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Chapter Three Procedural Law Pursuant to the EU Competition Law, the German Cartel Law and the Law Number 5/1999 in:

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The Implementation of Circumstancial Evidence pursuant to the European Union Competition Law, the German Cartel Law and the Indonesian Competition Law, page 127 - 244

1. Edition 2019, ISBN print: 978-3-8288-4127-7, ISBN online: 978-3-8288-7337-7, https://doi.org/10.5771/9783828873377-127

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Procedural Law Pursuant to the EU Competition Law, the German Cartel Law and the Law Number 5/1999 Procedural Law pursuant to the European (EU) Competition Law Introduction Principally, the enforcement proceedings of the European Competition law, are administrative proceedings, instead judicial ones.428 According to Klees the administrative nature thereof would manifest during the preliminary and investigation phases, where the evidences are collected.429 According to Schweitzer and Mestmäcker, the European Commission (the Commission) enforcement proceedings as to the EU competition rules have been considered mainly as the administrative proceedings. This applies not only to the Commission decision on finding and terminating of infringement430, the Decision on penalties in form of the fines431, the Decision on periodic penalty payments.432 Traditionally, in contrast to the United States (US) Antitrust law enforcement proceeding, the European and German Competition laws, rely predominantly upon the public enforcement method. In terms of a difference between the private and public enforcement aforementioned, Chapter Three 3.1 3.1.1 428 A. Klees, Europäisches Kartellverfahrensrecht: Mit Fusionskontrollverfahren (2. Aufl. Heymanns Carl. Verlag, 2013) 79–82. 429 ibid. 82–84. 430 H. Schweitzer and E.J. Mestmäcker, Europäisches Wettbewerbsrecht (3 Aufl. CH Beck, 2014) 511–514. 431 ibid. 432 ibid. 127 the normative structure is a determinant factor.433 This means, in the private enforcement method, the enforcement rules are to be written sophisticated enough, thus the Court could apply those rules correctly. In contrast, in the public enforcement method, those rules are subject to dissenting interpretations.434 Further, in terms of the enforcement method aforementioned, the German Cartel law has been characterised by a dualism of the public enforcement and supervision as well as the private enforcement (litigations).435 Henceforth, according to Gerardine et.al, there are five rationales for the European Competition law’s application of the public enforcement approach.436 First, enforcement of the Competition Law requires complex and specialised analytical appraisal, whereas an ordinary Court is not capable to perform this task. Hence, an administrative enforcement body, equipped with law and economic experts, is a key necessity. Second, due to the secretive nature of cartels, an independent administrative enforcement authorithy is very important to carry out sectorinquiries and market monitorings in order to detect anti-competitive practices. Third, a Court frequently hesitates to issue a judicial order for concluding the investigations over cartels infringement. Fourth, in the event of all necessary evidences are collected, a Court is often not able to manage a large number of documents and electronic data thereof. Consequently, a Court could not process the evidence to accomplish cartels cases. Fifth, a Court can only adjudicate cartels cases submitted by third parties. However, a Court could not initiate sector inquiries aimed to specific economic sectors and anti-competitive practices, which are highly important in the sense of economic value.437 With respect to the private enforcement (litigations) the European Competition law recognises an action for nullity of a collusive agreement; civil claims for elimination and forberarance of collusive agree- 433 Schweitzer, ‚Vorlesung zum deutschen und europäischen Wettbewerbsrecht‘ (WS 15/16, Fachbereich Rechtswissenschaft Freie Universität Berlin) 2–3. 434 ibid. 435 M. Heße, Wettbewerbsrecht: Schnell Erfasst (Springer, 2006) 35–36. 436 Geradin, Farrar, Petit, EU Competition Law (n 33) 47. 437 ibid. Chapter Three Procedural Law 128 ments and a claim for set-off and indemnities thereof.438 Whereas in the German Cartel law, the German Act against Restraint of Competition (GWB), in conjunctions with the German Civil Code (Burgerliches Gesetzbuch-BGB), recognises the civil claims similar to the EU aforementioned, but with an addition of the legal standing (power) of representative (class) action (Verbandsklagebefugnis).439 Equally important, the European Competition as well as the German Cartel law have been equipped with the public enforcement by the Antitrust/Competition Authorities, notably the Commission and the Bundeskartellkartellamt (the Federal Cartel Office), though the administrative instruments, consisting of:440 First, an order to bring the infringement to an end.441 Second, the provisional (interim) measures.442 Third, the commitments.443 Fourth, the ‘positive decision’.444 Fifth, the fines and periodic penalty payment.445 Sixth, the disgorgements (Vorteilsabschöpfung) by the Cartel Office (Bundeskartellamt), which is supported by the Association’s disgorgement.446 In general, the procedural rules of European competition are embodied in the Council Regulation (EC) No. 1/2003 of 16 December 2002 on the Implementation of the Rules on competition laid down in Articles 81 and 82 of the Treaty (“the Regulation Number 1/2003), the Commis- 438 Article 102 (ex Article 82 TEC), Consolidated version of the Treaty on the Functioning of the European Union – Part Three: Union Policies And Internal Actions – Title Vii: Common Rules On Competition, Taxation And Approximation Of Laws – Chapter 1: Rules on competition – Section 1: Rules applying to undertakings OJ C 115, 9.5.2008, 89–89. 439 Schweitzer, ‚Vorlesung zum deutschen und europäischen Wettbewerbsrecht: Sitzung 6‘ (WS 15/16, Fachbereich Rechtswissenschaft Freie Universität Berlin) 2–3. 440 ibid. 441 Art. 7 Regulation Nr. 1/2003. cf. Sec. 32 para. 1 GWB. Schweitzer, „Vorlesung zum deutschen und europäischen Wettbewerbsrecht“ (n 432) 5–8. 442 Art. 8 Regulation Nr. 1/2003. cf. Sec. 32 (a) GWB. Schweitzer, „Vorlesung zum deutschen und europäischen Wettbewerbsrecht“ (n 432) 5–8. 443 Art. 9 Regulation Nr. 1/2003. cf. Sec. 32 (b) GWB. Schweitzer „Vorlesung zum deutschen und europäischen Wettbewerbsrecht“, (n 432) 5–8. 444 Art. 10 Regulation Nr. 1/2003. cf. Sec. 32 (c) GWB. Schweitzer „Vorlesung zum deutschen und europäischen Wettbewerbsrecht“ (n 432) 5–8. 445 Art. 23, 24 Regulation Nr. 1/2003. cf. Sec. 81–84 GWB. Schweitzer „Vorlesung zum deutschen und europäischen Wettbewerbsrecht“ (n 432) 5–8. 446 cf. Sec. 34 and 34 (a) GWB. Schweitzer „Vorlesung zum deutschen und europäischen Wettbewerbsrecht“ (n 432) 5–8. 3.1 Procedural Law pursuant to the European (EU) Competition Law 129 sion Regulation (EC) No. 773/2004 of 7th April 2004 relating to the conduct of proceedings by the Commission pursuant to Articles 81 and 82 of the ECT as well as a series of the Commission’s Guidelines, Notices, Directives, including the Commission notice on best practices for the conduct of proceedings concerning Articles 101 and 102 TFEU (2011/C 308/06).447 In terms of the law enforcement the European Competition laws, there are 5 principal institutions, therefor: First, the EU Commission (“the Commission”). Second, the National Competition Authorities (NCAs).448 Third, the National Courts of EU Member States (“the EU National Courts”). Fourth, the European Competition Network (“ECN”). Fifth, the Courts of Justice of the EU.449 However, it should be bore in mind, that the antitrust enforcement proceedings rely predominantly on the National Competition Authority, such as the Bundeskartellamt, which implements those proceedings according to the Domestic Procedural Rules, but with its implementation is subject to the principle of effectiveness.450 Initially, the Commission, as a central figure, has been bestowed with three key duties.451 Firstly, the Commission ‘shall ensure the application of the Treaties, and of measures adopted by the institutions pursuant to them’ pursuant to Article 17 TFEU.452 Secondly, the Commission pursues a general policy aimed to apply the principles enshrined in the EU 447 P. Behrens, Europäisches Marktöffnungs- und Wettbewerbsrecht: Eine systematische Darstellung der Wirtschafts- und Wettbewerbsverfassung der EU (CF Müller, XLIX, 2017) 917–918. 448 Geradin, Farrar, Petit, EU Competition Law (n 33) 325–327. 449 ibid. 321. 450 This procedural principle means that the norms and rules enshrined in the EU Treaties, in the National laws, must not be designed such as in the practice to make its implementation impossible or excessively difficult, such as to obtain judicial protection. S. Kadelbach, Allgemeines Verwaltungsrecht unter europäischem Einfluss, Jus Publicum Bd.36 (Mohr Siebeck: 1999) 131. cf. Schweitzer, „Vorlesung zum deutschen und europäischen Wettbewerbsrecht“ (n 432) 3–5. 451 Jones and Sufrin, EU competition law. Text, cases, and materials. (4.th Ed. OUP, 2011) 1147–1150. 452 Article 17 (1) of the TFEU reads: “1. The Commission shall promote the general interest of the Union and take appropriate initiatives to that end. It shall ensure the application of the Treaties, and of measures adopted by the institutions pursuant to them. It shall oversee the Chapter Three Procedural Law 130 Treaty as well as guides the undertakings’ conduct in implementing the principles thereof. As an illustration, the Commission issues Guidelines to implement the Article 101 (3) TFEU’s provisions. Thirdly, by virtue of Article 103 (1) and (2) TFEU, the Commission is able to propose necessary legislations for implementing the Article 101 and 102 TFEU’s provisions.453 In addition, as regards the National Competition Authorities (NCA)’s responsibilities, Article 35 of the Regulation Number 1/2003 stipulates, as follows: “1. The Member States shall designate the competition authority or authorities responsible for the application of Articles 81 and 82 of the Treaty in such a way that the provisions of this regulation are effectively complied with. The measures necessary to empower those authorities to apply those Articles shall be taken before 1st May 2004. […] application of Union law under the control of the Court of Justice of the European Union. It shall execute the budget and manage programmes. It shall exercise coordinating, executive and management functions, as laid down in the Treaties. With the exception of the common foreign and security policy, and other cases provided for in the Treaties, it shall ensure the Union's external representation. It shall initiate the Union's annual and multiannual programming with a view to achieving interinstitutional agreements.” ibid. 453 The provisions of Article 103 TFEU (ex Article 83 TEC) stipulates: 1. The appropriate regulations or directives to give effect to the principles set out in Articles 101 and 102 shall be laid down by the Council, on a proposal from the Commission and after consulting the European Parliament. 2. The regulations or directives referred to in paragraph 1 shall be designed in particular: (a) to ensure compliance with the prohibitions laid down in Article 101(1) and in Article 102 by making provision for fines and periodic penalty payments; (b) to lay down detailed rules for the application of Article 101(3), taking into account the need to ensure effective supervision on the one hand, and to simplify administration to the greatest possible extent on the other hand; (c) to define, if need be, in the various branches of the economy, the scope of the provisions of Articles 101 and 102; (d) to define the respective functions of the Commission and of the Court of Justice of the European Union in applying the provisions laid down in this paragraph; (e) to determine the relationship between national laws and the provisions contained in this section or adopted pursuant to this Article. Article 103 (ex Article 83 TEC), Consolidated version of the Treaty on the Functioning of the European Union – Part Three: Union Policies And Internal Actions – Title Vii: Common Rules On Competition, Taxation And Approximation Of Laws – Chapter 1: Rules on competition – Section 1: Rules applying to undertakings OJ C 115, 9.5.2008. 3.1 Procedural Law pursuant to the European (EU) Competition Law 131 2. When enforcement of Community competition law is entrusted to national administrative and judicial authorities, the Member States may allocate different powers and functions to those different national authorities, whether administrative or judicial.”454 Even more, the EU National Courts function in three possible scenarios. First, they have jurisdictions as to civil litigation complaints between private undertakings, e.g. action for damages. Second, they act as a public enforcement actor of the Competition Law, for instance the Courts in Finland and Ireland.455 Third, they function as the Reviewer Court over the National Competition Authorities’ decisions.456 Hence, Article 15 of the Regulation Number 1/2003 mandates the institutional cooperation of National Courts with the Commission.457 454 Furthermore, the subsequent provisions of Article 35 of the Regulation 1/2003: “3. The effects of Article 11(6) apply to the authorities designated by the Member States including courts that exercise functions regarding the preparation and the adoption of the types of decisions foreseen in Article 5. The effects of Article 11(6) do not extend to courts insofar as they act as review courts in respect of the types of decisions foreseen in Article 5. 4. Notwithstanding paragraph 3, in the Member States where, for the adoption of certain types of decisions foreseen in Article 5, an authority brings an action before a judicial authority that is separate and different from the prosecuting authority and provided that the terms of this paragraph are complied with, the effects of Article 11(6) shall be limited to the authority prosecuting the case which shall withdraw its claim before the judicial authority when the Commission opens proceedings and this withdrawal shall bring the national proceedings effectively to an end.” EU Council, Regulation (EC) No 1/2003 of 16 December 2002 on the implementation of the rules on competition laid down in Articles 81 and 82 of the Treaty Official Journal L 001, 04/01/2003 P. 0001–0025. 455 The Commission, Cooperation with national courts (Antitrust). ‹http://ec.europa.e u/competition/court/antitrust.html› accessed on 19th October 2015, 2–5. 456 ibid. 457 “1. In proceedings for the application of Article 81 or Article 82 of the Treaty, Courts of the Member States may ask the Commission to transmit to them information in its possession or its opinion on questions concerning the application of the Community competition rules. 2. Member States shall forward to the Commission a copy of any written judgment of national courts deciding on the application of Article 81 or Article 82 of the Treaty. Such copy shall be forwarded without delay after the full written judgment is notified to the parties. 3. Competition authorities of the Member States, acting on their own initiative, may submit written observations to the national courts of their Member State on issues relating to the application of Article 81 or Article 82 of the Treaty. With the permission of the court in question, they may also submit oral observations to the Chapter Three Procedural Law 132 Nevertheless, Article 15 of the Regulation Number 1/2003 in conjunction with Article 267 TFEU enunciate that the EU National Courts’ request of legal opinion to the Commission does not preclude their rights to file a preliminary ruling to the Court of Justice of the EU. For that reason, Article 267 TFEU prescribes: “The Court of Justice of the European Union shall have jurisdiction to give preliminary rulings concerning: (a) the interpretation of the Treaties; (b) the validity and interpretation of acts of the institutions, bodies, offices or agencies of the Union; Where such a question is raised before any court or tribunal of a Member State, that court or tribunal may, if it considers that a decision on the question is necessary to enable it to give judgment, request the Court to give a ruling thereon. Where any such question is raised in a case pending before a court or tribunal of a Member State against whose decisions there is no judicial remedy under national law, that court or tribunal shall bring the matter before the Court. If such a question is raised in a case pending before a court or tribunal of a Member State with regard to a person in custody, the Court of Justice of the European Union shall act with the minimum of delay.”458 In addition, as regards the European Competition Network (ECN)’s duties, the Recitals 15 of the Regulation Number 1/2003 prerequisites, as follows: “The Commission and the competition authorities of the Member States should form together a network of public authorities applying the Community competition rules in close cooperation. For that purpose, it is necessary to set up arrangements for information and consultation. Further modalities for the cooperation within the network will be laid down and revised by the Commission, in close cooperation with the Member States.”459 national courts of their Member State. Where the coherent application of Article 81 or Article 82 of the Treaty so requires, the Commission, acting on its own initiative, may submit written observations to courts of the Member States. With the permission of the court in question, it may also make oral observations. For the purpose of the preparation of their observations only, the competition authorities of the Member States and the Commission may request the relevant court of the Member State to transmit or ensure the transmission to them of any documents necessary for the assessment of the case.” The Regulation (EC) No 1/2003 (n 453) Article 15. 458 Geradin, Farrar, Petit, EU Competition Law (n 33) 321–325. 459 The Regulation Number 1/2003 (n 453), Recitals 15. 3.1 Procedural Law pursuant to the European (EU) Competition Law 133 Equally important, the Courts of Justice of the EU play a very important role in the EU Competition Law’s enforcement. Whereas the Court of Justice of the EU consists of the General Court (GC) and the Court of Justice (ECJ), they have 3 chief duties. First, the annulment proceeding under Article 263 TFEU. Second, the revision of administrative fines according to Article 261 TFEU. Third, the adjudication of indemnity actions regulated by Article 268 TFEU.460 In like manner, Kokkoris outlines three duties of the Court of Justice of the EU. Firstly, pursuant to Article 267 TFEU the General Court and the Court of Justice (“ECJ”) have the principal juridical competences to adjudicate the competition law matters based upon the preliminary rulings by the Courts of Member States. Secondly, based on the appeal upon the Decision of the Commission the General Court in the first instance is able to adjudicate the competition laws dispute either by ordering a new investigation of the case or confirm the prior Decision of the Commission. Thirdly, the Court of Justice (ECJ), as the final instace court, can re-adjudicate the Decision of General Court. Thus, the ECJ can annul the previous decision based upon the parties’ further appeal. Moreover, the Court of Justice of the EU’s decisions serve as the subsequent jurisprudence of the EU Competition Law, whereby these decisions have a supremacy effect vis-à-vis the national Competition Laws of the Member States.461 As a matter of fact, hitherto, there have been critics as to the balancing of powers of the Commission in the enforcement European competition law. Whereby the Commission performs whole three functions in the enforcement proceedings, namely: investigations, prosecution, and decisions making as well as a ‘quasi legislative’ function, the public question as to the judicial protection guarantee mandated by Article 6 para 1 European Convention for the Protection of Human Rights and Fundamental Freedoms and Article 47 Charter of Fundamental Rights of the European Union would not be jeopardised. Nevertheless, after the Court of Human Rights of EU Decision in the Menarini case, the judicial supervision of the Court of Justice of EU over the Commission’s decisions has reflected the proper allocation of judicial 460 Jones and Sufrin, EU Competition law (n 450) 1147–1150. 461 I. Kokkoris, Competition cases from the European Union: the ultimate guide to leading cases from the EU, Member States and EFTA. (2nd edition. Sweet and Maxwell, 2010) 1–12. Chapter Three Procedural Law 134 powers; thus it would enable the guarantee and the maintenance of judicial protection as well as the guarantee of fair, impartial and objective trials.462 Fundamental Guiding Principles Within the European Competition law, particulary in the enforcement proceedings, theses guiding principles are utmost important and would serve as the common of the EU Law. In fact, the guiding principles have been developed by the Court of Justice of the EU in order to guarantee that ‘the law is observed’ in accordance with Article 19 (1) Treaty on European Union (TEU) as well as the compliance of the other EU insitutions, for instance, in their legislations.463 Indeed, Article 2 TEU [Article 6(1) EU] states clearly: “The Union is founded on the values of respect for human dignity, freedom, democracy, equality, the rule of law and respect for human rights, including the rights of persons belonging to minorities. These values are common to the Member States in a society in which pluralism, non-discrimination, tolerance, justice, solidarity and equality between women and men prevail”.464 Arguably, the guiding principles are profoundly important in the EU Competition Law’s enforcement owing to three reasons. First, the principles provide a platform for a fair and efficient administrative decisionmaking process. In other words, these principles ensure that officials 3.1.2 462 EU Courts of Human Rights, Decision 27.9.2011, Menarini: «Le respect de l’article 6 de la Convention n’exclut donc pas que dans une procédure de nature administrative, une «peine» soit imposée d’abord par une autorité administrative. Il suppose cependant que la décision d’une autorité administrative ne remplissant pas ellemême les conditions de l’article 6 Sec. 1 subisse le contrôle ultérieur d’un organe judiciaire de pleine juridiction […]. Parmi les caractéristiques d’un organe judiciaire de pleine juridiction figure le pouvoir de réformer en tous points, en fait comme en droit, la décision entreprise, rendue par l’organe inférieur. Il doit notamment avoir compétence pour se pencher sur toutes les questions de fait et de droit pertinentes pour le litige dont il se trouve saisi.“ Behrens, Europäisches Marktöffnungs- und Wettbewerbsrecht (n 446) 918–919. 463 H. Hofmann, G.C. Rowe, A. Türk, Administrative Law (n 24) 57–59. 464 ‹http://eur-lex.europa.eu/LexUriServ/LexUriServ.do? uri=OJ:C:2008:115:0013:0045:en:PDF› accessed on 14th October 2015. 3.1 Procedural Law pursuant to the European (EU) Competition Law 135 perform their duties impartially and make decisions rationally and proportionally. Second, the principles guarantee individuals and affected parties against arbitrary administrative decisions, to illustrate, duty to provide reason and protection of human (fundamental) rights. Third, the principles promote the accountability of administrative acts vis-à-vis the publics, for instance accessibility and openness rule.465 These guiding principles are internalised and manifest in three main aspects of the EU Competition law’s enforcement proceedings, notably: First, the efficient and effective implementation of the Commission’s investigatory powers. Second, the rights of defence of the Parties, affected by the onerous investigative measures of the Commission.466 Third, the judiciary control or supervision by the Court of Justice of EU over the Commission’s measures and decisions abovementioned.467 Principle of Legality Normatively, during the administrative proceedings, the Commission must act pursuant to the EU Laws, whether they stipulated in the primary or secondary legislations or in the jurisprudence of the Courts of Justice of the EU. Accordingly, these principles mandate several interlinked requirements, as follows: First, the administrative officials must act within power and doctrine of ultra vires acts. Second, the proper exercise of discretions. Third, the administrative officials must act in good faith (bona-fide) and to avoid an improper goal. Fourth, they must act in accordance with the prescribed legal procedures, such as conduct enquiries, right of defense, public participation and duty to state reasons. Fifth, they must respond to justified individual claims, such as comprehensive and necessary inquiries, provision of information and punctual consideration of application.468 Equally important, according to the Article 263 (1) and (2) of TFEU concerning the judicial review competences of the Court of Justice of EU, the compliance with the legality principle is the main guiding principle 3.1.2.1 465 H. Hofmann, G.C. Rowe, A. Türk, Administrative Law (n 24) 57–59. 466 Schweitzer, ‚Vorlesung zumWettbewerbsrecht‘ (n 432) 467 Behrens, Europäisches Marktöffnungs- und Wettbewerbsrecht (n 446) 917–921. 468 H. Hofmann, G.C. Rowe, A. Türk, Administrative Law (n 24) 57–60. Chapter Three Procedural Law 136 for the European Courts.469 Accordingly, the provisions of Article 263 (1) and (2) TFEU provides: “The Court of Justice of the European Union shall review the legality of legislative acts, of acts of the Council, of the Commission and of the European Central Bank, other than recommendations and opinions, and of acts of the European Parliament and of the European Council intended to produce legal effects vis-à-vis third parties. It shall also review the legality of acts of bodies, offices or agencies of the Union intended to produce legal effects vis-à-vis third parties.” “It shall for this purpose have jurisdiction in actions brought by a Member State, the European Parliament, the Council or the Commission on grounds of lack of competence, infringement of an essential procedural requirement, infringement of the Treaties or of any rule of law relating to their application, or misuse of powers”.470 Officiality Principle Within the administrative proceedings, the Commission is principally subject to the principle of ex-officio Discretion (Opportunitätsprinzip), which means that the initiation of investigation or inquiries against the Competition law’s infringement depends on the Commission. Further, the Commission has also discretionary power over indictments against the alleged undertakings.471 In addition, during the administrative proceedings, the Inquisitorial principle applies (Untersuchungsmaxime). Generally, this principle refers to the following duties: Firstly, the Commission shall examine all the facts ex-officio. Thus, the Commission determines the natures and scope of investigatory measures. Secondly, the Commission shall take into account all significant facts individually as well as the circumstances in favour of the alleged undertakings. Thirdly, the Commission could not refuse applications and thus give none of reasonable grounds. Further, according to Immenga and Mestmäcker, this principle implies the obligation to find the substantive truth (materiellen Wahrheit) as well the respect of legality of an administrative act (Rechtmäßgikeit).472 3.1.2.2 469 ibid. 470 ibid. 471 Klees, Europäisches Kartellverfahrensrecht (n 427) 80. 472 Immenga and Mestmäcker, Wettbewerbsrecht: Kommentar (n 44) 2212–2215. 3.1 Procedural Law pursuant to the European (EU) Competition Law 137 Whereas the provision of Article 296 (2) TFEU provides: “Legal acts shall state the reasons on which they are based and shall refer to any proposals, initiatives, recommendations, requests or opinions required by the Treaties.” Accordingly, the violation of this principle constitutes a breach against the important formal requirements of administrative act under the provision of Article 263 (2) TFEU.473 Accordingly this Article stipulates: “It shall for this purpose have jurisdiction in actions brought by a Member State, the European Parliament, the Council or the Commission on grounds of lack of competence, infringement of an essential procedural requirement, infringement of the Treaties or of any rule of law relating to their application, or misuse of powers.”474 Protection of the Fundamental Rights Principle Beumer maintains that protection of the fundamental rights principle is a cornerstone of fair administrative proccedings and of a fair trial in the EU Competition Law.475 In fact, since the entry into force of the Lisbon Treaty, the fundamental rights protection principle, e.g. right to be heard has a legally binding effect in the EU legal system.476 Specifically, Article 6 ECHR constitutes the fundamental rights protection principle in the EU procedural laws. Hence Article 6 ECHR covers two kinds of the EU procedures: First, the procedure concerning dispute on civil rights and obligations. Second, protection to procedures on criminal charges.477 As an illustration, in the Jussila v Finland case, the European Court of Human Rights (ECtHR) invoked the provisions of Article 6 ECHR in competition law matters.478 Furthermore, in the Menarini case, the ECtHR maintained that ‘the EU Competition Law proceedings are fully 3.1.2.3 473 Schweitzer and Mestmäcker, Europäisches Wettbewerbsrecht (n 429) 511–514. 474 Consolidated version of the Treaty on the Functioning of the European Union, Section 5: The Court of Justice of the European Union. ‹https://eur-lex.europa.eu/ legal-content/EN/TXT/?uri=celex%3A12012E%2FTXT› accessed on 05th October 2019. 475 E. Beumer, ‘The Interaction between EU Competition Law Procedures and Fundamental Rights Protection: The Case of the Right to Be Heard’ (Yearbook of Antitrust and Regulatory Studies, Vol. 2014 7 (10)) 11–12. 476 ibid. 477 ibid. 478 ibid. Chapter Three Procedural Law 138 subject to Article 6 ECHR’s protection’. Put differently, in the EU Competition Law’s proceedings, the fundamental rights protection starts when the Commission informs the undertaking in writing objection statements against the undertaking.479 Accordingly, the provisions of Article 6(1) and (3) of the Lisbon Treaty stipulate: “1. The Union recognises the rights, freedoms and principles set out in the Charter of Fundamental Rights of the European Union of 7 December 2000, as adapted at Strasbourg, on 12 December 2007, which shall have the same legal value as the Treaties. The provisions of the Charter shall not extend in any way the competences of the Union as defined in the Treaties. The rights, freedoms and principles in the Charter shall be interpreted in accordance with the general provisions in Title VII of the Charter governing its interpretation and application and with due regard to the explanations referred to in the Charter, that set out the sources of those provisions. 3. Fundamental rights, as guaranteed by the European Convention for the Protection of Human Rights and Fundamental Freedoms and as they result from the constitutional traditions common to the Member States, shall constitute general principles of the Union's law.”480 Furthermore, Recitals 37 of the Regulation Number 1/2003 provides: “This Regulation respects the fundamental rights and observes the principles recognised in particular by the Charter of Fundamental Rights of the European Union. Accordingly, this Regulation should be interpreted and applied with respect to those rights and principles.”481 In general, the fundamental rights protection principle in the EU Competition Law’s proceedings manifest in five aspects. First, the fair trial right. Second, the right to an oral hearing. Third, the right to access documents. Fourth, the professional secrecy right. Fifth, the limited right against self-incrimination.482 Also, as regards the fair trial’s right, Article 6 ECHR in conjunctions with Article 47 of the Charter of Fundamental Rights of the EU (CHFR- EU) possess “an open-ended, residual quality”, that is to say, several 479 ibid. 480 Khan and Kerse, EU Antitrust Procedure (n 253) 17–21. 481 The Regulation Number 1/2003, Recitals 37 (n 453). 482 Beumer, ‘the Interaction’ (n 474) 11–14, See Ezrachi, EU Competition Law, An Analytical Guide (n 239) 478–481. 3.1 Procedural Law pursuant to the European (EU) Competition Law 139 fundamental rights have been added into Article 6 ECHR, for instance right to oral hearing in one’s presence and protection against arbitraty decisions.483 Accordingly, Article 6 ECHR provides: “In the determination of his civil rights and obligations or of any criminal charge against him, everyone is entitled to a fair and public hearing within a reasonable time by an independent and impartial tribunal established by law. Judgment shall be pronounced publicly but the press and public may be excluded from all or part of the trial in the interests of morals, public order or national security in a democratic society, where the interests of juveniles or the protection of the private life of the parties so require, or to the extent strictly necessary in the opinion of the court in special circumstances where publicity would prejudice the interests of justice.” Further, the provisions of Article 47 (CHFR-EU) states: “Everyone is entitled to a fair and public hearing within a reasonable time by an independent and impartial tribunal previously established by law. Everyone shall have the possibility of being advised, defended and represented.” Equally important, Article 27 of the Regulation Number 1/2003 in conjuctions with Article 10–14 of the Commission Regulation Nr. 773/2004 elaborate procedural rights of the parties in competition law proceedings, e.g. right to be heard.484 Thus, the provisions of Article 27 of the Regulation Number 1/2003 read: „1. Before taking decisions as provided for in Articles 7, 8, 23 and Article 24 (2), the Commission shall give the undertakings or associations of un- 483 Beumer (n 474) 12–17. 484 The provisions of Article 10 until 14 of the Commission Regulation No. 773/2004 concerning the Right to be heard stipulates as follows: Article 10 concerning the Statement of objections and reply: “1. The Commission shall inform the parties concerned in writing of the objections raised against them. The statement of objections shall be notified to each of them. 2. The Commission shall, when notifying the statement of objections to the parties concerned, set a time-limit within which these parties may inform it in writing of their views. The Commission shall not be obliged to take into account written submissions received after the expiry of that time-limit. 3. The parties may, in their written submissions, set out all facts known to them which are relevant to their defence against the objections raised by the Commission. They shall attach any relevant documents as proof of the facts set out. They shall provide a paper original as well as an electronic copy or, where they do not provide an electronic copy, 28 paper copies of their submission and of the documents attached to it. They may propose that the Commission hear persons who may corroborate the facts set out in their submission.” Chapter Three Procedural Law 140 dertakings which are the subject of the proceedings conducted by the Commission the opportunity of being heard on the matters to which the Commission has taken objection. The Commission shall base its decisions only on objections on which the parties concerned have been able to comment. Complainants shall be associated closely with the proceedings. […] 3. If the Commission considers it necessary, it may also hear other natural or legal persons. Applications to be heard on the part of such persons shall, where they show a sufficient interest, be granted. The competition Article 11 concerning the Right to be heard: “1. The Commission shall give the parties to whom it has addressed a statement of objections the opportunity to be heard before consulting the Advisory Committee referred to in Article 14(1) of Regulation (EC) No 1/2003. 