University of Amsterdam
Faculty of Law
An Examination of the Legal Possibilities to Introduce Criminal Sanctions
for Violations of Article 102 TFEU
With a focus on ‘Big Tech’
Susan Smid
24 December 2020
Email: smidsusan@gmail.com Student number: 10983821
Master Thesis: International and European Law, track: European Competition Law and Regulation (LLM)
Thesis Supervisor: Rein Wesseling Word count: 12.983
Abstract
Under the current sanctioning system of article 102 of the Treaty on the Functioning of the European Union (TFEU), the abuse of a dominant position is prohibited: undertakings are allowed to have such a position, but they are not allowed to abuse it. The European
Commission (Commission) can impose behavioural and structural remedies, and fines, for violations of article 102 TFEU. However, with regard to big tech companies, it seems that these remedies do not always provide for the desired deterrent effect, since such companies seem to consecutively abuse their dominant position. Therefore, there is an extensive debate going on about the effectiveness of these remedies, but also about new possibilities to enhance their effectiveness. The Commission itself is also aware of the problem, and has proposed two new regulations: the Digital Services Act and the Digital Markets Act. These proposals do provide for new, and promising, rules. Yet again, they do not provide the Commission with the power to impose other sanctions than fines, behavioural or structural remedies. However, the introduction of criminal sanctions for violations of article 102 TFEU was never part of the discussion. When looking at the norm of article 102 TFEU, it does seem that the introduction of criminal sanctions for violations of article 102 TFEU will violate the lex certa principle: the provision is not clear, certain and predictable enough. Nevertheless, the ECJ and the ECtHR ruled that criminal sanctions under the norm of article 102 TFEU are possible. Furthermore, there are also existing jurisdictions where abuse of a dominant
position can be prosecuted as a criminal offence, which shows that the lex certa principle does not have to be an obstacle for the introduction of criminal sanctions. However, criminal sanctions for abuse of dominance are almost never imposed in practice within these
jurisdictions, so it does seem that these sanctions are ineffective. In the European competition law system, it is perhaps also possible to introduce criminal sanctions, namely on the basis of 83(2) TFEU, since the criteria under this article are possibly met: criminal measures could prove to be essential to ensure effective competition law, and European competition law has been subject to harmonization measures. Nevertheless, only directives can be adopted on the basis of article 83 TFEU. This entails that Member States can be required by such a directive to adopt criminal sanctions for abuse of dominance, but enforcement at the level of the EU institutions will not be possible. This does seem odd, since the Commission mainly enforces article 102 TFEU. However, there are legal possibilities to enforce criminal sanctions at the level of the EU institutions, but this would require amendments of the treaty: an amendment of article 83 TFEU, an amendment of article 103(2)(a) TFEU or adopting a new provision.
Table of Contents
Introduction...1
Chapter 1: The Current Sanctioning System of Article 102 TFEU...3
1.1 Remedies for Violations of Article 102 TFEU...3
1.1.1 Fines...4
1.2 Effectiveness of 102 TFEU Procedures...4
1.2.1 Deterrent Effect of Current Sanctions with regard to ‘Digital Abuse of Dominance’..6
1.3 New Regulations Introduced by the Commission...9
1.3.1 The Digital Services Act...9
1.3.2 The Digital Markets Act...10
1.4 Other Possible Tools? ...12
Chapter 2: The Possibility of Criminal Sanctions under the ‘Norm’ of Article 102 TFEU...14
2.1 The Lex Certa Principle and Article 102 TFEU...14
2.1.1 Article 102 TFEU: an open norm? ...15
2.2 Interpretation of Criminal Sanctions under Article 102 TFEU by European Courts...17
2.2.1 The ECJ...17
2.2.2 The ECtHR...18
2.3 Existing Competition Law Regimes Where Criminal Sanctions for Abuse of Dominance Can be Imposed ...19
2.3.1 The United States...20
2.3.2 Ireland...21
Chapter 3: Legal Possibilities within the EU Competition Law System for Criminal
Sanctions...24
3.1 Possible Legal Bases for the Introduction of Criminal Sanctions...24
3.1.1 Article 103 TFEU...24
3.1.2 Article 83(1) TFEU...25
3.1.3 Article 83(2) TFEU...26
3.1.4 Appropriate Legal Basis...28
3.1.4.1 Directive 2014/57 on Criminal Sanctions for Market Abuse...29
3.2 Criminal Sanctions Enforced at the Level of the Member States...30
3.3 Criminal Sanctions Enforced at the Level of the EU Institutions...30
3.3.1 Article 86 TFEU...31
3.3.2 Treaty Amendment(s)...32
3.3.2.1 Amendment of Article 83(2) TFEU...32
3.3.2.2 Amendment of Article 103(2)(a) TFEU...32
3.3.2.3 Introduction of a New Provision...32
3.3.3 An Effective EU Enforcement Framework...33
Conclusion...34
Introduction
‘The world is changing fast and it is important that the competition rules are fit for that change. Our rules have an inbuilt flexibility which allows us to deal with a broad range of anti-competitive conduct across markets. We see, however, that there are certain structural risks for competition, such as tipping markets, which are not addressed by the current rules’.1 – M. Vestager.2
Today, we live in a world that is undergoing enormous technological changes. Technology has brought much growth for the society as a whole: it helped to boost our economies, it created jobs, and it helped us to connect with people all over the world. It has also brought a lot for consumers specifically: consumers can access different markets online, they have a wide array of choices and can easily compare several products. Some companies were there from the beginning of the ‘internet area’: such as Google, Facebook, Apple and Amazon, and were therefore able to become very powerful. However, competing platforms find it more difficult to establish themselves in the market now that these ‘big tech companies’ have become so powerful. Yet, competition in the market is of the utmost importance for the consumer. And, with regard to big tech companies probably also for the society as a whole: some people claim these companies are even able now to influence our political choices by algorithms.3 Also, it seems that these ‘big tech’ companies do not always play by the rules: they are allowed to have such a dominant position in the market, but it appears that they abuse that position, which is not allowed. Thus, we are at a point now, where it seems that the technological growth has reached a certain tipping point, at which the negative side of it becomes more apparent.
Under article 102 of the Treaty on the Functioning of the European Union (hereinafter: TFEU)4, the abuse of a dominant position is prohibited: ‘any abuse by one or more
1 Margrethe Vestager, ‘Antitrust: Commission consults stakeholders on a possible new competition tool’ (European Commission, 2020)
<https://ec.europa.eu/commission/presscorner/detail/en/ip_20_977> accessed 1 September 2020.
2 Margrethe Vestager, the Executive Vice-President of the European Commission. 3 B. Marr, ‘Are Tech Giants With Their AIs And Algorithms Becoming Too Powerful?’ (Forbes, 2020) <https://www.forbes.com/sites/bernardmarr/2020/06/19/are-tech-giants-with-their-ais-and-algorithms-becoming-too-powerful/> accessed 21 October 2020.
undertakings of a dominant position within the internal market or in a substantial part of it shall be prohibited as incompatible with the internal market in so far as it may affect trade between Member States’.5 The European Commission (hereinafter: the Commission) can impose certain remedies and fines on undertakings that violate article 102 TFEU. However, as stated by Vestager, it does seem that these sanctions do not always have the desired deterrent effect nowadays, especially with regard to big tech companies. Is our current competition law system still suitable for dominant companies, and especially with regard to big tech? The Commission has proposed two new regulations: the Digital Services Act6 and the Digital Markets Act.7 But, what about criminal sanctions? Could these sanctions not provide for effective deterrence? Therefore, in this thesis, I will try to find an answer to the following question: what are the legal possibilities within the EU competition law system to introduce criminal sanctions for violations of article 102 TFEU?
