Download Stronger NCAs – Procedures, Powers, Prospects

21st Annual
EU Competition Law and Policy Workshop
Stronger NCAs – Procedures, Powers, Prospects
ORGANIZED BY PHILIP LOWE, MEL MARQUIS and GIORGIO MONTI
Conclusions
1. The Workshop welcomed a presentation by Anna Vernet from the
European Commission of the ‘ECN plus’ project aimed at empowering
national competition authorities to become ‘more effective enforcers’
and noted the four issues which the Commission had identified as key to
strengthening their enforcement role:
 Their degree of independence from political and other outside
influences and the adequacy of the staff and financial resources at
their disposal;
 The toolbox of enforcement powers at their disposal;
 Their ability to impose fines and other penalties;
 The leniency programmes at their disposal.
2. The results of the Commission’s consultation of stakeholders on ECN
plus showed that there was considerable support for new initiatives at
the EU and national level to improve the effectiveness and efficiency of
NCAs. However, it was emphasised that any increase of their
enforcement powers required a commensurate strengthening of
undertakings’ rights of defence.
3. The efficiency and effectiveness of a competition authority should be
assessed in particular with respect to the accuracy of its decisions, the
degree of quality control it has carried out, including evaluation of past
decisions, its ability to use any discretion it had to establish clear
enforcement priorities, the efficiency and speed of its investigations, and
the extent to which the rights of defending and intervening parties were
adequately protected. Building up the knowledge and skills of a
competition authority was essential to its effectiveness, but necessarily
required diverting some resources away from current tasks to invest in
future capacities.
4. Many competition authorities also had parallel responsibility for
enforcement of consumer protection law and other sectoral regulation.
They had to make clear choices about the use of their scarce resources
in relation to those different responsibilities. It was also stressed that
the number of enforcement decisions taken against companies was not
the best or only measure of effectiveness of a competition authority.
However, a record of little or no enforcement was likely to undermine
the credibility and reputation of an authority, as well as its
independence, even if the quality of its research and advocacy was of a
high level.
5. The Workshop stressed that the Commission and the NCAs were integral
parts of the ECN. The Commission’s structures and procedures should
also be consistent with the principles and standards set for all ECN
members. The EU enforcement system, based around the Commission
and the Courts in Luxembourg, frequently provided the necessary
benchmarks for Member States that were establishing or reforming their
competition regimes.
6. In addition, the Workshop drew attention to the fact that the
Commission’s ‘ECN plus’ initiative concentrated on enhancing the
powers of the NCAs in relation to enforcement of EU law. A broader
question to be addressed was the effectiveness and efficiency of
national competition regimes in applying both EU and national law. In
this context, the scope for greater harmonisation of national procedures
remained to some extent limited because they were embedded in wider
systems of civil law. The EU Damages Directive had shown that it was in
principle possible to carve out a competition-specific regime, but there
limits to this.
7. The role of the Courts in exercising effective judicial control on a
competition authority was considered as an essential element in
guaranteeing the independence, accountability and efficiency of a
competition regime. Through their judgments on referral or appeal, the
Courts in Luxembourg could contribute to increasing convergence of
enforcement activities among national competition authorities and
between them and the Commission. The Commission could assist both
the European and national Courts in their efforts to achieve more
convergence through more active intervention in preliminary ruling
procedures and through its submission of amicus briefs at national level.
8. There was a broad consensus among the Workshop participants that
some basic principles - or minimum standards - for the independence,
the resources and the extent of the enforcement powers of NCAs could
be included, for example, in an EU Directive. Without the legal obligation
to respect minimum standards of independence and enforcement, there
was a constant danger of rollback, in particular in countries where the
competition regimes are new and where there has been a tradition of
political intervention in the work of public agencies.
9. The majority view within the Workshop was that a European Directive
strengthening the powers and independence of the NCAs would
nevertheless leave sufficient flexibility to reflect the variety of very
different political, cultural and institutional traditions in the Member
States. However the diversity of regimes among the Member States was
not an obstacle to efficiency and effectiveness. A degree of competition
between the different systems encouraged innovation and best practice.
As in other areas of public policy, there should be continuous
improvement in the structures and processes of competition authorities.
10.For this reason, any new EU legislation aimed at enhancing the powers
of the NCAs should be accompanied by a revision of existing Guidance
papers and other soft law instruments on procedural and substantive
issues which could provide a degree of predictability and legal certainty
for firms, while at the same time allowing for adaptation of the guidance
given in the light of the development of both case law and markets.
Several participants attached importance to guidance in raising the
presently low awareness of competition law among many sectors of
business.