2. The Commission shall, in its decisions, deal only with objections in respect of which the parties referred to in paragraph 1 have been able to comment.“ See the European Commission Regulation (EC) No 773/2004 of 7 April 2004 relating to the conduct of proceedings by the Commission pursuant to Articles 81 and 82 of the EC Treaty (OJ L 123, 27.4.2004, p. 18–24). Article 14 concerning the conduct of oral hearings: “1. Hearings shall be conducted by a Hearing Officer in full independence. 2. The Commission shall invite the persons to be heard to attend the oral hearing on such date as it shall determine. 3. The Commission shall invite the competition authorities of the Member States to take part in the oral hearing. It may likewise invite officials and civil servants of other authorities of the Member States. 4. Persons invited to attend shall either appear in person or be represented by legal representatives or by representatives authorised by their constitution as appropriate. Undertakings and associations of undertakings may also be represented by a duly authorised agent appointed from among their permanent staff. 5. Persons heard by the Commission may be assisted by their lawyers or other qualified persons admitted by the hearing officer. 6. Oral hearings shall not be public. Each person may be heard separately or in the presence of other persons invited to attend, having regard to the legitimate interest of the undertakings in the protection of their business secrets and other confidential information. 7. The hearing officer may allow the parties to whom a statement of objections has been addressed, the complainants, other persons invited to the hearing, the Commission services and the authorities of the Member States to ask questions during the hearing. 8. The statements made by each person heard shall be recorded. Upon request, the recording of the hearing shall be made available to the persons who attended the hearing. Regard shall be had to the legitimate interest of the parties in the protection of their business secrets and other confidential information.” ibid. 3.1 Procedural Law pursuant to the European (EU) Competition Law 141 authorities of the Member States may also ask the Commission to hear other natural or legal persons.” Even more, according to Beumer, Article 6 ECHR provides the fair hearing guarantee, notably the right to an oral hearing. In fact, the right to an oral hearing in one’s presence serves as a safeguard against the Commission’s arbitrary decisions. Albers and William pointed out the high importance of an oral hearing right in order to ensure checks and balances in the administrative proceedings, mainly due to: First, the complexity of competition cases and second, the discretionary competences of the Commission as a law enforcement institution.485 Moreover, the Commission Regulation No. 773/2004 explicitly mandate the right to an oral hearing, whereas Article 12 of the Commission Regulation No. 773/2004 reads, as follows: “The Commission shall give the parties to whom it has addressed a statement of objections the opportunity to develop their arguments at an oral hearing, if they so request in their written submissions.” Further, as regards to hearing of other persons, Article 13 stipulates: “1. If natural or legal persons other than those referred to in Articles 5 and 11 apply to be heard and show a sufficient interest, the Commission shall inform them in writing of the nature and subject matter of the procedure and shall set a timelimit within which they may make known their views in writing. 2. The Commission may, where appropriate, invite persons referred to in paragraph 1 to develop their arguments at the oral hearing of the parties to whom a statement of objections have been addressed, if the persons referred to in paragraph 1 so request in their written comments. 3. The Commission may invite any other person to express her or his views in writing and to attend the oral hearing of the parties to whom a statement of objections has been addressed. The Commission may also invite such persons to express their views at that oral hearing.” Equally important, Article 28 of the Regulation Number 1/2003 in conjunctions with Article 16 until 17 of the Commission Regulation No. 773/2004 explicitly regulates the protection of professional secrecies and confidential information. Accordingly, these stipulated rights refer as well to the right to refuse to give evidence (Zeugnisverweigerungsrecht) 485 M Albers and K Williams ‘Oral Hearings – Neither a Trial Nor a State of Play Meeting’ (Working Paper, 2010) ‹http://ec.europa.eu/competition/hearing_officers/albers_ williams_article.pdf › accessed on 31th December 2018. Chapter Three Procedural Law 142 which is subject to the Courts’ discretion (nemo tenetur se ipsum accusare). Interlinked with the right abovementioned, Article 27 (2) of the Regulation Number 1/2003 in conjunctions to Article 15 until 16 of the Commission Regulation No.773/2004 stipulates the right to access files during the administrative proceedings, as follows: “The rights of defence of the parties concerned shall be fully respected in the proceedings. They shall be entitled to have access to the Commission's file, subject to the legitimate interest of undertakings in the protection of their business secrets. The right of access to the file shall not extend to confidential information and internal documents of the Commission or the competition authorities of the Member States. In particular, the right of access shall not extend to correspondence between the Commission and the competition authorities of the Member States, or between the latter, including documents drawn up pursuant to Articles 11 and 14. Nothing in this paragraph shall prevent the Commission from disclosing and using information necessary to prove an infringement.”486 In the second place, Ezrachi explains, the Courts of Justice of the EU, in the Orkem v. Commission and Mannesmannröhren-Werke AG v. Commission cases, has introduced the limited right against self-incrimination in the competition law enforcement proceedings.487 By virtue of Recitals 23 of the Regulation Number 1/2003, Ezrachi outlines that the limited right against self-incrimination refers to the following notions: “The Commission is empowered to take statements and interview natural and legal persons who consent to be interviewed for the purpose of collecting information relating to the subject-matter of an investigation. When complying with a decision of the Commission, undertakings have a right of silence only to the extent that they would be compelled to provide answers which might involve an admission on their part of the existence of an agreement which it is incumbent upon the Commission to prove. However, undertakings are obliged to answer factual questions and to provide documents, even if this information may be used to establish against them, or against another undertaking, the existence of an infringement.”488 Indeed, the implementation of the limited right against self-incrimination is stipulated in the provisions of Article 3 and 4 of the Regulation 486 The Regulation Number 1/2003 (n 453) Article 27 (2 487 Ezrachi, EU Competition Law (n 239) 478–80. 488 ibid. 478–482. 3.1 Procedural Law pursuant to the European (EU) Competition Law 143 773/2004 concerning the Commission’s competences to take statements and inquire information from the undertakings during the administrative proceedings.489 In dubio pro reoPrinciple According to Holtappels, historically the in dubio pro reo principle originates from the Roman civil and subsequently penal laws.490 By virtue of the Reception process in the German legal system, initially in the penal proceedings during the Frankish Kings in the 5th until 6th centuries, continued by the medieval period’s criminal law, this principle has evoluted progressively.491 Within the European procedural law, the principle of in dubio pro reo (presumption of innocence or doubt benefits to the accused) means, whenever the Court demands the conviction, that the accused had indeed unlawfully substantiated or violated whole statutory elements of the provision.492 In particular, within the European Competition law, especially in the review or verification proceedings, this principle is of crucially importance.493 According to Ott, the in dubio pro reo principle would be the decision rule, instead of an evidentiary one, within the 3.1.2.4 489 ibid. 490 P Holtappels, Die Entwicklungsgeschichte des Grundsatzes "in dubio pro reo" (de Gruyter Verlag, 1965) 2–5. The manuscripts (Edict) of Roman laws stipulated accordingly: Inter pares numero iudices si dissonae sententiae proferantur, in liberalibus quidem causis, secundum quod a divo Pio constitutum est, pro liberiate statutum optinet, in aliis autem causis pro reo. Quod et in iudiciis publicis optinere oportet, 14). 491 In the Constitutio Criminalis Carolina, notably the Halsgerichtsordnung Karls V., stipulated „und daß […] an viel orten offter mais wider recht und gute vernunfft gehandelt und entweder die unschuldigen gepeinigt und getötet werden. Im Artikel 150 heißt es dann, die Richter sollten ja nicht eigene unvernünfftige Regel oder Gewohnheit. […] sprechen machen, die den Rechten widerwärtig seynd als je Zeiten an den peinlichen Gerichten hißhero geschehen“ ibid.19–25. 492 J.G. Fischer et.al (eds.) Karlsruher Kommentar zur Strafprozessordnung (7. Auflage CH Beck 2013), R. 62 493 Loewenheim et. al (eds) Kartellrecht: Europäisches und Deutsches Kartellrecht, Kommentar (3 Aufl, CH Beck, München: 2016), R 43. Chapter Three Procedural Law 144 judiciary process, that the Judge must follow in evaluating the whole evidence and circumstances.494 Whereas the in dubio pro reo principle serves as a corner stone principle in the European Competition procedural laws, it requires mandates that, whenever the Commission and the Court of Justice of EU remain doubt as to the violation of an accused during the Antitrust enforcement proceedings, having assessed whole facts as well as direct and indirect evidences emerged; thus, the accussed undertaking must enjoy judicial benefits and cannot be deemed guilty by the Commission or by the Court.495 Altough the principle of in dubio pro reo has not been explicitly stipulated in the European Competition legislations, the provisions of Article 6 para. 2 of the European Convention of Human Rights (ECHR) and Sec. 261 of the German Code of Criminal Procedure (StPO) enunciate this principle.496 Lianos and Genakos emphasise that the 494 According to Ott: „This, in the StPO nowhere explicitly pronounced, the evidence evaluation dominating "rule of law fundamental principle" with constitutional rank whose violation already observed the review court on the Sachricht, means that everyone, despite having exhausted all the evidence, must object to unrecoverable doubts as to the fact that the defendant has significant grounds for the decision. The principle "in dubio pro reo" is a decision rule and not a rule of proof, which the trial judge only has to obey if he has not fully convinced himself of the existence of a fact that is directly relevant to the decision after the evidence has been completed. Only if there are still doubts after the conclusion of the evaluation of the evidence which the trial judge can not overcome will he have to decide in favor of the defendant by always choosing the most favorable of the defendants from several possible conclusions. For individual elements of the evaluation of evidence, the principle of doubt (with regard to the main fact) is in principle not applicable not just as little isolated from the existence of a concrete indices of relief or exoneration.The doubts do not say anything about how the trial judge has to appreciate the evidence; nor about the standard by which the judge may consider a fact certain. The principle is therefore not violated if the judge should have doubted, but only if he is convicted, although he doubts, which in turn is reversible only if it also results from the grounds of the judgment. On the other hand, the application of the "doubts" does not need it if the doubts which Richter still has after concluding the evaluation of the evidence are based only on the assumption of a purely intellectual, abstract-theoretical possibility, which lack real points of contact; In this case, the judge already spans the requirements of the judicial conviction formation, if he gives in to the not "reasonable" doubt and not convicted.” (unofficial translation). Ott in Karlsruher Kommentar zur Strafprozessordnung (n 491) 56. 495 ibid. 496 Nigel Foster and Satish Sule, German Legal System and Laws (4th Ed OUP,2014) 139– 140. 3.1 Procedural Law pursuant to the European (EU) Competition Law 145 principle of ‘in dubio pro reo’ has been embodied in Article 48 (1) of the Charter of Fundamental Rights of the EU (CHFR-EU), which prescribes that ‘any doubt in the mind of the Court must operate to the advantage of the undertaking to which the decision finding an infringement was addressed’.497 Nehl argues, taking into account the ‘quasi-penal character of the imposition of fines of EU Competition procedural law, the European Competition law recognizes“ the principle in dubio pro reo and the applicable evidentiary requirement rules, for instance the burden of proof, were general principles of law, whose non-observance amounted to an error of law.498 Accordingly, the ECJ in the Hülls case explained, as follows: “[…] the presumption of innocence resulting in particular from Article 6(2) ECHR is one of the fundamental rigthts which […] reaffirmed in the Preamble of the Single European Act and in Article F(2) of the Treaty on European Union, are protected in the (Union) legal order.”499 Further, the ECJ asserted: “[…] given the nature of the Competition Law infringements […] and the nature and degree of severity of the ensuing penalties, the principle of the presumption of innocence applies to the procedures relating to infringements of the competition rules applicable to undertakings that may result in the imposition of fines or periodic penalty payments.”500 Equally important, as to the scope of application of the in dubio pro reo, the Court of Justice of EU in the joined case of Sumitomo Chemical and Sumika Fine Chemical v. Commission argued, as follows: “[…] the presumption of innocence implies that every person accused is presumed to be innocent until his guilt has been established according to law. It thus precludes any formal finding and even any illusion to the liability of an accused person for a particular infringement is a final decision, unless that person has enjoyed all the usual guarantees accorded for the exercise of 497 ibid. 140–142. 498 Nehl, ‘Commentary Article 48 (1) – Presumption of Innocence’ in Peers, et.al, The EU Charter of Fundamental Rights: A Commentary (Bloomsbury,2014) 1278–1280. 499 Case C-199/92 P Hüls AG v Commission of the European Communities 1999 I-04287, paras. 141–55. cf. Ezrachi, EU Competition Law (n 239) 71. 500 Case C-199/92 P Hüls para. 150. Chapter Three Procedural Law 146 the rights of the defence in the normal course of proceedings resulting in a decision on the merits of the case.”501 Accordingly, Nehl hypothesizes that implementation of the in dubio pro reo principle encompasses three application scopes. First, the personal scope of application, which means the principle in dubio pro reo “covers any natural or legal person charged with and liable to be held responsible for an infringement of the EU Competition Law, that may give rise to a decision stating the infringement and imposing a pecuniary sanction.” This scope of application correlates mainly to imposition of fines (periodic penalties). Second, the in dubio pro reo principle applies mainly to whole competition law proceedings, both in the administrative and judicial phases, aiming at finding or confirming any competition law infringement and at imposing a pecuniary sanction. Nevertheless, this principle applies outside the formal proceedings, for example the premature/undue public statements by the Commission. Also, in the administrative and judicial proceedings as to competition law infringements, the presumption of innocence principle prerequisites mainly the governing rules on the administration of evidence, namely by the Commission. Put differently, whenever the Commission either commits an improper reversal burden of proof, jeopardising the alleged undertakings or the Commission has failed to meet the standard of proof in its final decisions; these will result in the breach of in dubio pro reo principle, that is to say, an error of law. Third, the temporal scope of application, whereas the in dubio pro reo principle’s application reaches beyond merely the investigation of an infringement and imposition of pecuniary sanctions (fines) proceedings, notably the Commission’s final decision at the end of administrative proceedings.502 In fact, the GC has emphasised in the Pergan Hilfsstoffe case, as follows: “the guilt of a person accused of an infringement is established, definitively only where the decision finding that infringement has acquired the force of Res judicata, which implies either the absence of an appeal against 501 See General Court, Joined Cases T-22/02 and T-23/02, Sumitomo Chemical and Sumika Fine Chemicals v Commission (6 October 2005) [Sumitomo Chemicals], http://curia.europa.eu/juris/liste.jsf?language=en&num=T-22/02, accessed on 19th October 2018. 502 Nehl, Commentary Article 48 (n 497) 283. 3.1 Procedural Law pursuant to the European (EU) Competition Law 147 that decision by the person concerned within the time limits provided in the sixth paragraph of Article 263 TFEU or after such appeal, the definitive closure of the contentious proceedings, in particular by a judicial decision confirming the lawfulness of that decisions.”503 As a matter of fact, in the Rhône-Poulenc case, the Advocate General Vesterdorf strongly advocated the application of ‘in dubio pro reo’ principle, as follows: “Considerable importance must be attached to the fact that the competition cases of this kind (cartels) are in realtiy of a penal nature, which naturally suggests that a high standard of proof is required (…). There must be a sufficient basis for the decision and any reasonable doubt must be for the benefit of the applicants according to the principle of in dubio pro reo.”504 Further, the Advocate General Vesterdorf emphasised: “This principle is of essentially importance in the competition case presenting indirect (circumstantial) evidences of a concerted practice, such as parallel conducts of alleged undertakings. The European Courts have been reluctant to simply conclude the existence of concerted practices based upon merely price parallelism. Thus, the European Court demands a realtively higher standard of proof in order to prevent the false-positive error, notably by judging the oligopolistic interdependence as a cartel infringement against the Article 101 (1) TFEU.”505 Consequently, Thanos describes that in the EU Competition Law’s proceedings, the in dubio pro reo principle has three juridical effects, as follows:506 First, in the evidentiary requirements rule. Altough the in dubio pro reo principle has been implicit in the competition laws of the EU and Member States, this principle has been indeed the cornerstone for the EU Competition Law’s rules of evidence. Second, in the Commission’s professional activities and discretionary competences to issue decisions. Thus, the Commission is subject to the in dubio pro reo principle, that is to say, the Commission must be prudently careful in issuing the decisions and holding press-release related to the alleged undertakings in cartel cases. 503 Nehl, Commentary Article 48 (n 297) 1282–1283. 504 Lianos and Genekos, Econometric Evidence (n 26) 86–87. 505 ibid. 506 I. Thanos, Die Reichweite der Grundrechte im EU-Kartellverfahrensrecht Schriften zum Europäischen Recht (EUR), Band 172 (Duncker & Humblot, 2015) 352–354. Chapter Three Procedural Law 148 Third, in the Leniency programme’s application. This means the Leniency programme must comply with the legality principle (Rechtsmäßigkeit) in the implementation and arrangement thereof. Consequently, by virtue of Article 101(1) and (3) TFEU as well as Article 2 of the Regulation Number 1/2003, Thanos concludes that the in dubio pro reo principle will require the Competition Authorithy to bear: First, the subjective burden of proof (formelle Beweislast), which means who must present the evidence to substantiate the allegation (assertion) before the Court. Second, the objective burden of proof (materielle Beweislast), meaning who must burden a risk of an unprovability resulted from the allegation (assertation).507 The Administrative Proceeding’s Phase and Principle By virtue of the Regulation Number 1/2003, the EU Competition Law’s proceeding recognises the following possibilities for the Commission to initiate inquiry or investigation measures. First, by means of market monitoring.508 Second, obtaining information from other authorities.509 Third, receiving information from the complainants.510 Fourth, acquiring information from consumers.511 Fifth, secure information through the Leniency programme and sector inquiry.512 3.1.3 507 ibid. 508 ibid. 509 ibid. 510 ibid. 511 ibid. 512 According to Geradine, et.al as regards to the initiation of administrative proceedings verb is missing, as follows: a. Market monitoring “The Commission is not a repressive Authority. It does not hide and spy on the market players in an obsessive quest for evidence for unlawful conduct. Yet and contrary to what is often written, the Commission constantly monitors the evolution of markets. The Commission pays close attention to market facts and data, through the monitoring of business journals, academic papers, economic reports, radio and television information” b. Information receive through other institutional channels “Information that circulates within DG COMP. As explained previously, within sectoral Directorate, several units generally work on distinct antitrust matters (in general antitrust, mergers and State aid). Those units are not supposed to act as silos. Rather, 3.1 Procedural Law pursuant to the European (EU) Competition Law 149 Subsequently, according to Klees, the Commission attempts to obtain necessary knowledge of facts, enabling the Commission to prove information retrieved by the merger and State aid units should be shared with the antitrust unit and vice versa. This may thus lead to the opening of Articles 101 and 102 TFEU cases.” c. Information received from complainants “Pursuant to Article 7 (3) of the Regulation 1/2003, a ‘natural or legal person can show al legitimate interest and Member States’ can lodge complaints alleging breaches of Article 101 and 102 TFEU. The Commission adopted a Notice on the handling of complaints, which sets out the conditions of admissibility of complaints, the rights of complainants, and their involvement in the procedure. Informal vs Formal complaints. There are two possible ways to complain before the Commission. First, natural or legal persons can complain informally. The complainant is then a mere informant. He or she brings information on potentially anticompetitive practices to the attention of the Commission, through unofficial contacts. Should the Commission open proceedings subsequently, it will be deemed to have acted ex officio. Informal complainants enjoy no specific rights to participate in the subsequent proceedings (through for example the submission of observations). Second, natural or legal persons can formally complain to the Commission pursuant to Article 7 (2) of the Regulation 1/2003. Those complaints must comply with the requirements set out in the Regulation 773/2004 relating to the conduct of the proceedings. In contrast to informal complainants, formal complainants benefit from specific rights. First, the formal complainants have a right to a reasoned reply from the Commission. Second, formal complainants can participate in the subsequent proceedings. This, however, comes at certain prices: drafting a formal complaint consumes time, effort and money. Moreover, formal complainants, whose identity is disclosed to the firm(s) accused of anti-competitive conducts – may be subject to retaliation. 4. Information received from consumers “Whilst the consumers are often said to be the true addressees of competition policy, their role in competition proceedings, and in particular in the detection of competition infringements, has remained embryonic. Consumer Liaison Office. In a bid to foster consumer participation in competition proceedings, in 2003 the Commission created a Consumer Liaison Office (CLO) within the DG Competition. The CLO is primarily responsible for receiving information and request concerning competition problems faced by the end users, namely the consumers. A team of Consumer Liaison Correspondent responsible for each economic sector gives advice to consumers within a month of receiving queries.“ 5. Information received through specific legal instruments “The EU competition framework also provides for two Ad-hoc insturments that purport to improve the Commission’s ability to detect infringements, that is, Sector inquries and the Leniency Programme“ cf. Geradine, Farrar, Petit EU Competition Law (n 44) 391–405. Chapter Three Procedural Law 150 cartels infringement under Article 101 TFEU.513 According to the Regulation Number 1/2003, the Commission is vested with investigatory competences in order to collect necessary information from the affected parties. Kerse and Khan point out that the Commission’s investigatory competences are twofold. First, for requesting necessary information to establish a case’s facts. Second, for inspecting the undertaking’s premise. In addition, the Commission can opt either to ask necessary information by request or by issuing an order.514 Accordingly, the Commission can request necessary information, which encompasses: First, contemporary documentary evidence of the alleged undertaking. Second, the parties’s ex-post facto statement during the investigation proceeding.515 Altough the Commission has the considerably wide investigatory competences in the administrative proceedings, Article 18 until Article 21 of the Regulation Number 1/2003 confine the Commission’s competences. In fact, the Regulation Number 1/2003’s limitation applies to the Commission investigatory competences, as follows: First, the inquiries into certain economy sectors and into certain types of agreement.516 Second, the competence to investigate allegations of violation against the provisions of Article 101 and 102 and the Merger Regulations of the EU. 513 Klees, Europäisches Kartellverfahrensrecht (n 427) 83–87. 514 Kerse and Khan, EU Antitrust Procedure (n 253)103–105. 515 ibid. 125. 516 The provisions of Article 17(1) of the Regulation Number 1/2003 read: “1. Where the trend of trade between Member States, the rigidity of prices or other circumstances suggest that competition may be restricted or distorted within the common market, the Commission may conduct its inquiry into a particular sector of the economy or into a particular type of agreements across various sectors. In the course of that inquiry, the Commission may request the undertakings or associations of undertakings concerned to supply the information necessary for giving effect to Articles 81 and 82 of the Treaty and may carry out any inspections necessary for that purpose. The Commission may in particular request the undertakings or associations of undertakings concerned to communicate to it all agreements, decisions and concerted practices. The Commission may publish a report on the results of its inquiry into particular sectors of the economy or particular types of agreements across various sectors and invite comments from interested parties.” 3.1 Procedural Law pursuant to the European (EU) Competition Law 151 Judiciary Review by the Court of Justice of the EU With respect to the EU Competition Law proceedings, Schweitzer explains that the judiciary review (judicial supervision) by the Court of Justice of the EU has been a fundamental element of the EU’s commitment to the rule of law principle.517 Principally, the judicial review by the Court of Justice of the EU serves the following functions: First, to protect the institutional balance under the EU Treaties as well as to ensure the Commission does not commit ultra-vires518 Second, to ensure consistent judicial interpretation of the competition legislations by means of observing their systematic function and defined goals. Ultimately, this leads to equal treatment and legal certainty. Third, to protect the affected undertakings or parties, that is to say, their procedural and substantive rights.519 Also, Schweitzer asserts the importance of the EU judicial review in the competition law cases, particulary to minimise the Commission’s prosecutorial biases, as follows: “A principled and well-functioning regime of judicial review is a fundamental part of the European Union’s commitment to the rule of law, and of particular relevance in the field of EU competition law: Over the last 50 years, the EU Commission has become one of the most powerful competition authorities worldwide. Efforts to strengthen private enforcement notwithstanding, the EU heavily relies on public enforcement to implement its competition rules. The EU Commission is at the center of this public enforcement regime. It is a specific feature of the EU Commission’s enforcement powers that it combines investigative, prosecutorial and decision-making powers. The risk of a prosecutorial bias is an obvious corollary of such an institutional design. Apart from procedural guarantees during the administrative proceedings and internal checks and bal- 3.1.4 517 Schweitzer, ‘Judicial Review in EU Competition Law’ in Lianos and Geradin (eds.). Handbook on European competition law: Enforcement and procedure (Edward Elgar Publishing, 2013) 491. 518 Etimology, ultra-vires means ‚beyond the powers or, an act in excess of their existing powers‘. Historically, “The ultra vires doctrine originated in the Anglo -American legal system, but is now recognised also with us. After the ultra vires doctrine are transactions which enter a legal entity under public law by her outside the specified by law or the articles purview said legal person, legally invalid.” ‹http://w ww.proverbia-iuris.de/ultra-vires› accessed on 17th March 2017. 519 Schweitzer, Judicial Review (n 516) 491. Chapter Three Procedural Law 152 ances, it must be countered by a strong and efficient regime of judicial review.”520 Equally important, Mestmäcker and Schweitzer assert that in the EU Competition Law’s system, whereby the administrative authorithy (Verwaltungsbehörde) can both investigate and make decision over competition law cases, an effective judicial review is profoundly important. In fact, the effective judiciary review principle has been integrated in the EU legal system by virtue of Article 6 (2) ECHR and Article 47 of the CHFR-EU. Even more, in the Menarini case the European Court of Human Rights (ECtHR) emphasised the judicial review of an imposition of fines decision (Bußgeldbeschluss), that is to say, to rectify the administrative body’s decision in terms of de jure and de facto revisions. If necessary, the Courts of Justice of the EU can replace the administrative body’s decision with their rectified decisions.521 On the one hand, Mestmäcker and Schweitzer outline that Article 263 TFEU enables the Courts of Justice of the EU to perform the judicial review, namely the legality of Commission’s decision. Nonetheless, the Courts’s judicial review competences are limited by the EU Competition Law’s jurisprudences, whereby the Commission has discretionary competences in the judgements involving appraisal of complex economic circumstances. For example, the relevant market analysis and the working effects of anticompetitive practices. On the other hand, the EU Competition Law’s jurisprudences have been advocating the intensive judicial reviews over the Commission’s decisions regardless the Commission’s discretionary competences. Accordingly, by virtue of the EU Competition Law’s jurisprudences, the Courts of Justice of the EU are obligated to: “examine not only the objective truth of the evidence presented, namely the reliability and consistency, but also to inspect whether the evidence contains all relevant data for assessing complex circumstances and thus the evidence can substantiate the conclusions, inferred from the evidence.”522 In the EU Competition Law’s proceedings, the Courts of Justice of the EU can perform three different functions: First, as the administrative 520 ibid. 521 Schweitzer and Mestmäcker, Europäisches Wettbewerbsrecht (n 429) 530–531. 522 ibid. 3.1 Procedural Law pursuant to the European (EU) Competition Law 153 court, for example reviewing the legality of the Commission’s decision. Second, as the civil court, that is to say, to give material compensations for damages due to the EU organs’ action. Third, as the constitutional court, notably, to adjudicate cases pertaining the legal interpretations of the EU Treaties.523 Principally, the provisions of Article 263 TFEU serve as the juridical platform for the judicial review of competition law cases. Hence Article 263 TFEU prescribes, as follows: “The Court of Justice of the European Union shall review the legality of legislative acts, of acts of the Council, of the Commission and of the European Central Bank, other than recommendations and opinions, and of acts of the European Parliament and of the European Council intended to produce legal effects vis-à-vis third parties. It shall also review the legality of acts of bodies, offices or agencies of the Union intended to produce legal effects vis-à-vis third parties. It shall for this purpose have jurisdiction in actions brought by a Member State, the European Parliament, the Council or the Commission on grounds of lack of competence, infringement of an essential procedural requirement, infringement of the Treaties or of any rule of law relating to their application, or misuse of powers.” According to Schweitzer, under the provisions of Article 263 TFEU concerning the legality supervision mechanism, the judiciary review of the Courts of Justice of the EU encompasses: First, review over the infringement of an essential procedural requirement (procedural propriety review). Second, review over the infringement of the EU Law.524 With regard to the procedural propriety review, the Courts of Justice of the EU will examine the Commission’s investigation competence application, that is to say, whether the Commission obeys the EU procedural laws. Further, Schweitzer asserts, as follows: “[…] with the burden of proof being on the Commission, the Court will, inter alia, inquire whether the Commission has complied with its duty ‘to examine carefully and impartially all the relevant aspects in the individual case, whether it has fully respected the right to be heard and the duty to provide a statement of reason (Article 296(2) TFEU).” 523 Kerse and Khan, EU Antitrust Procedure, 521–522. 