In order to answer this question, I will start by examining the current European Union’
(hereinafter: the EU or the Union) competition law sanctioning system of article 102 TFEU in Chapter 1. First it will be assessed what kind of remedies and fines can be imposed for
violations of article 102 TFEU. Then, their effectiveness will be scrutinized. In addition to that, the regulations that the Commission has proposed, to possibly enhance the effectiveness of the system, will be outlined. In Chapter 2, it will be scrutinized whether the norm of article 102 TFEU in itself even lends for criminal sanctions. In addition to that, existing competition law regimes where criminal sanctions can be imposed for abuse of dominance will be
assessed, and it will be scrutinized whether these sanctions are effective. Then, in Chapter 3, it will be examined what the legal possibilities are within the EU competition law system to introduce such sanctions. And finally, a conclusion will be drawn based on the results of the research.
5 Ibid., article 102.
6 European Commission, Proposal for a Regulation of the European Parliament and of the Council on a Single Market for Digital Services (Digital Services Act) and amending Directive 2000/31/EC, 15 December 2020.
7 European Commission, Proposal for a Regulation of the European Parliament and of the Council on contestable and fair market in the digital sector (Digital Markets Act), 15 December 2020.
Chapter 1: The Current Sanctioning System of Article 102 TFEU 1.1 Remedies for Violations of Article 102 TFEU
Under article 102 of the TFEU, undertakings are prohibited from abusing their dominant position on the market.8 Such undertakings are allowed to have a dominant position, however they have a special responsibility to not reduce competition any further and thus not abuse their dominant position on the market. Under article 7 of Council Regulation No 1/2003 on the implementation of the rules on competition laid down in articles 81 and 82 of the Treaty9 (hereinafter: Regulation No 1/2003) the Commission has the power to impose structural or behavioural remedies on an undertaking when it finds that it has infringed article 102 TFEU. Structural remedies are for example remedies that will change the structure of the
undertaking, such as divestiture of the company.10 Behavioural remedies are aimed to change the behaviour of the undertaking and ‘address the conduct of the undertakings by imposing duties and constraints on their behaviour’.11 An example of a behavioural remedy in an abuse case, is to remedy a refusal to supply with a commitment to supply.12 A behavioural remedy will usually be combined with a fine.13 There is a preference for behavioural remedies, since ‘structural remedies should only be imposed either where there is no equally effective behavioural remedy or where any equally effective behavioural remedy would be more burdensome for the undertaking concerned than the structural remedy. Changes to the structure of an undertaking as it existed before the infringement was committed would only be proportionate where there is a substantial risk of a lasting or repeated infringement that derives from the very structure of the undertaking’.14 When dealing with abuse of dominance cases, behavioural remedies are the default choice of the Commission.15
8 TFEU, article 102.
9 Council Regulation No 1/2003 on the implementation of the rules on competition laid down in articles 81 and 82 of the Treaty, 16 December 2002 (Regulation No 1/2003).
10 A. Tajana, ‘Structural Remedies and Abuse of Dominant Position’ (2006) 1 Competition and Regulation in Network Industries, p. 6.
11 Ibid.
12 P. Hellström, F. Maier-Rigaud & F. W. Bulst, ‘Remedies in European Antitrust Law’ (2009) 76(1) The Antitrust Law Journal, p. 5.
13 R. Anderson, T. Daniel, and A. Heimler, ‘Abuse of Dominance’, in R. Shyam Khemani (editor), A framework for the design and implementation of competition law and policy, Organisation for Economic Co-operation and Development (World Bank Books 1999), p. 84. 14 Regulation No 1/2003, recital 12.
1.1.1 Fines
When undertakings violate article 102 TFEU, either negligently or intentionally, the Commission also has the power to impose fines under article 23(2)(a) of Regulation No 1/2003. In the Guidelines on the method of setting fines imposed pursuant to Article 23(2)(a) of Regulation No 1/200316 the working method with regard to the setting of the amount of the fines is laid down. The Commission uses a two-step method: first, the Commission will determine the basic amount of the fine.17 This basic amount will be based on the value of sales of goods or services to which the violation directly or indirectly relates.18 The portion of the value of sales that will be taken into account depends on the degree of gravity of the infringement, multiplied by the number of years the infringement took place.19 Second, the Commission can adjust the basic amount upwards or downwards taking into account aggravating or mitigating circumstances.20 With regard to aggravating circumstances, the Commission might think that due to certain circumstances the amount of the fine should be increased, such as in the case of a ‘repeat offender’.21 The Commission can also increase the amount of the fine when it believes that the fine otherwise will not have a deterrent effect.22 With regard to mitigating circumstances, one can for example think of a situation where an undertaking did not intentionally infringe article 102 TFEU.23 In addition to that, the final amount of the fine shall not exceed 10 percent of the total turnover of the undertaking in the preceding business year.24 With regard to the current practice of EU competition law
sanctioning, fines seem to have been the most widely used tool. However, are these fines effective enough?
1.2 Effectiveness of 102 TFEU Procedures
There has been quite some discussion about the effectiveness of the fines and remedies that can be imposed article 102 TFEU violations. However, for purposes of this thesis I will not go into the ineffectiveness of remedies and fines with regard to abuse of dominance in all
16 Guidelines on the method of setting fines imposed pursuant to Article 23(2)(a) of Regulation No 1/2003, 1 September 2006. 17 Ibid., recital 12. 18 Ibid., recital 13. 19 Ibid., recital 19. 20 Ibid., recital 27. 21 Ibid., recital 28. 22 Ibid., recitals 30, 31. 23 Ibid., recital 29.
sectors. I will only discuss the possible ineffectiveness of these sanctions with regard to abuse of dominance by ‘big tech’ companies.
There has been a lot of discussion about the effectiveness of the current sanctioning system of article 102 TFEU with regard to big tech companies. First of all, because it is ‘too slow’. With regard to these companies, there is a risk of network effects: this entails that the more users a platform has, the more users it can attract. The network effect ‘arises where the value of a product increases with the number of other customers consuming the same product’.25 With regard to search engines, such as Google for example: ‘users of a search engine will benefit as more people use the same one: the more consumers use a particular search engine, the more data it will gather about them, and this in turn will lead to improved search
results’.26 Since it is more attractive for other people to use that platform as well, competing platforms find it more difficult to establish themselves in the market. That can create tipping, where one platform takes over; it is then impossible for others to compete effectively. Thus, in markets where structural risks for competition exist, such as network effects, powerful ‘gatekeepers’ are created, which could be prevented by early intervention. Accordingly, the Commission has to be able to act fast: if it waits too long, tipping has already taken place. However, with regard to the Google cases for example, the Commission launched its
investigation into abusive practices in online advertising in 2010.27 Nonetheless, Google was fined for these practices in 2019.28 So these cases can easily take 10 years. In technology markets in particular, 10 years is a long time and a lot can happen.
However, for purposes of this thesis I will not focus on the fact that 102 TFEU procedures are too slow. I will focus on the second, often debated, problem with regard to the effectiveness of article 102 TFEU: these lengthy investigations usually only result in fines and behavioural remedies. Yet, it appears that these sanctions do not always have the desired deterrent effect.
25 R. Whish and D. Bailey, ‘Competition Policy and Economics’, in Competition Law (Oxford University Press 2018), p. 11.
26 Ibid.
27 ‘Antitrust: Commission probes allegations of antitrust violations by Google’ (European Commission, 2010) <https://ec.europa.eu/commission/presscorner/detail/en/IP_10_1624> accessed 20 August 2020.
