Volume 6 - Issue 2
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Editorial - Reforming EU Competition Law
Regulation 1/2003 entered into force on 1 May 2004 introducing a fundamental change in the enforcement of Articles 101 and 102 TFEU. 1 May 2004 also marked a fundamental change in the history of the EU: ten new Member States joined the European Union. The modernization of EC competition law enforcement has in fact taken place against the background of enlargement. Enlargement and the modernization of law enforcement had been closely connected to one and other not only in the field of competition law. This paper discusses the impact of Regulation 1/2003 in the ten new Member States situated in Central and Eastern Europe that joined the EU in 2004 and 2007. What makes these Central and Eastern European countries (CEECs) special is transition from command and control economy and totalitarian rule to market economy and to compliance with the rule of law. What makes implementation of EU rules in CEECs’ legislation special is the conditionality and the fact that Europeanization of these countries’ laws have been interacting with market, constitutional and institutional reforms. The paper discusses both the direct and indirect impact of Regulation 1/2003 in the legislation, enforcement models and institutional designs in these countries. The experience of the CEECs indicate that EU leverage has been the most noticeable and direct on the statutory enactments of substantive competition law, however, it has in an indirect way also influenced enforcement methods and institutional choices. The exceptional influence of the EU on the CEECs’ competition rules can be demonstrated by the fact that these countries often aligned their national laws even further than they were obliged to. However, in the less visible parts of the law such as procedural rules divergence can be substantial with important consequences for overall enforcement outcomes. Moreover, in the CEECs there is a significant difference between the black letter of the law and its active enforcement.
Block exemption regulations (BER) survived the modernisation of EU competition law. According to the Commission, they play a major role in the system instituted by Regulation 1/2003. Some authors consider that BER are conceptually hard to nest within the new system, but that they provide legal certainty. Others adopt a more critical approach and propose their axing. This paper adopts the latter approach. In view of the mixed messages that the Commission has been sending in the review of existing general and industry specific BER, this paper revisits the institution of BER, its justification and need in the decentralised system brought forward by Regulation 1/2003 and the more economic approach to EU competition law. After stating the initial justification for BER under the prior enforcement system, the paper stresses the difficulties for their fitness within the new paradigm, focusing on the distortions that they may generate for an effective and consistent enforcement of EU competition law. In order to complete the modernisation of EU competition law in a second wave (that is, as a consequence of the current revision of Regulation 1/2003), the paper recommends a clear-cut policy to abrogate all BER and to issue substitutive guidelines in exchange.
A new block exemption regulation for motor vehicle distribution agreements was adopted in May 2010. Regulation 461/2010 extends the application of Regulation 1400/2002 – the first ‘new style’ block exemption for the car sector – for three years regarding the distribution of new motor vehicles. After that period, the sector will finally fall within the scope of the general block exemption for vertical agreements - Regulation 330/2010. At the same time, Regulation 461/2010 contains a list of hardcore restrictions applicable to the car aftermarket. It is accompanied by a set of sector-specific supplementary guidelines. As Regulation 1400/2002 is progressively replaced, the momentum calls for an assessment of its achievements and the merits of the changes envisaged. The Commission appears to finally acknowledge that the maintenance of specific rules for the car sector is of questionable necessity, and opts to gradually include the sector in the general block exemption regulation for vertical agreements. Such a welcome change should doubtlessly bring coherence to an exemption system divided by the existence of a specific car industry regime for the past fifteen years. Unfortunately, a closer look at the modifications rapidly mitigates the initial enthusiasm, particularly since the Commission has opted to maintain specific rules for the aftermarket, and has delayed the inclusion of the sector in the general regime for vertical agreements. Whilst it is too early to assess the merits of the forthcoming amendments, this paper questions the practical effectiveness of the Commission’s most recent reform, and argues that a precious opportunity to unify the curious divide between distribution agreements in the car sector and all other industries may have – yet again – been squandered.
Between Economic Freedom and Effective Competition Enforcement: the impact of the antitrust remedies provided by the Modernisation Regulation on investigated parties freedom to contract and to enjoy property
This paper seeks to analyse the issues emerging from the imposition of certain antitrust remedies, such as the obligation to grant intellectual property licenses regarding key inventions covered by patent or copyright and to stipulate contracts with other firms, including competitors, as a means to remedy the consequences of antitrust infringements. It will consider the extent to which Article 7 remedies can be reconciled with other important tenets of the market economy, such as the freedom to contract and the right to peacefully enjoy one’s possessions. After briefly examining the rationale for the application of certain human rights’ guarantees to competition investigations and decisions, the first part of the paper will consider the questions of whether and to what extent the European Convention on Human Rights protects economic freedom and compare the current position with that adopted by the US Supreme Court. The second part will illustrate the notion of competition remedies and consider whether the principles governing them are compatible with current human rights standards as well as with the concept of the rule of law as a tool to protect ‘everyone’ from the arbitrary or disproportionate use of public power. The final part of the paper will argue that although antitrust remedies pursue a legitimate objective, i.e. the preservation of economic well-being through competitive markets, they must also comply with basic human rights safeguards, such as the protection of property and of freedom to contract, by striking a “fair balance” between the common good and the legitimate interests of the affected undertakings. It will be concluded that the practice in this area should conform to standards consistent with the principles enshrined in the ECHR and to the substantive concept of ‘rule of law’, i.e. accuracy, administrability, consistency, objectivity, applicability and transparency.
This article assesses whether the current enforcement system of EU competition law complies with the requirements of Article 47 of the Charter of Fundamental Rights (CFR) and Article 6 European Convention of Human Rights (ECHR). It concludes that this is not the case and puts forward possible ways to remedy this deficiency. It argues that EU competition procedures fail to meet the core due process standards laid down by the ECHR and the CFR because fines are not imposed by an independent tribunal at first instance. In addition, the limited exception to that key principle does not apply as competition law infringement cannot be deemed ‘minor offences’ and the General Court’s review of the Commission decisions remains too limited. Therefore, it is suggested that EU Courts should ideally be granted the power to adopt final infringement decisions at first instance, so as to ensure full compliance with Article 6 ECHR. However, in light of the constitutional and practical difficulties raised by such a change, this article examines three alternatives: (i) creating a new independent competition authority; (ii) broadening the review powers of the EU Courts; and (iii) having an independent adjudicator adopt public findings on the case after a hearing at which the case team acts as prosecutor, after which the Commission would have to decide whether to adopt these findings or to take a different decision. While none of these alternatives would on its own fully comply with the requirements of Article 6 ECHR, it is submitted that the combination of broader judicial review plus having an independent adjudicator adopt public findings on the case could be put in place relatively quickly, would solve a number of the shortcomings of the current system and seems to be the best alternative in the short/medium term pending full reform.
• ©2003-2011 Angus MacCulloch & Andrew Matthews •