524 Schweitzer, Judicial Review (n 516) 495–500. Chapter Three Procedural Law 154 The ECJ explains as to the statement of reason, as follows: “show clearly and unequivocally the reasoning of the Community authority which adopted the measure so as to inform the persons concerned of the justification for the measure adopted and to enable the Court to exercise its powers of review”525 In the second place, as regards to the review of the EU Law’s infringement, the Court of Justice of the EU must guarantee the institutional balances, that is to say, to ensure that the Commission complies with the EU substantive laws. Further, the Courts of Justice of EU shall ensure a consistent interpretation and application of EU laws in order to protect the legal certainty. Eventually, the Court of Justice of EU must protect the fundamental and human rights as mandated by the EU treaties and international laws. Put differently, the Court of Justice of EU as ‘recours pours excess de pouvoir’, in terms of administrative court, shall examine the administrative acts of Commission under the principle of legality, for example reviewing the Commission ‘margin of discretion’.526 According to Schweitzer, in the judicial practice of EU Competition Law, the European Courts of Justice of the EU distinguish three types of judicial review over competition law cases.527 First, the review of law. Second, the review of facts. Third, the review of application of laws to facts.528 Also, the first type of review is subject to ‘full and comprehensive judicial review’. Whereas, the second and third type of review are subject to ‘full judicial review’. Accordingly, as regards the first type of review, pursuant to the Article 19 (1) TFEU the European Courts will “ensure that in the interpretation and application of the Treaties the law is observed”. On the one hand, the Court of Justice of EU will perform judicial review as to substantial aspect of the EU Competition rules, for example whether the terms ‘agreements’, ‘concerted practices’ and ‘restriction of competition’ have been correctly applied. On the other hand, in the second and third types of review, the Court of Justice of EU shall merely examine the correctness and comprehensiveness of facts used by the Commission. Besides, pur- 525 Schweitzer, Judicial Review (n 516) 495–499. 526 Schweitzer, Judicial Review (n 516) 494–499. 527 ibid. 528 ibid. 3.1 Procedural Law pursuant to the European (EU) Competition Law 155 suant to the Article 32 of Protocol on the “Statute of the Court of Justice of the European Union” the European Courts can ask expert evidences to find the material truth in the judicial proceedings. However, the presentation of economic expert evidences in the competition law cases is difficult to implement.529 Moreover, the European Courts of Justice of the EU will perform the judicial review to facts as well as to the application of the law to the facts involving complex assesments. Principle and Rule concerning Evidence Burden and Standard of Proof In the European Competition law’s enforcement proceedings, Article 2 of the Regulation Number 1/2003 stipulates, as follows: “Burden of proof In any national or Community proceedings for the application of Articles 81 and 82 of the Treaty, the burden of proving an infringement of Article 81(1) or of Article 82 of the Treaty shall rest on the party or the authority alleging the infringement. The undertaking or association of undertakings claiming the benefit of Article 81(3) of the Treaty shall bear the burden of proving that the conditions of that paragraph are fulfilled.”530 Historically, the evidentiary provisions of Article 2 of the Regulation Number 1/2003 derogated from the procedural rules contained in the previous Regulation Number 17/62, whose objectives are to solidify the ‘direct enforcement’ system as well as the legal exemptions of Article 101 (3) TFEU, which subsequently would reduce the judicial uncertainties over the facts’conclusion.531 Systematically, the evidentiary rules in Article 2 of the Regulation Number 1/2003 have been manisfested in three kinds of proceedings of the European Competition law, notably: Initially, the administrative 3.1.5 3.1.5.1 529 ibid. 530 G.K de Bronett, Europäisches Kartellverfahrensrecht: Kommentar zur VO 1/2003 (2. Auflage Carl Heymanns, 2012) 56–59. 531 These provisions of Article 2 are to be read in conjuctions with Article 103 paragraph 2 TFEU, notably alphabet b: 1. The appropriate regulations or directives to give effect to the principles set out in Articles 101 and 102 shall be laid down by the Council, on a proposal from the Commission and after consulting the European Parliament. Chapter Three Procedural Law 156 proceeding.532 Secondly, the imposition of administrative fines proceeding.533 Thirdly, the civil litigation proceeding.534 For an example in the administrative proceedings, the Commission shall corroborate or present convincing (firm) evidences, that solidify the conviction, that a cartel infringement had indeed took place.535 Subsequently, for example, in the imposition of administrative fine proceedings, the in dubio pro reo principle has a precedence (primacy) before the evidentiary provisions of Article 2 thereof. This rule applies both to the imposition of administrative fines under Article 23 of the Regulation in conjunctions to Sec. 81 of the German Cartel Act. Respectively, this rule must be read in conjunctions with the German’s Declarative Protocol concerning the precedence of the presumption of innocence.536 Chronologically, prior to Article 2 of the Regulation Number 1/2003 the ECJ the Anic case, had envisaged the meaning of burden of proof, namely: “[…] it is incumbent on the Commission to prove the infringements which it has found and to adduce evidence capable of demonstrating to the requisite legal standard the existence of circumstances constituting the infringement. […] In doing this, the Commission must establish in particular all the facts enabling the conclusion to be drawn that an undertaking participated in such an infringement and that it was responsible for the various aspects of it.”537 Furthermore, Recitals 5 of the Regulation Number 1/2003 prerequisites: “It should be for the party or the authority alleging an infringement of Article 81(1) and Article 82 of the Treaty to prove the existence thereof to the required legal standard.”538 2. The regulations or directives referred to in paragraph 1 shall be designed in particular: (b) to lay down detailed rules for the application of Article 101(3), taking into account the need to ensure effective supervision on the one hand, and to simplify administration to the greatest possible extent on the other. 532 Schmidt in Immenga and Mestmäcker, Wettbewerbsrecht (n 44) R. 35–37. 533 ibid., R 38–39. 534 ibid., R 35–37. 535 Schmidt in Immenga and Mestmäcker, Wettbewerbsrecht (n 44) R. 38–39. 536 ibid. 537 ibid., R. 1–15. 538 de Bronett, Europäisches Kartellverfahrensrecht (n 529) 56–58. 3.1 Procedural Law pursuant to the European (EU) Competition Law 157 Hence the burden of proof rests primarily upon parties or authorities alleging an infringement against Article 101 (1) TFEU. Once this could be established, the burden of proof shifts to alleged undertakings in order to counter allegations. Thus, alleged undertakings could argue that the concurrence of wills is subject to beneficial exemptions of Article 101 (3) TFEU.539 Accordingly, the European Competition law embraces the principle incumbit, probatio, qui dicit, non qui negat.540 With regard to the burden of proof, it should be bore in mind that the Courts of Justice of the EU embrace the principle of in dubio pro reo, pursuant to Article 6 (2) European Court of Human Rights (ECHR) Convention. Consequently, an imposition of fines or penaltic payments upon undertakings due to competition law violation should be subject to this principle. This presumption of innocence principle refers to the notion, as follows: “[…it] implies that every person accused is presumed to be innocent until his guilt has been established according to law. It thus precludes any formal finding and even any allusion to the liability of an accused person for a particular infringement in a final decision unless that person has enjoyed all the usual guarantees accorded for the exercise of the rights of the defence in the normal course of proceedings resulting in a decision on the merits of the case.”541 Furthermore, in the European Competition Law, following categorisation between burden and standard of proofs, as well as material subjective and objective evidential burdens the following notions play a central role: “[…] the standard of proof determines the requirements which must be satisfied for facts to be regarded as proven. It must be distinguished from the burden of proof. The burden of proof determines, first, which party must put forward the facts and, where necessary, adduce the related evidence (“formelle Beweislast”, also known as the evidential burden); second, the allocation of that burden determines which party bears the risk of facts remaining unresolved or allegations unproven (“materielle Beweislast”).”542 539 Jones and Surfin, EU Competition Law (n 450) 123. 540 The Latin maxim, meaning “The burden of the proof lies upon him who affirms not he who denies” Geradin, Ferrer, Petit, EU Competition Law (n 44) 391–4. 541 Jones and Sufrin (n 450) 123. 542 C. de la Torre 'Evidence, ‘Proof and Judicial Review in Cartel Cases' (World Competition, Volume 32/ Issue 4, Kluwer Law International, 2009) 505–578. Chapter Three Procedural Law 158 As far as the standard of proof is concerned, the European Competition Law’s jurisprudence competition law has been up to now requiring that ‘sufficiently, precise and coherent proofs’ must be established.543 Furthermore, the European Courts in the competition law precedents require quality of evidences as follows: ‘sufficiently precise and coherent [or consistent]’544, ‘precise and consistent’545, ‘solid, specific and corroborative’546, ‘firm, precise and consistent body of evidence’547, ‘convergent and convincing’548, ‘convincing’549, or ‘cogent’.550 Furthermore, the Court of Justice in its recent decision, Dresdner Bank case, stipulated: “Any doubt in the mind of the Court must operate to the advantage of the undertaking to which the decision finding an infringement was addressed. The Court cannot therefore conclude that the Commission has established the infringement at issue to the requisite legal standard if it still entertains any doubts on that point, in particular in proceedings for annulment of a decision imposing a fine. […] the Commission must show precise and consistent evidence in order to establish the existence of the infringement.551 Furthermore, the ECJ in the Dresdner Bank case stipulated that ‘the Commission must adduce precise and consistent evidence to establish cartels agreement. On the one hand, the Commission should not establish precision and consistency as regards to each element of infringement, but merely globally.552 On the other hand, the European courts in adjudicating competition law cases indicate a strong tendency to the principle ‘beyond reasonable doubt’ in terms of its eviden- 543 The standard of proof refers to “the standard of proof determines degree of conviction, which the judges must establish by considering the acceptable evidentiary instruments, in order to substantiate an allegation as truth and accept the evidences.The standard of proof determines the degree of conviction, the need to obtain the decision because of the admissible evidence ”. cf. ibid. 544 Geradine, Ferrer, Petit, EU Competition Law (n 44) 128–130. 545 Schmidt in Immenga and Mestmäcker, Wettbewerbsrecht (n 44) 25–29. cf. Geradine, Ferrer, Petit, EU Competition Law (n 44), 128–130. 546 ibid. 547 ibid. 548 ibid. 549 ibid. 550 Ibid. 551 Geradine, Ferrer, Petit, EU Competition Law (n 44), 128–129. 552 ibid. 3.1 Procedural Law pursuant to the European (EU) Competition Law 159 tiary standard. In the Woodpulp case, for example, the Court of Justice stipulated: “the evidence must be ‘sufficiently precise and coherent […] to justify the view that the parallel business […] was the result of concerted action.” Equally important, Bellamy, the former Judge of the European Court, asserted as regards to evidentiary standard, as follows: “Thus, we have not yet articulated the difference known in common law systems between the criminal standard of ‘proof beyond reasonable doubt’ and the civil standard of ‘balance of probabilities’, a difference which is also known in civil law systems but not perhaps articulated in quite the same way. In practice, we are applying something very close to the criminal standard but perhaps subconsciously making some allowance in cartel cases for the inherent difficulty of proving collusion. “553 Equally important, Schweitzer explains that the European Competition Law requires the Commission to apply significanty higher evidentiary standards to prove cartels infringements under Article 101 TFEU, particulary in the decision imposing fines, similar to ‘beyond reasonable doubt’ in the common law system.554 Accordingly, the GC argued in the Siemens case regarding the evidentiary standard thereof: “In competition matters, the Commission must show precise and consistent evidence in order to establish the existence of the infringement and to support the firm conviction that the alleged infringements constitute appreciable restrictions of competition within the meaning of Article 81(1) EC. However, it is not necessary for every item of evidence produced by the Commission to satisfy those criteria in relation to every aspect of the infringement. It is sufficient if the set of indicia relied on by the institution, viewed as a whole, meets that requirement. The existence of an anti-competitive practice or agreement may therefore be inferred from a number of coincidences and indicia which, taken together, may, in the absence of another plausible explanation, constitute evidence of an infringement of the competition rules.”555 Consequently, by inferrence from the EU Competition Law’s jurisprudences, Schweitzer emphasises that “if any doubt remains in the mind of the court on whether the Commission has established an infringement, it follows from the of innocence [in dubio pro reo] as established 553 OECD, ‘Judicial Enforcement of Competition Law 1996’ (Roundtable Policy, 1996) 105–107. 554 Schweitzer, Judicial Review (n 516) 501. 555 ibid. General Court, Case T‑223/11 Siemens AG v European Commission. Chapter Three Procedural Law 160 by Article 6(2) ECHR and as accepted as a general principle of the Union law that the Commission’s decision finding an infringement must be annulled.”556 Evidentiary Evaluation and Category of Evidence In the European competition law enforcement proceedings, evidences could be classified into: inculpatory and exculpatory evidences as well as direct and indirect (circumstantial) evidences. According to the Commission: “the notion of indirect or circumstantial evidences (…) comprise of evidence which is appropriate to corroborate the proof of existence of a cartel by way of deduction, common sense, economic analysis or logical inferences from demonstrated facts”.557 Whilst direct evidence reveals directly the relevant facts, indirect evidences “prove a fact with which the relevant fact bears a logical relationship. Indirect evidence can rarely be used in isolation and usually requires corroboration or is itself used to corroborate other (possibly also indirect) evidence.” For example, in proving cartels agreement, the Commission could not rely solely upon indirect evidences, such as economic evidences. Mere economic evidences, such as parallel price movements, could not serve as sufficient proof of a cartels’ practice. These evidences ought to exist side-by-side with other evidences to corroborate other material indications regarding cartels practice. In other words, indirect (circumstantial) evidences on their own could be sufficient to prove cartels infringement, provided the judges review theses evidences in a holistic way and thus an overall indication of violation could be manifested.558 Equally important, the Commission can employ the direct evidences and the indirect (circumstantial) evidences to substantiate cartels infringement in accordance with Article 101 TFEU. However, in the practice of EU Competition Law, due to an absence of exact definitions of these evidentiary types, there has been a difficulty to make a clear distinction between the direct and indirect evidences. Further, as 3.1.5.2 556 Schweitzer, Judicial Review (n 516) 501. 557 Lianos and Genakos,’ Econometric Evidence’ (n 26) 55–57. 558 de la Torre, ‘Evidence, Proof and Judicial Review’ (n 541)505–578. 3.1 Procedural Law pursuant to the European (EU) Competition Law 161 regards to the increasing importance of indirect (circumstantial) evidence, Buhart and Maulin report, as follows: “However, direct evidence available to the competition authorities is increasingly rare due to the business community’s growing awareness of European competition law and the risk of fines. Given these developments, so as not to pose a burden on the Commission deemed “impossible”, the Commission may prove, to some extent, its claims through the use of presumptions. The Community courts have thus validated the use of circumstantial evidence to corroborate the existence of a cartel based on deductions or economic analysis. This was especially the case in the Wood Pulp judgment, in which the ECJ appointed two expert economists responsible for determining whether the Commission’s analysis concerning alleged parallel conduct was correct.”559 The Application of Evidentiary Rules and Principle In the context of application of evidentiary rules to Article 101 (1) TFEU, particulary the concerted practices, the real difficulties encountered by the EU Competition Authorithy (the Commission) are the informal market coordination by undertakings, which are committed within unlawfully secretive circumstances, such as by a price increase announcement leading to cartels. Herewith, Article 2 of the Regulation Number 1/2003 in correlation with Article 101 (1) TFEU, elaborates the so-called direct evidence, on the one hand, and the indirect (circumstantial) evidence on the other hand.560 According to Schröter and van Vormizeele, the direct evidences of unlawful market coordinations by undertakings, either in the form of the agreements, decisions of undertakings association, or of the concerted practices, include, among others, documents, that consist of agendas, participants’ list, verbatims of meetings, logs or records of participating undertakings, exchange of correspondence, scripts on the future corporate actions and policies disbursed in medias, witness 3.1.5.3 559 J Buhart and R Maulin, ‘Proof in Cartels: State of Play and Perspectives’ (Concurrences N° 4–2011) http://awa2012.concurrences.com/academic/article/proof-in-c artels-state-of-play-and, accessed on 20th March 2016 51–64. 560 Emmerich in Immenga and Mestmäcker, Wettbewerbsrecht: Kommentar (n 44) R. 98–102. Chapter Three Procedural Law 162 statements or even personal confessions of the cartel participants.561 In majority of cases, the Commission obtained the direct evidences by means of the Leniency programme.562 561 Schröter and van Vormizeele in von der Groeben, Schwarze, Hatje (eds.), Europäisches Unionsrecht. Vertrag über die Europäische Union – Vertrag über die Arbeitsweise der Europäischen Union – Charta der Grundrechte der Europäischen Union (7 Aufl. Baden-Baden (Nomos) 2015). 562 The Leniency programme refers to a general term for the total or partial reduction of fines applied to firms that co-operate with antitrust authorities in cartel investigations, which are currently enunciated in the 2006 Commission Notice on immunity from fines and reduction of fines in cartel cases, as amended in 2015. The Commission, Notice on Immunity from fines and reduction of fines in cartel cases, Official Journal C 298, 8.12.2006, 17. According to the Commission, Directorate General for Competition (DG COMP): “In essence, the leniency policy offers companies involved in a cartel – which self-report and hand over evidence – either total immunity from fines or a reduction of fines which the Commission would have otherwise imposed on them. It also benefits the Commission, allowing it not only to pierce the cloak of secrecy in which cartels operate but also to obtain insider evidence of the cartel infringement. The leniency policy also has a very deterrent effect on cartel formation and it destabilizes the operation of existing cartels as it seeds distrust and suspicion among cartel members. In order to obtain total immunity under the leniency policy, a company which participated in a cartel must be the first one to inform the Commission of an undetected cartel by providing sufficient information to allow the Commission to launch an inspection at the premises of the companies allegedly involved in the cartel. If the Commission is already in possession of enough information to launch an inspection or has already undertaken one, the company must provide evidence that enables the Commission to prove the cartel infringement. In all cases, the company must also fully cooperate with the Commission throughout its procedure, provide it with all evidence in its possession and put an end to the infringement immediately. The cooperation with the Commission implies that the existence and the content of the application cannot be disclosed to any other company. The company may not benefit from immunity if it took steps to coerce other undertakings to participate in the cartel. Companies which do not qualify for immunity may benefit from a reduction of fines if they provide evidence that represents "significant added value" to that already in the Commission’s possession and have terminated their participation in the cartel. Evidence is considered to be of a "significant added value" for the Commission when it reinforces its ability to prove the infringement. The first company to meet these conditions is granted 30 to 50% reduction, the second 20 to 30% and subsequent companies up to 20%. The Commission considers that any statement submitted to it within the context of its leniency policy forms part of the Commission’s file and may therefore not be disclosed or used for any other purpose than the Commission’s own cartel proceedings.” 3.1 Procedural Law pursuant to the European (EU) Competition Law 163 As far as the indirect (circumstantial) evidences are concerned, the Commission and the Court of Justice of EU could prove the unlawful market coordinations, notably by the concerted practices, through the indirect evidences obtained during the administrative and judicial proceedings. For example, the uniform market behaviour of undertakings could constitute an indirect evidence. However, the evaluation or appraisal of indirect (circumstantial) evidence must be subject to the considerations of peculiar characteristics of the market at hand.563 Hence, such an irrational corporate actions or conducts, which are contrary to the economic interest of an undertaking at hand could be an indirect (circumstantial) evidence.564 Equally important, as regards the corroboration of indirect (circumstantial) evidences, according to Emmerich, the ambivalence of market behaviours of undertakings, notably in the oligopolistic market structure, must be carefully considered by the Competition Authority. Therefore, the Commission and the Court of Justice of EU, in order to reach the convicing and firm conclusion as to the cartel violation, must corroborate further the indirect evidences, the so-called ”Plus factors” or the “Parallelism plus”. Respectively, in the praxis of the European Competition law, Emmerich elaborates the ‘Plus factors’ as follows: “Such plus factors are, in particular, the participation of the participating companies in joint meetings with an anti-competitive objective and all other forms of information exchange, provided that there are other alternative courses of action open to the market. The same applies if the parallel behavior of the undertakings concerned creates competitive conditions The same is true if companies consistently demand identical prices in different national markets, even though the diverging market structures in the various Member States are the same Certain Member States may indeed allow or even suggest a differentiated price strategy or, if the circumstances of a common price increase, as in the past, are broadly similar imminent amounts of the price increase and the like more necessarily indicate a previous vote. Another such plus factor is the fact that the common and identical behavior of companies must remain incomprehensible for their individual interests and can therefore only be explained on the basis The Commission, http://ec.europa.eu/competition/cartels/leniency/leniency.html, accessed 28th December 2018. 563 Schröter and van Vormizeele in von der Groeben, Schwarze, Hatje (eds) Europäisches Unionsrecht (n 560) R. 65–69. 564 ibid. Chapter Three Procedural Law 164 of common goals and plans. For example, where producers from one Member State in other Member States also only supply to producers but refuse to supply to traders and end users, if they follow export prices higher local producer prices instead of price competition with their lower prices, if they refrain from exports and if they exaggerate on the export markets, clearly demanding prohibitively-priced prices. Again, of course, if companies are able to give other plausible reasons for their behavior. Other circumstances, depending on the peculiarities of the individual markets may indicate the existence of a behavioral vote, but are the simultaneous termination of the business relationship with a company by several competitors, of the common distribution of competitors through the same dealer or representative or a single distribution organization, co-operation in joint ventures or joint control of a competitor, as well as personnel links at the executive level.”565 Whereas, according to Kovavic, in other perspective as regards the “Plus factors”, the European Competition law and US Antitrust law’s practices have since longtime developed this kind of indirect evidences for the purpose of distinguishing collusive agreements, and concerted practices from the oligopolistic interdependence, occuring ordinarily in an oligopoly market, by elaborating as follows: “Evidence of certain types of conduct strongly signifies market collusion. Examples include, as argued by Kovacic and others, ‘super plus factors’ such as evidence that competing firms share firm-specific production information.In the absence of such evidence, a decision to further investigate market players for potential collusion can be based on empirical analysis, including the use of empirical screens. For example, a decision to further investigate can also be justified when the data in question (e.g. price or quantity-related data) are clearly abnormal and completely different from a carefully chosen benchmark.”566 565 Emmerich in Immenga and Mestmäcker, Wettbewerbsrecht (n 44) R. 100–102. 566 E Ghezzi; M Maggiolino, ‘Bridging EU Concerted Practices With U.S. Concerted Actions’ (Journal of Competition Law & Economics, Volume 10, Issue 3, Oxford Academic, 2014) 647–690. 3.1 Procedural Law pursuant to the European (EU) Competition Law 165 Procedural Law pursuant to the German Cartel Law Introduction Principally, the German Act against Restraints of Competition (GWB) or the German Cartel Law) stipulates four main enforcement procedures of the prevailing cartel law.567 First, the administrative proceeding (Verwaltungsverfahren) before the Competition governmental authorities (Kartellbehörde, Bundeskartellamt).568 Second, the appeal or complaint proceedings (Beschwerdeverfahren) before the Courts.569 Third, the imposition of fines proceedings (Bußgeldverfahren).570 Fourth, the civil litigation (Bürgerliche Streitigkeiten) before the Courts.571 Furthermore, the German Cartel law stipulates that there are five Competition Authorities (Kartellbehörden), responsible for the implementation of the Law and share jurisdictions. First, the Federal Cartel Office (Bundeskartellamt or FCO), whose main duties are to apply GWB to all restraints of competition having an effect on Germany, irrespective the location of an infringement. The Bundeskartellamt is an independent higher federal authorithy assigned to the Federal Ministry of Economics and Technology and serves as the centre of the eGerman Leniency Progamme. The Bundeskartellamt establishes a cooperation with other competition authorities particulary the Directorate General of Competition of the European Commission.572 Second, the Federal Ministry of Economics and Technology (Bundesministerium für Wirtschaft und Technologie-BMWT), whose main function is to issue a ministerial authorisation (Ministererlaubnis) whenever a concentration prohibited by the FCO has outweight benefits to the economy as a whole.573 Third, the State Cartel Offices (Landeskartellbehörden), whose main duty is to deal with competition cases which af- 3.2 3.2.1 567 Bach, in Immenga and Mestmäcker, Wettbewerbsrecht, Band.2 (CH Beck, München, 2012) 2160–65. 568 Pursuant to the Sec. 54–62 GWB. Bach in Immenga and Mestmäcker (n 566). 569 Pursuant to the Sec. 63–76 GWB. ibid. 570 Pursuant to the Sec. 81–86 GWB. ibid. 571 Pursuant to the Sec. 87–89a GWB. ibid. 572 Schneider in Langen and Bunte, Kommentar zum (n 99) 1133–1135. 573 Staebe in Just and Schulte, Kartellrecht (n 118), 381–399. Chapter Three Procedural Law 166 fect one Federal State (Land). However, the merger and acquisition cases are subject to FCO’s examination.574 Fourth, the other Authorities, for instance the Federal Network Agency (Bundesnetzagentur) and the Monopolies Commission (Monopolkommission), whose main responsibilities comprise, among others: to develop the electricity, gas, telecomunication, post and railway markets through the liberalisation and deregulation intruments.575 Fifth, the District Court and the Federal Supreme Court (Bundesgerichtshof-BGH), whereas the Decision of the Bundeskartellamt is subject to the Higher Regional Court/Court of Appeals (Oberlandesgerichte-OLG). Furthermore, the Decision of the Higher Regional Court can be appealed to the Bundesgerichsthof in the following matters, notably: the questions of general importance, the development of law and the ensurement of uniform court practice.576 The Administrative Proceeding (Verwaltungsverfahren) General Principles In general, the administrative proceedings rules before the German Competition Authority (Kartellbehörde) are regulated in Sec. 54 until 62 of the GWB. Besides, there are common provisions for administrative proceedings, the complaint (Beschwerde) and the appeal of law (Rechtsbeschwerde) pursuant to Sec. 77 until 80 of the GWB. In addition, provisions of the Administrative Procedure Act (Verwaltungsverfahrensgesetz – VwVfG) complement the administrative proceedings of the German Cartel Law.577 The administrative proceedings rules before the Kartellbehörde have been very formal. The rules give the Kartellbehörde powers to make legally binding decision proportionally. However, the Bundesgerichtshof had in the Pepcom case made decision concerning the 3.2.2 3.2.2.1 574 ibid. 575 Schneider in Langen and Bunte, Kommentar zum (n 99) 1133–1135. 576 Bechtold and Denzel in Kokkoris, “Competition cases (n 460) 501–510. 577 Funke in Berg and Märsch, Deutsches und Europäisches Kartellrecht (n 297) 568– 569. 3.2 Procedural Law pursuant to the German Cartel Law 167 Third-party’s right to appeal, which was developed in accordance to the EU Competition Law.578 Systematically, the administrative proceeding provisions in Sec. 54 until 62 of the GWB shall not apply to other enforcement proceedings, such as the imposition of fines proceeding (Bußgeldverfahren). Accordingly, the rules concerning investigation and procedural rights of the Parties under the administrative proceeding largely differ with the other proceedings. Thus, the Kartellbehörde is obliged from the start of case to decide whether the administrative proceeding or the imposition of fines will apply to cases in question. However, the Kartellbehörde can shift the proceeding from one to another depending upon the discretion (Ermessen). Hence whenever the event shift from the administrative to the imposition of fine proceeding, the Kartellbehörde is able to re-employ previously obtained evidences in a proportional manner.579 As has been previously noted, in the administrative proceeding before the Kartellbehörde a set of general guiding rules of the Administrative Procedure Act (VwVfG) applies. First, the inspection of files and secrecy (privacy) rules according to Sec. 29 and 30 of the VwVfG. Second, the relevancy of procedural and/or formal mistakes. Third, the re-interpretation rule and ancillary provisions as stipulated in Sec. 36 of VwVfG. Fourth, the withdrawal and revocation of administrative acts according to Sec. 48 and 49 of VwVfG.580 Equally important, in the administrative proceeding of the German Cartel law, the principle of ‘protection of legitimate expectation’ prevails as well as legal certainty shall apply under Sec. 38 of VwVfG. In addition, Sec. 61 of VwVfG requires the immediate enforcement measure of the Decision of the Kartellbehörde.581 At the same time, the Kartellbehörde imposes also a set of informal administrative proceeding practices, which comprise among others: the publication of information, advocacy, informal information request, lecturing activities, and public relations matters.582 578 Peter in Just and Schulte, Kartellrecht (n 118) 408–410. 579 Bach, in Immenga and Mestmäcker, Wettbewerbsrecht (n 566) 2174–2177. 580 Ost in Säcker, et.al, Europäisches und deutsches Wettbewerbsrecht (n 13) 1000–1002. 581 Bach in Immenga and Mestmäcker, Wettbewerbsrecht (n 566) 2147–2150. 582 Ost in Säcker, et.al, Europäisches und deutsches Wettbewerbsrecht (n 13) 1066–1070. Chapter Three Procedural Law 168 In fact, the administrative proceedings before the Kartellbehörde consists of three main phases. Firstly, the initiation or opening phase. Subsequently, investigation and evidentiary phase. Eventually, the conclusion or decisional phase. In the opening or initiation of a case phase, the Kartellbehörde can initiate a case either by ex-officio (von Amts wegen) or upon request or application (Antrag) pursuant to Sec. 54 (1) of the GWB. However, the Kartellbehörde can initiate an investigation based on its own initiative having received request from complainants pursuant to Sec. 54 (2) of the GWB.583 Accordingly, in this context the problematic of ‘horse and rider’ emerges.584 Furthermore, in this phase the Opportunity principle (Opportunitätsprinzip) applies, which refers to the considerations of the Kartellbehörde as to whether and how it takes enforcement measures against the Cartel law infringement.585 Equally important, as regards to the participating Parties in the administrative proceeding, Sec. 54 (2) of the GWB elaborates that Parties to the proceedings before the Kartellbehörde are: First, those who have applied for the initiation of the proceeding. Second, the alleged cartels, undertakings, trade and industry associations or professional organisations against which the administrative proceedings are directed. Third, persons and associations of persons whose interests will be substantially affected by the decision and who, upon their application, have been admitted by the Competition Authority to the proceedings.Furthermore, the Bundeskartellamt shall also be the party to the proceedings before the supreme Land Authorities (Landesbehörde) as stipulated by Sec. 54 (3) of the GWB. In this context, the investigation phase recognises three courses of action: First, searching towards the alleged undertakings, second, compilation and third, an analysis of evidences and lastly examination of witnesses. Thus, according to Sec. 57 of the GWB, the taking of evidences is carried out following the court’s proceeding practice.586 Even more, the provisions of Sec. 32 until 32 (e) and 34 of the GWB confer the Bundeskartellamt following decisional powers. Accordingly, its principally important powers are: First, the order con- 583 Bach, Immenga and Mestmäcker, Wettbewerbsrecht (n 566) 2162–216 584 Peter in Just and Schulte, Kartellrecht (n 103) 405–406. 