Time is on my side

The CJEU recently found that national procedural rules should be interpreted strictly, reminding national competition authorities of the need to conduct investigations expeditiously. Cormac Little starts the clock.

In its 14 January 2021 judgment in Case C-450/19 (Kilpailu-ja kuluttajavirasto), the EU Court of Justice (CJEU) focused on when the national limitation period for bringing proceedings for breaches of EU and/or national competition law comprising alleged collusion in a public-procurement process begins.

The court’s judgment contains findings of significant interest regarding both the public and private enforcement of antitrust rules in the EU.

Time of the preacher

Article 101 of the Treaty on the Functioning of the EU (TFEU) prohibits agreements between undertakings, decisions by associations of undertakings, and concerted practices that have the object or effect of restricting competition with an effect on trade between EU member states. Price-fixing, market-sharing, and other forms of cartel behaviour are viewed as ‘hard-core’ infringements of article 101.

The national competition laws of all EU member states contain provisions that apply article 101, by analogy, to antitrust infringements whose effect is limited to a single country (or part thereof) – for example, the Irish equivalent to article 101 is contained in section 4 of the Competition Act 2002 (as amended), whereas the Finnish equivalent is found in paragraph 4 of Law 480/1992 on restriction of competition (as amended).

Waiting on a friend

Cartels are usually secretive and conspiratorial. Accordingly, national competition authorities (NCAs) have found that the best way to detect such infringements is to encourage one of the participants to come clean and cooperate with an investigation in return for immunity from or, a reduction in, penalties.

Many competition regimes operate such immunity or leniency programmes, including at EU level and in Ireland/other member states. Accordingly, major antitrust investigations in the EU are often triggered by applications for immunity or leniency. Under such schemes, a participant in cartel activity that blows the whistle regarding its co-conspirators may qualify for no or reduced sanction.

The current Irish Cartel Immunity Programme (CIP), which came into effect in early 2015, outlines the policy of both the Competition and Consumer Protection Commission (CCPC) and the Director of Public Prosecutions in considering applications for immunity from prosecution for cartel offences.

Hold on

Eltel is a major Nordic provider of power supply and communications networks. One of Eltel’s key competitors is Empower Oy (Empower), since renamed Enersense International Oyj. In spring 2007, Fingrid Oyj (Fingrid), the Finnish national electricity transmission system operator (the Irish equivalent is EirGrid plc), published a tender for the construction of a high-voltage power line between two municipalities in western Finland.

The tender deadline was fixed for 5 June 2007, with the relevant works being due for completion by 12 November 2009. Eltel submitted its bid on the eve of the relevant deadline and signed the contract with Fingrid on 19 June 2007. Ultimately, Eltel completed the high-voltage line by the November 2009 deadline and received its final payment from Fingrid on 7 January 2010.

Empower submitted a leniency application to Kilpailu-ja kuluttajavirasto (the Finnish Competition and Consumer Authority, or FCCA) on 31 January 2013. This prompted an investigation into the alleged cartel between Eltel and Empower regarding contracts for the design and construction of power transmission lines in Finland.

On 31 October 2014, the FCCA granted leniency to Empower, thus exempting this company from sanction for any involvement in a ‘power lines’ cartel.

On the same day, the FCCA issued proceedings before the Finnish Market Court for the imposition of a €35 million fine on Eltel for its participation in the ‘power lines’ cartel.

According to the FCCA, the single and continuous infringement of article 101 of the TFEU (and its Finnish equivalent) was implemented through a series of meetings between Eltel and Empower, where the two companies allocated future public-works contracts between them while agreeing tables for such tenders containing prices and margins. 

Time travelling blues

In a judgment dated 30 March 2016, the FCCA’s application was rejected by the Market Court on procedural grounds since, under Finnish law, a fine cannot be imposed unless the court application is lodged within five years from the date at which the restraint of competition ceased.

The FCCA appealed the Market Court’s decision to the Supreme Administrative Court (SAC), arguing that the relevant competition law infringement ended at the earliest on 12 November 2009 (that is, when the power line was constructed) or, alternatively, lasted until 7 January 2010 (when the final instalment was paid by Fingrid to Eltel).

More broadly, the FCCA argued that the award of a public works contract to a cartel participant has long-term effects, given that the contracting authority is likely to have paid a higher price than would have been the case absent the cartel, coupled with the likelihood that the relevant fee will be paid in instalments over several years.

While denying the existence of any cartel, Eltel also argued that the duration of any breach of EU and/or Finnish competition rules must be assessed by reference to the period for which the impugned conduct occurred.

Accordingly, if there was a cartel, it ended either on the date the tender was submitted (namely 4 June 2007) or, alternatively, 19 June 2007 – the date on which the contract with Fingrid was signed.

