been suggested by one of the parties so far, and describe the expertise that the intervener can bring to this interpretative exercise. 

(e) Consent of the parties: provide the date on which the parties were informed about the intervener’s proposed intervention and whether consent was granted or not. The relevant correspondence should be appended to the Application Notice and, if consent was not forthcoming, the grounds should include a brief summary of the reasons for the refusal. If you can answer any of the concerns raised, you should do so briefly.

(f) Form of the intervention: detail the form of the proposed intervention, i.e. the evidence (if any) the intervener proposes to adduce and whether the intervener proposes to make oral submissions at the hearing or only make written submissions. It may be appropriate to propose a time limit or page limit for the proposed submissions.

(g) Timing: in some cases, particularly those on an expedited timetable, or where the application to intervene is made shortly before the hearing, it may be appropriate to propose a deadline for the filing of written submissions, and to provide some assurances to the court that the intervention will not materially delay proceedings.

(h) Costs: it may be appropriate to seek a prospective order for costs…. The grounds should describe the order sought and the basis for doing so (e.g. that the intervener is well placed to assist the court on the issues, but has limited resources, and its submissions will be limited to a particular time/page limit).

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two poss.ways of submitting the application to intervene:

(a) filing a formal Application Notice at court (and paying the court fee for an application);or

(b) submitting the documents in a coverletter to the court office: The advantage of a coverletter is that it may include a request that the court waive the fee for filing an Application Notice, which, for example, in the High Court is £255 at the date of publication.

However, if refused, creates the risk of potential delay…thus, to mitigate this risk, enclose a cheque for the court fee, expressly permitting the court to cash it, should it refuse to waive the fee…. in urgent cases, is best to proceed by way of application

cocoo will seek a waiver [of the intervention application fee] by illustrating that its intervention is in the public interest and that it has limited funds. If the intervention will not proceed unless the fee is waived, this should be made clear.

Organisations may wish to consider a joint intervention or may wish to explore other options of financial support to cover the fees associated with any application

Also, cocoo’s Funders and donors/crowdjustice, with a particular interest in the public interest issues, may make a grant or a donation to support the intervention…Occasionally, a solicitors firm may be willing to act pro bono 

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application to intervene in the Supreme Court and Privy Council

The application should be made on Court Form 2 (‘SC002 ’) and should state whether permission is sought for both oral and written interventions or for written intervention only. The current fee for filing an application for permission to intervene in the Supreme Court is £800.83 However, where an application to intervene is filed by a charitable or not-for-profit organisation which seeks to make submissions in the public interest, the Chief Executive of the Supreme Court may, at its discretion, reduce or remit the fee. A request for fee reduction or remission should be made to the Registrar(see below). Charities and not-for-profit organisations may only apply for the remittal of court fees at the Supreme Court level; it is not possible to apply for a remittal in lower courts or tribunals.

under Supreme Court Rule 6.3.10, interveners must file their submissions (the original plus two copies) at the same time as the respondents (i.e., 4 weeks before the proposed date of the hearing) (usually subject to any other agreement).

As a practical point, you should bring a further copy to the Registry and ask them to stamp it as evidence that it has been properly submitted. In addition, a further ten copies of the submissions should be provided to the appellants to enable them to file the core volumes (pursuant to Rule 6.3.11).

In other courts, the main parties to proceedings should follow the guidance contained in CPR 54A 15.1–15.3.

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Costs

 Different costs rules apply in

(i) the Administrative Court (jr), and Court of Appeal and

(ii) all other UK courts/tribs.

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costs could be ordered against an intervener who:

‘In the event that the permission to intervene is granted, Cocoo requests that such permission be granted on the basis that it will neither seek nor be required to pay costs, on the grounds that Cocoo is, for the reasons set out in the application enclosed, uniquely well placed to assist the court on the issues which it seeks permission to address, is able to bring a wider perspective to bear on those issues than any one party to the proceedings and has substantial experience and expertise on the issues before the Court’.

this order will provide that the intervener will neither seek costs from any of the other parties nor be required to pay costs of those other parties

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Cocoo requests an undertaking on costs from the other parties, and includes the following in its letter to the parties, seeking consent to the intervention:

‘As a charity and not-for-profit organisation with limited funds, our client is understandably concerned about the possibility of a costs order being made. We note that the Court will not ordinarily award costs in favour of, or against, an intervener. As such, we would also ask for an undertaking that your client will not seek costs against Cocoo as intervener. For its part, Cocoo undertakes that it will not seek costs against any party, and further will bear costs associated with the printing of additional materials required by its intervention, should permission be granted’

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cocoo also seeks a prospective order as to costs from the Court of Appeal when it makes its application to intervene, drafting the following in its covering letter to the court:

‘In the event that the permission to intervene is granted, Cocoo requests that such permission be granted on the basis that it will neither seek nor be required to pay costs, on the grounds that Cocoo is, for the reasons set out in the application enclosed, uniquely well placed to assist the court on the issues which it seeks permission to address, is able to bring a wider perspective to bear on those issues than any one party to the proceedings and has substantial experience and expertise on the issues before the Court’.

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Finally, Cocoo includes the following in the draft Order enclosed with its application:

(a) the Applicant will bear its own costs of the intervention; and

(b) no order as to costs shall be made in favour of, or against, the Applicant as a third party intervener.

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(ii) costs in all other courts:

-the Supreme Court:

the above does not apply to jr proceedings heard by the Supreme Court….here, interveners bear their own costs…additional costs to the parties resulting from an intervention, may be ordered against the intervener.

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costs in the High Court or Court of Appeal: are at the discretion of the court

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costs in Tribunals:

there are no specific costs rules that apply to interveners…However, the usual position in that tribunal is that the parties, and the intervener, are expected to bear their own costs.

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The European Court of Human Rights – echr:

The ECHR and the Rules of Court of the European Court of Human Rights (ECtHR) provide that the President of the Court may grant permission to intervene in the interest of the proper administration of justice.

How to apply?

There is no prescribed form for intervention, no fee for requesting permission and no need to seek the consent of the parties. The only requirements are that the requests must be duly reasoned and made in French or English. The usual approach of NGOs in the UK is to fax a letter requesting permission to the Registry of the Court, setting out the relevant case, the NGO’s interest and a brief outline of the proposed intervention.

The time limit for requesting permission to intervene is 12 weeks from the date when the ECtHR notifies the relevant State defendant that the case has been accepted, that is, the case is “communicated”.

Where a case has been referred or relinquished to the Grand Chamber, interveners have 12 weeks from that later decision. Late applications are not normally considered.

 Assuming that a reasoned application is made within the time limit, permission to intervene by way of written submissions is almost always granted, subject to the standard conditions that the submissions will not exceed ten pages and that the

intervener will not seek to address either the facts or the merits of the case. However, poorly reasoned requests will be refused.

The ECtHR has a very limited power to award costs; it may only award costs if this is necessary to “afford just satisfaction” to a successful applicant. There is no specific provision to make costs awards against interveners or unsuccessful applicants….THUS, Interveners should expect to meet their own costs and to have no order made against them.

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The Court of Justice of the European Union: [ECJ = cjeu] 

The right of third parties to intervene in cases before the CJEU is very limited, because there only are two poss.types of action:

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(a) Preliminary references:  are requests to the CJEU from domestic courts for authoritative interpretation of points of EU law.

Any party can apply for a preliminary reference. An intervener in domestic proceedings may suggest that the court make a preliminary reference on an issue…..Interveners may only participate in the preliminary reference proceedings if they have been granted permission to intervene in the domestic proceedings, prior to the reference being made..However, even if a party is granted permission to intervene in domestic proceedings, this does not necessarily guarantee standing to intervene before the CJEU.

Preliminary reference proceedings before the CJEU are free of charge and the CJEU does not rule on the costs, which is a matter left to the referring national court.  

A notice of the questions referred for preliminary ruling is published in the Official Journal of the EU (available online). 

The judge-rapporteur draws up an internal preliminary report, setting out the questions to be answered and the main points raised by the parties and interveners.

Deadline for written observations (two months and ten days after notification).

Parties and interveners inform the Registrar in writing of any errors or omissions in the Report for Hearing at the earliest opportunity in advance of the hearing…A judge-rapporteur (who is charged with managing the case) and Advocate General are allocated.

submissions can be filed with the CJEU using the e-curia website, and do not need to be served on the other parties.. There is no set time limit for this process, and it can take several months.