585 Funke in Berg and Märsch, Deutsches und Europäisches Kartellrecht (n 297) 570. 586 Ost in Säcker, et.al, Europäisches und deutsches Wettbewerbsrecht (n 13) 1001–1014. 3.2 Procedural Law pursuant to the German Cartel Law 169 cerning termination and subsequent findings of infringements pursuant to Sec. 32 of the GWB. Second, the edict of preliminary injunctions according to Sec. 60 of the GWB. Third, the prohibition concerning the mergers by undertakings stipulated by Sec. 36 (1) of the GWB. Fourth, the order concerning skimming-off of benefits pursuant to Sec. 34 and 43 of the GWB. Thereby, in the conclusion phase, the provisions of Sec. 61 stipulate two elements: First, the issuance of an order (Verfügungen) and second, the notification (Zustellung).587 Also, the provisions of Sec. 61 of the GWB reads: “1) Decisions of the cartel authority shall contain a statement of reasons and be served together with advice as to the available legal remedies upon the parties pursuant to the provisions of the Act on Service in Administrative Procedure [Verwaltungszustellungsgesetz]. Sec. 5 (4) of the Act on Service in Administrative Procedure and Sec. 178 (1) no. 2 of the Code of Civil Procedure shall apply mutatis mutandis to undertakings and associations of undertakings as well as to contracting entities within the meaning of Sec. 98. Decisions directed at undertakings with their registered seat outside the scope of application of this Act shall be served by the cartel authority upon the person who was named by the undertaking to the Bundeskartellamt as authorised to accept service. If the undertaking has not named any person authorised to accept service, the cartel authority shall serve the decisions by way of publication in the Federal Gazette. (2) If proceedings are not completed by way of a decision served upon the parties pursuant to paragraph 1, the parties shall be informed in writing of the completion of the proceedings.”588 Within the administrative proceedings, the principle of administrative legality (Gesetzmäßigkeit der Verwaltung), embodied in Article 20 III of the Federal Republic of Germany’s Grundgesetz (GG), applies. This principle means that any administrative action must be based on prevailing legislation.589 Nevertheless, in the broad sense, this principle refers to two main characteristics: First, due to the principle of precedence of law (Vorrang des Gesetzes), all of the administrative actions must comply with the existing laws and regulations. Further, the administrative actions are not in contrary to respective superior rules. Had these principles been violated, the affected parties or the citizens 587 ibid. 1057–1067. 588 ibid. 589 Foster and Sule, German Legal System (n 495) 287–289. cf. Ost in Säcker, et.al, Europäisches und deutsches Wettbewerbsrecht (n 13) 1100–1102. Chapter Three Procedural Law 170 are able to file the judicial review due to an illegality of the administrative actions.590 Second, the principle of subjection of law (Vorbehalt des Gesetzes), requiring a prior authorisation of the prevailing laws. Thus, these rules will limit the administrative competence. In the second place, whenever the administrative decision violated the public rights and properties, thus the judicial review applies.591 Equally important, the administrative authorities have certain degrees of the discretionary competence (Ermessen) in making decisions. However, the discretionary competence is subject to certain limitations, notably: First, a non-use of discretion (Ermessensnichtgebrauch) take places. Second, exceeding discretion (Ermessensüberschreitung). Third, misuse of discretion (Ermessensfehlgebrauch).592 Subsequently, the German Cartel Law’s administrative proceedings are also equipped with the principle of proportionality (Verhältnismäßigkeit). Basically, this principle refers to a basic principle of the Rule of law (Rechtsstaat) and mandates that every law, administrative act, and measures of public institutions must not go beyond that strictly required to achieve the legal purpose.593 Whereas this principle has derived from the protection of fundamental rights and individual freedoms in European values, the German Constitutional and Administrative laws develop this principle into a test of three parts, which are: First, the administrative actions must be suitable (efficient) to achieve the aim they are used for (Geeignetheit). Second, the administrative actions must be necessary to achieve this aim (Erforderlichkeit). Third, the administrative actions must outweigh the individual interests or basic rights on a balance.594 Evidentiary and Inquisitorial Principles Within the framework of German Cartel Law, the GWB enshrines three main aspects of the evidentiary and inquisitorial principles. These are: (1) 3.2.2.2 590 Foster and Sule, German Legal System (n 495) 287–289 (Article 19 IV 4 of the GG). 591 ibid. 290–293. 592 M Reimann and J Zekoll (eds.) Introduction to German Law (CH Beck, 2006), 95–97. 593 Foster and Sule, German Legal System (n 495) 291–300. 594 Reimann and Zekoll, Introduction to German Law (n 591) 90. 3.2 Procedural Law pursuant to the German Cartel Law 171 the investigatory principle; (2) the burden of proof; (3) the types of evidentiary instruments.595 Firstly, as to the investigatory principle, due to its inquisitorial system, the Kartellbehörde must comply with the inquisitorial principle (Amtsermittlungsgrundsatz, Untersuchungsmaxime). By virtue of Sec. 24 of the VwVfG, three inquisitorial principles prevail. First, "the Offical authority shall examine the facts of its own motion. It determines the nature and extent of the investigation and it is not bound by arguments and proof of evidence presented by the parties in the proceeding”. Second, the official authority shall take into account all significant matters individually. third, the official authority may not refuse the use the receipt of declarations or applications that fall within compentency, because it holds the declaration or the request in the matter inadmissible or unfounded.596 Profoundly important in this respect, Schmidt emphasises that the inquisitorial principles have goals to find the substantive or material truth (materielle Wahrheit), by ensuring the legality (Rechtmäßgikeit) of the administrative acts at the same time. Also, the abovementioned principles mean that the establishment of the facts of a matter (Sachverhalte), which are complete and accurate determine directly the legality of administrative actions.597 Secondly, with respect to the material burden of proof, the German Cartel Law distinguishes between the inquisitorial principles and the officiality principle (Offizialmaxime).598 Thus, the officiality principle means that the initiation, required investigations of the proceeding take place because of an ex-officio initiative.599 Besides, the principle refers to a factual truth-finding process during the administrative proceedings.600 Consequently, the rule on presentation of evidences by the parties 595 Schmidt „Sec. 57 GWB“ in Immenga/Mestmäcker, Wettbewerbsrecht (n 566) R 1– 38. 596 ibid. 597 ibid. 598 Engelsing in Säcker, et.al, Europäisches und deutsches Wettbewerbsrecht Band. 2 (n 13) 1026–1030. cf. Schmidt in Immenga and Mestmäcker, Wettbewerbsrecht (n 566) 2212–2217. 599 Reimann and Zekoll, Introduction to German Law (n 591). 600 Schmidt „Sec. 57 GWB“ in Immenga/Mestmäcker, Wettbewerbsrecht (n 566) R 1– 14. Chapter Three Procedural Law 172 (Beibringungsgrundsatz) is inapplicable. Whenever the Parties presented evidences in the administrative proceeding, these evidences do not have a binding effect and thus are unnecessary for the Kartellbehörde. Equally important, the administrative proceedings apply the principle of cooperation obligations (Mitwirkungsobliegenheiten), which considerably limits the Kartellbehörde’s obligation on burden of proof.601 Under the material burden of proof, pursuant to the German Cartel Law, by virtue of Sec. 24 of VwVfG, it could be inferred that the Kartellbehörde has the administrative obligation to inquire (investigate) the facts of a case. However, the Kartellbehörde has the discretionary competence (Ermessen) to decide which types of investigatory measures applied within the administrative proceeding.602 Even more, the provision of Sec. 24 of VwVfG prescribes that during the administrative proceeding, the Kartellbehörde shall observe the guiding rules, as follows: First, the investigations (inquiries) must be comprehensive and shall not be redundant or superfluous. This means, the Kartelllbehörde investigates only whenever the information and knowledge obtained from the proceedings are insufficient to find the substantive truth. Second, the neutrality principle towards the Parties during the administrative proceeding.603 On the other hand, the principle of proportionality applies to the collection of the evidence phase. Hence the Bundesverfassungsgericht is of the opinion that this principle consists of three main ingredients. First, suitability (Geeignetheit). Second, necessity (Erforderlichkeit). Third, proportionality in a strict sense (Zumutbarkeit).604 In the second place, the Kartellbehörde must consider the intended administrative action and the significance of a case prudentially. Also, the Kartellbehörde must opt for the most moderate or lenient measures to collect evidences.605 Indeed, within the administrative proceedings, the Kartellbehörde must conduct investigations until two requirements have been fulfilled. First, the whole matters of fact are clarified. Second, until the non-li- 601 ibid. 602 Sec. 24 para.1 of VwVfG. cf. Schmidt „Sec. 57 GWB“ in Immenga/Mestmäcker, Wettbewerbsrecht (n 566) R 1–14. 603 ibid. 604 ibid. 605 ibid. 3.2 Procedural Law pursuant to the German Cartel Law 173 quet situation ceases to exist. In other words, obscurities concerning legal facts are cleary explained.606 Whenever an assumption emerges during the administrative proceeding, thus the principle of neutrality applies. This means the Kartellbehörde must examine the incriminating and acquitting evidences.607 At the same time, within the administrative proceeding, the principle of unfettered consideration of evidences (freie Beweiswürdigung) applies, which means, as follows: First, the Kartellbehörde is not allowed to do typification (Verbot der Typisierung). Put differently, the Kartellbehörde must examine the evidences from the beginning and factual circumstances comprehensively. Second, the Kartellbehörde could employ previous empirical knowledge (Erfahrungssätze) for the appraisals during the investigatory proceedings. However, the application of empirical knowledge must be very careful. In other words, this means that the empirical knowledge must be disclosed and thus supported by appropriate evidences. 608 Moreover, as regards to the substantive burden of proof (materielle Beweislast) in proving the cartels infringement, the provisions of Sec. 1 and 2 of the GWB in conjuction with Article 2 of the Regulation Number 1/2003 applies. The substantive burden of proof refers to the Parties, who must prove factual circumstances in question. Accordingly, Article 2 of the Regulation Number 1/2003 reads as follows: “In any national or Community proceedings for the application of Articles 81 and 82 of the Treaty, the Burden of proving an infringement of Article 81 (1) or of Article 82 of the Treaty shall rest on the party or the authorithy alleging the infringement. The undertaking or association of undertakings claiming the benefit of Article 81 (3) of the Treaty shall bear the Burden of proving that the conditions of that paragraph are fulfilled.” 606 In the European and German Cartel Laws, non-liquet is a situation where there is no applicable law. The Latin term of non-liquet means “it is not clear”. According to Cicero this term was applied during the Roman republic to a verdict of “not proven” where the case was “not clear”. Schmidt „Sec. 57 GWB“ in Immenga/ Mestmäcker, Wettbewerbsrecht (n 566) R 1–14. 607 Accordingly, that in the case of presumption according to Sec.18 and 20 GWB thus the Kartellbehörde subject to the Neutrality principle (Sec. 24 Abs. 2 VwVfG). cf. Schmitd, ‘Sec. 57 GWB’ in Immenga and Mestmäcker, Wettbewerbsrecht (n 566) R 1–14. 608 ibid. Chapter Three Procedural Law 174 Thirdly, as regards the admissible evidences, pursuant to Sec. 26 para.1 of the Administrative Process Law (Verwaltungsverfahrengesetzt – VwVfG), the Bundeskartellamt as the Competition Authority can collect and corroborate varying types of evidences to obtain clarification of factual circumstances and thus the material (substantive) truth of a case at hand. In the administrative proceedings there is none of ‘Numerus clausus’ as regards to the admissible evidentiary instruments.609 Nevertheless, the Decision of Bundeskartellamt in a cartel infringement shall be based on ‘a high accuracy grade of plausibility’ pursuant to Sec.61 of the GWB.610 Moreover, both the Oberlandsgericht (OLG) and the Bundesgerichtshof put ‘high importance to an economic analysis’ in examining and deciding cartels law cases.611Whereas the provisions of Sec. 57 of the GWB requires the Kartellbehörde to follow the formal procedures in the taking of evidences, these provisions distinguish between the formalised and free evidences.612 Henceforth, during the administrative proceedings, the German Cartel Law acknowledges and thus can corroborate the following evidentiary instruments: First, the direct inspection (Augenschein) of cartel law enforcement authority, such as photographs, conversation records and videos.613 Second, request for transmittal of official deeds or documents (Beiziehung von Urkunden), which means the Bundeskartellamt could demand from third parties an official assistance as to the documents or official deeds for the investigation processes.614 Third, judicial interrogation (Vernehmung) of the involving parties and third ones as regards to collusive practices between undertakings.615 Fourth, hearing of witnesses which have reliable and substantial infor- 609 Accordingly, in accordance with the general principle of Sec. 26 VwVfG. cf. Schmidt ‘Sec. 57 GWB’ in in Immenga/Mestmäcker, Wettbewerbsrecht (n 566) R 1–13. 610 Schneider in Langen and Bunte, Kommentar zum Kartellrecht (n 99) 1234–1240. 611 W. Kirchhoff, ‘Requirements of proof in court – the economic approach: Introductory Statement’ (Judge, Federal Court of Justice, Germany IKK Berlin April 15, 2011) 2–5. 612 Schmidt „Sec. 57 GWB“, in Immenga/Mestmäcker, Wettbewerbsrecht (n 566) R 1– 14. 613 Sec. 372 (1) ZPO. cf. Schneider in Langen and Bunte, Kommentar zum Kartellrecht (n 99) 1234–1237. 614 Sec. 142 ZPO. cf. Schneider in Langen and Bunte, Kommentar (n 99). 615 Sec. 57 of the GWB in conjunction to Sec. 26 para.1 (2) VwVfG. cf. Schneider in Langen and Bunte, Kommentar (n 99) 1235–1240. 3.2 Procedural Law pursuant to the German Cartel Law 175 mation to provide clarification of facts as to collusive arrangements between undertakings.616 Fifth, hearing of persons with specialist knowledge (Sachsverstädige), this means both of the Bundeskartellamt and the Courts adjudicating cartels cases could seek expert opinions to assist them in understanding the factual circumstances as to the alleged cartels infringement. However, the value of this expert opinions is merely as facilitating instrument for the Bundeskartellamt and Courts in making judicial decisions as to the cartels cases at hand.617 Sixth, dawn raids and forfeitures (Beschlagnahme), which means the Bundeskartellamt could perform on-site raids and forfeitures of documents and other relevant evidences for the purpose of proving the cartels infringement.618 Seventh, requests for information (Auskunftsverlangen), whereas the Bundeskartellamt is able to request the other law enforcement authorities or state official institutions the information to obtain clearance of factual circumstances concerning the cartels cases. 619 The Imposition of Fines Proceeding (Bußgeldverfahren) General Principles Within the German Cartel Law, Emmerich explains that the sanction mechanism against the cartel infringement has three pillars. First, the administrative enforcement proceedings particularly through the order to end the infringement under Sec. 32 of the GWB. Second, the civil litigation proceedings concerning claim for damages (Schadenersatzanspruch) stipulated in Sec. 33 of the GWB. Third, through the imposition of fines in the fining proceeding (Bußgeldverfahren) pursuant to Sec. 81 of the GWB.620 3.2.3 3.2.3.1 616 ibid. 617 Sec. 57 para.5 of the GWB. Schneider in Langen and Bunte, Kommentar zum Kartellrecht (n 99) 1235–1240. 618 Sec. 59 para 4 in conjuction to Sec. 58 of the GWB. Schneider in Langen and Bunte, Kommentar zum Kartellrecht (n 99) 1235–1240. 619 Sec. 59 para 1 of the GWB. cf. Schneider in Langen and Bunte, Kommentar (n 99) 1235–1240. 620 Sec. 81 GWB (vgl. Sec. Art. 7 und 23 VO 1/2003). V. Emmerich Kartellrecht (n 619) 515–517. Chapter Three Procedural Law 176 Furthermore, the provisions of Sec. 81 until 86 of the GWB enunciate the substantive rules of the fining proceeding (Bußgeldverfahren). Nevertheless, the prevailing procedural rules refer to the provisions stipulated in the German Act on Regulatory Offences (Gesetz über Ordnungswidrigkeiten – OWiG). However, the provision of Sec. 83 unitil 86 of the GWB prescribes rules concerning jurisdiction of the Appeal Court and Appeal to the Higher Courts on points of law. In accordance with the provisions of Articles 7 and 23 of the Regulation Number 1/2003, the imposition of fines proceeding aims not only to prevent and deter cartels practices, but also to skim-off profits gained from cartels offences.621 In contrast to the US Antitrust Law (Sherman Act), Schmidt asserts that the GWB acknowledges merely the administrative offence proceedings with the imposition of fines (Bußgeld), not the criminal law process. Thereby, an administrative offence is not a criminal delict.622 Furthermore, Dannecker and Biermann explain that the imposition of fines proceeding has twofold functions: First, to supervise cartels (antitrust) practices in the market. Second, to guarantee the Rule of law (Rechtsstaat) principle.623 Whereas the imposition of fines proceeding under the GWB and OWiG concern primarily with the natural person liability due to the cartel offence, the rules of the fining procedure (Bußgeldverfahren) can permeate and thus apply to the legal person, such as corporations. Accordingly, the natural persons could subject to imposition of fines whether they act as perpetrator of cartel infringement or as the owner (Inhaber) of the violating undertaking.624 Besides, according to the provision of Sec. 30 of OWiG the imposition of fines prevails to the natural persons who act: First, as a partner authorised to represent the undertaking with legal capacity. Second, as the authorised representative with full power of attorney or in a managerial position. Third, as another person responsible on behalf of the management of a undertaking.625 621 The Regulation Number 1/2003, Article 13. cf. Emmerich, (n 619) 515–517. 622 Schmidt in Immenga and Mestmäcker, Wettbewerbsrecht (n 566) 225. 623 Dannecker and Biermann „Sec. 81 GWB“ in Immenga and Mestmäcker, Kommentar (n 566) R. 1–16. 624 ibid. 625 ibid. 3.2 Procedural Law pursuant to the German Cartel Law 177 Furthermore, whenever natural and legal persons commit bid-rigging cartels, thus the provision of Sec. 298 of the German Criminal Code (Strafgesetzbuch – StGB) applies. Consequently, in the investigation of bid-rigging cartels, two autonomous enforcement proceedings take place. First, the criminal proceedings, whereas the public prosecutor (Staatsanwalt) leads the prosecutorial proceedings against the natural person. Second, the Kartellbehörde performs the imposition of fines proceedings against the persons or undertakings. Hence, Sec. 298 of StGB applies to the natural persons committing cartel infringement. As regards the number of penal fines imposed, Sec. 40 StGB stipulates that the statutory maximum of this fine is calculated by multiplying the maximum number of daily instalments (Tagessätzen) with maximum value an instalment could have. Accordingly, the amount of fines imposed is subject to the considerations of personal and economic situations of the natural person.626 Besides, Sec. 62 of StGB regulates that the natural persons committing bid-rigging cartel crimes can be disqualified from the profession in order to prevent re-occurrence of the cartels infringement. Nonetheless, this penal sanction is subject to the principle of proportionality considering the impact and degree of violation.627 Eventually, in the determination of fines’s amount, the Kartellbehörde shall take into account the gravity and the duration of the infringement. Specifically, the Kartellbehörde must consider the following aspects: market impact, affected commerce, economic conditions of the undertakings involved, the period between infringement and fine.628 For that reason, the Bundeskartellamt has issued in 2013 the Leitlinien für die Bußgeldzumessung in Kartellordnungswidrigkeitenverfahren. Equally important, the provisions of Sec. 81 (5) and 34 GWB prescribe that the Kartellbehörde can impose skimming-off fines 626 ibid. 627 M. Freese, Sanctions in EU Competition Law: Principles and Practice (1st Ed., Hart Publishing, 2014) 236–238. 628 Raum in Langen, Bunte, Kommentar zum (n 99) 1148–1152. cf. Freese, Sanctions in EU Competition Law (n 626) 206. Chapter Three Procedural Law 178 to the undertakings because of ‘illegal economic benefits’ resulted from cartel practices. 629 Evidentiary and Investigatory Principles The main objective of the imposititon of fines proceedings is to find the material truth (materielle Wahrheit).630 Therefore, during the processes of this proceeding, the investigation principle (Untersuchungsgrundsatz) plays a very important role. This is to say that, the German Competition Authority (Kartellbehörde), will determine by itself the scope and feasible instruments to be applied on the case at hand. Thereby, the Kartellbehörde is free to perform whatever it considers necessary to conduct the investigation and prosecution. Moreover, the Kartellbehörde can verify all information and seek more information and is not bound by the statements or testimonies of the parties. Nevertheless, the Kartellbehörde must assure that all necessary measures have been taken to reach a just and correct decision in order to find the material or substantial truth (materielle Wahrheit) of the case in question. 631 Principle of the Unfettered Consideration of the Evidence (Grundsatz der freien Beweiwürdigung) Pursuant to Sec. 261 StPO the Court must find evidences on the basis of its own opinion during the trial proceedings in a freely manner. Thereby, the Court is not subject to old medieval rule ‘ordeal by fire ‘and the Judge must personally be convinced as to the existence of facts presented before the Court. According to Roxin, the subjective conviction of a judge must be objectively convincing to other judges. Further, the provision of Sec. 274 StPO limits this principle, which stipulates that breach of essential formal requirement in the main proceeding must be proven by a protocol. Further, the prohibition of wrongfully 3.2.3.2 3.2.3.2.1 629 Dannecker and Biermann „Vorbemerkung vor § 81“ in Immenga and Mestmäcker (n 566). Freese, Sanctions in EU Competition Law (n 626) 206. 630 Dannecker and Biermann, „Vorbemerkung Sec. 81“ in Immenga and Mestmäcker (n 566). R 1–308. 631 Reimann and Zekoll, Introduction to German Law (n 591) 433. cf. Foster and Sule, German Legal System (n 495) 384–385. 3.2 Procedural Law pursuant to the German Cartel Law 179 obtained evidence (Beweisverwertungsverbot) confines this principle.632 Furthermore, under this principle it is prohibited to take negative inferences from the choice of accused to be remain silent.633 Principle of Presumption of Innocence (In Dubio Pro Reo) In the German Legal system, according to Holtappels, historically the in dubio pro reo principle originates from the Roman civil and subsequently penal laws.634 By virtue of the reception process in the German legal system, initially in the penal proceedings during the Frankish Kings in the 5th until 6th Centuries, continued by the medieval period’s criminal law, this principle has evoluted progressively.635 Altough the principle of in dubio pro reo has not been explicitly stipulated in the European Competition legislations, the provisions of Article 6 para. 2 of the European Convention of Human Rights (ECHR) and Sec. 261 of the German Code of Criminal Procedure (StPO) enunciated this principle.636 Lianos and Genakos emphasise that the principle of ‘in dubio pro reo’ has been embodied in Article 48 (1) of the Charter of Fundamental Rights of the EU (CHFR-EU), which prescribes that ‘any doubt in the mind of the Court must operate to the advantage of the undertaking to which the decision finding an infringement was addressed’.637 3.2.3.2.2 632 C. Roxin and E. Kern, Strafverfahrensrecht: Ein Studienbuch (25 Aufl, Rechtsstand: 1. Mai 1998 Taschenbuch) 384–385. 633 Reimann and Zekoll, Introduction to German Law (n 591) 434 634 The manuscripts (Edict) of Roman laws stipulated accordingly: Inter pares numero iudices si dissonae sententiae proferantur, in liberalibus quidem causis, secundum quod a divo Pio constitutum est, pro liberiate statutum optinet, in aliis autem causis pro reo. Quod et in iudiciis publicis optinere oportet, 14). Holtappels, Die Entwicklungsgeschichte des Grundsatzes "in dubio pro reo" (n 489) 2–5. 635 In the Constitutio Criminalis Carolina, notably the Halsgerichtsordnung Karls V., stipulated „und daß… an viel orten offter mais wider recht und gute vernunfft gehandelt und entweder die unschuldigen gepeinigt und getötet… werden. Im Artikel 150 heißt es dann, die Richter sollten ja nicht eigene unvernünfftige Regel oder Gewohnheit. […] sprechen machen, die den Rechten widerwärtig seynd als je Zeiten an den peinlichen Gerichten hißhero geschehen.“ Holtappels (n 489). 636 Foster and Sule, German Legal System and Laws (495) 139–140. 637 ibid 140–142. Chapter Three Procedural Law 180 In the Competition Law enforcement proceedings, the Advocate General Vesterdorf strongly advocated the application of ‘in dubio pro reo’ principle, as follows: “Considerable importance must be attached to the fact that the competition cases of this kind (cartels) are in realityof a penal nature, which naturally suggests that a high standard of proof is required (…). There must be a sufficient basis for the decision and any reasonable doubt must be for the benefit of the applicants according to the principle of in dubio pro reo.”638 Reimann and Zekoll assert that the principle of in dubio pro reo applies to all issues concerning the questions of guilt or innocence of the persons or undertakings, for instance alibis, justifications, excuses or immunities.639 Pursuant to Sec. 46 para. 1 of OWiG in conjuctions with the provisions of Sec. 160 and 163 StPO, the inquisitorial principles apply to the imposition of fines proceedings.640 Furthermore, as regards to the scope of the evidence’s collection, the principle of discretionary competence (pflichtgemäßen Ermessen) applies pursuant to the provision of Sec. 77 OWiG. Thereby, the Kartellbehörde is not subject to stringent evidentiary rules stipulated in Sec. 224 StPO. Furthermore, the consideration of evidences (Beweiswürdigung) is oriented to the court’s evidentiary considerations.641 Accordingly, there are five principles which are important. First, the role of personal certainty (persönliche Gewissheit). Second, empirical knowledge (Erfahrungssätze). Third, the significancy of confessions. Fourth, the admissible evidentiary instruments. Fifth, the role of indirect evidences (Indizienbeweis).642 In the imposition of fines proceedings, the personal certainty (persönliche Gewissheit) refers mainly to a subjective conviction. Thereby, the adequacy assumption that the personal certainty has probability value is deemed as incorrect and harmful. Moreover, the employment of personal certainty must be able to convince not only the Judges or 638 Lianos and Genekos, “Econometric Evidence” (n 26) 86–87. 639 Reimann and Zekoll, Introduction to German Law (n 591) 434. 640 Dannecker and Biermann, „Vorbemerkung Sec. 81 GWB“ in Immenga and Mestmäcker (n 5669 R. 287–303). 641 ibid. 642 ibid. 3.2 Procedural Law pursuant to the German Cartel Law 181 Adjudicators but also the third Parties logically.643 Furthermore, as regards to the empirical knowledge (Erfahrungssätze), the imposition of fines proceedings distinguishes between the scientific knowledge (wissenschaftliche Erkenntnisse) and ordinary empirical knowledge. Equally important, the knowledge concerning typical symptoms and connectives within the economic processes is highly important in the imposition of fines proceedings. In the cartel enforcement proceedings, the scientific and economics theories or statements were not qualified as the empirical knowledge. These theories and statements must be applied with other evidences in order to convince the Judges or Adjudicators, such as the interest of the undertakings in the cartel enforcement proceedings.644 Furthermore, during the imposition of fines proceedings, Sec. 46 para. 1 OWiG concerning admissibility of evidences applies. Thus, the opinion of the Kartellbehörde is not an evidence before the Court. Additionally, the confession of the Parties is deemed as an additional evidence as stipulated by Sec. 46 para.1 OWiG. Moreover, in the imposition of fines proceedings, the confessions of the Parties do not have binding effects for the court and the Kartellbehörde. Thereby, the courts and Kartellbehörde must cross-examine the confessions with other parties.645 Equally important, as regards to indirect evidences, the Court and Kartellbehörde are able to conclude the merits of a case in question from the indirect factual circumstances by means of judicial inferences. Hence the indirect evidences encompass: First, indirect witness testimony. Second, written documents such as certificates (Urkunde) and visual inspection properties (Augenscheinobjekte). Third, written documents on cartel agreements, such aas protocols and notices. However, each of this written document must lead to the compulsive conclusions. Third, the decryption of coding mechanism in the bid-rigging cartels. Fourth, the “plus-factors” are essential evidence in the concerted practice. Fifth, the private control measures in order to punish mutual cheatings, for example the price-cutting strategy. Finally, the exchanges of contracts, the notification of contracts to the neutral parties like the 643 ibid. 644 ibid. 645 ibid. Chapter Three Procedural Law 182 Notary constitute the indirect evidences to substantiate the cartels infringements.646 The Appeal (Objection) Proceedings before the Oberlandesgericht (Kartell-OLG) In the imposition of administrative fines proceedings, the Oberlandesgericht (Kartell-OLG) constitutes an important function, whereby Sec. 83 of the GWB stipulates: “Jurisdiction of the Higher Regional Court (Oberlandesgericht-OLG) in Judicial Proceedings (1) The Higher Regional Court in whose district the competent competition authority has its seat shall decide in judicial proceedings concerning an administrative offence pursuant to Sec. 81; it shall also decide on an application for judicial review (Sec. 62 of the German Administrative Offences Act) in the cases of Sec. 52(2) sentence 3 and Sec. 69(1) sentence 2 of the German Administrative Offences Act. Sec. 140(1) no. 1 of the German Code of Criminal Procedure in conjunction with Sec. 46(1) of the German Administrative Offences Act shall not be applicable. (2) The decisions of the Higher Regional Court shall be made by three members including the presiding member.”647 Primarily, the judicial philosophical backgrounds for the appeal process of the Antitrust Decisions to the Oberlandesgerichtin the imposition of administrative fines proceeding, Dannecker and Biermann argue, as follows: “In deviation from Sec. 68 OWiG, the provision of Sec. 83 (Sec. 82 to the sixth GWB amendment) regulates the material (and local) jurisdiction of the Higher Regional Court as the first judicial authority in the appeal procedure. This reflects the legislator's aim to concentrate antitrust case law on as few courts as possible. By assigning jurisdiction to the Higher Regional Court, the court which already acquires antitrust expertise when deciding on appeals in administrative proceedings, also takes part antitrust proceedings. With regard to this purpose of the law and the general reference in Article 83 (1) to offenses under Section 81, the validity of 3.2.3.2 646 ibid. 647 The German Act against Restraints of Competition (Gesetz gegen Wettbewerbsbeschränkungen 9. Novelle) (Bundesgesetzblatt (Federal Law Gazette) I, 2013, p. 1750, 3245), as last amended by Article 1 of the law of 1 June 2017 (Federal Law Gazette I, p. 1416). ‹https://www.gesetze-im-internet.de/englisch_gwb/englisch_g wb.html#p0962› accessed 27th December 2018. 3.2 Procedural Law pursuant to the German Cartel Law 183 the jurisdiction clause in Section 83 must also be considered as the fine proceedings for which the Bundeskartellamt or Bundesnetzagentur acts as the market transparency agency acted. Furthermore, Sec. 83 applies to administrative offenses in connection with infringements in the field of mergers of health insurance companies. The assignment of jurisdiction to the Landessozialgericht in Sec. 202 sentence 3 SGG concerns only appeal proceedings. For judicial acts before objection, for example,in the preliminary proceedings of the antitrust authority, it remains with the general jurisdiction of the other courts of criminal justice (Sec. 46 Abs. 1 OWiG).This is especially true for judicial jurisdiction in connection with searches and seizures (Sec.Sec. 105, 98 StPO) and other coercive measures (Sec. 162 StPO). With regards to the competence for the general judicial review of "measures" (investigations) of the antitrust authority, Sec. 62 (2) OWiG refers to the court named in Sec. 68 OWiG, which is competent to decide on an objection to the fine. However, in this respect, the district court is also responsible for the fine proceedings for antitrust violations, since Sec. 83 in total only applies to the judicial procedure after opposition. In these cases, the district court in whose district the administrative authority has its seat is competent.”648 Nevertheless, in the proceedings before the Oberlandesgericht-Kartell- OLG, there is no particular requirement for the cooperation of a defense counsel.649 Provided that there is compelling necessity due to the difficulties of the factual and legal situations, thus the appointment of a defense counsel can take place pursuant to Sec. 140 para 2 and Sec. 46 (1) OWiG therefore only takes place if deemed necessary because of the difficulty of the factual or legal situation.650 Principally, the Oberlandesgericht-Kartell-OLG exerts its judicial powers based upon two main jurisdicitions and one additional jurisdiction, which encompass: First, the subject-matter jurisdiction (Sachliche Zuständigkeit) and occupation of Kartellsenat-OLG.651 Second, 648 Dannecker and Biermann, „Sec.83 GWB“ in Immenga/Mestmäcker, Wettbewerbsrecht (n 566). 