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ALR ARTICLE--FOR YALE CONFERENCE 5/5/20095:36PM

131

THE MANY FACES OFADMINISTRATIVE ADJUDICATION IN THE

EUROPEAN UNION

61 Admin. L. Rev. __ (2009)

MICHAEL ASIMOW &LISL DUNLOP

TABLE OF CONTENTS

Introduction .....................................................................................................I. Adjudication in the European Community: General Themes ...............

A. EC Adjudicatory Procedures Are Heterogeneous .........................1. Differences Between the Sectors .............................................2. Reasons for Differences Between Sectors ...............................

B. Commission Procedures Are Inquisitorial Rather Than

Adversarial ....................................................................................C. Trends in Favor of Providing Procedural Protections ...................1. Overview..................................................................................2. Early Procedural Protections and UK Accession .....................3. Development of the Right of Defense Through

Michael Asimow is Professor of Law Emeritus, UCLA School of Law. LislDunlop is counsel with Shearman & Sterling, New York. This article resulted from a reportwritten by the authors as part of the European Union Administrative Law Project of theSection on Administrative Law and Regulatory Practice of the American Bar Association.The full report is incorporated in Administrative Law of the European Union (2008). Wewish to thank George Bermann, who spearheaded the EU project and did a monumentalamount of work in bringing it to a successful conclusion. In addition, we appreciate theresearch assistance of Gabe Grossman and the generous counsel and editorial assistance of

George Bermann, Eleanor Fox, Charles Koch, Herwig Hoffman, Nancy Landreville, XavierLewis, and Jeff Lubbers, as well as the many lawyers and EU officials who read andcommented on this manuscript. In particular, we gratefully acknowledge the hard work ofour sectoral reporters, all lawyers in Brussels: Ian Forrester, Assimakis Komninos, UrsulaSchliessner, Peter Bogaert, Simone Heitz, Till Muller-Ibold, Antoine Winkler, Rosane Stasde Richelle, Bruno Vandermeulen, Jacques Bourgeois, and Natalie McNelis.


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132 ADMINISTRATIVELAWREVIEW [61:SE

Competition Cases: Transocean andHoffman-LaRoche .......................................................................................4. Subsequent Competition CasesThe Right to Inspect

the File .....................................................................................5. Expansion of the Right of Defense to Other Sectors ...............

a. Trade Remedies ................................................................. b. State Aids ..........................................................................c. Customs Duties .................................................................d. Other Regulatory Functions ..............................................

6. Development of Specific Procedural Rights ............................a. AttorneyClient Privilege ................................................. b. Confidentiality ...................................................................c. Decision Within a Reasonable Time .................................

d. Statement of Reasons ........................................................7. Procedural Protections in Application Cases ...........................

II. Summary of Administrative Procedure in the Six Sectors ...................A. Competition .............................................................................B. Trade Remedies .......................................................................C. Trademarks ..............................................................................D. Food Safety ..............................................................................E. State Aids .................................................................................F. Pharmaceutical Licensing ........................................................

Conclusion .......................................................................................................

INTRODUCTION

Despite enormous variation in the details, federal and stateadministrative adjudication in the United States fits comfortably into aprocedural template. Whether the adjudication is formal or informal,and whether or not an Administrative Procedure Act (APA) is applicable,we would expect to see some sort of adversarial [no comma] trial-typehearing employed to resolve disputes between private parties andgovernment agencies. Private parties have a fair chance to make their caseand confront the evidence against them. The hearing will be presided over by a reasonably impartial administrative judge. Agency prosecutors andinvestigators cannot be the decisionmakers or furnish ex parte advice to thedecisionmakers. The heads of the agencies make the final agency decision,which is broadly reviewable by courts. A similar adversarial templateexists in the United Kingdom. In the UK , administrative adjudication isusually conducted by a tribunal that is organizationally independent of thegovernment agency that is party to the case.

Although the European Union (EU) engages in a huge array ofadministrative adjudication, there is no procedural template like those in


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2009] THEMANYFACES OFADMINISTRATIVEADJUDICATION 133

the United States or United Kingdom. Instead, adjudicatory proceedings ineach regulatory sector are different from the other sectors. The procedurefor investigation and hearing is inquisitorial rather than adversarial. Overtime, EU courts have imposed some due process norms on this structure,although the development and application of such norms varies from sectorto sector. This paper introduces the reader to the world of administrativeadjudication in the EU.

This article is intended as a practical and descriptiverather than atheoretical accountof EU adjudicatory administrative procedure. It focuseson six regulatory sectors: competition, trade regulation, trademarks, foodsafety, pharmaceutical licensing, and state aids. These six sectors accountfor the great majority of EU adjudication. This paper is written from the

perspective of American observers and uses U.S. administrative proceduresas its frame of reference, drawing frequent comparisons between theprocesses observed in the EU and those that exist in the U.S. and UK.

I. ADJUDICATION IN THE EUROPEAN COMMUNITY:GENERAL THEMES

To set the stage: This paper concerns adjudicatory decisions taken at thelevel of the European Commission (EC or Commission), not those taken atthe member-state level. Most regulatory schemes involving privatecompanies are administered by Member States (often pursuant tolegislation adopted at the Community level), but this paper does not

concern itself with member state adjudication. The article considersadjudicatory procedures at the administrative level, not issues relating to judicial review by Community courts. The emphasis is on procedural protections available to private parties in connection with theseproceedings.

For purposes of this paper, the term Commission includes not only theEC itself, but also European agencies empowered to play key roles inmaking individualized decisions.1 These agencies include the Office ofHarmonization in the Internal Market (OHIM), which administers EUtrademark law; the European Medicines Agency (EMEA) and itsCommittee for Medicinal Products for Human Use (CHMP), which play

1. For discussion of EU independent agencies, see Wolfgang Wei, Agencies vs.Networks: From Divide to Convergence in the Administrative Governance in the EU, 61ADMIN.L.REV. __ (Special Edition) (2009); Jens-Peter Schneider, A Common Framework

for EU Agencies and the Meroni Doctrine, 61 ADMIN.L.REV. __ (Special Edition) (2009);Alexandra Gatto, Governance in the European Union: A Legal Perspective, 12 COLUM.J.EUR. L.487, 50508 (2006); Damien Geradin, The Development of European Regulatory

Agencies: What the EU Should Learn From American Experience, 11 COLUM.J.EUR.L.1(2005).


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key advisory roles in pharmaceutical licensing; and the European FoodSafety Authority (EFSA), which carries out risk analysis functions in foodsafety regulation.

The article concerns decisions of specific applicability (i.e.,adjudication), not decisions of general applicability (i.e., rulemaking),although in some cases the ECs final decision takes the form of a rulerather than an individualized decision. Adjudicatory decisions involve theapplication of general norms to particular facts and impose legalconsequences (such as penalties, denials or grants of permission or alicense, changes in legal status, or orders to alter conduct) on parties(usually private parties but sometimes Member States). The paper refers,where applicable, to the duty of good administration provided for in the

Charter of Fundamental Rights,2 which was incorporated in the recentTreaty of Lisbon.3 If ratified, the Lisbon Treaty may broaden theprocedural rights discussed in this paper.

A. EC Adjudicatory Procedures Are Heterogeneous

1. Differences Between the Sectors

A striking aspect of the six sectors we studied was the heterogeneity ofprocess. Each set of procedures has its own foundation in the Treaty of theEuropean Community or in statutes, each is administered by a separatebureaucratic structure, each has its own procedural regulations, each has its

own historical development, and each has a different relationship withdecisionmaking processes in the Member States. Nevertheless, as pointed

2. Charter of Fundamental Rights of the European Union, Art. 41(2) (2000) providesfor a right to good administration. Good administration means that every person has aright to have his or her affairs handled impartially, fairly, and within a reasonable time;every person has a right to be heard before any measure which would adversely affect himor her is taken; every person has a right of access to his or her file, while respecting thelegitimate interests of confidentiality and professional and business secrecy; and theadministration is obligated to give reasons for its decision. See PAUL CRAIG, EUADMINISTRATIVE LAW 38587 (2006); Klara Kaska, Toward Administrative Human Rightsin the EU: Impact of the Charter of Fundamental Rights, 10EUR.L.J. 296 (2004); Mario P.Chiti, Forms of European Administrative Action, 68 LAW & CONTEMP. PROBS. 37, 4344(2004).

3. See Treaty of Lisbon, arts. 1(8) & 6(1), Dec. 17, 2007, available athttp://europa.eu/lisbon_treaty/index_en.htm. If ratified, the Treaty of Lisbon will renamethe Treaty of the European Community (TEC) as the Treaty on the Functioning of theEuropean Union (TFEU). While the right to good administration already exists as ageneral principle of Community law, see HANNS PETER NEHL, PRINCIPLES OFADMINISTRATIVE PROCEDURE IN ECLAW 1339 (1999), the incorporation of the Charter intothe Treaty might extend administrative hearing rights to certain sectors in which they are notyet fully recognized.


