On 5 September 2024 in Cases C-510/23 and C-511/23, AG Pikamäe handed down his opinion on the interpretation of Article 102 of the Treaty on the Functioning of the European Union (TFEU) and certain provisions of the Unfair Commercial Practices Directive, read in light of the principles of the protection of competition and the effectiveness of administrative action. AG Pikamäe opines that national procedure time limits must not prejudice national competition authorities' ability to adequately investigate and put an end to alleged anti-competitive behaviour.

 

Background

The preliminary reference ruling request concerned two different disputes between two companies and the Autorità Garante della Concorrenza e del Mercato (AGCM). This article will only focus on the facts and proceedings stemming from the dispute in Case C-511/23.

Caronte & Tourist SpA (C&T) is the main service provider in the Strait of Messina and it occupies a quasi-monopolistic position. In March 2018, several consumer complaints were filed with the AGCM alleging that C&T was charging excessively high prices. This conduct is illegal under Article 102 TFEU. The AGCM sent a request for information on 23 April 2019. The port authority replied on 26 November 2019. In August 2020, the AGCM notified C&T that a formal investigation into its pricing practices has been launched. On 29 March 2022, the AGCM adopted a decision whereby it found that on the basis of Italian competition law, C&T had abused its dominant position in charging excessively high prices for its services rendered. It ordered the infringement to be immediately stopped and fined C&T around 3.7 million euro.

C&T challenged the validity of the AGCM's decision before the Regional Administrative Court of Lazio, Italy (the Referring Court), arguing inter alia that the time limit set under Italian law providing for a 90-day time limit within which a statement of objections by the AGCM has to be issued, (the Procedural Time Limit) was not honoured. By way of background, the AGCM must adhere to this Procedural Time Limit, as otherwise it would lose its power to prohibit anti-competitive behaviour or impose sanctions. In this case, the stage preceding the communication of the statement of objectives had lasted 855 days in total.

 

The question referred to the CJEU

The Referring Court expressed doubt as to the compatibility of this provision with EU law, particularly with the principle of effectiveness. In staying domestic proceedings and based on Article 267 TFEU, it asked the Court of Justice of the European Union (CJEU) the following:

Is the Procedural Time Limit requiring that the statement of objections by the AGCM is issued within a 90-day time limit which starts running from the moment that the AGCM has knowledge of the essential elements of the alleged infringement, compatible with Article 102 TFEU, particularly considering the principles of protection of competition and the effectiveness of administrative action?

 

AG Pikamäe's opinion

The AG held that at its core; the Referring Court's question seeks to ascertain to what extent national rules are liable to frustrate the objectives which are pursued by the EU legislature. AG Pikamäe noted that under Regulation No 1/2003 which catered for decentralised enforcement of competition law by national competition authorities, Member States are free to set their own national procedural time limits. Notwithstanding this liberty afforded to Member States, the determination of these time limits is subject to compliance with the principles of effectiveness and equivalence.

In AG Pikamäe's views, the Procedural Time Limit was nothing short of problematic. In making this determination, he considered that the investigation process that needs to be undertaken by competition authorities in their assessment can be quite cumbersome and time-consuming. This involves careful preparation being undertaken prior to carrying out any investigations, coordination with other national competition authorities and the European Commission and coordination with law enforcement authorities in instances where dawn raids are planned to take place.

In considering these elements, AG Pikamäe held that it seemed to be extremely difficult, if not impossible for the AGCM to carry out all these activities in a 3-month period. To add insult to injury, the Italian procedural law did not provide for the possibility of extending this time limit or simply "stop the clock", even in cases where, owing to the complexity of the case at hand this short time frame would be unrealistic.

Besides the logistical issues that the Procedural Time Limit presented, AG Pikamäe also highlighted that the enforcement of competition law was at the risk of being undermined. Having such a short and stringent window of opportunity for the AGCM to act, meant that the AGCM might have to abandon the complex investigations in favour of focusing on the simpler ones to satisfy the Procedural Time Limit. This would seriously risk undermining the effectiveness of competition law by allowing certain anticompetitive practices to go investigated.

AG Pikamäe further did not appreciate the Procedural Time Limit due to the unforgiving consequences that ensue for failure to follow it. In this respect, he highlighted that if the time limit is not observed, the AGCM would no longer be able to investigate the infringement, order its end or impose sanctions on the infringers. This further meant that if the AGCM had issued a decision but failed to adhere to the Procedural Time Limit, the final measure that it would have imposed would be invalid. Put differently, the failure of the AGCM to honour the Procedural Time Limit had the automatic consequence of complete annulment of its decision.

Recalling the CJEU's case law, AG Pikamäe held that national procedural time limits need to strike a balance between on the one hand, ensuring that legal certainty is guaranteed for all parties and on the other hand protecting the efficient and effective application of the EU's competition rules. Striking this delicate balance is essential in ensuring that the Internal Market is not harmed by anticompetitive agreements or practices.

 

Closing remarks

AG Pikamäe did not leave much room for interpretation in rendering his opinion. In his views, the Procedural Time Limit is unjustifiable and violates EU law by sidelining the principle of effectiveness since it renders the enforcement of EU competition law excessively difficult if not impossible.  

All eyes are now on the CJEU for its views on the matter.

 

Disclaimer: Ganado Advocates is responsible for contributing this law report but was not in any way involved as legal advisor for the parties in the judgment being covered in this law report.

 

Dr Chris Grech is an Advocate at Ganado Advocates, forming part of the firm's corporate finance team.