The European Union has provisionally agreed to give member states greater enforcement powers to clamp down on anti-competitive practices.
The move is meant to ensure that EU competition policy is enforced evenly across the 28-nation bloc and that national competition authorities have the same “appropriate” powers at hand to stamp out cartel behaviour, abuse of dominant position, and other corporate practices that prevent a fair market from operating.
The European Commission hopes the directive will give national competition authorities effective tools and make sure they have the resources necessary to detect and sanction companies that break EU competition rules. It will also ensure that they can take their decisions in full independence.
The new rules will make sure that national competition authorities will act independently when enforcing EU antitrust rules and that they work in a fully impartial manner.
The directive will also ensure that national regulators have the necessary financial and human resources to do their work and have all the powers needed to gather relevant evidence.
It will also make sure that the 28 EU competition authorities have adequate tools to impose proportionate and deterrent sanctions for breaches of EU antitrust rules, as well as have coordinated leniency programmes that encourage companies to come forward with evidence of illegal cartels.
The proposed directive, however, makes no mention of aligning sanctions between EU member states or what constitutes best practice as to how enforcement agencies should conduct investigations, as approaches can differ significantly from one country to the other.
Several law firms, including Pinsent Masons and Hogan Lovells, have said that there needs to be more “consistency” of enforcement of EU competition law, as well as “minimum standards” regarding implementation of any changes.
Present approach to enforcement
Currently, the European Commission and EU member states’ national competition authorities work closely on enforcing the EU’s antitrust rules through the European Competition Network (ECN), whose framework underpins the application of EU antitrust rules by all enforcers.
And the Commission is keen to point out that EU member states are already primarily responsible for enforcing most antitrust cases. Since 2004, the Commission and national competition authorities have adopted over 1,000 decisions that applied EU antitrust rules and, in the decade between 2004 and 2014, over 85 percent of all of these were taken by national competition authorities.
When the Commission put its proposals out to public consultation between 2015-2016, not every EU member state appreciated its efforts. Lithuania, for example, believed its regulatory approach to antitrust issues was sufficient and did not require EU action to ensure better enforcement, more independence for its competition authority, or any further rules regarding the imposition of fines.
The United Kingdom, on the other hand, believed that while it already had “a robust and flexible legal competition framework that is well enforced,” it agreed with the Commission that “there is evidence to suggest that there are gaps in enforcement across Europe, to varying degrees.”
Some law firms that responded to the consultation highlighted that there were some significant differences in approaches to investigations and enforcement.
Hogan Lovells, for example, said that how national competition authorities conducted searches could sometimes differ widely, with some authorities sifting documents on site, while others would take servers and equipment away. The firm also noted that there was not always a satisfactory mechanism for companies to complain about regulators over-stepping procedures or to seek redress for damages, and that sanctions could vary considerably from one country to another.
For example, some authorities (such as the Belgian competition authority) set the fine cap only as a percentage of national turnover (or in Belgium, to be more precise, the turnover in Belgium and from Belgian exports), whereas other authorities (such as the Dutch competition authority) look at the worldwide turnover of the companies involved.
Competition lawyers have suggested that the European Commission has emerged as a tougher regulator of competition affairs following the reluctance of some member states to take action to curb corporate sharp practice themselves. Recent examples include Ireland’s reticence to pursue lost tax revenue from computer giant Apple, while Luxembourg has also been criticised for its lax approach to corporate tax abuses and granting of “sweetheart” tax deals to major companies.
The European Commission first mooted the proposal in March 2017 following a public consultation in November 2015, with Margrethe Vestager, the Commissioner in charge of competition policy, saying “we want all national competition authorities to be able to take decisions fully independently and have effective tools at their disposal to stop and sanction infringements."
In a statement released at the time, the Commission said that there should be a uniform approach to enforcement within the European Union and underlined the fact that “it should not matter where a company is based within the Single Market when it comes to competition enforcement.”
“By ensuring that national competition authorities can act effectively, the Commission's proposal aims to contribute to the objective of a genuine Single Market, promoting the overall goal of competitive markets, jobs, and growth,” the Commission said in March 2017.
The legal text of the directive—which still needs to be formally approved by the European Parliament and Council—is expected by the end of 2018.