28 ‘Antitrust: Commission fines Google €1.49 billion for abusive practices in online advertising’ (European Commission, 2019)
<https://ec.europa.eu/commission/presscorner/detail/en/IP_19_1770> accessed 20 August 2020.
1.2.1 Deterrent Effect of Current Sanctions with regard to ‘Digital Abuse of Dominance’
Lately, the Commission has been quite busy investigating cases with regard to big tech companies, such as Google, Amazon and Apple. As stated by Ms. Vestager: ‘in the last five years, some of the darker sides of digital technologies have become visible’.29 Recently, the Commission has sent a statement of objections to Amazon. Amazon has a dual role as online platform as well as retailer on this platform, and is according to the Commission abusing its dominance by relying on non-public data of retailers using its platform for its own sales.30 The Commission is also looking into Apple, after a complaint of Spotify. Apple has possibly abused its dominant position, by favouring Apple Music in the App Store. Apple presumably charges 30 percent fee over purchases of other music subscriptions than Apple Music, such as Spotify.31
However, the recent most known big tech abuse of dominance cases are the Google cases. Google abused its dominance in subsequent cases. In 2017 the Commission found that Google gave a prominent place to its own comparison shopping service and has demoted rival comparison shopping services in the search results.32 Therefore, Google was fined 2.42 billion euro by the Commission for abusing dominance as a search engine by giving illegal advantage to its own comparison shopping service.33 In addition to that, the Commission also
29A. Satariano & M. Stevis-Gridneff, ‘Big Tech’s Toughest Opponent Says She’s Just Getting Started’(New York Times, 2020)
<https://www.nytimes.com/2019/11/19/technology/tech-regulator-europe.htm> accessed 20 August 2020.
30 ‘Antitrust: Commission sends Statement of Objections to Amazon for the use of non-public independent seller data and opens second investigation into its e-commerce business
practices’ (European Commission, 2020)
<https://ec.europa.eu/commission/presscorner/detail/en/ip_20_2077> accessed 10 December 2020.
31 ‘Antitrust: Commission opens investigations into Apple's App Store rules’ (European Commission, 2020) <https://ec.europa.eu/commission/presscorner/detail/en/ip_20_1073> accessed 20 October 2020.
32 ‘Antitrust: Commission fines Google €2.42 billion for abusing dominance as search engine by giving illegal advantage to own comparison shopping service’ (European Commission, 2017) <https://ec.europa.eu/commission/presscorner/detail/en/IP_17_1784> accessed 20 August 2020.
33 Case No 3974, Google Search (Shopping) (Commission Decision of 27 June 2017); ‘Antitrust: Commission fines Google €2.42 billion for abusing dominance as search engine by giving illegal advantage to own comparison shopping service’ (European Commission, 2017) <https://ec.europa.eu/commission/presscorner/detail/en/IP_17_1784> accessed 20 August 2020; ‘Antitrust: Commission probes allegations of antitrust violations by Google’
demanded Google to apply ‘equal treatment’: Google should treat rival shopping comparison services ‘no less favourably’ than its own.34 Google has implemented this remedy by making its shopping comparison service ‘independent’. Google has implemented a system where all shopping comparison services, including its own, can bid for ads to appear on Google’s search page.35 In this way, the service has to compete for advertising space just like the other shopping comparison services.36 Then, in 2018, the Commission found that Google had imposed illegal restrictions on Android device manufacturers and mobile network operators in order to strengthen dominance of its search engine.37 Therefore, Google was fined 4.34 billion euro by the Commission.38 And in 2019, the Commission found that Google had abused its dominance by closing contracts with third-party websites, requiring them to only place Google search adverts on their search result pages and no adverts of rivals.39 Thus, Google was fined 1.49 billion euro by the Commission for abusive practices in online advertising.40
It thus seems that Google repeatedly abused its dominant position. The Commission launched its investigation into abusive practices in online advertising in 2010.41 However, the alleged misconduct with regard to illegal practice regarding Android mobile devices started in 2011.42 This is a year after the investigation into the online advertising misconduct was
(European Commission, 2010)
<https://ec.europa.eu/commission/presscorner/detail/en/IP_10_1624> accessed 20 August 2020.
34 See 33 Google Search (Shopping) Case, par. 699.
35 B. Vesterdorf and K. Fountoukakos, ‘An Appraisal of the Remedy in the Commission’s Google Search (Shopping) Decision and a Guide to its Interpretation in Light of an Analytical Reading of the Case Law’ (2018) 9 Journal of European Competition Law & Practice, p. 1. 36 ‘Google’s Proposed Remedy in Europe Fails to Deliver “Equal Treatment” and Threatens to Make the Problem Worse’ (Open Markets, 2017)
< https://www.openmarketsinstitute.org/publications/googles-proposed-remedy-in-europe-fails-to-deliver-equal-treatment-and-threatens-to-make-the-problem-worse> accessed 9 October 2020.
37 Ibid.
38 Case No 40099, Google Android (Commission Decision of 18 July 2018); ‘Antitrust: Commission fines Google €4.34 billion for illegal practices regarding Android mobile devices to strengthen dominance of Google's search engine’ (European Commission, 2018) <https://ec.europa.eu/commission/presscorner/detail/en/IP_18_4581> accessed 20 August 2020.
39 Ibid.
40 See 28 European Commission. 41 See 27 European Commission. 42 See 38 European Commission.
launched, and therefore makes one question what the deterrent effect on Google is? Also, the Commission has fined Google a total of 8.34 billion euro from 2017-2019. Google has a global total annual revenue of around 135 billion euro.43 As said by Judge M. Eochaidh in the shopping comparison service case in 2017: ‘you have been fined a large amount, but was it sufficient? Imagine you were fined €2.4 by your local authority for littering and you had €120 in your pocket — would you miss the €2.4?’.44 Or as stated by Tiku: ‘considering that
Google reportedly paid the EU more in fines in 2018 than it set aside for taxes globally, the commission’s penalties do not so far seem to have made a dramatic impact’.45 So are fines actually effective with regard to big companies, that are as dominant as Google on their relevant markets? The Google cases indicate that they are not as effective as the Commission probably wants them to be.
However, not only the fines that were imposed are debated, also the effectiveness of the other remedies imposed on Google seem to have been the subject of an extensive debate. With regard to the ‘equal treatment’ remedy in 2017 for example, some authors argue that the so called ‘independence’ of the shopping service is not effective: the only way the service would really be independent, is by imposing structural remedies, such as divestiture.46 Furthermore, by selling the best spots to the highest bidders, Google is making the problem of unequal treatment even worse: ‘the auction model that Google now proposes would tilt the playing field to favor rich companies such as Google – which can simply pay more for search result slots – over less well-capitalized companies that may offer the public better services and more relevant results’.47 Marsden is also of the opinion the equal treatment remedy is ineffective, since according to him Google is still discriminating against other
43 A. Satariano, ‘‘This Is a New Phase’: Europe Shifts Tactics to Limit Tech’s Power. The region’s lawmakers and regulators are taking direct aim at Amazon, Facebook, Google and Apple in a series of proposed laws’ (New York Times, 2020)
< https://www.nytimes.com/2020/07/30/technology/europe-new-phase-tech-amazon-apple-facebook-google.html> accessed 28 August 2020; Annual revenue of Google from 2002 to 2019 (Stastista, 2020) < https://www.statista.com/statistics/266206/googles-annual-global-revenue/> accessed 3 September 2020.
