Bill No. 7479 on the organisation of the National Competition Authority and repealing the Law of 23 October 2011 on competition in the final stretch
Bill No. 7479 (hereinafter “ the Bill”) implements into national law the Directive (EU) 2019/1 of the European Parliament and of the Council of 11 December 2018 to empower the competition authorities of the Member States to be more effective enforcers and to ensure the proper functioning of the internal market (hereinafter “the Directive”), which should have been implemented into Luxembourg law by the 4th of February 2021.
In implementing the Directive, the Bill also aims at adapting Luxembourg law to the evolutions of the case law of the Court of First Instance and the Court of Justice of the European Union by specifying the procedures and the new powers of what will be the new "Competition Authority of the Grand Duchy of Luxembourg", and no longer the "Competition Council".
The Bill reforms the status of the current Competition Council and grants additional powers to the new Competition Authority.
Even though the implementation of the Directive has been considerably delayed due to the discussions on the Bill and the opinions of the Council of State, it is currently divided in two parts (Bills No. 7479A and 7479B) in order to ensure the entry into force of the new law on 1st January 2023.
I. The new Authority
A. The new legal status of the Competition Authority
The Bill grants the legal personnality to the current Competition Council (an independent administrative authority), by transforming it into a Competition Authority with the status of a public establishment. Through this status conferred, the Bill allows the Competition Authority (hereinafter “ the Authority”) to represent itself in court, which is currently not the case.
This new status allows the Authority to be endowed with regulatory power. The Authority's regulations will have to be published in the official journal and on the Authority's website.
The Bill introduces an exception to the general principle of the monopoly of legal representation by a lawyer in court.
Despite this, and as emphasised in the opinion of Luxembourg Bar Association, the “ECN+" Directive does not require such an exception.
The exception to the general rule of the monopoly of legal representation by a lawyer in court introduced by the Bill is unfortunate
B. The composition
The Authority is composed of a College (hereinafter “ the College”) of permanent members, including a President, a vice-President and four full members. In addition, the College has substitute members (minimum of six), at least one of which needing to be a judge.
It should be noted that the number of members of the Authority will be significantly increased from four to six members.
It is regrettable to notice that none of the full members of the Authority needs to come from the judiciary and that no specific knowledge in competition law is required to become an actual member of the Authority.
C. The authority's competences
In particular, the Authority will have to investigate and to sanction violations of Articles 4 and 5 of the act and of Articles 101 and 102 of the Treaty on the Functioning of the European Union (hereinafter “ TFEU”), specifically anti-competitive agreements between undertakings, decisions of associations of undertakings and abuses of a dominant positions.
The Authority has the power to carry out sectoral investigations or by type of agreement and to issue opinions on any question relating to competition issues and issue an annual report on its activities.
II. Procedural developments
A. Initiation of the procedure : the referral to the Authority
The Authority, composed of three members, may open a procedure on its own initiative or based on a complaint.
In case of a complaint, the Authority must acknowledge receipt of the complaint within seven days, which is a new requirement.
To this effect, the Authority has the right to reject a complaint in the following cases :
where another competition authority is dealing with the same facts on the basis of the provisions of Articles 101 and 102 TFEU;
when it considers that the elements required in the complaint are not present;
when it considers that it is not competent to deal with the case;
where the facts complained are time-barred;
where there is not lack of evidence;
when it considers that the complaint is not a priority for the Authority.
1. The investigation stage
Subject to the prior authorisation of the judge, the investigating officer may carry out surprise inspections in the premises of undertaking and and association of undertakings.
During the examination, the investigating officer may :
access all offices, land and transport facilities of undertakings and associations of undertakings;
control the books and any other documents related to the activity of the undertaking, regardless of the support, and access to all information that the entity under inspection has access to;
take or obtain, in any form, copies or extracts of such books or documents and, if it considers it appropriate, proceed with such information searches and the selection of copies or extracts at the offices of the Authority or at any other location designated by it;
to secure all commercial establishments and books or documents during the period of inspection and to the extent necessary for the inspection;
to ask any representative or member of staff of the undertaking or the association of undertakings for explanations of facts or documents relating to the object and purpose of the inspection and to record his answers;
to obtain the necessary assistance from the public authorities or an authority with equivalent powers of constraint, to allow them to carry out their mission.
b. The process of the inspection prodecure
The inspection is carried out under the authority and control of the judge who has authorized it.
The ruling of the judge is notified to the undertakings director on site and at the time of the visit by the examining officer or the effective officer or investigators who assist him.