There is no right to submit further written observations in reply to written observations submitted by other parties. Therefore, when drafting written observations, is best to pre-emptively address arguments that it is expected the other parties may run

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(b) Direct actions:  are disputes between institutions or individuals for breaches of EU law and include: (i) proceedings for failure to fulfil an obligation under the treaties; (ii) proceedings for the annulment of EU law; (iii) proceedings for failure to act; and (iv) proceedings to establish liability and award damages in civil suits brought against the EU

 

interventions are only possible where the intervener can establish an interest in the result of a case, eg where it is directly affected

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Interveners making oral submissions are well advised to attend throughout the hearing…interveners should pursue the opportunity to make oral submissions, because written submissions are “frozen in time” … also, if the court has questions about the intervener’s case, and they are not represented by counsel on the day of a hearing, the ability of the intervener to assist the court may be significantly undermined….counsel for the intervener is not required

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 types of intervention :

submissions on the law; on comparative or international experience; and/or the production of written or expert evidence on the issues before the court.

thus, ask yourself, when drafting your intervention: 

(a) Are you making submissions on the law or the facts?

(b) Do you want the court to be aware of matters within the expertise of your organisation?

(c) Will you need to submit a witness statement in support of the assertions made in your intervention?

(d) Are you making submissions on comparative experiences of other courts?

(e) Will certified translations of foreign judgments or other materials be necessary?

(f) Is the material which you would like to put before the court proportionate to the value which it will add to the court’s consideration of the case?

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The intervention should include an introduction which covers the following (some of which will be pasted from the intervention application):

(a) The intervener: provide a brief description of your organisation (in order to save space for your substantive arguments, this can simply be a synthesised version of the description of your organisation included in your application). You will already have shown in your application what value you are able to add to the proceedings, so there is no need to provide any further information in respect of your specialist knowledge or expertise relevant to the issues raised, but it is worth re-iterating in your introduction the fact that you have been granted permission to intervene, and that the submissions should (if relevant) be read together with your application to intervene (and any supporting witness evidence provided with that application);

(b) The scope of the intervention: briefly reiterate the public interest issues raised by the case, their impact upon the public generally or sectors of it, and the arguments you wish to address;

(c) The relevant law applicable to the intervention: re-state with clarity what area of law your intervention will grapple with, including any relevant statutory underpinning which might be involved;

(d) The order sought to accommodate the intervention: again, this information is likely to have been given in your intervention application, but it is worth re-stating concisely what outcome you wish to see from the intervention, and invite the court to proceed accordingly. This will enable the court and the parties to understand where the intervention fits into the proceedings

(e) Cross-referencing: it is helpful to the court if you are able to provide cross- references to other information in the court’s core bundle (such as the claim form, defence, court documents and, if possible, the skeleton arguments), as this does assist the judge(s) with their reading.

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 (0) what is the factual context for the intervention (i.e., why you are making the intervention):

(a) Why is this particular case important?

(b) What in your (the intervener’s) experience enables you to add value to this case?

(c) Are there any pertinent studies or statistics which might help you describe this background?

(d) what is the relevant law?;

(e) what does that law mean?; 

(f) how does it apply to this case?

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References to authorities must be clear and proportionate. eg If the parties introduce 10 or 15 authorities, the court may readily question whether an intervener should be permitted to introduce more

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if cocoo submits evidence by way of a witness statement…. you should consider:

(a) whether that person has the expertise and authority to make the points you wish to convey to the court;

(b) who might need to be involved in preparing the statement alongside your legal team;

(c) the time it might take to produce the statement. So as to properly inform your legal submissions, a witness statement should be produced as early as possible in your intervention timeline

(d) on a practical note, whether the person giving the statement is going to be available to sign it. These practical issues should be handled with care and in good time, particularly where multiple organisations are working together on a joint intervention (see above).

cocoo’s witness statement evidence should be simply to buttress the points made in your submissions by grounding them in some factual context

at the outset, cocoo should inform the other parties and the court of your intentions, setting out briefly what the statement will cover and why it is necessary….this can avert costs risks to cocoo

You may also wish to rely on material from other jurisdictions in order to conduct a comparative analysis. This could be introduced, for example, by way of an annex to your written submissions….See http://justice.org.uk/our-work/third-party-interventions

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Your submissions should conclude with a brief statement of what you actually want the court to do ….. in Cases with an EU law dimension, the conclusion also provides the opportunity to suggest to the court that it should exercise its discretion to refer the case to the CJEU pursuant to Article 267 TFEU

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Court Bundle: [ideally e-bundles]

The appellant will circulate an index of all authorities and materials proposed to be included in the bundle. At this stage you will have an opportunity to add any materials or authorities you seek to rely on in your intervention which have not already been included. 

In situations where permission to intervene is sought (or granted) late in the proceedings, and where the main bundle has already been agreed between the parties, for cocoo seek to include any materials, would cause disruption…thus, here, the intervener can simply produce a separate, standalone ‘Supplementary Bundle’ of materials and file this at court.

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Supplementary submissions:

if legislative or case-law developments mean that your submissions have become slightly outdated, or could be improved by reference to a recent judgment, write to the court to request its permission to update your submissions by way of ‘supplementary submissions/ observations’

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ANNEXES

Index of Precedents for an application to intervene

Description of Document

Letter to other parties in support of application to intervene

Cover letter to the Court of Appeal

Application Notice for Court of Appeal (Civil Division) (Form N244)165

Draft Order for an application to intervene

Real-life examples of written submissions and other useful materials taken from cases in which JUSTICE has intervened are available on the JUSTICE website, at http://justice.org.uk/our-work/third- party-interventions

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(A) LETTER TO OTHER PARTIES IN SUPPORT OF APPLICATION TO INTERVENE

Fred Lister Richards and Sons LLP 21 Sherwood Lane

London SW3 7GT

FAO Janet Jason

Greenton Shopping Mall Greenton

GR6 9EL

By Email and Post

11 February 2016

Dear Sirs

R (on the application of Jason) v Greenton City Council

We write to inform you that our client, Green Action, intends to seek leave to make a third party intervention in the above case before the Court of Appeal. We are currently finalising our client’s application for leave to intervene and shall forward a copy to you in due course.

Green Action’s expertise as an intervener

Green Action is a registered charity and law reform organisation. It works to promote the protection of the environment through research and education, analysis and commentary, and interventions in the courts. Green Action has extensive experience in intervening in domestic and international cases involving important environmental matters. Recent interventions included the cases of R (on the application of Jones) v Leicester City Council and R (on the application of Henderson) v Brighton & Hove City Council. Thus, Green Action is well placed to assist the Court of Appeal in the consideration of, and has a direct interest in, the important issues in this case.

Nature of Green Action’s proposed submissions

Green Action wishes to participate in these proceedings as a third party intervener in order to assist the Court with information about:

(i) statistics on the environmental and public health advantages of pedestrianisation and

(ii) the legal arguments based on emerging international jurisprudence on the protection of the environment as a human right. Green Action intends to complement, and not replicate, the submissions of the main parties to these proceedings. Green Action will not present arguments on behalf of either of the parties to the appeal and will remain strictly within the bounds of the permission granted by the Court.

Green Action will seek permission to present written submissions to the Court to assist the Court’s determination of the case. Please also note that Green Action seeks permission to make oral submissions (of limited duration) in addition to written argument. We should be grateful if you could inform us of whether your client would be prepared to consent to an intervention by Green Action in these proceedings by 19 February 2016. In the event that your client is not prepared to give consent please could you provide a brief explanation of the reasons for refusal.

Costs

If permission is granted, Green Action will bear its own costs and has retained counsel and this firm to act pro bono to assist in the preparation of its proposed intervention.

As a charity and not-for-profit organisation with limited funds, our client is understandably concerned about the possibility of a costs order being made. We note that the Court will not ordinarily award costs in favour of, or against, an intervener. As such, we would also ask for an undertaking that your client will not seek costs against Green Action as intervener. For its part, Green Action undertakes that it will not seek costs against any party, and further will bear costs associated with the printing of additional materials required by its intervention, should permission be granted.

We would appreciate your urgent consideration of this letter, and a prompt response in writing. Yours sincerely

Richards and Sons LLP

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(B.1) COVER LETTER TO THE COURT OF APPEAL

Fred Lister Richards and Sons LLP 21 Sherwood Lane

London SW3 7GT

Civil Appeals Office Room E307

Royal Courts of Justice The Strand

London WC2A 2LL

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By Email and Post

22 February 2016

Dear Sirs

R (on the application of Jason) v Greenton City Council

We act for Green Action on a pro bono basis in connection with its proposed intervention in the above referenced proceedings. Please find enclosed the application for permission to intervene of our client, Green Action, in respect of the above proceedings, by way of oral and written submissions.

The application consists of the requisite form supported by a witness statement of Graham Young, Director of Green Action, a draft order prepared to assist the Court and the requisite fee.

The present application is made with the consent of the Appellant in this case. The Respondent has not consented to this application on the grounds that Green Action’s intervention will unnecessarily broaden the remit of the case, causing the other parties to incur unnecessary costs. Green Action contests this, on the basis that (i) for the reasons set out in the witness statement of Graham Young, including its expertise in matters relevant to these proceedings and its extensive experience in intervening in domestic and international cases involving important environmental matters, Green Action is uniquely well-placed to assist the court; (ii) Green Action’s submissions will complement, and not replicate, the submissions of the main parties to these proceedings; and (iii) Green Action seeks permission to intervene only by way of written submissions and limited oral submissions, minimising any potential costs burden on the other parties.

