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Vice President of the European Commission responsible for Competition policy
Due process and competition enforcement
IBA – 14th Annual Competition Conference
Florence, 17 September 2010
Ladies and Gentlemen,
I am very pleased to be here today for your annual conference and I would like to thank Michael Reynolds for his kind invitation.
I will try to present you over the next thirty minutes my views on the state-of-play of some of the more relevant competition policy issues in Europe and on the avenues for its future development.
I will do so focussing on due process in competition proceedings. Due process is a good vantage point, because it involves crucial aspects of our work.
I know you too are keen about this topic. I have read with interest the paper you submitted to us earlier this year in response to our consultation on Best practices in antitrust proceedings.
I also understand that you formed a dedicated Working Group to prepare your response to our draft documents.
I would like to tell you that I really appreciate your effort.
To me, it means that the dialogue between the European Commission and the legal profession – through its leading organisation – is based on openness, intellectual honesty, and mutual respect.
I’m happy to be telling you these things, because a good dialogue with all our stakeholders has been always the way I've tried to fulfil my political responsibilities in the past, and indeed is one of my rules of conduct over this five years period as head of the Competition portfolio in the Commission.
Let me now go direct to the point:
Many debates about due process include a compare-and-contrast chapter on the relative merits of administrative and judicial enforcement systems; so I think I could start from it.
To be clear from the outset: I believe both models can achieve the right results and both can be very effective.
But from the European perspective I see the advantages of our system of administrative enforcement and integrated decision-making authorities.
One advantage of our model over the judicial system is that it has helped us take forward the analytical part of our work. When you think how a pure judicial system could work in a Union composed by 27 member states, with different cultures, different systems, this advantage appears quite clearly. Over the years, we have established a system that incorporates the very best economic analysis into competition enforcement.
The decisive turn in terms of economic analysis took place after 1990, when we started to introduce such analysis dealing with mergers.
In the two decades since then, we have extended this approach to our other competition enforcement instruments – most recently to exclusionary abuse of dominance.
We were not led by the Court in these developments. While the Court focused on types of conduct, we tried to look more at the effects of the conduct.
I believe we have the responsibility to lead this sort of development; a responsibility which it would be very difficult for a court of justice to fulfil.
Tom Rosch from the Federal Trade Commission made a similar point earlier this year.
Referring to two decisions in which the FTC had taken bold steps on a difficult point of antitrust law, he argued that the FTC was able to introduce a new analysis, and more predictability, than the courts would have been able to do.
In a word, we are ideally placed to move forward the European approach to competition enforcement and to keep up, at the same time, with developments in economic thinking.
In sum, the administrative system can be more dynamic; it can evolve and it can adapt swiftly to new conditions; and this brings great benefits to companies as well as to consumers.
However, I have not come to Florence to paint you a rosy picture; I follow closely the debate about how our system works in practice and I am aware of the concerns that are raised.
Some argue that the Commission, as an administrative authority, cannot guarantee the same procedural safeguards as the courts.
I respect this concern, but I find it misguided.
My first reply is that there are many administrative authorities in the Member States and around the world; we are part of this large family and we follow a very solid and established legal tradition.
Secondly, I would like to raise a point: we all know that due process is a fundamental principle, and it is one to which the Commission applies the highest standards.
We all also know that due process is not the only principle to which we must adhere. For instance, we must also take enforcement action in a timeframe relevant to the market concerned.
In other words, we do not only have to get to the right result, but we have to do it within a reasonable time.
This is important, because companies and consumers harmed by anti-competitive conduct cannot wait forever. An old maxim applies here; justice delayed is justice denied.
And since I intend to maintain and promote the evolving nature of our system, there will always be room for improvement, in both due process, and in efficiency.
Where I can see that a particular change will improve the system of competition enforcement, I will make it. I want to be clear also here: every time I will conclude that some changes can really improve our procedures, I will be ready to react in a positive way.
But the debate around due process should really be a debate about finding a dynamic balance that can adapt to ever-changing conditions.