44 ‘EU judge suggests Google fine should be higher’ (The European Gazette, 2020)
<https://www.eu-journalists.eu/2020/02/15/eu-judge-suggests-google-fine-should-be-higher> accessed 28 August 2020.
45 N. Tiku, ‘The EU Hits Google With a Third Billion-Dollar Fine. So What?’ (Wired, 2019) <https://www.wired.com/story/eu-hits-google-third-billion-dollar-fine-so-what/> accessed 1 September 2020.
46 See 36 Open Markets. 47 Ibid.
shopping comparison services. ‘The problem with the ‘remedy’ is that the comparison shopping sites are still effectively invisible, displayed on a tab behind Google’s Shopping Unit. That problem also signals the obvious solution: bring them forward and make them visible. Specifically, change the default so that comparison shopping services are as visible as Google’s own Shopping Unit, and they can then at least rise or fall based on actual
competition on the merits’.48 Versterdorf and Fountoukakas on the other hand do not agree with these scholars. They are of the opinion that the remedy does comply with the principle of equal treatment, since Google its own service has to compete with rivals services on equal terms.49 Furthermore, Google’s shopping comparison service does not gain any advantage from these biddings, since the profits generated by the biddings will go to Google Search, and not to Google’s shopping service: thus, ‘there is therefore no possibility for Google Shopping to outbid rivals through cross-subsidisation’.50
1.3 New Regulations Introduced by the Commission
The Commission itself also became aware that the system is not as effective as it should be. Therefore, the Commission has proposed two new regulations: the Digital Services Act51 and the Digital Markets Act52.
1.3.1 The Digital Services Act
In 2000 the legal framework for online market services was established: the Electronic Commerce Directive (hereinafter: the e-Commerce directive).53 The online market has
experienced enormous growth in the last twenty years, which made the e-Commerce directive not as suitable anymore. The principles of the e-Commerce directive are still relevant,
however, the Commission aims to improve and modernise the current framework with the new ‘Digital Services Act’ (hereinafter: the DSA).
48 P. Marsden, ‘Google Shopping for the Empress’s New Clothes –When a Remedy Isn’t a Remedy (and How to Fix it)’ (2020) Journal of European Competition Law and Practice, p. 1, 2.
49 See 35 B. Vesterdorf and K. Fountoukakas, p. 16. 50 Ibid.
51 See 6 Digital Services Act. 52 See 7 Digital Markets Act.00
53 Directive 2000/31/EC of the European Parliament and of the Council, on certain legal aspects of information society services, in particular electronic commerce, in the Internal Market (e-Commerce Directive), 8 June 2000.
Under the proposed DSA, the Commission wants to introduce ‘a series of new, harmonised EU-wide obligations for digital services, carefully graduated on the basis of those services' size and impact’.54 The DSA is mainly focused on the users of digital services providers, by setting out rules and responsibilities for the providers in order to prevent illegal or harmful content, and thereby improving the safety of users. 55
Under article 8 and article 20 for example, digital services can be required to remove certain illegal content. In addition to that, the proposal sets even stricter rules for ‘very large
platforms’, platforms that have more than 45 million users of the service within the EU, corresponding to 10% of the Union’s population.56 These ‘very large platforms’ have to do a ‘risk assessment’ once a year, thereby identifying ‘any significant systemic risks stemming from the functioning and use made of their services in the Union’57, and putting measures into place with regard to these risks,58 thereby preventing abuse of their systems.59 In addition to that, these large platforms shall provide the Commission, when requested, access to data, so that the Commission can scrutinize whether the platform is complying with the
regulation.60 Furthermore, the proposal includes a set of transparency measures for very large platforms, for example with regard to advertising and algorithms.61 Failures to comply with the obligations set out in the proposal, will be sanctioned with interim measures or fines.62
1.3.2 The Digital Markets Act
The proposed ‘Digital Markets Act’ (hereinafter: the DMA) builds on the ‘Regulation on promoting fairness and transparency for business users of online intermediation services’.63 With the DMA, the Commission wants to address ‘the negative consequences arising from certain behaviours by platforms acting as digital “gatekeepers” to the single market. These
54 ‘Europe fit for the Digital Age: Commission proposes new rules for digital platforms’ (European Commission, 2020)
<https://ec.europa.eu/commission/presscorner/detail/en/ip_20_2347> accessed 16 December 2020.
55 See 6 Digital Services Act, p. 2. 56 Ibid., p. 2, article 25.
57 Ibid., article 26(1). 58 Ibid., article 27.
59 See 54 European Commission. 60 See 6 Digital Services Act, article 31. 61 Ibid., articles 29, 30 and 33.
62 Ibid., articles 42, 55, 59 and 60.
63 Regulation 2019/1150 of the European Parliament and of the Council of on promoting fairness and transparency for business users of online intermediation services, 20 June 2019.
are platforms that have a significant impact on the internal market, serve as an important gateway for business users to reach their customers, and which enjoy, or will foreseeably enjoy, an entrenched and durable position’.64 In the past, the focus with regard to big platforms lied more on the fact that they brought much innovation and opportunities.65
However, for online platforms entering the market now it is quite hard to compete with these platforms: ‘businesses are increasingly dependent on a limited number of large online
platforms to connect them to consumers. These ‘gatekeeper’ platforms can use the large amounts of data gained from these connections to nip competition in the bud, for example by refusing competitors access to this data or by developing new activities in adjacent
markets’.66
The proposal is limited to ‘a number of core platforms’; and, ‘providers of core platform providers can be deemed to be gatekeepers if they: (i) have a significant impact on the internal market, (ii) operate one or more important gateways to customers and (iii) enjoy or are expected to enjoy an entrenched and durable position in their operations’.67 The
thresholds for these criteria are laid down in the second paragraph of article 3 of the DMA.68 Thus, a platform with 45 million users or more can be qualified as a ‘very large online platform’ under the DSA, but it shall have to meet all these criteria as well to qualify as a gatekeeper under the DMA. However, the Commission can also, based on market
investigations, identify a platform as a gatekeeper, that does meet these criteria, but does not fulfil all the thresholds.69 All in all, it appears that ‘the DMA provides a rebuttable
presumption for identifying gatekeepers based on turnover, market value and user thresholds.
64 See 54 European Commission.
65 ‘The Digital Services Act Package’ (European Commission, 2020)
<https://ec.europa.eu/digital-single-market/en/digital-services-act-package> accessed 1 September 2020.
66 F. ten Have and S. Evans, ‘New Competition Tool: something old, something new, something borrowed’ (Stibbe, 2020) < https://www.stibbe.com/en/news/2020/july/new-competition-tool-something-old-something-new-something-borrowed> accessed 20 August 2020.
67 See 7 Digital Markets Act, p. 2., article 3. 68 Ibid.
It seems likely that the ‘GAFA’ companies (Google, Apple, Facebook and Amazon) will be required to take up the challenge of rebutting this presumption’.70
This proposal should enable other, smaller, platforms to also compete on the digital market by introducing certain rules for gatekeepers. 71 The proposal tries to accomplish that goal by setting out certain prohibitions and obligations for gatekeepers, so that unfair practices can be avoided. 72 The proposal also requires these gatekeepers to put measures into place in order to comply with these obligations.73 Furthermore, the proposal enables the Commission to
conduct a market investigation in order to examine whether existing core platforms shall have to be qualified as gatekeepers, but also whether ‘foreseeable’ future gatekeepers, should be designated as gatekeepers already.74 Accordingly, the Commission can intervene in markets that risk ‘tipping’ due to existing or upcoming gatekeepers.75 In addition to that, the
Commission can also conduct market investigations in order to decide if other practices should also be added to the list of ‘unfair practices’.76 Undertakings can be required to provide the Commission with the data it needs in order to carry out these market
investigations.77 Moreover, the Commission can impose fines for non-compliance with the regulation.78 And, if a gatekeeper has ‘systematically infringed the obligations’ the
Commission can impose behavioural or structural remedies.79 However, structural remedies can only be imposed if there is no ‘equally effective’ behavioural remedy or if such a remedy would be more burdensome.80
1.4 Other Possible Tools?
The Commission has adopted two new proposals for regulations. These proposals do provide for new promising rules, but they do not provide for remedies other than fines, behavioural 70 R. Wesseling, C. Swaak and F. ten Have, ‘Gatecrashing Gatekeepers? The EU’s digital reform is out’ (Stibbe, 2020) < https://www.stibbe.com/en/news/2020/december/gatecrashing-gatekeepers-the-eus-digital-reform-is-out> accessed 16 December 2020.