Relevant correspondence with the parties to these proceedings regarding the issue of consent to our client’s proposed intervention is duly enclosed with the application. The present application and supporting evidence will be served on the legal representatives of the Appellant and of the Respondent.

In the event that the permission to intervene is granted, Green Action requests that such permission be granted on the basis that it will neither seek nor be required to pay costs, on the grounds that Green Action is, for the reasons set out in the application enclosed, uniquely well placed to assist the Court on the issues which it seeks permission to address, is able to bring a wider perspective to bear on those issues than any one party to the proceedings and has substantial experience and expertise on the issues before the Court.

Please note that Green Action is a registered charity with limited funds, seeking to make submissions in the public interest. Its counsel and solicitors are all acting pro bono. We hereby request remission of the required application fee in this matter.

I should be grateful if you would contact me directly at fred.lister@richardsandsons.com in the event that the enclosed form does not comply with the requisite formalities.

Yours faithfully

Richards and Sons LLP

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3. What order are you asking the court to make and why?

For the reasons identified in the enclosed Witness Statement of Graham Young, Director of Green Action, an order that:

(1) the Applicant is granted permission to intervene in these proceedings by way of written and oral submissions;

(2) the Applicant will bear its own costs of the intervention; and

(3) no order as to costs shall be made in favour of, or against, the Applicant as a third party intervener.

These appeals are presently set down for hearing on 14 March 2016, and as such the Applicant respectfully requests prompt consideration of this Application.

Please give the service address, (other than details of the claimant or defendant) of any party named in question 9.

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Statement of Truth

The Statement of Truth will need to be filled in only where evidence submitted in support of the application is contained in this application notice. It should be signed by the person giving the evidence; this will usually be the applicant or an authorized representative of the applicant.

If a solicitor is instructed to sign the statement of truth on behalf of the applicant, this section should read “The applicant believes” and be signed by the solicitor making the application in his or her own name and the area below the signature space crossed out to read “Applicant’s solicitor”. The position held by the signatory (partner, associate) should be inserted in the space indicated for this purpose.

(I believe) (The applicant believes) that the facts stated in this section (and any continuation sheets) are true.

Signed Dated

Applicant(‘s legal representative)(‘s litigation friend) Full name

Name of applicant’s legal representative’s firm

Position or office held

(if signing on behalf of firm or company)

11. Signature and address details

Signed Fred Lister Dated 22 February 2016 Applicant’s legal representative

Position or office held Partner

(if signing on behalf of firm or company)

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(B.3) DRAFT ORDER FOR AN APPLICATION TO INTERVENE

CASE NO: 2016/8934/B

IN THE COURT OF APPEAL (CIVIL DIVISION)

ON APPEAL FROM THE HIGH COURT OF JUSTICE, QUEEN’S BENCH DIVISION, ADMINISTRATIVE COURT : CO/1547/2015 BETWEEN:

[DRAFT] ORDER

UPON AN APPLICATION made by Application Notice dated 22 February 2016 for permission to intervene in these proceedings

AND UPON READING the witness statement of Graham Young, Director of Green Action, dated 22 February 2016.

iT IS ORDERED that:

(1) the Applicant is granted permission to intervene by way of written and oral submissions;

(2) the Applicant will bear its own costs of the intervention; and

(3) no order as to costs shall be made in favour of, or against, the Applicant as a third party intervener.

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CORPORATIONS

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sustainability = 

undertakings* aimed at the (identification, prevention, restriction or mitigation) of the negative impact of economic activities on people (including working conditions, animals, the environment, or nature. egs: the protection of the environment, biodiversity, climate, public health, animal welfare, and fair trade.)

* ‘undertaking’ =

any natural or legal person [pb, co, ngo etc] whose [agreements or conduct = ua] involve ‘economic activity’, regardless of its legal form or how it is financed.  Only uas are subject to cl/cp.

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CL GROUNDS/POLICIES

• Ensure low prices • Ensure high output • Promote innovation (disruptive & sustained) • Promote consumer choice & variety competition

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GROUNDS GREY AREA

• Fairness (no exploitative conduct) • Freedom to compete/freedom to trade •Limit abuse of economic dependence & superior bargaining power • Ensuring market access for small and medium undertakings •Privacy and informational selfdetermination

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WPI GROUNDS/POLICIES

•Protection of the environment, biodiversity and sustainability •Media pluralism •Security of supply • Right to food • Competitiveness of the local industry • Geopolitical concerns & national security • Promotion of employment & social welfare •Promoting human happiness or capabilities

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PRIVACY WPI GROUND <> CL GROUNDS

-whether merger control should take into account the fact that access to personal data may constitute an important source of market power. 

-ec v microsoft, limited Microsoft’s ability to have access to and to process its users’ personal data in the future since the new rules would have strengthened the existing rights and would have empowered individuals with more control over their personal data. the Commission found that concentration of data could nevertheless have a potential impact on competition by marginalising or making difficult the entry of a competitor of Linkedin that offered a greater degree of privacy protection to its users than offered by LinkedIn, and thereby restricting, ‘consumer choice in relation to this important parameter of competition”’, privacy. In doing so the Commission conceptualised privacy as a parameter of competition that may eventually be subject to measurement.

-possibility of adp from privacy breaches, discrimination and exploitative contracts, facilitated by control of big data, companies interchanging individualized offers on the basis of the information they acquire through consumers’ past browsing history, enables them to charge different prices to various customers for homogeneous products (online personalised pricing).

A recent case brought by the German cma against Facebook (BKA) uses Article 102 TFEU to cover adpg from the exploitation of consumers by digital platforms when harvesting consumer (personal) data. Facebook collected the data of its users by merging the various sources of personal data generated by the use of other services owned by Facebook, such as WhatsApp or Instagram, or by the use of third party websites and apps, which ‘embedded’ Facebook products through the ‘like’ button and the use of Facebook analytics. Facebook was found to hold a dominant position in the German market for social networks. The BKA raised the possible existence of adp as Facebook made the use of its service conditional upon the user granting the company extensive permission to use his or her personal data, even those generated offFacebook. Users were, therefore, no longer able to control how their personal data was used. and the users were oblivious. Considering that Facebook’s merging of the data constituted a violation of the users’ constitutionally protected right to informational self-determination, the Court decided adp… also, competition was reduced by the ‘loss of control’ of the users as they were no longer able to control how their personal data were used.

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In Astra Zenecca the CJEU found that misleading representations to the patent office, a possible regulatory offence, could constitute adp, if it was part of an overall strategy of a dominant undertaking seeking to unlawfully exclude rivals.

USA PATENT LITIGATION DATABASE     EU PATENT LITIGATION DATABASE     MISLEADING EU PATENTS DATABASE  
UK PATENT REVOCATION

A patent can be revoked if the patentee’s prescribed declaration:  “…contains a false statement or representation which is material and which the patentee knew or ought reasonably to have known was false at the time when the statement or representation was made”.

https://www.supremecourt.uk/cases/uksc-2019-0172.html

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the ‘Chicken of Tomorrow’ :

A joint initiative by organizations from the poultry sector and supermarkets to introduce a sector wide sustainability policy in favour of a minimum standard for breeding and growing chickens, such as providing them with more space, a better natural day-night rhythm, and lower use of antibiotics, all of which are aimed at improving, be it marginally, the conditions of chicken and their ‘animal welfare’. The agreement looked to replace the ‘regular’ chicken with the ‘Chicken of Tomorrow’,…. BUT The ACM (dutch compet.auth) concluded that the potential advantages of this initiative to animal welfare and sustainability did not outweigh the reduction in consumer choice and potential price increases…..The Dutch Ministry of Economic Affairs reacted, following calls from the civil society, and sent a draft instruction document to the ACM urging them not take into account the longterm interest of (future) users but also the WPI positive effects…. but,  EC objected to such wpi effects, mentioning that ‘if certain policy goals are considered valuable for society as a whole, while not by the consumers in the relevant market, regulation is the right tool [to protect them] and not competition law.

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short term monopolies are lawful and an important element of the free-market system. The opportunity to charge monopoly prices, at least for a short period, is what attracts business acumen in the first place. but not in the long term….Just as competition can stimulate innovation and data protection, so can it stimulate sustainability(wpi) too…However, in some cases, there is tension between sustainability and competition. When balancing, there are 2 opportunities:

Opportunity 1

agreements such as price-fixing, customer-sharing, distribution, collective distribution or production restraints, and collective refusals to buy or supply, fall under the

[cartel or cl prohibition = (uk competition act + EU  TFEU):

• anti-competitive agreements, including price-fixing, market-sharing or bid-rigging arrangements and, potentially, agreements involving exclusivity, restrictions of long duration or certain collaborative arrangements with competitors such as joint selling or purchasing
• ADPs. eg, setting of unfair prices or trading conditions or the refusal to supply an existing customer without objective justification

Agreements which barely impact competition do not fall under the cartel proh. examples:

1/agreements that incentivize undertakings to make a sustainability contribution without being binding. eg. target to reduce CO2 emissions

2/codes of conduct promoting environmentally-conscious practices. These often involve joint standards and certification labels about the use of raw materials, production methods, etc.

