Emily O'Reilly
European Ombudsman
Address to the Women's Competition Network on "The Emerging Role of the European Ombudsman in Competition Cases"

 

[INTRO NOTES]

It is a real and rare pleasure for me to be surrounded this evening by women-only practitioners and professionals, all in leadership positions, responsible for and dealing with European competition law and policy.

It is often said - on both sides of the Atlantic - that the number of women entering professions requiring quantitative skills is far too low. Antitrust, an area where economics are often at the heart of every dispute, is a prime example of an area that was for many decades dominated by men. The first ever female Commissioner for Competition [Neelie Kroes] was appointed in 2004, 57 years after the first Competition Commissioner took up office in 1958.

Since I arrived in Brussels in late 2013, I have often heard Kroes’ name mentioned in relation to what was in essence affirmative action for women. She was unashamedly instrumental in taking decisive action to reverse a situation that was no longer in tune with reality; under her leadership senior female colleagues such as Lori Ewans, Nadia Calvino quickly rose to become deputy directors general in DG COMP, spearheading an overall rebalancing of the gender composition of what had been seen as a fairly exclusively male club.

I am therefore happy to see another woman taking again the helm of this important DG [Margrethe Vestager since 1 November 2014] and her confident and proactive handling of her brief to date has not just attracted attention within the EU but globally, such is the importance of the challenging decisions she has made and will continue to have to make.

Turning now to the subject matter of this evening’s event and I want to state at the outset that I am neither a lawyer nor a competition and anti-trust expert. I am an Ombudsman, a person who makes sure that the path towards the making of a decision was followed correctly but not a person who necessarily judges the correctness of a decision once that path is judged to have been followed properly - and particularly if that decision is ultimately a political one.

Lawyers and courts deal with law, an Ombudsman deals with issues of law yes but primarily of poor administration and that includes the concepts, among others, of fairness, equity, impartiality, transparency, proportionality and ethical behaviour. In other words I deal with complaints where an institution may not have broken a law when it acted in a certain way but may well have breached the principles of good administration nonetheless.

My background is in investigative journalism and between 2003 until my election as European Ombudsman in 2013, I served as the Ombudsman and Freedom of Information Commissioner for Ireland. As Ombudsman I made recommendations on the outcomes of investigations, as Freedom of Information Commissioner, I made binding decisions about the release of records held by public institutions. If the institutions did not agree with my decisions they had to challenge me in court. In the EU institutions, it is the person denied the records who has to go to court and I think that power imbalance is a regrettable one.

Antitrust law of course is primarily a litigation-driven practice; companies and their determined lawyers and advisers will often find themselves entangled in protracted, complex and time-consuming investigations carried out by the Commission, and will ultimately seek to defend themselves by bringing cases directly to the EU Courts in Luxembourg.

But enforcement of EU competition law is also a heavily “procedure-based oriented process”. And principles of “good administration” have a central role in competition law enforcement. In the eyes of some practitioners, the Commission is often seen to be acting not only as an investigator, but also as a prosecutor and therefore as a de facto “first instance judge”.

This has inevitably led to questions being raised by some of those directly affected by Commission investigations as to whether the principles of fairness, impartiality, diligence, equal treatment, and transparency, have been fully respected.

And it is at this precise interface that over the last number of years the European Ombudsman has become more involved as a new actor. It is at this juncture where one can see the Ombudsman becoming slowly, but steadily, over the last few years a new actor in the space occupied by companies, DG Competition and the EU Courts.

So perhaps the best way to explain, in a succinct way, how this line is being drawn by my Office is to go through some of our antitrust-related decisions which have laid the foundations of our policy and so illustrate the Ombudsman’s emerging role in this area.

[The Main EO Decisions]

1 Intel

Let me start with our first decision, adopted back in 2009, in a case concerning Intel [1935/2008/FOR].

