The EU Commission’s ECN+ Proposal

On 22 March 2017, the European Commission (“Commission”) published its Proposal for a Directive to empower the national competition authorities (NCAs) to be become more effective enforcers while ensuring the proper functioning of the EU internal market.

The European Commissioner for Competition Margrethe Vestager quoted: ‘EU antitrust rules make markets work better, with Member States’ competition authorities and the Commission working hand in hand in this regard. That is why we want all national competition authorities to be able to take decisions fully independently and have effective tools at their disposal to stop and sanction infringements. Because a well-functioning Single Market is to the benefit of European consumers and businesses.’

The Commission opted for a Directive quoting that ‘empowering NCAs by giving them minimum means and instruments to be more effective enforcers would lead to more effective enforcement of the EU competition rules and further spread the competition culture throughout Europe. […] Common minimum standards regarding the investigation and sanctioning tools would reduce divergent outcomes for companies and make the application of the EU competition rules by NCAs more predictable.’ Any national specificities are to be respected.

The objective of the presented Proposal consists in the further empowerment of the NCAs and their more effective function in the context of the application of EU competition rules (and national competition law provisions when applied in parallel with Articles 101 and 102 TFEU) while aiming at the establishment of a genuine internal market where the ultimate goal of competitive markets, jobs and growth will be achieved. As quoted in the text of the Proposal, ‘uneven enforcement of the EU competition rules distorts competition in the internal market and it undermines the system of decentralised enforcement that was put in place by Regulation (EC) No 1/2003’.

The Proposal follows the Commission’s Communication of Ten Years of Council Regulation 1/2003 (COM (2014) 453) which had identified potential areas of action where further empowerment of the NCAs shall be achieved. The Commission had also carried out a public consultation between November 2015 and February 2016 whose outcome consisted in the call for concrete legal action to be undertaken by the Commission. As quoted in the Proposal, ‘soft action on behalf of the Commission had been used extensively to prompt voluntary action at national level, however, several NCAs still lack the guarantees and instruments to be effective enforcers’.

Further, on 19 April 2016, the Committee on Economic and Monetary Affairs of the European Parliament and the Commission’s Competition Directorate General co-organised a Public Hearing on how to empower NCAs to be more effective enforcers. For this Hearing, Noerr Brussels had been requested to prepare a study on the role and powers of NCAs from a practitioners’ perspective.

The new Proposal undertakes to complement Regulation (EC) No 1/2003 and its focus lies on the following issues:

• Independence of NCAs. When enforcing EU competition rules, NCA should be independent and in a fully impartial function without being subject to any instructions from public and/or private entities. The Commission has been recently concerned about the ousting of high-ranked national officials in various NCAs during the last two years and therefore, wishes to eliminate any political pressure and/or applied on members of NCAs.
• Sufficient financial and human resources. The Commission has realised that a number of NCAs struggle with insufficient resources that do not enable them to effectively perform their duties and exercise their powers.
• Investigative tools. NCAs should have sufficient powers to gather all relevant evidence such as e.g. the right to search mobile phones, laptops and tablets – a key drawback in the digital age.
• Deterrent sanctions. NCAs should have the powers to impose proportionate and deterrent sanctions (both fines and periodic payments) for breaches of EU competition rules. Pursuant to the Proposal the maximum amount of the fine a NCA may impose on each undertaking shall be at least 10% of its total worldwide turnover in the business year preceding the decision; hence, EU Member States may establish an even higher threshold if they wish so.
• Appropriate allocation of liability. Specific reference to parental liability and succession of undertakings so that companies cannot escape fines through corporate re-structuring. Indeed, several NCAs cannot today hold parent companies liable for infringements committed by subsidiaries under their control while other NCAs cannot hold legal successors of an infringer and economic successors of an infringer liable for fines or there is uncertainty about this despite settled EU case law; and
• Enforce fines exterritorial. NCA should be able to enforce payments of fines against infringing undertakings with no legal presence on the territory of the NCA imposing the fine. Currently, administrative NCAs cannot request the enforcement of their fines cross-border if the infringer has no legal presence in their territory. Nowadays, in the digital era, many companies sell over the internet to an undefined number of customers established in various EU Member States and they only have a legal presence in e.g. one EU Member State. Currently there is scope for these companies to escape the enforcement of a fine. The Commission wishes to tackle this serious drawback of the decentralised system established with Regulation (EC) No 1/2003 through the imposition of legally binding rules in order to achieve a level playing field in the internal market.
• Coordinated leniency programmes. A similar pattern of leniency programmes with minimum common features is being proposed by the Commission in order to avoid largely incoherent national leniency schemes which jeopardise the uniform application of EU competition rules by the NCAs. Pursuant to the proposed rules natural persons of applicants for immunity from fines (no reference to reduction of fines) shall be protected from any criminal and administrative sanctions for the involvement in the cartel under the condition of active cooperation with the NCA concerned.

The Proposal will now be transmitted to the European Parliament and Council for adoption. Once adopted, EU Member States have to transpose the provisions of the Directive into national law.