3/agreements aimed at improving product quality, while products produced in a less sustainable manner are no longer sold. These agreements fall outside the cartel prohibition if they do not appreciably affect price and/or product diversity. One example is agreements that are aimed at a more efficient use of packaging materials or at no longer using a certain type of packaging.

4/initiatives where new products or markets are created, and where a joint initiative is needed for acquiring sufficient production resources, including know-how, or for achieving sufficient scale.  joint actions are  necessary in the start-up phase.

5/ agreements which sole purpose is to make respect the laws of the countries in which they do business. do our business partners comply with the rules?. These agreements allow them to perform such checks. eg. respecting labor laws (for example, banning child labor, paying a minimum wage, respecting the right to unionize), protecting the environment (such a ban on illegal logging), and respecting fair-trade rules (such as a ban on bribery).

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Opportunity 2

Article 101, paragraph 3 of the TFEU exempts from the cartel prohibition, uas that:

a. offer efficiency and sustainability benefits:

undertakings to set up a production process so that the difference between operational costs and social costs is eliminated as much as possible. For example, to pay a ‘living wage’, or compensate for greenhouse gas emissions. In their marketing activities, they can use these to promote their product to consumers.

b. allow consumers a ‘fair share’ of those benefits; These can be current users as well as future ones. direct users or indirect ones. lower in the production chain, and end-user… benefits can even include others than consumers (general public = wpi). For example, if undertakings in a certain sector jointly decide to use carbon-neutral energy only, greenhouse gas emissions will decrease (wpi), and will also help realize the government’s policy objective of reducing CO2 emissions. ‘fair share’ = consumers should be compensated at least for the harm caused to them by the restriction of competition.

Egs of non environmental sustainability uas:  eg. paying a fair wage in developing countries that do not have a minimum wage. eg. minimum requirements for animal welfare in the production of meat; eg. changing the recipes of food products for public-health reasons.

where a. and b. are not met, consumers have the right to be fully compensated for the harm caused by the restriction of competition. example, if a sustainability agreement leads to a quality improvement in production, but also leads to a price increase, consumers will have to attach sufficient value to those quality improvements to offset the price increase, ow, they have r. to compensation.

c. The restriction of competition is necessary for reaping the benefits, and does not go beyond necessary; example, where a ua is necessary because no undertaking can afford to be the first [to change its behavior]. Example: lack of expertise or scale. 

d. Competition is not eliminated in respect of a substantial part of the products.

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PBs = [public or private-tender]:  CL EXCEPTIONS

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‘undertaking’ =

any natural or legal person [pb, co, ngo etc] whose [agreements or conduct = ua] involve ‘economic activity’ [eg ngo doing commercial advertising and sponsoring], regardless of its legal form or how it is financed.  Only uas are subject to cl/cp…..the existence of an UA, does not  nec.mean that is infringing CL, or that it needs to amend its conduct…In cases involving genuine uncertainty [on whether a proposed activity is ua [subject to clcp], and if so, whether, the ua would be anticomp, the  CMA should be approached to provide a non-binding ‘Short-form Opinion’ on the application of the CA98 to a specific activity. contact the CMA’s Enquiries and Reporting Centre on 0845 7 22 44 99.

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Identifying ‘economic activity’

A pb should ask itself, for each of its activities, separately:

1/Am I offering or supplying a good or service (on a given market), or exercising a public power?

2/is that offer or supply ‘commercial’, or exclusively ‘social’?

If the answer to both is yes, then – for the purposes of that activity (and any related upstream purchasing) – the PB is acting as an undertaking, thus subject to UK and EU competition law. 

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Exercise of ‘public powers’

where a body (public or private-tender) acts in a purely administrative capacity and merely regulates the provision of goods and services on a market, is not regarded as offering or supplying such goods or services…thus, is not ec.activity, thus there is no ua. That such administrative activity is for a fee will not necessarily render the activity ‘economic’. However, to the extent that the body also participates in the market, such participation may constitute an economic activity.

eg. provision of a national military or the administration of justice, is not regarded as offer or supply of goods or services… certain functions relating to air traffic control, environmental protection and tax collectionare also an exercise of ‘public powers’.

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Purchase of gs [goods/services]

PB’s gs purchases are ua, only if there is a subsequent economic offer/supply of gs 

gs purchasing PBs, even where not acting as an undertaking, are required to undertake an open competitive procurement 

recent UK decision (Bettercare): the CAT found that a purchaser PB buys non-economic goods/services, it still  may involve contracts commercial enough, to regard it an ua….this is good news for companies selling to PBs because it broadened the circumstances in which the purchasing PBs had to follow CL

A different view was taken by the Spanish Court of first instance, in appeal from ec, held that where a PB purchases non-economic goods/services (for instance, one which involves no remuneration and is PI) is not an ua(Case T-319/99, FENIN): the important fact is the purpose of the purchase.

david.marks@cms-cmck.com  +44 (0) 20 7367 2136.

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Diff

•  PB’s Offer/supply of a ‘commercial’ nature:    is ua. eg pb activity for profit in direct competition with private sector companies. For example, Companies House is ua when competing with private sector information providers in the supply of online company data search tools….Similarly, a PB is engaging in ua, when it carries out ‘wider – non core- markets activities for profit…..But….an activity need not generate a profit– or even have a profit-making motive– to be an ‘economic’ activity (ua). Example: ECJ: a pb provided employment recruitment services free of charge , was an economic activity

 

• PB’s Offer/supply of an exclusively ‘social’ nature:  an activity exclusively social is not ua.  an economic activity that also pursues some public service objectives will still be an economic activity….Activities where no market exists, becos they cannot be carried out for profit without State support….eg: pb activities under redistributive principles (= the principle of ‘solidarity’ ) to redistribute income between rich ad poor) is an exclusively social activity….  where private companies have carried out that activity in the past, this may indicate that if a pb carries it out, it would be an economic activity…..the fact that a pb decides not to allow private companies to provide a certain good or service does not mean that that activity is not ‘economic’…..-a public body’s operation of a pension fund/insurance scheme, was found by the EU court to be an economic activity as operated on the principle of ‘capitalisation’ (the level of benefit is based on the financial results) and in competition with insurance companies. That the fund also pursued some social objectives, principles of solidarity and was non-profit making, was not sufficient to render such activity ‘non- economic’…..EU courts : pb compulsory healthcare and insurance schemes are only ‘exclusively social’, if:

1. 1. 1. provide members with the service (for example, insurance cover) regardless of their financial status and state of health
      2. do not take a member’s level of contributions into account when paying benefits, and
      3. are non-profit-making.

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PBs : CL EXCLUSIONS 

Where pbs do act as undertakings, thus subject to cl, there are cl exclusions: 

Schedule 3 par 4 of the CA98 and Article 106(2) TFEU, exclude from CL:

-The ‘services of general economic interest’ exclusion: applies to pbs that have a universal service obligation [uso], such as core postal services or ambulance

-The CA98 also excludes agreements that an undertaking is by law, forced to enter, eg: undertakings mandated by a regularor; eg where a party is required by law to disclose publicly price sensitive information 

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THE CONSEQUENCES FOR PBs ENGAGING IN ECONOMIC ACTIVITY

• if pb’s CL compliance impedes the efficient exercise of their functions, they need to determine whether any amendments are required.
• pbs economic activities in mixed markets* only breach cl, if cause anticomps

(* markets where pbs, private firms and third sector organisations (for example, charities)) compete between them)

• consequences of pbs failure to comply with cl :

• • • An agreement will be void and unenforceable.
    • Third parties (including injured competitors, customers and consumer groups) that have suffered loss, can bring a civil damages claim.
    • CMA may impose substantial penalties: up to 10 per cent of their annual worldwide turnover, and be directed to change their behaviour.
    • Individuals who dishonestly engage in cartel activity can be prosecuted under the criminal cartel offence and sentenced to up to five years in prison and/or a fine.
    • co directors can be disqualified from managing a company for up to 15 years.

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UN: CPCL EXCEPTIONS AND EXEMPTIONS

Diff: exemptions tend to be broader in scope, as is the case with sectoral or industry examples, whereas exceptions are on a case-by-case basis, applying a rule-of-reason, such as in selected M&A transactions and specialization agreements if the WPI outweighs the anticomps

cpcl exemptions and exceptions are usually needed to further the objectives of cpcl.