649 ibid. 650 ibid. 651 According to Dannecker and Biermann as to the subject-matter jurisdiction of the Kartell-Oberlandesgerichshof: “The Higher Regional Court has jurisdiction over the decision on the appeal against the antitrust authority’s fine. It is in accordance with the law of criminal law to designate the "entrance competence" of the Higher Regional Court in rela- Chapter Three Procedural Law 184 geographical (territorial) jurisdiction (Örtliche Zuständigkeit).652 Third, the jurisdiction in the event there are: (1) Request to decide the Appeal for the Court Decision against the Dismissal application to reestablish the applicant’s rights and dismissal of its appeal (“Restitutio in integrum”) pursuant to Sec. 62, Sec. 52 para. 2 (3) OWiG, and (2) tion to the district court and district court as factual and not merely as functional competence. According to Sec. 95, this material jurisdiction is exclusive. In the opinion of the Bundesgerichtshof, 9 the establishment of an auxiliary cartel senate is generally permissible if there is a temporary charge on a certain permanent court. It can thereby be achieved that the acceleration principle is taken into account and that the procedures can be completed within a reasonable time. The Higher Regional Court decides on the appointment of three members including the chairperson (Sec. 83 para. 2). This express regulation was required for clarification in relation to section 122 GVG (see section 2) and corresponds to the composition foreseen in section 122 (1) of the GVG in the case of non-first instance jurisdiction of the Higher Regional Court. The law (Sec. 91) speaks only of the cartel senate at the higher regional courts, without clarifying whether the cartel senate should be considered as a criminal tribunal when deciding on fines.10 The provision of Sec. 116 (1) sentence 1 GVG is not exhaustive. The Cartel Senate at the Higher Regional Court is therefore similar to the "senate for fines" provided by Sec. 46 para. 7 OWiG neither civil nor criminal senate, but its own specialized court body.11 This specialization and concentration can with the peculiarities and difficulties of anti-trust law this sentence is not complete. (with its close connection with antitrust law).” cf. Dannecker and Biermann, „Sec.83 GWB“ in Immenga/Mestmäcker, Wettbewerbsrecht (n 566). 652 According to Dannecker and Biermann as to the geographical (territorial) jurisdiction of the Kartell-OLG: “The local jurisdiction of the Higher Regional Court is determined in accordance with. Sec. 83 according to the seat of the "competent" antitrust authority. Despite this deviation from the wording of Sec. 68 (1) OWiG, Sec. 83 (1) is also to be interpreted as meaning that the jurisdiction of the Higher Regional Court is determined by the seat of the antitrust authority which issued the penalty notice the antitrust authority was locally (and objectively) responsible for the prosecution and punishment, thus irrelevant to the local jurisdiction of the Higher Regional Court. In addition to Sec. 83, Sec.Sec. 7 to 11 StPO do not apply (correspondingly) (Sec. 95). However, in case of a jurisdiction clause Sec. 14 StPO applies accordingly (see Sec. 46 (1) OWiG). For federal states with several higher regional courts, Sec. 92 contains the authorization of the state governments to assign cases according to Sec. 83 to a higher regional court or to several higher regional courts. In particular, the Land Nordrhein-Westfalen has made use of this authorization, which the Düsseldorf Higher Regional Court has declared responsible. Since its relocation from Berlin to Bonn, the competent higher regional court for the Bundeskartellamt is no longer the Kammergericht, but the Düsseldorf Higher Regional Court.” Dannecker and Biermann, „Sec.83 GWB“ in Immenga/Mestmäcker, Wettbewerbsrecht (n 566). 3.2 Procedural Law pursuant to the German Cartel Law 185 Request to decide the appeal for the Court Decision against the rejection of an objection through the Kartellbehörde according to Sec. 62, 69 para. 1 (2) OwiG.653 The Civil Litigation Proceeding (Bürgerliche Streitigkeiten) General Principle The provisions of Sec. 87 until 90 of the German Act against Restraint of Competition (GWB) provides rules concerning the civil law proceedings resulted from cartels infringement, for example claim for damages. According to Schmidt, the provisions concerning the civil litigation proceedings aim to provide compensation of damages due to cartel infringements.654 Accordingly, the civil litigation proceeding enables the Kartellbehörde and the associations to claim for skimming-off the illegal benefits resulted from cartels infringement pursuant to the provisions of Sec. 34 and 34a of the GWB.655 In contrast to the administrative appeal proceedings, the civil law proceedings in Sec. 87 until 90 of the GWB concerns mainly with the civil disputes stipulated by Sec. 13 of the Courts Constitution Act (Gerichtsverfassungsgesetz – GVG) in conjunctions with the provisions of 3.2.4 3.2.4.1 653 ibid. R. 2–14. 654 Schmidt and Haucap, Wettbewerbspolitik und Kartellrecht (n 260) 277–279. 655 Further, the provision of Sec. 34 of GWB concerning the skimming off of benefits by the Kartellbehörde: “(1) If an undertaking has intentionally or negligently violated a provision of this Act, Article 81 or 82 of the EC Treaty or a decision of the cartel authority and thereby gained an economic benefit, the cartel authority may order the skimming off of the economic benefit and require the undertaking to pay a corresponding amount of money.” Furthermore, the provision of Sec. 34a of GWB provides “(1) Whoever intentionally commits an infringement within the meaning of Sec. 34 (1) and thereby gains an economic benefit at the expense of multiple purchasers or suppliers may be required by those entitled to an injunction under Sec. 33 (2) to surrender the economic benefit to the federal budget, to the extent that the cartel authority does not order the skimming off of the economic benefit by the imposition of a fine, by forfeiture or pursuant to Sec. 34 (1).” See Emmerich, Kartellrecht (619) 517 518. Chapter Three Procedural Law 186 Sec. 87 and 91 of the GWB.656 Whereas the provision of Sec. 13 of GVG reads: “The ordinary courts shall have jurisdiction over the civil disputes, family matters and non-contentious matters (civil matters) as well as criminal matters for which neither the competence of administrative authorities nor the jurisdiction of the Administrative Courts (Verwaltungsgerichte) has been established and for which no special courts have been created or permitted by provisions of federal law.” In the civil law litigation proceeding, the District Courts (Landgerichte) has exclusive jurisdictions to implement the competition rules stipulated in Articles 101 and 102 TFEU as well as in Articles 53 and 54 of the Convention on the European Economic Area. Thus Sec. 95 of the GWB reiterates the exclusive jurisdiction of the Landgericht. Moreover, with respect to the judicial review of the decision of the Landgericht, the Cartel Division (Kartellsenat) of Bundesgerichtshof (BGH) has the exclusive jurisdiction. Hence the provision of Sec. 94 (1) of the GWB stipulates: “(1) The Federal Court of Justice shall establish a cartel division; it shall decide on the following judicial remedies: 1. in administrative matters, on appeals on points of law from decisions of the Courts of Appeal (Sec. 74, 76) and on appeals from the refusal to grant leave to appeal (Sec. 75); 656 Further, Sec. 87 of GWB provides as regards to the exclusive jurisdiction of the District Court: “Regardless of the value of the matter in dispute, the District Courts [Landgerichte] shall have exclusive jurisdiction in civil actions concerning the application of this Act, of Articles 81 or 82 of the EC Treaty or of Articles 53 or 54 of the Convention on the European Economic Area. Sentence 1 shall apply also if the decision in a civil action depends, in whole or in part, on a decision to be taken pursuant to this Act, or on the applicability of Articles 81 or 82 of the EC Treaty or of Articles 53 or 54 of the Convention on the European Economic Area. Sentence 1 shall not apply to civil actions arising from the legal relations mentioned in Sec. 69 of the Fifth Book of the Code of Social Law [Sozialgesetzbuch], also as far as rights of third parties are affected hereby.” Accordingly, Sec. 91 of GWB stipulates concerning the Cartel Division of the Court of Appeal: “The Courts of Appeal shall establish cartel divisions. They shall decide on legal matters assigned to them pursuant to Sec. 57 (2) sentence 2, Sec. 63 (4), Sec. 83, 85 and 86, and on appeals from final judgments and other decisions in civil actions pursuant to Sec. 87 (1).”Schmidt in Immenga and Mestmäcker, Wettbewerbsrecht, p.2822–2829. 3.2 Procedural Law pursuant to the German Cartel Law 187 2. in proceedings concerning administrative fines, on appeals on points of law from decisions of the Courts of Appeal (Sec. 84); 3. in civil actions pursuant to Sec. 87 (1): a) on appeals on points of law from final judgments of the Courts of Appeal including appeals from the refusal to grant leave to appeal, b) on reviews from final judgments of the District Courts, c) on appeals from decisions of the Courts of Appeal in the cases of Sec. 574 (1) of the Code of Civil Procedure.” In addition, the provision of Sec. 90 of the GWB prerequisites the court to inform the Bundeskartellamt concerning the whole legal actions in the civil litigation proceeding. Thereby, the courts shall forward copies of all relevant documents and the decision to the Bundeskartellamt, which include the civil litigation matters and the application of Articles 101 and 102 TFEU.657 The Bundeskartellamt can participate in the court’s processes whenever necessary.658 Schmidt explains that in the civil law litigation proceedings the Bundeskartellamt acts as the “Amicus curiae”. Put differently, the Bundeskartellamt will participate in the courts’ proceedings, as the non-party, to provide opinions and give statements for assisting the court in making the decision. Whereas this amicus-curiae rule derives originally from the Common-law tradition, Sec. 27a of the Act concerning the Federal Constitutional Court (Gesetz über das Bundesverfassungsgericht – BVerfGG) that acknowledges and applies this rule. Eventually, as regards the institutional cooperation, Article 15 of the Regulation Number 1/2003 prescribes that the German courts are able to request the Commission to transmit information and opinions as to questions on the application of the European Competition law.659 657 Schmidt and Haucap, Wettbewerbspolitik und Kartellrecht (n 260) 227–228. The provision of Sec. 90 (1) of GWB provides: “1) The Bundeskartellamt shall be informed by the court of all legal actions pursuant to Sec. 87 (1). The court shall, upon request, transmit to the Bundeskartellamt copies of all briefs, records, orders and decisions. Sentences 1 and 2 shall apply mutatis mutandis in other legal actions which concern the application of Articles 81 and 82 of the EC Treaty.” Schmidt and Haucap, Wettbewerbspolitik und Kartellrech (n 260) 227–228. 658 ibid. 659 Furhter the provision of Article 15 of the Regulation 1/2003 stipulates concerning the cooperation with the national Courts: “1. In proceedings for the application of Article 81 or Article 82 of the Treaty, courts of the Member States may ask the Commission to transmit to them infor- Chapter Three Procedural Law 188 Principle of Free Party-Dispositions (Dispositionsgrundsatz) In the German Code of Civil Procedure (Zivilprozessordnung – ZPO) the principle of free party-dispositions reflects the procedural aspect of the general right of self-determination. Put differently, the Parties in the proceedings, instead the Court, who determine the beginning, the subject-matter and termination of the proceedings. Thereby, the Court does not have the competence to initiate the proceeding ex-officio as well as to preclude the Parties from surrendering the case at any stage of the proceedings.660 Principle of Party Representation (Verhandlungsgrundsatz) Whereas the provisions of the ZPO have undergone several changes, this principle consistently refers to the concept that the Parties in the proceedings have freedom to present the legal facts and the relevant evidences before the Court. Thus, due to the adversarial procedure characteristic of the proceedings, the Court does not have obligation to conduct ex-officio inquiries towards the Parties during the proceedings.661 3.2.4.1.1 3.2.4.1.2 mation in its possession or its opinion on questions concerning the application of the Community competition rules. 2. Member States shall forward to the Commission a copy of any written judgment of national courts deciding on the application of Article 81 or Article 82 of the Treaty. Such copy shall be forwarded without delay after the full written judgment is notified to the parties. 3. Competition authorities of the Member States, acting on their own initiative, may submit written observations to the national courts of their Member State on issues relating to the application of Article 81 or Article 82 of the Treaty. With the permission of the court in question, they may also submit oral observations to the national courts of their Member State. Where the coherent application of Article 81 or Article 82 of the Treaty so requires, the Commission, acting on its own initiative, may submit written observations to courts of the Member States. With the permission of the court in question, it may also make oral observations.” Schmidt and Haucap, Wettbewerbspolitik und Kartellrecht (n 260) 227. 660 Reimann and Zekoll, Introduction to German Law (n 591) 365–366. 661 ibid. 3.2 Procedural Law pursuant to the German Cartel Law 189 Principle of the Party’s Right to Due Process (ordnungsgemäßes Verfahren) Article 103 I of the Grundgesetz concerning the fair trial stipulates that the Parties have the right to due process. This means the Parties shall be entitled to the fair-hearing in accordance with the law. In other words, the Parties have the right to make motions, present the facts, and thus present the evidences in the civil litigation proceeding. Additionally, the Parties have the opportunity to be appraised as to the opponent’s allegations and to comment as well as to refute the opponent’s opinions and statements. Eventually, the rule of fair hearing denotes also that the Parties have the rights to present legal arguments and rebuttals, whereas the Court is obliged to make deliberations of the arguments and rebuttals.662 Evidentiary for Finding Material Truth Principles In the German Civil Law’s proceeding, based upon the principle of parties’ disposition (Beibringungsgrundsatz), the Parties must present the holistic chain of evidences to support their legal claims before the court. In the claim for damages due to the cartels infringement, the parties must prove not only the cartel infringement, but also the facts that the cartels infringement cause harms and damages.663 Conversely, the undertaking acting as the defendant must rebut the legal claim by submitting the counter evidences. For example, the defendant could argue that the claiming undertakings have not done efforts to find alternative supplier.664 On the one hand, in the German Civil Law’s proceedings, two evidentiary requirement rules are of importance. First, the shifting of the 3.2.4.1.3 3.2.4.2 662 ibid. 663 Reimann and Zekoll, Introduction to German Law (n 591). cf. Foster and Sule, German Legal System and Laws (n 495) 139–140. cf. Wach, et.al, Germany Report on Competition Law, at. 9–10 ‹http://ec.europa.eu/competition/antitrust/act ionsdamages/national_reports/germany_en.pdf,› accessed 4th October 2017. 664 ibid. Chapter Three Procedural Law 190 burden of proof.665 Second, the relaxation of the burden of proof.666 With regards to the evidentiary instruments, Sec. 291 of ZPO provides that facts which are obvious (Offenkundig) do not have to be proved. This means that the facts are deemed as common knowledge or have been known by the Parties through the court’s jurisprudences. On the other hand, as regards the evidentiary value of documents, the provisions of Sec. 416 until 418 of ZPO prevails.667 Specifically, as regards 665 This rule refers to: “The burden of proof is shifted from the party on whom it normally falls to the opposing party. In some cases, this is known in legal parlance as the rule-exception relationship. The burden of proof then falls on the party invoking the exception. The legislator, for example, assumes the buyer's good faith under Sections 932(1)(1), 892(1)(1) and 2366 of the German Civil Code. The shifting of the burden of proof is of particular significance in cases involving liability under the law on defective performance, where the debtor (defendant) must prove that he is not liable for the failure to comply with an obligation under Section 280(1)(2) of the Civil Code. ECN, European Judicial Network, Taking of evidence and mode of proof – Germany, ‹http://ec.europa.eu/civiljustice/evidence/evidence_ger_en.htm,› accessed on 4th October 2017, 2–5. 666 This rule refers to: First, “Statutory presumptions are a relaxation for the party on whom the burden of proof falls as the latter simply has to demonstrate and prove the facts on which the presumption is based (Section 292 of the ZPO (Code of Civil Procedure)). Statutory presumptions may apply to facts such as the presumption that a mortgage certificate is transferred to the creditor by virtue of possession of the certificate (Section 1117(3) of the Civil Code). They may also relate to rights such as presumption that the holder of the certificate of inheritance has the status of heir (Section 2365 of the Civil Code). Legal presumptions can, in principle, be rebutted in accordance with Section 292 of the ZPO provided no other legal provisions apply.” Second, “Statutory presumptions are comparable a priori to actual presumptions on which prima facie evidence is based. Prima facie evidence is where a fact to be proved is a typical occurrence in the normal course of events where all the undisputable and established circumstances of the case are taken into account. Prima facie evidence can be used in particular to establish causality and fault, e.g., fault where a car is driven into a tree. The opposing party can challenge the presumption on the basis of facts which cast serious doubt on whether a typical occurrence is involved.” Third, “Case law is increasingly defining the burden of proof by specific area of risk on the grounds of equity and fair balancing of interests.” ECN, European Judicial Network, Taking of evidence and mode of proof – Germany 667 Sec. 416, 416 (a), 417 and 418 of ZPO. cf. Wach, et.al, Germany (n 662) 9–10. 3.2 Procedural Law pursuant to the German Cartel Law 191 the evidentiary value of private records and documents, Sec. 416 of ZPO prescribes: “To the extent that private records and documents are signed by the parties issuing them, or have been signed using a mark that has been certified by a notary, they shall establish full proof that the declarations they contain have been made by the parties who prepared such records and documents.” Moreover, with respect to the evidentiary evaluation and conviction (Überzeugung) of the Court, the provisions of Sec. 286 of ZPO regulate as follows: “(1) The court is to decide, at its discretion and conviction, and taking account of the entire content of the hearings and the results obtained by evidence being taken, if any, whether an allegation as to fact is to be deemed true or untrue. The judgment is to set out the reasons informing the conviction of the judges. (2) The court shall be bound to statutory rules of evidence only in the cases designated in the present Code.” Put differently, in the civil litigation proceedings, principle of unfettered consideration of evidences (Prinzip der freien Beweiswürdigung) applies. Thereby, the court has judicial discretion both in the admission and weighing the evidences. Also, the judicial review over this judicial discretion is restricted to determine whether the violation of fair hearing (Recht auf rechtliches Gehör) and arbitrariness during the proceedings exist.668 Moreover, the evidentiary standards in the civil litigation proceeding relate with the provision of Sec. 261 of the German Code of Criminal Procedure (StPO) on the free evaluation of evidences, that is to say, the ‘beyond reasonable doubts’ is inapplicable in the civil litigation proceeding.669 Moreover, the German Civil Law’s proceeding acknowledges principally five types of the admissible evidences. First, the judicial inspection pursuant to the provisions of Sec. 371 until 372a of ZPO. Mainly, this evidence refers to a direct physical inspection of the evidence by the Judges through the human senses. Further, this includes the in- 668 Wach, et.al, Germany Report. p. 9–10. 669 The provision of Sec. 261 of StPO concerning the Free evaluation of evidences reads: “The court shall decide on the result of the evidence taken according to its free conviction gained from the hearing as a whole.” Chapter Three Procedural Law 192 spected sound, video recordings and computer records.670 Second, the witnesses’ testimonies, which are regulated in the provisions of Sec. 373 until 401 of ZPO. Principally, this evidentiary instrument refers to the persons which can confirm events occurred in the past which they themselves have witnessed and thus can not be replaced. Thus, witnesses are not the Parties in the proceedings.671 Third, expert evidence, which can be classified into: experts appointed by the Court, expert witnesses and private expert opinions. Hence, the provisions of Sec. 402 until 414 of ZPO enshrines the rules on expert evidences.672 Accordingly, the Judges appoint the experts having the specialist knowledge in order to evaluate the facts in the proceedings. However, the experts have functions to give a value judgement over the established facts and thus do not constitute the fact themselves. For example, the 670 Schmidt ‘Vorbemerkung vor § 87 GWB’ in Immenga and Mestmäcker (n 566) R. 55–58. 671 The provisions of Sec. 373 until 401 of ZPO prescribes: “Sec. 375 ZPO; Taking of evidence by a judge correspondingly delegated or requested (1) The task of taking evidence by hearing witnesses may be allocated to a member of the court hearing the case or to another court only if, and to the extent, that it is to be assumed from the outset that the court hearing the case will be able to properly evaluate the results obtained in taking the evidence, without obtaining a direct impression of the course of the taking of evidence, and: 1. If it seems expedient, by way of assessing the truth, to examine the witness on site or if, according to the stipulations of the law, the witness is not to be examined at the seat of the court, but instead at a different location; 2. If the witness is prevented from appearing before the court hearing the case and the witness is not examined in the form governed by section 128a (2); 3. If, in light of the great distance the witness would have to travel, and taking account of the significance of his or her statement, it cannot be reasonably expected of the witness to appear before the court hearing the case, and the witness is not examined in the form governed by section 128a (2). (1a) The task of taking evidence by hearing witnesses may be allocated to a member of the court hearing the case also in those cases in which this seems suitable for the purpose of simplifying the oral argument before the court hearing the case, and if, and to the extent, that it is to be assumed from the outset that the court hearing the case will be able to properly evaluate the results obtained in taking the evidence without obtaining a direct impression of the course of the taking of evidence.” (2) The President of the Federal Republic of Germany is to be examined in his residence. 672 The provisions of Sec. 402 until 414 of Zivilprozessordnung (ZPO). 3.2 Procedural Law pursuant to the German Cartel Law 193 medical diagnosis of a doctor to assist the Judges to find conclusions of the case in question. Besides, the Parties could designate a private expert report to be presented before the Court only in exceptional circumstances and this is subject to the mutual consent of the Parties.673 Fourth, the documents. this type of is regulated by the provisions of Sec. 415 until 444 of the ZPO.674 Eventually, the documents refer to the written declarations. Thus, the German Civil Law’s proceeding distinguishes between evidentiary values of the public documents and the private documents. Fifth, the questioning of the Parties. This evidence refers to the subsidiary forms of evidences. Accordingly, this type of evidence merely serves the main evidences pursuant to Sec. 445 (2) of the ZPO. Nevertheless, the application of this type of evidence has been subject to the court’s approval as well as the other Parties’agreement.675 Procedural Law pursuant to the Law Number 5/1999 Introduction Since the inception of the Law Number 5/1999, the procedural laws to be applied within the Indonesian Competition Office (KPPU) as well as the Indonesian Courts, have been undergone gradual amendments. Intially, the Presidential Decree Number 75/1999 concerning the Com- 3.3 3.3.1 673 European Judicial Network (EJN), Taking of evidence and mode of proof (n – Germany, http://ec.europa.eu/civiljustice/evidence/evidence_ger_en.htm, accessed on 4th October 2015. 674 The provisions of Sec. 415 until 444 ZPO reads as follows: “Evidentiary value of public records and documents regarding declarations (1) Records and documents that have been prepared, in accordance with the requirements as to form, by a public authority within the scope of its official responsibilities, or by a person or entity vested with public trust within the sphere of business assigned to him or it (public records and documents), shall establish full proof, provided they have been executed regarding a declaration made before the public authority or the public official issuing the deed. (2) Evidence proving that the transaction has been improperly recorded is admissible. 675 European Judicial Network (EJN), Taking of evidence (n 664). Chapter Three Procedural Law 194 mission for Supervision of Business Competition (hereinafter referred to as “KPPU”). Subsequently, the KPPU Decree Number 05/KPPU/KEP/IX/2000 (SK 05), which amended into the KPPU Regulation (“Peraturan Komisi or Perkom”) Number 1/2006 regarding the Procedures for Settlement of Cases. Afterwards, the Perkom Number 1/2006 has been amended into the Perkom Number 1/2010 on the Handling of Cases, which took into effect on 5th April 2010 until now.676 As a matter of fact, there had been delicate debates as to the applicability of the provisions of Indonesian Criminal Procedural Code (Kitab Undang-Undang Hukum Acara Pidana-KUHAP) upon the the Indonesian Competition law’s enforcement proceedings. There had been an ongoing question, if the enforcement procedural provisions in the Law Number 5/2000 as well as the Perkom would not be adequate, KPPU could invoke partially the provisions of criminal proceedings under the KUHAP.677 Accordingly, there are several reasons for the applicability of the KUHAP’s provisions in the Indonesian Competition law’s enforcement proceedings, among others: Firstly, the functions of inquries (Penyelidikan) as well as examination (Pemeriksaan) have not been acknowledged and prescribed in the Indonesian Civil Procedural Code (“Kitab Undang Undang Hukum Acara Perdata-KUH Perdata”). Secondly, the main objective of the Competition law’s enforcement proceedings before the KPPU is the material or substantive truth. In contrast, in the Indonesian Civil Procedural Code (KUH Perdata), the main purpose thereof is to discover the formal truth (formelle Wettelijk). In this sense, the material or substantive truth refers to following notions: “In seeking material truth, it is necessary for the existence of KPPU's conviction that an alleged business actor commit or do not carry out actions that cause monopolistic practices or unfair business competition. To create conviction, KPPU must ensure that there are actions that cause monopolistic practices or business competition.”678 Furthermore, in the processes of discovering the material or substantive truth, KPPU must rely upon the concrete evidences as well as sup- 676 Lubis and Sirait (eds), Hukum Persaingan Usaha (n 225) 389–391. 677 ibid. 678 ibid. 3.3 Procedural Law pursuant to the Law Number 5/1999 195 ported by the unrebuttable conviction during the competition enforcement proceedings, as correctly explained by the following notions: “In the process of seeking material truth, KPPU has the authority to summon business actors who, for reasons that are reasonably suspected, have committed violations. A reasonable reason is the allegation that resulted from the investigation process carried out by the Commission. The business actor is given the right to express his opinion as an effort to defend himself against the accusations of KPPU. After the suspicion and listening to the defense of the business actor, in order to obtain material truths, KP- PU can carry out verification by summoning witnesses, expert witnesses and everyone who is considered to know the violation. In addition, the written Deed can also be used as evidence. After conducting the investigations, listening to the defenses of the business actor and carrying out evidence, KPPU could make a decision. Decisions are in the form of the existence of violations committed by the business actor being examined as well as the presence or absence of losses on the part of other business actors as a result of the violation. By looking at the investigation process up to the decisions made by the Commission, it is clear that the truth sought in monopoly cases and business competition is material truth based on tangible evidence, and the undisputed beliefs of the KPPU. “679 Accordingly, the addressee of these enforcement procedural laws and regulations are all business actors as defined by Article 1 (5), notably “individual(s) or business entities either incorporated as legal entities or not, established and domiciled or conducting business activities within the jurisdiction of the Republic of Indonesia, either independently or jointly based upon an agreement, conducting various business activities in the economic fields”. Thereby, these legislations prevail towards any business actor engaging businesses in Indonesia, including, amongst other, state-owned enterprises and subsidiaries of foreign companies.680 Equally important, according to the Law Number 5/1999 and regulations abovementioned, KPPU acts as the principal Competition Authority (CA). Moreover, KPPU is an independent public institution, that is to say, KPPU does not subject to the Government and other stakeholders’ political and business influences.681 Thereby, KPPU is 679 ibid. 680 The Indonesian Competition Law Number 5/1999 concerning Prohibition of Monopolistic Practices and Unfair Business Practices, Article 5, ‹ www.aseancompeti tion.org/aegc/aegc-members/indonesia.› accessed on 30th September 2017. 681 ibid. Chapter Three Procedural Law 196 only accountable to the President. Accordingly, its Members (“Commissioners”) are appointed and dismissed by the President upon prior approvals of the House of Representatives (“DPR”).682 According to the Presidential Decree Number 75/1999 and Sauter, KPPU will perform following responsibilities: First, law enforcement which encompasses investigating, interpreting, and enforcing provision of the Law No.5/1999 as outlined by Article 35 a, b, c and d. Second, competition advocacy which provides advisory opinions on government policy and laws related to, or affecting, monopolistic practices and unfair business competition as prescribed by Article 35 e. Third, generating guidelines and competition policy notices to assist business and the public to understand and comply with the Law No.5/1999 as mandated by Article 35 f.683 In the practice of the Law Number 5/1999, KPPU has been frequently considered as “quasi-judicial body”, which means that it has been conferred with civil remedial as well as penal remedial competencies. More important are the institutional relationships of KPPU with the District Court (Pengadilan Negeri) and the Indonesia Supreme Court (Mahkamah Agung Republik Indonesia-MARI), whereas based upon the appeal processes either by KPPU or by the business actors the District Court frequently compete with KPPU in the adjudications of competition law matters. In addition, in the last instance the Supreme Court has the authorithy to uphold or to hand down previous KPPU and the District Court’s Decisions over the competition law disputes.684 Accordingly, Sirait posed critism as to KPPU’s existence, as follows: “Another foreign import to the Indonesian legal system was that the Law introduced a self-regulatory agency (KPPU) as the primary law enforcer. The Commission is an independent and quasi-judicial agency with a variety of powers. Initially, many were skeptical about the existence of such a Commission and raised questions about its position in the structure of the legal system and whether KPPU should be treated as a court at first 682 ibid. 683 Sauter in Säcker, et.al, Law Concerning Prohibition of Monopolistic Practices (n 39) 691. 684 Lubis and Sirait, Hukum Persaingan Usaha (n 225).369–370. cf. Sauter in Säcker, et.al, (n 3) 369–370. 3.3 Procedural Law pursuant to the Law Number 5/1999 197 instance or merely as an administrative body. The Commission’s decisions may be appealed to the District Court by the Reported Party if they disagree with a decision. This is the first stage where the court is involved and takes a role in enforcing Law No. 5 of 1999. It should also be understood that in a civil law system, judges and administrative agencies have less ability to influence the development of legal doctrines because the judges’ role in developing doctrine is relatively limited; they merely apply the law and give explanations of the written law but they do not make it. When compared to a common law system where judges have greater opportunities to develop the law, Indonesian courts have taken time to adapt to this new mechanism to enforce the competition law. Both the judiciary and the Commission realized that by relying on the traditionally mandated enforcement structure, improvements in enforcement would be retarded. As a result, both were persuaded to collaborate to find a resolution to the need to harmonize procedural standards between the two institutions which had been a source of considerable friction.”685 Administrative Proceedings before KPPU According to KPPU Regulations Number 1/2006 and KPPU Regulation Number 2/2008 in conjunctions with KPPU Decision Number 05/KPPU/KEP/IX/2000, the enforcement proceedings in KPPU consist of the following phases: First, the reporting or collecting indications phase. Second, the preliminary investigation phase. Third, the advance investigation phase. Fourth, the decision phase. Fifth, the after the decision phase.686 Whereas in the reporting phase, KPPU is able to receive reports concerning infringement against the Law Number 5/1999, both from every natural person knowing the alleged violations and the affected parties, KPPU could also conduct its inquiry initiative as to alleged vi- 3.3.2 685 Sirait, Overview of the Indonesia Competition Law Number 5 of 1999 concerning the Prohibition of Monopolistic Practices and Unfair Business Competition, http://w ww.jftc.go.jp/eacpf/05/AOTS/indonesia_ningrum.pdf, accessed on 22th March 2016. 