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out in Part I.C, decisions of the European courts have prompted a certainamount of procedural convergence between the sectors.

This subsection describes the wide differences between the adjudicatory procedures in the six administrative sectors. Part II of this paper brieflysummarizes adjudicatory procedures in those sectors.4

EU adjudicatory procedures vary depending on whether they aretriggered by an initial application for a benefit (i.e., merger applications,trademark applications, food licensing, pharmaceutical licensing, state aids)or whether they are triggered by administrative action that could lead to asanction or deprivation of an existing status (i.e., competition, traderemedies, trademark oppositions, changed circumstances or sanctions in pharmaceutical cases). In two areas, state aids and food licensing, the

decisional process seems more political rather than adjudicatory in nature.Each sector follows its own investigative procedure which enables the

relevant directorate of the Commission to inform itself about the facts andcircumstances of a dispute.5 In certain competition cases, the DirectorateGeneral for Competition (DG Comp) conducts an intrusive investigationthat can include unannounced site visits and inspections of nonbusiness premises including residences.6 In other cases, such as trade remedies,food safety, state aids, and pharmaceutical licensing, the EC or independentagencies such as EFSA conduct an active investigation based primarilyupon documents furnished by the parties or by experts in the field. In thetrademark area, OHIM conducts an initial trademark search and thereafterrelies on complaining parties or Member States to provide the necessarydata. In the area of state aids, the ECs investigation consists primarily ofrequesting information from Member States.

Rights of access to the ECs file also vary widely. In some areas, suchas competition and trademarks, the parties have broad access to alldocuments in the ECs file, other than material protected by confidentiality

4. See AMERICAN BAR ASSOC. SECTION OF ADMINISTRATIVE LAW AND REGULATORYPRACTICE,ADMINISTRATIVE LAW OF THE EUROPEAN UNION,ADJUDICATION VOLUME(2008)(providing a more detailed summary of the procedures in the six sectors). The full-lengthversions of the reports prepared by our sectoral reporters are available on the website of theABA Section on Administrative Law and Regulatory Practice, available athttp://www.abanet.org/adminlaw/eu/home.html#Sector.

5. Generally in American administrative law, agencies have broad investigatorypowers to subpoena documents. While subpoenas must be judicially enforced, the agencyneed only show that the documents in question are relevant to a subject the agency isauthorized to investigate. See AM.BARASSOC.,SECTION OF ADMIN.LAW AND REGULATORYPRACTICE, AGUIDE TO FEDERAL AGENCY ADJUDICATION 4757 (Michael Asimow ed. 2003)[hereinafter ABAGUIDE].

6. In American administrative law, an agency generally must secure a warrant toinspect business premises, but the requirements for obtaining such warrants are much lessdemanding than in criminal cases). Marshall v. Barlows Inc., 436 U.S. 307 (1978).


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(such as the identity of informers or business secrets) or internal ECdocuments.7 However, nonparties (such as complainants) have morelimited access to files. In other areas, the parties have access only to non-confidential versions of the documents in the files (trade remedies). Instate aids, neither Member States nor private parties have access to theECs file.

Another significant area of variation relates to oral hearings. Hearingsinvolving oral testimony are routinely allowed upon request in some areas(competition, trade remedies, pharmaceutical licensing), occur rarely insome areas (trademarks), and are never held in other areas (food safety,state aids). In many cases, the parties are entitled only to a written ratherthan an oral exchange. In state aid cases, interested parties are entitled to

submit written comments (to which Member States can reply) and toengage in informal meetings with the staff, but no oral hearing is provided.In contrast, oral adjudicatory hearings are the norm in U.S. administrativelaw.8

In EU adjudication, oral hearings are usually conducted by the team ofcase handlers who are engaged in investigating the matter.9 The casehandlers do not write proposed decisions after conducting the hearings.However, in competition cases, oral hearings are conducted by hearingofficers who specialize in conducting hearings (and dealing with data

7. In American administrative law, neither the Administrative Procedure Act (APA)nor due process requires agencies to provide discovery of documents in their files becausethe discovery rules applicable in civil cases do not apply to administrative litigation. SeeABA GUIDE, supra note 5, 4.03. However, many agencies have adopted rules permitting

parties to discover material in the agencys files. Alternatively, such information isavailable on demand to anyone (including third parties) under the Freedom of InformationAct (FOIA). However, under FOIA exceptions, an agency is not required to disclose

predecisional agency memoranda. 5 U.S.C. 552(b)(5) (2000); NLRB v. Sears, Roebuck &Co., 421 U.S. 132 (1975). In addition, under FOIA, an agency is not required to disclosevarious documents compiled for law enforcement purposes, such as those that mightdisclose the identity of a confidential source. 5 U.S.C. 552(b)(7) (2000).

8. In the United States, administrative adjudication normally entails oral presentationof testimony by witnesses followed by cross-examination. 5 U.S.C. 556(d) provides: A

party is entitled to present his case or defense by oral or documentary evidence, to submitrebuttal evidence, and to conduct such cross-examination as may be required for a full andtrue disclosure of the facts. Nevertheless, relying on the last clause of the provision justquoted, the courts allow agencies to dispense with cross-examination when credibility is notat stake, such as in cases involving only differences of expert testimony. See ABA GUIDE,supra note 5, 5.08. An oral hearing can be denied entirely if there are no disputed issuesof fact. See, e.g., Weinberger v. Hynson, Westcott & Dunning, Inc., 412 U.S. 609 (1973)(upholding summary judgment procedure at Food & Drug Administration). An oral hearingcan also be denied in cases involving claims for money or benefits or initial licensing whena party will not be prejudiced thereby. 5 U.S.C. 556(d).

9. In U.S. practice, adjudicatory hearings are generally subject to separation offunctions, meaning that the hearing officer has not played any adversarial role in respect tothe pending case. For further discussion, see infra text accompanying notes 2627.


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requests and confidentiality issues), but do not conduct investigations.10

Hearing officers in competition cases are responsible to the Commission,not to DG Comp. They file a report on whether the procedural rules have been observed. The report may, but need not, contain substantiveobservations on the Commissions internal draft decision. DirectorateGeneral for Trade (DG Trade) has also introduced independent hearingofficers in trade remedies cases, although the precise ground rules have notyet been formalized.12

The ultimate Commission decision generally takes the form of anindividualized decision addressed to the parties. However, in some cases,such as trade remedies and most food safety cases, the decision may takethe form of a broadly applicable rule.13 An individualized decision must

state reasons that are sufficient to allow for judicial review and mustcontain discussion of both law and facts, but the necessary detail of thestatement of reasons varies with the circumstances of the case.14

Generally there is no opportunity for administrative reconsideration.However, in trade remedy cases, parties may apply for an interim review ofthe definitive measures imposed by the Commission after one year. Intrademark cases, OHIM provides a board of appeals to reconsider theagencys initial decisions.

The relationship between decisions at the Commission level anddecisions at the Member State level varies as between the six sectors. Inthe competition area, enforcement is divided between the Commission andcompetition authorities in the Member States, although the Member Statesmust follow the law established at the EU level. In pharmaceuticallicensing, under the centralized process, licensing occurs at theCommission level, but under the decentralized process it occurs at the

10. The post of hearing officer was first established in 1982 in order to enhance theimpartiality and objectivity of competition proceedings before the Commission. Their usewas formalized by the Commission decision of May 23, 2001. O.J. (L 162) 21. Seegenerally, VAN BAEL &BELLIS,COMPETITION LAW OF THE EUROPEAN COMMUNITY,10.15(4th ed. 2005).

12. See Natalie McNelis, A Hearing Officer for Trade, 3 GLOBALTRADE & CUSTOMS J. 77 (2008); See also European Commission, External TradeTradeIssues, http://ec.europa.eu/trade/issues/respectrules/ho/index_en.htm (last visited Apr. 5,2009) (providing a description of the role and mission of a Hearing Officer). See sourcescited infra note 92 for further discussion of hearing officers in trade remedy cases.

13. In American practice, adjudicatory disputes are resolved by a decisional documentproduced by the agency head or heads. The decision is individualized and addressed to theparties. 5 U.S.C. 556(b).

14. In American practice, the APA requires a statement of findings of fact, conclusionsof law, and reasons for discretionary decisions. See id. 557(c); ABA GUIDE, supra note 5,

6.021. Post-hoc rationalizations (reasons supplied by agency counsel at the judicialreview stage) are not allowed). Due process also requires a statement of reasons eventhough the APA does not apply. Id. 6.021 n.7.