The case was the first significant involvement of the Ombudsman into the way antitrust procedures are being handled by DG Competition and was made in one of the cases that ended with one of the highest fines ever imposed on a company. Without going into the details of that rather long investigation, suffice to say that our inquiry focused only on one small, but important procedural aspect: the keeping of notes by DG Competition during important meetings with the companies involved.

Intel, while still under investigation by the Commission, made a complaint to the EO in July 2008, arguing that DG Competition had failed to take minutes of a meeting with a senior Dell executive, even though the meeting directly concerned the subject-matter of its anti-trust investigation of Intel.

After a very thorough and detailed inquiry, the Ombudsman found that the meeting of August 2006 with Dell did in fact concern the subject-matter of the Commission investigation. He also found that the Commission did not make a proper note of that meeting and that its investigation file did not include the agenda of the meeting.

That was an instance of clear maladministration.

However, and this is an important point to make, the Ombudsman did not “cross the line”, and did not make any finding as to whether the Commission by acting the way it did, had infringed Intel's rights of defence.

The Ombudsman did not either make a finding of maladministration in relation to Intel's second allegation, which was that the Commission encouraged Dell to enter into an information exchange agreement with micro-chip producer AMD. In the complainant's view, this agreement gave AMD access to information contained in the Commission's investigation file. The Ombudsman did find, however, that the Commission failed to make a proper note this time of a telephone call between the Commission and Dell, in which the information exchange agreement was discussed. Such a note would have helped to clarify the relevant facts. He thus recommended, in a further remark, that, in future, proper notes should be made of any meetings or telephone calls with third parties concerning important procedural issues.

During his in-depth inquiry, the Ombudsman obtained three opinions from the Commission and conducted an inspection of documents at the DG Competition’s premises. The Ombudsman’s decision which was classified as confidential, was sent to the Commission and Intel on July 2009. The preparation of the non-confidential version of the decision required consultation with Intel, Dell and AMD to ensure that publication would not harm the interests of the complainant or of a third party.

The case was the first example of the Ombudsman’s intent, while mindful of the Court’s exclusive competence to hold the Commission to account for properly enforcing the Treaty’s competition rules, to also hold the Commission to account for any breach of the principles of good administration.

The Intel case alerted DG Competition to the fact that apart from the Hearing Officer and the EU Courts, another institution could and would actually take a closer look into the way DG Competition was conducting its investigations. It also demonstrated that the Ombudsman had become another forum for those wishing to challenge the way the Commission had conducted its own antitrust investigations. Antitrust lawyers were also of course apprised of this new avenue of accountability, outside of the courts. The fact that the service is easily accessible and free of charge no doubt also had its attractions.

2 The ManProc case

Shortly after the Intel Decision the Ombudsman received another antitrust-related complaint [297/2010/GG] submitted by one of your colleagues - and also a former Director of DG Competition - John Temple Lang, who, relying on Regulation 1049, had sought access to the internal manual of procedure of DG Competition, also known as the "Antitrust ManProc”.

His access request was originally turned down on the grounds that this was a working document prepared for purely internal purposes. DG Competition considered that the disclosure of this document would be highly detrimental to its antitrust decision-making process. DG Competition also argued that disclosure of the Manual would undermine the purpose of the Commission's inspections and investigations within the meaning of Article 4(2), third indent of Regulation 1049. It explained that the Manual contained sensitive internal information and guidance on the investigative procedure and techniques in antitrust investigations. Any disclosure would thus risk putting in the public domain its investigation strategy, seriously undermining the future successful conduct of antitrust investigations and inspections.

Having carried out a full inspection of DG Competition’s relevant files, the Ombudsman agreed with the Commission that, in principle, disclosing the Antitrust Manual would make public its investigation strategy. However, it was not immediately clear how that concern could be relevant as regards those parts of the Manual that dealt with other, equally important issues such as “file-keeping” and “access to the file”, in which the complainant was particularly interested. The Ombudsman thus made a proposal for a friendly solution in terms of the Commission granting at least partial access to the Manual.