686 Lubis and Sirait, Hukum Persaingan Usaha (n 225) 361–369. Chapter Three Procedural Law 198 olations of the Law Number 5/1999.687 Further Article 40 of the Law Number 5/1999 reads: “The Commission (KPPU) may conduct investigations of business actors if there is an allegation of the occurrence of violations of this Law even though no report is filed.” According to Sirait and Lubis, KPPU could initiate the preliminary investigation phase after the Decree on admissibility of preliminary investigation is issued. Pursuant to Article 39 (1) of the Law Number 5/1999 the time limit for the preliminary investigation is 30 days as of the issuance date of the Decree. However, upon receiving reports from the persons and affected parties, KPPU is required to examine the completeness and clarity of reports previously.688 Subsequently, in the advance investigation phase, KPPU could begin the investigation provided: Firstly, there had been indications concerning violations of the Competition Law Number 5/1999; Secondly, KPPU requires more investigatory time to examine the competition cases in questions. Additionally, KPPU will issue the Decision regarding initiation of the advance investigation. Moreover, as regards to the time limit of advance investigations, Article 43 of the Competition Law Number 5/1999 stipulates: “(1) The Commission shall be obligated to complete an advance investigation within 60 (sixty) days from the start of the advance investigation as intended in Article 39 paragraph (1). (2) If required, the time limit for an advance investigation as intended in paragraph (1) may be extended by not more than 30 (thirty) days.”689 Moreover, in the advance investigation proceeding, KPPU distinguishes the two types of legal status of business actors, which are: the report- 687 Article 38 (1) and (2) of the Law Number 5/1999 reads: “Any person having knowledge of the occurrence of or reasonably suspecting that a violation of this Law has occurred, can report it in writing to the Commission with a clear statement concerning the occurrence of violation, attaching the identity of the reporting party. A party suffering loss as a result of violations of this Law may file a written report to the Commission with a complete and clear statement regarding the occurrence of violation and the losses inflicted, attaching the identity of the reporting party.” 688 Lubis and Sirait, Hukum Persaingan Usaha (n 225) 324–325. 689 ibid. 3.3 Procedural Law pursuant to the Law Number 5/1999 199 ed and the witness.690 Afterward, in the advance investigation phase, KPPU will summon the Parties to attend the administrative proceedings. Besides, Article 41 (3) of the Competition Law Number 5/1999 requires that the summoned parties are obliged to attend the administrative proceedings. Thereby, the summoned parties are subject to criminal prosecutions they had refused to fulfil their obligation of attending the administrative proceedings before KPPU.691 Equally important, the KPPU’s advance investigation proceeding comprises mainly three aspects. First, the administrative inquiries procedure. Second, the adjudication of principal legal matters. Third, the evidentiary or substantiation processes.692 Whereas in the administrative inquiry procedure, KPPU will examine the parties’ identities and their legal rights, Article 65 (2) of KPPU Regulation Number 1/2006, the parties have the right to be escorted by or come along with their Barrister or Advocate.693 The adjudication of main legal matters, moreover, consists of two proceedings. On the one hand, KPPU is authorised to question the parties unilaterally, that is to say, the parties are not able to refute or comment as regards to the documents and witnesses acquired by KPPU. On the other hand, the parties are given op- 690 Article 1 (5) of the Law Number 5/1999 stipulates: “Business actors shall be any individual or business entity, either incorporated or not incorporated as legal entity, established and domiciled or conducting activities within the jurisdiction of the Republic of Indonesia, either independently or jointly based on agreement, conducting various business activities in the economic field.” ibid. 691 Article 41 of the Law Number 5/1999 reads: “(1) Business actors and or other parties examined shall be required to submit instruments of evidence required in the investigation and or hearing. (2) Business actors shall be prohibited from refusing to be heard, from refusing to provide information required for investigations and or hearings, or from impeding the investigation and or hearing processes. (3) Violations of the provisions of paragraph (2) shall be submitted by the Commission to investigators for conducting investigations in accordance with the prevailing provisions.” Indonesian Law regarding the Prohibition of Monopolistic Practices and Unfair Business Competition Number 5/1999. http://eng.kppu.go.id/competition-law/, accessed on 7th January 2019. 692 Lubis and Sirait, Hukum Persaingan Usaha (n 225) 324–327. 693 This principle has also been stipulated by the Indonesian Law Number 18/2000 concerning Advocates and Legal Aid. Lubis and Sirait, Hukum Persaingan Usaha (n 225) 325–327. Chapter Three Procedural Law 200 portunities to submit either documents or information related to the case in question to KPPU. Further, the parties are given an opportunity to confer additional documents or information to KPPU both in the preliminary and in the advance investigations. This opportunity has been to a large extend regarded as another form of defense of rebuttal rights. Also, in the adjudication of main legal matters, KPPU provides the parties an opportunity to give corrections as to the procès-verbal(“Berita Acara Pemeriksaan-BAP”) upon the prior approval of KP- PU.694 Equally important, in the evidentiary or substantiation proceedings, KPPU attempts to find and verify the material truth as to the case in question. Accordingly, the evidentiary requirement rules pursuant to Article 42 of the Competition Law Number 5/1999 prescribes: “Evidence used by the Commission for investigation and examination are: (a) Witness or Testimony’s explanations, (b) Expert explanations, (c) Letters and/or Documents, (d) Indications, (e) Explanations from the business actor”.695 Whereas the evidentiary requirement rules of Article 42 of the Competition Law Number 5/1999 apply primarily to the administrative proceedings before KPPU, these rules apply simultaneously as the judiciary proceedings before the Courts according to the principle of Lex specialis derogat legi generali. With respect to the decision phase, pursuant to Article 43 (3) of the Competition Law Number 5/1999 KPPU must decide whether an infringement of competition law had been existed or not existed within 30 days. Accordingly, Article 43 (4) prescribes that the Commission’s Decision abovementioned must be announced in an open hearing to the public and followed by the notification to the parties. Taking into account the principle of transparency and efficiency, KPPU is obliged to deliver thedDecision abovementioned without delay, that is to say, not only through direct submission to the business actors (in person) but also through e-mail or facsimile.696 694 ibid. 695 ibid. 696 ibid. 3.3 Procedural Law pursuant to the Law Number 5/1999 201 Eventually, in the after-decision phase, three scenarios are possible to take place according to the Competition Law Number 5/1999.697 Firstly, the business actor voluntarily accepts the decision of KPPU and is thus willingly to implement the decision and submit the implementation report. Article 44 (1) of the Competition Law Number 5/1999 provides: “Within 30 (thirty) days from the time the business actor concerned receives notice about the Commission’s Decision as intended in Article 43 paragraph (4), the business actor concerned shall be obligated to implement such decision and to submit an implementation report to the Commission.” Secondly, the business actor refuses the Decision of KPPU and thus subsequently appeals to the District Court (“PN”). Whereas, Article 44 (2) of the Competition Law Number 5/1999 stipulates: “Business actors may appeal to the District Court by no later than 14 (fourteen) days after receiving notification of the Commission’s Decision.” Thirdly, the business actor is neither willing to implement the decision of KPPU nor to appeal the District Court. In this scenario, Article 44 (4) of the Competition Law Number 5/1999 provides: “In the event that the provisions of paragraph (1) and paragragph (2) are not implemented by the business actor concerned, the Commission shall submit such decision to an investigator for conducting an investigation in accordance with the provisions of the prevailing laws and regulations.” Accordingly, the KPPU’s decision serves as the sufficient initial evidence for the investigators to conduct criminal investigations as regulated by Article 44 (5) of the Competition Law Number 5/1999.698 Judiciary Review (Judicial Supervision) Within the judicial proceedings before the District Courts (PN) as well as the Supreme Court of Republic of Indonesia (MARI), Article 45 and Article 46 of the Competition Law Number 5/1999 in conjunction with the Regulation of Indonesian Supreme Court (“MARI”) Number 2.3.3 697 ibid. 698 ibid. Chapter Three Procedural Law 202 3/2005 (“Perma No.3/2005”) and Number 1/2003 (“Perma No.1/2003) prescribe the procedural rules which are primarily important.699 In contrast to the previous rule on judicial appeal, the Law Number 5/1999 as well as Perma No. 3/2005 introduce “the judicial complaint” to counter administrative decisions of KPPU.700 Article 1 of the Perma No.1/2003 defines “the judicial complaint” as a legal endeavor provided to the business actor, who refuses the decision of KPPU. Further, Article 2 (1) of the Perma No.3/2005 stipulates that the business actor affected by KPPU decision can only file a judicial complaint to the District Court, in which the domicile (corporate seat) of business actor locates. With regard to the jurisdictional forum, the Perma No.3/2005 clearly stipulates two possibilities. First, the business actor must file a judicial complaint to the District Court (PN), in which the business actor’s corporate seat locates. Whenever, there is more than one business actor, with the same corporate seat, filing judicial complaints against a same decision of KPPU, thus the District Court must register the complaints with a similar register number. Second, whenever the business actors subject to different jurisdictions of the District Court, thus KP- PU is able to propose the Supreme Court (MARI) to appoint a certain District Court to adjudicate the judicial complaint. This rule aims to guarantee a legal certainty as to the Court’s Decision over the judicial complaint.701 As has been noted by the Perma No.3/2005, as regards KPPU’s legal position in the judicial complaint, the District Court considers KP- PU as the parties to this adjudication. Principally, there are two juridical reasons behind this rule: Firstly, to ensure the principle of objectivity, proportionality and equity pursuant to the principle of “audi alteram et partem”. Second, to prevent or to minimalise evaluation bias of KPPU during the evidentiary proceeding before the District Court.702 Furthermore, in judicial proceedings in the District Court, Article 45 (1) requires the District Court to adjudicate the complaints within 699 Peraturan Mahkamah Agung RI Nomoer 1/2003 (“Perma No.1/2003) ‹http://ww w.kppu.go.id/id/produk-hukum/perma/› accessed on 23th March 2016. 700 Lubis and Sirait, Hukum Persaingan Usaha (n 225) 331–337. 701 ibid. 702 ibid. 3.3 Procedural Law pursuant to the Law Number 5/1999 203 the time limit of 14 days as of the registration of judicial complaint. Accordingly, the Chairman of the District Court must appoint the Judges, who have sound knowledge in the Competition law, to adjudicate the judicial complaint.703 Also, pursuant to Article 5 (3) of the Perma No.3/2005, the District Court does not employ the mediation process in adjudicating the judicial complaint.704 Moreover, the District Court, by means of an interlocutory (provisional) decision, can issue an order for KPPU to carry out additional examinations of the case in question.705 It must be observed, that the District Court must decide the judicial complaint within the time limit of 30 days as of an initiation of trial over the judicial complaint.706 Finally, with respect to the cassation proceedings before the Supreme Court (MARI), Article 45 (3) of the Competition Law Number 5/1999 regulates that KPPU and the business actors could file the cassation to the Supreme Court (MARI) within the time limit of 14 days as of the decision of District Court delivered. In this respect, the Supreme Court (MARI) acts as the Court of last resort both for KPPU and the business actors. Equally important, according to Article 45 (4) of the Competition Law Number 5/1999, the Supreme Court (MARI) is obliged to decide on the case within the time limit of 30 days as of the cassation is received.707 Judiciary Review (Judicial Supervision) In the Indonesia competition law, in the event of a cartel infringement, KPPU shall employ evidentiary requirements as prescribed in the Law Number 5/1999. Nevertheless, in the law enforcement proceedings of 3.3.3 703 Article 5 (2) of the PERMA No.3/2000. ‹http://www.kppu.go.id/id/produk-huku m/perma/›, accessed on 5th January 2019. 704 Lubis and Sirait, Hukum Persaingan Usaha (n 225) 334. 705 Article 6 (1) of the Indonesian Supreme Court Regulation (PERMA) No.1/2003. See ‹http://www.kppu.go.id/id/produk-hukum/perma/› accessed on 5th January 2019. 706 Article 45 (2) of the Law Number 5/1999. Law regarding the Prohibition of Monopolistic Practices and Unfair Business Competition. ‹http://www.kppu.go.id/id /produk-hukum/perma/› accessed on 5th January 2019. 707 Lubis and Sirait, Hukum Persaingan Usaha (n 225) 324–327. Chapter Three Procedural Law 204 the Law Number 5/1999 the Indonesia District Court and the Supreme Court also apply the general evidentiary requirement rules, namely civil law and criminal law ones, to adjudicate competition law violation cases. Hence, it is necessarily important to understand the general evidentiary requirement rules to conduct analysis of the Indonesia competition law optimally. Evidentiary Rule and Principle General Evidentiary Rule From a theoretical standpoint, there are four approaches with regard to the evidentiary requirement rule, which are as follows:708 Evidentiary Principle According to the Judge's Conviction (Conviction Intime) According to this approach, the judges in adjudicating cases could make dictum in the end of trial proceedings based upon merely their personal conviction, in spite of inadequacy of evidences. Thus, the judges have a wide discretion or judicial freedom in deciding cases. However, this approach has drawbacks, notably the judges could be largely subjective and arrive to decisions which are contrary to the principle of justice. Although this evidentiary has been derived from the French legal system, Article 294 (1) of the Indonesia Civil Procedure Law (Herziene Indische Regeling-HIR) stipulates as follows: “None of persons can be punished, unless the judges have obtained personal conviction with legally evidentiary instruments, which confirm the wrongful of an alleged offence and the alleged person, that he or she commits the offence.”709 3.3.4 3.3.4.1 3.3.4.2 708 M. Y. Harahap, Pembahasan permasalahan dan penerapan KUHAP (Ed. 2, Sinar Grafika, Jakarta, 2000) 71–77. 709 M. Y. Harahap, Hukum acara perdata: Tentang gugatan, persidangan, penyitaan, pembuktian, dan putusan pengadilan (Cet. 2 Sinar Grafika, Jakarta, 2005) 55–58. 3.3 Procedural Law pursuant to the Law Number 5/1999 205 Evidentiary Principle According to the Positive Law (Positife Wettelijke Bewijstheorie) This principle has been often depicted as ‘the formal evidentiary approach’ (formule bewijstheorie), whereas according to this approach ‘whenever all elements of statutory act are proved in the trial proceedings, thus the judges’ conviction becomes insignificant and the judges are obliged to decide the cases immediately’. However, this principle has a prominent drawback, notably the judges decide cases although the evidences are insufficient. Article 138 (2); 150 (3); 153 (3); 154 (1); 155(1); 156 (1) of the HIR embody this evidentiary principle.710 Evidentiary Principle According to the Restricted Judges Conviction (La conviction raisonee) This evidentiary is a modus vivendi for the dilemmatic evidentiary approaches aforementioned. Accordingly, in this approach the judges are able to make decisions based upon their personal conviction; however, this personal conviction must be based upon the rules concerning evidences either stipulated in the prevailing legislations or outside the prevailing legislations.711 Evidentiary Principle According to the Laws Negatively (Negatief Wettelijke) According to this evidentiary approach, the judges in the trial proceedings are able to decide based upon evidence rules which are limited by the laws plus the judges’ conviction. These two consideration factors are integrated and inseparable for the judges in the trial proceedings, notably in the criminal law proceeding. Furthermore, pursuant to Article 183 the Indonesia Criminal Procedural Code (KUHAP), the standard of proof for deciding cases for the judges has at least two evidentiary instruments, in which the judges’ conviction is one of the instruments. This principle is profoundly important to establish ‘beyond rea- 3.3.4.3 3.3.4.4 3.3.4.5 710 Harahap, Pembahasan permasalahan dan penerapan KUHAP (n 707) 71–77. 711 ibid. Chapter Three Procedural Law 206 sonable doubt’ and achieve ultimate righteous truth (materiele waarheid). With regard to the evidentiary instruments, the Indonesia civil law, criminal law and administrative law acknowledge the following instruments, which encompass as follows:712 1) Testimony (Witness and Expert testimony); 2) Written or documentary evidence; 3) Indicating evidence; 4) Information of the accused person; 5) Acknowledgement; 6) Allegation evidence; 7) Judge’s knowledge; 8) Oaths713 Principle of Evidentiary Evaluation According to Mertokusumo, the Indonesia procedural law scholar, from the adjudicators’ perspective, there are three theories concerning evaluation and/or assessment of evidences, which are as follows:714 Free evidentiary theory According to this principle, in the evaluation of evidences, the judges should not be restricted by certain rules. As a matter of fact, the judges shall have a wide discretionary power to make assessments or evaluations as to evidences in the trial proceedings. Nonetheless, this principle prerequisites the impartial, honest and reliable judges to adjudicate cases before the courts.715 3.3.4.2 3.3.4.2.1 712 I G Zega, ‚Tinjauan Mengenai Indirect Evidence (Bukti Tidak Langsung) sebagai Alat Bukti Dalam Kasus Dugaan Kartel Fuel Surcharge Maskapai Penerbangan di Indonesia (Tesis Magister Hukum, Pascasarjana Universitas Indonesia, Jakarta 2012) 51–57. 713 Harahap, Pembahasan permasalahan dan penerapan KUHAP (n 707) 71–77. cf. Zega, (n 711). 714 Chazawi, Hukum Pembuktian Tindak Pidana Korupsi, (Cet.1, Penerbit Alumni, 2006) 7–9. 715 Zega, ‘Tinjauan Mengenai Indirect Evidence (Bukti Tidak Langsung) (n 711) 51–55. 3.3 Procedural Law pursuant to the Law Number 5/1999 207 Negative evidentiary theory According to Article 169 HIR and Article 1905 of the Indonesia Civil Code (Burgerlijke Wetboek-BW), the principle requires that the judges should be limited in their discretionary powers when evaluating or assessing evidences as stipulated by the evidentiary rules. Hence, the discretionary powers of the judges, notably in obtaining and evaluating of evidences, are to be limited through exceptional provisions.716 Positive-limited evidentiary theory Pursuant to Article 165 HIR in conjunction to Article 1870 of BW, this principle mandates an instruction to the judges to evaluate evidences in the light of their discretionary powers, unless the prevailing laws stipulated otherwise. For example, Article 169 HIR stipulates that a notarial deed is to be regarded as an authentic document and thus has a full evidentiary value.717 Specific Evidentiary Requirement With regard to the evidentiary requirements, Article 42 of the Law Number 5/1999 requires, as follows: “Evidence used by the Commission for investigation and examination are: (a) witness explanations, (b) expert explanations, (c) letters and/or documents, (d) indications, (e) explanations from the business actor”.718 Pursuant to Article 42 of the Law Number 5/1999 these acceptable evidentiary instruments serve to find and to verify the material truth before the competition law authorities. According to Hansen, in the practice of Indonesian Competition Law Number 5/1999, indications or indirect evidence could serve as an acceptable evidentiary instrument in the adjudication proceedings. However, this requires that the indications or indirect evidences are ‘coherent and consistent’ with other available evidences in the cartels law enforcement proceedings. Nevertheless, the implementation of indirect evidences or indications in the 3.3.4.2.2 3.3.4.2.3 3.3.4.3 716 ibid. 717 ibid. 718 Lubis and Sirait, Hukum Persaingan Usaha (n 225) 324–327. Chapter Three Procedural Law 208 cartel’s infringement cases could not be generalised, instead this should be subject to an individual and casuistic approach by the Courts.719 Application of the Indirect (Evidences) and the ‘Plus Factors’ (Parallelism Plus) within the Cartel Enforcement Proceedings Application of the Indirect (Circumstantial) Evidences in the Cartel Enforcement Proceedings In the majority of antitrust enforcements, the Competition Authorities in the European Union (EU), in Germany and in Indonesia, had experienced profound difficulties as to how to detect (conceal), deter and thus prosecute cartel infringements, because cartels involve various forms of agreement, arrangement or practices between the undertakings to eliminate and subvert the competition processes on the market. Altough cartels occur secretively, they cause detrimental effects, which are perceivable by consumers, for instance prices’ increases of products ultimately reducing the consumers’ welfare.720 Equally important, Ruky emphasises that cartels are the most dangerous infringement against competition law, compared to other violations. In fact, the Competition Authority (CA) faces an intensive enigma as to ‘who commits cartels and what types of cartels occur?’721 Likewise, Beaton-Wells, et.al, explains that difficulties in detecting, prosecuting and deterring cartels violations rest upon the fact that cartels infringement frequently involve so-called ‘multiple-cheatings’. Put differently, the undertakings participating in cartels (cartelists) initially cheat the Competition Authorithy by presenting themselves as competitors, but in fact they do not compete against each other. Thus, the undertakings participating in cartels cheat other competitors, consumers and public as well (first-level cheating). Subsequently, the cartelists cheat the operation of cartels, secretly operate against the agreement not to compete when it may be to their economic advantage to initiate competition again, thus cheating between the 3.4 3.4.1 719 ibid., 324–325. 720 Silalahi ‘Circumstantial Evidence’ (n 14) 1–3. 721 Ruky ‘Economic Evidence’ (n 16) 1–5. 3.4 Application of the Indirect (Evidences) and the ‘Plus Factors’ (Parallelism Plus) 209 cartelists (second-level cheating). Afterwards, the ex-cartelists who act as the “whistle-blowers” and informants to the CA in the Leniency program, cheat the other cartelists by deserting to the law enforcement authorities (third-level cheating). Eventually, the former cartelists who act as the ‘whistle-blower’ and informants to the Competition Authority (CA), cheat the law enforcement officials by not giving the evidences optimally (fourth level cheating).722 Moreover, Heineman maintains that the access to evidences isa main problematic matter in the competition law enforcement.723 Accordingly, cartels practices are therefore difficult to uncover due to their secretive nature and the lack of availability of evidences. In fact, according to Andrews, the harder the CA investigates on cartels, the craftier the undertakings can commit cartels.724 In the second place, according to Silalahi, cartels frequently occur in an oligopolistic market due to their characteristics. Therefore, Jones and Sufrin are of the opinion that in an oligopolistic market, cartels (explicit collusion) as well as tacit collusion could emerge consecutively.725 For that reason, Silalahi emphasises that the undertakings operating in an oligopolistic market are subject to the oligopolistic interdependences (‘conscious parallelism’).726 Hence, Kerber and Schwalbe describe that these oligopolistic interdependences between undertakings had been derived from and could be explained by the game-theory approach.727 Inded, Jones and Sufrin explain that based upon the economic theory, the undertakings in an oligopolistic market would recognise that the profitability of their conduct (behaviour) will depend on the other competitors’ conduct (behaviour) in a market. Put differently, they would be better-off if they imposed higher prices and obtained higher profits. Thus, they could coordinate their conduct (behaviour) in a similar way to those committing cartels infringement, without an explicit collusive 722 C Beaton-Wells and C Tran (eds) Anti-Cartel Enforcement in a Contemporary Age: Leniency Religion (Hart Studies in Competition Law Book (Hart Publising 2015) 249. 723 Heinemann, ‘Access to Evidence and Presumptions- Communicating Vessels in Procedural Law’, in Schweitzer and Hüschelharth, Public and Private Enforcement of Competition Law in Europe: Legal and Economic Perspectives (Springer Verlag, 2014) 167–170. 724 Ruky, ‘Economic Evidence’ (n 16) 3. 725 Jones and Surfin, EU Competition Law (n 46) 510–512. 726 Silalahi, ‚Circumstantial Evidence‘ (n 14) 2–3. 727 Kerber and Schwalbe, in Säcker, et.al, Europäisches Wettbewerbsrecht (n 13) 116–117. Chapter Three Procedural Law 210 agreement.728 Posner categorises such behavioural interdependencies on the markets as ‘tacit collusion’.729 Thereby, Silalahi suggests that the Competition Authorithy (CA) requires not only the direct evidence, but also the indirect (circumstantial) evidence in order to substantiate cartels infringement, notably in an oligopolistic market.730 In addition, Ruky reiterates that the substantiation of cartels existence in the market prerequisites a particular evidentiary instrument, namely the economic evidence.731 As a matter of fact, according to the Organization for Economic Co-operation and Development (OECD), within the cartels’ prohibition enforcement proceedings, the CA shall employ two types of evidences: First, the direct evidence, which refers to the evidence that identifies a meeting or communication between the subjects and describes the substance of their agreement. The most common form of direct evidence are: First, documents (in printed or electronic form) that identify an agreement and the parties to it, and oral or written statements by co-operative cartel participants describing the operation of the cartel.732 Second, the indirect (circumstantial) evidence. The indirect (circumstantial) evidence is an evidence that does not specifically describe the terms of an agreement, or the parties to it. It includes evidence of communications among suspected cartel operators and economic evidence concerning the market and the conduct of those participating in it that suggest concerted action.733 Equally important, in the European Competition law, according to the Commission, the indirect (circumstantial) evidence is defined as follows: “[…] the notion of indirect or circumstantial evidence comprises of evidences which is appropriate to corroborate the proof of the existence of cartels by way of deduction, common sense, economic analysis or logical inference from the demonstrated facts.”734 728 Jones and Sufrin, EU Competition Law (n 46) 534–537. 729 Posner, Antitrust Law (n 80) 53. 730 Silalahi,’Circumstantial Evidence (n 14)’ 2–3. 731 Ruky, ‘Economic Evidence’ (n 16), 2–5. 732 OECD, ‘Prosecuting Cartels Without Direct Evidence’ (n 19) 2–10. 733 ibid. 734 ibid. 3.4 Application of the Indirect (Evidences) and the ‘Plus Factors’ (Parallelism Plus) 211 Even more, Ruky describes that the indirect (circumstantial) evidence can be classified into three categories. First, the communication evidence.735 Second, the facilitating practice (quasi-economic evidence).736 Third, the economic evidence.737 According to the Commission, economic evidence refers to evidences which are derived from an economic reasoning employed in the competition law cases, notably in order to develop in a consistent manner or, conversely, to rebut facts due to their inconsistencies, the economic evidence and arguments in a case in question.738 735 According to the Organisation for Economic Co-operation and Development (OECD): “Communication evidence is evidence that cartel operators met or otherwise communicated, but does not describe the substance of their communications. It includes, for example, records of telephone conversations among suspected cartel participants, of their travel to a common destination and notes or records of meetings in which they participated. Communication evidence can be highly probative of an agreement. Almost all of the circumstantial cases described by delegations included communication evidence; in some the evidence was compelling.” OECD, ‘Prosecuting Cartels (n 19) 10. 736 ibid. 737 According to the Organisation for Economic Co-operation and Development (OECD) as to the economic evidence: “Economic evidence can be categorized as either conduct or structural evidence. The former includes, most importantly, evidence of parallel conduct by suspected cartel members, e.g., simultaneous and identical price increases or suspicious bidding patterns in public tenders. It can also include evidence of facilitating practices, though that conduct could also be characterised as ìquasi-communication evidence. Structural economic evidence includes evidence of such factors as high market concentration and homogeneous products. Of these two types of economic evidence, conduct evidence is considered the more important. Economic evidence must be carefully evaluated. The evidence should be inconsistent with the hypothesis that the market participants are acting unilaterally in their self interest. Economics, including the use of game theory, can be instructive on how to make this judgment. It appears that in most countries, however, that kind of analysis is not yet employed. But further, economic evidence can play an important role in the initial stages of a cartel investigation. A proper analysis of it could provide a basis for deciding which of several possible cases are likely to be the most fruitful to pursue, with the hope and expectation that better evidence of agreement, both direct and circumstantial, will be discovered.” OECD; ‘Prosecuting Cartels without Direct’ (n 19) 10–12. 738 The Commission, Directorate General Competition, 'Best Practices on Submission of Economic Evidence and Data Collection in Cases concerning the Applica- Chapter Three Procedural Law 212 With regard to the economic evidences according to Ruky, they can be further divided into two types: First, the structural evidence. The structural economic evidence refers to the following economic variables: (1) high market concentration; (2) low concentration on the opposite side of the market; (3) high barriers to entry markets; (4) high degree of vertical integration; (5) standardised or homogeneous product. These economic variables could indicate the existence of cartels practice in a given market.739 Second, the conduct evidence. The conduct evidence refers to the particular market behaviour of undertakings, inter alia ‘parallel prices increases’ and ‘suspicious tender or bidding patterns’, which could indicate whether the undertakings compete or not compete with each other on a relevant market.740 Kekevi and Göksin argue that the economic evidences are able to prove cartels infringement based upon two reasons. First, the economic evidence can assist the Competition Authority (CA) to identify ‘cartelised markets’ by analysing outputs and price levels on a market. Secondly, the economic evidence supports the CA to prove cartels infringement by means of analysing the conducts (behaviours) of the undertakings in a market.741 Nevertheless, Silalahi observes that even though the economic evidence has been accepted in the most competition law jurisdictions, the Competition Authority views this type of evidene as ambiguous for the following reasons, that is to say, this category of evidence cannot exactly explain whether the undertakings have individually or collectively committed certain market conducts.742 For that reason, Kekevi suggests that the CA must be cautious in implementing the indirect (circumstantial) evidences in order to prevent or minimalise the occurrence of the following catastrophic errors. First, to falsely condemn innocents, although what they carry out is subject to the oligopolistic interdependence or conscious parallelism (‘False positive’ or ‘Type I ertion of Articles 101 and 102 TFEU and in Merger Cases’ ‹http://ec.europa.eu/dgs/ competition/economist/best_practices_en.html› accessed on 22nd May 2018 739 Ruky, ‘Economic Evidence’ (n 16) 3–4. See also OECD, ‘Prosecuting Cartels Without Direct Evidence’ (n 19) 5–7. 740 OECD, ‘Prosecuting Cartels Without Direct Evidence’ (n 19) Ruky, ‘Economic Evidence’ (n 16) 3–4. 741 ibid. OECD, ‘Prosecuting Cartels Without Direct Evidence’ (n 19) 5–7. 742 Silalahi, ‘Circumstantial Evidence’ (n 14) 2–3. 3.4 Application of the Indirect (Evidences) and the ‘Plus Factors’ (Parallelism Plus) 213 ror’).743 Second, to acquit cartel members by identifying their cartel behaviour as an oligopolistic interdependence (‘False negative’ or ‘Type II error’).744 Ultimately, whenever the Competition Authority (CA) encounters difficulties for finding direct evidences to prove concerted practices as well as for obtaining plausible explanations for parallel market behaviour (price parallelism), the CA could proceed to find additional circumstantial evidences, which are pervasively known as the “Plus factors”.745 Particularly important, according to Judge Posner, in the In re Text Messaging Antitrust Litigation argued that “direct evidence of conspiracy is not a sine qua non and [indirect] circumstantial evidence could very well be used to establish an antitrust conspiracy.”746 743 Type I Error refers to: “the incorrect rejection of a true null hypothesis. It is also known as a false positive or an error of the first kind. For example, a fire alarm goes off indicating a fire breaking out when in fact there is no fire. Or a blood test result that shows a patient has a certain disease when in reality the patient does not have that disease. In antitrust cases, Type I error represents a false judgment in which the court condemns a conduct that was not anticompetitive. Type I error reflects an overenforcement or over-regulation.” Kekevi, Can Ecoomics Help Us with Cartel Detection’ (n 20), 11–12. See also New York Law School, ‘European Competition Law: Unpacking a European Court of Justice Opinion’ ‹https://www.eucomplaw.com/error-types/› accessed 5th January 2019. 744 Furthermore, Type II Error refers to the following notions: “is defined as the failure to reject a false null hypothesis. It is also known as a false negative or an error of the second kind. For example, a fire breaking out and the fire alarm do not go off. Or a blood test fails to indicate that a patient has a certain disease. In antitrust cases, Type II error represents a false judgment in which the court fails to condemn a conduct that is anticompetitive. Type II error reflects under-enforcement or under-regulation.” Kekevi, Can Ecoomics Help Us with Cartel Detection’ (n 20), 11–12. See also New York Law School, ‘European Competition Law: Unpacking a European Court of Justice Opinion’ ‹https://www.eucomplaw.c om/error-types/› accessed 5th January 2019. 745 M. Sadhya, ‘Concerted action in an oligopoly and the role of plus factors’ (LL.M Thesis, West Bengal University of Juridical Science, India, 2012) 8. 