Application of Articles 101 and 102 TFEU (formerly Articles 81 and 82 of the EC Treaty)
The new arrangements for applying the anti-trust procedures, which were introduced by Council Regulation (EC) No 1/2003, are designed to ensure more effective enforcement of the European Union (EU) competition rules in the interest of consumers and businesses, while easing the administrative burden of firms doing business in Europe. Via decentralised application of the competition rules and by strengthening a posteriori control, this regulation will lighten the Commission's administrative workload allowing it to concentrate its resources on the enforcement of the most serious competition infringements. It will also increase the part played by national competition authorities and national courts in implementing EU competition law while guaranteeing its effective and uniform application.
This regulation, adopted by the Council on 16 December 2002 and implementing the rules on competition laid down by Articles 101 and 102 of the Treaty on the Functioning of the European Union (TFEU) (formerly Articles 81 and 82 of the Treaty establishing the European Community (EC Treaty)), replaced Regulation (EEC) No 17/62 from 1 May 2004.
Regulation No 17/62 established a centralised monitoring system under which agreements liable to restrict and affect trade between EU countries must, in order to qualify for an exemption, be notified to the Commission. The Commission's exclusive power to authorise agreements which restrict competition but which meet the conditions of Article 81(3) of the EC Treaty has led to a large number of agreements being notified by companies, a fact which has undermined efforts to promote a rigorous and decentralised application of the EU competition rules.
With a view to simplifying administrative formalities for firms and enabling the Commission to take more effective action against serious infringements of the rules on competition, the Commission launched, with the publication of its 1999 White Paper, a long process of reform which resulted in the publication of this regulation.
This reform brings about the transition from a system of centralised authorisation by the Commission based on prior notification to a legal exception system which, being based on the decentralised application of EU competition rules and a strengthening of a posteriori control, lightens the Commission's workload and increases the role of national competition authorities and courts in implementing EU competition law, while guaranteeing that it is effectively and uniformly applied.
This regulation lays down rules implementing the provisions of the TFEU relating to agreements, decisions by associations of undertakings and concerted practices which may restrict competition (Article 101 TFEU) and abuses of a dominant position (Article 102 TFEU).
Cooperation between the Commission and EU countries’ competition authorities and courts
The direct effect of the legal exception system established by this regulation is to increase the responsibility of undertakings since, given that they are no longer subject to a prior-notification requirement, they will have to ensure in good faith that agreements do not affect free competition and do not infringe EU rules in this area. However, in order to avoid any abuse, the competition authorities in Europe - including the Commission - and the national courts will themselves assume greater responsibility in ensuring that the EU competition rules are complied with, while coordinating their respective activities. To that end, efforts are required to encourage an exchange of information between the various institutions.
To facilitate the exchange of information among competition authorities in Europe, the regulation provides for the creation of a European competition network which consists of the national competition authorities and the Commission. Within this network, exchange of information, including confidential information, can take place which might help enforce violations of the rules on competition. The Commission must transmit a copy of the most important documents and, at the request of the competition authorities, furnish any document necessary to an assessment of the case pursued by it. For their part, the national competition authorities are responsible for informing the Commission of any prohibition or commitment decision relating to the application of Articles 101 and 102 TFEU and any decision withdrawing the benefit of a block exemption regulation not later than thirty days before it is adopted.
To avoid any overlap and ensure a uniform and coherent application of European competition law, the regulation maintains the rule that national competition authorities are automatically relieved of their competence if the Commission initiates its own proceedings. Nevertheless, the latter undertakes to consult the national authority in question before initiating proceedings. In addition, when the competition authority of an EU countryor the Commission receives a complaint concerning an agreement, a decision by an association of undertakings or a concerted practice which is being or has been dealt with by another competition authority, it may suspend its proceedings or reject the complaint.
For its part, before taking a decision to order an infringement to be brought to an end, to make binding the commitments offered by undertakings, to find Article 101(1) TFEU inapplicable or to impose a fine or periodic penalty payment on undertakings, the Commission will consult the Advisory Committee on Restrictive Practices and Dominant Positions at one of its meetings or by written procedure. This Committee, made up of representatives of national competition authorities, serves as a forum for discussing cases that are being handled by the various competition authorities in Europe.
Finally, regarding the cooperation which must exist between the Commission and national courts, the regulation lays down that the national courts may ask the Commission to transmit to them information in its possession or its opinion on questions concerning the application of EU competition rules. In addition, EU countries undertake to forward to the Commission a copy of any written judgment of national courts relating to the application of Article 101 or 102 TFEU. This regulation also makes provision for the Commission and national competition authorities to submit written or oral observations to the national courts on issues relating to the application of Articles 101 or 102 TFEU.