After a round of further exchanges of correspondence with the Ombudsman and faced with a determined practitioner, in March 2012, DG Competition finally decided to publish on its web site its “Antitrust Manual of Procedures”, comprising many internal working documents on the procedures relating to the scope of a competition investigation.

The document published, comprehensive as it may be, does not contain any information on the DG Competition's internal procedures relating to conducting inspections or how the Commission prioritise which cases to pursue, which as the Ombudsman also noted, constituted indeed sensitive internal information the disclosure of which could undermine the successful conduct of future antitrust investigations.

Although to date antitrust lawyers find it normal that such an important DG Competition document is available on line, I think very few may realise that this is thanks to the Ombudsman.

3 The Almunia Saga…

Let me now turn to what one may be tempted to call the Almunia saga

Soon after I took office, my colleagues alerted me to the existence of an on-going complaint that concerned the way the Commission’s was taking an unusually long time to deal with a rather sensitive State aid complaint. That case was my first involving DG Competition and the former Commissioner Almunia.

The complainant argued that more than four years after it received a complaint about Spain’s alleged breach of the State Aid rules in its tax treatment of certain football clubs, the Commission had failed to make any decision on whether the complaint warranted any enforcement action on its part.

Normally in such cases DG Competition will make known its position within a period of 12 months; in this case the continuing failure of DG Competition to make a decision had led the complainant believe that the Commission’s inaction may have reflected an unwillingness to act by the Commissioner Almunia, a former Spanish Government Minister and a strong football supporter – although the latter affiliation does not constitute of course maladministration.

During our inquiry the Commission failed adequately to account for the four year delay in dealing with the complaint by giving an indication as to when or if it would be pursued further.

I therefore concluded that the Commission had failed to take a timely decision on whether infringement proceedings against Spain should be initiated; and that the Commission had failed to allay suspicions that Commissioner Almunia had a conflict of interests. I said that its inaction reflected an unwillingness by that Commissioner to start infringement proceedings which might impact negatively on domestic football clubs in his home country. Domestic political loyalty is of course understandable but Commissioners do of course have to put their national affiliations aside once they join the Commission.

Perceptions are important and in this case, the continuing failure to decide on what to do vis-à-vis the complaint - more than four years after the complaint was received - could and had created a negative perception of the independence and fair dealing of the Commission.

Again as in the Intel case, the Ombudsman’s inquiry did not involve the Ombudsman taking any view on the merits of the allegation regarding the granting or otherwise of State Aid to some Spanish football clubs. That was none of my business. Rather my business was purely the actions – or in this case non-action – of the Commission.

4 Crédit Agricole

The next significant complaint I received also involved Commissioner Almunia.

The complaint was lodged by Crédit Agricole, one of the banks involved in an on-going cartel investigation by DG COMP. That investigation had already led to more than €1 billion in fines for three global banks — The Royal Bank of Scotland, Deutsche Bank and Société Générale — who had all agreed in late 2013 to settle a claim in relation to the fixing of rates for Euro interest rate derivatives related to the Euro Interbank Offered Rate.

Crédit Agricole and two other banks had refused the settlement and had instead opted to contest the allegations.

In its complaint, Crédit Agricole cited comments Commissioner Almunia had made before the European Parliament, in speeches and to various news outlets about DG Competition’s on-going investigation. Crédit Agricole took particular issue with the fact that in mid-2012, that is before DG Competition decided to open a formal antitrust investigation into the alleged cartel, the then Commissioner Almunia was quoted as saying that the investigation would lead to "results" because "the evidence we have collected is quite telling". According to the complainant, DG Competition had breached the principle of impartiality.

In my inquiry, I concluded that even though several of the statements made by Commissioner Almunia did not identify Crédit Agricole by name, they still referenced a small group of companies that were "easily identifiable."

In essence, all these statements gave the appearance of bias, in that the comments made by former Commissioner Almunia could be interpreted as meaning that he had already decided the French bank was involved in the alleged cartel even though the case had not yet been decided by DG Competition.

