EXTRATERRITORIAL APPLICATION OF EU COMPETITION LAW PDF

Preview

Summary

UNIVERSITÁ DEGLI STUDI DI TORINO DIPARTIMENTO DI GIURISPRUDENZA TESI DI LAUREA MAGISTRALE IN DIRITTO DELL'UNIONE EUROPEA EXTRATERRITORIAL APPLICATION OF EU COMPETITION LAW RELATORE: CHI. MO PROF. FRANCESCO COSTAMAGNA CANDIDATA: ILARIA FEVOLA 2 Extraterritorial Application of EU Competition Law I...

Description

UNIVERSITÁ DEGLI STUDI DI TORINO DIPARTIMENTO DI GIURISPRUDENZA

TESI DI LAUREA MAGISTRALE IN

DIRITTO DELL'UNIONE EUROPEA

EXTRATERRITORIAL APPLICATION OF EU COMPETITION LAW

RELATORE: CHI. MO PROF. FRANCESCO COSTAMAGNA

CANDIDATA: ILARIA FEVOLA

2

Extraterritorial Application of EU Competition Law

Ilaria Fevola

3

Acknowledgements I am grateful to many persons who have helped, supported and often borne me in writing this thesis. This work is the outcome of almost two years of research on the issue of extraterritoriality. Therefore, the number of persons to whom address a special acknowledgement has increased over time. I will try to thank you all. Forgive me in case I will forget someone. My warmest thanks to: Professor Francesco Costamagna for having wisely conducted me in the last two years since I first told you my wish to deal with extraterritoriality. Your suggestion to focus on competition law has been definitely one of the best choice I could have ever taken. Finally, thank you for having let me write all this work in English. My coaches Alberto Miglio and Stefano Montaldo. I should write another dissertation just to thank you both. It is difficult to explain how much I am grateful to you. Since the moot courts days, when you welcomed me as young and “wild” student of EU law in the ELMC team, you have always been extraordinary EU law teachers but my special thank goes for having always supported me in the last three years for every choice I have taken, going further from being just ELMC coaches. Professor Ornella Porchia, being my first EU law professor, for having strongly encouraged me to participate to the moot court experience when I attended your course on my second year. All I have done after has come from your ability to convince me it was worthy to focus my university path on EU law. Stefano Saluzzo, for having provided useful advices and for having shared precious material with me. Professors Andrew Scott and Orla Lynskey and my LSE tutor Ryan Stones. What I have learned at LSE has been essential in writing this dissertation. A special thank is due to Orla Lynskey for the incredible lectures on the Google case from which I have found inspiration for the last part of 5

my thesis. Thank you all for rendering the experience of studying harder than ever and being in the highest level class I had never imagined to find myself in one of the best months of my life. The staff of the Human Rights and Migration Law Clinic: Ulrich Stege, Maurizio Veglio, Andrea Spagnolo, Emiliano Giovine for helping me in my very first approach with extraterritoriality in drafting the appeal to the ECHR last year. ELMC mooters: Enrico, Giulia, Lucia, Benedetta, Davide, Federico and Gabriella. Thank you for rendering the experience of studying, researching and mooting on EU law a very enjoyable one. Zeleke Boru. I owe you a lot. Your support and your advices have been essential in the first part of this dissertation. Thank you for explaining me how to deal with a research thesis but most importantly, thank you for your friendship I have always been sure to count on. Elena Perotti. You provided me precious suggestions in searching material and studying extraterritoriality in my first steps dealing with this issue when I was struggling in finding legal sources. I am so happy that this initial help has resulted in a different cooperation. You perfectly know how much I am looking forward to start this new experience at WAN-IFRA with you. Itsiq Benizri for supporting me in every possible way in the last year. You have been one of the greatest supporters during the process of my applications and you also are the one who better understands how much this has challenged the outcome of this thesis. My friends: Annalisa, Lucrezia, Paolo, Matteo, Simone, Sofia and Sara. You have been one of the most precious help. You have never stopped to trust me and you have always pushed me in believing in myself. The greatest lesson I have learned since the starting of this thesis has been to never give up. Last but not least, my family to whom I owe everything. Thank to my sister Elisa in particular for having lent me her “engineering” eyes for the language revision.