The data is seized either by seizing the physical medium of the data or by making a copy of said data.
A copy of the official report of the extraction of the data shall be given to the representatives of the undertaking who were present.
During the entire inspection procedure, the persons subject to the inspection may be assisted by a lawyer and must inform the inspecting officer with respect to the documents protected by the confidentiality of communications between lawyers and clients and request them to be kept confidential.
In this regard, it should be emphasised that the Bill only protects direct correspondence between lawyer and client, in violation of EU case law.
Indeed, it results from several judgments concerning this question - CFI, Order, 4th April 1990, Hilti, case T-30/89, §§ 16 to 18 and EU Court of First Instance, 17th September 2007, Akzo Nobel, joined cases T-125/03 and T-253/03, §§ 122 and 123, confirmed by CJEU, 14th September 2010, Akzo Nobel, case C-550/07 P, §§ 40 and 41. C-550/07 P, §§ 40 and 41 - that legal privilege, a principle guaranteed by European Union law, not only includes exchanges between lawyer and client, but also any document from the client which reproduces these exchanges and any preliminary document drawn up in order to solicit the opinion of a lawyer for the purposes of a defense. It is therefore the information itself that is protected, regardless of the document in which it is reproduced.
Therefore, the confidentiality of lawyer-client communications limited to direct correspondence between lawyer and client as provided for by the Bill is highly regrettable. The Luxembourg Bar Association also criticised this point, without success.
The ruling of the judge may be appealed by the inspected person before the Court of Appeal's Chamber of Council within five days from the date of notification of the ruling.
The judgment of the Council Chamber of the Court of Appeal may be appealed in cassation.
2. The investigation phase
The investigation of a case by the Authority on its own initiative or based on a complaint is assigned by the President of the Authority to an effective member who will be the only person in charge of the investigation of the case.
In this context of the investigation of the case, the investigating officer is allowed to make requests for information to undertakings and to any other person.
He may also request expert opinions, collect information and conduct interviews with any undertaking's representative.
B. Closing of the investigation
1. Decision to dismiss the case
The investigating officer deciding that there are no reasons to take action, shall adopt a decision to dismiss the case, including the reasons for the decision.
In case of a complaint, before taking a decision, the investigating officer shall inform the complainant of his intention to dismiss the case and indicate the reasons on which his opinion is based and give the complainant the opportunity to submit written observations within one month. The decision to close the case is then notified to the concerned undertakings.
The applicant may introduce an appeal against the decision of the investigating officer before the President of the Authority and the College will take a decision. The appeal must be submitted, under penalty of inadmissibility, by a motivated and signed request within one month from the date of receipt of the case decision.
The decision of the College is not subject to appeal.
In order to guarantee impartiality, it would have been highly desirable to provide for an appeal against the decision of the College before the Administrative Tribunal rather than an “hierarchical” appeal before the Authority.
2. The withdrawal of the complainant
If the complainant withdraws his complaint, the investigating officer closes the case or continues with the inspection. In the latter case, the case is treated as being initiated the Authority.
This possibility is a new element.
C. Opening of the contradictory procedure
1. Communication of complaint
The investigating officer who establishes at the end of the investigation period the facts that may constitute an infringement of the provisions of the law, sends a statement of objections to the concerned undertakings, setting out the objections against them, before submitting the case to a three-member college of the Authority.
It is only when a statement of objections has been sent out that undertakings can have access to the file, respond and be heard in order to comment on the case.
2. The Authority can order interim measures
After the Authority has received a referral on the subject of the case, the College may, at the request of the complainant or the investigating officer, order the necessary interim measures in case of urgency justified by potential, serious and irreparable prejudice to competition.
In case of an order for interim measures at first sight on a violation of Articles 101 or 102 of the TFEU, the Authority informs the European Competition Network.
The ruling for interim measures is preceded by a formal hearing of the parties. This hearing allows the undertakings, associations of undertakings - concerned by the request for interim measures - and, where appropriate, the complainant, to express their views on the proposed interim measures.
The College hears successively the different parties and has the right to hear any other legal or natural person, if necessary.
The College may require undertakings and associations of undertakings to suspend the practices concerned or to restore them to their previous state.
Thus, interim measures are strictly limited to what is necessary to deal with the emergency.
D. Substantive decision
1. Decision to dismiss
If, following the notification of a statement of objections by the investigating officer, the Authority considers that the conditions for one or more of the prohibitions in Articles 4 and 5 of the Bill and Articles 101 and 102 TFEU are not satisfied, it will decide to dismiss the case, which is a novelty introduced by the Bill.The decisions to dismiss the case can be challenged before the administrative court of first instance.
