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Vice President of the European Commission responsible for Competition Policy
Weaving Europe’s single competition enforcement area
European Competition Day – Change and challenges
Rome, 10 October 2014
E Ministro Guidi,
Ringrazio Giovanni Pitruzzella e l’Autorità garante della concorrenza e del mercato per il gradito invito ad aprire questa Giornata europea della concorrenza, che è una tappa importante del semestre di Presidenza europea.
E siccome oggi ricorre il ventiquattresimo anniversario dalla vostra fondazione, colgo l’occasione per fare i miei migliori auguri all’antitrust italiana.
Come si dice? Cento di questi giorni
Subito dopo la fondazione, l’Autorità è diventata una delle forze propulsive del processo che, con il passare degli anni, ci ha dato il sistema europeo che assicura il rispetto delle regole di concorrenza in Europa.
Grazie mille per il vostro impegno.
I am sure my successor Ms Vestager and your colleagues from DG Competition can continue to count on your support in the future, starting with the Damages Directive; the landmark piece of legislation that should be formally adopted before the end of the semester under the Italian Presidency.
I want to acknowledge the support of all national authorities in the preparation stages of the directive; in particular the role of the Lithuanian and Greek authorities during the respective Council Presidencies over the past, crucial year.
I also thank all NCAs for their work in their respective countries, which has allowed the directive to soon see the light of day.
The final text strikes the right balance between the public and private enforcement of EU antitrust rules.
It preserves the effectiveness of public enforcement – in particular of leniency and settlement programmes – and affirms the principle that private enforcement works best when it can rely on the work of Europe’s network of public agencies.
I invite all national agencies to remain actively involved in this process.
You are ideally placed to inform the people and national parliaments of the benefits this legislation will bring, especially to individual victims of antitrust infringements and to small- and medium-sized companies.
This is the last time I’m speaking at a European Competition Day. The present stage of transition towards the Juncker Commission is the perfect time for me to look back and share with all of you some ideas for the future.
This is precisely what I have been doing, together with DG Competition, regarding two milestones of Europe’s competition policy – both ten years old – Regulation 1/2003 and the 2004 Merger Regulation.
Regulation 1/2003 decentralized enforcement of articles 101 and 102 of the Treaty to national competition authorities, whereas the Merger Regulation kept the centralized review of mergers over a certain threshold while opening to companies the referral process from Member States to the Commission and vice versa.
I asked DG Competition to take stock of how these instruments have worked over the past ten years. And then we invited you all, other stakeholders, and the general public to help us understand what we can do to improve them.
So, we have two important debates on the future of competition enforcement across the EU.
In cartels and antitrust the European Commission and national authorities apply the same Treaty articles as interpreted by the EU Court of Justice. The main issues here are the national authorities’ independence, investigative powers, and sanctions.
In contrast, the Commission reviews mergers not by virtue of the Treaty but of a Regulation. For smaller transactions national laws still apply and these may differ in procedure and substance.
Let me go into some details.
Regulation 1/2003 triggered the most far-reaching overhaul of EU antitrust enforcement for over 40 years.
It transformed the implementation of Articles 101 and 102. As a result, national competition authorities and national courts have become enforcement pillars.
The system has served us well.
However, after ten years the time has come to think about other steps we can take to establish a genuine common enforcement area in Europe.
We summed up our analysis in a Communication adopted in July. The first point is that multiple enforcers have guaranteed a much wider and more effective application of EU antitrust rules.
Regulation 1/2003 boosted the application of EU antitrust rules on a scale that the Commission could never have achieved on its own.
Over the last ten years, the Commission and national authorities have together adopted more than 800 decisions.
The good news is that multiple enforcement has not opened gaps in the system – as many feared at the start. Cooperation between competition authorities has exceeded expectations and enforcement is consistent across Europe.
Working with sister agencies has become standard practice for the Commission and national authorities. A common competition culture is emerging from our exchanges, especially within the European Competition Network.
Examples of this common culture would include our action in energy, in the payments sector, in retail and food distribution, just to give some examples.
Parallel enforcement strengthens both the Commission and the NCAs and boosts our impact on the markets.
A common culture is also a result of the fact that NCAs and the Commission inform and consult each other before deciding on cases.
So far so good.
But as business evolves at an incredible pace we are facing new challenges all the time, such as in e-commerce and online bookings markets.
A number of ongoing cases in the ECN raise novel issues regarding the application of competition rules to the use of the internet for the sale of goods and services.
It is important that the ECN sends a consistent message to companies as to what they can and cannot do.
For example, it should be clear to them which restrictions they can impose on the use of the internet as they design their distribution models and which clauses they can include in distribution contracts.
As you know, broad principles for e-commerce were set out in the Guidelines on Vertical Agreements adopted in 2010.
As actual cases are analysed across Europe, and with e-commerce evolving at a fast pace, it is essential to discuss within the ECN how to best apply those principles and arrive at consistent individual decisions.
If we want to promote pan-European business models, we need to give legal certainty to the business community.
More generally, there is much we can do together to achieve a genuine common enforcement area in Europe.
To start with, some aspects of how NCAs apply EU competition rules were not covered by Regulation 1/2003. In particular, there are no provisions governing their independence and the tools and sanctions they can use. And divergences persist in these areas.
