11 - EU Law Enforcement Authorities and Access to Justice

Summary

The contribution offers a critical appraisal of the individual’s (in)access to justice when his or her fundamental rights have been violated during direct enforcement action by EU law enforcement authorities. Based on three case studies – ESMA, DG COMPETITION, OLAF – we argue that direct enforcement, and the shared activities and joint decisions of EU and national authorities it entails, have been ‘squeezed’ into the existing system of separated controls between the EU and the Member State legal orders. This brings with it challenges regarding the control over public power which may affect ‘access to’ and ‘justice’. The main argument of our contribution then is that in the current EU-constellation, courts are – contrary to what is generally assumed – not always, or in any case not necessarily, best-suited for remedying fundamental rights violations and providing the protection the individual needs. Therefore, the co-existing judicial and non-judicial remedies can address each other’s gaps and ultimately ensure a fully-fledged protection of fundamental rights if designed properly and aligned with each other and with national law.

11.1 Introduction

In the context of enforcing the law, the rule of law makes demands, inter alia, on both individuals and those who govern or rule over them. In broad terms, the rule of law requires of individuals that they respect and abide by legal norms promulgated by those who govern. To prevent or to respond to (alleged) violations of a prescribed norm – or more generally, to ensure that a norm is effectively respected – those who govern rely on enforcement (i.e., ‘the sword’). Enforcement consists of public action to prevent or respond to a violation of a prescribed norm.¹

Of those who govern, the rule of law requires that, in enforcing the law, they themselves do not operate beyond, or place themselves above, the law and what this law deems permissible. That is where fundamental rights enter into play: to protect the individual against the arbitrary exercise of power by those who govern.² The role of the rule of law then, in which fundamental rights find their expression, is to concern itself with the way in which power is exercised and to cast it in a constraining harness of public norms that grant, delimit, and control the discretionary exercise of power (‘the shield’).³

For an individual to have fundamental rights is one thing; to see them effectively enforced and protected is another. To ensure that their fundamental rights are enforceable, there is a duty incumbent on those who govern to put in place institutions that uphold the individual’s rights and connected to that, to grant the individual whose rights have been infringed access to those institutions. It is this latter component that is generally referred to as ‘access to justice’. As the name suggests, access to justice consists of two elements: ‘access’ and ‘justice’. The first is procedural in nature and serves to ensure that those whose fundamental rights are violated have (equal) access to the means in place that can address these violations. The second element is substantive and more normative in nature; it demands that just outcomes are to be achieved (i.e., that the individual’s rights are adequately protected), yet the definition and perception of what is just may vary in light of individuals’ morality, context, and other pre-existing and emerging factors. The two elements are necessarily connected: the attainment of justice or of a just result presupposes access.⁴ When it comes to ‘access to justice’, one of the core notions in this contribution, we focus primarily (though certainly not exclusively) on the procedural limb of ‘access to justice’. In other words, we are interested in potential pathways or mechanisms for achieving justice, not in justice in the result.

In short, then, as a concept, access to justice takes on a functional role in the perennial rule of law debate and in this contribution is understood as an instrument that allows for the effective protection of the individual’s fundamental rights (‘the shield’) against violations by those who govern in the process of enforcement (‘the sword’).

Against this background, one development is that of an ever-evolving EU polity. The EU has become more than an international organisation where the addressees of international agreements have been predominantly the nation-states. Ever since Van Gend & Loos, individuals have been considered as important actors in enforcing (fundamental) rights with which Union law has endowed them particularly because the Member States have a ‘natural aversion to controlling their own behaviour’.⁵ This has become all the more important in the last two decades with the advent of EU law enforcement authorities: supranational actors created by EU law that have at their disposal enforcement powers and monitor compliance with its laws, investigate suspected violations, and/or sanction non-compliance with the view of stopping, deterring, and/or restoring after undesirable behaviour.⁶

In this contribution, we offer a critical appraisal of the individual’s (in)access to justice when their fundamental rights have been violated during enforcement by EU law enforcement authorities. Direct enforcement by EU law enforcement authorities has been proliferating despite uncertainties that this novel type of public power has brought in terms of control mechanisms, both judicial and non-judicial.⁷ Direct enforcement, and the shared activities and joint decisions of EU and national authorities it entails, have been ‘squeezed’ into the existing system of separated controls between the EU and the Member State legal orders. This brings with it challenges regarding the control over public power that may affect ‘access to’ and ‘justice’, not only from a strictly legal perspective but also from a normative conceptual perspective. To what extent can the law and the obligations that flow from it be foreseeable for the individuals subject to direct enforcement actions? To what extent have different substantive, procedural, and institutional issues been aligned between existing systems of control? What mechanisms of control could bring more ‘justice’ and satisfaction in such a setting and upon which conditions does this depend?

For the remainder of this contribution, we proceed in the following fashion. In Section 11.2, we offer a – perhaps somewhat unorthodox – understanding of the notion of ‘access to justice’ in light of the EU’s powers of direct enforcement by means of EU law enforcement authorities. Access to justice, or so we argue, is more than access to, or effective remedies before, a court that is to enforce the individual’s fundamental rights and hold state authorities accountable (i.e., the judicial pathway), but also encompasses other, non-judicial, mechanisms – both at the national and the Union level and for each separate procedure of enforcement – which provide the individual with means to enforce their rights and ensure that those violating rights are held to account. We start by outlining which fundamental rights are at stake at the various stages of enforcement and how these rights may be interfered with and/or violated by EU law enforcement authorities (Section 11.2.1). Thereafter, in Section 11.2.2, we demonstrate how direct enforcement by EU law enforcement authorities has brought about a shift in the ways in which Union law in particular policy areas is enforced and how this shift has largely not been accompanied by a change in the way in which judicial control is offered in order to remedy violations of fundamental rights suffered by the individual subject to enforcement action. To substitute and/or complement the absence of judicial control, other mechanisms have been put in place that help achieve the individual’s access to justice.⁸ These non-judicial mechanisms are, or so we argue, better suited to ensuring that fundamental rights are effectively protected. This is reflected in socio-legal literature⁹ in which it is established that access to court and a possible positive outcome does not necessarily equate to the attainment of justice. Enforcement’s success is highly dependent on its preventive function, rather than sanctioning, as it can be more effective from both economic and policy goals perspectives.¹⁰ In short, the point we wish to drive home is that, in the current EU constellation, courts are – contrary to what is generally assumed – not always, or in any case not necessarily, best-suited for remedying fundamental rights violations and providing the protection the individual needs.

In Section 11.3, we then examine the way in which ‘access to justice’ is given shape in the legal frameworks of three EU enforcement authorities: the European Securities and Markets Authority (ESMA), the European Commission’s Directorate General for Competition (DG COMP), and the European Anti-Fraud Office (OLAF). We look at these three EU enforcement authorities in particular because of the three different ways in which they share their functions with their national counterparts. The first is hierarchically positioned above national authorities (ESMA). The second acts in parallel with national authorities (DG COMP). The third acts mainly in support of national authorities (OLAF). In short, each of the authorities chosen represents one of three ‘families’ or ‘flavours’ of EU law enforcement authorities,¹¹ thereby offering a representative sample to discuss.

In Section 11.4, we evaluate the different ways in which the concept of ‘access to justice’ is implemented in the legal frameworks of the three authorities studied. In Section 11.5, we outline recommendations for ways in which the individual’s access to justice can be improved in the legal frameworks of the three agencies subject to study and further (academic) research.

11.2 Access to Justice in Enforcement by EU Enforcement Authorities

In the process of enforcement, three stages are normally distinguished: monitoring compliance with, investigating possible violations of, and sanctioning non-compliance with the applicable law.¹² In the socio-legal literature and in legislative practice (discussed in Sections 11.2.1 and 11.2.2), one can witness a development of theories and tools aimed at enhancing compliance of individuals with the applicable law. Therefore, such theories and tools aim at ensuring the preventive (rather than the responsive) function of enforcement.¹³ From a law and economics perspective, enforcement can be seen as more effective, including time- and cost-efficient, if individuals’ compliance with the law is achieved at the earliest possible stage of enforcement. In this connection, literature on compliance and better regulation shows the importance of investing in educating those who need to comply with the rules, rather than simply sanctioning them.¹⁴ Should sanctions ultimately prove necessary, the same literature shows the importance of using an enforcement ladder, that is, escalating from soft enforcement tools, like warnings and dialogues, to hard ones like punitive fines, to enhance effectiveness. We may notice that these theories find application in the existing laws and operation of EU enforcement authorities. For instance, EU enforcement authorities increasingly use soft law guidance whereby they explain how they ought to enforce laws, how certain ambiguous concepts are to be interpreted, and may hold (informal) dialogues as a tool to enhance compliance and thus prevent violations or as soft sanctioning mechanisms.