746 W. E. Kovacic et. al., ‘Plus Factors and Agreement in Antitrust Law’ (110 Mich. L. Rev. 393 2011), 393–400. Chapter Three Procedural Law 214 Application of the “Plus Factors” (Parallelism Plus) for Consolidating the Evidences of Cartels On the one hand, in the current competition (antitrust) enforcement proceedings, the most difficult obstacle to solve is how to accurately distinguish, if the parallel market behaviour, such as the parallel pricing, in an oligopolistic market, is attributable to the concerted practices. On the other hand, if the parallel market behaviour is naturally the effect of market structure. Whereby, the first conduct is unlawful and is subject to the cartel prohibitions; the latter (“conscious parallelism” or “oligopolistic interdependence”) is lawful, yet it demands particular Competition (Antitrust) law remedies.747 Whereas the concerted practices prohibition mandates the independence postulate, this would not deprive the rights of undertakings to intelligently adapt with other competitors’ market conduct, that is to say, the parallel market behaviour.748 Primarily, in the European Competition law, the concerted practices under the prohibition of Article 101 (1) TFEU must be comprehended in the conceptual mindset inherent in the EU Treaty on competition policies: “[…] the criteria of co-ordination and co-operation […] must be understood in the light of the concept inherent in the provisions of the Treaty […] that each economic operator must determine independently the policy which he intends to adopt on the market. The Treaty thus lays down a requirement of independence. However, this requirement does not prevent economic operators from adapting themselves intelligently to the conditions of the market; rather it prohibits any practice that may influence competitors’ conduct on the market.”749 Hence, the parallel conduct would not be, in itself, illegal and to prove the existence of a collusive agreement or concerted practices.750 Respectively, the German Federal Cartel Office (Bundeskartellamt) inquired the parallel pricing on the fuel sector and found that there is no 3.4.2 747 Lettl, Kartellrecht (n 138), 25–35. 748 ibid. 749 ibid. 750 D. Slobodenjuk, ‘Parallel Behaviour under EU Antitrust Law’ (Presentation Paper, IBA Conference 1st CIS Competition Law, Clifford Chance, London 8–9 December 2011) 1–3. 3.4 Application of the Indirect (Evidences) and the ‘Plus Factors’ (Parallelism Plus) 215 agreements or concerted practices, in spite of the parallel pricing therein. Thus, the FCO found that the oligopolistic market structure and a very transparent market had resulted in the parallel pricing.751 Accordingly, the Court of Justice in the Ahlström Osakeyhtiö and others v Commission of the European Communities case, argued as follows: „parallel conduct cannot be regarded as furnishing proof of concertation unless concertation constitutes the only plausible explanation for such conduct. It is necessary to bear in mind that, although Article [101] of the Treaty prohibits any form of collusion which distorts competition, it does not deprive economic operators of the right to adapt themselves intelligently to the existing and anticipated conduct of their competitors.” Furthermore, according to Allendesalazar, Lage and Vallina, indicating the legal stance of the Court of Justice of EU, has been as follows: “[…] it is perfectly justifiable for players in the market to adapt themselves to the existing or anticipated conduct of their competitors and as such parallel conduct is not caught by Article 101 and no presumption of collusion is created.”752 Similar legal stance is found in the US Antitrust Law as regards the parallel pricing: “While a showing of parallel business behaviour is admissible circumstantial evidence from which the fact finder may infer agreement, it falls short of conclusively establishing agreement or […] itself constituting the Sherman Act offense. Even conscious parallelism, a common reaction of firms in a concentrated market (that) recognize their shared economic interests and their interdependence with respect to price and output decision is not in itself unlawful […]. The inadequacy of showing parallel conduct or interdependence, without more, mirrors the ambiguity of the behavior: consistent with conspiracy, but just as much in line with a wide swath of rational and competitive business strategy unilaterally prompted by common perceptions on the market.”753 751 According to the President of the Bundeskartellamt (German Federal Cartel Office), Dr. Andreas Mundt: “the market structures are such that agreements are not necessarily required as there is, so to speak, an implicit understanding between the companies. This leads to excessive prices.” ibid. 13. 752 Allendesalazar, Lage and Vallina, ‘Oligopolies, Consicous Parallelism, and Concertation’ in C D Ehlermann, I. Atanasiu, European Competition Law Annual 2006: Enforcement of Prohibition of Cartels (Hart Publishing, Oxford: 2007) 119–122. 753 Sadhya ‘Concerted Action in An Oligopoly and The Role of Plus Factors’ (n 744) 8. Chapter Three Procedural Law 216 In the Competition law theory, the parallel pricing is not Per-se Illegal and it does not create a “presumption of iuris tantum of collusion”754 In certain circumstances, parallel pricings could solely constitute ‘indirect evidence’ for ‘concerted practices’ by taking into account the overall competition parameters.755 Nevertheless, hitherto, the Competition Authorities have been experiencing perplexities to correctly distinguish between the legitimate conscious parallelism, on the one hand, and the illicit collusion, on the other hand.756 Particularly, in an oligopolistic market, the blurry line of distinction between the two becomes manifested.757 Put differently, how to correctly distinguish between conscious parallelism and the concerted practices in an oligopolistic market because of the market 754 Allendesalazar, Lage and Vallina, ‘Oligopolies, Consicous Parallelism, and Concertation’ (n 751) 119–122. 755 In the ICI (“Dyestuffs”) case the Court of Justice of EU: „by its very nature, then, a concerted practice does not have all the elements of a contract but may inter alia arise out of coordination which becomes apparent from the behaviour of the participants. Although parallel behaviour may not by itself be identified with a concerted practice, it may however amount to strong evidence of such a practice if it leads to conditions of competition which do not correspond to the normal conditions of the market, having regard to the nature of the products, the size and number of the undertakings, and the volume of the said market. This is especially the case if the parallel conduct is such as to enable those concerned to attempt to stabilize prices at a level different from that to which competition would have led, and to consolidate established positions to the detriment of effective freedom of movement of the products in the common market and of the freedom of consumers to choose their suppliers. Therefore the question whether there was a concerted action in this case can only be correctly determined if the evidence upon which the contested decision is based is considered, not in isolation, but as a whole, account being taken of the specific features of the market in the products in question.“ The EU Court of Justice C 48–69. Imperial Chemical Industries Ltd. v Commission of the European Communities., Case 48–69 (ECLI identifier: ECLI:EU:C:1972:70), paras. 65–68. 756 Allendesalazar, Lage and Vallina, ‘Oligopolies, Consicous Parallelism, and Concertation’ (n 751) 119–122. 757 Sadhya ‘Concerted Action in An Oligopoly and The Role of Plus Factors’ (n 744) 5–8. 3.4 Application of the Indirect (Evidences) and the ‘Plus Factors’ (Parallelism Plus) 217 structure thereof becomes the utmost obstacle for the Competition Authorities.758 The European Competition and the US Antitrust laws’ practices have provided viable solutions as regards to the methods for distinguishing between a collusive agreement or concerted practices as well as the conscious parallelism (an oligopolistic interdependence).759 The European Competition and US Antitrust laws’ practices have introduced the “Parallelism-plus doctrine” and ”Plus factors” as well as the “inter-firm communications postulate” in order to distinguish between concerted practices (cartel); and the conscious parallelism (an oligopolistic interdependence).760 According to Ghezzi and Maggiolino, with regard to “plus-factors” and evidence of the concerted practices: Evidence of certain types of conduct strongly signifies market collusion. Examples include, as argued by Kovacic and others, ‘super plus factors’ such as evidence that competing firms share firm-specific production information. In the absence of such evidence, a decision to further investigate market players for potential collusion can be based on empirical analysis, including the use of empirical screens. For example, a decision to further investigate can also be justified when the data in question (for example, price or quantity-related data) are clearly abnormal and completely different from a carefully chosen benchmark. Elaborations of the Circumstantial (Indirect) Evidences in the EU Competition Law, German Cartel Law and Indonesian Competition Law In the application framework of the indirect (circumstantial) evidences, notably the economic evidence constitutes the main ingredient of indirect (circumstantial) evidences in order to substantiate cartels in- 3.4.3 758 Allendesalazar, Lage and Vallina, ‘Oligopolies, Consicous Parallelism, and Concertation’ (n 751) 119–122. 759 Ghezzi and Maggiolino, ‘Bridging EU Concerted Practices with U.S. Concerted Actions’ (n 565) 651–666. 760 ibid. Chapter Three Procedural Law 218 fringement optimally. Accordingly, the economic evidence is the integral part of the indirect (circumstantial) evidences, which differs from the direct evidences such as contemporary documents, minutes or notes of meetings and corporate statements.761 Further, according to Lianos and Genakos, the categories of economic evidence encompass economic theories, models of collusive conducts, evidences relating to market structures, natures of the product and economic theory on facilitating practices.762 Equally important, the implementation of indirect (circumstantial) evidences in the antitrust enforcement proceedings, must be considered within the evidentiary rules of the European Competition and the German Cartel laws. Whereas in the practice thereof, the standards of proof have been requiring that “sufficient, precise and coherent proofs” must be established. Furthermore, the Court of Justice of EU in the Competition law precedents requires quality of evidences as follows: ‘sufficient precise and coherent [or consistent]’, ‘precise and consistent’, ‘solid, specific and corroborative’, ‘firm, precise and consistent body of evidence’, ‘convergent and convincing’, ‘convincing’, or ‘cogent’. Furthermore, the Court of Justice in its recent decision, Dresdner Bank case, stipulated: “Any doubt in the mind of the Court must operate to the advantage of the undertaking to which the decision finding an infringement was addressed. The Court cannot therefore conclude that the Commission has established the infringement at issue to the requisite legal standard if it still entertains any doubts on that point, in particular in proceedings for annulment of a decision imposing a fine. […] the Commission must show precise and consistent evidence in order to establish the existence of the infringement.”763 Furthermore, in the Woodpulp case, for example, the Court of Justice stipulated: “the evidence must be ‘sufficient precise and coherent […] to justify the view that the parallel business […] was the result of concerted action.” 761 OECD, ‘Prosecuting Cartel without Direct Evidence’ (n 19) 20. 762 Lianos and Genakos, “Econometric Evidence in EU Competition Law in Lianos and Geradin, Handbook on European Competition Law (n 26) 1–12. 763 Geradine, Farrar and Petit, EU Competition Law (n 33) 128–130. 3.4 Application of the Indirect (Evidences) and the ‘Plus Factors’ (Parallelism Plus) 219 On the one hand, the European Court’s Judge, asserted as regards to evidentiary standard, as follows: “Thus, we have not yet articulated the difference known in common law systems between the criminal standard of ‘proof beyond reasonable doubt’ and the civil standard of ‘balance of probabilities’, a difference which is also known in civil law systems but not perhaps articulated in quite the same way. In practice, we are applying something very close to the criminal standard but perhaps subconsciously making some allowance in cartel cases for the inherent difficulty of proving collusion. “764 On the other hand, in the German Cartel law, the main objective of the competition enforcement proceedings, notably the administrative and the imposition of administrative fines, has been to find the material truth (materielle Wahrheit).765 Hence, the German Cartel Authorities (Kartellbehörde) must assure that all necessary measures have been taken to reach a just and correct decision in order to find the material or substantial truth (materielle Wahrheit) of the alleged antitrust violation at hand. The Kartellbehörde is authorised to collect and corroborate varying types of evidences to obtain clarification of factual circumstances and thus the material (substantive) truth of a case at hand, including the indirect (circumstantial) evidences. For example, the Oberlandsgericht (OLG) and the Bundesgerichtshof (BGH) put “high importance to an economic analysis” in examining and deciding the alleged antitrust (competition) violation cases. In the administrative and imposition of fines proceedings, for example, the German Cartel Office (Bundeskartellamt) Decision must achieve ‘a high accuracy grade of plausibility’ pursuant to Sec.61 of the GWB.766 In the antitrust enforcement proceedings before the German Court, there are several factors playing as key determinants for reaching the Decisions, notably, (1) the Judge’s personal certainties (persönliche Gewissheit), (2) the Judge’s empirical knowledge (Erfahrungssätze), (3) the significancy of 764 OECD, ‘Judicial Enforcement of Competition Law 1996’(OCDE/GD(97)200) ‹https://www.oecd.org/daf/competition/prosecutionandlawenforcement/1919985 .pdf› 105–107.accessed on 1st May 2018 765 Dannecker and Biermann, „Vorbemerkung Sec. 81“ in Immenga and Mestmäcker, Wettbewerbsrecht (n 566) R 1–226. 766 Schneider in Langen and Bunte, Kommentar zum Kartellrecht (n 99) 1230–1234. Chapter Three Procedural Law 220 confessions,. (4) the role of indirect evidences (Indizienbeweis).767 Particulary important, as to the indirect (circumstantial) evidences, the Kartellbehörde and the German Court could conclude the merits of a case in question from the indirect factual circumstances by means of judicial inferences (facta concludentia). Respectively, the “plus-factors” are the most important evidences for substantiating the concerted practices. Accordingly, the evidentiary standards in the German Cartel law enfocement proceedings shall establish the “beyond reasonable doubts” in accordance with Sec. 261 of the German Code of Criminal Procedure (Strafprozessordnung – StPO).768 In the European Competition Law According to the Commission, economic evidences could be defined as “evidences which are derived from an economic reasoning employed in the competition law cases, notably in order to develop in a consistent manner or, conversely, to rebut facts due to their inconsistencies, the economic evidence and arguments in a case in question.”769 Further, according to Lianos, in the European Competition Law’s enforcement proceedings, the economic evidence has been applied in the following three competition law cases. First, in the cartel violation cases; for example, to establish evidences of concerted practices under the Article 101 (1) TFEU and to determine the fines imposed. Second, in the merger cases; for instance, to identify market definition, anticompetitive harms, and unilateral effects. Third, the 3.4.3.1 767 Dannecker and Biermann, ‚Vorbemerkung Sec. 81‘ in Immenga and Mestmäcker, Wettbewerbsrecht (n 566) R 1–226. 768 “§ 261 Grundsatz der freien richterlichen Beweiswürdigung Über das Ergebnis der Beweisaufnahme entscheidet das Gericht nach seiner freien, aus dem Inbegriff der Verhandlung geschöpften Überzeugung.“ ([Free Evaluation of Evidence] “The court shall decide on the result of the evidence taken according to its free conviction gained from the hearing as a whole.”). Strafprozessordung – StPO ‹https://www.gesetze-im-internet.de/englisch_stpo/englisch_stpo.html#p17 42› accessed on 5th January 2019. 769 The Commission: DG Competition, ‘Best Practices on Submission of Economic Evidence and Data Collection in Cases concerning the Application of Articles 101 and 102 TFEU and in Merger Cases’ 5. 3.4 Application of the Indirect (Evidences) and the ‘Plus Factors’ (Parallelism Plus) 221 abuse of dominant positions for example, in market definition and pricing abuses.770 Whereas the Commission has severally used economic evidences to prove and prosecute cartels infringement, the Courts of Justice of the EU, namely the Court of Justice of EU (ECJ), has adopted a very strict standard of proof in evaluating the economic evidence. In the case of Wood-pulp, the Commission based its decision on economic evidence as to parallel-behaviour of the alleged undertakings, but without carefully examining the market structure. Subsequently, the EJC decided that ‘the Commission had no documents (direct evidences) which directly establish the existence of concertation between the producers concerned’. Further, the EJC dismissed the Commission’s argument by deciding, that the Commission ‘cannot rely on economic evidences (including econometric evidence) in order to prove cartels, but combines different pieces of evidences (direct and indirect)’ and thus ‘examined not isolation but in their entirety and never divorced from their context.’771 Afterwards, in the case of Microsoft, the Courts of Justice of the EU argued that the Court “must not only establish whether the evidence put forward is factually accurate, reliable and consistent but must also determine whether that evidence contains all the relevant data that must be taken into consideration in appraising a complex situation and whether it is capable of substantiating the conclusions drawn from it.”772 Furthermore, the ECJ annulled the Commission’s decision by arguing that the economic evidences were not sufficient to prove concerted practices.773 Specifically, the ECJ was of the opinion that “the Commission cannot rely on economic evidence only (including econometric evidence) in order to prove cartels infringement, but must combine different pieces of evidences (direct and indirect), examined not in isolation but in their entirety and never divorced from their con- 770 I. Lianos ‘Economic evidence and econometrics in competition UNCTAD’ (Faculty of laws University College London, Research Partnership Platform Geneva 7 July 2013) ‹file:///U:/RPP2013_Lianos_en.pdf› accessed on 15th October 2015. 771 Lianos and Genakos, “Econometric Evidence in EU Competition Law in Lianos and Geradin, Handbook on European Competition Law (n 26) 1–12. 772 ibid. 773 ibid. Chapter Three Procedural Law 222 text”.774 Nothwithstanding the opposing arguments of the Courts of Justice of the EU, in the PO/Copper plumbing tubes case, the Commission applied the economic evidence to prove a price fixing cartel in the European market for water, heating and gas tubes by means of price regression analysis to determine the effects to competition.775 Subsequently, in the Ryan-air case, the Commission employed as well the economic evidence to analyse the effects of concentration in the airtransportation market.776 However, in the Ryan-air case, the GC argued for the addition of a rigorous scrutiny of the economic evidence because of the protections of fundamental human rights, which are guaranteed by the EU. Accordingly, the Court stated “where the institutions have a power of appraisal, respect for the rights guaranteed by the legal order of the European Union in administrative procedures is of even more fundamental importance’, whereas this means ‘the duty of the Commission to examine carefully and impartially all the relevant aspects of the individual case, the right of the person concerned to make his views known and also his right to have an adequately reasoned decision.”777 Equally important, according to Holterhus, pertaining the economic evidence, the practice of European Competition Law recognises the dichotomy of evidences, that is to say, the factual evidence and prognosis evidence, particularly in merger cases. Whereas the first type evidence the European Courts in the General Electric case stated: “As to the nature of the Community judicature’s power of review, it is necessary to draw attention to the essential difference between factual matters and findings, on the one hand, which may be found to be inaccurate by the Court in the light of the arguments and evidence before it, and, on the other hand, appraisals of an economic nature.”778 Thus, Holterhus emphasises that in cartels infringement cases, the factual evidence comprises, inter alia: agreements between undertakings, the existence of market transparency through information exchanges 774 ibid. 775 ibid. 776 ibid. 777 ibid. 778 Holterhus, Beweisführung in der europäischen Fusionskontrolle: Regelungserfordernis und Regelungsbestand im Spannungsfeld von Wahrheit und Wahrscheinlichkeit (Mohr Siebeck, 2014), 30–37. 3.4 Application of the Indirect (Evidences) and the ‘Plus Factors’ (Parallelism Plus) 223 between undertakings, the existence of punishment mechanism between the undertakings (Cartelists), and the existence of prices discounts between undertakings.779 As regards the prognostic evidence, whereas the Commission using evidences relating to the current and probable future state of competitions on the market to determine the ‘significantly impediment of competition’. This prognostic evidence could be based, for example on structure and competitive dynamics of market. However, the Court of Justice in the case of Bertelsmann and Sonny decided that under the balance of probabilities standard, the prognosis evidence has none of strength and quality of supporting evidence. The Court adduced, that the Commission “must adduce adequate evidence of all facts on which its decision is based”. Hence, the Court argued that such evidence must be “sufficiently precise and coherent proof ” to sustain the Commission’s conclusion in its decision. Thus, the quality of evidence of the Commission must go beyond the only assessment that factual proposition is “more likely than not”. The Court of Justice imposed this high evidentiary requirement to prognosis evidence by taking into account the serious legal consequences for the alleged undertakings, namely the undertakings must pay the high fines and are liable for compensation of damages to the third parties.780 Nevertheless, the precedent of European Competition laws has indicated that the solely application of economic evidence will rarely, if ever, prove conclusive by themselves. Put differently, from the evidentiary standard requirement, the economic evidence had not been sufficient to prove cartels infringement against the Article 101 (1) TFEU. In the case of Rhône Poulenc, the Advocate General Vesterdorf convincingly asserted that: “Considerable importance must be attached to the fact that competition cases of this kind (cartels) are in reality of a penal nature, which naturally suggests that a high standard of proof is required […]. There must be a sufficient basis of the decision and any reasonable doubt must be for the benefit of the applicants according to the principle in dubio pro reo.”781 779 ibid. 780 N Levy, ‘Evidentiary Issues in EU Merger Control in Hawk’, (Fordham Competition Law Institute, 2008) 87–93. 781 I Kokkoris, I Lianos, The reform of EC competition law: new challenges (Kluwer Law International, 2010) 312–314. Chapter Three Procedural Law 224 Furthermore, as regards to the inconclusive value of economic evidence, the GC stipulated, as follows: “It is the Commission’s task to make an overall assessment of what is shown by the set of indicative factors used to evaluate the competitive situation. It is possible, in that regard, for certain items of evidence to be prioritised and other evidence to be discounted. That examination and the associated reasoning are subject to a review of legality which the Court carries out in relation to Commission decisions on concentrations”.782 Accordingly, learning from the previous failures, the Commission has issued the Best Practices for the Submission of Economic Evidence and Data Collection in Cases concerning the Application of Articles 101 and 102 TFEU and in Merger Cases (the Best Practice of Economic Evidence).783 Equally important, in Recitals 2, 3 and 4 of the Best Practice of Economic Evidence, the Commission is of the following opinion: “It is therefore necessary to: (i) ensure that economic analysis meet certain minimum technical standards at the outset, (ii) facilitate the effective gathering and exchange of facts and evidence, in particular any underlying quantitative data, and (iii) use in an effective way reliable and relevant evidence obtained during the administrative procedure, whether quantitative or qualitative.” “First, in order to determine the relevance and significance of an economic analysis for a particular case, it is first necessary to assess its intrinsic quality from a technical perspective, i.e. whether it has been generated and presented in a way that meets adequate technical requirements prevalent in the profession. Second, one must assess the congruence and consistency of the economic analysis with other pieces of quantitative and qualitative evidence (such as customer responses, or documentary evidence).”784 Equally important, Röller maintains that the application of economic evidence is subject to the judicial supervision of the European Courts. 782 General Court, Case T-342/07, Ryanair v Commission, [2010], para.136. cf. Holterhus, Beweisführung in der europäischen Fusionskontrolle: (n 777) 30–37. 783 The Commission: DG Competition, “Best Practices on Submission of Economic Evidence and Data Collection in Cases concerning the Application of Articles 101 and 102 TFEU and in Merger Cases” 3–5. 784 ibid. 3.4 Application of the Indirect (Evidences) and the ‘Plus Factors’ (Parallelism Plus) 225 In the case of Aalborg Portland and Others v. Commission, the Court stated: “Examination by the Community judicature of the complex economic assessments made by the Commission must necessarily be confined to verifying whether the rules on procedure and on the statement of reasons have been complied with, whether the facts have been accurately stated and whether there has been any manifest error of appraisal or misuse of powers.” Subsequently, in the Tetra case, the Court argued, as follows: "the fact that the Commission has a margin of discretion with regard to economic matters, […] does not mean that the Community Courts must refrain from reviewing the Commission’s interpretation of information of an economic nature. Not only must the Community Courts, inter alia, establish whether the evidence relied on is factually accurate, reliable and consistent but also whether that evidence contains all the information which must be taken into account in order to assess a complex situation and whether it is capable of substantiating the conclusions drawn from it.”785 In the German Cartel Law According to Burrichter and Paul, in the German Cartel Law’s enforcement proceedings, the economic evidence has an important function. This type of evidence has been mainly provided by the expert testimony, which serves as ‘aides to the judge’ by assisting the judges with their specific knowledge. For example, the economic evidence supports the parties before the Court to establish adequate and sufficient evidences in the two main matters, namely the causation and the quantum.786 Also, this prerequisites rigorous analysis of the economic variables, such as input cost, demand-fluctuations, market entries and the exit by competing undertakings, and prices.787 As it has been described previ- 3.4.3.2 785 See LH Röller ‘Economic Evidence and Analysis in Competition Policy: some remarks’ (Government Economists in Competition and Regulation 2005 Conference Wednesday, 9 November 2005, DTI Conference Centre). ‹http://ec.europa.e u/dgs/competition/economist/eeac.pdf,› accessed on 19th October 2017. 786 Burrichter and Paul, ‘Economic Evidence in Competition Litigation in Germany’ in Schweitzer and Hüschelrath, Public and Private Enforcement of Competition Law in Europe (n 722) 193 194. 787 ibid. Chapter Three Procedural Law 226 ously, the Court’s appointed experts (Gerichtssachverständige) and the expert counsel for the parties (Privatgutachter) can provide the economic evidence. Hence, these experts are designated by the Court and must provide neutral legal opinions. Besides, their duty is mainly to accord advisory assistances to the Judges in the verification of facts or foreign law rules. Nonetheless, their legal opinions are absolutely subject to the Court’s decision-making competence.788 In the German Cartel Law, the Court relies mainly upon the principle of unfettered consideration of evidences (freie Beweiswürdigung), which is applied in the Criminal Law’s enforcement procedure. Therefore, the Court is supposed to decide based upon its independent conviction by taking into account the entire courses of proceedings to establish ‘personal certainty or assurance (persönliche Gewissheit) and thus be able to prove cartels infringement789. Equally important, in the substantiation of cartels infringement, the Bundesgerichtshof requires the existence of cartels overcharge, whereas the Bundesgerichtshof stipulated, as follows: “According to economic principles, cartels will typically involve a cartel overcharge. It is therefore highly likely […] that a cartel being formed and maintained because it leads to higher prices than could otherwise be obtained in the market”.790 Nevertheless, the economic evidence is rebuttable whenever the opposing parties can argue for other reasonable economic reasons before the Court.791 In addition, cartels infringement can be substantiated by means of a time series analysis to establish the ‘structural-break’, which indicates cartels existence.792 This method was applied before the Oberlandesgericht (OLG) Düsseldorf.793 In fact, the OLG Düsseldorf, in the cement cartel case, carried out a ‘full and comprehensive judicial review’ as to the Bundeskartellamt’s arguments through the rigorous analysis of economic evidence at hand. Even more, the OLG Düssel- 788 Reimann and Zekoll, Introduction to German Law (n 591) 374. 789 ibid. 790 Burrichter and Paul, “Economic Evidence in Competition Litigation in Germany in Schweitzer and Hüschelrath, Public and Private Enforcement (n 722) 205. 791 ibid. 792 ibid. 213. 793 ibid. 216. 3.4 Application of the Indirect (Evidences) and the ‘Plus Factors’ (Parallelism Plus) 227 dorf applied a ‘broad discretion’ as regards the economic evidence at hand. Put differently, the Court requires through analysis by appointing reliable experts to provide economic analysis over time series data in the market (model-based approach) in order to attain an accurate decision.794 Nevertheless, from the German Cartel Law’s perspective, the application of economic evidence alone is inadequate to substantiate cartels infringement between the cartelists. Arguably, there is a large possibility that the oligopolistic interaction (conscious parallelism) exists, instead of cartels (collusive agreement). Thus, both phenomena have been difficult to differentiate by applying solely upon the economic variables’ analysis.795 Equally important, in the German Cartel Law’s enforcement proceedings, the application of economic evidence has been considerably problematic. According to Burrichter and Paul, there are several reasons for this proposition. First, the difficulties concerning access to economic-related data. For example, the Bundeskartellamt could hesitate to give its economic-related data upon the parties’ request. This request is considered as ‘administrative assistance’ (Amtshilfe) and thus could be refused for confidentiality reasons pursuant to the Sec. 5 (2) of the Act on Administrative Procedure (VwVfG). Second, the constitutional limitation regarding confidentiality of economic-related information (data). Hence, the provisions of Article 20 (3) and (4) of the Grundgesetz prerequisite the citizens’ right of resistance against any acts trying to obstruct their constitutional (fundamental) rights. For example, whenever the parties before the Court refuse to provide their underlying (raw) data as the economic evidence due to the confidentiality reason. Third, the reconciliation of dissenting economic experts’ statements (opinions). Accordingly, Burrichter and Paul describe that there have been none of the intrinsic economic thresholds to evaluate expert’s opinion, to decide whether the opinion (statement) is sufficient and reliable.796 For that reason, the Bundeskartellamt has issued the Notice on Best Practices for Economic Expert Opinions, which aims 794 Lianos and Genakos ‘Econometric Evidence’ (n 26) 72–73. 795 Burrichter and Paul, “Economic Evidence in Competition Litigation in Germany” in Germany in Schweitzer and Hüschelrath, Public and Private Enforcement (n 722) 205. 796 ibid. 225. Chapter Three Procedural Law 228 to attain two functions. First, to assist the cartel law practitioners to develop and present evidences in a way to enable the Judges to determine their probative weight. Second, to support the Competition Authority (CA) in identifying and discarding baseless or unreasonable economic opinions and thus disregarding contradictory economic opinions.797 As a matter of fact, the Bundeskartellamt’s Best Practices prescribe the following requirements as regards to the economic opinion for the purpose of the economic evidence: First, relevance; this refers to a requirement that an economic opinion must be clear from the opinion which competition issues are dealt with, which methods are used and what the conclusions and their implications are. These must be relevant to the case. Second, completeness; this means that “an expert opinion must be written to be comprehensible within a reasonable period of time. Opinions which do not contain the information necessary to understand and to replicate results are incomplete. Results of economic analyses which are not comprehensible cannot be considered as evidence.” Third, transparency; thus, this refers to a requirement that an economic analysis, based on simplifying assumptions, to disclose the assumptions and being assessed for their compatibility with the relevant facts of the case under competition law. Fourth, consistency; this means that whenever an economic opinion contains analysis of similar or different circumstances, each of the assumption and result of the analysis isnot contradictory. Hence, any inconsistencies in the economic assumptions or results must be acknowledged and explained properly.798 In the Indonesian Competition Law Number 5/1999 Until now, on the one hand, there has been juridical obscurities concerning the implementation of indirect (circumstantial) evidences for proving cartels infringement in the Indonesia Competition Law Number 5/1999. Equally important, according to Hansen, in the framework of the Law Number 5/1999, indications are considered and could be 3.4.3.3 797 C A Melischek, The Relevant Market in International Economic Law: A Comparative Antittrust and GATT Analysis, (OUP,2013) 205. 798 The Federal Cartel Office (Bundeskartellamt), “Best practices for expert economic opinions 20 October 2010”. 