Cartelization

A State measure will only be caught by the joint application of Articles 3(g), 10(2) and 81 EC Treaty if it (i) introduces new infringements, (ii) reinforces infringements or (iii) delegates authority to private entities. Since the third point is not of relevance in the context of the EU ETS only the first two are considered. Yet it should be noted that a conditio sine qua non for the application of European Competition law is that trade between Member States must be affected.13

12 Since their joint application requires infringements of Article 81 or 82 to be applicable it is not surprising that the Court did not apply it in the context of collective agreements between management and labour, in pursuit of social policy objectives such as the improvement of conditions of work and employment which do not fall within the ambit of either Article. See Joined cases C-115/97 to C-117/97 Brentjens' Handelsonderneming BV v Stichting Bedrijfspensioenfonds voor de Handel in Bouwmaterialen [1999] ECR I - 06025, para. 66; Case 219/97 Maatschappij Drijvende Bokken BV v Stichting Pensioenfonds voor de Vervoer- en Havenbedrijven [1999] ECR I-06121, para. 52.

13 For a statement of this criterion with regard to State measures see Case 136/86, Bureau national interprofessionnel du cognac v. Yves Aubert, [1987] ECR 4789, para. 16; Case 311/85, ASBL Vereniging van Vlaamse Reisbureaus v. ASBL Sociale Dienst van de Plaatselijke en Gewestelijke Overheidsdiensten, [1987] ECR

This section examines how anticompetitive measures taken within the framework of the EU ETS are to be assessed in light of the foregoing discussion. The same structure as applied above will be used.

i) The measure requires or favours the adoption of agreements, decisions or concerted practices contrary to Article 8114

In light of the case law it is clear that obligations created by national measures that are self-sufficient or self-contained cannot be regarded to reinforce or favour cartelization.15 Since neither Directive 2003/87/EC nor any of the National Allocation Plans submitted by the Member States obliges undertakings to collude, it can be concluded that national measures taken within the EU ETS framework are neither self-sufficient nor self-contained and can therefore not be excluded from joint application of Articles 3(g), 10(2), 81 EC Treaty.

While it is clear that the Court requires the violation of Article 81 EC Treaty before it will condemn any State measure, it is, however, not at all clear how strong the link the ECJ requires between a State measure and undue behaviour of undertakings has to be. Unfortunately the Court failed to clarify how it interprets the terms 'requiring' or 'favouring'. The flagrant violation the ECJ condemned in CNSD expressly requiring an association of undertakings to form agreements, granting it relative decision-making powers and providing legal compliance rules is clearly a strict point of reference.16

If the CNSD judgment was taken as a benchmark, barriers to entry established under allocation mechanisms would not be caught but would escape legal sanctioning. This is based on the finding that they do not contain the express obligation to collude but nevertheless increase benefits from cartelization.

ii) The measures reinforce the effects of a violation of Article 81 EC Treaty17 Another branch of the ECJ's approach to State measures under Article 81 EC

3801, para. 18; Case C-60/91, José Antonio Batista Morais, [1992] ECR I-02085, para. 12; Case C-35/96, Commission v. Italy (CNSD), [1998] ECR I-03851, para. 48; and Case C-35/99, Manuele Arduino, [2002] ECR I-01529, para. 33.

14 This criterion has been expressed in Case 209-213/84, Lucas Asjes and others, Andrew Gray and others, Andrey Gray and others, Jacques Maillot and others and Léo Ludwig and others, [1986] ECR 1425, para. 72. Neergaard (1998), p. 72, maintains that it can also be found in Leclerc, Case 229/83, Association des Centres distributeurs Édouard Leclerc and other v. SARL 'Au blé vert' and others, [1985] ECR 1, para. 15.

15 Case 2/91, Wolf W. Meng, [1993] ECR I-05751, para. 15; Case 245/91, Ohra Schadeverzekeringen NV., [1993] ECR I-05851, para. 11.

16 Case C-35/96, Commission v. Italy (CNSD), [1998] ECR I-03851, para. 55.

17 As introduced in Case 209 - 213/84, Lucas Asjes and others, Andrew Gray and others, Andrey Gray and others, Jacques Maillot and others and Léo Ludwig and others, [1986] ECR 1425, para. 72.