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Member State level. In trademarks, licensing of community trademarksoccurs at the Commission level but Member States license trademarks thatare enforceable within that state. A large amount of trademark litigationoccurs in courts of the Member States. In the case of food safety, mostregulation is at the Commission level. In the case of novel foods, however,applications are lodged in a Member State which performs the initialassessment, while the final decision occurs at the Commission level. In theareas of trade remedies and state aids, decisionmaking is lodgedexclusively at the Commission level.

2. Reasons for Differences Between Sectors

There are several reasons why adjudicatory procedures have developedin such a diverse manner. These include differences in the history of directCommission involvement in the particular sector, the involvement ofMember States in the area, the different types of parties affected by the procedures, and the development of separate agencies outside theCommission.

First, administrative procedures evolved in each of the sectorsindependently and in tandem with the development of the EUs regulatoryrole. The Commission began to function in each of the areas studied atdifferent times, and procedures developed as necessary to address thegrowing scope of Commission involvement. Over time, guided by practical experience and by decisions of the European courts, the

Commission honed and expanded its adjudicatory procedures.Competition law provides a clear case in point. Competition was one of

the earliest fields in which the Commission enjoyed adjudicatorycompetence. Its authority dates back to 1962, when it was granted broadpowers to enforce the competition rules contained in the 1957 Treaty ofRome, the forerunner of the current EC Treaty.15 The adjudicatoryprocedures developed in competition cases were applied to merger caseswhen Commission gained power to review and investigate mergertransactions in 1990.16 By contrast, in the area of pharmaceutical licensing,a centralized procedure directly involving the Commission was notintroduced until 1995. Similarly, the European Food Safety Authority wasnot established until 2002.17

15. Council Regulation 17/62 of February 6, 1962 (first regulation implementingArticles 85 and 86 of the Treaty). 1962 O.J. (L 13) 21.2.

16. Council Regulation (EEC) No. 4064/89 of December 21, 1989, Corrigendum, 1990O.J. (L. 257), on the control of concentrations between undertakings. 1989 O.J. (L 395)30.12.

17. Regulation EC No. 178/2002. See Alberto Alemanno, The Evolution of European


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Second, in some areas the Commission shares the field with regulatorybodies of the Member States, while in other areas the Commission has solecompetence. For example, the Commission co-administers customs caseswith member state customs authorities.18 The varying involvement ofMember States in the different areas studied is one possible cause ofvariations in procedure.

Third, adjudicatory procedures must address the needs of the differenttypes of entities involved. For example, in the state aid field, the parties tothe proceeding are the Commission and the Member State granting the aid.Beneficiaries of the aid or their competitors are not parties. Clearly, issuesrelating to access and procedural fairness in cases where Member States areparties are quite different from those in which private parties oppose the

Commission. Further, the involvement of a Member State injects a political element into the process. In trade cases, the Commissioninvestigates an entire industry; the remedies are often duties or restrictionsimposed on imports from some foreign country or countries. In such cases,certain procedural rights, such as the right to inspect the file, may beextended to any person with some interest in the industrymanufacturers,exporters and importers, industry associations, users and consumerorganizations. By contrast, in other areas such as trademarks and pharmaceutical licensing, Commission decisions typically only affect private parties or corporations and the procedural protections are moretailored to private parties.

Fourth, procedures may have developed differently because of theestablishment of specialist bodies with a defined range of functions, such asthe OHIM, EFSA, EMEA, and CHMP.19 Since such bodies are speciallyconstituted and are not part of the Commission, they have considerablefreedom to establish administrative procedures within their specificmandates. The OHIM, for example, is the only institution we studied thatprovides for an internal appeal process before parties seek judicial review.In addition, the OHIM imposes a form of separation of functions, withdifferent officials working at different stages of the proceedings.20 At theother end of the spectrum, the EFSA has very limited procedural

Food Regulation: Why the European Food Safety Authority Is Not an EU-Style FDA , inWHATS THE BEEF? THE CONTESTED GOVERNANCE OF EUROPEAN FOOD SAFETY 237(Christopher Ansell & David Vogel eds., 2006) [hereinafter Alemanno, EU-Style FDA];Alberto Alemanno, The European Food Safety Authority at Five , 1 EUR.FOOD &FEED L.REV. 2 (2008) [hereinafter Alemanno,European Food Safety].

18. For discussion of customs remission and repayment cases, see infra textaccompanying note 65.

19. Seesupra note 1 and accompanying text.20. Seeinfra Part II.C.


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protections for private parties, since it is primarily a scientific bodyengaged in risk assessment and not responsible for the ultimate riskmanagement decision. In addition, EU food safety regulation is a hybrid ofadjudicatory and rulemaking methodologies and private protections are lesssignificant in rulemaking than in adjudication. Similarly, the EMEAperceives its role as an independent and scientific (as opposed to political)body. Interestingly, the EMEA and CHMP have developed procedures forparty involvement in their review of pharmaceutical licensing applicationsand imposition of penalties, even though these bodies serve only anadvisory function and have no decisionmaking authority of their own.

In light of the above, it is questionable whether harmonization of processes across the various sectors is a realistic or desirable goal. It

certainly has not been a focus of Commission attention, possibly in part dueto resource constraints. There are many demands on Commissionresources, in particular due to the active involvement of Member States inthe implementation of EU law and the need to devote resources totranslation. Certain aspects of adjudicatory procedure can require theexpenditure of significant resources, such as the need for extensivehearings in cases where many parties have an interest,21 and for this reasonmay be disfavored in some areas. Further, substantial development andconvergence of decisionmaking processes has taken place at the DG leveland through common-law-type development of administrative lawprinciples through the European Court of Justice (ECJ) and the EuropeanCourt of First Instance (CFI).22 For these reasons, there does not appear tobe any impetus within the Commission or from the wider legal communityfor additional procedural harmonization.

B. Commission Procedures Are Inquisitorial Rather Than Adversarial

In the U.S. model of agency decisionmaking, the investigative stage andthe adjudicative stage are separate. First, the agency staff conducts aninvestigation and decides to issue a complaint (in the case of violations oflaw) or to reject an application (in cases that have been triggered by anapplication for a license or benefit). Second, the target of the complaint orthe rejected applicant is furnished a hearing before an impartial andpreviously uninvolved hearing officer,24 followed by a final decision made

21. In one antidumping investigation in the footwear industry, Commission staff in DGTrade gave hearings to approximately seventy interested parties.

22. See discussion infra in Part I.C., infra.24. In cases covered by the APA, the trial is conducted by an administrative law judge

(ALJ). An ALJ works for the agency for which the ALJ decides cases, but is hiredaccording to a strictly defined procedure administered by the Office of Personnel


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by the agency head or heads.26

Most American administrative hearings are adversarial in nature and are

similar to a judicial civil trial.27 Normally, parties present their casesthrough the introduction of oral and written testimony and are entitled tocross-examine opposing witnesses. The decisionmaker may consider onlyevidence that was presented at the hearing (and material that is officiallynoticed). The decision (both at the stage of initial hearing and at theagency-head level) contains a statement of findings and reasons. Judicialreview on the administrative record is almost always available, but thereviewing courts powers are constrained. In the UK, a tribunal (themembers of which were not previously involved in the case) provides thehearing at which a party can challenge an administrative determination.

The tribunal is independent of the agency that made the adverse decision;judicial review is on the record and judicial power is constrained.28

The U.S. model generally provides forseparation of functions, meaningthat persons who have functioned in adversarial roles (prosecutors,investigators, or advocates) are not permitted to serve as decisionmakers inthe same case (either hearing officer or agency head).29 In addition, neither

Management. The independence of ALJs is protected by a variety of statutory provisions.For example, ALJs engage exclusively in hearing cases and never conduct investigations.ALJs cannot receive ex parte communications from other agency staff members with respectto facts in issue. ALJs work for the agencies for which they decide cases but cannot besupervised by staff members who engage in adversary functions. Agencies are not allowedto conduct evaluations of their ALJs. See ABA GUIDE, supra note 5, at 10.05, 10.10.Many agencies to which the APAs adjudication provisions do not apply also employ a largestaff of hearing officers who perform no tasks other than hearing cases. In other non-APAagencies that provide fewer hearings, any staff member can be designated as the hearingofficer, but customarily that person will not have participated in the investigation of the caseunder consideration. .

