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Anticompetitive agreements: New risks – EU law does not protect against extradition to third countries

By  Sebastian Janka and  Sarah BlazekNoerr

A recent ruling by the European Court of Justice (ECJ) on 10 April 2018 highlights the serious consequences for natural persons of participating in anticompetitive agreements. According to the decision, it is compatible with EU law for EU Member States to extradite citizens of other EU Member States to third countries such as the United States.

This applies even if national constitutional law blocks the extradition of that country’s nationals. Such an extradition does not constitute discrimination, according to EU law. EU citizens may therefore have large fines and custodial sentences abroad imposed and also enforced. Additionally, no compensation can be claimed from the extraditing country in a state liability action. Given these serious consequences for natural persons, the early implementation of well-founded and comprehensive antitrust law compliance measures in companies is more important than ever, especially to protect the company’s own employees.

Background to the case
Since April 2016, the ECJ had been considering the case of Romano Pisciotti in a preliminary ruling procedure (C-191/16, see in particular the details of the background to the case here. On 10 April 2018 the judgment was rendered in the matter which had been controversial from the outset. In its decision the ECJ essentially agreed with the opinion of the Advocate General Yves Bot. It ultimately came to the conclusion that the Federal Republic of Germany had acted lawfully when extraditing Mr Pisciotti and Mr Pisciotti was therefore not entitled to any compensation.

The key facts were as follows: The Italian citizen Romano Pisciotti – a manager accused in the United States of having been involved in anticompetitive concerted practices and agreements – was arrested at Frankfurt airport during a stopover of his flight from Nigeria to Italy and finally extradited from Germany to the United States in April 2014 under the corresponding EU-USA Agreement. There he was handed a significant fine and custodial sentence. The manager has since served his two-year custodial sentence. Subsequently, he filed a state liability action against Germany before the Berlin Regional Court and submitted that he had been discriminated against because of his nationality, since Germany does not extradite its own citizens to third countries. He alleged that this was contrary to EU law and he was therefore entitled to compensation, he said. The Regional Court presented several questions to the European Court of Justice for a preliminary ruling to help answer this matter.

The pivotal issue of the case was the question of whether it is a breach of EU law if Germany does not extradite its own citizens to third countries because of the German Basic Law (Article 16(2) GG), but citizens of other EU states do not enjoy this protection – in other words different standards apply to its own citizens and citizens of other EU Member States.

The ECJ held that initially substantive EU law applies if an EU citizen has exercised his right to move freely within the European Union (Article 21 TFEU) and the extradition request was made in the context of the EU-USA Agreement. The fact that, when he was arrested, he was only in transit in Germany is not capable of casting doubt on the applicability of EU law.

Regarding the legality of the extradition, however, the ECJ came to the conclusion that this was in conformity with EU law: Neither the general prohibition of discrimination (Article 18 TFEU) nor the right to freedom of movement (Article 21 TFEU) forbid a Member State in principle from treating its own citizens and citizens of other EU Member States differently on the basis of a national constitutional law standard. An EU Member State may therefore prohibit the extradition of its own citizens and at the same time enable the extradition of citizens of other EU Member States.

In its grounds, the ECJ broadly adopted the explanations in the submissions of Advocate General Yves Bot (see here):

The judges found that in this case there was unequal treatment of an EU citizen. Yet, it considered the restriction to be proportionate and thus justified, and therefore not a breach of the right to free movement. The legitimate objective was to prevent the risk of impunity for persons who have committed an offence. The extradition was also necessary since Germany had no alternative, less prejudicial options to act. An EU Member State is only required to inform in advance the Member State whose citizenship the EU citizen possesses. Thus, the home country must at least be given the opportunity to issue a European arrest warrant for its citizen. In the case of Mr Pisciotti, however, the consular authorities of the Italian Republic were kept informed of Mr Pisciotti’s situation by Germany before enforcement of the extradition request by the United States, without the Italian juridical authorities issuing a European arrest warrant for him. In the opinion of the ECJ, EU law therefore did not stand in the way of extraditing Mr Pisciotti to the United States.

Conclusion and outlook
Following the ruling by the judges in Luxembourg, EU Member States can therefore treat citizens of other EU Member States differently from their own citizens with regard to extradition to third countries. This opens up new and extensive areas of risk for natural persons accused of having behaved anti-competitively in third countries. Alongside large fines, long custodial sentences are possible in many third countries. Give this considerable expansion of risks in connection with breaches of antitrust law, it is therefore more important than ever to put in place comprehensive antitrust compliance measures at companies early on. Companies should carefully review their existing antitrust compliance systems in light of the increased risk and update or adapt them if necessary. This applies especially to thorough and continuous training in antitrust law for managerial staff and other employees.

The judgment of 10 April 2018 in the matter of Romano Pisciotti (case C-191/16) is available here. The press release of the ECJ is available here.

Compliments to Noerr, a member of the EACCNY