Access to justice by private actors – natural and legal persons – is of paramount importance when it comes to enforcement actions by public authorities. This is because regulation as such can restrict the rights and freedoms of private actors and in the process of enforcing substantive regulatory norms, such rights and freedoms can be affected further. Think, for instance, about obligations imposed by relevant EU legislation on financial market participants to provide specific information to enforcement authorities on a regular basis.¹⁵ If an EU enforcement authority concludes that the financial market participant violated the relevant legislation and therefore imposes a fine or even withdraws the participant’s authorisation, the freedom to conduct a business may be restricted even further. To ensure there is no abuse of public power, private actors must have access to justice to question and check the relevant authorities’ enforcement actions and decisions. Access to justice is thus essential at all of the three enforcement stages: monitoring, investigating, and sanctioning. In this section, we distinguish which fundamental rights are relevant at each enforcement stage (Section 11.2.1). Then, in Section 11.2.2, we discuss the evolution of the concept of access to justice in relation to enforcement and the evolution of its meaning to encompass more possibilities to promote fundamental rights than just ‘access to the court’.

11.2.1 Enforcement Stages and Applicable Fundamental Rights

11.2.1.1 Monitoring

Monitoring compliance with substantive norms is an essential first step in the enforcement process. Private parties as such may have an active role in the monitoring stage. For instance, a company that operates in a competitive market may notice wrongdoing by another company and file a complaint with the relevant supervisory authority or even go directly to court. Depending on the legislative setup, an EU enforcement authority may have responsibility to monitor compliance with laws too, without depending on individual complaints. To that effect, relevant legislation may bestow upon an EU enforcement authority such powers as monitoring the proper functioning of financial markets; requesting from market participants information on a regular or ad hoc basis; conducting ad hoc, planned, or risk-based designed on-site inspections; holding (ad hoc) dialogues to promote and ensure compliance; and issuing (soft law) guidance to educate relevant parties and incentivise compliance. For this, an EU enforcement authority needs to have sufficient resources. If resources are limited, the authority may adopt prioritisation policies and conduct risk-based inspections. Often, the monitoring of compliance is organised in a mixed way (private actors’ complaints and public authorities’ public supervision).

At the monitoring stage, the following procedural safeguards are relevant to consider as their affordance will ensure that the fundamental right to good administration and the right to judicial protection will be observed should any dispute arise as a result of the monitoring stage. First, the power of enforcement authorities to ask for (more) information needs to be balanced with the obligation to have a legal basis and state reasons for issuing such requests, which in turn allows supervised entities to assess the scope of the obligation to cooperate. Then, a grey area concerns informal information requests and the issuance of non-binding instruments, like guidance, notices, and recommendations. These have to be done professionally and private parties need to have protection against possible abuses of power in the course of such informal contacts, otherwise disputes based on informal contacts may lead to subsequent legal actions. One such instance is the uncertainty surrounding the formal force and further judicial reviewability of soft law guidance that can be used for ensuring compliance. More specifically, parties may question the binding force of such documents and disagree on their content and the procedure preceding their adoption. Yet such soft law documents could form the basis of enforcement decisions vis-à-vis private actors, including the imposition of fines. While an addressee may question the decision imposing the fine, soft law instruments as such cannot be challenged through an action for annulment (Article 263 of the Treaty on the Functioning of the European Union (TFEU)) (see Chapter 14). In any case, to question the controversial soft law guidance, a private party would need to go through all three stages of the enforcement process, which requires time and resources. Against this background, other channels seem necessary to make sure that the relevant parties are not denied access to justice. Think, for instance, of the right to participate and to be consulted ex ante, when soft law instruments are being adopted. In light of the aforementioned better compliance studies, perhaps even the right to request helpful guidance and/or be educated (by the EU authority) as to how to comply with such documents is required.

11.2.1.2 Investigation

The investigation of potential violations of laws, rules, or norms is the next stage of enforcement after monitoring, though in some cases there may be no public authority role in monitoring as such. When monitoring does take place, ‘day-to-day’ supervision can give rise to a suspicion that a substantive norm has been infringed, which, as a result, can function as a prelude to a subsequent investigation. Investigations are there to gather information/evidence on the basis of which proof can be established that can (help) justify the imposition of a subsequent (punitive) sanction against those to which the substantive norm in question is addressed by either the European law enforcement authority in question or by another EU or national authority.¹⁶

The fundamental rights that are most often – though by no means exclusively – interfered with during investigations are the right to privacy and the right to a fair trial. According to Article 7 of the Charter of Fundamental Rights of the European Union (CFR), everyone has the right to respect for, among other things, their private and family life, home, and communications.¹⁷ It is particularly this right’s dimensions of ‘home’ and ‘communications’ that are at issue during investigations. The reason for including the right to a fair trial is that the investigation phase in many ways determines the conditions that allow for or inhibit a future trial from being fair.¹⁸ An illustrative example in this regard, drawn from the well of case law of the European Court of Human Rights (ECtHR), is not being able to consult with a lawyer during an interrogation by police authorities and the subsequent admissibility of that evidence at trial.¹⁹ Another example, of particular importance at the interface of non-punitive (EU) and parallel or subsequent punitive proceedings (EU or national), is where an individual is under a duty to cooperate during administrative investigations and this information is later used against them in punitive proceedings, thereby breaching the privilege against self-incrimination.²⁰

All in all, in the investigation of potential violations of EU law, EU enforcement authorities may have directly or via relevant national authorities the powers to enter premises, to request information/interview, and to make a production order/require access to information. To ensure that the fundamental rights at stake are adequately protected, investigatory powers must have a ‘sound basis in law’²¹ and investigations must respect defence rights and safeguards such as, among others, the right to have access to a lawyer, the privilege against self-incrimination, the legal professional privilege, the right to be informed, and the right to translation.²²

11.2.1.3 Sanctioning

If the investigation leads to the conclusion that there is a violation of the law, the sanctioning stage may follow. Sanctions vary greatly across sectors: warnings, fines, periodic penalty payments and interim measures, suspension of voting rights, withdrawals of licences, recommendations, and public notices, to name but a few. There seems to be a development in legislation and in enforcement practice resembling the scholarly ideas of the usefulness of ‘responsive regulation’ and of the ‘enforcement pyramid’.²³ These theories support the idea that to respond to non-compliance in the most proportionate way, depending on the severity of the violation, the enforcement authority should gradually escalate its enforcement response from the lighter tools (e.g., informal warnings) to the heftier ones (e.g., fines and withdrawal of licences).

As the sanctioning stage has the most intrusive effect upon the ability to exercise certain rights and freedoms, like the right to property or the freedom to conduct a business, it is essential to have in place mechanisms to control potential abuses of enforcement authorities’ sanctioning powers. In the first instance, before the imposition of measures adversely affecting their interests, the relevant private parties must be granted the right to have access to the file and be informed of the allegations against them and be put in a position to respond to such allegations through the effective exercise of their right to be heard. Secondly, addressees of a sanctioning decision must be able to challenge it before a court. Thirdly, the existence of other safeguards and principles, such as the principles of legality and proportionality are essential. Montaldo elaborates in this respect the principle of proportionality, ‘the more intense a public power and its effects on individuals are, the more demanding this principle becomes. This is why proportionality is of a particular significance in the domain of sanctions, where the magnitude of public coercive powers reaches its peak’.²⁴ Therefore, as a fourth point, it is important to ensure that the decision-making processes and the bodies determining the type and severity of a sanction are independent, impartial, and transparent. For this, the enforcement authority needs to have its independent operation secured de jure and de facto. Finally, political controls over sanctioning policies and choices of a supervisor may be seen as mechanisms complementing access to justice.

