*Head of Unit, European Competition Network,
DG Competition, European Commission
It is widely recognized that the entry into force of the Regulation 1/2003 on 1 May 2004 was a landmark reform, amounting to the most far-reaching overhaul of the EC antitrust procedures since 1962. Its implementation has simplified and strengthened antitrust enforcement in several key ways.
First, abolishing the practice of notifying business agreements to the Commission has ended bureaucracy and legal costs for companies and enabled the Commission to focus its resources on the important fight against cartels and other serious violations of antitrust rules.
Second, empowering national competition authorities and courts to apply the EC antitrust rules in an effective manner means that there has been a huge increase of the application of the EC antitrust rules by a multiplicity of enforcers.
Third, the Regulation establishes a more level playing field for businesses operating cross-border as all competition enfor-
cers, including the national competition authorities and national courts, which are obliged to apply EC antitrust rules to cases that affect trade between Member States.
Fourth, the Regulation enables close cooperation between the Commission and national competition authorities in the European Competition Network (ECN).
Fifth, the Regulation equips the Commission with enhanced investigation tools so that it can better detect breaches of the EC antitrust rules.
Given the ground-breaking novelty of this system, the
Regulation foresaw a period of five years for the Commission and the other stakeholders to gather meaningful experience before a report could be made on its functioning. Article 44 of Regulation 1/2003 stipulates that the Commission shall report to the Council and Parliament by 1 May 2009. Such a Report was published on 29 April 2009, based on taking stock of experience with the new system and examining how the principal objectives of the Regulation, i.e. effective and coherent enforcement of the EC competition rules, have so far been met. The Report on the first five years of functioning of Regulation 1/2003 has launched a broad debate with stakeholders. This has largely confirmed that the Commission has a mature system of antitrust enforcement. In a limited number of areas the Report, which is accompanied by the Staff Working Paper, highlights aspects which merit further evaluation, but leaves open the question of whether any amendment to the existing rules or practice is required. It will serve as a basis for the Commission to assess, in a further stage, whether it is appropriate to take further policy initiatives.
From the Commission’s perspective, the functioning of the Regulation 1/2003 has overall been very positive. The impact of Regulation 1/2003 has led to a profound change in the enforcement of the EC antitrust rules. Regulation 1/2003 brought about a quantum leap in terms of the application and enforcement levels of Articles 81 and 82. The fact that more than 300 envisaged decisions have so far been shared by the national competition authorities within the ECN gives a clear indication of the enhanced enforcement of Community competition rules, as they are being applied on a scale which the Commission could evidently not have achieved on its own.
The Commission has also benefited from its enhanced investigation powers. For example, it has used its new tool of taking binding commitment decisions under Article 9 on several occasions. Thanks to commitments, the Commission can get through more cases and therefore prevent more harm. By also avoiding delays in the implementation of remedies the Commission can have a swift market impact, which is its ultimate aim. Two recent cases - E.ON and RWE can serve as good example of this approach. The commitments which the Commission obtained in these cases are making the clearest recent steps towards opening up European electricity and gas markets. At this moment, the Commission is testing commitments by another European energy giant, GDF-Suez.
Importantly for the Commission, one of the main consequences of Regulation 1/2003 has been to enable it to take a proactive approach. This is reflected in the increasing use of sector inquiries which have been launched since modernization in complex and economically very significant sectors: energy, financial services and pharmaceuticals. Such inquiries, whilst extremely resource intensive, bring enormous value in terms of the Commission’s understanding of these activities. As a competition authority in the 21st century facing ever more sophisticated issues, it is essential that the Commission can be engaged in this way.
The Commission has also relied on its power to take oral statements under Article 19 and has invoked its power (once) to carry out a search in a private home.