26. See 5 U.S.C. 557(b); ABA GUIDE, supra note 5, 6.03.27. Some large systems of U.S. administrative adjudication do not fit the adversary

model. In adjudications conducted by the Social Security Administration (SSA), the SSA isnot represented by counsel. The ALJ is responsible for representing the agency,safeguarding the interests of the applicant (especially if the latter is not represented bycounsel), and then deciding the case. This inquisitorial approach was approved by the U.S.Supreme Court inRichardson v. Perales, 402 U.S. 389 (1971). Similarly, the Court uphelda provision prohibiting the payment of more than ten dollars to an attorney for a claimant forveterans benefits, stating that Congress was not required to follow adversarial procedures,at least in cases of benefit determinations. See Walters v. Natl Assn of RadiationSurvivors, 473 U.S. 305 (1984). In addition, administrative adjudication is often much lessadversarial than civil or criminal litigation. For example, hearing officers are not supposedto serve as passive umpires. Instead, hearing officers are expected to play an active role instructuring issues and questioning witnesses or assisting unrepresented parties, whereas suchactions are quite problematic for trial judges.

28. See H.W.R.WADE &C.F.FORSYTH, ADMINISTRATIVELAW ch. 23 (9th ed. 2004).29. 5 U.S.C. 554(d). The APA does not require separation of functions in initial

licensing. Id. 554(d)(A). In practice, however, agencies frequently separate functions ininitial licensing. Many federal adjudicatory schemes are not covered by the APA but the


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outsiders nor adversary staff members are permitted to engage in ex partecommunications with the hearing officer or the agency heads. Separationof functions is not complete since, in most cases, hearing officers areemployees of the agency that has conducted the investigation.30 However,hearing officers are organizationally separated from adversaries andgenerally have considerable de facto independence.

EU administrative adjudication does not follow this adversarial model,31nor does it follow the administrative procedures employed in most civil lawcountries. Some European countries provide for relatively little formalprocedure at the administrative level, but specialized administrative courtsfurnish in-depth review of the administrative action.32

Instead the model resembles that of the inquisitorial criminal justice

system used in civil law countries.33 Inquisitorial criminal law systems

general rules of separation of functions are observed in practice in non-APA adjudication.Due process may require separation of functions in some instances, but the case law issketchy. See ABA GUIDE, supra note 5, 7.061 n.76.

30. In some situations (involving industrial injuries and mine safety, among others)federal law provides for two separate agencies, one engaged in rulemaking, investigationand prosecution, another engaged in investigation. Scholars who have studied theseindependent adjudicating agencies have not assessed them positively. See Daniel J. Gifford,

Adjudication in Independent Administrative Tribunals: The Role of an Alternative AgencyStructure, 66 NOTRE DAME L.REV.965 (1991).

31. See Craig, supra note 2, at 37072. Craig observes that the European courts havetersely dismissed claims by litigants that the lack of an independent administrative tribunalin EU regulatory cases violates Article 6(1) of the European Convention on Human Rights,which mandates that in the determination of civil rights or obligations, everyone is entitledto a fair and public hearing within a reasonable time by an independent and impartialtribunal established by law. European Convention on Human Rights, art. 6(1), Nov. 4,1950. Craig speculates that the fairly intensive judicial review provided by CFI should beviewed as the independent and impartial tribunal referred to by Article 6(1), especially inconjunction with the array of administrative procedural rights discussed in Part I.C below.

32. Francesca Bignami, Creating European Rights: National Values and SupranationalInterests, 11 COLUM. J. EUR. L. 241, 260, 26669 (2005). The administrative courtsgenerally receive new evidence and entertain new objections to the administrative decision.

Nevertheless, the administrative courts tend to be quite deferential to the administration. Incontrast, administrative hearings at the agency level are required under Germanysadministrative procedure law. See JRGEN SCHWARZE, EUROPEAN ADMINISTRATIVE LAW125569 (1992).

33. See Mirjan R. Damaka, THE FACES OF JUSTICE AND STATE AUTHORITY (1986), andMximo Langer, From Legal Transplants to Legal Translations: The Globalization of Plea

Bargaining and the Americanization Thesis in Criminal Procedure, 45 HARV. INTL L.J.1(2004), for discussions of inquisitorial systems and a comparison to adversarial systems.The term inquisitorial carries unfortunate connotations, suggesting to some readers aconnection with the Spanish Inquisition. Of course, the inquisitorial approach utilized bycivil law countries has nothing in common with the Spanish Inquisition. It might be betterto employ some term like inquiry or investigational rather than inquisitorial. SeeHenry Friendly, Some Kind of Hearing, 123 U.PENN.L.REV. 1267, 1290 (1975) Friendlywrote: Whoever baptized the continental system as inquisitorial did a disservice toAmerican legal thought. Call it investigatory and the pejorative connotation fades away.

Nevertheless, this paper sticks with the term inquisitorial since it is in common use.


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vary greatly, but, generally speaking, a magistrate judge supervises theinvestigation by the police and prosecutors and assembles a dossier. Themagistrate can dismiss the case at any time. If a criminal case is notdismissed, a trial ultimately takes place, usually before a different judge.The trial is based primarily on the written materials contained in thedossier. There may be oral testimony by witnesses and by the accused, butthe judge controls the proceedings. Broadly speaking, a criminal trialunder most civil law systems is viewed as the end point of theinvestigation, not as an event that is separated from the investigation.

EU administrative procedure in the sectors we examined resembles theinquisitorial criminal law model. The specialized staff members of therelevant directorate of the Commission conduct an investigation of a

proposed enforcement action or of an application for a benefit. Theinvestigation concludes with a notice to the target or applicant setting forththe Commissions tentative findings.

At some point in the investigation, a hearing may take place, but thenature of that hearing is quite different from those that typically occur inthe United States or the United Kingdom. The same case handlers whoconducted the investigation also conduct the hearing. The hearing isviewed as an opportunity for the investigated party to state its side of thecase or clarify the circumstances of the dispute. Parties do not engage incross-examination or confrontation of adverse witnesses. In competitionand trade regulation cases, however, the hearing is conducted by anindependent officer who specializes in presiding at hearings and who hasnot been involved in the investigation. The hearing officers job is to makesure the targets procedural rights are respected, not to make findings onthe substantive issues in the case.34 Whether the hearing is provided bycase handlers or an independent hearing officer, the hearing does not resultin a proposed decision.

An exception to the generally inquisitorial mode of decisionmakingoccurs in trademark opposition cases; here the responsible agency (OHIM)functions as an impartial arbiter in a dispute between an applicant for aCommunity trademark and the holder of an existing mark that alleges thenew mark would be infringing.35 Most of the investigation in these cases isleft to the parties and the Office resolves the dispute based on the

submissions of the opposing parties.

34. Seesupra text accompanying notes 1011.35. Trademark cases also include a form of separation of functions in that officials who

participated in one phase of the trademark process (such as an opposition) cannot be thesame officials who worked on the earlier application. Members of the Board of Appealscannot have participated in any prior proceedings.


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C. Trends in Favor of Providing Procedural Protections

1. Overview

While the adjudicatory procedures of the EU remain inquisitorial innature, an important evolutionary process has occurred over the last threedecades. During that period, there has been a steady accretion ofprocedural protections for private litigants and Member States engaged inadjudicatory disputes with EC regulators. These rights relate toinvestigations, access to Commission files, adequate notice, provision of ahearing (oral or written), decision within a reasonable time, and a statementof reasons. These rights are derived from several different sources: (1)

provisions in the Treaty; (2) regulations applicable to specific sectors; and(3) a body of ECJ and CFI case law that has catalyzed the process ofprocedural norm creation.36 The case law seems similar to the case-by-caseevolution of the standards of U.S. procedural due process37 and of UKnatural justice.38 As a result, there has been a convergence betweenprocedural norms governing adjudication in the EU on the one hand andthe United States and UK on the other.39

We believe that this process of convergence will likely stop short ofadoption of the full panoply of rights presented in the adjudicatory systemof the United States. The expansion of the rights of defense of privateparties in Community adjudication has both benefits and costs. The costsof providing oral hearings, for example, in complex cases such as

competition and trade remedies can be quite substantial, since there may bemany parties who wish to be heard and highly complex economic issues tobe resolved. Further, the existence of multiple Community languages addscost and complexity to many aspects of administrative proceedings. TheCommission probably lacks the financial and human resources needed toapply detailed due process rights in all sectors of its operations.

36. See CRAIG, supra note 2, chs. 1011; Joanne Scott & Susan Sturm, Courts asCatalysts: Re-Thinking the Judicial Role in New Governance, 13 COLUM. J. EUR. L. 565(2007); Jrgen Schwarze, Enlargement, the European Constitution, and Administrative

Law, 53 INTL & COMP. L.Q. 969, 96976 (2004); Koen Lenaerts & Jan Vanhamme,Procedural Rights of Private Parties in the Community Administrative Process , 34COMMON MARKET L.REV.531 (1997).