For example, cl strictly prohibit horizontal price agreements between competitors, as they tend to lessen competition. However, various forms of non-price horizontal agreements may be in the public interest, if inter-firm cooperation results in standardization of products, improved quality and increased information, so that consumers  have better choices.

However, cpcl exemptions/exceptions may induce distortions in other sectors…thus, various industries and markets are “seamlessly” interconnected, even when the linkages are not obvious, as distortions in one market “ripple” through to other sectors of the economy.

For example, insulating the domestic steel producer from competitive pressures may result in higher steel prices, which result in higher costs for the automobile and construction industries, and other industries that use steel. Because of the artificially higher profits earned in the steel industry, the firms can pay higher wage rates, and bid away labour from other industries creating labour shortages or resulting in higher costs of production for other goods and services.Moreover, steel companies will have fewer incentives to be innovative…

Whether the costs of such exemptions and exceptions or policies are outweighed by the benefits needs to be carefully balanced.

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Interface between cpcl and other government economic policies :

In some countries, such as usa, Canada and New Zealand, the cl primary objective is the promotion of economic efficiency (ew). In uk, emphasis is placed on “public interest” ..In the Eu, priority is given to economic or market integration and prevention of dominance by large firms. In Germany, preserving or ensuring freedom of individual action and economic freedom is crucial.

In several countries, Governments have privatized State-owned enterprises with exclusive or monopoly rights so as to obtain a higher sale price and/or attract foreign investment. And import controls or investment restrictions are to protect domestic firms, deterring new entrants and foreign investment.

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cpcl exemptions

< > cocoo.uk will identify where exemptions are violated/abused

– Collective bargaining, which permits employees to form unions or groups to negotiate wages, and other conditions of employment

– Associations of fishermen to negotiate terms regarding buying and processing of fish; and travel agents to negotiate prices and commissions paid for domestic flights (to counter the monopoly or near-monopoly position of the domestic airline)

– Underwriting of insurance and securities

– Amateur sport to form leagues, teams

-tas and business firms may exchange statistics, develop product standards, define terminology, engage in cooperative research and development (R&D), restrict advertising expenditures, adopt common weights and measures, packaging, etc.

-with notification and prior clearance, firms are permitted to form export cartels with the objective of increasing exports, or enter into specialization and rationalization agreements in order to achieve economic efficiency.

– for professional sports, financial institutions’ activities, and IP (patents, copyrights and trademarks).

– regulated economic activities are also generally exempt from cpcl.

canada: If the M&A results in higher prices for consumers, and higher profits for producers, it will be cleared, so long as there are real efficiency gains, or , increased real value of exports. However, the transacting parties must demonstrate that the efficiencies cannot be realized by less anticompetitive alternative means such as a joint venture or specialization agreement.

the United States uses the “consumer welfare or surplus” test (as this is their priority). As a result of a historic Supreme Court decision in the 1920s, it was ruled that professional baseball did not fall within the scope of the federal antitrust laws as it was not a “trade or commerce”, other than incidentally. Other professional sports such as football and basketball are similarly exempted: football, baseball, basketball and hockey leagues concerning the selling of rights for the telecasting of their games.

Critics have questioned these exemptions, for which no arguments or evidence are presented. In recent years, the congressional authorities have raised the issue of removing these exemptions, especially during the strike by baseball players over salaries (which tend to be very high by any comparative standard), share of stadium gate and broadcasting revenues, and when local team games are “blacked out” from television.

< > cocoo.uk will identify where exemptions are violated/abused, specially players that strike or get high revenues

In addition, USA allow for a “defence” (exceptions) to be made for horizontal mergers and acquisitions, which while resulting in SLC (substantial lessening of competition), have significant efficiency gains that cannot be realized otherwise, eg via a joint venture. the efficiency gains must be passed on to the consumer in the form of lower prices and/or improved quality and choices. To date, there has been no case where the efficiency defence in a M&A transaction has been accepted.

The ec under Article 81(3) of the Treaty of Rome can grant exemptions to uas and practices if they have significant countervailing benefits, either on their individual merit, or through the application of a “block exemption”= uas in specified sectors. Only the European Commission can issue exemptions, which must be notified for clearance (except for block exemptions).

If an ua or practice is not notified and authorized, it is subject to investigation and prosecution by the Treaty. 

< > cocoo.uk will identify unnotified anticomp uas/practices 

 to get Individual exemptions, the ua/practice must:

– Contribute to improving the production or distribution of goods or to promoting technical or economic progress;

– Allow consumers a fair share of the resulting benefits.

– Not impose restrictions on firms that are not indispensable to the attainment of the above-listed objectives; 

– Not give rise to the possible elimination of competition in a substantial part of the market of the products in question.

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Block exemptions:

ec has issued block exemptions for exclusive distribution and purchasing arrangements, R&D cooperatives, patent and know-how licensing, and specialization agreements. In each of the exempt areas, clauses are listed that define what may be legally incorporated or prohibited in the agreements.

<> cocoo will look into those clauses

For example, a joint-venture agreement between firms may contain a “non-competition clause” if it is “indispensable” to the success of the venture

<> cocoo:  is it really indispensable?

Similarly, a block exemption may permit only territorial restrictions of sales by firms for a period of time

other ec exemptions cover transportation (road, inland waterways, air and marine), insurance, and agricultural sectors, and also computer reservation systems and motor vehicle distribution and licensing. Export cartels are also exempted in so far as they do not restrict exports and/or competition in the common market.

but ec does not grant exceptions to M&As that may result in dominance on the grounds of economic efficiencies.

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UK

The UK exceptions are the same as contained in Article 85(3) of the Treaty of Rome.

The Director General of Fair Trading may impose conditions on a ec parallel exemption

United Kingdom’s Competition Act does not contain an exception for mergers on efficiency grounds. However, the Minister of Trade and Industry may override the decision of the cma, if the M&A is in wpi

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Intellectual property rights: The exemption to (IPRs)

a careful balance has to be struck. Since exemptions in this area grant statutory monopoly ipr rights, firms can potentially adp

<> cocoo : which patents etc are adp? if so the exemptions must be withdrawn or limited

 

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professions:

eg lawyers, physicians and accountants are granted exemptions on the grounds of ensuring qualified and ethical services. However, professional bodies limit competition by erecting barriers to entry: qualifications, prevent even informational advertising and fix fees.

except for qualifications and standards of services, exemptions for professional bodies are not justifiable on economic grounds.

<> cocoo will find prof.body exemptions, except for qualifications and standards of services, and destroy them.

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Exemptions that reduce risk and uncertainty Insurance, investment brokerage and banking services:

they are granted only to reduce risk and uncertainty.

<> cocoo will find exemptions other than to reduce risk and uncertainty, [eg exemptions for  pricing of insurance or security brokerage services, or to setting of interest rates and service charges by banks], and destroy them !

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Exemptions for R&D activities :

are justifiable. Cooperation and competition between firms are not in conflict.

<> cocoo identifies where coop. becomes anticomps.

eg in  pharmaceuticals and electronics, firms cooperate in R&D but compete in the pricing and sale

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in some  jurisdictions, exemptions are granted for “special” sectors such as energy, liner shipping, air, trucking, professional sports, small business and government enterprises. In most of these cases there are no credible economic bases for exempting these sectors or types of economic activities from competitive pressures. This view also holds for many “natural monopolies”, which while being regulated by separate bodies are insulated from the application of competition law principles…..all evidence suggests that alternative pro-competition approaches to these sectors are feasible. For example, privatization, deregulation, structural changes and the introduction of competition in the airline, power and telecommunication sectors have increased productivity, lowered prices and improved services.

<> cocoo identifies where coop. becomes anticomps.

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 Conclusions and recommendations

we need to adopt basic procedures and principles in the granting of exemptions:

(i) Exemptions should be granted on a limited-time basis with a “sunset” clause and provisions for periodic review.

(ii) The review of exemptions should include analysis of their impact on economic efficiency and consumer welfare, and in a cost-benefit framework identify the “winners” and “losers”, and whether indeed there are overriding benefits that serve the consumer or broader economic interests. 

(iii) The exemptions should be granted after public hearings with the participation of the interested and affected parties

 (iv) The exemptions should be as least restrictive of competition as possible. In many areas, particular exemptions and/or exceptions dealing with infrastructure industry such as power, telecommunications and transportation, alternative less anticompetitive approaches are feasible.

(v) Exemptions should be generic in nature, relating to types of economic activities or arrangements, and be less industry- or sector-specific. With such principles, the number, nature and scope of the exemptions and exceptions will tend to be more limited, and the procedures more accountable and transparent. There will also tend to be greater policy and economic coherence.

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EC

Restrictive Agreements and Practices – Article 85 of the ec Treaty

The prohibition of Article 85 (1) applies both to horizontal agreements between competitors, and to vertical agreements, such as agreements between manufacturers and the distributors of their goods.

agreements falling under Article 85(1) are null and void under civil law.