11.2.2 The Evolution of the Concept of Access to Justice in Enforcement Matters: Beyond the Nation-State and beyond the ‘Judge’

Thus far we have looked at the function of fundamental rights within the nation-state and subsequently highlighted the fundamental rights that are at risk of being violated during the three different enforcement stages. In this section, we aim to show that even though an increasing number of EU policy areas are enforced directly at the EU level, this development has largely not been accompanied by a change in which judicial control is offered. In other words, while tasks are shared, controls remain separated.²⁵

The traditional method of enforcing EU norms has been that of ‘indirect’ or ‘decentralised’ enforcement: the EU legislator sets out substantive norms and the EU Member States enforce them.²⁶ In enforcing EU norms, Member States enjoy enforcement autonomy, a term meant to indicate that where Union law does not lay down enforcement specificities, Member States remain free to lay down national procedural rules for the enforcement of EU rights.²⁷ However, indirect enforcement does not always bring about the envisaged results. Relevant literature has attributed problems of non-implementation of and non-compliance with EU policies to such causes as political unwillingness at the Member State level and lack of national resources.²⁸

One way of addressing the aforementioned (indirect) enforcement deficit has been the shift towards direct modes of enforcing EU law, notably through the creation of EU law enforcement authorities: supranational actors created by EU law that have at their disposal enforcement powers and monitor compliance, investigate suspected violations, and/or sanction non-compliance with EU law.²⁹ In the context of direct enforcement of EU law, various new modes of interaction between the EU and the national level have been instituted. These novel modes of EU administration have been characterised as shared, mixed, multilevel, multijurisdictional, composite, and integrated.³⁰ Their common denominator is that, under the umbrella of an EU actor, the different national legal orders of the Member State are brought together.³¹ EU actors are in constant liaison with national counterparts and operate in a functional EU territory.³² Direct enforcement of EU law by EU law enforcement authorities challenges the traditional understanding of fundamental rights,³³ including the right of access to a court and to remedies. We shall illustrate this point by means of three examples.

The first example concerns difficulties pertaining to effectuation of the right of access to a court when an EU binding measure culminates in a national sanction: in the investigative stage of enforcement, an EU authority carries out an on-site inspection at the business premises of a private party and obtains important evidence suggesting that the investigated person violated substantive legal provisions. However, given that the EU authority is not competent to sanction on its own motion, it requests that its national counterpart opens sanctioning proceedings vis-à-vis the aforementioned private party. A sanction is indeed imposed by the EU authority’s national counterpart. The affected party appeals the decision before the competent national court arguing inter alia that the EU authority engaged in a fishing expedition thereby violating their right to privacy. In light of the well-known Foto-Frost doctrine,³⁴ national courts are not allowed to invalidate acts of EU organs. The only possibility then left to the reviewing national court is to make use of the preliminary reference procedure (see Chapter 4) and refer a question to the Court of Justice.

A second example concerns national enforcement action leading to EU sanctions and the difficulties surrounding the review – by EU courts – of the national part of such a shared procedure. Think of the following example. A national enforcement authority obtains evidence in the context of an on-site inspection. That evidence is thereafter transferred to the EU authority. Subsequently, based on that evidence, the EU actor imposes on the investigated person a punitive sanction. However, the addressee of the EU sanction argues that, in obtaining the critical piece of evidence, the national authority acted unlawfully. Can the Court of Justice of the European Union (CJEU), which will be called upon to review the final EU decision in accordance with Article 263 TFEU, also review the legality of the acts of the national organs? The CJEU has asserted in that respect that the principle of ‘single judicial review’,³⁵ which emanates from the principle of sincere cooperation (Article 4(3) Treaty on European Union (TEU)), demands that the EU courts alone carry out judicial review, that is, they are exclusively competent to review the legality of the acts of national organs. While the reasoning behind the court’s view, namely that single judicial review rules out the possibility of contradictory rulings, is compelling, at the same time, the court has not yet explained on the basis of which standards – EU or national – such national acts shall be reviewed.³⁶

A third example concerns the situation in which an EU authority carries out (non- binding) preparatory work that forms the basis for the opening of a national sanctioning procedure. However, according to the CJEU, given that the action of the EU authority was merely preparatory, and therefore did not affect the legal position of the individual, that individual is now unable to question the legality of the act of the EU authority through an action for annulment.³⁷

All three examples demonstrate that while we witness a shift in the ways in which Union law in particular policy areas is enforced, this shift has largely not been accompanied by a change in the way in which judicial control is offered to remedy violations of rights suffered by the individual subject to enforcement action. While procedures for the enforcement of EU law are increasingly hybrid/ shared between EU and national actors, judicial review seems to be stuck to dogmas developed within the nation state, according to which a court is only competent to review acts emanating from organs within that court’s own jurisdiction. As a result, effective access to a court might in fact become illusory, seeing as the mechanisms currently foreseen, like the preliminary reference procedure, may be quite lengthy and cumbersome for an individual to seek. After all, as has been rightly noted in that respect – ‘justice delayed is justice denied’.³⁸ Furthermore, EU courts reviewing the legality of national measures may not always be well placed to carry out a full review of national questions of law and fact.³⁹ In other circumstances, decisive preparatory acts of EU authorities are not subject to any review as they do not change the legal position of the concerned party. This is precisely the reason why the main argument that we wish to bring forward in this contribution is that access to justice is (or must be) more than access to a court. As access to a court may – in the multijurisdictional EU law enforcement setting – know certain limitations, it is essential that judicial mechanisms are complemented or accompanied by sufficient non-judicial control mechanisms.

The other important argument here is that enforcement features certain characteristics that necessitate other forms of control, from a functional perspective. Establishing enforcement priorities as to how to allocate scarce human, financial, and technological resources and equipment in enforcement, which clearly can affect private parties’ access to justice, is an area where political accountability normally plays an essential role. Access to non-judicial control mechanisms may then allow many more possibilities, actors, and procedures to make sure that rights and freedoms are being ensured. At the end of the day, justice means solving the problem at stake and ensuring the effectiveness of policies in a legitimate way, including with the protection of fundamental rights. Achieving ‘justice beyond the judge’ could be done, for instance, through the availability of mechanisms of direct complaint procedures before public authorities (administrative bodies and other dispute resolution tools), contacting members of parliament (political accountability), quasi-legal routes (Ombudsman), mechanisms of external review, or even informal channels. This is especially the case if the enforcement authority lacks independence in its enforcement operations, that is, the ability to withstand pressures from the political sphere and the supervised sector. How could one ensure their fundamental rights if the enforcement authority were dependent on a political will or an industry lobby when making such essential and far-reaching choices as whether to investigate a case or not or to impose a sanction or not? Enforcement action can only ensure fundamental rights and be legitimate if the enforcer (institution, staff, procedures) can be organised in an impartial way. To do this, independence should be guaranteed. In light of rich academic literature on this concept, one can distil the necessity of having relevant de jure obligations (institutional, personnel, financial dimensions to protect functional discretion)⁴⁰ brought to life de facto, thanks to having relevant institutional and contextual culture.

In Section 11.3, we will follow the distinction between the judicial and non-judicial remedies for the enforcement actions of the three selected EU law enforcement authorities and touch upon the question of independence of relevant authorities and their staff.

11.3 Implementation of Access to Justice in the Legal Frameworks of EU Law Enforcement Authorities: The Case of ESMA, DG COMP, and OLAF

In this section, we look at the legal frameworks of three EU enforcement authorities – ESMA, DG COMP, and OLAF. These three have been selected in light of the three types of division of competences between EU and national authorities distinguished earlier – hierarchical, parallel, and supportive.⁴¹ The first refers to a hierarchical positioning of the EU enforcement authority above the national authority. This is so for ESMA. The second division of competences exists where the EU and national authorities operate in parallel. That is the case for DG COMP. The third and last division of competences, which applies to OLAF, is where the EU authority acts mainly in support of national authorities.⁴² The aim of this section is to explore which of these types of division of enforcement competences may be more or less likely to ensure access to justice.

11.3.1 ESMA

ESMA enjoys direct powers in all three stages of enforcement. ESMA contributes to ensuring stability and safety of financial markets by regulating and supervising private actors like credit rating agencies (CRAs) and trade repositories (TRs). At the same time, as ESMA activities interfere with the freedoms of private parties, it has to respect these parties’ fundamental rights and freedoms. How does ESMA do this? First of all, to be able to operate on the EU financial markets, supervised private entities, for example, CRAs, shall receive an authorisation/licence from ESMA. For instance, CRAs assign credit ratings to individual companies and countries. Such ratings may be used by investors to decide whether they wish to invest in debt securities, therefore ESMA supervises these entities together with relevant national counterparts and it ensures that ratings are not based on falsified information. ESMA can delegate some powers to its national counterparts, however, it normally does not do so. The main reason why ESMA carries out supervisory and enforcement tasks by itself is that – by virtue of EU law – it has at its disposal all necessary direct supervisory and enforcement powers. In that sense, unlike other EU enforcement authorities, it does not rely on the powers of national counterparts. For many years, ESMA has had a dedicated supervision department that monitors these entities’ performance and ensures compliance with relevant laws in various ways.