Vallo Torinese, 14th July 2016 6

Table of Contents Extraterritorial Application of EU Competition Law PART 1: An Introduction to Extraterritoriality and Competition Law

Chapter 1 THE ISSUE OF EXTRATTERRITORIALITY UNDER PUBLIC INTERNATIONAL LAW 1.

Jurisdiction: Old and New Topic in International Law................................ 23 1.1Meanings of Jurisdiction: The Solution Suggested By The Council Of Europe Model Plan ....... 26 1.2

The Roots of Extraterritoriality: The Lotus Case................................................................. 29

1.3

Jurisdiction Under Customary International Law: States’ Reaction To Lotus As A Way To

Avoid Extraterritoriality .................................................................................................................... 34 1.4

The Territoriality Principle: Primary (And Anachronistic) Basis of Jurisdiction ............... 35

1.4.1 Historical Overview of The Territoriality Principle In Europe And In The US: Two Different Approaches .................................................................................................................... 37 1.4.2 Limits of the Territoriality Principle in Economic Globalization Challenges ..................... 40

2.

The Principles of Extraterritorial Jurisdiction .............................................. 44 2.1

The Nationality Principle: An Abandoned Primary Basis of Jurisdiction ........................... 44

2.2

The Protective Principle: The Broad and Narrow Category of State’s Vital Interests ....... 50

2.3The Universality Principle: The Most Exceptional Principle of Extraterritorial Jurisdiction .... 52

Table of Contents

Chapter 2 EXTRATERRITORALITY AND COMPETITION LAW: THE US EXPERIENCE 1.

THE FOUNDATIONS OF COMPETITION LAW ...................................... 57 1.1

The Historical Origin of Competition Law and Its Definition: A Free Market Economy ... 58

1.2

Economic Goals as Core Value of Competition Law ........................................................... 63

1.2.1 Towards Economic Efficiency To Reach a Perfect Competitive Market ............................ 63 1.2.2 The Concept of Welfare as Result of Efficiency ................................................................. 65 1.3

Other Goals of Competition Law: Economic Freedom as Pillar of Liberal Democracy and

the Debate around Happiness ........................................................................................................... 67 1.4

The Scholar Debate About Competition Law: The Chicago School and Ordoliberalism ... 70

1.4.1

The Chicago School: The Strong Belief in The Market .................................................. 70

1.4.2

Ordoliberalism in Europe: The Economic Constitution .................................................. 75

1.5

2.

Foundations of US antitrust law .......................................................................................... 77

THE LONG-ARM OF THE US ANTITRUST LAW: THE EFFECTS

DOCTRINE .............................................................................................................. 82 2.1

The American Banana Decision: Discussing the Territorial Nature of Law ....................... 84

2.2The Foundations of the Effects Doctrine in Alcoa: The Unilateral Assertion of Jurisdiction ..... 88 2.3

Hartford Fire: The Substantial Effects ................................................................................. 93

2.4

The FTAIA: Direct, Substantial and Reasonably Foreseeable Effects ................................ 97

2.5 The Second Step of the Jurisdictional Analysis: Limiting Extraterritorial Jurisdiction ........... 100 2.5.1 The Interest Balancing Test in Timberlane: Comity of Nations and the Rule of Reason .. 100 2.5.2 Empagran: The US as “World Antitrust Forum” .............................................................. 105

8

Table of Contents

PART 2: The Extraterritoriality of EU Competition Law

Chapter 3 AN OVERVIEW OF EU COMPETITION LAW 1.