I am also aware of issues concerning the relations of some NCAs vis-à-vis their respective governments; for instance, regarding the appointment and dismissal of management and decision-makers.
Not all NCAs have the same degree of independence and not all EU governments give them the human and financial resources they need to carry out their responsibilities.
As to the tools NCAs can use, only a few of them have the whole array of enforcement powers required for effective enforcement.
Some authorities cannot inspect non-business premises or gather data stored on mobile phones and tablets. Others cannot even issue enforceable requests for information, or adopt commitment decisions.
Finally, there are problems with fines and the lack of common basic principles. The Court of Justice has long established that the effectiveness of penalties is a condition for the consistent application of EU competition rules.
Yet, in some EU countries parent companies cannot be held liable, and the turnover used to determine maximum amounts may also vary significantly. As a result, the deterrent power of fines can be undermined.
Another area that is not covered by Regulation 1/2003 is leniency programmes, which we all know are essential to bust cartels.
I know I’m preaching to the choir. The ECN has tried to encourage soft convergence through several channels.
The Commission has given its full support to these efforts. For instance, the Country Specific Recommendations that are part of the European Semester look – among other things – at the state of competition in individual countries.
Recommendations have recently been adopted on the need for independence and adequate resources for NCAs in some countries.
In particular, countries under EU financial assistance programmes strive to improve competition conditions and reinforce their national agencies.
Thanks to MoUs concluded in the context of these programmes, the Irish NCA now has adequate staff and the Cypriot and Portuguese authorities were given more effective investigative powers.
But some underlying problems remain across several jurisdictions. We do not have a clear legal basis to make sure that all NCAs can enforce EU antitrust rules with the same effectiveness.
The debate will develop in the coming years, and it will be up to the next Commission to decide how to promote the most appropriate reforms.
Ladies and Gentlemen,
I will now turn to the other debate on how to improve merger control across Europe.
As was the case in antitrust, the system that has emerged from the 2004 reform has served us well. Together, we make sure that potentially problematic deals do not create anti-competitive market structures.
At the same time, unproblematic mergers are dealt with quite swiftly, so that companies can proceed with their plans – and the simplification package of last year made the system even more business-friendly.
Yet, there is always room for improvement. The changes we have in mind would require amending the regulation itself. That is why we issued a White Paper during the summer to launch the debate around two main proposals.
The first looks at extending the Commission’s power to review – when necessary – the acquisition of non-controlling minority shareholdings, which is already possible in some national jurisdictions.
The second is about streamlining the system for referring cases from NCAs to the Commission and vice versa.
We are inviting discussion on two specific points to improve the referral system:
A fast-track system that companies can use to notify directly to the Commission mergers that are subject to control in several Member States – this, provided no competent Member State objects.
A mechanism to make sure that when one or more Member States wish to refer to the Commission a merger already notified to them, the Commission would look at the transaction for the whole of the EEA so as to avoid parallel investigations.
At present, in almost all cases it is clear which authority is better placed to look at a merger. The turnover thresholds form a bright-line test and the existing referral mechanism help to fine-tune the case allocation to the most appropriate authority.
However, the Commission reviews hundreds of transactions a year while national authorities look at between two and three thousand.
With these figures, there are bound to be some cases that need to be discussed. And when this occurs, it is better to sort things out in confidence among the authorities concerned.
The White Paper also looks beyond these policy proposals, which would be significant in their own right.
There are no contradictions in the vast majority of merger decisions taken by the national authorities. However, in few mergers with cross-border impact we have seen conflicting outcomes.
For instance, in the recent Eurotunnel/SeaFrance case the UK Competition Commission reached a different conclusion from the French Autorité de la Concurrence. And there is no easy way to solve the problems this asymmetry has created.
It would be good if we could avoid this. The White Paper suggests more cooperation also among NCAs to minimise conflicting outcomes and facilitate the referral of such cases to the Commission, if NCAs so wish.
But I believe we can go even further.
We could give ourselves the goal of building a European merger area in which the Commission and all NCAs would apply the same substantive law as we already do in antitrust.
This idea was included in a 2010 report on the Single Market that President Barroso asked Mario Monti to prepare.
The White Paper endorses this objective but I know that achieving it would require a more ambitious overhaul of merger control.
It will be for my successor to see whether and when the time is ripe for such an ambitious project.
Ladies and Gentlemen:
The European Competition Network is recognised as a paragon of good governance. I fully subscribe to the very positive assessment of your collective action and of the work of DG Competition. I’ve had ample proof of it during my years as Commissioner for Competition.
The level of cooperation between national and European levels of responsibility we have achieved in competition enforcement should be cited more often to confound populists and Euro-sceptics when they depict the EU as a bureaucratic behemoth.
If everything goes according to plan, I will soon hand over my post to Ms Vestager. During her confirmation hearings last week, she said that serving the common interest is a hallmark of competition policy.
She also said that her action would be based on facts and guided by neutrality, impartiality and rigour stressing that she would listen to everyone, but her own judgement would not be swayed by anyone.
I wholeheartedly endorse the principles and values she put forward before the members of the European Parliament. The interests of Europe’s consumers and companies will be in good hands for the years to come.
I wish Ms Vestager every success as she takes up her new responsibilities as Commissioner for Competition. And I encourage the ECN to continue working as closely as possible with her and her team.