37. See ABA GUIDE, supra note 5, ch. 2.38. See WADE &FORSYTH, supra note 25, ch. 1214.39. In the event that the Treaty of Lisbon is ratified, the process of convergence

between the U.S. and EU systems of adjudication may be accelerated because the Treatyincorporates the duty of good administrative embodied in the Charter of FundamentalRights. Seesupra text accompanying notes 23.


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2. Early Procedural Protections and UK Accession

The right of defense for parties who are targets of administrativeaction has long been recognized in the law of Member States, particularlyin France, and was recognized in Community law as well. However, inearlier years, the rights of defense were rather sketchy by the standards ofU.S. or UK law. For example, in competition cases, the target companysright of defense included notification of the Commissions objections, asummary of the contents of the Commissions file, an opportunity to makeknown its views and provide exculpatory evidence, and a right to astatement of reasons sufficient for the parties and reviewing courts tounderstand whether a decision was lawful.40

These rights have evolved over time, largely through judicialconsideration of competition cases. Some commentators believe this was anatural evolution.41 Others argue that the judicial decisions are, in part,attributable to the UKs accession to the EU treaty in 1973.42 According tothis account, British commentators criticized Community procedures incompetition cases because they fell short of satisfying UK standards ofnatural justice.43 Natural justice is the British analogue to due process. Itincludes an unbiased decisionmaker as well as the right to notice, right toknow the governments case, and an appropriate, usually oral, hearing. Inorder to respond to these objections, the EU expanded the targets rights.These changes were reflected first in critical reports by an EU AdvocateGeneral (who was British), by critical reports of a Select Committee of the

House of Lords, and then in a series of ECJ decisions.45

3. Development of the Right of Defense Through Competition Cases:

Transocean andHoffman-La Roche

In the Transocean decision in 1974,47 the ECJ considered the complaintof an association of marine paint manufacturers that had earlier received afive-year exemption for various anticompetitive practices embodied in its

40. Bignami, supra note 29, at 25965.41. See generally NEHL, supra note 3, at 1013.42. Bignami, supra note 29, at 26972.43. See generally, WADE &FORSYTH, supra note 25, ch. 12-14.45. See Bignami, supra note 29, at 272-79 (, observing that Community officials were

concerned that UK national courts might not enforce decisions that failed to meet thestandards of natural justice). Others attribute the evolutionary development of defenserights to the establishment in 1989 of the Court of First Instance (CFI) which sees itself asan administrative court. Still others attribute the development to concerns within the EUthat constitutional courts in Member Sstates such as Germany might question theCommunitys decisionmaking procedures.

47. Case 17/74, Transocean Marine Paint Assoc. v. Commission, 1974 E.C.R. 1063.


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agreement. The Commission renewed the exemption but inserted a newcondition requiring the members to report any common managers ordirectors between the members and nonmember paint companies. Theassociation objected to the fact that the Commission had imposed thecondition without giving it notice and an opportunity to be heard.

The Court decided that the failure to give notice of the precise conditionviolated the requirements of notice and hearing in the competitionregulations:

It is clear, however, both from the nature and objective of the procedure forhearings . . . that this Regulation . . . applies the general rule that a personwhose interests are perceptibly affected by a decision taken by a publicauthority must be given the opportunity to make his point of view known.

This rule requires that an undertaking be clearly informed, in good time, ofthe essence of conditions to which the Commission intends to subject anexemption and it must have the opportunity to submit its observations to theCommission . . . .48

Thus, Transocean construed the regulations implementing thecompetition law broadly to assure that a party subject to adverse action isentitled both to adequate notice and to an opportunity to make itsobjections known.

Transocean might be viewed narrowly as involving only aninterpretation of the competition regulations. Two years later, however, inHoffmann-La Roche, the ECJ generalized the requirements of proceduralfairness articulated in Transocean into broad principles of Community law,

at least in cases involving a sanction.

49

In sweeping dictum, the Courtdeclared:Observance of the right to be heard is in all proceedings in which sanctions,in particular fines or penalty payments, may be imposed, a fundamental

principle of Community law which must be respected even if the proceedings in question are administrative proceedings . . . . Theundertakings concerned must have been afforded the opportunity during theadministrative procedure to make known their views on the truth andrelevance of the facts and circumstances alleged and on the documents used

by the Commission to support its claim that there has been an infringementof Article 86 of the Treaty.50

48. Id. at 107980. The Advocate General in Transocean was English and hadstrongly argued that the principles of natural justice applied before European courts. For adiscussion of the evolution of the right to appropriate notice, see CRAIG, supra note 2, at36365.

49. Case 85/76, Hoffmann-La Roche & Co. v. Commission, 1979 E.C.R. 461.50. Id. at 51112. A recent application of the right of defense occurred in a merger

case. The Commission breached the right of defense of one of the merger partners (whichstill existed as a separate entity) by failing to permit it to defend itself. The Commissionallowed the merged entity to submit observations, but was obliged to allow the constituent


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4. Subsequent Competition CasesThe Right to Inspect the File

Subsequent decisions by European courts vindicate the right of theparties in competition cases to inspect all nonconfidential documents in thefile.51 Clearly, the right to inspect the file is an essential aspect of the rightof defense, particularly given the inquisitorial, document-based approachtaken in EU cases. For example in Hercules,52 the target complained thatonly selected documents in the Commissions file had been disclosed priorto the hearing. The CFI ruled that the Commission was bound by its ownregulations to disclose all of the information in the file, other than businesssecrets or internal Commission documents or information disclosed to theCommission under a promise of confidentiality.53

Similarly, in the Soda Ash cases,54

the CFI used the phrase equality ofarms to describe the targets need for broad access to possibly exculpatorydocuments in the file.55

It is sufficient for it to be established that the non-disclosure of thedocuments in question might have influenced the course of the procedureand the content of the decision to the applicants detriment . . . if thedocuments in question might . . . have had a significance which ought not tohave been disregarded.56

The Court added :It cannot be for the Commission alone to decide which documents are of usefor the defense. Where, as in the present case, difficult and complexeconomic appraisals are to be made, the Commission must give the advisers

company to submit objections as well. Cases C-65/02P, C-73/02P, Thyssenkrupp StainlessGmbH v. Commission, 2005 E.C.R. I-06773.

51. For a detailed discussion of cases involving access to Commission files, includingthe application of the access right in complex multiparty cases, see CRAIG, supra note 2, at36569; Lenaerts & Vanhamme, supra note 33, at 54149. For a discussion of the generalright of access to all EU-agency documents (the EU equivalent of the U.S. Freedom ofInformation Act), see ADMINISTRATIVE LAW OF THE EUROPEAN UNION, supra note 4; CRAIGsupra note 2, at 35060. Article 41(2)(b) of the Charter of Fundamental Rights provides forthe right of every person to have access to his or her file. Charter of Fundamental Rights,art. 41(2)(b), Dec. 18, 2000. If the Charter becomes enforceable by Community courts, theright of access will apply to all of the Commissions adjudicatory functions. Seesupra textaccompanying notes 45.

52. Case T-7/89, S.A. Hercules Chemicals N.V. v. Commission, 1991 E.C.R. II-1711,173940, 5354. Cases with II- before the page number are decisions of the CFI,whereas cases with I- before the page number are decisions of the European Court ofJustice (ECJ). Similarly, cases with a T- number are CFI decisions; cases with a C-number are ECJ decisions.

53. However, the failure to disclose the responses of other targets to the statement ofobjections was not prejudicial since disclosure could not have led to a different result. Id. at1740, 56.

54. Case T-30/91, Solvay SA v. Commission, 1995 E.C.R. II-1775.55. Id. at 1802, 59 (quotingHoffmann-La Roche).56. Id. at 1806, 68.


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of the undertaking concerned the opportunity to examine documents whichmay be relevant so that their probative value for the defense can be assessed .. . . Having regard to the general principle of equality of arms, which

presupposes that in a competition case the knowledge which the undertakingconcerned has of the file used in the proceeding is the same as that of theCommission, the Commissions view [that it can decide what documents areexculpatory] cannot be upheld in such a situation. The rights of defensewhich the applicant enjoys during the administrative procedure would beexcessively restricted in relation to the powers of the Commission, whichwould then act as both the authority notifying the objections and the decidingauthority, while having more detailed knowledge of the case-file than thedefense.58

Of course, the right of access to the file must be balanced against the

obligation to maintain the confidentiality of the business secrets of otherundertakings, a right protected by the Treaty. This requires a delicatebalancing of the right of defense against the right of confidentiality.59

5. Expansion of the Right of Defense to Other Sectors

Subsequent decisions by European courts have expanded the rights ofdefense to regulatory sectors other than competition.

a. Trade Remedies

In NTN Toyo Bearing Co.,60 the Advocate General urged that theprinciples of disclosure of files developed in competition law should apply

in the area of trade remedies as well, regardless of the absence ofregulations that required it.