THE FOUNDATIONS OF EU COMPETITION LAW ............................. 113 1.1 Competition as Core Value of the EEC: the New Formulation of Article 3 (3) TEU. Could This Have An Impact In The Future Extraterritorial Assertions of Jurisdiction? .................................. 117 1.2 The Creation of a Single Market: Competition Law as an Instrument. The Origin of the Competition Treaty Provisions ........................................................................................................ 120 1.3 Economic Freedom: The Influence of Ordoliberalism .............................................................. 124 1.4 Consumer Welfare: the Modernization of EU Competition Law .............................................. 128 1.4.1 Continental Can: The Long-term Effects on Consumers .................................................. 131 1.4.2 GlaxoSmithKline: Protecting The Final Consumer ............................................................ 134 1.5. The External Outcomes of Competition Law: EU Law Pursuing Non-Economic Objectives . 136 1.5.1 Industrial Policy: The “EU 2020” Strategy as Example of the Commission Adopting Its Own Policy Without Any Support of the ECJ In Its Rulings ..................................................... 139 1.5.2 Wouters case: Protecting National Interests ....................................................................... 142

2.THE TREATIES PROVISIONS: ARTICLES 101 AND 102 TFEU’S SILENCE ON EXTRATERRITORIALITY ...................................................... 147 2.1Article 101 TFEU: The Prohibition of Anticompetitive Agreements ......................................... 148 2.2 Article 102 TFEU: Abuse of Dominant Position ....................................................................... 153 2.3 The Effects on Trade Between Member States: The Jurisdictional Limit ................................. 156 2.4 The Enforcement of Articles 101 and 102 TFEU: Establishing an European Jurisdiction ...... 158

9

Table of Contents

Chapter 4 THE PRINCIPLES OF EXTRATERRITORIAL APPLICATION UNDER EU LAW 1. Dyestuff : The First Case on Extraterritoriality ............................................. 164 1.1 Advocate General Mayras’s Recommendation to Adopt An “Effects Doctrine”...................... 166 1.2 The ECJ Ruling Based on the Single Economic Entity Doctrine .............................................. 169

2. The Economic Entity Doctrine: The Attribution of the Subsidiary’s Acts to the Parent Company as a Method of Avoiding Jurisdictional Obstacles ......... 171 2.1 Continental Can: the Application of the Doctrine to Article 102 TFEU .................................. 173 2.2 The Subsequent Developments of the Economic Entity Doctrine in United Brands and Hoffmann-La Roche......................................................................................................................... 174 2.3 IBM v. Commission: the Court’s Silence on the Applicant’s Jurisdictional Claim Based on the Principles of Comity and Non-Intervention .................................................................................... 175

3. The Effects Doctrine Embraced By the Commission and Avoided By the ECJ: The European “Qualified Effects” Doctrine ....................................................... 178 3.1 The Effects Doctrine in the Commission Decision in Wood Pulp adopting an “US approach” ......................................................................................................................................................... 179 3.2 Advocate General Darmon Advocating For an Effects Doctrine in Wood Pulp: The Relationship With Public International Law ................................................................................... 181 3.2.1 The Effects Doctrine In The Light of International Law ................................................... 181 3.2.2 The Principles of United States Law .................................................................................. 183 3.2.3 The Need of a New Jurisdictional Criterion ...................................................................... 184 3.3 Aluminium Imports from Eastern Europe: The Reliance on Comity Considerations ............... 185

10

Table of Contents 3.4 The General Court’s Recognition of an Effects Doctrine as Alternative and Not Cumulative Principle of Extraterritorial Jurisdiction in Intel ............................................................................ 189

4. The Implementation Doctrine: The Irrelevance of Where the Anticompetitive Agreements Is Formed...................................................................... 192 4.1 The Foundations of the Implementation Doctrine in Wood Pulp.............................................. 192 4.2 The Commission Adopting the Implementation Doctrine in the Lysine cartel Decision .......... 197 4.3 The CFI Re-labelling the Qualified Effects as An Implementation in Microsoft ...................... 198