To be specific about its enforcement powers, ESMA can issue a great number of soft law documents clarifying how relevant sectoral laws are to be implemented. For instance, ESMA often issues technical standards that are to be endorsed by the Commission (for instance, Commission Delegated Regulation (EU) No 449/2012 where the terms of application for registration licence for CRAs are clarified, including which information needs to be submitted and through which forms). ESMA can address requests for information to supervised entities and carry out inspections, which are ‘risk-based, proportionate, forward looking and action oriented’.⁴³ Finally, financial market participants have the opportunity to pose questions to ESMA through its webpage and ESMA’s answers form additional guidance, the so-called Q&As.

Once the selected private actors are registered/licensed, ESMA monitors them, can investigate possible suspicions of non-compliant behaviour, and can sanction violations via public notices and fines. The law is clear as to the sole responsibility of ESMA over these participants of financial markets. ESMA does not have to share any powers with the relevant authorities at the national level, unless it chooses to delegate some tasks or requires assistance at the national level.

Information gathering is crucial for enforcement in the financial sector. In that respect, ESMA has set a number of requirements as to the information that has to be submitted to its supervisory section on a regular basis. For instance, CRAs have to report rating data to ESMA, which ESMA then analyses. In 2013, ESMA issued Recommendations and Guidelines on the scope of Credit Rating Agency Regulation (CRAR)⁴⁴ addressed to, among others, CRAs. In addition, ESMA can perform on-site inspections to get more evidence-based information in addition to its desk-based analysis and it can also receive complaints to check an element concerning CRAs and their reporting. Article 23 (b–e) CRAR sets detailed rules as to how and when ESMA can request information when it supervises and when an Independent Investigator may investigate issues that have given rise to suspicion of violating the law and lead to sanctioning.

11.3.1.1 ESMA and the Person Concerned’s Judicial Remedies: ‘Access to Court’

Generally speaking, the fact that ESMA is solely responsible for overseeing the relevant private actors and for sanctioning non-compliance makes access to the court a clear-cut issue. ESMA is an EU agency, and its decisions are legally binding for the addressees; the latter can appeal final decisions to ESMA’s Board of Appeal and to the CJEU. Concerning the respect of fundamental rights in relation to CRAs, the relevant legislation (such as CRAR) provides relevant procedural safeguards for all the stages of enforcement. There are rules on how to submit questions for the Q&A guidelines. At the monitoring stage, when ESMA addresses information requests to supervised entities, it must abide by a list of requirements, including the obligation to state reasons and an indication of the possibility to request information (Article 23b). The same applies to general investigations and on-site inspections. Article 23e CRAR provides specific procedures for deciding on a fine, including the observation of the right to be heard, which shall be granted during the investigation by the Independent Investigation Officer (IIO) and before the Board adopts the final decision and determines the amount of the fine, if relevant. The fines are specified in Article 36a and relevant annex III and vary depending on the violation and whether it happened ‘intentionally or negligently’, where the latter would lead to a lower fine. As the enforcement has the most detrimental effect upon the rights and freedoms of private actors, the final decisions and fines can be subject to appeal before the Board of Appeal (BoA), which is a joint BoA for three EU supervisory agencies, and then before the CJEU. Article 36e CRAR states, among others, that the CJEU ‘may annul, reduce or increase the fine or periodic penalty payment imposed’.

There are three instances where one may question the clarity of procedural safeguards and the availability of judicial review. First, ESMA’s guidelines and Q&As fall within the category of so-called soft law (see Chapter 14). The adoption of soft law has been regulated by ESMA’s founding regulation (Articles 10–16 Regulation 1095/2010, as amended in 2019), yet the adoption procedure gives ESMA some discretion whether or not to hold a public consultation. There may be instances where the public and the financial market participants are not consulted. As there is no normative framework regarding the question of the extent to which a public consultation and participatory rights should be there, the CJEU’s restricted possibility to review soft law may be seen as problematic. It seems debatable whether private parties should be under an obligation to comply with soft law de jure if they have not been consulted ex ante as regards the adoption of soft law potentially affecting their operation and supervision over them. This is in part because ESMA is an independent agency lacking fully-fledged input legitimacy itself. If the court is so strict as to the status and review of soft law, one may need to have an obligation to enhance the ex ante participation of private actors in adopting soft law. This comes from the idea of having a more comprehensive system of control.⁴⁵

Secondly, the legal status of the applicable soft law is unclear. Even though recent case-law (FBF) clarifies the possibility to question the validity of soft law through the preliminary reference procedure, the initiation of action against soft law by the addressee is unclear still.⁴⁶

Finally, as recent research shows,⁴⁷ the legislative language of acts regulating ESMA’s enforcement powers and procedures is not always clear and may raise questions. More specifically, it is not clear how terms such as ‘intentional’ or ‘negligent’ violations by private actors shall be interpreted. This includes, for instance, the question as to where to look for guidance – EU and/or national legal systems and in which areas (public, criminal, private, etc.) when one has to respect procedural safeguards and interpret EU law that lacks clarity as to which law should apply. Furthermore, CRAR allows national procedural differences to be part of ESMA’s procedures when it states that ESMA has to respect national laws when going on-site. This may lead to different procedural guarantees, which are defined nationally, for private parties in similar situations. For instance, if ESMA decides to inspect a private actor in a country where a judicial authorisation is required before the inspection, the private actor may experience more protection (judicial check on the inspection decision), than if no such national requirement is imposed on ESMA. The question is whether there is enough of a safeguard to ensure that ESMA is prevented from potential forum shopping among the jurisdictions when choosing where to inspect and, further, whether such divergent standards are allowed.⁴⁸

11.3.1.2 ESMA and the Person Concerned’s Non-judicial Remedies: ‘Access to Justice’

The recently amended 2019 founding regulation of ESMA (Regulation (EU) 2019/2175) includes a new article, a so far unprecedented clause that can be seen as an additional tool to seek ‘justice’. Article 60a establishes a new procedure on how to address acts exceeding ESMA’s competence: ‘Any natural or legal person may send reasoned advice to the Commission if that person is of the opinion that the Authority has exceeded its competence.’ The operation of this provision is as yet unclear. Furthermore, this policy area is one where many private actors, their associations, and lobby organisations operate. Clearly, all these actors and citizens can address relevant MEPs with their concerns about ESMA’s operation, and the European Parliament can exercise political accountability (Article 3 of the founding regulation) through ad hoc hearings and through the submission of annual reports. The EU Ombudsman is available, too, as this is an institution that can be approached by anyone who has experienced maladministration by EU institutions and agencies.

11.3.1.3 The Degree of Independence of ESMA

As mentioned, the protection of fundamental rights in enforcement is tightly interconnected with independence of the supervisor. For this reason, the independence of ESMA has been regulated in secondary law (Articles 42, 46, 49, 52, 59, 62 of the founding regulation) and internal policies and documents available online.⁴⁹ The de jure organisation of independence seems quite advanced. The personnel independence is regulated for both the top-level functions, staff and non-staff, and is based on legal requirements for appointment, sophisticated appointment and removal procedures for the top-level official, and considerations of ethical behaviour and subsequent positions. The set-up of ESMA respects institutional and financial independence (Article 5 – legal personality, Article 62 – independence for contributions to the budget and a mixed composition of the budget). For the enforcement as such, an element of independence is seen in delineating the supervisory, investigation, and sanctioning stages, each of which is exercised by different sections/personnel of ESMA with the possibility to be heard when it comes to investigations and sanctioning.

11.3.2 DG COMP and the European Competition Network

Enshrined in Articles 101 and 102 TFEU, EU antitrust rules are addressed to economic operators. They prohibit agreements between competitors that harm competition and anticompetitive unilateral conduct by dominant firms. In that sense, the individuals whose rights may be interfered with in the course of antitrust proceedings are first and foremost economic operators, commonly known as ‘undertakings’. However, the fundamental rights of other parties, like those of complainants, may also be at stake.⁵⁰ Indeed, third-party complaints play a key role in the public enforcement of antitrust rules, in view of the fact that, through third-party complaints, competition authorities may often become aware of alleged irregularities in the markets.

Regulation 1/2003⁵¹ has introduced a system of parallel enforcement, meaning that DG COMP and the national competition authorities (NCAs) enforce Articles 101 and 102 TFEU in tandem. To that effect, they are enabled to exchange with each other information and use in evidence any matter of fact or of law.⁵² Given that a system of parallel competences may give rise to parallel proceedings, which is problematic not only from an efficiency perspective but also from a fundamental rights perspective (ne bis in idem), duplication of effort is avoided in at least two ways. First, Article 11(6) of Regulation 1/2003 foresees that the initiation by DG COMP of antitrust proceedings shall relieve the NCAs of their competence to enforce Articles 101 and 102 TFEU. Secondly, the European Competition Network (ECN),⁵³ a network that brings together DG COMP and the twenty-seven NCAs, functions as a forum for case allocation⁵⁴ and information exchange, which ultimately contributes to avoiding duplication of efforts and proceedings. The ECN does not, however, possess legal personality, therefore its allocation decisions may not be appealed before a court, which raises important questions concerning the (non-judicial) remedies that concerned undertakings are able to seek vis-à-vis ECN case allocation that may be affecting their legal position. This will be further discussed below.