InAl-Jubail Fertilizer,62the Court endorsed this view by overturning anantidumping duty because of the Commissions failure to disclose criticalinformation to a target exporter. The undisclosed material includedinformation on European costs of production and prices of fertilizer, whichhad served as the basis for concluding that the domestic industry had beeninjured. The regulations required disclosure only of information relevant to

58. Id. at 181112, 81, 83.59. See id. 88 (allowing access to documents with narrow deletions to preserve

confidentiality). See Lenaerts & Vanhamme, supra note 33, at 54149 for a discussion ofthe process of balancing access to documents against confidentiality. See also Cases T-110/03, T-150/03, T-405/03, Sison v. Council of the European Union, 2005 E.C.R. II-1429,2 CMLR 29 (holding that individual whose assets were frozen as part of the fight againstterrorism did not have right of access to his file nor to names of states that furnishedinformation about him).

60. Case 113/77, NTN Toyo Bearing Co. v. Council, 1979 E.C.R. 1185. See Report ofthe Advocate General, at 126165.

62. Case C-49/88, Al-Jubail Fertilizer Co. v. Council, 1991 E.C.R. I-3187.


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the defense of the exporters interests or that the Commission had used inthe investigation. However, the Court declared,

[F]undamental rights form an integral part of the general principles of law,whose observance is ensured by the Court. Consequently, it is necessarywhen interpreting . . . the regulation to take account in particular of therequirements stemming from the right to a fair hearing, a principle whosefundamental character has been stressed on numerous occasions in the case-law of this court. . . . Those requirements must be observed not only [in

penalty cases] but also in investigative proceedings prior to the adoption ofanti-dumping regulations which, despite their general scope, may directlyand individually affect the undertakings concerned and entail adverseconsequences for them.63

b. State Aids

The Treaty provides for a notice and comment procedure in the area ofstate aids that is open not only to Member States but to beneficiaries of theaid and to competitors of the aided industry.64 That provision has beensupplemented by regulations that require the Commission to provide anopportunity for comments in doubtful cases.65

In the Netherlands case,66 the statement of objections to a state-aidscheme was not sufficiently specific. In addition, the Netherlands was notgiven an opportunity to make known its position on the consultations theCommission had conducted with organizations of persons that competedwith the aided company. As a result, the Member States rights of defense

were infringed.

67

Similarly, PTT, the direct beneficiary of the aid inquestion, was also entitled to be heard by the Commission since thecontested decision related directly to it and the economic consequencesdirectly affected it. PTT was entitled to receive a specific statement ofobjections and a right to be heard.68 In addition, competitors of an aidedentity have a right to a statement of reasons for the Commissions

63. Id. at I-3241. This decision reflected the views of the Advocate General thatHoffmann-La Roche applied to antidumping cases. Id. at I-322122.

64. Art. 88(2): If, after giving notice to the parties concerned to submit theircomments, the Commission finds that aid granted by a State or through State resources isnot compatible with the common market. . . . The ECJ held that this provision must befollowed in all cases in which the Commission finds that a state-aid scheme presentsdifficulties of deciding whether it is compatible with the common market. As the result, theCourt annulled a Commission decision that declined to challenge an aid scheme because acompetitor of the aided industry was not invited to submit comments. Case C-198/91, Cookv. Commission, 1993 E.C.R. I-2487, 252931.

65. Reg. 659/1999, Art. 6(1).66. Kingdom of the Netherlands v. Commission, Joined Cases C-48/90 and C-66/90,

1992 E.C.R. I-565, I-63840.67. Id. 444968. Id. 5053.


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determination that no state aid exists.69

c. Customs Duties

Although most decisions relating to customs duties are administered atthe member state level, certain customs disputes are considered at theCommission level. In Technische Universitt Mnchen,70 the Courtdetermined that the competent institutions have a duty to examine carefullyand impartially the relevant aspects of the individual case, and the personconcerned has a right to make its views known and to have an adequatelyreasoned decision. The Court determined that all three of those obligationswere infringed.

The issue was whether an electron microscope similar to that which theUniversity wanted to import from Japan was manufactured within theCommunity. If not, the instrument could be imported duty-free fromJapan. A committee of experts that was not shown to be qualified made thedecision.

The right to be heard in such an administrative procedure requires that the person concerned should be able, during the actual procedure before theCommission, to put his own case and properly make his views known on therelevant circumstances and, where necessary, on the documents taken intoaccount by the Community institution.71

Certain cases in which importers seek remission or repayment ofcustoms duties are also decided at the Commission level. The Court of

First Instance held thatrespect for the rights of the defence in all proceedings which are initiatedagainst a person and are liable to culminate in a measure adversely affecting

69. Case C-367/95 P, Commission v. Chambre Syndicale Nationale des Enterprises deTransport de Fonds et Valeurs (Sytraval and Brinks France), 1998 E.C.R. I-1719, 5859,64. In Case T-613/97, Union Franais de lExpress (UFEX) v. Commission, 2006 E.C.R.II-1531 (June 7, 2006), CFI set aside a Commission decision in a state aid case because ofan inadequate statement of reasons. The issue was whether assistance given by the FrenchPost Office to SFMI was state aid and this turned on whether the price charged SFMIcovered variable costs and was an adequate contribution to fixed costs. The Commissionfailed to explain how various approximations of variable cost were made. The court requiredthe Commission to furnish a summary of its analytical accounting calculations. For adiscussion of the Commissions obligation to exercise due care in considering state aidcomplaints, see Craig, supra note 2, at 37678.

70. Case C-269/90, Hauptzollamt Mnchen-Mitte v. Technische Universitt Mnchen,1991 E.C.R. 5495. See Jrgen Schwarze, Judicial Review of European AdministrativeProcedure, 68 LAW &CONTEMP.PROB. 85, 9496 (2004).

71. Id. at 5501. Scott and Sturm observe,: [T]he court is seeking to promote a processwhereby Commission-appointed scientific experts enter into discussions with other partiesin possession of information which may reasonably be thought to be indispensable inanswering the question with which they have been presented. Scott & Sturm, supra note33, at 58485.


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that person is a fundamental principle of Community law which must beguaranteed, even in the absence of any rules governing the procedure inquestion.73

As a result, the Commission had to provide an opportunity for a partyseeking remission or repayment of customs duties to effectively make itsviews known and to provide full access to nonconfidential material in theCommissions file (not merely to material that the Commission consideredrelevant).

d. Other Regulatory Functions

The community courts have generalized the rights of defense that haveevolved in specific sectors of regulation. They apply in any area ofCommission regulation, regardless of whether procedural rights areprovided for in regulations or even if the regulations purport to negativehearing rights.

For example, in Lisrestal, a case involving a claim by the EuropeanSocial Fund (ESF) for the repayment of a subsidy to a Portuguese trainingfacility because of irregularities in the application process, ECJ said:

Observance of the right to be heard is, in all proceedings initiated against aperson which are liable to culminate in a measure adversely affecting that person, a fundamental principle of Community law which must beguaranteed even in the absence of any rules governing the proceedings inquestion. . . .That principle requires that the addressees of decisions whichsignificantly affect their interests should be placed in a position in which

they may effectively make known their views.76

Lisrestal is notable because the responsibility for enforcement of theconditions of the grant was shared between ESF and a Portuguese agency, but the latter had followed the decision of ESF without providing anyprocedural protection to the recipient of the subsidy. Thus CFI could have

73. Case T-42/96, Eyckeler & Malt v. Commission, 1998 E.C.R. II-401,. 7780;Case T-50/96, Primex Produkte Import-Export GmbH & Co. v. Commission, 1998 E.C.R.II-3773, 5764. However, CFI did not accord the applicant an oral hearing in aremissionrepayment case, in the absence of a showing of reasons that why written procedurewas inadequate. Cases T-134/03 and 135/03, Common Market Fertilizers v. Commission,2005 E.C.R. II-3923 10509. In the Suproco case, discussed in text at notes 7880,suprainfra,CFI based its decision in a customs case entirely on the Commissions failure tostate the reasons for its decision in sufficient detail for the court to review the decision andthe parties to understand the reason why their petition was rejected.

76. Case C-32/95, Lisrestal v. Commission, 1996 E.C.R. I-5373, 21, affirming a CFIdecision, T-450/93, 1994 E.C.R. II-1177. Case C-135/92, Fiskano v. Commission, 1994E.C.R. I-2885, 38, held that the right of defense applies where the Commission sent aletter to the government of Sweden imposing sanctions on the owner of a fishing boataccused of fishing without a license. The vessel owner has a right of defense, even though itwas also penalized by Sweden.