5. The Long-arm of the European Merger Regulation ...................................... 201 5.1 An Historical Overview of the EUMR Becoming Part of EU Competition Law ....................... 202 5.2 The European Jurisdiction under Regulation 139/2004: the EU Dimension of Concentrations ......................................................................................................................................................... 205 5.3 The Gencor case: Applying Both the Effects Doctrine and the Implementation Doctrine to EUMR .............................................................................................................................................. 211 5.3.1 The Territorial Scope of the EUMR .................................................................................. 213 5.3.2 Whether the Commission’s Decision Violated Public International Law ......................... 214 5.4 Boeing/McDonnel Douglas: establishing cooperation with the US Federal Trade Commission ......................................................................................................................................................... 216 5.5 Ge/Honeywell: The European and US Understanding on Extraterritoriality Gradually Approaching .................................................................................................................................... 219

11

Table of Contents

Chapter 5 CURRENT DEVELOPMENTS OF EU COMPETITION LAW: THE GOOGLE CASE. NEW HORIZONS IN THE EU EXTRATERRITORIALITY 1. Google Search Investigations: A Review of the Procedural Steps Taken By the Commission So Far ................................................................................................................................................... 228 2. The New Investigation on Google Android opened in April 2016 .............................................. 234 3. The EU Jurisdiction in Google Antitrust Cases under the European Principles of Extraterritoriality ............................................................................................................................ 237

Bibliography BOOKS ................................................................................................................... 249 CHAPTER IN BOOKS ......................................................................................... 252 ARTICLES ............................................................................................................. 254

12

Introduction

T

his work deals with the extraterritoriality of EU competition law. The process, which has leaded me to choose this topic, finds its roots and it is the result of my personal enrollment in several activities throughout the last

two years. The first time I found myself to hear about extraterritoriality was in the context of the Human Rights and Migration Law Clinic as member of the Strategic Litigation Group, organized by the University of Turin and the International University College (IUC). There, I was asked to draft an appeal to the European Court of Human Rights (“ECtHR”) regarding the omission by Italy and Malta to rescue a boat of migrants in distress in the high seas, which resulted in the death of 200 people in October 2013. The most challenging aspect we were called to research on was the extraterritorial application of the European Convention of Human Rights (“ECHR”), as the facts had occurred in international waters. More generally, the extraterritorial application of human rights treaty was at stake. I was extremely fascinated by the issue and thus, being very interested in EU law, on which I had always be sure to write a thesis about, I started wondering whether the same issue existed as far as EU law was concerned. What I noticed in the first steps of my research was that the same legal problems I had found relating the ECHR, existed also regarding the Charter of Fundamental Rights of the EU, being the “Human Rights Treaty” of the EU. However, the topic and legal scholars and practitioners did not seem for the Charter as concerned as for the extraterritorial application of the ECHR. I found myself more attracted by the extraterritorial application of EU competition law for several reasons. Firstly, since attending a summer school at London School of Economics (LSE) I discovered the most recent developments of EU competition law, one of which is the application of competition rules to the digital market, the Google case is an example of. Secondly, at that time I had already had the feeling that while the EU institutions, namely the Commission and the European Court of Justice (hereinafter the “ECJ”) has founded a European extraterritorial jurisdiction on several occasions, the topic had not attracted the interests of legal scholars. Therefore, I noticed this sort of indifference in my view due to the tendency European scholars have to consider the EU as a close system and to deal with 13

Introduction

competition law issues focusing on the trade between Member States within the meaning of Arts 101 and 102 TFEU. Consequently, the impact some decisions and rulings might have outside the EU borders and more importantly, the extraterritorial application of EU competition law is ignored by the majority of scholarship. 1 I have the personal belief the extraterritoriality of EU law reflects, on the one hand, the increasing role the EU has acquired due to economic power in the international sphere and, on the other hand, its desire of an expanded international identity. Therefore, this work will aim to study how the extraterritoriality has developed in Europe. It aims at finding in the Commission’s decisions and the ECJ’s rulings the principles of extraterritorial application of competition law under EU law, in the silence on extraterritoriality of the Treaties provisions of Arts 101, prohibiting anticompetitive agreements, and 102 TFEU, on the abuse of dominant position. In order to answer to this question, Chapter 1 will deal with extraterritoriality under public international law. Indeed, extraterritoriality finds its origins in international law, being the first area of law, which historically tried to provide an answer to extraterritorial assertions of jurisdiction by States. After exploring the topic of j...