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SPEECH/11/396

Joaquín Almunia

Vice President of the European Commission responsible for Competition Policy

Fair process in EU competition enforcement

European Competition Day

Budapest, 30 May 2011

Ladies and Gentlemen:

I would like to thank the Hungarian presidency for organising this European competition day. I would also like to commend your decision to devote this edition to the initiatives our authorities can take to bring our action in competition-law enforcement across the EU closer together. National and EU competition authorities have been working well together for many years and, also thanks to our good relations, we have been building a model for competition control that is second to none.

Last year, the European Commission and the competition authorities of our 27 Member States in the European Competition Network issued more than one hundred decisions based on Articles 101 and 102. Since the start of the ECN in 2004, we have decided more than 500 cases. More importantly, our decisions have become more consistent and our workload better allocated. We should add to these figures the sector-specific expertise that we are developing together in key economic areas and the role we are playing in promoting competition in legislative initiatives.

On the strength of this record, it is important that we never stop to look for higher levels of convergence in our policies and in our enforcement work. Of course, I fully respect the legal and cultural diversity, which – in competition control as in many other domains – is a hallmark of the European project. But mutual respect has never hindered cooperation; in fact, it is a condition of it.

My contribution to our debate today will centre on the work we have been doing at the European Commission to improve our methods and practice. We have now come to a point where I can announce a package of measures that are set to make our process even more transparent, will better ensure the rights of the parties throughout the process, and keep our enforcement effective. I will tell you about the improvements that will be made to our Best Practices for antitrust procedures. I will also announce a revision of the mandate of the Hearing Officer, which is the latest tangible expression of my determination to fully ensure the fair treatment of the companies that are involved in our scrutiny.

Improving our rules and procedures is a means to a higher end. It is about upholding the rights and protecting the interests of companies and consumers; which means building a sense of trust and justice in the marketplace. It is about keeping our decision-making and our investigative tools in tune with ever-changing conditions in the markets. Above all, this work is ultimately about making sure that our internal market of 500 million people works in an efficient way. I cannot overestimate the importance of this last aspect of our control.

Together with regulatory and other authorities at European and national level, we are in the business of upholding and completing the establishment of the internal market, one of Europe's biggest assets. In the aftermath of the crisis, a fair but firm enforcement of competition law can help sustain the recovery; it can help create jobs; and it can help the countries of Europe which are now lagging behind to catch up and post higher growth rates. These are the ultimate goals of our efforts to maintain the highest standards of excellence in our policies and in our system of enforcement.

Competition law enforcement has contributed greatly to these objectives by making sure that companies compete on the merit. A recent example of our work on the ground is our decision last month to fine the leading producers of washing powder in Europe. The three companies involved – which settled the case – had formed a cartel that had directly affected households in eight EU countries for about three years. The same logic of active enforcement applies when it comes to abuses of dominant positions. The ongoing market test of Standard & Poor's proposed commitments to solve our competition concerns is an example of our willingness to tackle unilateral conduct as diligently as possible. But commitments to prevent abuses are not always adequate to ensure effective enforcement. And in such cases, we must not hesitate to take the necessary decisions, including imposing fines.

So, it is our job to have companies respect the law; but this is a two-way street. We are also bound by the law. Before I move on to the improvements we are planning, let me recall that Commission decisions – whether in antitrust, merger control or State aid – are appealed and reviewed by the European Courts in most instances.

Earlier this month the General Court upheld the fines we imposed in 2008 on two companies – Elf Aquitaine and Arkema France – which had formed a cartel with other companies in the market for sodium chlorate, a product used in the paper industry. The ruling is important because it is the first time the Court assesses fines that were set on the basis of the 2006 Fines Guidelines. To improve deterrence, the Guidelines have, among other things, put more emphasis on recidivism. The ruling confirms this policy. The Court upheld our decision to increase the fine by 90% for a company that had already been involved in three cartels.

