On 9 July 2014, the European Commission published a Communication which reviews the operation of Regulation 1/2003 and lays out areas where progress will be needed in the future. The Commission is seeking, in particular, to identify areas for action to enhance the enforcement of EU antitrust rules by national competition authorities ("NCAs").

The Communication is also accompanied by two working documents which deal, in greater detail, with the antitrust enforcement of the Commission and NCAs over the past decade as well as institutional and procedural issues in enhancing the role of the NCAs.

Regulation 1/2003 had introduced a number of important changes to the enforcement of EU competition rules. In particular, the Commission's powers of investigation into suspected infringements of competition law were enhanced. In addition, a new framework for greater cooperation between the Commission and the NCAs was introduced.

As part of these reforms, both the Commission and the NCAs obtained the power to fully enforce EU antitrust rules, with the Commission losing its monopoly to apply the exemption contained in Article 101(3) TFEU and the NCAs becoming bound to apply EU rules to agreements or practices which have an effect on EU trade.

In 2009, the Commission published a report on the functioning of Regulation 1/2003 which concluded that the reforms had been largely successful in bringing about improvements in the enforcement of competition rules. The framework for cooperation between regulatory authorities was also found to be a success, leading to greater consistency and convergence.

No reforms were proposed at that time, although the report did recognise that procedural divergences existed at national level, which should be addressed. The recently published Communication builds on this report and outlines the enforcement of competition rules by both the Commission and the NCAs, noting that differences continue to exist between the Member States.

According to the Communication, Regulation 1/2003 has successfully transformed the enforcement of competition rules in the EU. Furthermore, the Communication emphasises the close cooperation which exists within the European Competition Network (ECN), which it credits with underpinning the coherent application of the rules across the EU.

However, the Communication accepts that reform is needed and sets out priority areas where further progress is necessary. The Commission will then assess which policy initiatives should be taken to best achieve these goals.

Although Regulation 1/2003 did not harmonise the procedures used by the NCAs in enforcing competition rules, after ten years of cooperation a substantial level of alignment has been noted, although significant differences still exist.

To remedy these continuing divergences, the Commission will seek to reinforce the institutional position of NCAs, while also ensuring greater convergence of national procedures and sanctions. The Communication notes that some Member State authorities are administrative in nature, while others are more judicial. Reforms have been recommended in some Member States to strengthen the institutional position and resources of NCAs.

The Commission has also observed an increasing trend of NCAs merging with other regulators, with only a minority of NCAs remaining exclusively responsible for competition enforcement (See, for instance, VBB on Competition law Volume 2014 No. 3, available at www.vbb.com, which deals with the creation of the Competition and Markets Authority in the UK). The Commission warns that the amalgamation of competences should not lead to a weakening of competition enforcement or a reduction in the means assigned to competition supervision.

The Commission also believes it is necessary to ensure that all NCAs have a complete set of powers at their disposal including core investigative powers; the right to set enforcement priorities; key decision-making powers; and the necessary enforcement and fining powers to compel compliance with investigative and decision-making bodies. The Commission also recommends the introduction of minimum guarantees to ensure that NCAs can execute their tasks in an impartial and independent manner.

In addition to the institutional considerations outlined above, the Communication also highlights the alignment of procedures as a means of enhancing competition enforcement. At present, NCAs apply EU competition rules on the basis of different procedures, although many are now, more or less, aligned with Commission practice.

The Communication notes, however, that practices remain dispersed in certain areas such as differences in scope of investigative powers, the ability to impose structural remedies and the power to set enforcement priorities. The Commission further notes that any confluence remains fragile and dependent on soft law instruments.

Regarding sanctions, the Communication notes that differences still exist with regard to the underlying principles of fine calculation, such as the base used for calculating the amount of the fine and the method for taking into account the gravity and duration of the infringement.

The Commission therefore considers it necessary to ensure that all NCAs have effective powers to impose deterrent fines on undertakings and on associations of undertakings. However, it is also recognised that it is necessary to find the right balance between increased harmonisation on the one hand, and the appropriate degree of flexibility for NCAs when imposing fines in individual cases on the other. In addition, the Commission recommends increased cooperation in the practical implementation of leniency programmes.

The Commission hopes that the achievements to date can be built upon with the abovementioned reforms to create a truly common competition enforcement area in the EU.

The full Communication "Ten Years of Antitrust Enforcement under Regulation 1/2003: Achievements and Future Perspectives" can be accessed here:

http://ec.europa.eu/competition/antitrust/legislation/antitrust_enforcement_10_years_en.pdf

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