DG COMP has a plethora of investigative and sanctioning powers. More specifically, it may carry out investigations into sectors of the economy (sector inquiries),⁵⁵ request information from undertakings by simple request or by decision,⁵⁶ interview legal or natural persons who consent to be interviewed,⁵⁷ and carry out on-site inspections at business premises⁵⁸ and other premises, land, and means of transport.⁵⁹ It is important to note that, with the exception of information requests ordered by simple request, and requests for interviews, all of DG COMP’s powers are of a coercive nature, as refusal to cooperate could result in the imposition of punitive sanctions.⁶⁰ As to sanctioning powers,⁶¹ where substantive antitrust rules have been violated, DG COMP has the power to impose punitive fines⁶² and periodic penalty payments.⁶³

The fundamental rights that are primarily at stake during antitrust investigations are the obligation to state reasons, the right to privacy – particularly during on-site inspections and fair trial rights, such as access to a lawyer, the legal professional privilege, and the privilege against self- incrimination. During the inter partes stage, which follows the investigative stage, the right to good administration (Article 41 CFR) and more specifically the right to have access to the file and the right to be heard are of paramount importance. Regarding the sanctioning stage, the principle of legality, the proportionality of the sanction, and the prohibition against double jeopardy (ne bis in idem) come into play.

11.3.2.1 Safeguards and Defence Rights in DG COMP’s Legal Framework

DG COMP’s legal framework contains various procedural safeguards. Some of these are included in Regulation 1/2003 and in Regulation 773/2004,⁶⁴ while others were initially developed in the case law of the CJEU and were subsequently included in DG COMP’s internal manual of procedures⁶⁵ and in European Commission soft law instruments.⁶⁶ More specifically, if DG COMP rejects a complaint, they must respect the duty to state reasons.⁶⁷ Information requests ordered pursuant to a decision must also respect the obligation to state reasons, by specifying as a minimum the legal basis, the purpose of the request, and the required information and by fixing time-limits.⁶⁸ Likewise, on-site inspections must be ordered on the basis of a decision specifying the subject matter and purpose of the inspection. If, for the performance of an inspection, national law requires ex ante authorisation by a judicial authority,⁶⁹ national courts are competent to review the arbitrariness and excessiveness of the envisaged coercive measures, while the CJEU is competent to carry out a lawfulness check.⁷⁰ During an investigation, undertakings are allowed to consult their lawyer⁷¹ and are entitled to a (limited) right to remain silent.⁷² Furthermore, undertakings may invoke the confidentiality of communications between lawyer and client (legal professional privilege).⁷³ Following the investigation phase, if DG COMP considers that there are grounds to continue the proceedings, they may either proceed towards the adoption of a statement of objections (SO) or engage in discussion with an eye to a commitment decision.⁷⁴ If an SO is adopted, undertakings must be granted the right to be heard⁷⁵ and to have access to the file.⁷⁶ When imposing sanctions and setting the amount of fines, DG COMP must respect the principle of proportionality.⁷⁷ To that effect, the Commission has published Guidelines on the method of setting fines.⁷⁸

The NCAs’ powers are laid down in national law. Directive ECN+ seeks to harmonise the minimum investigative and sanctioning powers that NCAs must have at their disposal,⁷⁹ admissibility of evidence,⁸⁰ and safeguards.⁸¹ However, seeing as the ECN+ Directive is a minimum harmonisation instrument, the national standards regarding the protection of defence rights in investigations for the enforcement of EU competition law still differ to a significant extent.⁸²

11.3.2.2 DG COMP and the Person Concerned’s Judicial Remedies: ‘Access to Court’

The addressees of final European Commission decisions can appeal them directly before the CJEU by means of an action for annulment.⁸³ Final decisions are understood as those that bring about a distinct change in the legal position of their addressee,⁸⁴ such as a decision to perform an on-site inspection, information requests by decision, settlement and commitment decisions, decisions to impose fines and periodic penalty payments, and decisions to reject a complaint.

More problematic in light of judicial accountability is the issue of the ECN’s allocation decisions. Given that the ECN lacks legal personality, such decisions are not open to judicial review. Yet if one considers allocation decisions tantamount to a choice of forum, which may in turn significantly affect the legal position and the content of the defence rights that are available to investigated individuals, the question arises as to how persons affected by allocation decisions can seek effective remedies. Furthermore, DG COMP’s broad margin of discretion in cartel investigations to choose to end a procedure by means of a settlement and not through the imposition of a fine, as well as its discretion to conclude a procedure by means of commitments, also raise questions from the perspective of access to a court. We do not, therefore, refer to the final decision as such, which is subject to the review of the CJEU in any case, but rather to the (interim) decision to choose one path and not another. These discretionary choices and the lack of judicial control thereof should therefore be offset by other non-judicial remedies, which we shall examine below.

11.3.2.3 DG COMP and the Person Concerned’s Non-judicial Remedies: ‘Access to Justice’

Political Accountability

Seeing as DG COMP is a European Commission Directorate, the rules regarding the Commission’s political accountability vis-à-vis the European Parliament (EP)⁸⁵ are applicable. More specifically, the Commission’s president is elected by the EP upon the Council’s proposal.⁸⁶ The Commission must submit to the EP an annual general report, which shall be discussed by the latter in open session.⁸⁷ In terms of rectification, under Article 17(8) TEU, the EP has the power to dismiss the Commission. Furthermore, under Article 226 TFEU, following the request of a quarter of its members, the EP may set up a temporary Committee of Inquiry to investigate alleged contraventions in the implementation of Union law. The European Commission and the EP have concluded a Framework Agreement that governs their relations⁸⁸ and contains modalities to ‘strengthen the political responsibility and legitimacy of the Commission’.⁸⁹ The picture that emerges if one studies relevant documents of the past decade, such as EP reports and debates regarding Commission annual reports on competition policy is one where the EP repeatedly voices concerns regarding the lengthiness of antitrust investigations;⁹⁰ the lack of involvement of the EP when designing soft law instruments;⁹¹ the independence of DG COMP; and, more specifically, the need for a strict separation between the internal divisions that draft guidelines and those that enforce them,⁹² the lack of binding legal provisions concerning the setting of fines,⁹³ and the lack of comprehensive feedback on DG COMP’s part concerning specific requests made by the EP in the latter’s annual competition report.⁹⁴ All of this shows that the adoption and enforcement of soft law instruments may not be as transparent.

In addition to the EP, the Commission and thus DG COMP are subject to the checks of the ECA. Pursuant to Articles 285–287 TFEU, the ECA checks whether the EU budget was raised and spent lawfully and whether financial management was sound.⁹⁵

The NCAs are accountable vis-à-vis national parliaments with a recital in the ECN+ Directive merely stating that Member States may require NCAs to publish periodic reports on their activities to national parliaments, while the monitoring of their financial expenditure might also be foreseen.⁹⁶

Due to lack of legal personality, the ECN cannot be held accountable vis-à-vis the EP or national parliaments regarding its (allocation) decisions. Interestingly, even though information concerning the ECN’s activities may be indirectly provided to the EP through the Commission’s annual report, it has been noted that ‘the EP’s debates and resolutions on the Commission annual reports reflect a very low level of accountability concerning the ECN’,⁹⁷ with the EP generally endorsing the functioning of the ECN and not raising any concerns regarding transparency and accountability within the ECN.⁹⁸

The Hearing Officers

A Hearing Officer is an independent person whose tasks revolve around safeguarding the effective exercise of procedural rights in DG COMP antitrust proceedings. Hearing Officers are not part of DG COMP but – for administrative purposes – are attached to the Competition Commissioner.⁹⁹ More specifically, undertakings may ask the Hearing Officer to examine claims that a document is covered by the legal professional privilege,¹⁰⁰ to examine requests related to the applicability of the privilege against self-incrimination,¹⁰¹ to grant extension of time-limits,¹⁰² and – where they find that undertakings have not been properly informed whether they are subject to the investigation, including its purpose and subject matter – to compel DG COMP to inform undertakings of their procedural status.¹⁰³ Moreover, Hearing Officers decide on whether the right to be heard – including an oral hearing – and the right to have access to the file can be granted to third parties, that is, persons other than those to whom the SO is addressed.¹⁰⁴

11.3.2.4 Independence

In the context of EU antitrust law enforcement, the independence of the European Commission/DG COMP, the NCAs, and the ECN is critical for at least two reasons. First, given that competition authorities are empowered to impose fines of a criminal nature, within the meaning of Article 6 of European Convention on Human Rights (ECHR), it is logically expected that they must also meet the requirements of an ‘independent and impartial tribunal’.¹⁰⁵ Secondly, it has rightly been noted that, as various Member States may have an interest in national companies, through for instance the holding of shares, having an independent competition authority is instrumental in ensuring that the enforcement authority will not be captured by the industry/State interests.¹⁰⁶ Additionally, one should not forget that the need for independence transcends the authority to also reach the judiciary. Indeed, assuming that a competition authority is not an ‘independent and impartial tribunal’ within the meaning of Article 6 ECHR, it is of paramount importance that the judiciary reviewing the decisions of the competition authority is independent. Independence is then key for an individual’s access to justice, as the degree of independence of a competition authority may affect the overall fairness of antitrust enforcement proceedings.