11.There were different views as to the balance to be struck by the
Commission and by NCAs between providing guidance on the one hand
through taking decisions which could be tested by the Courts, and
therefore through a solid basis of case law, and on the other through
guidelines in which an authority indicated the policy it intended to
pursue. There was also some support for the Commission to provide,
under specific conditions, guidance through fully reasoned clearance
decisions, and for national competition authorities to adopt similar
decisions in very specific circumstances.
12. Clearly any guidance which was not subsequently backed up by case law
was of little value. At the same time, reliance on old case law which
reflected neither technological and market developments nor the best
available techniques of economic analysis provided bad guidance and
undermined the reputation and legitimacy of a competition regime.
Whether or not there were agreements or practices which should be
regarded as per se illegal, there had to be some underlying basis of
empirical evidence and analysis of anticompetitive effects to give
credibility and legitimacy to case law. Only competition authorities, with
the knowledge and experience of markets and of economic analysis
which they accumulate over time, were in a position to provide Courts
with an up-to-date view on markets and how to assess them effectively.
Without the guidance that authorities can provide through enforcement
decisions and guidance documents there will be no effective definition
of enforcement policy; there will rather be outdated case law and
greater legal uncertainty for business as to those structures or conduct
that are likely to be illegal and those that are not.
13.There was general agreement within the Workshop that there was now
greater predictability in merger control policies, although at least at
European level there was a continuing reluctance to challenge merger
decisions before the Courts, and case law remained limited. However,
the available guidance on enforcement under Articles 101 and 102 TFEU,
such as enforcement in the field of vertical restraints, now appeared out
of date in relation to the rapid development of the digital economy and
new disruptive business models. The analysis of what now constituted
market power, and what practices could be regarded as anticompetitive
had become more complex. Recent cases in relation to online platforms
revealed clear divergences between authorities on what enforcement
action should be taken in relation to the same facts.
14.There was now a clear role for the ECN to pool knowledge and
experience in these new areas and to reflect this in papers or opinions.
Without providing guidance as such, these documents would at least
constitute agreed statements about the latest state of knowledge on
trends in these new sectors. In addition, there was agreement that it
was neither sensible nor possible for all cases with cross-border effects
to be handled by the Commission. Yet there was certainly room for
improvement in cooperation between national competition authorities
that are dealing broadly with the same infringement. Upstream,
knowledge and experience of the markets concerned needs to be
shared, even if there is divergence on remedies. Procedural obstacles to
rights of defence (including access to file) for parties in different
countries need to be removed.
15.The Workshop gave general support to the idea of improvements to the
leniency regime in the direction of a European one-stop shop. This could
begin with harmonisation of summary applications, an EU-wide marker
system and protection of immunity applicants in other jurisdictions.
Participants also favoured rules providing for the exclusion of individual
sanctions for employees of infringing undertakings insofar as the risk of
such sanctions may discourage leniency applications. With regard to
fines, the Workshop agreed on the need for convergence in fining
methodologies but less importance was attached to the issue of
harmonising the level of fines. At the same time, some participants felt it
was now time to give credit for companies’ compliance efforts.
16.The extent of independence from political influence (governments or
parliaments) and from commercial interests is crucial for authorities in
administrative rather than adversarial systems. There are particular
trade-offs to be considered: in some circumstances independence can
lead to isolation and lack of influence on political authorities, and to a
degree of lack of accountability. Factors relevant to independence
include: the selection and appointment of senior officers, the duration of
their mandates and whether they can be renewed; and the staff and
financial resources at their disposal. Budgetary allocations from
government were the common source of funds for NCAs. However,
some authorities derived some funds directly from their enforcement
activities through fines, merger fees or sectoral taxes. This gave them
some independence from government but where such approaches are
relied on exclusively the level of receipts may be volatile. Drawing on
multiple funding sources was arguably the best guarantee of budgetary
independence.
17.Several Workshop participants also stressed the need to protect the
personal independence of the key decision-makers in an authority. One
way was to appoint a supervisory board which was not directly
responsible for any specific enforcement decision but could be the first
point of contact for outside interventions. Others underlined that action
by a competition authority that is too independent and prescriptive
could be interpreted as a measure equivalent to secondary legislation,
which should be decided more legitimately by parliamentary bodies. It
was also underlined that problems of independence of competition
authorities could arguably be dealt with better by constitutional courts
rather than being settled in the framework of competition law.
18.Governments frequently set up independent bodies to demonstrate
their strong political commitment to a policy objective like promoting
competition but were unpleasantly surprised that these bodies
subsequently took decisions outside their political control. However as
confidence was progressively built up between the independent
authorities and a government, the initial tensions could possibly be
removed. In addition it was pointed out that some governments were
under pressure to legislate to achieve specific market outcomes (for
example, a share out of television rights between two or three
broadcasters), whereas competition authorities aimed at maintaining or
improving competition between market operators.
Philip Lowe, Chair. PL/030616.