Former Commissioner Almunia’s statements were made during the 2012-14 period and he was replaced by the current Commissioner Margarethe Vestager in late 2014. I therefore asked the new Commission to acknowledge the maladministration that had occurred under the previous commission and to make sure that this does not happen again.

I also urged the Commission to issue guidelines on public statements by commissioners about on-going investigations. I now expect to receive the Commission’s reply to my guidelines request by the end of this June.

In Crédit Agricole, I stated clearly that it was not unreasonable for Commissioner Almunia to try to close pending cases before leaving office, and, mindful not to step into the Commission’s own substantive assessment, I also noted that even if the Commission had “unduly rushed matters", the question of whether Crédit Agricole's rights of defence were infringed was not at stake in my review, but rather only the question of the Commission's impartiality.

Given that a new Commissioner had in the meantime taken office, and the cartel investigation was now being conducted under the leadership of a new Commissioner, I explicitly noted in my decision that I found no reason to think that the past issues which were the subject matter of my inquiry would affect the outcome of DG Competition’s investigation.

Nowhere in my decision is there any finding that relates to the substantive aspects of the Commission’s probe; it is important to stress here that my inquiry had nothing to do with the question of whether Crédit Agricole was or not part of an illegal cartel; this is something for DG COMP to establish. My inquiry only concerned procedural aspects and principles of good administration.

5 UEFA

In January of this year, I opened another inquiry into the way the Commission acted when dealing with a complaint against the UEFA Financial Fair Play Rules. The complainant alleges that former Commissioner Almunia who decided on his complaint was in a clear situation of conflict of interest [Case 2086/2014/AN].

Since the inquiry is on-going, I prefer simply to mention it for your own information and not discuss it further.

6 Infineon

In August 2014, Infineon, a German semiconductor manufacturer, which was a party in DG Competition’s “Smart Card Chips” cartel investigation, turned to the Ombudsman alleging that the Commission had breached its rights of defence by using a "fast track" procedure with the intention of adopting a decision imposing a fine on the company. Infineon asked that the Commission issue a new Statement of Objection before any decision is taken.

In early September 2014, that is one month after I had received the complaint in question, the Commission imposed fines totalling EUR 138 million on Infineon, Philips, Samsung and Renesas for forming a cartel in the smart card chips market.

The complainant informed me that it intended to lodge an application for annulment of the Commission’s decision to the General Court by no later than 17 November 2014. I therefore requested the Commission to provide an opinion by no later than 6 November 2014, and to address only one issue. On 6 November 2014, the Commission sent me its opinion, which I immediately forwarded to the complainant for its observations. The complainant sent its observations to the Ombudsman on 7 November 2014. I adopted my decision on 13 November 2014, that is 4 days before the complainant could go to the Court.

In opening an inquiry in early November 2014, I noted that the Commission had already in September 2014, adopted a decision in which it found that there was an infringement of EU competition law by Infineon and others. There were therefore no longer grounds for me to examine the complainant's claim that the Commission should issue a new Statement of Objections before adopting a decision.

I did however consider that it was still possible and useful to inquire into certain procedural aspects of the complainant's allegations, and in particular into why DG Competition waited until 28 July 2014, to send Infineon a “Letter of Facts” containing a copy of the electronic version of an important internal email by another company, giving Infineon a very short deadline of just 5 days for a response.

Infineon argued that by withholding for more than six months from it the electronic version of an internal e-mail of a competitor, the Commission had breached its rights of defence. Infineon had from the outset, when it became aware of the existence of that email in the Commission’s file, wished to obtain this evidence as it claimed that it doubted the authenticity of the e-mail.