71 See 7 Digital Markets Act, p. 2. 72 Ibid., articles 5, 6.
73 Ibid., article 7.
74 Ibid., article 15(1), 15(4).
75 See 70 R. Wesseling, C. Swaak and F. ten Have. 76 See 7 Digital Markets Act article 17.
77 Ibid., article 19. 78 Ibid., article 26. 79 Ibid., article 16(1). 80 Ibid., article 16(2).
and structural remedies: which were available to the Commission already. As explained, it seems that at least with regard to big tech companies, these remedies and fines are not effective enough. However, the possibility of introducing criminal sanctions was never part of the discussion. What are the possibilities for ‘criminal competences’ for the Commission with regard to violations of article 102 TFEU? Would criminal sanctions possible enhance the deterrent effect?
Chapter 2: The Possibility of Criminal Sanctions under the ‘Norm’ of Article 102 TFEU Before exploring whether it is legally possible within the EU competition law system to adopt criminal sanctions for violations of article 102 TFEU, one can also wonder whether norm of article 102 TFEU in itself even lends for criminal sanctions. In this chapter it will be
discussed whether this ‘norm’ is sufficiently clear and certain enough so that criminal sanctions could possibly be imposed for violations of article 102 TFEU. In addition to that, existing competition law regimes where criminal sanctions can be imposed for abuse of dominance will be examined: do these regimes show that it is possible to introduce criminal sanctions under the norm of article 102 TFEU? And if so, are these sanctions effective?
2.1 The Lex Certa Principle and Article 102 TFEU
An important principle within criminal law is the ‘lex certa principle’. The European Parliament defines this principle as follows: ‘the description of the elements of a criminal offence must be worded precisely to the effect that an individual shall be able to predict actions that will make him/her criminally liable’.81 And according to the European Court of Human Rights (hereinafter: the ECtHR): ‘the individual can know from the wording of the relevant provision and, if need be, with the assistance of the courts’ interpretation of it, what acts and omissions will make him criminally liable’.82 Consequently, for criminal sanctions to be adopted under article 102 TFEU, this provision should be sufficiently clear and certain, in order to enable undertakings, and possibly individuals within these undertakings, to predict what actions could make them criminally liable.
Under article 102 TFEU, ‘abuse of a dominant position on a relevant market’ is prohibited. It does seem that the abuse of dominance provision is quite an open norm, on two levels. First of all, for an undertaking to fall under this provision, it must be dominant on the relevant market. Secondly, the undertaking in question must abuse this dominant position. Both concepts have been open to many debates and cases.
81 Resolution European Parliament, ‘An EU approach to criminal law’ Official Journal of the European Union C264 E/7, 22 May 2012, recital 4. -
https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:52012IP0208&from=GA
2.1.1 Article 102 TFEU: an open norm?
Undertakings, the Commission, scholars, and the European courts do not always seem to agree about what falls under ‘abuse’, ‘dominance’ or the ‘relevant market’. As pointed out by Nazzini: ‘the text of Article 102 is open textured. It prohibits any abuse of a dominant
position within the internal market. It then describes four types of conduct that may constitute an abuse but the EU courts have repeatedly affirmed that such a list is not exhaustive’.83
In the Hoffman-La Roche case, dominance was defined by the European Court of Justice (hereinafter: the ECJ or the Court) as: ‘a position of economic strength enjoyed by an
undertaking, which enables it to prevent effective competition being maintained on a relevant market, by affording it the power to behave to an appreciable extent independently of its competitors, its customers, and ultimately consumers’.84 However, what exactly falls under ‘effective competition’, a ‘relevant market’ and ‘to an appreciable extent’? As stated by Vesterdorf: ‘the notion of dominance is by no means clear and to decide whether an
undertaking is in a dominant position will always be a question of a more or less subjective assessment of a number of factual, often complex, circumstances and economic analyses which have to be preceded by an economic analysis of the relevant product and geographical market on which to assess the question of dominance, an analysis which may in itself be very complex and uncertain’.85
But also the term ‘abuse’ seems to be unclear. As defined in the Hoffman-La Roche case: ‘the concept of abuse is an objective concept relating to the behaviour of an undertaking in a dominant position which is such as to influence the structure of a market where, as a result of the very presence of the undertaking in question, the degree of competition is weakened and which, through recourse to methods different from those which condition normal competition in products or services on the basis of the transactions of commercial operators, has the effect of hindering the maintenance of the degree of competition still existing in the market or the growth of that competition’.86 However, what are ‘methods different from those which
83 R. Nazzini, ‘Unequal Treatment by Online Platforms: A Structured Approach to the Abuse Test in Google’ (2016) GCLC Book Series, p. 2.
84 Case No 85/76, Hoffman-La Roche v. the Commission (13 February 1979), par. 38. 85 B. Vesterdorf, ‘Article 102 TFEU and sanctions: appropriate when?’ (2011) 32 European Competition Law Review, p. 575.
condition normal competition’?87 ‘The answer to the question whether a given conduct may be abusive in individual cases depends on an assessment of all the factual and economic detailed circumstances of the case by the authority and the result of its appreciation does not necessarily correspond to what another authority may find is normal competition on the merits or, on the contrary, abusive conduct’.88 And as stated by Allan: ‘competitive impact of unilateral behaviour is highly fact-specific. It is dependent on effects in particular cases that are commonly impossible to predict with certainty and may well be debatable even in retrospect’.89
Thus, article 102 TFEU is open to many interpretations, which also led to a lot of debates with regard to cases before the Court. With regard to the Google case of 2017 for example, Google was fined by the Commission for abusing its dominance as a search engine by giving illegal advantage to its own comparison shopping service.90 There has been a lot of
discussion about how to qualify the legal nature of Google’s abuse here. Nazzini argues that the abuse here should be qualified as an exclusionary abuse, and thus ‘arguing a contrario, the alleged abuse in Google is not exploitative’.91 Pakman on the other hand states that ‘fitting the publicly available facts of Google Search into one of these existing types of abuse (i.e., refusal to deal, discrimination, and tying) is equivalent to fitting a square peg in a round hole’.92 And also in the Microsoft case of 200793, there was a lot of disagreement about what criteria should have been fulfilled in order to constitute the abusive practice ‘a refusal to supply’.94 Microsoft was of the opinion, that the Magil and IMS Health cases apply here, and that the criteria laid down in those cases were not fulfilled here. 95 The Commission on the other hand, interpreted these cases differently, and stated that an automatic application of such case law is not possible, since the circumstances here ‘are not necessarily the same as
87 See 85 B. Vesterdorf, p. 575. 88 Ibid., p. 576.
89 B. Allan, ‘Rule-making in the Context of Article 102 TFEU’ (2014) 13 Competition Law Journal, p. 12.
90 See 33.
91 See 83 R. Nazzini, p. 22.
92 P. Akman, ‘The Theory of Abuse in Google Search: A Positive and Normative Assessment under EU Competition Law’ (2016) 2 Journal of Law, Technology and Policy, p. 370.