Our decision-making process – and the decisions that result from it – are open and respectful of the rights of defence of the parties.
In all our cases – including the new cartels settlement procedure – the parties have the opportunity to comment and be heard on our objections, and to see the evidence on file. And here, the role of the Hearing Officer is relevant.
We issue decisions both when we uphold a complaint and when we reject one; when we approve a merger and when we block one.
In addition, all our decisions can be appealed to the European courts. And this is a right enjoyed by the parties under investigation and by complainants.
Review by the European courts is an integral part of competition cases – and parties make full use of their rights of appeal.
The scrutiny is very close and very careful – and I certainly believe that it should be so.
Ladies and Gentlemen:
I’ve been telling you about the main advantages of the model we have adopted and developed over the years. I’ve also told you about my intention to support our constant drive to improve it.
Where to now? I would like to share some general thoughts with you on the future of competition enforcement in the EU.
As part of our drive for improvement and in light of the comments we have received through our consultations, what changes should we consider?
A number of stakeholders call for very broad changes, including:
Clearly, these proposals point at the need for more safeguards. I have to look at it against the existing system, because we already offer a number of guarantees. For instance:
In addition, procedural rights are guarded by the Hearing officers, who also report directly to me and are independent from the department.
How do these safeguards work in practice? Let me give you some data.
Between 2007 and 2009, 17 out of 21 cartel cases were amended after the parties exercised their rights of defence. Many of these changes were substantial and one case was dropped altogether.
In the same period, 6 out of 7 abuses of dominance cases were amended, and one case was dropped.
And these figures do not include cases that were dropped earlier in the process – as you know, many potential cases are dropped at the early investigation stages.
So, as you can see, the system bears tangible fruits. As a consequence, I do not believe that we need to embark in major reforms of our institutional set-up.
But I’m open to local changes that would improve our system of enforcement. There are several specific points that I am looking at very carefully.
Constructive debate, such as the one we traditionally have with the IBA, will help me take these decisions and make our system fairer, more open, and more efficient.
Finally I would like to close on a more general note.
Enforcing competition rules is not an end in itself, but a means to establish good market conditions for Europe’s economies to flourish.
In addition, it is not a means to protect competitors, but to to prevent consumer harm.
The clout and political capital enjoyed by the European Commission helps European governments and business take competition seriously.
This is particularly important in the present juncture, and for two reasons.
We know these temptations well: State aid to favour national champions, rules that veto mergers and prevent the takeover of national companies, a broad beggar-thy-neighbour attitude.
The Commission, with its decision-making powers, helps to prevent that these moves harm consumers and distort competition, particularly in this difficult period.
Over the last two years, many governments in the EU and around the world have used budgetary stimulus measures to prevent the worst effects of the crisis.
I believe these measures have worked well; they have helped our economies and societies to weather the storm. But we are now beginning to see the limits of this kind of intervention.
At present, 24 EU countries are subject to the excessive deficit procedure. To face this situation, last July the Council proposed to strengthen Europe-wide economic governance and to keep a closer watch on national budgetary and structural policies.
One lesson EU countries have learned from the crisis is that it will be easier for them to take the path towards recovery if they stand together and play as a team.
And they know they will find an ally in the EU as they take difficult decisions to return to sound fiscal positions.
Preserving the integrity of the internal market is crucial in this context, because our internal market remains our most precious asset and will be decisive to put Europe back on track.
I believe that a strong, fair and efficient competition policy can boost competitiveness, create jobs, and encourage innovation; and it can do so at very little cost.
In a context of strained fiscal positions throughout the EU, this is more important than ever.
Ladies and Gentlemen, let me conclude.
Given the adaptive nature of our system and rapidly evolving situation, EU competition policy might look different five or ten years down the road.
But I can safely predict that it will continue to protect consumers, ensure a level playing field in the internal market, and contribute to Europe’s drive towards growth and jobs.
I am sure we can count on you to achieve the best results possible in this regard.