Faced with the novel question of the duration of the economic effects of a competition law infringement, the SCA referred the question of when a cartel ends to the CJEU for preliminary ruling under article 267 of the TFEU. In this regard, there are four possible dates, starting with the earliest:

• The date of the bid submission,
• The date the contract was signed,
• The date the relevant works were completed, or
• The date on which the final contractual payment was made.

Your time is gonna come

After recalling the key concept that each economic entity must independently decide its market conduct, the CJEU stipulated that any contact between competitors likely to reveal future market activity is a breach of article 101 of the TFEU.

The court also noted that the FCCA identified the overall engagement between Eltel and Empower in advance of the submission of bids for the construction of the relevant high-voltage line in Western Finland as a “single and continuous infringement”.

The CJEU stated that EU competition rules focus on the economic consequences of anti-competitive arrangements rather than their legal form. More specifically, article 101 may continue to be engaged, provided the illegal conduct produces effects beyond the date the relevant contracts terminate.

In this regard, the court noted that the FCCA considers that Eltel’s submission of the June 2007 bid is the most recent action in the relevant single and continuous antitrust infringement. That said, in an interesting nuance, the court found that the relevant breach ended once a definitive contract was agreed between Eltel and Fingrid.

In other words, the court found that the restrictive effects of a bid-rigging cartel disappear once the essential elements of the relevant contract, most notably the overall price, are agreed by the parties. Indeed, as soon as the contracting authority signs the agreement with the winning tenderer, it definitively loses the chance to procure the relevant works, goods, or services under normal market conditions.

The CJEU distinguished between the restrictive effects of the cartel on competition (which deprives the contracting authority, in this case Fingrid, of the opportunity of awarding a public contract under normal conditions of competition) and the resulting wider negative economic effects on other economic operators.

Such market players may launch damages actions before the national courts. The court specifically stated that the limitation periods for any such actions are outside the remit of its judgment.

In sum, the court held that, in the case of a single and continuous infringement whose most recent element is the submission of a ‘rigged bid’, the period of breach ends when the key elements of the specific public contract are agreed. Following on from the January CJEU decision, on 20 August 2021, the SAC dismissed the FCCA’s proposal to fine Eltel, thus upholding the March 2016 decision of the Market Court.

In the midnight hour

The decision has significant implications for both the public and private enforcement of competition rules.

The (Irish) CIP, like other immunity/leniency schemes, is a vital weapon in the battle against anti-competitive activity, particularly cartels. Any such programme is based on the principle that participants (including both legal and natural persons) in anti-competitive conduct will qualify for immunity/leniency from sanction provided they cooperate with any subsequent investigation/any ensuing court proceedings.

Indeed, paragraph 3.8 of the CIP requires an immunity applicant to cooperate fully with the CCPC on a continuing basis, including for any prosecutions. Put another way, immunity/leniency is granted in the expectation that a whistle-blower’s erstwhile co-cartelists will be pursued and perhaps penalised.

This was certainly the intention of the FCCA when, acting on foot of evidence (presumably provided by Empower), it requested the Market Court to fine Eltel. However, based on the CJEU’s judgment, the FCCA was time-barred from pursuing Eltel, since the five-year time-period expired on 19 June 2012 – around seven months before Empower submitted its leniency application.

Clearly, the lack of relevant conditions regarding the justiciability of material provided by an applicant is an obvious gap in the Finnish leniency programme, since immunity was granted to a company in return for the provision of evidence that was, at least, in terms of the ‘power lines’ cartel, unusable.

The CIP contains a similar lacuna so, as currently constituted, the difficulty faced by the FCCA would, in a similar scenario, also be encountered by the CCPC in terms of the issuing of summary proceedings.

Over the last decade, the European Commission, conscious perhaps of the limits and nature of both its and the various NCAs’ respective resources, has increasingly encouraged victims of cartels and other anti-competitive activity to seek redress before the national courts.

This policy resulted in the adoption in 2014 of an EU directive whose aim is to facilitate the award of damages by national courts for infringements of competition law (this directive was implemented into Irish law by SI 43/2017, the European Union (Action for Damages for Infringements of Competition Law) Regulations 2017). Article 9 of these regulations stipulates that an action for damages should be commenced within six years from the date of the relevant cause of action.

However, this six-year period does not commence until the later of the date on which the infringement ceased or the date of the finding of an infringement by the European Commission/Irish courts.

Accordingly, coupled with the CJEU’s judgment in Eltel, this provision emphasises the view that alleged victims of competition law infringements have more scope for manoeuvre than the CCPC (and other NCAs) in terms of the timing of any enforcement action. 

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