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placed responsibility for providing a hearing on the member state agency,but it chose not to do so.

Similarly, Air Inter SA v. Commission involved the Commissionsdecision to open up particular air routes in France to new competition. Theexisting carrier that would be damaged by the new competition was entitledto claim the rights of defense. CFI noted:

It must be observed that the application of the fundamental principle of therights of the defence cannot be excluded or restricted by any legislative

provision. Respect for that principle must therefore be ensured both wherethere is no specific legislation and also where legislation exists which doesnot itself take account of that principle.78

6. Development of Specific Procedural Rights

a. AttorneyClient Privilege

The Court recognized that a limited form of attorneyclient privilegeapplies to investigations undertaken by the Commission.79 The privilegeapplies to written communications between lawyer and client but with twoimportant conditions: (1) the communications are made for the purposesand in the interests of the clients rights of defense;80 and (2) they emanatefrom independent lawyers registered with an EU bar (that is, lawyers whoare not bound to the client by a relationship of employment).81

The CFI has also addressed the procedure that the Commission mustemploy to identify and segregate documents subject to claims of privilege.It held that the staffs quick review of such documents prior to theirremoval in a dawn raid was improper, and that company officials mayrefuse to allow even a cursory glance if they believe that there areappropriate grounds to assert privilege. The disputed documents must bekept in a sealed envelope and the Commission must issue a formal decisionrejecting the companys claim of privilege, which decision may beappealed. The Commission may not open the sealed envelope until the

78. Case T-260/94, 1997 E.C.R. II-997, 60.79. Case 155/79, Australian Mining & Smelting Europe Ltd. v. Commission, 1982

E.C.R. 1575, 1611 2128.80. This means that privilege applies to all written communications exchanged after

the initiation of the administrative procedure though it may be extended to earlier writtencommunications which have a relationship to the subject matter of that procedure. Id. 23.

81. Subsequently, the CFI confirmed earlier case law by holding that the privilege doesnot protect communications between a company and its in-house counsel. Joined Cases T-125/03, T-253/03, Akzo Nobel Chemicals Ltd. & Akcros Chemicals Ltd. v. Commission(Sept. 17, 2007). See generally Eric Gippini-Fournier, Legal Professional Privilege inCompetition Proceedings Before the European Commission: Beyond the Cursory Glance,28 FORD.INTL L.J. 1967 (2005).


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CRI has ruled or the time for making such appeal has expired.82

b. Confidentiality

Article 287 of the Treaty provides that Community personnel shall berequired . . . not to disclose information of the kind covered by theobligation of professional secrecy, in particular information aboutundertakings, their business relations or their cost components. Thecommunity courts have implemented this provision and often engaged in adelicate balance between the rights of the target to examine documents inthe file and the confidentiality rights of those who have submittedinformation to the Commission.83

In theAdams case,84

the ECJ held that this obligation runs to individualsas well as to undertakings. The confidentiality obligations apply toinformation supplied voluntarily by an informant to the Commission. Theinformation consisted of redacted documents from which a target companywas able to deduce the identity of the informant. The Court held that theCommission breached its duty by failing to warn the informant that he wasin serious danger of prosecution by the Swiss authorities for businessespionage if he returned from Italy to Switzerland.

c. Decision Within a Reasonable Time

Both the investigatory phase and the administrative decision phase must be completed within a reasonable time.85 The reasonableness of aparticular delay is appraised in light of the circumstances specific to eachcase. In particular, the court should weigh the importance of the case forthe person concerned, its complexity, and the conduct of the applicant andof the competent authorities.86

82. Joined Cases T-125/03, T-253/03, Akzo Nobel Chemicals Ltd. and AkcrosChemicals Ltd. v. Commission 8290 (Sept. 17, 2007).

83. See Lenaerts & Vanhamme, supra note 33, at 54149.84. Adams v. Commission, Case 145/83, 1985 E.C.R. 3539, 358591. See Schwarze,

supra note 63, at 96.85. See Lenaerts & Vanhamme, supra note 33, at 567; Kaska, supra note 2, at 313

15. Article 41 of the Charter of Fundamental Rights provides for a right of goodadministration, including the right of every person to have his or her affairs handledimpartially, fairly and within a reasonable time. In the event that Article 41 becomesenforceable as a constitutional principle, the right to timely decision may becomeconsiderably stricter than it is at present. Seesupra text accompanying notes 23.

86. Joined Cases C-238-99, Limburgse Vinyl Maatschappij NV v. Commission, 2002E.C.R. I-8375, 8685 19394. In this case, the court held that an investigation lasting fouryears and ten months was not excessive, given the complexity of the case, the amount ofdocuments that had to be considered, and the large number of parties. In addition, the ten-month period of adjudication could not be considered excessive.


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d. Statement of Reasons

Article 253 of the Treaty established the right to a statement of reasons,87a right frequently enforced by the Community courts88 as well as in thelegal systems of Member States. The rationales for this obligation are thatthe requirement to state reasons forces agencies to consider their decisionsmore carefully, enables parties subject to the decisions to understand themand to decide whether to seek judicial review, and enables the court todetermine the rationality of the decision. Requiring a decisionmaker togive reasons also facilitates various forms of legislative and executiveoversight of administrative decisionmaking.

In Suproco,the CFIs decision annulling the Commissions decision was

based entirely on the Commissions failure to state its reasons in sufficientdetail for the court to review the decision and for the parties to understandthe basis for the Commissions rejection of their petition for customs relief.The decision in question (which related to whether imported sugar productsfrom Curaao qualified for tariff relief and which involved highly technicalregulations) indicated the Commissions conclusion but not its reasoning.The Suproco court said:

According to settled case-law, the statement of reasons required by Article253 EC must be appropriate to the measure at issue and must disclose in aclear and unequivocal fashion the reasoning followed by the institutionwhich adopted the measure in question in such a way as to enable the

persons concerned to ascertain the reasons for the measure and to enable thecompetent Community Court to exercise its power of review.90

The Commission is not required to furnish all the details of the factualand legal aspects of every decision. In Suproco,the court noted:

The requirements to be satisfied by the statement of reasons depend on thecircumstances of each case, in particular the content of the measure inquestion, the nature of the reasons given and the interest which the

87.Regulations, directives and decisions adopted jointly by the European Parliament andthe Council, and such acts adopted by the Council or the Commission, shall state thereasons on which they are based and shall refer to any proposals or opinions whichwere required to be obtained pursuant to this Treaty.

Lenaerts & Vanhamme, supra note 33, at 56266.88. See CRAIG, supra note 2, at 37881; KOEN LENAERTS, DIRK ARTS & IGNACE

MASELIS, PROCEDURAL LAW OF THE EUROPEAN UNION 30108 (2d ed. 2006); Jerry L.Mashaw, Reasoned Administration: The European Union, the United States, and theProject of Democratic Governance, 76 GEO. WASH. L. REV. 99 (2007) (arguing thatreasoned administration is a fundamental human right).

90. Case T-101/03, Suproco NV v. Commission, 2005 E.C.R. II-3839 20. Similarly,seeSee also Joined Cases T-50/06, T60/06, T62/06, and T 69/06, Ireland v. Commission(2007). (CFI raised issue on its own motion that Commission had stated a conclusion butnot the reasoning for a key portion of its decision).


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addressees of the measure, or other parties to whom it is of direct andindividual concern, may have in obtaining explanations.91

Thus the reasons for a decision that follows a well-established line ofauthority may be given in summary fashion by reference to the priordecisions, but the Commission must give an explicit account of itsreasoning if the decision goes appreciably further than the previousdecisions.93

7. Procedural Protections in Application Cases

The law relating to the procedural rights of persons who have applied for benefits is less well developed than the law relating to parties who are

subject to some kind of sanction or other loss of status. TechnischeUniversitt Mnchen94 involved an application to import a scientificinstrument into the Community without payment of duty. The ECJ heldthat the applicant had procedural rights, including a right to make itsobjections known to the Committee which made the decision. In thetrademark area, rejected applicants are entitled under the regulations to aright to file observations (and in unusual cases to an oral hearing) evenwhen no opposition has been filed.95 In the area of pharmaceuticallicensing, there is a right to submit written observations and to an oralhearing before CHMP which is processing an application. There is also aright to have the CHMP opinion reviewed by the Commission.

In Windpark,96 the applicant applied for financial aid to construct a wind

park under a program whereby various recipients of energy projects couldreceive aid. There were about 700 proposals. The applicant was notselected to receive support but was placed on the reserve list. Later, inresponse to a letter, the Commission stated that available funds had beenexhausted. In this situation, there was no right to a detailed statement ofreasons for the decision rejecting the application for financial support,including comparative information on the competing projects that wereselected. The reason for the making an exception to the normal

91. Id.; see also Case C-48/96 P, Windpark Groothusen GmbH & Co. Betriebs KG v.Commission, [1998] E.C.R. I-2873, 2909 34-35; Case C-350/88, Socit Franaise desBiscuits Delacre v. Commission, 1990 E.C.R. 395, 422 15.