2. Establishment of an infringement
In case of violation of the law, the Authority's College will impose any structural or behavioural coercive measure proportionate to the violation found against the undertakings and necessary to stop the violation.
3. Periodic penalty payments
The Authority may impose on undertakings and associations of undertakings periodic penalty payments of up to 5% of the global average daily turnover in the last financial year for each day of delay from the date it sets in its decision, to force them to put an end to a violation of the provisions of the law or to comply with a decision on engagements.
The Authority, in adopting a decision finding an infringement, can impose fines on undertakings and associations of undertakings where, intentionally or unintentionally, they have committed a violation of the provisions of Articles 4 and 5 of the Act and Articles 101 and 102 of the TFEU.
These fines are proportionate to the importance and the duration of the facts, to the situation of the sanctioned undertaking or the group to which the undertaking is attached and to the possible repetition of practices prohibited by the law.
Fines are determined individually for each undertaking sanctioned and with justification for each fine.
The maximum amount of the fine imposed is 10% of the worldwide turnover excluding VAT during the last closed financial year.
Undertakings or associations of undertakings whose practices are the subject of a referral to the Authority, at any time and as long as a decision on the merits of the case has not been taken by the College, can propose commitments to address the competition concerns at issue.
The College, by way of decision, can make these commitments binding and require the termination of the practices concerned.
The decision concluding that there are no longer reasons for the Authority to act can be adopted for a determined period.
6. Fines for associations of undertakings
If an association of undertakings is not solvent, it is required to call for contributions from its members to pay the amount of the fine. If these contributions have not been made to the association of undertakings, the Authority may require payment of the fine directly from any undertaking whose representatives were members of the relevant decision-making bodies of the association.
The possibility of requiring payment from members is new.
An undertaking that recognises during an investigation its participation to a violation of Articles 4 and 5 of the Bill may be eligible for a reduction of up to 30% of the amount of the fine envisaged.
The possibility to settle a case is new.
8. The leniency programme
The Bill extends the leniency programme to secret and non-secret cartels.
Indeed, the leniency programme allows undertakings and associations of undertakings to benefit from immunity or a reduction of fines in respect of an alleged cartel within the meaning of Article 4 of the Bill or Article 101 TFEU.
In order to benefit from an exemption from fines, the applicant must satisfy the conditions set out in Article 53 of the Bill.
This Article provides that the applicant must have ended its participation in the alleged cartel and that it must cooperate effectively, fully, continuously, and promptly with the Authority since the filing of its application. It must therefore reveal its participation in a cartel.
The applicant must be the first to provide evidence allowing the Authority to carry out a targeted inspection. This evidence must be sufficient to establish an infringement under the leniency programme, provided that the Authority is not already in possession of sufficient evidence.
If the application is rejected by the Authority, the applicant may request a review in order to obtain a reduction of fines.
In order to be eligible for a fine reduction, the applicant must again comply with the above conditions and disclose its participation in a cartel.
The evidence provided must add significant added value to establishing the existence of a violation under the leniency programme.
It is important to specify that the mere admission of having participated in a cartel does not qualify for leniency.
The Bill also introduces two new elements.
Indeed, the undertaking that wishes to apply for immunity or reduction of fines may first apply for the allocation of a marker that determines and protects its place in the order of arrival for the purpose of granting leniency for a period of time determined on a case-by-case as determined by the Authority.
This period allows the applicant to collect the information and evidence necessary to reach the level of proof required for immunity or reduction of fines.
If it considers it justified, the Authority will provide the requested marker.
In addition, the Authority will accept summary applications from applicants who have applied for leniency from the European Commission, either by applying for a marker or by filing a full application concerning the same alleged cartel, provided that such applications cover more than three Member States as territories concerned.
III. Judicial review
An appeal in full jurisdiction (“reversal on appeal”) may be lodged before the administrative tribunal against :
Decisions ordering interim measures;
Decisions to dismiss the case;
Measures imposed to stop a violation;
Fines imposed on undertakings;
Decisions imposing commitments;
Decisions imposing a fine for non-compliance with a decision of the Authority's decision.
It is important to note that the Bill does not introduce a merger control.
It appears that the political authorities seem finally have understood the need to introduce a merger control and a draft bill introducing a national merger control has been announced for 2023.
Our team specialized in competition law is at your disposal in case of questions.