Powers of the European Commission
In order to ensure that the rules on competition concerning agreements, decisions of associations of undertakings and restrictive practices (Article 101) and abuses of a dominant position (Article 102), which are liable to be anticompetitive, are applied, the Commission has a number of powers to take decisions, to conduct investigations and to impose penalties. It exercises these powers when, following a complaint or on its own initiative, it considers in a given case that there has been a violation of Article 101 or 102 TFEU.
Under this regulation, the Commission is able to take the following decisions:
- a decision finding and terminating an infringement: if the Commission finds there to be an infringement of Article 101 or 102 TFEU, it may adopt a decision requiring the undertakings and associations of undertakings concerned to bring the infringement to a end or finding that the infringement has been brought to an end;
- a decision ordering interim measures: in cases of justified urgency, the Commission, acting on its own initiative, may, on the basis of a prima facie finding of infringement, order interim measures;
- a decision making commitments binding: where the Commission intends to adopt a decision requiring that an infringement be brought to an end and where the undertakings concerned offer commitments to meet its concerns, it may make those conditions binding for a specified period. It may reopen the proceedings if the facts of the case change, the undertakings act contrary to their commitments or the decision is based on incomplete, incorrect or misleading information;
- a decision finding that Articles 101 and 102 TFEU are inapplicable: the Commission may, for reasons of EU public interest, find that, on the basis of the facts of which it is aware, Article 101 does not apply to an agreement, a decision by an association of undertakings or a concerted practice either because the conditions of Article 101(1) are not met or because the conditions for a derogation under Article 101(3) are met. It may do likewise for cases of dominant positions, as referred to in Article 102.
In order to ensure a proper right of defence, the Commission, before taking a decision, will give the undertaking or association of undertakings in question the opportunity of being heard on the aspects to which it objects. The parties concerned also have the right of access to the Commission's file, provided that this does not result in business secrets being divulged. However, in order to safeguard professional secrecy, any information gathered may be used solely for the purpose for which it was acquired. The Commission and the national competition authorities are also under an obligation not to divulge any information they have acquired or exchanged.
The Commission has the following powers of investigation:
- conduct sector inquiries: where the trend of trade between EU countries, the rigidity of prices, or other circumstances, suggest that competition may be being restricted or distorted within the common market, the Commission is able to conduct an inquiry into a particular sector of the economy or into a particular type of agreement across various sectors;
- request information: the Commission may, by simple request or by decision, ask undertakings and associations of undertakings to provide any information it needs to carry out the duties assigned to it by this regulation; any natural or legal person who might have useful information is required to supply any information asked of them; the Commission may also ask governments and national competition authorities for any information it requires to carry out its duties;
- take statements: the Commission may interview any natural or legal person who consents to be interviewed;
conduct inspections: the Commission may conduct any necessary inspections of undertakings and associations of undertakings, and the latter are required to submit to such inspections; to this end, its officials are empowered to:
- enter the premises, land and means of transport of undertakings and associations of undertakings;
- enter any other premises, land and means of transport of undertakings and associations of undertakings, including the homes of directors, managers or other staff members, if a reasonable suspicion exists that books or other records related to the business and to the subject-matter of the inspection might be held there;
- examine the books and other records related to the business;
- take copies of or extracts from such books or records;
- seal any business premises and books or records for the period of the inspection;
- ask any representative or member of staff of the undertaking or association of undertakings for information and record their answers.
The officials authorised by the Commission to conduct inspections will exercise their powers upon production of a written authorisation specifying the subject matter and purpose of the inspection and the possible penalties. In good time before it is conducted, the Commission must give notice of the inspection to the competition authority of the EU country concerned. The competition authority of an EU country may, in its own territory, carry out any measure under its national law on behalf and for the account of the competition authority of another EU country or, on request of the Commission undertake an inspection in order to establish whether there has been an infringement of Article 101 or 102 TFEU.
The Commission may impose the following penalties on undertakings and associations of undertakings:
Fines:The Commission may impose on undertakings and associations of undertakings fines not exceeding 1 % of the total turnover in the preceding business year where, intentionally or negligently:
- they supply incorrect, incomplete or misleading information in response to a request or do not supply information within the required time-limit;
- they produce the required books or other records related to the business in incomplete form during inspections or refuse to submit to inspections which have been ordered;
- they refuse to reply to a question during an inspection or reply in an inaccurate, incomplete or misleading manner;
- seals affixed by officials authorised by the Commission have been broken.