Article 85(3) of the Treaty lists four conditions (economic advantages, consumers’ fair share of the benefits, indispensability of the restrictions, non-elimination of competition) which must all be met before an agreement/practice can be “exempted”.

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adp

Article 85:  IF there is restraint upon competition and an effect on interstate trade, such agreements are prohibited, regardless of the size of the undertakings concerned.

Article 86:  UNLIKE ART 85, Article 86 only attacks the abuse (not the existence) of a dominant position, when an effect on interstate trade is involved.

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 Merger Control – Council Regulation 4064/892 sets up a system of merger control at EU level for EU-scale mergers

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in developing countries, the state plays a double role: as ca, and as market player. Thus, the transition to become a developed country requires cas to be indep <> cocoo challenge nations’ [regs/laws that are in breach of their own constitutions/int.treates], by failing to declare the indep of cas 

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cas have 2 clcp mandates:   <> cocoo challenge cas failing to comply with these mandates

a. enforcement

b. advocacy

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a. clcp enforcement 

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in the UK, (though not in most other countries), cma have the power/duty to investigate/remedy anticomps, without targeting any individual company: The CMA first carries out a Market Study ,following which, it can either make recommendations to the industry or to government (e.g. for regulatory action), or it can decide to carry out a full Market Investigation[ =  the CMA is required to decide whether there is an Adverse Effect on Competition (‘AEC’).]…..eg: cma marketstudy 2019 on the large 4 audit/acc firms.  The CMA then made recommendations to government…. but it might have been better if there had been a full Market Investigation which could have led to the CMA imposing its own remedies, rather than relying on politicians to take on significant vested interests.)

the cma has a Horizon Scanning team, responsible for gathering leads [using these tools]:

• an internal intranet-based ‘Ideas Lab’. This gathers ideas and electronic discussion from OFT staff members;
• an cma Project Ideas Group. This group meets bi-monthly and provides support to R&D
functions within the OFT by bringing together people and intelligence from across the
organisation, and coordinating resource to investigate embryonic ideas;
• the Consumer Direct database. Consumer Direct is a government-funded telephone and online service offering information and advice on consumer issues, operated by the cma in partnership with local government Trading Standards Services. Consumer Direct holds a database of complaints received from consumers. cma monitors trends across sectors in order to inform its market study selection process.

ca settlements/leniency:

are easier to get, if competition authorities use transparent and predictable procedures, so defendants can assess upfront the rewards for agreeing to settle as well as the risks if they decide not to settle 

When a competition authority accepts a settlement without admission of guilt, it gets a higher fine, but reduces the defendant’s liability, thus undermining deterrence.

Settlements are usually used to end a case when the initial investigation has been concluded. exceptions: Germany settled during the early stages of an investigation, thus blurring the line between leniency/cooperation/settlement

if the combined discounts from cooperation/settlement/guilty plea, are too generous, Leniency programs will not be used by firms

cma has the right to make an application to the  (“CAT”) to increase the penalty over what was agreed under the settlement, if the party to the settlement appeals the cma infringement decision to the CAT

Sometimes cma announces a settlement, without having made public that it had issued a SO (statement of objections) to the firm.

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ca MARKET STUDIES

Market studies are part of ca’s advocacy mandate, and serve two primary purposes.

a. as a precursor to litigation: when anticompetitive behavior is suspected in a sector but the source is unknown

b. as a foundation for competition advocacy: when there is no anticomp suspicion, yet it does not appear that the market is functioning well for consumers.

market studies may lead to proposals to deregulate, restrict regulation, reform market institutions, or improve information dissemination to consumers or suppliers….Market studies are a good way to develop the link between consumer policy and competition policy:

eg. ca’ market study found that drug manufacturers were competing for shelf space in Canadian pharmacies by offering pharmacies, rebates of up to 40 percent of the retail price. However, in many provinces, the benefits of this competition were not passed on to consumers or insurance companies….thus, a public drug plan was designed, to give pharmacies incentive to pass rebates on to consumers

eg. the OECD’s Competition Assessment Toolkit was used, to discover that the rules that limit advertising, prices, and restrict entry, go beyond legitimate consumer protection. Rather than protecting consumers, these rules lead to anticomps that translate into higher prices, limit choice of service providers, and restrict consumer information. The study identified numerous examples of rules that regulators should consider revising/removing to promote greater competition, to better serve consumers and to enhance productivity

<> cocoo: press/triggerasupercomplaint, requesting cma to start a market study… to amend some regulations

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UK. CMA MARKET STUDIES

cma performs market studies pursuant to section 5 of the Enterprise Act 2002

The cma does not have the power to force undertakings to provide information for the purposes of a market study. It has powers to collect information, but there is no penalty for non-compliance

cma market study’s possible outcomes:

a. a decision that intervention is not appropriate on the evidence available,
b. making recommendations to the Government or regulators,
c. investigation or enforcement actions…. [when cartel prohibition may be needed]
c. a market investigation reference (“MIRs”) to the Cma

eg: • the medicines distribution market study:

• The PPRS market study, in which predatory pricing and price discrimination in the pharmaceuticals sector were found to have been facilitated by the PPRS. The aim of the study was to assess whether the PPRS secures value for money for the (NHS), whilst offering appropriate incentives for pharmaceutical companies to invest in new and useful drugs for the future. the study:

− identified a number of drugs where prices were significantly out of line with patient benefit, including treatments for cholesterol, blood pressure and stomach acid
− recommended that the current ‘profit cap and price cut’ scheme should be replaced with a patient-focussed value based pricing scheme in which the prices the NHS pays for medicines reflect the therapeutic benefits to patients.

The cma recommended that changes should be made to the government’s Pharmaceutical Price Regulation Scheme (PPRS) to ensure that NHS medicines costs do not increase as a result of the changes in distribution. It also recommended that the government consider legislating to provide for minimum service standards, if it was concerned that these would reduce under the new distribution arrangements. The government response accepted the recommendations for alterations to the PPRS, and said that it would keep service standards under review. 

The PPRS is the method by which the UK Government seeks to control the prices of branded prescription medicines. The scheme comprises two main components: profit controls that apply to all the branded products sold by a company to the NHS, and price controls that allow companies freedom to set the initial price of new active substances, but restrict subsequent increases to the NHS list price.

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eg. the private dentistry market study:

was triggered by a super-complaint that highlighted six problem areas (encompassing both competition and consumer concerns): a lack of price transparency; a failure of competition; little impact from new entrants to the market to trigger increased competition; the absence of a complaints system; a reduction in competition because of problems with access to NHS dentistry; and a failure to comply with professional guidance….The study recommended improving consumer information through better self regulation and reducing restrictions on the supply of dentistry services; that each practice should have an indep. complaints procedure; All of the recommendations were implemented by gov.

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eg. cma market study into the fairness of unauthorised bank overdraft charges, and got them removed.

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eg.  the public subsidies [to private firms] market study:

gave recommendations for changes to state aid rules, guidance to subsidy providers in the UK and improved data collection on subsidies. The study produced:

− a practical framework to identify the costs and benefits of a proposed subsidy, including its potential impact on competition…UK Treasury incorporated this into its government guidance on public subsidies (known as the Green Book);
− proposals to the EC for reforming state aid controls to avoid distorting competition. These are now reflected in the Commission’s state aid framework for R&D and risk capital for SMEs

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eg: the property searches market study:

complaints made by private search companies about access to information held by local authorities, and by a single central electronic search provider. The study made a number of recommendations, aimed at opening up access to private search companies to the raw property information held by local authorities….all of the recommendations were accepted by the government and the reg.body 

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b. ca advocacy 

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cas have a duty to press [eg via market studies…] for the amendment of clcp harmful economic policies, and to build a competition culture: informing firms and citizens about the value of competition…..so that firms/consumers can raise their own complaints : section 11 of the Enterprise Act 2002, certain designated consumer bodies have the power to make what is called a ‘super-complaint’ to the cma. This collective complaint is unique to the UK. When the cma receives a super-complaint, it must publish a reasoned response within 90 days… One of the possible outcomes of a super-complaint could be a market study

<> cocoo v nations that fail to give their cas powers to resist anticomp

-to inform citizens and firms:   it’s harder to persuade a jury of the harm caused by anticomps, than, say, shoplifting. I don’t think people get it. eg. flights are now cheaper etc.; airports: in 2009 cma ordered competition between London’s 3 major airports, by ordering Heathrow’s owner, BAA, to relinquish ownership of Gatwick and Stansted. It also ordered BAA to relinquish ownership of either Edinburgh or Glasgow airport, so as to introduce more competition between Scottish airports. 

-to promote trade liberalisation…but domestic firms lobby gov, to promote anticomps: eg to keep existing entry barriers to foreign competitors.