93 Case No T-201/04, Microsoft v. the Commission (17 September 2007).
94 Guidance on the Commission's enforcement priorities in applying Article 82 of the EC Treaty to abusive exclusionary conduct by dominant undertakings (2009/C 45/02), 24 February 2009, recital 76: ‘typically competition problems arise when the dominant
undertaking competes on the ‘downstream’ market with the buyer whom it refuses to supply’. 95 See 93 Microsoft Case 2007, par. 112.
the one identified in in Magill’.96 The Court stated: ‘they disagree as to the criteria established in the case-law that are applicable in such a situation’.97
Thus, there seems to be confusion about the interpretation of the different concepts of article 102 TFEU, and as stated by Vesterdorf: ‘art.102 is not drafted in clear, precise and
unambiguous language and therefore does not create, at least sufficiently, legal certainty’.98 Accordingly, since article 102 TFEU is not straightforward, it could be regarded as an open norm. Therefore, it seems that imposing criminal sanctions for violations of article 102 TFEU, will violate the lex certa principle. Criminal sanctions can only be adopted for 102 TFEU violations, if it is clear to the individual or undertaking, which actions will make him or her criminally liable.99 As of now, it is questionable whether that is the case with regard to article 102 TFEU.
2.2 Interpretation of Criminal Sanctions under Article 102 TFEU by European Courts However, it does appear that the ECJ and ECtHR take a different approach with regard to the ‘openness’ of the norm of article 102 TFEU. Both courts have their own interpretation of whether criminal sanctions could be imposed for violations of article 102 TFEU.
2.2.1 The ECJ
In the Microsoft case of 2012, Microsoft claimed that the Commission infringed article 24 of Regulation 1/2003100, since it imposed a periodic penalty payment on Microsoft, without specifying the exact obligations.101 This, according to Microsoft, infringed fundamental rights.102 However, the Court did not side with Microsoft, and ruled: ‘the use of imprecise legal concepts within a provision does not prevent liability being established as against a person who contravenes it. As the Commission points out, if it were otherwise, an
infringement of Article 101 or 102 TFEU — which are themselves drawn up using imprecise legal concepts, such as distortion of competition or ‘abuse’ of a dominant position — could not give rise to a fine without the prior adoption of a decision establishing the
96 Ibid., par. 316. 97 Ibid., par. 314.
98 See 85 B. Vesterdorf, p. 577.
99 See 81 Resolution European Parliament. 100 Regulation 1/2003, article 24.
101 Case No T-167/08, Microsoft v. the Commission (27 June 2012), par. 76. 102 Ibid.
infringement’.103 Accordingly, the Court does state that ‘abuse of a dominant position’ under article 102 TFEU is an ‘imprecise legal concept’. However, according to the Court this does not entail that criminal sanctions cannot be imposed: ‘so far as the latter provision is
concerned, the use of imprecise legal concepts in making rules, breach of which entails the civil, administrative or even criminal liability of the person who contravenes them, does not mean that it is impossible to impose the remedial measures provided for by law, provided that the individual concerned is in a position, on the basis of the wording of the relevant provision and, if need be, with the help of the interpretation of it given by the courts, to know which acts or omissions will make him liable’.104
Thus, the ECJ is of the opinion that an individual must know from the wording of the provision, if needed with help of the court, what acts make him criminally liable. However, the Court also ruled that ‘imprecise legal concepts’ do not stand in the way of imposing criminal sanctions. Yet, even though article 102 TFEU is an open norm, criminal sanctions can be adopted for violations of abuse of dominance.
2.2.2 The ECtHR
The ECtHR approaches ‘criminal sanctions under article 102 TFEU’ differently. In the Engel case, the ECtHR has outlined certain criteria; if these are met, administrative fines can be qualified as being criminal in nature, and therefore the European Convention on Human Rights105 (hereinafter: the ECHR) will be applied. The ECtHR anticipates in particular on: (i) the qualification of the act as an criminal offence in the domestic laws of the state in question, (ii) the nature of the offence (iii) the degree of severity of the penalty that can be imposed.106 In later cases, the ECtHR added to these criteria: ‘a sanction will be criminal in nature if the sanction is not merely imposed for compensatory reasons but is truly punitive and meant to have a deterrent effect’.107
103 Ibid., par. 91. 104 Ibid., par. 84.
105 European Convention on Human Rights (ECHR) 3 September 1953.
106 Case No 5100/700, Engels and Others v. The Netherlands (8 June 1976), par. 82.
107 F. Dethmers and H. Engelen, ‘Fines under article 102 of the Treaty on the Functioning of the European Union’ (2012) 2 European Competition Law Review, p. 95.; Case No
With regard to abuse of dominance, the ECtHR held in the ACF Chemiefarma case that fines for article 102 TFEU violations are not imposed for compensatory reasons, but they have as ‘their object to suppress illegal activities and to prevent any reference’.108 Thus, according to the ECtHR, fines for abuse of dominance do ‘fulfil punitive purposes under criminal law’.109 In addition to that, the ECtHR has stated: ‘the autonomous interpretation adopted by the Convention institutions of the notion of a “criminal charge” by applying the Engel criteria have underpinned a gradual broadening of the criminal head to cases not strictly belonging to the traditional categories of the criminal law, for example administrative penalties’.110
Thus, according to the ECtHR, administrative sanctions under article 102 TFEU can also be seen as criminal sanctions. Under article 6 of the ECHR everyone charged with a crime is entitled to the right of a fair trial.111 Therefore, the ECHR should be applied when fines for 102 TFEU violations are imposed. The ECtHR does not go into the fact whether article 102 TFEU is open to too many interpretations and that therefore criminal sanctions cannot be imposed under the norm of that provision, since that would violate the lex certa principle. The ECtHR takes another approach: according to the ECtHR it does not really matter whether criminal sanctions are explicitly mentioned or not. The ECtHR has stated that fines and other administrative sanctions imposed in abuse of dominance cases are punitive, and can in themselves be seen as criminal sanctions.
2.3 Existing Competition Law Regimes Where Criminal Sanctions for Abuse of Dominance Can be Imposed
According to the ECJ, ‘imprecise legal concepts’ do not stand in the way of imposing criminal sanctions, and according to the ECtHR, sanctions for article 102 TFEU violations are already seen as criminal in nature. However, it does appear that ‘abuse of dominance’ is quite an open norm, and that the adoption of criminal sanctions will probably violate the lex certa principle. Nevertheless, there are jurisdictions where criminal sanctions can be imposed for abuse of dominance; does this show that lex certa is not an obstacle for the introduction of criminal sanctions?
108 Case No 41/69, ACF Chemiefarma NV v. the Commission (15 July 1970), par. 173. 109 See 107 F. Dethmers and H. Engelen, p. 95.