With respect to DG Comp’s independence, pursuant to Article 245 TFEU, the members of the Commission shall be independent. In addition, a number of checks and balances aim at ensuring the independence of the decision-making process. More specifically, an Advisory Committee is established, which consists of members of the twenty-seven NCAs, the Hearing Officer, the Commission’s legal service, and a Chief Economist. That committee must always be consulted prior to the adoption of a decision.¹⁰⁷ As far as the NCAs are concerned, independence requirements are set out in Article 4 of the ECN+ Directive.

Lately, the de facto independence of the Commission, the NCAs, and the ECN have been questioned. As far as the Commission is concerned, it has been noted that, notwithstanding the control exerted by the Advisory Committee, the fact remains that decisions are taken by the College of Commissioners, a decision-making body consisting of twenty-seven politicians prone to political lobbying and external influences.¹⁰⁸ As regards the NCAs, it is yet to be seen whether and, if so, to what extent the inclusion of quite broadly formulated independence requirements in the ECN+ Directive will bring about the envisaged results. One thing is for sure: at the moment, the rule of law crisis in various EU Member States places the independence of competition authorities and of the courts subsequently reviewing their decision in a state of flux. Considering that the Commission is allowed to reject complaints on the grounds that an NCA is better placed to examine a complaint,¹⁰⁹ combined with the fact that allocation decisions that take place within the ECN are not subject to any (judicial) control, it becomes evident that some cases may end up being dealt with by NCAs whose independence can be strongly questioned, without the individual having at their disposal any judicial avenue to attain justice.

11.3.3 OLAF

OLAF’s mission is to step up the fight against fraud, corruption, and any other illegal activity affecting the financial interests of the Union.¹¹⁰ To that end, OLAF carries out administrative investigations in the Member States (i.e., ‘external investigations’) and in the Union’s institutions, bodies, offices, and agencies (i.e., ‘internal investigations’).¹¹¹ For reasons of clarity, we consider only the first – external – type of investigations. OLAF investigates so-called persons concerned: any natural or legal person suspected of having committed any act that falls within OLAF’s mandate. To be sure, this mandate is very broad and covers potentially any act where Union money is involved, irrespective of the policy area affected and irrespective of where – at the EU or Member State level – the alleged infringement has taken place.

OLAF, as should be clear by now, is an investigatory body. It does not monitor nor does it impose sanctions. OLAF’s Director-General opens an investigation when there is a ‘sufficient suspicion’, which is often based on information that derives from third parties, that may or may not have monitoring functions or anonymous information.¹¹² At the end of an investigation, when OLAF wishes to see follow-up to its work – in the form of sanctions or otherwise – its Director-General draws up a report (often) accompanied by recommendations that indicate the action to be taken by the Member State concerned: disciplinary, administrative, financial, or judicial (i.e., punitive) action.¹¹³ OLAF’s reports are admissible as evidence in national proceedings.¹¹⁴

The fundamental rights that may be interfered with or violated, considering OLAF’s restricted investigatory task, are limited to those outlined in Section 11.2.1: the right to privacy and the right to a fair trial. With respect to the first, as indicated earlier, OLAF’s on-the-spot checks and inspections interfere with the natural or legal person’s right to respect for the home and their communications, as protected by Article 7 CFR.¹¹⁵ The right to a fair trial is not directly at risk in OLAF’s investigations. After all, the (potential) trial before a Member State court only takes place after OLAF has concluded its work. Nevertheless, the way in which OLAF obtains evidence during its investigations – by means of its on-the-spot checks and its interviews – is of importance for the trial and sanctioning phase and what OLAF does ‘often determines the framework in which the offence charged will be considered at the trial’.¹¹⁶ OLAF’s legal framework recognises this and, accordingly, provides the person concerned with the necessary procedural guarantees.¹¹⁷ The person concerned has the right to avoid self-incrimination even though OLAF exercises no compulsion. In addition, they have the right to be assisted by a ‘person of choice’; a broad denominator that includes lawyers. Once the investigation has been completed and before conclusions referring to a person concerned by name are drawn up, that person shall be given the opportunity to comment on the facts concerning them.¹¹⁸ In other words, while OLAF’s legal framework does not say so explicitly, the person concerned has a right to be heard before the report is transmitted for follow-up proceedings. Beyond that, to make the exercise of procedural safeguards effective, the person concerned also has the right to be informed of the safeguards with which OLAF must comply.¹¹⁹

11.3.3.1 Safeguards and Defence Rights in OLAF’s Legal Framework

While OLAF’s legal framework offers a host of safeguards, some are notably absent. The legal professional privilege is awarded no particular status in OLAF’s legal framework and is mentioned only in passing in internal guidelines. If during digital forensics operations in the context of an on-the-spot check the person concerned claims that the device in question contains data of a legally privileged nature, the data shall be acquired and placed in a sealed envelope. The representative of the economic operator shall be told that they will be invited for a meeting to resolve the issue before OLAF opens the sealed envelope.¹²⁰ The internal guidelines do not dictate whether the information, if indeed it falls under the scope of the legal professional privilege, may still be used or whether it must be excluded from the case file if OLAF and the person concerned do not come to a resolution on the issue. Additionally, it seems to regulate only those situations in which privileged information is stored digitally; ‘physical’ privileged information – letters and the like – are not accorded protection.

Another safeguard that, until recently, was notably absent is the right to have access to the file. Contrary to other fields of law, such as competition law enforcement by DG COMP, the CJEU refused for a long time to extend the protection of the right to have access to the file to the OLAF. The reasoning that underpinned the Court’s judgment was that no obligation under EU (fundamental rights) law existed to grant the person concerned access to the file, because (i) OLAF’s report – that is, the end-product of its work – does not bind the Member State authorities to which it is addressed; and/or (ii) it is these national authorities that, ultimately, bring about a ‘distinct change’ in the concerned person’s legal position. According to the CJEU, it is incumbent on the authority initiating the follow-up to OLAF’s investigative work to grant access to the file.¹²¹ In the last few years, the CJEU seemingly has backed down, ever so slightly, from this position. In Homoki v Commission, the CJEU held that OLAF cannot refuse the person concerned access to the investigation report after an investigation has been closed and when such disclosure would no longer prejudice OLAF or its investigations.¹²² In a similar application in Vendrame v Commission, yet to be decided on, Vendrame lodged an action before the CJEU complaining of OLAF’s refusal to grant access to the investigation report.¹²³

Because of OLAF’s limited (investigatory) task and the consequent need for national authorities to jump in when follow-up, by means of further investigations and/or ultimately sanctioning, is necessary, there is a division of responsibility (and of labour) when it comes to ensuring access to justice in the case of fundamental rights interferences and violations. In Sections 11.3.3.2 and 11.3.3.3, we highlight how this division features in the person concerned’s quest for access to judicial remedies and non-judicial remedies.

11.3.3.2 OLAF and the Person Concerned’s Judicial Remedies: ‘Access to Court’

OLAF’s investigative acts can interfere with or violate the person concerned’s fundamental rights. Because these acts are imputable to the EU legal order, judicial control – at least in theory – is available at the EU level. The CJEU controls OLAF’s investigations by means of the action for annulment and the action for damages.¹²⁴ Beyond these two direct forms of review before the EU court, a person can indirectly have an OLAF act reviewed when a national court refers a preliminary question on the validity of an OLAF act to the Court of Justice. Our discussion here will focus on the first two forms of (direct) review.