The Commission may also impose fines on undertakings and associations of undertakings not exceeding 10 % of the total turnover realised in the preceding business year by each of the undertakings which participated in the infringement where they infringe Article 101 or 102 TFEU, contravene a decision ordering interim measures or fail to comply with a commitment made binding by a decision of the Commission.
In fixing the amount of the fine, the Commission must take account of the gravity and the duration of the infringement. When a fine is imposed on an association of undertakings and the association is insolvent, the Commission may require payment from each of the undertakings which were members of the association at the time of the infringement. The financial liability of each undertaking may not exceed 10 % of its total turnover in the preceding business year. Decisions to impose a fine do not fall within the scope of criminal law.
Periodic penalty payments: The Commission may also impose on undertakings and associations of undertakings periodic penalty payments not exceeding 5 % of their average daily turnover in the preceding business year per day and calculated from the date appointed by the decision, in order to compel them to:
- put an end to an infringement;
- comply with a decision ordering interim measures;
- comply with a commitment made binding;
- supply complete and correct information which it has requested;
- submit to an inspection which it has ordered.
Where the undertakings have met the obligation which the periodic penalty payment was intended to enforce, the Commission may decide to reduce the definitive amount.
The Commission's power to impose fines or periodic penalty payments is limited to a period of three or five years, depending on the infringement committed. The limitation period, which begins on the day on which the infringement is committed, will be interrupted by any action taken by the Commission or a national competition authority for the purpose of proceedings in respect of an infringement. The period will suspended for as long as the Commission's decision is the subject of proceedings pending before the Court of Justice. By contrast, the limitation period for the enforcement of penalties is five years.
The Court of Justice reviews the Commission's decisions and may rule against decisions by the Commission to impose a fine or periodic penalty payment.
Block exemption regulations
Different regulations empower the Commission in the areas defined by them to grant regulations which declare Article 101(1) TFEU inapplicable to certain categories of agreements, decisions by associations of undertakings and concerted practices (block exemption regulation). These regulations include:
- Regulation (EEC) No 19/65 on application of Article 81(3) of the Treaty to certain categories of agreements and concerted practices;
- Regulation (EEC) No 2821/71 on application of Article 81(3) of the Treaty to certain categories of agreements, decisions and concerted practices;
- Regulation (EC) No 487/2009 of 25 May 2009 on the application of Article 81(3) of the Treaty to certain categories of agreements and concerted practices in the air transport sector;
- Regulation (EEC) No 1534/91 on application of Article 81(3) of the Treaty to certain categories of agreements, decisions and concerted practices in the insurance sector;
- Regulation (EC) No 246/2009 of 26 February 2009 on the application of Article 81(3) of the Treaty to certain categories of agreements, decisions and concerted practices between liner shipping companies (consortia).
If these block exempted agreements, decisions or concerted practices nonetheless have negative effects that are incompatible with Article 101(3) TFEU, the Commission and the national competition authorities may, acting on its own initiative or on a complaint, withdraw the benefit of such a block exemption regulation in particular cases.
This regulation amends the following regulations:
- Regulation (EEC) No 1017/68 applying rules of competition to transport by rail, road and inland waterway;
- Regulation (EEC) No 2988/74 concerning limitation periods in proceedings and the enforcement of sanctions relating to transport and competition;
- Regulation (EEC) No 4056/86 laying down detailed rules for the application of Articles 81 and 82 of the Treaty to maritime transport;
- Regulation (EEC) No 3975/87 laying down the procedure for the application of the rules on competition to undertakings in the air transport sector;
- Regulations (EEC) Nos 19/65, 2821/71 and 1534/91 on application of Article 81(3) of the Treaty to categories of agreements, decisions and concerted practices;
- Regulation (EEC) No 17/62 implementing Articles 81 and 82 of the Treaty;
This regulation repeals the following regulation:
- Regulation (EEC) No 141/62 exempting transport from the application of Council Regulation No 17.
|Act||Entry into force||Deadline for transposition in the Member States||Official Journal|
|Regulation (EC) No 1/2003||
OJ L 1 of 4.1.2003
|Amending act(s)||Entry into force||Deadline for transposition in the Member States||Official Journal|
|Regulation (EC) No 411/2004||
OJ L 68 of 6.3.2004
|Regulation (EC) No 1419/2006||
OJ L 269 of 28.9.2006
Successive amendments and corrections to Regulation (EC) No 1/2003 have been incorporated into the basic text. This consolidated version is for reference only.