93. Case C-350/88, Delacre, 1990 E.C.R. 395, 1719. Delacre held that theCommission was not required to explain the details for setting a subsidy level for butter. Thesubsidy is adjusted every two weeks and the industry is familiar with the process for settingthe price.

94. Seesupra text accompanying notes 6364.95. Reg. 40/94.96. Case C-48/96 P, Windpark Groothusen GmbH & Co. Betriebs KG v. Commission,

[1998] E.C.R. I-2873 (affirming Case T-109/94, 1995 E.C.R. II-3007 (CFI)).


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requirement of stating reasons is that the rejected applicants legal positionremained unchanged. Its sole entitlement was to an objective examinationof the application.97

In Windpark,the Court also decided that the rejected applicant was notentitled to a hearing, because that right arises only where the Commissioncontemplates the imposition of a penalty or adoption of a measure likely tohave an adverse effect on that persons legal position. In addition, the factthat there were hundreds of applicants militates against giving any of thema hearing. However, this decision did not resolve the issue of whether thereis a right to hearing in connection with the rejection of an application for aspecific license or permission, such as to market a food or drug, or rejectionof a trademark application (as opposed to an application for funding where

only some of the applicants can be funded).

II. SUMMARY OF ADMINISTRATIVE PROCEDUREIN THE SIX SECTORS

This section contains brief summaries of the adjudicatory practice in thesix sectors of EU administration that we studied.98

A. Competition100

Article 81(1) of the Treaty prohibits various anticompetitive practicesthat are incompatible with the common market. Broadly speaking, this provision parallels 1 of the U.S. Sherman Act. Article 81(3) providesthat the prohibition of Article 81(1) may be declared inapplicable to certain

97. Id. I-290910, 3439.98. Practitioners who need a more detailed account of these procedures should consult

ADMINISTRATIVE LAW OF THE EUROPEAN UNION, supra note 4. The full accounts of EU procedure contributed by our sectoral reporters are available on the Iinternet. Seehttp://www.abanet.org/adminlaw/eu/home.html#Sector. The six sectors described herein donot exhaust all the areas of adjudication and dispute settlement that involve the Commission.For example, cases involving customs duties are sometimes adjudicated at the Commissionlevel. See Part I.C. In addition, the clearance of accounts process concerns disputes

between Member States and the Commission about agricultural subsidies. Each year, theCommission seeks to recover improper payments and Member States member statesfrequently dispute its conclusions. Prior to seeking relief in the Community courts, MemberStatesmember states and the Commission resort to a conciliation procedure. TheConciliation Body hears the dispute and seeks to reconcile the divergent positions of theCommission and the Member Sstate. At the conclusion of the process, the mediation bodydraws up a nonbinding report on the outcome of its efforts, including making remarks on theunresolved points of dispute. See Reg. 442/94, art. 1.

100. For a thorough discussion of the administrative process in competition cases, seeCHRISTOPHER S. KERSE &NICHOLAS KHAN, EC ANTITRUST PROCEDURE 1444 (5th ed.2005); IVO VAN BAEL &JEAN-FRANCOIS,BELLIS, supra note 10, at 85776 (mergers), 10211166 (antitrust); LUIS ORTIZ BLANCO, EC COMPETITION PROCEDURE (2nd ed. 2006). For a

brief summary, see CRAIG, supra note 2, at 38791.


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restrictive practices that are found to be economically beneficial andjustified.

Under regulation 1/2003, which went into effect in 2004, theCommission no longer has a monopoly on granting such exemptions; theymay now be granted by Member States. Courts of the Member States canadjudicate cases arising out of both public and private enforcement of thecompetition law articles of the Treaty. The prior practice of requiring parties to notify the Commission of anticompetitive practices has beenabolished (although it still exists in some Member States). Article 82 of theTreaty prohibits abuse of a dominant position and thus roughly parallels themonopolization provision of 2 of the U.S. Sherman Act. Finally, theCommission regulates mergers that have a Community dimension.

The DG Comp may initiate an investigation of a possible violation ofArticles 81 and 82 in response to a complaint. It may also initiateinvestigations following referral by a Member State or on its own initiative.A team headed by a DG Comp case manager and consisting of several casehandlers conducts the investigation. The investigation usually includes anon-the-spot inspection. The investigators may seek additional informationinformally or through a formal decision requiring information to befurnished. In some cases, nonbusiness premises can be searched.

If the DG Comp decides to proceed further (with the approval of theLegal Service and the Competition Commissioner and, in some cases, of anadvisory committee of competition authorities from Member States), itissues a statement of objections (SO) consisting of a factual descriptionof the conduct involved and a legal assessment. If a compromise isreached, the Commission issues a preliminary assessment which containscommitments by the companies involved.

In merger cases, the process is initiated by prior notification to theCommission of a proposed merger. Generally, prenotification contactsoccur between the applicants and Commission staff. The Commissionconducts a Phase I investigation of the proposed merger and may grantclearance at that stage. If it concludes that the proposed concentrationraises serious doubts as to its compatibility with the Common Market, itinitiates a Phase II investigation and issues an SO. State of playmeetings occur during Phase II to facilitate exchange of information.

The SO (in both antitrust and merger cases) informs the targetcompanies of the charges against them (or the Commissions doubts abouta proposed merger) and sets a time limit within which they may inform theCommission of their views. The parties may file written objections andattach relevant documents or can request a hearing. The Commission mustprovide full access to all documents in its file to the target companies, other


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than business secrets or other confidential information or internalCommission documents. Complainants (as opposed to targets) have accessonly to the nonconfidential version of these documents.

While the right to be heard is primarily exercised through filing writtenmaterials, the Commission must provide an oral hearing upon request inantitrust and merger cases. At the hearing, the targets (or the parties in amerger case) have the right to make their views known about the facts andcircumstances alleged against them and to support their claim that theyhave not infringed the Treaty. The hearing follows a detailed order of presentation and may include both the testimony of live witnesses andexperts. There is no right of cross-examination or confrontation, but theCommission officials may question any witness who appears. If the SO is

significantly amended, an additional hearing must be provided.Complainants may also be heard but this is discretionary with theCommission. As pointed out earlier, the hearing officer is an independentofficial rather than the case handlers. The official prepares a report on theprocedural aspects of the case.102

The case handlers then draft the preliminary decision. The preliminarydecision is reviewed by the Commissions Legal Service and presented forconsultation to the Advisory Committee (consisting of member staterepresentatives).103 The final decision is made by the College ofCommissioners. The hearing officer does not make a substantive (asopposed to a procedural) decision. However, the hearing officer maycomment on the preliminary decision. Such comments are not madeavailable to the parties.

The final decision must contain a sufficient statement of reasons, so thata reviewing court may exercise its supervisory function and the parties canascertain whether the decision is well founded. The statement of reasonsmust include both the factual and legal grounds on which the decision isbased, including comment on the evidence. It must be more fully reasonedif it sets forth a new legal interpretation.

102. Seesupra text accompanying notes 1011.103. We understand that the Legal Service provides an important checking role in the

process of Commission consideration of preliminary decisions. When the full Commissionmakes the decision, it can override a negative opinion of the Legal Service. However, inmany situations, the Commissioners decide a case by written procedure without discussionor the decision is delegated to a single member of the Commission. In the latter twosituations, the act can be adopted only if it is in accord with the opinion of the LegalService.


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B. Trade Remedies

Under the law of trade remedies, the Commission can protect EUindustry from dumping104 and from governmental subsidies that giveforeign competitors an unfair advantage.105 In dumping and subsidy cases,the conduct that has been complained of must cause material injury.Antidumping and antisubsidy cases can result in the imposition ofadditional duties on foreign goods. In addition, the EU can takesafeguard measures that protect Community industry with temporaryrelief against foreign competition that causes serious injury. Safeguardcases, which are quite rare, usually result in quantitative restrictions onimports from all countries.106

Antidumping and antisubsidy cases usually begin with a writtencomplaint on behalf of Community industry. Before lodging such acomplaint, companies tend to engage in informal exchanges with DG Tradein order to address specific legal issues about which the potentialcomplainant has doubts.

During a forty-five-day period, the Commission evaluates the complaintand the representativeness of the complainants. Thereafter, it publishes arelatively brief notice of initiation of investigation and invites interested parties to come forward (within ten days) and submit information andrequest a hearing (within forty days). The Commission advises particularimporters and exporters (and relevant associations) that it knows to beconcerned of the initiation of the i

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