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Mutual (Dis)Trust: EU Competition Law Enforcement In The Shadow of the Rule of Law Crisis

 |  February 28, 2022

By: Kati Cseres & Michael Borgers (Verfassungs Blog)

Last week, the General Court of the European Union, in its judgment T-791/19 Sped-Pro, recognized for the first time the impact that systematic rule of law deficiencies have on national competition authorities. The judgement is seminal in that it openly questions the ability of national authorities impacted by rule of law backsliding to effectively enforce EU law. The judgement also goes to the heart of explaining the pivotal constitutional role of competition law within the EU legal order.

The Sped-Pro case

The case concerns a complaint filed with the Commission in 2016 by the Polish company Sped-Pro against PKP Cargo, a company controlled by the Polish state. Sped-Pro submitted that PKP Cargo abused its dominant position on the Polish market for rail freight transport services on account of its alleged refusal to conclude a multi-annual cooperation agreement on market conditions.

In 2019, the Commission rejected Sped-Pro’s complaint on the grounds that the Polish competition authority was best placed to examine it. Subsequently, the applicant brought an action before the General Court seeking annulment of the contested decision raising three arguments, alleging (1) a failure to have its case handled within a reasonable time and a failure to state reasons in the contested decision, (2) manifest errors in assessing the EU interest in pursuing the examination of the complaint and (3) breach of the principle of the rule of law in Poland. While the Court rejected the first two arguments of the applicant, it fully endorsed the argument that the systemic or generalised deficiencies of the rule of law in Poland and the lack of independence of the Polish competition authority and the national courts with jurisdiction in the field, must be considered by the Commission before rejecting a complaint for lack of an EU interest.

Case allocation mechanisms

In this case, the Court not only addressed rule of law issues as an element of effective competition law enforcement, but has also redrawn the otherwise clear jurisdictional mechanisms of case allocation, which govern the enforcement of competition law between the Commission and the Member States.

The allocation of cases between national competition authorities (NCA) and the Commission occurs within a framework of clear jurisdictional boundaries by seeking to find the best placed authority for enforcing Articles 101 and 102 TFEU, determined by various objective factors such as size and cross-border nature of the relevant behaviour and for mergers, is decided by reference to quantitative criteria.

Ever since the Automec II judgmentthe Courts acknowledged that the Commission has broad discretion to reject complaints. The principles governing the Commission’s margin of discretion when it decides to pursue a case or disregard it, have been broadly construed and entitle the Commission to classify complaints according to different degrees of priority based on the Union interest…