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Antitrust: commitment decisions – frequently asked questions

Commission Européenne - MEMO/13/189   08/03/2013

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European Commission

MEMO

Brussels, 8 March 2013

Antitrust: commitment decisions – frequently asked questions

What types of decision does the Commission take?

When the Commission decides to pursue a case, it will most likely adopt one of the following two types of decision.

The first is formally to find an infringement pursuant to Article 7 of Regulation (EC) No 1/2003 on the implementation of Articles 101 and 102 of the Treaty ("Regulation 1/2003"). The Commission may require the company concerned to stop the infringement, impose remedies and/or impose a fine ("prohibition decision" or "Article 7 decision"). The most recent examples include the decision fining Telefónica and Portugal Telecom, and the decision relating to the TV and computer monitor tubes cartel.

Alternatively, the Commission may take a "commitment decision" (or "Article 9 decision") based on Article 9 of Regulation 1/2003. That provision allows companies to offer commitments that are intended to address the competition concerns identified by the Commission. If the Commission accepts these commitments it adopts a commitment decision making them binding on the parties without, however, establishing an infringement.

What are the main characteristics of a commitment decision? What are the main differences from a prohibition decision?

A commitment decision makes legally binding commitments offered by undertakings under investigation, and concludes that there are no longer grounds for action by the Commission.

The major difference between the two types of decision is that a prohibition decision formally "finds that there is an infringement" whereas a commitment decision does not. Instead of saying whether there has been or still is an infringement, a commitment decision only refers to "concerns expressed by the Commission".

Another difference is that in a prohibition decision the Commission can impose suitable remedies bringing the infringement to an end - and/or impose a fine - while a commitment decision is based on commitments offered voluntarily by the undertakings concerned.

Both types of decisions are supported by solid evidence and based on coherent theories of harm. Due to the above mentioned differences, the Court of Justice requires a stricter proportionality test for assessing the remedies imposed by the Commission in a prohibition decision than it does for commitments proposed by the parties in a commitment decision.

Why does the Commission accept to close proceedings without the finding of an infringement? Why do parties offer commitments if they contest any wrongdoing?

Both the companies and the Commission may have an interest in pursuing the commitment route. Companies may want to avoid the impact of a prohibition decision on their reputations. They may also want to avoid a formal finding of an infringement against them.

The Commission, on the other hand, may have an interest in addressing identified competition concerns in a swift and effective manner, thereby quickly restoring undistorted conditions of competition in the markets. The procedure for commitment decisions is generally shorter than for prohibition decisions.

In which cases does the Commission adopt commitment decisions?

It is at the discretion of the Commission to assess whether or not it is appropriate to accept commitments offered by parties under investigation. The Commission decision to accept commitments is based on a number of factors, and depends in particular on the nature of the suspected infringement, the nature of the commitments and their ability to quickly and effectively solve the competition concerns, and the need to ensure deterrence. When assessing the commitments offered, the Commission must verify in light of the principle of proportionality whether the commitments would be sufficient to address the identified competition concerns. It will also take into consideration the interests of third parties.

Commitment decisions are not appropriate in cases where the Commission considers that the very nature of the infringement calls for a fine. Consequently, the Commission in particular does not apply the commitment procedure to secret cartels that fall under the Leniency Notice. Furthermore, in cases like cartels, there is no commitment possible to solve the competition problem. In such cases, an order to stop the practice and/or to pay a fine is the only appropriate outcome.

Other cases may lend themselves well to a commitment solution tackling the competition concerns effectively and quickly. Recent commitment decisions concern various sectors, such as energy and financial services. They have also been adopted in the fast moving IT/Media markets, where speed is of the essence to effective competition enforcement (see for instance Case AT.39847 – Ebooks).

What are the main steps of the procedure leading to a commitment decision?

Undertakings under investigation may contact the Commission at any time to discuss a possible commitment decision. The Commission encourages undertakings to signal their interest in doing so at the earliest possible stage. Once the Commission is convinced of the undertakings' genuine willingness to propose commitments which will effectively address the competition concerns, it drafts a Preliminary Assessment ("PA"). It summarises the main facts of the case and identifies the competition concerns. The PA serves as a basis for the parties to put forward appropriate commitments or to better define previously discussed commitments.

The Commission then market tests the offered commitments. A notice is published in the Official Journal of the European Union with a concise summary of the case and the main content of the commitments. Depending on the results of the market test, undertaking(s) may amend the commitments before the Commission makes them binding through a commitment decision.

The Commission or the undertaking(s) concerned may decide at any moment during the commitment procedure to discontinue their discussions. The Commission may then continue formal proceedings pursuant to Article 7 of Regulation 1/2003.

What types of commitments can be made binding through a commitment decision?

The Commission will not accept commitments that do not address competition concerns. Commitments must be unambiguous and self-executing. If need be, a trustee can be appointed to assist the Commission (monitoring and/or divestiture trustee).

There are two types of commitments: Behavioural commitments include a commitment by a company to provide certain services or goods under specified conditions (e.g. Case AT.39692 – IBM Maintenance Services). Structural commitment includes the divestiture of assets, for example of an electricity transmission network (see Cases AT.39388 and AT.39389 German electricity market).

In principle, the Commission can accept both types of commitments. Experience has shown that usually structural commitments tend to be more effective than behavioural ones. In each case, the Commission will assess whether the commitments proposed by the company effectively solve the competition problem identified. The commitments will always be tailored to the nature of the competition problem.

How does the Commission ensure that the commitments are complied with?

The commitments accepted in an Article 9 decision are binding on the undertaking(s) concerned. The Commission takes the monitoring of the proper implementation of its decisions very seriously. It will not hesitate to impose the appropriate sanctions in case of non-compliance.

Reporting obligations by the undertaking(s) concerned and the vigilance of other market players are often the starting point of monitoring actions by the Commission. In appropriate cases, the commitments foresee the appointment of a monitoring and/or divestiture trustee, who supervises that the undertakings concerned fulfil their commitments, thereby supporting the Commission's own monitoring efforts. The choice of the appropriate monitoring tools depends on the specificities of the case in question.

What are the sanctions in case of non-compliance?

If an undertaking concerned does not comply with its commitments, the Commission can impose a fine of up to 10 per cent of the undertaking's annual turnover without having to prove any violation of the competition rules. The Commission can also impose periodic penalty payments of up to 5 per cent of the average daily turnover until the undertaking complies with its commitments.

In parallel, the Commission may decide to re-open the investigation that was closed pursuant to the commitment decision, with a view to adopting a prohibition decision on the matter.

Can commitments be reviewed? What happens when the commitment decision expires?

On the basis of Article 9(2) of Regulation 1/2003, the Commission may, upon request or on its own initiative, re-open proceedings where there has been a material change in any of the facts on which the decision was based; where the undertakings concerned act contrary to their commitments; or where the decision was based on incomplete, incorrect or misleading information provided by the parties. The commitment text may also contain more specific review clauses.

The commitment decision may be adopted for a specified period. When it expires, the Commission may re-assess the competitive situation on the markets. This assessment is facilitated by the detailed data which the parties provide pursuant to the reporting obligation in the commitments.

Link to commitment decisions

Commitment decisions adopted by the Commission are available on the website of the Directorate-General for Competition at:

http://ec.europa.eu/competition/index_en.html


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