110 Case No 73053/01, Jussila v Finland (23 November 2006), par. 43. 111 ECHR, article 6.
2.3.1 The United States
In 1890, the ‘Sherman Antitrust Act’112 (hereinafter: the Sherman Act) was introduced in the United States (hereinafter: the US). The Sherman Act outlaws ‘every contract, combination, or conspiracy in restraint of trade’ and any ‘monopolization, attempted monopolization, or conspiracy or combination to monopolize’.113 Under section 2 of the Sherman Act, persons who ‘monopolise’ shall be punished with a fine or by imprisonment (not exceeding three years).114 Monopolisation under the Sherman Act can be compared with abuse of dominance under article 102 TFEU: section 2 of the Sherman Act is aimed at single-firm conduct with monopoly power or with a high risk of attaining such power.115
Thus, under US competition law criminal measures can be imposed for ‘monopolisation’.116 The justification for this is the ‘Utilitarian Justification of Deterrence’ which is ‘based on the assumption that criminal sanctions have more deterrent effect than a civil sanction’.117 In theory, criminal sanctions are available under section 2 of the Sherman Act.118 However, no criminal sanctions for section 2 violations have been imposed for many years: ‘criminal antitrust enforcement in the United States is confined to hard-core cartel activity’.119 In addition to that, if there was a criminal sanction imposed for an infringement of section 2, it almost always resulted in a monetary fine, and no detention.120 One reason for this could be
112 The Sherman Antitrust Act 2 July 1890.
113 US Federal Trade Commission, Guide to Antitrust Laws < https://www.ftc.gov/tips-advice/competition-guidance/guide-antitrust-laws/antitrust-laws> accessed 15 September 2020.
114 Sherman Antitrust Act, section 2.
115 Sherman Antitrust Act, section 2; Case No 384 U.S. 563, US Supreme Court, United States v. Grinnell Corp. (13 June 1966), p. 570.
116 Sherman Antitrust Act, section 2; The Clayton Antitrust Act 8 October 1914.
117 A.V. Pillai, ‘The Call for Criminal Sanctions for Enforcement of Competition Law and its Practical Concerns’ (2014) 1 Competition Law Cirque, p. 30.
118 W.F. Adkinson, K.L. Grimm and C.N. Bryan, Working Paper: ‘Enforcement of Section 2 of the Sherman Act: Theory and Practice’ (3 November 2008), p. 6. -
https://www.ftc.gov/system/files/documents/public_events/section-2-sherman-act-hearings-single-firm-conduct-related-competition/section2overview.pdf; B.A. Howell, ‘Sentencing of Antitrust Offenders: What Does the Data Show?’ -
https://www.ussc.gov/sites/default/files/pdf/about/commissioners/selected-articles/Howell_Review_of_Antitrust_Sentencing_Data.pdf
119 Ibid.; Organisation for Economic Co-operation and Development (OECD), Roundtable on Remedies and Sanctions in Abuse of Dominance Cases – Note by the United States,
DAF/COMP/WD(2006)25 (6 June 2006), p. 2.
120 R.W. Crandall, ‘The Failure of Structural Remedies in Sherman Act Monopolization Cases’ (2001) AEI-Brookings Joint Center For Regulatory Studies, p. 7.
that monopolisation cases under section 2 are quite hard to prove: the definition of ‘to monopolise’ is left largely undefined.121
Consequently, the US’ competition law regime does show that the lex certa principle does not have to be an obstacle for the introduction of criminal sanctions for ‘monopolisation’.
However, since criminal sanctions for violations of ‘monopolisation’ are never imposed in practice, these sanctions seem to be ineffective.
2.3.2 Ireland
Under Irish competition law, abuse of dominance is prohibited under section 5 of the
Competition Act 2002122 and article 102 TFEU. The abuse of a dominant position is qualified as a criminal offence, so the Irish Competition Authority (‘The Commission and Consumer Protection Committee’, hereinafter: CCPC) can start a criminal prosecution for an
infringement of section 5. However, the CCPC can also choose to pursue the matter in civil proceedings. The criminal sanction that can be imposed for abuse of dominance is a financial penalty.123 There are no criminal sanctions such as imprisonment for violating section 5 or article 102 TFEU under Irish law. Nevertheless, criminal fines can also be imposed on individuals that are implicit in the abuse.124
The CCPC has been very active in initiating civil proceedings for abuse of dominance cases.125 However, to date, the CCPC has never pursued a criminal prosecution for infringements of section 5 of the Competition Act.126 This can be due to the standard of
121 A. Klobuchar and R. Blumenthal, ‘Does Section 2 Of The Sherman Antitrust Act Need More Bite?’ (Antitrust Advocate, 2019)
< https://www.antitrustadvocate.com/2019/09/26/does-section-2-of-the-sherman-antitrust-act-need-more-bite/> accessed 19 September 2020.
122 Competition Act 1 April 2002. 123 Ibid., sections 7, 8(2).
124 R. Ryan and P. Horan, ‘Restraints of trade and dominance in Ireland: overview’ (Thomson Reuters, 2019) <
https://uk.practicallaw.thomsonreuters.com/5-617-2691?transitionType=Default&contextData=(sc.Default)&firstPage=true> accessed 16 September 2020.
125 A. Cox, ‘Competition Compliance in Ireland’ (Lexology, 2019)
<https://www.lexology.com/library/detail.aspx?g=1561e0af-2615-485a-a144-b7bfaa756d9a> accessed 21 September 2020.
proof, since in criminal cases the standard of proof is ‘beyond reasonable doubt’.127 With respect to antitrust cases, it appears to be quite hard to prove ‘beyond reasonable doubt’.128 However, with regard to cartel cases on the other hand, the CCPC has been pursuing criminal prosecutions.129 But also with respect to cartel cases, the CCPC has stated that it is only able to prosecute one criminal cartel case per year; ‘this obviously greatly reduces the deterrent effect of criminal sanctions since it means that the chance of being subject to such penalties is close to zero’.130
The Irish competition law regime for abuse of dominance does show that the lex certa principle is not necessarily an obstacle for the introduction of criminal sanctions for
violations of article 102 TFEU. However, the only ‘criminal’ sanctions that can be imposed for abuse of dominance are criminal fines, so this does not differ a lot from the EU
competition law sanctioning system. Furthermore, since the CCPC has never initiated a criminal prosecution for an infringement of section 5 of the Competition Act, it seems that criminal sanctions for abuse of dominance are not effective here.
2.3.3 Estonia
In 2001 the Competition Act131 was introduced in Estonia. Under this act, abuse of a
dominant position is a ‘misdemeanour’132: a ‘quasi criminal offence’, unless in the case of a first time offender.133 In 2002, the Penal Code134 was also introduced in Estonia. Under this code both crimes and misdemeanours are punished. Under paragraph 399 of the Penal Code: ‘a person who ... or engages in activities involving abuse of the dominant position on the market by the enterprise, if a punishment for a misdemeanour has been imposed on the
127 G. Fitzgerald and D. Mcfadden, ‘Filling a gap in Irish competition law enforcement: the need for a civil fines sanction’, p. 14. -
https://www.ccpc.ie/business/wp- content/uploads/sites/3/2017/05/2011-06-09-Filling-a-gap-in-Irish-competition-law-enforcement-the-need-for-a-civil-fines-sanction.pdf
128 Ibid.
129 P. Massey, ‘What has Irish Competition Law Achieved?’ Paper Presented to Dublin Economics Workshop Annual Economic Policy Conference Kenmare (15 October 2011), p. 8.
130 Ibid.
131 Competition Act 1 October 2001. 132 Penal Code 1 September 2002, par. 3(4).
133 Appendix 2 Ref. Ares(2018)703338 - 06/02/2018: Competition Law - Country Report, p. 34.
offender for the same act, is punishable by a pecuniary punishment or up to 3 years' imprisonment’.135
Estonia has joined the EU in 2004136, and has only since then harmonized its competition legislation with that of the EU. It does seem that Estonia falls under the ‘transition countries’ that have so far the most effective competition policy.137 Nevertheless, there are not many indications with regard to the deterrent effect of the criminal sanctions that can be imposed for abuse of dominance. The Estonian Competition Authority itself is of the opinion that the regulation with regard to abuse of dominance is ineffective.138 This is so due to the fact that the violation is qualified as a misdemeanour. A misdemeanour was actually intended for light offences: yet, abuse of dominance is quite a ‘big’ offence with many complexities.139
Nevertheless, the competition law regime of Estonia does show that the lex certa principle does not have to be an obstacle to impose criminal sanctions for abuse of dominance, since this is at least a theoretical possibility here.