However, that is not to say that everything has functioned to the full satisfaction. For example, it was controversial that Article 3 provides for a level playing field and a single legal standard for companies operating cross-border solely for Article 81, with Member States remaining free to apply national law provisions to unilateral conduct that are stricter than Article 82. It can be questioned whether it is appropriate to have Article 81 as the “EU’s law of the land” for agreements and practices that affect trade between Member States, whereas companies engaged in unilateral conduct remain potentially subject to stricter national rules. At the time of making the Regulation, the main laws of this type were present in Germany and France. In the meantime, it appears that a number of newer Member States (e.g. Hungary, Slovakia and Latvia) have introduced or have considered adopting such measures. Against this background, one of the issues of the Report on Regulation 1/2003 was to what extent these laws have been applied, whether they have to be factored into business decisions and if the stakeholders consider this to constitute a problem in practice.
Another issue that has given rise to some contention is the fact that the NCAs enforce Articles 81 and 82 EC according to their national procedural laws. Regulation 1/2003 left the Member States freedom to determine both the scope of their decisions (e.g. whether to impose structural remedies, what type and level of sanctions) and the procedural requirements that must be respected, subject only to the Community law principles of effectiveness and equivalence. There has been significant voluntary convergence of national with EU law since the entry into force of Regulation 1/2003, for example, a large number of Member States have enacted national laws enabling NCAs to adopt commitment decisions which are broadly modeled on Article 9. Nevertheless, differences remain, e.g. with respect to investigation and fining powers and the handling of complaints. Even for matters where there is prima facie a high degree of convergence, as for commitment decisions, there will often still be more detailed aspects of the procedural framework that differ. For instance some Member States laws set a time limit for commitments to be submitted. Some Member State laws foresee a market test, others not.
Also, certain criticisms about due process and the conduct of investigations in antitrust proceeding were highlighted by some stakeholders. Some of these criticisms reflect a misunderstanding of the Commission’s existing procedures. There may be a need for further clarification on how the Commission is applying the Regulation 1/2003 in practice.
Also, there is a clear need to continue firmly rebutting the criticisms against the nature of the Commission institutional structure (e.g. Commission as investigator, prosecutor, jury and judge, prosecutorial bias, non-conformity with the European Convention on Human Rights, etc.) and reaffirm that current enforcement system is fully compatible with Article 6 ECHR and the case law of the European Courts.
Also, the Commission’s practice with regard to fines has been extensively raised in replies to the stakeholder consultation, mostly pointing to both the level and legal questions of principle. Regulation 1/2003 essentially took over from Regulation 17 the legal basis for imposing fines for breaches of the substantive competition rules. In accordance with Article 23(2), the Commission may impose fines on infringing undertakings and associations of undertakings that do not exceed 10% of their total turnover in the preceding business year. Fines with sufficient deterrent effect, coupled with an effective leniency program, constitute the most efficient weapon in the Commission’s armory to fight cartels. In particular, deterrent fines prevent companies from entering into cartel agreements and entice cartelists to blow the whistle on existing cartels in return for immunity or a reduced fine under the leniency notice.
In the context of the level of fines, it is noteworthy that the Community Courts have reviewed a great number of fines imposed by the Commission and did not find the level of fines to be disproportionate or excessive. In the view of the Commission, the fines were not deterrent enough in previous decades. Now, taking better account of the economic impacts of the anticompetitive behavior, the Commission fines in order to deter, linking the fine to the relevant sales of the infringing company. And if the Commission catches recidivists (the recent French glass company Saint-Gobain is a good example) the fine increases are severe. Because of the adopting a clear policy basis for deterrent fines and a focus on most serious infringements the fines have increased. Moreover, it is well-known fact that several Member States have introduced sanctions on individuals for serious breaches of competition law (in particular cartels). Such measures include notably custodial sanctions and non-pecuniary sanctions on individuals, e.g. disqualification orders.
Finally, divergences of Member States’ enforcement systems remain on important aspects such as fines, criminal sanctions, liability in groups of undertakings, liability of associations of undertakings, succession of undertakings, prescription periods and the standard of proof, the power to impose structural remedies, as well as the ability of Member States’ competition authorities to formally set enforcement priorities. These aspects will merit further examination and reflection as an important part of the horizontal work of the Commission, national competition authorities and the European Competition Network since it is generally recognized that the ECN is a successful and best placed forum to discuss general policy issues on the European level.
* All views expressed in this article are strictly personal, and should not be construed as reflecting the opinion of the European Commission.
Publikováno dne: 11. 11. 2009.