In reaching my conclusions I was careful not to overstep my competence. Given the clear intention of Infineon to bring a Court case against the Commission’s decision it was important to draw a clear line between the scope of my inquiry and the Commission’s own competition-based assessment

My assessment was the following. Since the Commission is required to take account of any response to a Letter of Facts when it drafts its Decision closing its investigation, it follows that if a Letter of Facts is sent very late in an inquiry, the Commission will have a very limited period of time to analyse and take account the responses to that Letter of Facts. While it is certainly possible that the Commission will dedicate the resources necessary to analyse and take account of a response to a Letter of Facts, it cannot be ignored that a certain risk may arise, due to the time constraints involved.

Specifically, there is a risk that errors or omissions may occur in the analysis and that those errors or omissions will affect the decision closing the investigation. This is all the more likely if the evidence dealt with in the Letter of Facts and the response to it is complex.

In this case, I noted that since Infineon had responded to the Letter of Facts on 4 August 2014, the Commission had less than one calendar month to analyse that response before adopting its decision closing its investigation on 3 September 2014.

The real issue was not so much that the Commission had sent at such a late stage of the procedure the Letter of Facts containing an electronic copy of an internal e-mail of a competitor that incriminated Infineon. Rather, the issue was that although the Commission was in possession of the electronic copy of the e-mail since January 2014, it only sent it to Infineon in late July 2014.

The Commission failed to provide any convincing explanation for that delay.

In reaching my conclusion I had regard to the Intel case where the Ombudsman had concluded that it would not constitute good administration for the Commission to risk the successful outcome of an inquiry through a failure to make a proper record of an interview relating to the matter under investigation. Irrespective of whether the risks did or did not subsequently give rise to a breach of a party's procedural rights, it did not constitute good administration for the Commission to incur such risks by failing to draft a proper interview note.

I applied the same reasoning in the Infineon case. In doing so, I took no view whether by withholding for such a long time certain information from the complainant, the Commission breached the complainant's procedural rights or whether this could affect the legality of the Commission’s cartel Decision of 3 September 2014. That was an important reminder as I was again attempting to draw a clear line between my competences and those of the Commission and the EU Courts.

As far as my inquiry was concerned, what mattered was that obvious risks arose, and that irrespective of whether those risks did or did not subsequently give rise to a breach of Infineon’s procedural rights, or to errors or omissions in the Commission Decision, it did not constitute good administration for the Commission to incur such risks unnecessarily.

Concluding Remarks

As you can see, my Office has been rather busy with the handling these last few years of a number of antitrust-related complaints and inquiries. I did not of course mention all of them, but I hope that those which I mentioned help to illustrate my role and potential future role.

So to conclude how does my role in relation to good administration avoid crossing a line into interference with the decision making process of the Commission?

With the examples I have described, I have sought to demonstrate that my inquiries are not seeking to enter the realm of the Commission’s interpretation and enforcement of the Treaty’s competition rules. It is not the Ombudsman wish to become another “Judge” to review the legality of the Commission’s decisions in the field of antitrust. The Judges in Luxembourg are supposed to do this.

What the Ombudsman can do in this area is to ensure that in exercising its enforcement powers under the Treaty, the Commission complies with fundamental principles of good administration, such as fairness, impartiality, equal treatment, diligence, transparency and lack of conflict of interests. Antitrust procedures may often be complex and important but they are still administrative procedures.

Therefore there is no particular reason to exempt them from the principles of good administration or approach them with different mind-set when it comes to upholding those principles.

When the principles of fairness, impartiality, transparency and lack of conflict of interest are fully complied with, companies and all those adversely affected by the Commission’s antitrust investigations will have their trust strengthened in the Commission’s role as the guarantor of free and undistorted competition.

The answer is however not definitive yet, as the meaning and boundaries of the principles of good administration are still evolving in line with the overall developments in the functioning of the EU. These are not static principles and the Ombudsman has played an important role in giving more flesh and more essence to them. As antitrust procedures become more sophisticated, more demanding and more complex one should also expect that what once stood for fairness, transparency and ethical behaviour may no longer be the case to date. It is the Ombudsman’s role to always try to adapt those principles to the needs of a modern administration and to the benefit of the citizen and the society at large.

Thank you for your attention.