Presumptions

Team 2011-2012

Legal Presumptions

The T-Mobile decision relies on several legal presumptions to reach its conclusions. To fully understand the reasoning behind the decision, it is important to examine the nature of presumptions and how they operated in the context of the Advocate General’s and Court’s reasoning. In particular, by examining this aspect of the decision, it will become more apparent how presumptions fill the gaps between the burden and the standard of proof in proving a violation of Article 101.

The Oxford English Dictionary defines “presumption” as “[t]he action of taking for granted or presuming something; assumption, expectation, supposition; an instance of this; a belief based on available evidence.”¹ In a legal context, the concept of presumption can be more complex, as “presumption” is often used as a term of art. In general, however, a legal presumption refers to a connection between known facts and the inference that arises from them, based on prior experience. This creates a circumstance where the existence of a fact independently raises the truth of an inference; essentially making the inference a fact.²

In looking at the presumptions at play in T-Mobile, it is also important to distinguish – and keep in mind the distinction — between the “burden of proof” and the “standard of proof.” In a legal context, the “standard of proof” establishes a threshold level of proof that a party’s evidence must meet for a finding in that party’s favor. Standard of proof refers, in essence, to quantum and quality of evidence that a party produces in support of a material proposition. By contrast, the “burden of proof” refers to the party that has the obligation to meet the standard of proof. Legal presumptions play an important role in the standard of proof. A famous example of a presumption in the United States legal system is the presumption of innocence in a criminal proceeding — in simple terms, the law presumes the defendant to be innocent until the prosecution offers enough proof to rebut the presumption of innocence. Presumptions exist in other areas of law as well, where they establish the standard of proof. For example, in corporate law, the business judgment rule is a form of presumption that applies to actions by corporate directors. This establishes a presumption that a corporation’s board acted in good faith, on an informed basis, and in the best interest of the corporation.³ To overcome this presumption a party challenging a corporation’s board of directors must meet its standard of proof through a showing of bad faith, violation of fiduciary duty, gross negligence, etc.⁴

In the T-Mobile decision, the CJEU applied several levels of presumptions in its analysis. The overarching presumption in the case is that when (a) in a meeting between competitors, where (b) any information that one competitor shares could decrease market uncertainty to some degree, there is (c) a presumption that the other competitors took account of this information in determining their market conduct. Inherent within this presumption are two subsidiary presumptions: First, that a party who was present at the meeting acted upon the information that was disclosed, which would constitute a concerted practice under Art. 101(1). This proposition was first put forth by the CJEU in its decision in Anic⁵ and was affirmed in the T-Mobile decision. Second, that the action taken by the party after the disclosure of information will have an effect on the market. In essence, any conduct that has any potential to produce any competitive effects is presumed to have those effects. Therefore, the CJEU, by presuming an effect, which may or may not have occurred, is arguably presuming that a defendant is guilty until proven innocent.

AG Kokott attempted to justify the applications of these presumptions through ideals of deterrence. AG Kokott highlighted the concept of deterrence with an analogy to the crime of driving while intoxicated. She explained that an intoxicated driver who is behind the wheel of a car is presumed to have the potential to injure another person and, therefore, even a drunk driver who avoids an accident is criminally liable. In the T-Mobile case, the conduct at issue is presumed to have the potential to injure the market; therefore, the CJEU held, the conduct violates Art. 101. However, there is a stark contrast between the actions of the defendants in the T-Mobile case and a drunk driver. There is an abundance of evidence that engaging in drunk driving will have the effect of causing bodily harm to either the driver or a third party, but a similar evidentiary foundation does not exist on which to base the presumption of anticompetitive effects in the T-Mobile case. The CJEU itself recognized this in saying that anti-competitive potential is all that is necessary for an Art. 101 violation and that there is no need to account for the actual effects of the conduct in question.⁶

AG Kokott attempted to balance the strong presumption of anti-competitive conduct by pointing to the ability of the defendant to avoid such legal inferences by publicly disavowing the conduct and not remaining on the market.⁷ Staying with AG Kokott’s analogy, disavowing the conduct that triggered a presumption of a concerted practice in violation of Article 101, and removing oneself from the market, is similar to someone giving the bartender his car keys to ensure that he does not drive after having too many drinks. The bar patron who disavows his car is clearly preventing injury, as would actively disavowing conduct that caused competitive injury to the market. However, AG Kokott’s analogy does not account for the party who does not know or reasonably foresee the conduct to be anti-competitive. In AG Kokott’s analogy, this person is someone who is drunk and leaves the bar with his keys but takes a cab home. The presumption of guilt of a party who engages in conversation, takes no action, and does not realize the hypothetical consequences of the subject matter discussed is arguably contrary to ideas of fair play and due process. Even more striking, the same presumption is applied to a party who is simply present and receives unsolicited information without reciprocating. Applying the presumption from T-Mobile in that context seems analogous to convicting the bar patron who took a cab home instead of drinking and driving.

The T-Mobile decision also mandates that presumptions articulated in the decision be applied by the Member State courts. This seems counter intuitive because, generally, evidentiary rules fall within the discretion of the Member State judicial systems. However, AG Kokott asserts that evidentiary issues are within the power of the CJEU to determine as issues of substantive law.⁸ Nevertheless, determining the levels of proof seems to be both an issue of statute and of procedure. In the United States, the Federal Rules of Evidence provides a statutory background as to what can be procedurally allowed as evidence. These statutory court rules would seem to be procedural in nature. In essence, this evidentiary finding would constitute a procedural finding within the boundaries of a statute. AG Kokott does point to certain instances where the CJEU can legislate the procedure of Member States,⁹ and seems to indicate that these circumstances are present in the T-Mobile case. Specifically, AG Kokott invokes the principle of effectiveness¹⁰ to establish the power of the CJEU to make a ruling on the procedural law of Member States. Because proof of a concerted practice usually entails linking multiple events, often coincidences, AG Kokott justifies presumptions by reference to effective enforcement of competition policy.

The T-Mobile decision’s use of presumptions to establish concerted practices reinforces a key element of EU competition policy. Such presumptions enable enforcement authorities to meet their standard of proof that market participants are acting in concert and to the detriment of the common market without having to adduce, for example, extensive evidence of actual conduct or market effects. At the same time, these presumptions impose a high standard of proof for their rebuttal and in reality place most, if not all, of the burden of proof upon the accused. Although it might not be the CJEU’s intention or stated view, the CJEU has essentially applied a guilty-until-proven-innocent standard to concerted practices by object under Art. 101(1).