Treaty requires the presence of a pre-existing infringement.18 In its assessment, the Court would at first closely examine the relationship between advising experts and regulated undertakings. The Court held that representatives, in particular when appointed by public authorities upon proposal of the undertakings they are charged to regulate,19 must be acting upon their own behalf, not be bound by their respective undertakings and take interests of other sectors as well as the public20 at large into account.21 The Court has been accepting requirements for impartiality contained in national legislation.22 With regard to the EU ETS it would thus be examined whether the choice and design of the particular allocation method and the amount of allowances granted would favour the undertakings and sectors of the advising experts. If the Court were to find that advisors were neither impartial nor obliged to take the interests of other sectors and the public at large into account, it would proceed to test a second criterion.

In a second step the Court would examine whether an original contractual prohibition was transformed into legislative provisions23 with legal remedies and effective sanctions24 and whether it would either wholly or in part contain the terms of the pre-existing cartel agreement. Since the creation of the EU ETS introduces a new production factor to the market process, it is rather unlikely that there are any prior collusive agreements between undertakings regulating prices or sectoral output based on the overall amount of CO2 emissions. Consequently, it is quite unlikely that the Court would be able to condemn State measures taken within the framework of the EU ETS.

18 Case 2/91, Wolf W. Meng, [1993] ECR I - 05751, para. 19.

19 Case 123/83, Bureau national interprofessionnel du cognac v. Guy Clair, [1985] ECR 391, para. 3, 19-20.

20 In Case C-38/97, Autotransporti Librandi, [1998] ECR I 05955, para. 38-42, the Court held that the term public interest applied in Case C-96/94, Centro Servizi Spediporto, [1995] ECR I - 02883, para. 42, corresponds to the term general interest as applied in Case C-185/91, Bundesanstalt für Güterfernverkehr v. Gebrüder Reiff GmbH & Co. KG., [1993] ECR I - 05801, paras. 17-19 and Case C-153/93, Delta Schiffahrts- und Speditionsgesellschaft mbH, [1994] ECR I - 02517, paras. 21-22. Public interest criteria are to be determined by national legislation and their application is observed by national courts. See Case C-38/97, Autotransporti Librandi, [1998] ECR I 05955, para. 47.

21 Case C-185/91, Bundesanstalt für Güterfernverkehr v. Gebrüder Reiff GmbH & Co. KG., [1993] ECR I-05801, paras. 17-19.

22 Case C-185/91, Bundesanstalt für Güterfernverkehr v. Gebrüder Reiff GmbH & Co. KG., [1993] ECR I-05801, para. 4.

23 Case 136/86, Bureau national interprofessionnel du cognac v. Yves Aubert, [1987] ECR 4789, para. 24.

24 Case 311/85, ASBL Vereniging van Vlaamse Reisbureaus v. ASBL Sociale Dienst van de Plaatselijke en Gewestelijke Overheidsdiensten, [1987] ECR 3801, para. 23.

Yet irrespective of the fact that CO2 emission allowances constitute new products in most Member States, the second criterion employed by the Court is too legalistic to be of practical relevance in most cartel cases. Illegal cartel agreements are rarely drafted in contract form and, unless revealed by whistle blowers lured by effective leniency policies, not available to the Court. It is therefore unlikely that this criterion - if applied strictly by the Court - would permit the joint application of Articles 3(g), 10(2), 81 EC Treaty towards the EU Emissions Trading System.

This section has reviewed the joint application of Articles 3(g), 10(2) and Article 81 EC Treaty to State measures that induce undertakings' propensity to collude. It found little guidance as to how State measures taken within the framework of the EU ETS are to be assessed in the absence of pre-existing cartels. The Court is called upon to take due consideration of economic insights to assess the link between State measures and collusion. The benchmark employed by the Court, that violations of Article 81 can only be reinforced if they do include part of a cartel agreement, is criticized as very legalistic and as an element that will constitute a prohibitively high burden of proof in practice and appears to differ from the Court's case law under Article 81 procedures.25 Little support has therefore been found that allocation of emission allowances will fall within the ambit of the joint application of these Articles as it stands today.

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