Having said this, the EU Courts have always kept us under tight scrutiny, and rightly so, specifically with respect to the parties' rights of defence. On many occasions, the EU Courts have been examining the compatibility of our action with fundamental rights. Our compliance with fundamental rights is an integral part of our enforcement practice, at all stages of our cases. One example is the principle of non self-incrimination, which imposes limits to the questions we can ask a company during our investigations. Put in simple terms, we won’t ask: "Did you fix prices with your competitors at your meeting in Budapest on the 30th of May, 2011?" The Courts have been crystal clear on this point; companies are not obliged to answer questions that would entail admitting an infringement. Conversely, they are obliged to provide other factual information and pre-existing documents.

Ladies and Gentlemen:

I will now turn to the main improvements we are introducing to our Best Practices for antitrust procedures and to the mandate of the Hearing Officer. Over a year ago, we adopted provisional Antitrust Best Practices with innovations such as earlier opening of formal proceedings and state of play meetings at key points of the process. During the public consultation, we have received many comments – some supportive, some critical. Importantly, we have taken the time to test the draft measures in practice. Thanks to this work, we have prepared a new version of the Best Practices which I will soon put forward for consultation in the Commission and with the national competition authorities.

The main innovation is the inclusion of a section on fines in the Statement of Objections. In the future, companies will have a better idea, at an early stage, of the elements taken into account to calculate the fines; such as the value of the cartelised sales, an indication of the gravity, and issues of recidivism. This innovation will open a channel for dialogue with the parties: it will help us exchange information relevant to the calculation of the fines, and avoid post-decision corrections which, although they remain rare, are always unpleasant for both sides. The Best Practices will also give the parties earlier and wider access to key documents, such as economic studies, before formal objections are raised. In this way, they will be able to better understand the issues being investigated and to explain their point of view.

Also, the state of play meetings, which have proved to be very useful, will be extended from antitrust proceedings to cartel cases. The parties will have the right to meet my services after the oral hearing to discuss how the case is proceeding. State of play meetings will also be introduced for complainants so that we can discuss with them whether we will continue to investigate a matter that they have raised with us. The overall goals of these changes are to make our procedures more transparent and to involve the parties more closely.

Let me turn to the mandate of the Hearing Officer. The right to a fair hearing is a fundamental right. This right is safeguarded by the two Hearing Officers, who report directly to me. Since this function was introduced in 1982, our Hearing Officers have earned an impeccable reputation. They are independent from the case handling services and dedicated to ensuring that the process is fair and impartial.

However, their role is currently limited to the stages in our proceedings after the statement of objections is sent. But I believe procedural rights need to be upheld since the start of an investigation, and I plan to revise their mandate accordingly in the course of this year. This change will give the parties an independent review of their procedural claims over the entire process.

Another significant improvement to our process will be to allow the Hearing Officers to solve legal-privilege issues – an important issue in practice. Under our new rules, companies claiming privilege over documents could address themselves to the Hearing Officers, let them check the content of the documents and ask them to make a recommendation. I am confident that this can go a long way in resolving this type of issues in the future and avoid unnecessary litigation. The new mandate will also reaffirm that candidates who are not officials of the European Commission may apply for the post – a possibility that I will consider in the future.

In sum, the role of the Hearing Officers will be greatly enhanced, providing for new possibilities to solve process issues at an early stage. But let me stress that the fundamentals will not change: the Hearing Officers will not become judges and will not rule on the substance of cases; they will remain the guarantors of procedural rights.

Ladies and Gentlemen:

These are the main changes we are introducing at the competition department of the European Commission.

During the whole review process, we have kept three goals in mind:

  • making our control more effective;

  • adding more safeguards to protect the rights of the parties; and

  • opening more and better channels of information.

Fifteen months after I took office as Commissioner for Competition, I can tell you that the services I found were already first-class in terms of efficiency, fairness and transparency. So, what I’ve been presenting to you is not a revolution – there was no need for it. It is just the latest stage in the organic evolution of a fine European authority for competition.

Thank you.


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