– to intervene in the lawmaking process by filtering out the many law proposals, to single out those that present significant clcp issues: trade policies, state aids and subsidies, and procurement procedures….cas have a duty to urge gov, that anticomps originating from [trade policies, state aids and subsidies, and procurement], should be limited to restructuring programs, and should be temporary, and that gov should consider alternatives [that cause no anticomps]…..Governments are notoriously inefficient buyers. Their procurement procedures invite collusion and corruption. …thus, cas should be proactive in advocating procurement reforms, which will translate into savings for the country’s citizens

– to resist:

• reg.exemptions in some sectors (eg banking)….. cl and wpi regulation is necessary in some markets, but regulation should be kept to a minimum…. such regulatory reform results in higher productivity, lower prices, the elimination of shortages, the stimulation of innovation, while ultimately boosting GDP.

CMA is not a regulator, but both a competition and consumer agency regulation is a poor proxy for competition.  The UK’s sector regulators – Ofcom, Ofgem, Ofwat, ORR and so on – apply direct regulation only where there is no other option: where there is no scope for competition – where there are ‘natural monopolies’, which is typical for utility networks. It is very often economically wasteful, and sometimes environmentally wasteful, to duplicate gas pipelines or water reservoirs and pipes or electricity networks or broadband wire networks

• Privatisation. the tendency of governments is to confer a private firm with map, or even monopoly power, to maximise its sale [privatisation] value. Thus, it should be the goal of the competition agency to introduce as much competition

The ca should have a role in the privatisation process, so that public monopolies do not become private ones.

The state has a strong incentive to create an enterprise (eg a SOE:  [state owned enterprise] ) and give it map, with the sole purpose of selling (privatisation) it later, making a large profit…this could be a blatant breach of clcp….. BUT…The ca’s duty is to offer resistance to this, which is  easy if , in that nation (eg uk), cl can be applied to Privatisation… But, of course, developing countries only give to their cas, powers of advocacy, and not powers to resist Privatisation [that harms clcp]

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cma as a consumer protection body

cma proposed trustpilot and comparison websites, as a positive solution to misleading online reviews, fake positive reviews, or the suppression of bad reviews

Our 2 biggest fines last year were in medicines supplied by pharmaceutical companies to the NHS – an anti-epilepsy drug and an anti-depressant.  NHS was paying too much for them

The CMA’s powers are in some ways quite extraordinary. They can make Orders which are legally binding on businesses that were not part of the original investigation. For instance they can require a range of businesses to publish information which would make the market work more effectively. And they can force companies to sell large chunks of their businesses. For instance, they forced BAA (the owner of Heathrow Airport) to sell both Gatwick and Stansted.

Ofcom’s reluctance to refer the broadband final mile was better understood, despite BT’s clear unwillingness to allow its broadband competitors to access its exchanges and use BT’s wires to competitors. this reluctance was understood because a near two year Market Investigation would have slowed the needed (wpi) internet expansion…Ofcom and BT came to an agreement in 2006 intended to ensure that rival telecoms operators had equality of access to BT’s local network, resulting in the creation of BT Openreach.

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NAO recommendations  to cma

 -Like all other cas, the cma failed to identify major and persistent breaches of competition law in the financial sector….Following applications for leniency, in 2013, the Ec fined financial institutions €1.71 billion for participating in cartels in interest rate derivatives. as a result, competition powers were given to the Fca and the Psr (payment Systems Regulator) 

-“the cma has failed to produce a substantial flow of enforcement decisions. Awareness of competition law and the competition authorities is low, and there is limited evidence on the VFM of their work….Thus, BIS and HM Treasury should liaise with cma, to report costs in the CMA’s annual report on concurrency. This would increase transparency and help the government to judge whether it is achieving value for money…“The low caseflow we identified in 2010 has continued, with the CMA making 24 decisions and the regulators just eight since 2010. The UK competition authorities issued only £65 million of competition enforcement fines between 2012 and 2014 (in 2015 prices), compared to almost £1.4 billion of fines imposed by their German counterparts”

-cma should Commission an external review of the costs (including those of business), processes and their anticipated outcomes of its two major market investigations, including whether it could achieve greater vfm using smaller expert teams

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What is a cartel?

The term ‘cartel’ is a catch-all that covers any of the following collusive arrangements between businesses:

• Directly or indirectly fixing prices between businesses – where two or more businesses agree to raise the price of their product or service instead of setting their prices independently of each other and competing in the market place. This is known as price fixing.
• Limiting or preventing supply or production between businesses – where two or more businesses agree to limit or prevent the supply or production of a product.
• Dividing up customers or prospective customers between businesses – where two or more businesses agree that they will not poach each other’s customers and/or that business 1 will not compete with business 2 in area A if business 2 agrees to a similar arrangement for the benefit of business 1 in area B. This is known as market sharing.
• In response to a request by a third party to tender for a contract, a secret agreement between businesses that one or more of them will agree not to bid for the contract or one or more of them will put in an artificially high price for the contract to allow another business to win the contract – perhaps for a return of favour on another occasion when another contract is tendered. This is known as bid rigging.

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A single meeting can be all it takes to get you in trouble….Certain topics should not be discussed – especially anything that involves you telling others what prices you may charge or quote in the future.

Agreeing with a competitor what prices either or both of you will charge is illegal and can lead to serious penalties. This includes agreeing not to sell below a specific price.

It can be illegal for competing businesses to divide up markets, such as geographic areas or particular types of customer, and agree not to go after the same ones.

It can be anti-competitive if a supplier or manufacturer tries to restrict how other businesses sell their products.

It is legal to set a recommended retail price, but illegal to ‘force’ others to sell at this price and to penalise them if they decide to discount below it.

It is illegal for competing businesses to discuss commercially sensitive details of their bids with each other, such as what price they will quote, when responding to a tender.

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CARTELS

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Article 51 et seq. of Regulation (EU) 2016/679 of the European Parliament and of the Council of 27 April 2016 on the protection of natural persons with regard to the processing of personal data and on the free movement of such data, and repealing Directive 95/46/EC (General Data Protection Regulation), as well as Article 4(3) TEU

must be interpreted as meaning that, subject to compliance with its duty of sincere cooperation with the supervisory authorities, a competition authority of a Member State can find, in the context of the examination of an abuse of a dominant position by an undertaking within the meaning of Article 102 TFEU, that that undertaking’s general terms of use relating to the processing of personal data and the implementation thereof are not consistent with that regulation, where that finding is necessary to establish the existence of such an abuse.

In view of this duty of sincere cooperation, the national competition authority cannot depart from a decision by the competent national supervisory authority or the competent lead supervisory authority concerning those general terms or similar general terms. Where it has doubts as to the scope of such a decision, where those terms or similar terms are, simultaneously, under examination by those authorities, or where, in the absence of an investigation or decision by those authorities, the competition authority takes the view that the terms in question are not consistent with Regulation 2016/679, it must consult and seek the cooperation of those supervisory authorities in order to dispel its doubts or to determine whether it must wait for them to take a decision before starting its own assessment. In the absence of any objection on their part or of any reply within a reasonable time, the national competition authority may continue its own investigation;

2.      Article 9(1) of Regulation 2016/679

must be interpreted as meaning that, where the user of an online social network visits websites or apps to which one or more of the categories referred to in that provision relate and, as the case may be, enters information into them when registering or when placing online orders, the processing of personal data by the operator of that online social network, which entails the collection – by means of integrated interfaces, cookies or similar storage technologies – of data from visits to those sites and apps and of the information entered by the user, the linking of all those data with the user’s social network account and the use of those data by that operator, must be regarded as ‘processing of special categories of personal data’ within the meaning of that provision, which is in principle prohibited, subject to the derogations provided for in Article 9(2), where that data processing allows information falling within one of those categories to be revealed, irrespective of whether that information concerns a user of that network or any other natural person;

3.      Article 9(2)(e) of Regulation 2016/679

must be interpreted as meaning that, where the user of an online social network visits websites or apps to which one or more of the categories set out in Article 9(1) of that regulation relate, the user does not manifestly make public, within the meaning of the first of those provisions, the data relating to those visits collected by the operator of that online social network via cookies or similar storage technologies;

Where he or she enters information into such websites or apps or where he or she clicks or taps on buttons integrated into those sites and apps, such as the ‘Like’ or ‘Share’ buttons or buttons enabling the user to identify himself or herself on those sites or apps using login credentials linked to his or her social network user account, his or her telephone number or email address, that user manifestly makes public, within the meaning of Article 9(2)(e), the data thus entered or resulting from the clicking or tapping on those buttons only in the circumstance where he or she has explicitly made the choice beforehand, as the case may be on the basis of individual settings selected with full knowledge of the facts, to make the data relating to him or her publicly accessible to an unlimited number of persons;