The Court of Justice has consistently qualified whatever OLAF does – its investigative acts as well as its investigation reports – as preparatory in nature, that is, measures that pave the way for a final decision at the national level and that, in and of themselves, do not bring about a distinct change in the legal position of the person concerned.¹²⁵ Such preparatory measures are, according to IBM v Commission, only open to an action for annulment where they themselves are the ‘culmination of a procedure distinct’ from a national decision on the liability of the person concerned.¹²⁶ Because OLAF, at least in external investigations, necessarily depends on national authorities for follow-up on its investigations, the ‘distinct procedure’ criterion poses, in the current OLAF framework, an almost insurmountable hurdle to persons concerned wishing to annul an act attributable to OLAF.¹²⁷

Because actions for annulment are essentially closed off to the person concerned, the only pathway still left open to them is an action for contractual or non-contractual damages because neither of these poses admissibility requirements. Actions for damages have thus far shown poor returns for the person concerned.¹²⁸ The main issue lies in establishing causality between the unlawful act in question and the damage incurred, the latter of which is in most cases ultimately felt at the domestic level.

11.3.3.3 OLAF and the Person Concerned’s Non-judicial Remedies: ‘Access to Justice’

To make up for or complement the individual’s lack of access to court, the EU legislator has put in place non-judicial mechanisms to try and hold OLAF accountable. Many of these mechanisms, put in place before the 2020 revision of OLAF’s legal framework, try to attain a degree of political accountability. The purpose of these political mechanisms is to provide a sense of ex post accountability that ‘helps promote transparency and to avoid arbitrariness in the exercise of OLAF’s functions. It provides for a forum to identify and discuss possible loopholes in the framework for investigations’.¹²⁹ These mechanisms do not, however, provide the person concerned with a pathway to justice because they do not relate to OLAF’s investigations in concreto, but – on the contrary – operate on an ‘investigation-overarching’ level and concern OLAF’s fulfilment of its investigative task in general. Moreover, the person concerned whose rights have been interfered with or violated in the context of an OLAF investigation is not placed in the driving seat and cannot by their own motion initiate actions before or in these fora. In other words, the person concerned is completely at the mercy of OLAF or other institutions. OLAF’s legal framework puts in place the following mechanisms to ensure political accountability: the duty to report to, and exchange views with, EU institutions; the European Court of Auditor’s audits; and supervision by OLAF’s Supervisory Committee.¹³⁰

In addition to forms of political accountability, OLAF’s legal framework has in place a number of internal and external review mechanisms that allow for some means of controlling the legality of OLAF’s investigations: (i) OLAF’s Review Team, (ii) the controller of procedural guarantees, and (iii), the Ombudsman. We discuss each in turn.

Internal Review

OLAF’s Review Team

OLAF’s legal framework obliges the Director-General to put in place an internal advisory and control procedure. This procedure includes a legality check relating, inter alia, to the respect of procedural guarantees and fundamental rights of the persons concerned and of the national law of the Member States concerned.¹³¹ This legality check is to be carried out by OLAF’s Review Team, which consists of experts in law and investigative procedures.¹³² The end product of a review – both ex ante and ex post – is an opinion that the Review Team provides to OLAF’s DG. The DG, in turn, uses this opinion as a basis for decision-making.

While praiseworthy, there are notable caveats. The first and foremost is that it does not give the person concerned whose fundamental rights have been interfered with or have been violated a means to have their voice heard. The person concerned cannot request that the Review Team assess the legality of a particular investigative act or evaluate interferences with their fundamental rights. Secondly, the Review Team is not independent. The team, while not involved in carrying out investigative acts or writing the report, is part of OLAF’s staff and, in that guise, operates under the authority of the DG.¹³³ Thirdly, and already mentioned above, the Review Team does not have decision-making power. Its opinions are advisory only and the DG may deviate from these opinions if they wish to do so.¹³⁴ Fourth, one can question the effectiveness of the review. OLAF’s SC issued an opinion in which it found that that the Review Team’s opinions were not systematically followed-up on.¹³⁵

External Review

The Controller of Procedural Guarantees

OLAF’s legal framework quite recently established the Controller of Procedural Guarantees.¹³⁶ The Controller is appointed by the Commission and is administratively attached to OLAF’s SC.¹³⁷ The Controller’s purpose, as the name already suggests, is to ensure that the person concerned’s procedural guarantees and fundamental rights are protected and complied with.¹³⁸ To that end, OLAF’s legal framework provides for a complaints mechanism that allows the person concerned to lodge a complaint with the Controller regarding OLAF’s compliance with procedural guarantees as well as on the grounds of an infringement of the rules applicable to investigations by the OLAF, in particular, infringements of procedural requirements and fundamental rights.¹³⁹ The Controller, when dealing with complaints, does not interfere with OLAF’s investigation but has access to the necessary case-related documents and may organise and conduct hearings.¹⁴⁰ The complaint mechanism is adversarial in nature: both OLAF and the person concerned can state their case and have the right to be heard before the Controller completes the assessment.¹⁴¹ Where a breach is established, the Controller invites OLAF to take action to resolve the complaint. If the Controller finds the solution provided by OLAF satisfactory, the Controller closes the case; if the Controller does not find the solution satisfactory, they issue a recommendation on how to resolve the complaint.¹⁴² OLAF’s DG takes appropriate action as warranted by the recommendation. If the DG decides not to follow the Controller’s recommendation, the DG shall communicate to the complainant and to the Controller the main reasons for that decision.¹⁴³

The Controller, in contrast to the Review Team, is completely independent both from OLAF and from the SC to which it is attached. The Controller neither seeks nor takes instructions from anyone in the performance of their duties.¹⁴⁴ Moreover, the Controller is concerned with inter alia the legality of specific investigative acts. Importantly, the person concerned can motu proprio lodge a complaint before the Controller. The person concerned does not depend on OLAF or other bodies or authorities in their quest to access justice. Notwithstanding all the above, the Controller – when push comes to shove – only has the power to issue recommendations. Although the DG must state reasons if they consider deviation justified, they can decide not to follow the Controller’s recommendation.

The Ombudsman

The European Ombudsman can receive complaints from the person concerned in relation to instances of maladministration by OLAF like it does for all Union institutions, bodies, offices, and agencies in accordance with its constitutional mandate.¹⁴⁵ Maladministration can include, among other things, the violation of fundamental rights of the person concerned.¹⁴⁶ On the basis of a complaint – or on their own initiative – the Ombudsman conducts inquiries into the alleged maladministration.¹⁴⁷ Where the Ombudsman establishes instances of maladministration, they make recommendations to OLAF to address these instances. In relation to OLAF the Ombudsman has, on a number of occasions, dealt with complaints. Many of these complaints have concerned OLAF’s refusal to provide access to the case file or the investigation report by persons concerned and third parties.¹⁴⁸ Other complaints concerned OLAF’s failure to follow the applicable investigative formalities and not affording the person concerned a reasonable opportunity to respond to the findings.¹⁴⁹

While the Ombudsman, in a similar fashion to the Controller of Procedural Guarantees, allows the person to file a complaint on their own initiative before an independent authority concerning interferences and violations of fundamental rights, the complaint also suffers from the same defects. At the end of its inquiry, when the Ombudsman closes a case by way of decision, they can only recommend remedial action to OLAF. These recommendations, as the name suggests, are just that: non-binding recommendations.

11.4 Discussion

The aim of this edited volume is to investigate whether private parties have remedies (judicial and non-judicial) available when their fundamental rights are violated by the EU (here: by an EU enforcement authority). From our analysis, we can identify three key, cross-cutting themes where concerns exist in relation to access to remedies when fundamental rights have been violated by EU law enforcement authorities. These are:

1. 1. the limits of judicial review of non-binding preparatory acts and soft law instruments. As a corollary, the right to access to the court can be undermined;

2. 2. the principle of national procedural autonomy may lead to different degrees of protection of fundamental rights, which can affect legal certainty and fairness; and

3. 3. the limits of ex ante judicial remedies and of non-judicial remedies, like political accountability, which could mitigate gaps stemming from the limits of ex post judicial control and hence ensure more comprehensive control over executive discretion.

We briefly discuss these themes here and outline potential solutions to rectify the possible gaps in the protection of fundamental rights.

First, it is important to reiterate the following. During enforcement processes, EU law enforcement authorities, often together with national counterparts, may license private parties, monitor compliance, and investigate and/or sanction violations of the law. As such powers affect the rights and freedoms of private actors, EU law enforcement authorities are bound by the law to respect fundamental rights, such as the right to good administration (Article 41 CFR), the right to privacy (Article 7 CFR), fair trial rights (Articles 47/48 CFR), and the right of access to the court (Article 47 CFR). More specifically, the right to good administration includes the obligation to state reasons, the right to be informed, the right to be heard, and the right to have access to the file. The defence rights include, among others, the right to have access to a lawyer, the privilege against self-incrimination, and the legal professional privilege. In addition to that, sanctions must respect the principles of legality and proportionality of offences and penalties law (Article 49 CFR).

