Towards more effective enforcement of Art. 101 and 102 TFEU

1. Towards more effective enforcement of Art. 101 and 102 TFEU Marco Botta Max Planck Institute for Innovation and Competition European Competition Day, Bratislava, 23.11.2016

2. Outline • Public enforcement of EU competition law: the status quo • ECN plus project: • Why • Which • What • How • When??? • Questions for further debate in the panel

3. The status quo

4. Decentralized enforcement EU competition law • Reg. 1/2003: limited harmonization procedural rules followed by NCAs to enforce Art. 101-102 TFEU: • Art. 5: “exhaustive” lists of types of decisions adopted by NCAs • Art. 11, 12, 16: cooperation between EU Commission, NCAs and national courts • Art. 35: EU Member States “designate” a NCA responsible to enforce Art. 101-102 • Under Reg. 1/2003 EU MS enjoy broad procedural autonomy to define institutional set-up and enforcement powers NCAs

5. Sources of procedural convergence • CJEU case law (VEBIC; X; Pfleiderer/Donau Chemie; Tele 2 Polska; DHL Express Italia) • EU Commission’s guidelines (e.g. 2006 Guidelines on fines): NOT binding for NCAs, BUT NCAs “may take into account” (Expedia) • ECN Recommendations: • 2006 ECN Model Leniency programme, revised in 2012 • Seven recommendations adopted in 2013 on NCAs investigative and decision-making powers • Recommendations adopted by EU Commission towards individual EU MS: • European Semester • MoUs with EU MS receiving financial assistance

6. From convergence to minimum harmonization? • 2014 Communication 10 Years Reg 1/2003: “effective enforcement” requires minimum harmonization of NCAs procedural rules • Public consultation Nov. 2015 – Feb. 2016: • Over 100 multiple choice questions which reflect the content of the 2014 Communication • 146 replies both from NCAs as well as from other stakeholders. • General support for a mix of legislative and non-legislative action • Inception Impact Assessment: EU Commission is expected to issue a legislative proposal in the first quarter of 2017

7. ECN Plus project

8. “Why” – rationale of the legislative proposal? • “Effective enforcement”: basic rationale used by EU Commission to justify ECN + project  same rules “to do more”. Questions: • “Effectiveness” understood in a different manner than CJEU • NCAs are already the main enforcers of Art. 101-102 • Establishing a level-playing field: rationale mostly advocated in 2015 Public Consultation. Implications: • Legal certainty • Equality for firms subject to investigations by different NCAs • Increasing consumers’ welfare: main rationale Damages Directive, BUT absent in 2014 Communication and 2015 Public Consultation

9. “Which” - should be the benchmark for the legislative harmonization? • Two possible benchmarks: • Procedural rules followed by EU Commission under Reg.1/2003 and Reg. 773/2004: • Detailed rules • Top-down harmonization approach • Codification existing soft law -2013 ECN Recommendations: • Guidelines developed by NCAs • General principles

10. “What” would be included in the legislative proposal? • Both 2014 Communication and 2015 Public Consultation focussed on 4 key issues: • Resources and independence of NCAs • Enforcement toolbox of NCAs • Fines • Leniency • Areas excluded from the scope of possible harmonization: • Right of defence • Cooperation within ECN

11. “What” – Resources and independence • Convergence so far: European Semester and MoUs • Main divergences among NCAs: • Single v. two tiers systems • System of appointment and dismissal NCAs Board members • Number of human resources of the NCAs • Sources of financing (e.g. national budget, fines, merger fees) • Tasks: increasing tendency to merge NCA and NRA • Answers 2015 Public Consultation: • Preference for convergence via soft law • General principle NCA independence included in a possible Directive – same approach for NRAs in telecom and energy

12. “What” – Enforcement toolbox • Convergence so far: 2013 ECN Recommendations • Main divergences among NCAs: • Ability to set priorities • Inspections (e.g. non-business premises; electronic evidence) • Requests of information • Types of decisions: remedies; interim decisions; commitments • Answers 2015 Public Consultation: • National divergences perceived as a problem by most of the stakeholders (e.g. NCAs, law firms, companies)

13. “What” - Fines • Convergences so far: • 2006 EU Commission guidelines on fines • CJEU ruling in X • European Semester recommendations • Diverging among NCA: • Different mitigating and aggravating factors • Not all NCA can impose fines on associations • 10% annual turnover not always as “cap” for max. fine, but as “upper frame” only for the most serious infringements • Divergent interpretation concept of undertaking/subsidiary • Answers 2015 Public Consultation: • Definition common criteria to calculate fines considered necessary by stakeholders: soft law v. legislative harmonization • Firms against extension EU “single economic entity” doctrine

14. “What” - Leniency • Convergence so far: • ECN Leniency Model questioned by CJEU in DHL Express Italia • Main divergences among NCAs: • Lack of coordination for summary applications • Leniency for managers disqualification • Cooperation between NCA and public prosecutor • Answers 2015 Public Consultation: • Firms in favour of one stop approach for leniency • No harmonization leniency for managers disqualification

15. “What” - would remain outside legislative proposal • Right of defence: • Right to be informed (i.e. Statement of Objections) • Right to access the file • Right to oral hearing • Privilege against self-incrimination • Legal professional privilege • System of coordination within ECN: • Mechanisms to assign jurisdiction in cross-border cases • Consistency in enforcement of Art. 101-102

16. “How” - to implement the legislative proposal • Inception Impact Assessment: legislative proposal would be a Directive, rather than Regulation amending Reg. 1/2003 • Lessons from Damages Directive: • New Directive would be adopted jointly under Art. 103-114 TFEU • The Directive would formally be applicable only to NCA procedural rules concerning the enforcement of Art. 101-102 TFEU: risk of diverging national procedural rules for national competition law?? • Unlike Damages Directive, NCA procedural rules included only in national competition law  no need to amend different national legislations.

17. Questions for further debate

18. Questions addressed to the panelists • Should the right of defence remain outside the scope of the harmonized rules? • Should the ECN being revised in a new legislative proposal, in order to introduce formal mechanisms to assign jurisdiction to the NCAs in cross-border cases and increase the degree of consistency of the enforcement of Art. 101-102 among different NCAs? • What is the main power that the NCA from your jurisdiction is currently lacking and affects its ability to enforce Art. 101-102? • Which issues should be subject to a minimum harmonization via a new Directive and which one left to convergence via soft law instruments? • What should be the benchmark for a minimum harmonization of national procedural rules: EU Commission rules v. ECN Recommendations?