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Notes from the Fourth ACELG Annual Conference (November 14, 2014)

This year’s ACELG conference was dedicated to assessing one of the last decade’s most significant developments in EU competition law, namely the decentralization of its enforcement system. The conference offered unique benchmarks for evaluating the success of this reform by examining its various institutional and constitutional outcomes and their implications on the EU’s and its Member States’ legal orders.

By Or Brook

Ten years ago, Regulation 1/2003 decentralized the enforcement of EU competition law. The Regulation abolished the Commission’s previous monopoly on applying many of the EU competition rules and aimed to share the enforcement activities and responsibilities with the Member States’ national competition authorities (‘NCAs’) and national courts.

The shift from a supranational to a transnational and multiple-layered EU enforcement setting raised significant challenges relating to the new multi-level governance and the national actors’ administrative capacities. Nevertheless, Regulation 1/2003 contains very little guidance in this regard, and allows the Member States to choose the institutional embedding and accountability of their NCAs and national courts.

Against this background, the Fourth Annual ACELG conference offered unique perspectives for evaluating the new enforcement system’s success: while previous assessments primarily compared Regulation 1/2003’s outcomes to the Commission’s goals for decentralization (namely, enhancing the Commission’s possibility to set its enforcement priorities, ensuring effective supervision, and ensuring a uniform and coherent application of the competition rules), the conference offered three alternative institutional and constitutional benchmarks to guide the assessment, as described below.

 

The lack of extraterritorial enforcement of Article 101: an indication of Regulation 1/2003’s failure?

The first benchmark for assessing Regulation 1/2003 was proposed by Prof. Giorgio Monti (European University Institute) who presented his draft article titled “A Plea for ‘Extraterritorial’ Antitrust Enforcement by National Competition Authorities“. Based on the French administrative law distinction, Monti argued that Regulation 1/2003 has not resulted in a true “decentralization” (“décentralisation”) of enforcement in which the NCAs have become independent from the Commission in shaping and applying EU competition law. Rather, the Regulation has given rise to “de-concentration” (“déconcentration”) where the NCAs function as mere extensions of the Commission’s central administration and remain subject to its hierarchical power. Monti supported his claim by demonstrating the lack of a systematic extraterritorial enforcement of Article 101 by NCAs (i.e., NCAs do not pursue infringements whose effects extend beyond their jurisdictions). Monti maintained that since Regulation 1/2003 is intended to stimulate the application of EU competition law across borders, its incremental value under the current “déconcentration” application remains unclear.

Dr. Pieter van Cleynenbreugel (Leiden University) offered some interesting comments on Monti’s presentation. He noted that while Regulation 1/2003 has confirmed the Commission’s central role in the enforcement system, it has not precisely defined the NCAs’ role. Currently, the “National” component of the “National Competition Authorities” represents each Member State’s mandate to shape its NCA’s administrative constitutional framework. Van Cleynenbreugel noted that Monti’s proposal changes this approach by giving the NCAs more substantive discretion; according to Monti’s interpretation, and given that Regulation 1/2003 does not preclude the NCAs from setting their national priorities, each NCA could independently choose to specialize in the enforcement of a specific area of competition law and apply it in an extraterritorial manner across the EU.

The benchmark advocated by Monti and Van Cleynenbreugel for evaluating Regulation 1/2003 indicates that there is still much to be done to transform the NCAs into independent European agencies, which apply EU competition law separately from the Commission. However, the NCAs could achieve this goal be reinterpreting the current rules, without the Commission’s involvement or changes to the Treaties.

 

The indirect effects of decentralization on the NCAs’ institutional frameworks: an indication of Regulation 1/2003’s success?

The second benchmark offered by the conference focused on Regulation 1/2003’s indirect impact on the Member States’ national institutional frameworks. This benchmark was discussed by a roundtable of representatives from the Commission and NCAs, which emphasized that although Regulation 1/2003 has not referred to the capacity of the national actors, it has resulted in significant institutional implications:

Jeroen Capiau (EU Commission, DG Comp) explained that the Commission regards the decentralization as a success. Regulation 1/2003 has increased the competition law enforcement, and the work of the ECN has ensured a high degree of consistency in the Commission’s and the various NCAs’ practices.

