EU to give more power to national antitrust authorities in a bid to secure regulatory fines

Press conference by Margrethe Vestager, member of the European Commission in charge of Competition, on the merger of Dow/DuPont. Date: 27/03/2017. Location: Brussels – EC/Berlaymont. © European Union, 2017 / Source: EC – Audiovisual Service / Photo: Jennifer Jacquemart.

Last week, the European Commission has proposed a new set of rules to give national antitrust authorities more power and resources against anti-competitive practices. The proposed rules, which followed a public consultation that was launched last year, are intended to make the bloc’s national competition agencies more autonomous but also more reactive against multinational firms over regulatory cases. Indeed the proposed rules would enlarge the national watchdogs’ operative range, ultimately allowing them access to mobile phones, laptops and tablets.

Background

Antitrust rules within the European Union are administrated by the Council Regulation 1/2003 since it came into force in May 2004, changing the previous notification system, under which companies notified agreements to the Commission for approval under the antitrust rules. After ten years, The Commission’s Communication on Ten Years of Council Regulation 1/2003 (COM (2014) 453) identified a number of potential areas of action to make the national competition authorities more effective enforcers, and opened the way to new discussions. By way of follow-up, the Commission carried out a public consultation between November 2015 and February 2016 and listed options for a series of action with both the national competition authorities and the Member State ministries.

More powers needed

Indeed last Wednesday’s move came as a result of those consultations, which found shortcomings in the local competition agencies’ equipment and in the way they were structured, preventing them from doing their work effectively. “It is vital that national competition authorities have all the powers they need to do their job as effectively as possible”, said Margrethe Vestager, Commissioner in charge of competition policy, last week in an official statement. “For the last two years, we’ve been discussing whether that is already the case. And the message that’s come back is that national competition authorities do need more complete powers, in order to give consumers the best possible protection from anticompetitive behaviours”, Commissioner Vestager declared.

Enlarged rights

The proposal indeed aims at ensuring that national agencies have enough practical resources to carry out their activity effectively, such as funding and staff, but also enough power to do so. A big theme around the proposed new rules is actually the enlargement of the operative range of the local watchdogs, and so the right to search mobile phones, laptops and tablets for evidence of wrongdoing. “Today’s proposal seeks to ensure that national competition authorities have legal guarantees of independence, as well as appropriate funding and staffing to do their job properly”, said Commissioner Vestager.

The Commission’s scope is to create a sort of “common competition enforcement area”, as well as provide the national competition authorities with a minimum common “toolkit” and effective enforcement powers. “[The proposal] is about the establishment of minimum guarantees and standards to empower national authorities to reach their full potential”, said Vestager. “Every national authority is different, of course. […] But these authorities face similar challenges. And that’s what today’s proposal aims to address”, she also said.

A way to monitor multinationals

Antitrust experts and many European media outlets are also convinced that the EU antitrust authority was also concerned about looser antitrust systems in some countries where multinational firms can easily avoid paying regulatory fines, especially where they do not have a legal presence. New planned rules on parent company liability and succession would indeed prevent companies from dodging fines via corporate restructuring, a common practice in many European states. “The rules we propose aim to ensure the imposition of fines that really deter law-breaking. And they will also make sure that companies cannot escape the payment of fines by restructuring and also that fines can be enforced against companies in other EU countries”, Commissioner Vestager said.

Powers and responsibilities

“Of course, with great power comes great responsibility. All competition authorities must use their authority appropriately, fully respecting companies’ rights of defence”, Commissioner Vestager also added, underlying what looks to be already the hottest theme for multinational companies in the proposed reform. “Companies have the right to know the case against them, and to have a chance to respond. Today’s proposal therefore emphasises the fact that competition authorities must respect these rights, in line with the EU Charter of Fundamental Rights”.

A study by the European Commission revealed that, from 2004 till 2014, over 85% of all the decisions that applied EU antitrust rules were taken by national competition authorities. The EC said that, since 2004, the Commission and national competition authorities have adopted over 1,000 decisions. The proposal will now need approval from EU member states and the European Parliament before it can become adopted. Once adopted, Member States have to transpose the provisions of the Directive into national law.