Ne bis in idem and the DMA: the CJEU’s judgments in bpost and Nordzucker – Part II

[This is the second blog post on the principle of ne bis in idem and the DMA. You can read here our first post setting the scene and discussing EU case-law on ne bis in idem]

Yesterday’s post discussed at length the CJEU’s judgments in bpost and Nordzucker, and how they signal a shift in the Court’s case-law towards a unified test for ne bis in idem across EU law, including EU competition law. In this post we now discuss the implications of these judgments for the DMA and its interplay with EU and national competition law.

It is recalled that, going forward, large digital platforms will be subject to several potentially overlapping regulatory frameworks in the EU, namely (1) the DMA, (2) EU competition law, and (3) national competition rules (including competition rules specific to digital markets). It is thus possible that a digital platform could be subject to several proceedings for the same conduct – each proceeding under a different regulatory framework – thus begging the question whether this is compatible with the principle of ne bis in idem enshrined in Article 50 of the Charter of Fundamental Rights (the “Charter”).

As of today, the Commission has apparently sought to eschew the question, arguing that the DMA is complementary to competition law. Thus, according to recital 9 of the Commission’s proposal, the DMA “aims at complementing the enforcement of competition law”, hence it is “without prejudice to Articles 101 and 102 TFEU, to the corresponding national competition rules and to other national competition rules regarding unilateral behaviour that are based on an individualised assessment of market positions and behaviour, including its likely effects and the precise scope of the prohibited behaviour, and which provide for the possibility of undertakings to make efficiency and objective justification arguments for the behaviour in question.” Relatedly, recital 10 of the proposal provides that

“This Regulation pursues an objective that is complementary to, but different from that of protecting undistorted competition on any given market, as defined in competition-law terms, which is to ensure that markets where gatekeepers are present are and remain contestable and fair, independently from the actual, likely or presumed effects of the conduct of a given gatekeeper covered by this Regulation on competition on a given market. This Regulation therefore aims at protecting a different legal interest from those rules and should be without prejudice to their application.”

This approach would thus aim at pre-empting any concern over duplicate proceedings breaching the ne bis in idem principle, on the ground that the different regulatory frameworks (DMA, competition rules) protect different legal interests. While such an argument might have been persuasive under the Toshiba case-law, it does not hold water under the Court’s recent rulings in bpost and Nordzucker, whereby the Court defined “idem” as identity of offender and facts, the protected legal interest being irrelevant.

Now, this does not mean that the ne bis in idem principle will be automatically triggered whenever the same undertaking is subject to two sets of proceedings, one under the DMA and another under EU or national competition rules. To better understand the implications of bpost and Nordzucker, it is helpful to identify the various potential scenarios of interplay between the DMA and competition law. The discussion below assumes that the DMA will follow a centralized enforcement system, whereby the Commission will have exclusive competence to enforce the new rules. While national competition authorities have advocated in favour of having a greater role in enforcing the DMA, it appears that the political agreement between the Council and the Parliament will preserve the centralized architecture of the original Commission proposal.

Scenario 1: the undertaking is subject to separate proceedings under the DMA and EU competition law, both brought by the European Commission

In this scenario, the same undertaking is subject to two sets of proceedings brought by the European Commission, one under the DMA and one under EU competition law (Article 101 and/or 102 TFEU). In practice this is unlikely to be problematic. As noted by Monti, this scenario is probably purely theoretical, in that the Commission is unlikely to pursue an investigation into the same conduct under both the DMA and EU competition rules. Indeed, the Commission would be expected to rely on the DMA, in that the latter does not require the Commission to define relevant markets, establish market power and show anticompetitive effects. It would make no sense for the Commission to waste resources pursuing an antitrust case when it could achieve the same result via the DMA. In addition, the DMA provides the Commission with ample enforcement powers (including the power to impose behavioural or structural remedies), hence there will be no reason for the Commission to have recourse to competition law with respect to the same conduct. In that regard, the Commission is likely to enjoy certain administrative discretion in deciding under which framework (DMA / competition law) it will pursue investigations.

Scenario 2: the undertaking is subject to separate proceedings under the DMA and national competition law, each brought by a different authority

In this scenario the undertaking is subject to separate proceedings brought by different authorities. Consider for example that the first set of proceedings is brought by the Commission on the basis of the DMA, while the second set of proceedings is brought by a national competition authority under EU and national competition rules. A variation of this scenario would involve a third party bringing an action against the undertaking in question before a national court for breach of EU and national competition rules.

