ECJ clarifies admissibility of evidence and inability to pay (T-54/14 Goldfish and others)

The European Commission (‘Commission’) is entitled to take into account the content of taped recordings of phone talks among cartel participants and the accompanying written notes when the above mentioned recordings have been undertaken by a cartel member and also a party to the phone talks, even without the consent of the other party (or parties). The General Court (‘Court’) held that the recordings in question were lawfully obtained and used by the Commission given that the appellants had not been deprived of their right to a fair trial and/or defence and the allegations against the cartel participants were not solely based on the content of these recordings.

The Commission with a decision in November 2013 had imposed fines on a number of undertakings involved in collusive practices of a duration of nine years in the market for shrimps in the North Sea. The Commission had collected evidence mainly from the statements of the leniency applicant, a cartel member which escaped fine after having been granted immunity, the responses of cartel participants to the numerous requests for information respectively addressed by the Commission and the content of various documents seized in the course of dawn raids in both business and residential premises in Belgium, Denmark, Germany and the Netherlands. Among the seized documents the Commission found tapes with recordings of phone talks and relevant notes made by an employee of a cartel participant.

The Court stated that any type of evidence admissible under the procedural law of the relevant Member State in similar proceedings is in principle admissible at an EU level given that there is no legislation at EU level governing the concept of proof. Further the Court highlighted the fact that evaluation of evidence in EU competition law cases is regulated by EU law; hence, absent any uniform tendency established in the national legal systems, it is highly indispensable for the Court to achieve a uniform interpretation and implementation of the principle of unfettered judicial evaluation of evidence.
The Court cited that the use of such recordings does not violate the right of the appellants to a fair trial as enshrined in both Art. 6 ECHR and Art. 47 of the EU Charter of Fundamental Rights under the conditions that they have not been deprived of this right and that these recordings do not constitute the sole evidence.

The Court also considered the peculiarities of collusive practices and the grant difficulties encountered by the Commission and national competition authorities to discover such activities since they take place clandestinely, and ‘in most cases, the existence of an anti-competitive practice must be inferred from a number of coincidences and indicia, which, taken together, may constitute evidence’. It may be argued that the Court introduces an ‘adjusted’ standard of proof for EU competition law cases to be met which addresses the specific challenges encountered by competition authorities and judges when struggling to prove such collusive practices.

The above statements of the Court are of utmost importance for the practice of the Commission and national competition authorities when collecting evidence. It is highly likely that the Court may reach the opposite conclusion in future cases where one of these specific facts differs (e.g. if the recordings have taken place in France, where the national legislation is stricter than the respective Dutch provisions on non-consensual recordings of phone talks). This ruling enhances legal uncertainty for undertakings because no common pattern on legitimate use of recordings is established. Indeed, in case that national competition law applies, the ruling of the Court does not come into play. However, it is safe to say that the Commission is not entitled to undertake such recordings; they would be held automatically unlawful.

The Court also referred to the alleged inability of the appellants to pay the respective fine. Already a few months before the Court proceedings the appellants had been declared insolvent by A competent court in the Netherlands. The Court held that the Commission is not required, when determining the amount of the fine, to take into account the poor financial situation of the undertaking concerned because this ‘would grant an unjustified competitive advantage to undertakings least well adapted to the market conditions’. Echoing already settled case-law the Court cited that the mere fact a measure taken by the Commission leads to the insolvency or liquidation of a given undertaking is not prohibited as such by EU law; hence, even if the imposition of a fine leads to insolvency, this cannot justify the non-payment of a fine. According to the Court, liquidation of an undertaking does not amount to disappearance; by contrast, a reduction or non-payment of a fine may be accepted if the imposition of the fine would cause the assets of the undertakings involved to lose all their value.

As a general conclusion it shall be underlined that companies shall also avoid phone talks with competitors which may allegedly trigger the application of EU and/or national competition rules because any recording of such phone talks may be used as evidence from the public authorities to raise accusations of collusive practices. Further, companies will face almost insurmountable difficulties to argue that they are incapable of paying the fine imposed for collusive practices. Insolvency may be viewed as a necessary, though not an adequate condition for this argument to be accepted by the Commission.