135 Penal Code, division 7: par. 399.
136 EU Member Countries: Estonia - https://europa.eu/european-union/about-eu/countries/member-countries/estonia_en
137 F. Kronthaler, ‘Working Paper: Effectiveness of Competition Law: A Panel Data Analysis’ (2007) 7 IWH Discussion Papers, p. 4.
138 Organisation for Economic Co-operation and Development (OECD), Annual Report on Competition Policy Developments in Estonia 2012 DAF/COMP/AR(2013)2, par. 15. 139 Ibid.
Chapter 3: Legal Possibilities within the EU Competition Law System for Criminal Sanctions
The jurisdictions that are discussed in chapter 2 do not show that criminal sanctions for abuse of dominance are certainly effective in practice. Nevertheless, in this chapter it will be
scrutinized what the legal possibilities are within the EU competition law system to impose criminal sanctions, and how these sanctions can be enforced.
3.1 Possible Legal Bases for the Introduction of Criminal Sanctions
In order for the EU to impose criminal sanctions, it should first have a legal basis on which it has the power to introduce such sanctions. In this section possible legal bases will be
discussed and scrutinized.
3.1.1 Article 103 TFEU
Article 103 (1) TFEU states: ‘the appropriate regulations or directives to give effect to the principles set out in Articles 101 and 102 shall be laid down by Council, on a proposal from the Commission and after consulting the European Parliament’. Article 103 (2) TFEU: ‘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’. Under article 103 the Council of the European Union (hereinafter: the Council) is given broad legislative powers to adopt measures. However, the reference to ‘fines and period penalty payments’ does seem
problematic in order to use the article as a legal basis to adopt criminal sanctions: ‘it is clear that the authors of the Treaty thought that compliance with the antitrust prohibitions would be induced by the threat of financial penalties, not imprisonment’.140 Wils argues on the other hand, that if the Council believes it should adopt criminal sanctions in order to give effect to article 101 and 102 TFEU, it can do so through teleological interpretation of article 103 TFEU.141
140 W.P.J Wils, ‘Is Criminalisation of EU Competition Law the Answer?’ in: K.J. Cseres, M.P. Schinkel and F.O.W. Vogelaar (editors), Remedies and Sanctions in Competition Policy: Economic and Legal Implications of the Tendency to Criminalize Antitrust Enforcement in the EU Member States (Edward Elgar 2005), p. 50, par. 151. 141 Ibid., p. 50, par. 152.
3.1.2 Article 83 (1) TFEU
However, article 103 TFEU as a possible legal basis seems to be unlikely since the
introduction of article 83 TFEU. Article 83 TFEU states in the first paragraph: ‘the European Parliament and the Council may, by means of directives adopted in accordance with the ordinary legislative procedure, establish minimum rules concerning the definition of criminal offences and sanctions in the areas of particularly serious crime with a cross-border
dimension resulting from the nature or impact of such offences or from a special need to combat them on a common basis. These areas of crime are the following: terrorism, trafficking in human beings and sexual exploitation of women and children, illicit drug trafficking, illicit arms trafficking, money laundering, corruption, counterfeiting of means of payment, computer crime and organised crime. On the basis of developments in crime, the Council may adopt a decision identifying other areas of crime that meet the criteria specified in this paragraph. It shall act unanimously after obtaining the consent of the European
Parliament’.142 With regard to this article, it appears that ‘abuse of dominance’ is not one of the crimes listed. However, the Council can add crimes to the list based on the developments in crime. In order for the Council to be able to do so, such crimes have to meet the criteria: ‘particularly serious crime with a cross-border dimension resulting from the nature or impact of such offences or from a special need to combat them on a common basis’.143 It is quite questionable whether ‘abuse of dominance’ meets these criteria, especially with regard to ‘serious crime’. The crimes that are listed already are terrorism, money laundering, and so on; abuse of dominance is probably not on that level of ‘seriousness’. Furthermore, in order for the Council to ‘add a crime’, it should act unanimously, and it should have a lot of political will to do so.144
On the other hand, as for big tech companies, it does seem that the abuse of a dominant position is regarded as very serious lately. Some even argue that abuse of dominance by big tech companies can now possibly also be seen as an ‘organised crime’: ‘there are more than a few similarities between the organized crime and these four companies. Like the Mafia, the threats that Apple, Amazon, Facebook and Google pose to American democracy flow from the power they have over key services (from email to social media to music and film), the
142 TFEU, article 83(1). 143 Ibid.
144 G. Hakopian, ‘Criminalisation of EU Competition Law Enforcement – A possibility after Lisbon?’ (2010) 7 The Competition Law Review, p. 172.
way they use dominance in one area to achieve dominance in others and their ability to use fear to stop challenges to their control’.145 Thus, one could perhaps argue that abuse of dominance could possibly be qualified as an ‘organised crime’ within the meaning of article 83(1) TFEU. If not, perhaps based on the ‘developments in crime’146, the Council could identify abuse of dominance by big tech as a crime falling within article 83(1) TFEU.
3.1.3 Article 83(2) TFEU
With the adoption of Treaty on the European Union (hereinafter: the TEU)147, a pillar system was introduced: under the first pillar ‘the Communities’, under the second pillar ‘Common Foreign and Security Policy’ and under the third pillar ‘Justice and Home Affairs’.148 The Member States decided to cooperate with the EU with regard to criminal law under the third pillar.149 This was due to the fact that because of globalization and other developments, crimes did not only take place within one state any longer. Instead, cross border crimes were committed, such as money laundering, drug crime and human trafficking. 150 However, the Commission wanted to have a criminal competence under the first pillar as well. The
Member States and the Council disagreed with the Commission.151 Eventually, the ECJ ruled in the Environmental Crimes Case that: ‘as a general rule, neither criminal law nor the rules of criminal procedure fall within the Community's competence. However, the last-mentioned finding does not prevent the Community legislature, when the application of effective, proportionate and dissuasive criminal penalties by the competent national authorities is an essential measure for combating serious environmental offences, from taking measures which relate to the criminal law of the Member States which it considers necessary in order to ensure that the rules which it lays down on environmental protection are fully effective’.152
145 Z. Teachout, ‘How the legal fight against big tech is like the fight against organized crime’ (Washington Post, 2020) < https://www.washingtonpost.com/outlook/2020/08/01/antitrust-hearings-facebook-amazon-organized-crime/> accessed 10 October 2020.
146 TFEU, article 83(1).
147 Treaty on the European Union 7 February 1992.
148 P. Craig, ‘Development of the EU’ in: C. Barnard and S. Peers (editors), European Union Law (Oxford University Press 2020), p. 22.
149 J. Öberg, ‘Do we really need criminal sanctions for the enforcement of EU law?’ (2014) 5 New Journal of European Criminal Law, p. 4.
150 Ibid.
151 Ibid., p. 4, 5; R. Pereira, ‘Environmental Criminal Law in the First Pillar: A Positive Development for Environmental Protection in the European Union?’ (2007) 16 European Environmental Law Review, p. 254.
152 Case No C-176/03, the Commission v. the Parliament (13 September 2005), par. 47, par. 48.