This scenario is more likely to arise in practice. As Monti notes, a national competition authority or national court may be tempted to rely on national competition law to achieve a more ambitious result than that of the DMA – and indeed, some national competition authorities may do so in an attempt to make up for their limited role in enforcing the DMA.

Now, let’s assume that the first set of proceedings (say, the DMA proceedings) results in the final conviction or acquittal of the undertaking in question (hence the “bis” condition is satisfied). Is ne bis in idem triggered, to the effect that the second set of proceedings should be discontinued?  

The first step would be to examine whether the two proceedings satisfy the “idem” condition, understood as identity of offender and identity of facts per bpost and Menci. In practice, this will not be an easy condition to satisfy, as the Court has consistently taken a rather narrow view of the identity of facts condition (this was the case for example both in Toshiba and Slovak Telekom), stressing that the facts should be identical, not merely similar. In Nordzucker, the Court reiterated that the question of whether two antitrust proceedings concern the same facts needs to be examined by reference to the product market, the territory, and the time period during which the anticompetitive conduct is alleged to have taken place. Now, one could argue that this ruling concerns the case of two antitrust proceedings, hence it should not apply to our scenario, where one set of proceedings is brought under the DMA, which does not require the Commission to define any relevant market. Still, this does not seem convincing. Assume in our scenario that the two proceedings concern different time periods; in this case, it is implausible that the facts are identical. Relatedly, in a scenario where the facts are the same, if the DMA proceedings are brought after the national proceedings result in the final conviction or acquittal of the undertaking, then any overlap (and thus identity of facts) would exist solely with respect to the territory of the Member State where the national proceedings took place; the “idem” condition would not be satisfied for the rest of the EU. The Commission could thus carve out the territory of the Member State in question and take action for the rest of the EU.

Assuming the “idem” condition is satisfied, the second step will be to consider whether the duplication of proceedings – which would amount to a limitation of the fundamental right enshrined in Article 50 of the Charter – could be justified on the basis of Article 52(1) of the Charter. The national court would be called on to apply the analytical framework laid down in bpost, according to which the duplication of proceedings is justified if the following conditions are met:

Provided by law: the possibility of duplicate proceedings must be provided by law. The DMA provides that its application is without prejudice to EU and national competition law, hence this condition will be satisfied.

Essence of the right / Objective of general interest: the two proceedings must pursue, for the purpose of achieving a legitime objective of general interest, complementary aims relating, as the case may be, to different aspects of the same unlawful conduct at issue. If the two proceedings pursue the exact same objective, then the limitation of the ne bis in idem right is not justified. This is made clear in Nordzucker, where the Court held that two national competition authorities acting under Article 101 TFEU and corresponding provisions of national law pursue the same objective of ensuring that competition in the internal market is not distorted; as these proceedings do not pursue complementary aims, the Court held they “cannot in all evens by justified under Article 52(1) of the Charter”.

Hence the million-dollar question: does the DMA pursue the same objective as EU and/or national competition law? Or does it pursue a complementary aim?

On the one hand, the DMA proclaims to serve a distinct legal interest, namely ensuring the fairness and contestability of digital markets where gatekeepers are present. Of course, the Court of Justice is not bound by how the DMA labels itself. To draw an analogy, the fact that Article 23 of Regulation 1/2003 states that “[d]ecisions taken pursuant to paragraphs 1 and 2 shall not be of a criminal law nature” has not precluded the Court from considering antitrust proceedings to be of “criminal” nature. In that regard, several commentators (see e.g., the paper of Colangelo and Cappai and the sources they cite in page 21) have taken the view that the DMA in practice pursues the same objective as competition law, noting that (i) the Article 5 and 6 obligations mirror past and ongoing antitrust investigations; and (ii) the concepts of “fairness” and “contestability” are rooted in competition law (rather ironically, some commentators arguing the DMA is a competition law  instrument at the same time advocate for ousting the concept of “fairness” from EU competition law, arguing that Article 102 TFEU should not be used to run exploitative cases).