4.      Point (b) of the first subparagraph of Article 6(1) of Regulation 2016/679

must be interpreted as meaning that the processing of personal data by the operator of an online social network, which entails the collection of data of the users of such a network from other services of the group to which that operator belongs or from visits by those users to third-party websites or apps, the linking of those data with the social network account of those users and the use of those data, can be regarded as necessary for the performance of a contract to which the data subjects are party, within the meaning of that provision, only on condition that the processing is objectively indispensable for a purpose that is integral to the contractual obligation intended for those users, such that the main subject matter of the contract cannot be achieved if that processing does not occur;

5.      Point (f) of the first subparagraph of Article 6(1) of Regulation 2016/679

must be interpreted as meaning that the processing of personal data by the operator of an online social network, which entails the collection of data of the users of such a network from other services of the group to which that operator belongs or from visits by those users to third-party websites or apps, the linking of those data with the social network account of those users and the use of those data, can be regarded as necessary for the purposes of the legitimate interests pursued by the controller or by a third party, within the meaning of that provision, only on condition that the operator has informed the users from whom the data have been collected of a legitimate interest that is pursued by the data processing, that such processing is carried out only in so far as is strictly necessary for the purposes of that legitimate interest and that it is apparent from a balancing of the opposing interests, having regard to all the relevant circumstances, that the interests or fundamental freedoms and rights of those users do not override that legitimate interest of the controller or of a third party;

6.      Point (c) of the first subparagraph of Article 6(1) of Regulation 2016/679

must be interpreted as meaning that the processing of personal data by the operator of an online social network, which entails the collection of data of the users of such a network from other services of the group to which that operator belongs or from visits by those users to third-party websites or apps, the linking of those data with the social network account of those users and the use of those data, is justified, under that provision, where it is actually necessary for compliance with a legal obligation to which the controller is subject, pursuant to a provision of EU law or the law of the Member State concerned, where that legal basis meets an objective of public interest and is proportionate to the legitimate aim pursued and where that processing is carried out only in so far as is strictly necessary;

7.      Points (d) and (e) of the first subparagraph of Article 6(1) of Regulation 2016/679

must be interpreted as meaning that the processing of personal data by the operator of an online social network, which entails the collection of data of the users of such a network from other services of the group to which that operator belongs or from visits by those users to third-party websites or apps, the linking of those data with the social network account of those users and the use of those data, cannot, in principle and subject to verification by the referring court, be regarded as necessary in order to protect the vital interests of the data subject or of another natural person, within the meaning of point (d), or for the performance of a task carried out in the public interest or in the exercise of official authority vested in the controller, within the meaning of point (e);

8.      Point (a) of the first subparagraph of Article 6(1) and Article 9(2)(a) of Regulation 2016/679

must be interpreted as meaning that the fact that the operator of an online social network holds a dominant position on the market for online social networks does not, as such, preclude the users of such a network from being able validly to consent, within the meaning of Article 4(11) of that regulation, to the processing of their personal data by that operator. This is nevertheless an important factor in determining whether the consent was in fact validly and, in particular, freely given, which it is for that operator to prove.

consolid=concentr= low n.of suppliers (in a market)>> higher prob. of cocon

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STEP 1: ESTIMATE (RELMA = MAD)

WHY? to learn:  

1-if (MAS > the CA2002 thresholds = hmt ?) >> CMA.O2.review…below these threhs, there cannot be adp.cartel, nor slc(in matos)…..[plc’s mas = plc’s sales / total sales   (in a given market)]

2-whether there is MAP

3-the relma (relevant market):   [exception: where MAD does not affect MAS or MAP, MAD is ignored (by the cma)….ow: MAD is estimated (by cma), and is estimated by applying the HMT (‘hypothetical monopolist’ test):

3.1/ for the HMT to work (to det the certain RELMA), we would need lots of data, which we dont have >> we have to make-do with estimating a particular RELMA’s probab. how?:

• • -gws substitution trends/patterns (past.pres.fut), (wrt price.quality.value)
  • -changes in demand or supply (substitution) in response to price changes.
  • -price correlations (if + >> same market)
  • -Similar pattern of price changes suggest that the two products are in the same market,
  • -Two products of different quality might be in the same market but with some constant price differential. 
  • -An absence of correlations in price changes might imply that the two products are in separate markets.
  • -consumer.buyer surveys:  the question is not whether substitution is possible, but how many consumers would use a gws substitute, in response to quick and a 5-10% price rise (to make that price rise unprofitable)

3-2/ substitution can occur not only on the demand side, but also on the supply side (when a gws price rises >> other sellers substitute (switch) their gws production into that (now more profitable )market). ex: If supermarket apple prices >> significant increase in sales of street stall apples >> they are both in the same market.   Ex: a seller of one brand of luxury cars might have a relatively high share of ‘the luxury car market’, a much smaller share of ‘the car market’ and a tiny share of ‘the vehicle market’. 

a. If only a few luxury car buyers would switch (SUBSTITUTE) to buying economy cars if the price of luxury cars would rise >>   we must define the market as ‘luxury cars’, not as ‘all cars’ (>> the seller’s MAS might be high)

b. if many luxury car buyers would switch to economy cars if the price of luxury cars would rise >> we must define the market as ‘all cars’ (>> the seller’s MAS is small)

3.3/ -RELMA = a particular set of gws (prod.ma), in a particular geographic area (geo.ma), that are mutual ‘close substitutes’ [= when an increased price for a gws >> higer demand for the gws].  Relmas can be described by product, geography, and/or buyer group :

a/ buyergroup.ma : discrimination (different groups of buyers are charged different prices/qualities for the same gws) >> different relmas (for each group of buyers). For example, if only certain buyers would be able to switch to a new foreign supplier

b/ prod.ma :examples: Different brands of essentially similar products (eg two brands of whisky); Different types of products serving similar purposes (eg whisky and rum); Products targeted on clearly different consumer groups (eg men’s and women’s shoes); Products of differing quality (eg five star and three star hotels); Second hand and new products (eg cars); Products sold through different channels (eg apples sold at street stalls or supermarkets); Products available at different times (eg flights serving the same destination departing in the morning or the evening)

relma = the narrowest market for which a monopolist of all the products (in that market), would be able ,profitably, to, for a sustained period, increase the price of the product by typically 5-10% ….[however, gws also compete in quality and value (ex: add-on services, advertising), and this must be accounted for].

• • • (in matos, the ‘5-10% price increase is wrt premato prices)
    • (IN ADP.CARTELS, the ‘5-10% price increase’ is WRT prices under competitive conditions)

– example, when considering cars, proposing separate markets defined by colour (‘yellow cars’, ‘red cars’ etc) is too narrow because it would fail the test. Even if only one seller was selling yellow cars, he would not be able to increase profits by charging 5-10% more for them, because consumers would buy cars of other colours (“demand side substitution”) or other sellers would quickly start painting cars yellow instead of red (“supply side substitution”)…..Thus, the relma lies between the (too narrow) market for ‘yellow cars’ and the (too wide) market ‘cars’. Between these two extremes there will be questions:  Is ‘luxury cars’ a separate market? Are new cars and second-hand cars in the same market?…. if car prices were very high due to a ADP/CARTEL(monopoly), many cons.buyers might switch to using the bus….forgetting this can lead us to a ‘cellophane fallacy’ case :  a manufacturer of cellophane wrapping successfully argued that other wrapping materials were in the same market …but, in reality they only acted as substitutes because prices of the cellophane wrapping were at monopoly levels.

c/ geo.ma : examples: The geoma is mostly local because products sold in one location are not regarded by customers as good substitutes for products sold in another. Equally, rural and urban customers might be in separate geographic markets. Markets can be wider than ‘national’, if it is easy to obtain new supply from overseas.   If the CMA decides that a market is global, it will not concern about MAP exercised (on that plc) by national.plcs in that market

-ex:  if an importer of a product raises price and then loses sales to a new importer, that product is in a global market.  Search engines are global.        -geo.ma decision factors: exs: shipping costs; import tariffs; restrictions; marketing and distribution. For example, a cinema in Grand Baie is unlikely to be a substitute for a cinema in Mahebourg, but could be a substitute to a theatre in GranBaie, or with netflix, etc) 

–ex. cos suffering competition from (possible) imports, use (MAD=HMT=SNIPP) to prove their gws face competition in a wider geographic market. ex:  would a 5-10% increase in prices across Mauritius cause such an increase in imports within a year as to render that price increase unprofitable?.  it must be proved that those imports will respond quickly and sufficiently to a 5-10% price increase across Mauritius

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STEP 2: MAS

1/ Having defined the relma, we may now calculate MAS, (and the MAS concentration indices, ex: the HHI, C3 and C4)

2/now we compare MAS against the thresholds for: monopoly, mcr and (pot) MAP

3/consider if our co is in an industry where gws production capacity and volume could be better MAS measures, than gws production.

4/ look at MAS trends.patterns, past/pres/fut