Šarūnas Keserauskas (chairman of the Competition Council of Lithuania) and Mariana Tavares (Head of Cabinet of the President, Portuguese Competition Authority) discussed the importance of safeguarding the NCAs’ independence from their national governments. For instance, Keserauskas illustrated that the Lithuanian NCA’s independence has been vital to enforce against competition law infringements by the state, which in fact comprises most of the Lithuanian NCA’s enforcement activities.

Prof. Jacques Steenbergen (President of the Belgian Competition Authority) noted that Regulation 1/2003 was not only important for increasing the magnitude of the competition law enforcement, but also for stimulating a coordination and mutual learning network among NCAs. Unfortunately, no similar network was developed between national courts and judges. In addition, Steenbergen argued that it is unfortunate that the Commission does not provide reasoning for its positive decisions (i.e., decisions finding that no infringement occurred), and that the NCAs are not competent to issue such positive decisions.

This roundtable’s assessment of Regulation 1/2003 demonstrates that the Regulation, albeit indirectly, has promoted the NCAs’ independence and facilitated cooperation among the various NCAs and the Commission.

 

Interactions between competition law and the decentralized enforcement of EU economic regulation by national authorities in other areas: a call for special attention

The third benchmark proposed by the conference relates to the effects of the decentralized enforcement of EU economic regulation by Member States’ authorities in other areas beside competition law. Similarly to the NCAs in competition law, independent national regulatory authorities (NRAs) play a key role in the decentralized enforcement of other EU economic regulations, such as energy and telecommunications. This leads to interesting questions concerning the institutional and constitutional settings of the NRAs and the interactions between the various economic regulations.

Prof. Cosmo Graham (University of Leicester) presented a prominent example of the tension between EU competition law and other sector regulations. Graham examined the UK concurrent powers model, in which EU competition law is enforced by various national sector regulators. Until recently, this system resulted in insufficient competition law enforcement since the sector regulators made little use of their enforcement powers. The Enterprise and Regulatory Reform Act of 2013 was designed to resolve this problem, inter alia, by establishing the Competition and Markets Authority and obliging the sector regulators to consider using competition rules prior to the use of other sector regulations.

Prof. Saskia Lavrijssen (University of Amsterdam) discussed the role of national courts and NRAs in safeguarding the effective legal protection of EU rights. She emphasized that due to the procedural autonomy principle, the manner of awarding such protection varies significantly among different institutions. Lavrijssen examined the case law of the highest administrative court for energy cases in the Netherlands and demonstrated that it has not fully and consistently complied with the effective legal protection requirements.

Winfred Knibbeler (Freshfields, Bruckhaus, Deringer LLP Amsterdam) presented the conflicts between the judgments of the Dutch national courts and the Commission’s recommendations on remedies in the telecommunications sector. He explained that the NRAs may be placed in a problematic position, caught between conflicting national court judgments and the Commission’s recommendations.

The discussion of this third benchmark demonstrated that the decentralized enforcement of other EU economic regulations has created further institutional and constitutional challenges. In particular, the Member States’ procedural autonomy in shaping their NRAs requires special attention to ensure that it does not infringe on the enforcement of EU competition law.

 

Conclusions: the future of the decentralized enforcement of EU competition law

Generally, Regulation 1/2003 is deemed successful when it is evaluated against its original goals: the Regulation has allowed the Commission to concentrate its enforcement efforts on serious violations of competition law, and the NCAs and national courts have arguably enforced the competition rules in a relatively consistent manner.

Yet, the conference showed that the decentralization cannot be assessed only with regard to Regulation 1/2003’s original aims: while the Regulation contains procedural enforcement rules, it has significant constitutional implications on the role of competition law and other sector regulations both in the EU’s and its Member States’ legal orders. In particular, the Regulation has increased the NCAs’ discretionary and policy-making powers and, in turn, has motivated the Member States to ensure the NCAs’ independence.

In light of the above it seems that the next ten years of decentralized enforcement would move the debate from measuring the levels of enforcement and the consistency of application to focusing on the impact and roles of the national actors. As underscored by the conference sessions, this development is particularly thought-provoking as the decentralization has presented the Member States and NCAs with new opportunities for shaping their institutions and the substantive rules of their enforcement systems.

Or Brook is a PhD researcher at the Amsterdam Centre for European Law and Governance. Her personal page can be accessed here.

 

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