Going back to the first point of the list above, our analysis shows that enforcement by EU enforcement authorities can – by necessity or by design – allow for actions not easily amenable to judicial review, such as soft law and investigations that can (ultimately) result in punitive follow-up at the Member State level, which can nonetheless interfere with, and even violate, fundamental rights of the natural or legal person in question. In many of these instances, there is no possibility to obtain legal protection or to remedy these violations through the judicial avenue leading to Luxembourg. Think, for instance, about ESMA supervising private actors on a daily basis, including through informal conversations and guidance. From an effective enforcement perspective, the deployment of such informal tools seems essential to achieve compliance yet may lead to possible disagreements with the private actors. The private actors may have difficulties in having standing before the court if no de jure binding decision has been issued by ESMA against them or if soft law instruments have no legal force.

Furthermore, when various enforcement stages (monitoring, investigating, sanctioning) are exercised by the EU authority and its national counterparts, this can result in procedural hurdles in ensuring access to the court. A good example is OLAF. Because OLAF merely draws up a report accompanied by recommendations on the punitive follow-up to be taken at the Member State level and does not have the competence to impose sanctions, the CJEU has consistently held that the action for annulment is closed off for the person concerned as OLAF’s work is considered as preparatory and does not bring about change in the legal position of the person concerned (a standing requirement under TFEU Article 263). All the while, national courts do not possess the competence to rule on the validity of OLAF’s investigative acts or the report established as a result thereof, as doing so would violate the heavily guarded division of jurisdictional competences laid down in Foto-Frost. OLAF can, however, interfere with or violate the fundamental rights of the person concerned in the context of its investigations. The multi-jurisdictional legal order of the EU poses similar challenges in the field of enforcement of competition law. Here, too, some decisions by bodies lacking legal personality, like the ECN, seem to be subject to judicial scrutiny. Yet the ECN’s allocation decisions determine the content of the procedural rights that will ultimately be available to the parties subject to EU competition law enforcement proceedings.

The fact that the EU consists of multiple legal orders leads to the challenge of ensuring the protection of fundamental rights in the same fashion. The principle of national procedural autonomy shields national sovereignty and accommodates procedural differences and divergent fundamental rights’ standards across the Union. At the same time, this may come at the expense of legal certainty especially when the legal framework is designed in such a way as to allow EU law enforcement authorities to choose to carry out enforcement actions and obtain evidence in jurisdictions offering the least protection. A good example in that respect is ESMA and on-site inspections. EU law allows ESMA to seek ex ante judicial authorisation before the performance of an on-site inspection only if national law so requires. In the absence of EU law harmonising mandatory ex ante judicial authorisation, an EU enforcement authority may decide to carry out investigative activities in Member States that provide for lesser ex ante legal protection. In a similar vein, the fact that the twenty-seven Member States protect fundamental rights differently, yet evidence obtained on the basis of divergent standards can be exchanged freely between competition authorities and be used for sanctioning in various Member States, may come at the expense of procedural fairness.

To what extent can there be non-judicial remedies to address possible violations of fundamental rights by EU enforcement authorities (EEAs)? Our third point on the list above indicates that while non-judicial remedies may exist, they cannot possibly offer the same kind of protection that judicial remedies can. We have identified the following non-judicial remedies: political accountability, the availability of hearing officers (DG COMP), controllers of procedural guarantees (OLAF), Ombudsman, special mechanisms like a request to the Commission (ESMA), and ex ante forms of control via, for instance, consultation and participation of private parties in certain procedures. These remedies are important and can help those who seek justice for violation of their specific rights. The mechanisms of political accountability and the Ombudsman may address such violations from a structural perspective via, for instance, adjusting the law, which could stop such violations in the future and give the satisfaction of being heard and having one’s complaint taken into consideration. However, the limits of such non-judicial remedies are twofold. For one, unless a recommendation or advice is given by internal mechanisms of review, like the ESMA Board of Appeals or the DG COMP’s hearing officer, non-judicial mechanisms cannot rectify immediately the violation of one’s rights in a specific case. This is because EU enforcement authorities are required by law to carry out supervision and enforcement in an independent manner. No politician should be able to influence the EU authority when they enforce the law against private actors. Hence, we discussed the issue of independence and its importance at the institutional and personnel levels in enforcement. For two, non-judicial remedies do not and cannot possibly offer the same kind of protection that judicial remedies can as they often lack certain qualities that go part and parcel with the judicial authorities and remedies: taking binding decisions, availability of remedies in concreto and not merely in abstracto, and independence within the meaning of Article 6 ECHR/ 47 CFR. At the same time, it may also be the case that the legislative design of non-judicial remedies may not have yet been developed. These are often rather recent changes; future empirical research will hopefully show to what extent these can be effective means to find justice.

11.4.1 What Are the Lessons That We Can Draw from Our Analysis?

First of all, the three types of EEAs that we have considered in our analysis are useful for analytical purposes to see and assess the sources of potential violations of fundamental rights. The clearer the division of competences among EU and national authorities and the lesser the degree of possible de jure joint enforcement action, the clearer the judicial remedy becomes. For instance, if ESMA carries out all the enforcement actions on its own, the private party has only one authority to address and the private party can do so according to the EU standards of fundamental rights and via other non-judicial remedies at the EU level. At the same time, the more divided the enforcement process between EU and national jurisdictions and the greater the degree of mixing supervisors, the more challenges there can be in seeking judicial redress: Which court? Which standard of fundamental rights? Is there a check on an action or decision of an EEA? etc.

Secondly, the legislative design of enforcement responsibilities, tasks, powers, fundamental rights, and controls is of paramount importance to prevent violations of fundamental rights and redress if the violation has happened. However, at the moment of writing, the legislative design of direct EU law enforcement often results in an allocation of responsibility that may not be matched with accompanying (judicial or non-judicial) remedies at the respective national or EU level. While it is true that we are discussing a relatively new development, such a mismatch must be prevented. Relevant procedural guarantees and procedures need to be developed and be clear for both the EU authorities and the supervised parties. For instance, requests for information need to be based on good reasons, especially if they are issued informally. Supervised parties should be heard, especially if ex post controls, such as judicial review, do not cover specific types of acts, which can limit or affect fundamental rights. Judicial dialogue between EU and national courts should be enhanced in order to overcome the strict dichotomy between the EU and the national level when it comes to judicial review of EU law enforcement authorities’ actions.

Finally, as part and parcel of the previous lesson, the coexistence of judicial and non-judicial remedies can complement each other’s gaps and ultimately ensure a fully-fledged protection of fundamental rights if designed properly and aligned with one another, including EU-national alignment. For instance, if effective enforcement in the field of financial markets requires informal supervisory practices, mediation procedures could be envisaged to ensure a mechanism of redress of possible violations of fundamental rights during such informal supervision. If soft law guidance is crucial to enhance compliance, private actors need to be able to ensure they are being heard when the guidance is developed. If the legislator is setting novel types of cooperation, such as shared enforcement, it should be clear which standard of fundamental rights protection should apply, what key terms on the basis of which enforcement authorities base their decisions mean (e.g., violation with intent or negligently), and which jurisdiction(s) should be responsible for the review of all stages of enforcement. Lastly, it is essential that the EU legislator does not attempt to use (non-judicial) remedies, such as internal mechanisms of review by internal units, to fill the gaps in judicial protection in the domain of direct enforcement by EU authorities, but rather seeks to complement the existence of judicial remedies.

11.5 Conclusion

This chapter has discussed the question of the access to justice by private parties during enforcement procedures in the EU, especially EEAs. We have argued that enforcement activities have characteristics showing the necessity of both judicial and non-judicial remedies if one’s fundamental rights have been violated. Enforcement is a process that aims at ensuring policy goals and ensuring core values, where non-compliance should be better prevented, rather than responded to. This implies the importance of having informal, preparatory, ex ante as well as legally binding actions and decisions. These actions and decisions can, however, lead to violations of fundamental rights: rights to good administration, access to the court, privacy, due process, etc. These violations can be challenging to address for a number of reasons, including the multi-jurisdictional legal order of the EU at times lacking legislative clarity as to the scope of certain fundamental rights standards and enforcement responsibilities and the importance of informal actions and guidance enhancing compliance. In this context, we have argued for the importance of developing an alignment between judicial and non-judicial remedies to address violations of fundamental rights in a comprehensive and proportionate way.