In any event, bearing in mind that this is something for the Court to decide, it is interesting to note that in past cases the Court has accepted that duplicate proceedings pursued complementary aims, even where that was not obvious. A case in point is Menci, where the Court held that in pursuing the objective of ensuring the collection of VAT, the two sets of proceedings (one administrative, one criminal) served complementary aims. The Court identified these complementary aims as deterrence and punishment of “any violation, whether intentional or not, of the rules relating to VAT returns and collection by imposing fixed administrative penalties”, on the one hand, and the deterrence and punishment of “serious violations of those rules, which are particularly damaging for society and which justify the adoption of more severe criminal penalties”, on the other. As AG Bobek noted in bpost, however, the lines between administrative and criminal are blurred: “[t]o the extent that the given administrative rule is intended not only to obtain the payment of what is due (with possible default interest), but also to impose a punitive fine, the respective ambits of the criminal and administrative rules overlap when it comes to the objectives pursued.”

Proportionality and the need for coordination: the duplication of proceedings should not exceed what is appropriate and necessary to attain the objectives legitimately pursued. With respect to strict necessity, the Court in bpost drew inspiration from Menci and the ruling of the ECtHR in A and B v Norway to lay down the following test: it is necessary to assess (i) whether there are clear and precise rules making it possible to predict which acts or omissions are liable to be subject to a duplication of proceedings and penalties, and also to predict that there will be coordination between the different authorities; (ii) whether the two sets of proceedings have been conducted in a manner that is sufficiently coordinated and within a proximate timeframe (the proceedings must be sufficiently close in substance and in time); and (iii) whether any penalty that may have been imposed in the first proceedings was taken into account when assessing the second penalty.

Therefore, the two authorities need to coordinate their proceedings so that the latter are sufficiently close in substance and in time, and such coordination needs to be provided for in legislation. There are legitimate questions as to whether the original DMA proposal of the Commission satisfies this condition, since it does not provide for any cooperation mechanism between the European Commission (in its capacity as enforcer of the DMA) and national competition authorities. It is thus interesting to see whether the final text of the DMA will contain provisions to that effect. Now, there is a well-established framework for cooperation between the Commission and national competition authorities (the European Competition Network), hence extending this framework to cover situations where the Commission enforces the DMA (or creating a parallel framework to that effect) should not be problematic.

Still, even if the DMA provides for a mechanism of cooperation, it is not possible to determine ex ante whether a duplication of proceedings is compatible with ne bis in idem. As acknowledged by the Court in bpost (para. 52), a full examination of the strict necessity condition is only possible ex post, having regard to the particular circumstances of the case. Indeed, it is only then that a court can determine whether the two authorities actually coordinated their proceedings, and whether any penalty that may had been imposed in the first proceedings was taken into account when assessing the second penalty.

And here lies the weakness of Menci, as endorsed in bpost. As AG Bobek insightfully observed, the approach in Menci transforms the ne bis in idem principle from an ex ante normatively defined test to an ex post corrective test, involving criteria which are bound to be circumstantial and accidental. In practice, this means that Menci (and bpost) limits the ability of the ne bis in idem principle to act prophylactically (ex ante) and thus prevent the continuation of the second set of proceedings (recall that the ne bis in idem principle prevents not only duplication of penalties but also of proceedings) – unless of course it is clear that the two proceedings serve the exact same objective, or unless it is patently obvious that there is no coordination between the two proceedings. If, on the other hand, this is not the case, a judge may be reluctant to stop the second set of proceedings, to the effect that the undertaking will have to wait for the second set of proceedings to conclude and then challenge the second penalty on grounds of ne bis in idem.

Conclusion

bpost and Nordzucker are two seminal judgments, in which the Court finally unified its approach to ne bis in idem across EU law. To put it in a nutshell, the Court opted for a broad notion of “idem” (based on identity of offender + facts), while allowing for derogations based on the limitation of rights clause in Article 52(1) of the Charter, where the principle of proportionality plays a central role. This approach aims to strike a balance between on the one hand the protection of the fundamental right enshrined in Article 50 of the Charter, and on the other hand the effective enforcement of administrative rules. At a high level, this approach leaves the door open for duplication of proceedings under the DMA and (EU and national) competition law against the same undertaking and for the same facts, provided that such a duplication serves complementary aims and respects the principle of proportionality. Ascertaining the latter is nevertheless possible only ex post, having regard to the particular circumstances of each case. Hence my prediction that this will be fertile ground for litigation once the DMA comes into effect.