3.4 Application of the Indirect (Evidences) and the ‘Plus Factors’ (Parallelism Plus) 229 admitted as the indirect (circumstantial) evidence in the Law Number 5/1999’s enforcement proceedings. However, Hansen argues that the indications must be ‘coherent and consistent’ with the other evidences. On the other hand, the implementation of indirect evidences (indications) in the cartels infringement cases could not be generalised, instead this should be subject to case by case approach before the Courts.799 Article 42 (d) of the Law Number 5/1999, provides none of the elaborative explanations regarding indications. For that reason, KPPU released the Regulation No.1/ 2006, as amended by KPPU Regulation No.1/2010 concerning Procedure for Cartel Enforcement Proceeding, stipulating the indirect evidence. Subsequently, KPPU issued Regulation No. 1/2010 concerning implementation of Article 11 the Law Number 5/1999 regarding cartels prohibition enforcement. Hence, Article 36 the Regulation No.1/2010 prescribes that the indirect evidence comprises, among others: First, documents or verbatims of meetings as to the price, quota and market zone cartel agreements. Second, comparison of conscious parallelism towards the price, quota and market zone cartels. Third, testimonies of the employees and relevant parties knowing the cartel practices.800 Furthermore, KPPU issued Regulation No.4/2011 on Implementation of Article 5 the Law 799 Lubis and Sirait, Hukum Persaingan Usaha (n 225) 329. 800 Article 36 of the KPPU Regulation No.4/2010 mentions following circumstantial evidences: Documents or verbatims of meetings as to the price, quota and market zone cartels; Documents or Prices list records by the business actors; Data on the prices, production volume and total sales fluctuations; Production capacity data; Data on operational profits and excessive profits Data results on conscious parallelism towards the prices coordination, quota production, market zone partitions; Financial statements of the alleged companies in the cartel infringement; Testimonies of relevant parties knowing the communication and coordinations and information exchanges between the cartel participants; Testimonies of Kesaksian para pelanggan atas keseragaman dan keselarasan harga; Kesaksian karyawan atau mantan karyawan perusahaan. A M T Anggraini, ‘Indirect Evidence Dalam Pembuktian Kartel’ (UPH Law Faculty National Seminar “Eradicating Cartel Practices in Indonesia: The Challenges of Indirect Evidence", Lippo Karawaci, 20th January 2012) 2–8. Chapter Three Procedural Law 230 Number 5/1999 concerning price fixing. In the Regulation No.4/2011, KPPU asserts that evidentiary rules of Article 5 the Law Number 5/1999 largely applicable to Article 11 the Law Number 5/1999 on the rules of evidences for cartels infringement. According to Section 4.4 the KPPU Regulation No.4/2011 there are two types of evidences to substantiate Article 5 the Law Number 5/1999, namely: First, direct evidences. Second, indirect or circumstantial evidences.801 Equally important, the implementation of indirect (circumstantial) evidences in the Indonesia Competition Law Number 5/1999 has been largely introduced and developed in the KPPU’s decisions and the judicial practices, elaborated below. ”Plus-factor” for Consolidating the Circumstantial (Indirect) Evidences Introduction As has been noted previously, in the cartel prohibition enforcement proceedings, the so-called ‘plus-factors’ have a prominent function to corroborate other indirect (circumstantial) evidences, such as the economic evidence. Accordingly, Blanco asserts that to prove a cartel infringement, the Competition Authorithy (CA) could not solely base on the economic evidence.802 Equally important, in the US Antitrust Law, the provision of Section 1 the US Sherman Act (1980) stipulates: ‘Every contract, combination in the form of thrusts or otherwise, or conspiracy, in restraint of trade or commerce amongst the several States, or with 3.4.4 3.4.4.1 801 According to the KPPU Regulation No.4/2011: “Indirect or circumstantial evidences are evidence instruments which indicate the price fixing agreement. This type of evidences can be used as the admissible evidences to support an allegation on cartel infringements. The circumstantial evidences comprise: Firstly, Communication evidence but which directly shows a concurrence of wills. Secondly, Economic evidence, whose aims are to dismiss the possibility of an independent price fixing by the business actors. Thus, the circumstantial evidences which are appropriate and consistent with the market conditions and collusion can not serve as the complete evidence to the infringement against Article 5 of the Law No.5/1999.” cf. Rizkiyana and Iswanto, ‘Eradicating Cartel: The Use of Indirect Evidence’ (n 28) 2–5. 802 Blanco, Market power in EU Antitrust Law (n 57) 173–190. 3.4 Application of the Indirect (Evidences) and the ‘Plus Factors’ (Parallelism Plus) 231 foreign nations, is declared to be illegal. Every person who shall make any contract or engage in any combination or conspiracy declared by Sections 1 to 7 of this title to be illegal shall be deemed guilty of a felony’. Hence, whenever the parallel conduct on the market takes place, the US Supreme Court argued in the case of Monsanto v. Spray-Rite that “there must be direct or circumstantial evidence that reasonably tends to prove that the parties had a conscious commitment to common a scheme designed to achieve an unlawful objective”. Accordingly, the plus-factors could tackle the existing ambiguitiy as to the undertakings’ parallel market behaviour to prove the existence of cartels infringement.803 Furthermore, in the US Antitrust laws, in order to fulfill the evidentiary requirement standard of excluding the possibility that the undertakings behave independently in the market, the US Court prerequisites that “the evidence of a defendant’s parallel pricing [should] be supplemented by so-called plus-factors, only when these additional factors are present does the evidence tend to exclude the possibility that the defendants acted independently.” Hence, according to Areeda, the plus-factors refer to “the additional facts or factors required to be proved as a prerequisite to finding that parallel action amounts to conspiracy.”804 In the EU Competition Law’s jurisprudence, as regards the importance of plus-factors, in the CISAC v. Commission case, the Commission failed to substantiate the existence of cartels resulting from concerted practices on the market. Put differently, the Commission could not prove the concerted practice by using factors other than the parallel behaviour of the undertakings. Consequently, it was adequate for the undertakings to rebut the Commission’s allegations by providing reasonable explanations for the parallel market conduct.805 For that reason, the ECJ required a high burden of proof by argumenting “any doubt […] must benefit the undertakings” regardless of the decision 803 465 U.S. 752 Monsanto Co. v. Spray-Rite Svc. Corp. (1984). para 768. See also Silalahi ‘Circumstantial Evidence’ (n 14) 3–5. cf. ABA Section Antitrust Law, Proof of Conspiracy under Federal Antitrust Laws (American Bar Association, 2010) 24. 804 Stroux, US and EC Oligopoly Control (n 51) 47. cf. Kovavic et.al ‘Plus Factors and Agreement in Antitrust Law’ (Michigan Law Review Vol. 110:393) 393–400. 805 Stroux, US and EC Oligopoly Control (n 51) 47. Chapter Three Procedural Law 232 finding a cartels infringement involving the imposition of fines.” Hence, Ezrachi argues that the CA must analyse the presence of plusfactors, that is to say, the evidence that is inconsistent with the unilateral action on the market in order to prove cartels infringement.806 On the other hand, from the other competition law perpectives, Johri is of the opinion that the plus-factors could be understood as “economic actions and outcomes, above and beyond parallel conduct by oligopolistic firms, which are largely inconsistent with unilateral conduct but largely consistent with coordinated action. Possible plus factors are typically enumerated without any attempt to distinguish them in terms of a meaningful economic categorisation or in terms of their probative strength for inferring collusion.807 Indeed, Bohra argues: „Plus factors provides that if an inference of conspiracy has to be drawn from the concerted action the proof should include that defendants priced uniformly where price uniformity was improbable without an agreement; committed past antitrust violations involving collective action; directly communicated with competitors and then made simultaneous, identical changes in their behavior; or agreed to adopt common practices, such as product standardization whose implementation helped achieve pricing uniformity”.808 Within the Competition Law or Antitrust Law’ enforcement framework, the plus-factors have the function to prevent and even minimalise the two type of errors faced by the Competition Authority (CA).809 First, False positive (Type I error), whereas the competition authority imposes sanction to innocent firms, merely because they perform natural reactions in an oligopoly market due to the oligopolistic interdependence therein. In other words, this type of error ‘is to falsely convict innocent firms although what they do falls into the category of oligopolistic interdependence’810 Second, False negative (Type 806 Ezrachi, EU Competition Law (n 239) 75–76. 807 S Johri ‘Attribution of Price Parallelism as Cartels under the Competition Act, 2002’ (Dissertation submitted to Competition Commission of India, Nirma University 2012) ‹http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.649.697 8&rep=rep1&type=pdf› accessed on 30th December 2017, 426–423. 808 M Bohra, ‘Increasing Role of Economic Evidences In Prosecution Of Cartels’ (Research Paper, National Law Institute University India, 2011) 16–18. 809 Ruky, ‘Economic Evidence’ (n 16) 2–7. 810 Kekevi, ‘Can Economics Help Us with Cartel Detection?’ (n 20) 6–7 3.4 Application of the Indirect (Evidences) and the ‘Plus Factors’ (Parallelism Plus) 233 II error), whenever the competition authority is to acquit cartel members by identifying their cartel behavior (collusion) as an oligopolistic interdependence.’811 The Catalogue of Plus-Factors In the competition law’s practices, there are several factors, which constitute the plus-factors, which are the following:812 Motive to Conspire Principally this refers to “that there must generally exist both a motive to act in concert and some reason why such action might not occur absent sufficient coordination among rivals.” Further, Areeda outlines that “the presence of a benefit from, and therefore a motive for, common action is a prerequisite to the inference of an agreement, although it does not in itself demonstrate that the parties have formed an agreement.”813 In the Venzie case, the US Court required a two-tier test to permit an inference of a collusive agreement from a conscious parallelism. First, the existence of a showing of acts by defendants in contradiction to their own economic interests. Secondly, the existence of a satisfactory demonstration of motivation for an entering into an agreement. Eventually, the Court held that the requirement of a motive for conspiracy had to be demonstrated by showing that an individual firm was in a position to benefit from a specified concerted conduct.814 Behaviour against Self-Interest In the case of Milgram v. Loew’s Inc., the US Court maintained that “conduct in apparent contradiction to [each defendant’s] own selfinterest […] considerably strengthens the inference of conspiracy. 3.4.4.2 3.4.4.2.1 3.4.4.2.2 811 ibid 11–12. 812 Stroux, EC and US Oligopoly Control (n 51) 48–50. cf. Kovavic, et.al.’Plus Factors and Agreement in Antitrust Law’ (n 803). 426–433. See also Johri, ‘Attribution of Price Parallelism as Cartels under the Competition Act’ (n 806) 28–33. 813 Stroux, EC and US Oligopoly Control (n 51) 48–50. 814 ibid. Chapter Three Procedural Law 234 However, there has been disputes as to the definition of the requirement ‘conduct against self-interest.”.815 Furthermore, the other Court argued that “the presence of behavior contrary to the firm’s own interest and a motive to conspire lead to the conclusion that the inference of conspiracy is more probable than the inference of independent action.” In the Baby Food Antitrust Litigation Re., the Court was of the opinion that “in order to prove conspiracy based on the theory of conscious parallelism, evidence of action that is against self-interest or motivated by profit must go beyond mere interdependence; ‘parallel pricing must be so unusual that in the absence of an agreement, no reasonable firm would have engaged in it.”816 However, in the Antitrust Law practice, Stroux contended that “the motive and against individual-self-interest” plus-factors are ambiguous plus-factors for the finding of collusion in an oligopolistically structured markets, often other plus-factors have to be relied upon in order to infer conspiracy.”817 Factual Plus-Factors Within the Antitrust Law’s practice, the US Court acknowledges the factual evidences, inter alia high level of inter-firms communications, committed past antitrust violations involving collective actions, and identical sealed bids on a complex, made to order product; apart from extremely improbable coincidence, such uniformity could not occur without express collusion. Generally, showing that competitors had the opportunity to collude does not suffice as the plus-factors.818 Economic Plus-Factors With regard to this type of evidence, Posner argues that the following economic evidences, hand in hand with the two-tier test abovementioned, could indicate the existence of cartels. For example, the econo- 3.4.4.2.3 3.4.4.2.4 815 ibid. 816 Kovavic, et.al.’Plus Factors and Agreement in Antitrust Law’ (n 803) 426–433. Johri, ‘Attribution of Price Parallelism as Cartels under the Competition Act’ (n 806) 28–33. 817 Stroux, EC and US Oligopoly Control (n 51) 51. 818 ibid. 3.4 Application of the Indirect (Evidences) and the ‘Plus Factors’ (Parallelism Plus) 235 mic plus-factors, which include: pervasive parallel conduct in a market otherwise characterised by intense competition or where factors make tacit coordination implausible, poor economic performance in an industry bears on the existence of conspiracy, excessive prices or restricted output and “industry-wide saw-tooth pattern of pricing.”819 According to Stroux, in the Antitrust Law, the US Court experiences dissenting opinions and approaches as to the economic plus-factors, namely the persistent extraordinarily high profits. Posner argued that this economic evidence is probative. Furthermore, the US Federal Trade Commission (FTC) argued that “the evidence of parallel conduct together with high profit margins should, by themselves, be sufficient to establish conspiracy.”820 Facilitating Practices as the “Plus-factors” In the Antitrust laws’ practice, the US Court considers the adoption of facilitating practices by competing firms as the inference to cartels. For example, an adoption of delivered pricing, an adoption of two-tiered pricing, and an artificial product’s standardisation. In the case of Petroleum Prods., the US Court viewed that the price announcements “when considered together with the evidence concerning the parallel pattern of price restorations, is sufficient to support a reasonable and permissible inference of an agreement, whether express or tacit, to raise or stabilize price.” However as regards the information exchange between the competitors, the US Court argued that “there must be evidence that the exchanges of information had an impact on the pricing decisions”. Put differently, the Court restrict the inference of the cartels existence by merely using the information exchange, such as price announcements.821 On the one hand, as regards the main plus-factors, Gavil et. al, explains that these evidences include, but are not limited to: First, actions contrary to each defendant’s self-interest unless pursued as part of a 3.4.4.2.5 819 ibid. 820 ibid. 821 Kovavic, et.al.’Plus Factors and Agreement in Antitrust Law’ (n 803) 426–433. cf. Johri, ‘Attribution of Price Parallelism as Cartels (n 806) 28–33. cf. Stroux, EC and US Oligopoly Control (n 51) 49–50. Chapter Three Procedural Law 236 collective plan. Second, phenomena that can be explained rationally only as the result of concerted action. Third, evidence that defendants created the opportunity for regular communication. Fourth, industry performance data, such as extraordinary profits, that suggest successful coordination. Fifth, the absence of a plausible, legitimate business rationale for suspicious conduct (such as certain communications with rivals), or the presentation of contrived rationales for certain conduct.822 On the other hand, Posner emphasises that the facilitating practices, serving as the plus-factors, consist of: First, the defendant’s participation in past collusion related offences; second, evidence that the defendants had the opportunity to communicate or actually did so; third, the use of facilitating devices like a delivered pricing or most favoured nation clauses; Fourth, industry characteristics (product homogeneity, frequent transactions, readily observed price adjustments, high entry barriers, and high concentration) that are conducive to successful coordination.823 Facilitating Practices in an Oligopolistic Market as the Plus-Factors In terms of the strategic interactions in an oligopolistic market, undertakings are able to develop the facilitating practices by means of increasing transparency, reducing uncertainty of the competitors’ behaviour in a market, which enables them to achieve collussions and support collusive outcomes and to restrict destabilising factors for the cartels. Accordingly, Schelling points out that the facilitating practices serve as the ‘focal points’ and ‘focal rules’ for other competitors in the market to reach collusive outcomes. In brief, the focal points refer to tacit communications and certain signals, which can inform the competitors to reach the preferred outcomes and thus become the self-evident way to behave in a market. Whereas the focal rules refer to, for 3.4.4.2.5.1 822 Johri, ‘Attribution of Price Parallelism as Cartels under the Competition Act’ (n 806) 28–30. 823 Posner, Antitrust Law (n 80) 79–81. 3.4 Application of the Indirect (Evidences) and the ‘Plus Factors’ (Parallelism Plus) 237 example, basing point pricing, preserving existing price differences or existing market shares.824 Nevertheless, the facilititating practices cause dilemma to the Competition Authorithy (CA). Put differently, according to Stroux, on the one hand, facilitating practices could generate beneficial competitive effects; whereas on the other hand, they could incur detrimental effects to competition as ‘they can facilitate the achievement of, and the monitoring and detection of deviations form oligopolistic pricing, thus helping to prevent a breakdown in oligopolistic discipline.’825 Equally important, the facilitating practices in terms of the competition law can be classified into five categories, which are: First, price leadership. Second, exchange of information. Third, product standardisation. Fourth, geographical pricing sytem. Price leadership According to the Organisation for Economic Co-operation and Development (OECD), a price leadership “refers to a situation where prices and price changes established by a dominant firm, or a firm are accepted by others as the leader, and which other firms in the industry adopt and follow”826 In the Bain’s analysis as regards to price leadership: “in an oligopolistic market any independent price change by a single oligopolist tends to be read as an ‘offer’ by his rivals, and an acceptable reaction to the price change that may be interpreted as an acceptance of the offer of the first firm. Thus, negotiation can perhaps take place through a series of public announcements rather than through a meeting of persons, and the meaning of true consensual action becomes vague”.827 3.4.4.2.5.2 824 Stroux, EC and US Oligopoly Control (n 51) 27–28. cf. Kovavic et.al ‘Plus Factors and Agreement in Antitrust Law’ (n 803) 426–432. 825 Stroux, EC and US Oligopoly Control (n 51) 27–28. 826 However according to Seaton and Waterson “Price leadership occurs when one firm makes a change in a price (or set of prices) that is followed within a predetermined short period by the other (more generally, another) firm making a price change of exactly the same monetary amount in the same direction on the same product(s), and doing so significantly more often than would be expected by chance.” cf. Khemani and Shapiro, Glossary of Industrial Organisation Economics and Competition Law(n 39). 827 Stroux, EC and US Oligopoly Control (n 51) 27–28. cf. Kovavic, et.al. ‘Plus Factors and Agreement in Antitrust Law’ (n 803) 426–433. Chapter Three Procedural Law 238 According to Markham, there are three categories of a price leadership, which are: First, a dominant price-leadership ‘whereas one dominant competitor, the only firm large enough to significantly affect the market, imposes its prices upon the industry, and the other competitors follow, as they will have little to gain from diverging from the dominant firm’s prices’.828 Second, a barometric price leadership, whereas an undertaking as the leader is not dominant but is widely accepted as the best performing undertaking which is able to meet the demand and to adapt to evolving market conditions, such as cost increases.829 Third, collusive price leadership, either an explicit or a tacit one, where the competitors commit themselves to adapt to price increases initiated by one of them, acting as the price leader.830 Exchanges of Information In an oligopolistic market, exchange of information between firms could lead to an increase of market transparency. The more transparent the market is, thus easier it is for firms to detect deviating firms, what shortens detection lags and the increase of the possibility of punishing deviating firms adequately. The Organisation for Economic Co-operation and Development (OECD) explains as to the information exchanges: “Information exchanges among competitors increase transparency in the market, which can lead to efficiency enhancing benefits but may also present competition risks. The challenge for competition enforcers is how to approach this conduct within the context of traditional competition laws since generally jurisdictions around the world do not have specific rules dealing with exchanges of information.”831 3.4.4.2.5.3 828 Stroux, EC and US Oligopoly Control (n 803) 28–29. 829 According to Stigler, in the barometric price leadership, the barometric firm commands the adherence of rivals to this price only because, and to the extent that, its price reflects market conditions with tolerable promptness. cf. Deneckere and Kovenock (n 212). See also Stroux, EC and US Oligopoly Control (n 803) 28–29. 830 ibid. 831 OECD, ‘Information Exchanges Between Competitors under Competition Law‘ (DAF/COMP 2010 37, 2010) 9–12. 3.4 Application of the Indirect (Evidences) and the ‘Plus Factors’ (Parallelism Plus) 239 Furthermore, OECD elaborates: “[…] information exchanges among competitors may fall into three different scenarios under competition rules: (i) as a part of a wider price fixing or market sharing agreement whereby the exchange of information functions as a facilitating factor; (ii) in the context of broader efficiency enhancing cooperation agreements such as joint venture, standardization or R&D agreements; or (iii) as a stand-alone practice, whereby the exchange of information is the only cooperation among competitors.”832 Even more, in order to determine the detrimental effects of information exchanges, several factors are important, which are: First, market structure. Second, information contents being exchanged. Third, ways information being exchanged. Fourth, the frequency of information exchanges.833 Eventually, according to Stroux the information exchanges as to future conducts of firms constitute an anticompetitive practice. Communications between firms, which contain promises to adhere to an agreement, which is not a firm’s best choice, is just ‘cheap-talk’ and does not affect the firms’ oligopolistic interactions. However, whenever communication between firms as to future behaviours contains commitments, these would affect the firms’ oligopolistic interactions and thus increase the probability of collusion. For example, by means of ‘meeting competition’ and ‘most-favoured customer’, the cheap talks could transform into ‘the less cheap talk’. In addition, as regards the content of the exchanged information, this can be classified into three categories: First, data concerning prices, sales conditions, sales and outputs. Secondly, data concerning current costs, demand and capacity, which assist to identify possible collusive equilibrium and to determine 832 ibid. 833 The exchange of aggregate data as to the whole market is less likely to enhance collusion than information concerning individual companies, enabling the compliance monitoring to collusion, thus decreasing the incentives to deviate from collusions. Furthermore, the information exchanges concerning actual information, could alter incentives for firms and thus increase the likehood of collusions. These kind of information exchanges informs who is defecting and consequently allows for immediate sanctions. The frequency of information exchanges influences lapses of time evolving betwenn cheating and punishment and thus the profitability of cheating. Accordingly, the competition authorithy should concentrate on frequent, detailed and actual information exchanges. Stroux, EC and US Oligopoly Control (n 803) 28–31. Chapter Three Procedural Law 240 availability of effective punishment strategies. Thirdly, exchanges of data on investment, research and development (R&D), future costs and demands, reducing the long-term uncertainty, which could jeopardise a collusive equilibrium. From a game theory perspective, the first and second categories of information exchanges could largely lead to collusions and thus require more careful observation of the competition authorities.834 Product standardisation Notwithstanding its beneficial competitive effects, the product standardisation could cause detrimental effects to competition by facilitating collusion through increasing market transparency, thus making it easier for firms to collude on price and detect deviations from collusive agreements. Further, the product standardisation could slow down the innovations in market. 835 Regional Price Systems In order to facilitate collusion on the market, firms employ the geographical pricing system as well, which comprises among others: delivered pricing system, basing point and zone pricing systems. The geographical pricing systems had been frequently found in industries whose products are generally homogenous, transportation costs are high in proportion to the commodity’s values, and producers or buyers are dispersed geographically.836 According to Carlton ‘the geographical pricing systems could facilitate collusions in two ways: Firstly, the systems would remove price discretion on shipping or transportation charges. Secondly, firms’ adherence to the pricing systems could enable firms in the low demand area to penetrate the high demand market without costly and potentially destabilising revisions to the price schedule’.837 3.4.4.2.5.4 3.4.4.2.5.5 834 Kovavic et.al ‘Plus Factors and Agreement in Antitrust Law’ (n 803) 426–432. cf. Stroux, EC and US Oligopoly Control (n 803) 29–31. 835 Johri, ‘Attribution of Price Parallelism as Cartels under the Competition Act, 2002’ (n 806) 28–33. 836 ibid. 837 ibid. 3.4 Application of the Indirect (Evidences) and the ‘Plus Factors’ (Parallelism Plus) 241 Contingency Contract Provisions According to Stroux, ‘long-term sales contracts often include contingency clauses, ”Most-Favoured Customers” (MFC) clauses, which provide the buyer with the insurance protection against the contingency that the seller may offer a lower price to another customer’.838 However, an inclusion of MFC clauses in contracts could facilitate collusion and lead to supra-competitive pricing by constituting information exchange through customers policing price levels. Furthermore, according to Cooper, MFC clauses contribute to the achievement and maintenance of a tacitly collusive pricing structure. He argued that for firms to choose to adapt MFC clauses unilaterally, there need not be any explicit agreement among the rival producers to include these provisions in their sales contracts. Moreover, through MFC, all firms could profit from higher prices due to these clauses even if not all firms introduce them into their contracts.839 Evenmore,, the ”meeting competition” clause (MC) in a long-term supply contract provides the buyer with insurance protection against a lost opportunity of being offered a lower price by another seller, as the original seller commits himself to match the lower price offered by any other seller. A common variant is the meet-or-release (English clause), which provides sellers the chance to meet a lower price, offered to the buyer by a rival seller, or to release the buyer from the contract. The inclusion of MC clauses into a contract could serve as an information exchange device, buyers controlling adherence to consensus pricing by oligopolists. Thus, the cooperative joint profit outcome is made relatively more credible.840 Chapter Interim Result Pursuant to the European Competition and German Cartel Laws as well as the Indonesian Competition Law, the procedural law of cartels 3.4.4.2.5.6 3.5 838 Kovavic et.al ‘Plus Factors and Agreement in Antitrust Law’ (n 803) 426–433. 839 Johri ‘Attribution of Price Parallelism as Cartels under the Competition Act, 2002’ (n 806) 28–33. 840 Stroux, EC and US Oligopoly Control (n 51) 33–35. cf. Johri, “‘Attribution of Price Parallelism as Cartels under the Competition Act, 2002’ 28–33. Chapter Three Procedural Law 242 prohibition enforcement proceedings has been profoundly important in order to ensure the establishment of the due process of law. This concept refers to the notion of constitutional right guarantee: “that all legal proceedings will be fair and that one will be given notice of theproceedings and an opportunity to be heard before the public administration or government acts to take away one's life, liberty, or property. Also, a constitutional rights guarantee that a law shall not be unreasonable, arbitrary or capricious.” In the context of European and German Competition Laws, the guiding principles of the procedural law play a very important role and are regarded as the commonly accepted legal foundations of the EU Laws. These principles have been developed both by the Court of Justice of the EU in their duties of guaranteeing that ‘the law is observed’ pursuant to Article 19 (1) TEU as well as by other EU Organs through the respective legislations. Principally, according to Article 2 TEU (Article 6(1) EU) stipulating that “Union is founded on the values of respect for human dignity, freedom, democracy, equality, the rule of law and respect for human rights, including the rights of persons belonging to minorities. These values are common to the Member States in a society in which pluralism, non-discrimination, tolerance, justice, solidarity and equality between women and men prevail”. For example, the presumption of innocence (‘in dubio pro reo’) principle, whereas “Considerable importance must be attached to the fact that the competition cases of this kind (cartels) are in the reality of a penal nature, which naturally suggests that a high standard of proof is required (…). There must be a sufficient basis for the decision and any reasonable doubt mustbe for the benefit of the applicants according to the principle of in dubio pro reo.” This principle is essentially important in the competition case presenting indirect (circumstantial) evidences of a concerted practice, such as parallel conducts of alleged undertakings. In the German Cartel Law, the procedural law ensures that the obligation to find the substantive truth (materielle Wahrheit) as well as the respect of legality of an administrative act (Rechtmäßgikeit) are fulfilled. In the German Cartel Law, the German Courts rely on the principle of unfettered consideration of evidences (freie Beweiswürdigung), which is largely similar to the criminal proceedings. Accordingly, the Court will decide, according to its independent conviction by taking into account 3.5 Chapter Interim Result 243 the entire course of proceedings, to establish ‘personal certainty or assurance (persönliche Gewissheit). In the German Cartel law, pursuant to the principle of unfettered consideration of evidences (freie Beweiswürdigung), to successfully prove an existence of cartels, a ‘probable’ or a ‘large probability’ were not adequate or insufficient, instead there must be ‘personal certainty or assurance (persönliche Gewissheit)’ as to the elements of cartels violation. Principally, these procedural law principles have profound substantial roles in the implementation of the EU Competition laws because of three reasons: First, the principles provide the basis for the fair and efficient administrative decision-making processes by ascertaining that the officials perform their duties independently and make decisions rationally and proportionally. Second, the principles shall operate as the guarantee for individuals or affected parties against arbitrary administrative acts by imposing the duty to provide reasons and the protection of fundamental and human rights. Third, the principles shall promote the accountability of the administrative acts towards the public, for example accessibility and transparency principles. Furthermore, the European Competition, the German Cartel laws in conjucntions with the US Antitrust Law apply the so-called “Plus factors” or “Parallelism plus” for consolidating the indirect (circumstantial) evidences, whereby according to Kovavic: “Plus factors are economic actions and outcomes, above and beyond parallel conduct by oligopolistic firms, that are largely inconsistent with unilateral conduct but largely consistent with explicitly coordinated action. Possible plus factors are typically enumerated without any attempt to distinguish them in terms of a meaningful economic categorization or in terms of their probative strength for inferring collusion. In this Article, we provide a taxonomy for plus factors as well as a methodology for ranking plus factors in terms of their strength for inferring explicit collusion, the strongest of which are referred to as "super plus factors.”841 841 Kovavic et.al ‘Plus Factors and Agreement in Antitrust Law’ (n 803) 394–400. Chapter Three Procedural Law 244

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Abstract

Notwithstanding the two decades that have passed since the implementation of Law Number 5 on the Prohibition of Monopolistic Practices and Unfair Business Competition in 1999, the Indonesian Competition Authority or Komisi Pengawas Persaingan Usaha (“KPPU”) continues to face profound difficulties in uncovering cartel activities and thus in imposing penalties. Therefore, the KPPU strives to use circumstantial (indirect) evidence in its judicial practice to prove cartel transgressions. In German Cartel Law, EU Competition Law and in the US Antitrust practice, the courts also employ indirect (circumstantial) evidence, namely ‘facilitating practices’ and ‘plus-factors’, to substantiate cartel infringements. This book compares the different approaches to implimenting indirect (circumstantial) evidence in the Indonesian Competition Law to the German and European Competition Law, both from a procedural as well as a substantial law perspective.