Only the older Europeans among us can understand how things have changed with the new European regulation on competition, which became final after a political agreement within Council (see our bulletin of 27 November, pp.10/11). The changes introduced mark the forthcoming disappearance of a historic part of Community construction, Regulation No 17 of 1962, which had been the point of departure and the basis for a policy that was entirely new for our continent and which entailed the developments we now all know about. Mario Monti described this regulation as a "monument" of Europe. The mechanism of compulsory notification of concerted practices and their compulsory approval by the Commission will therefore disappear, a mechanism that was the cornerstone of the policy.
No regrets. So, no regrets? A little nostalgia, perhaps? Not a bit - as the radical change decided is the proof that progress has been made in the past forty years. In 1962, Regulation No 17 was not only a monument. It was above all a monument in the desert. Only one Community country at that time had competition norms - Germany, with the Bundeskartellamt. In the other Member States, undertakings were not subject to any regulations. It was therefore essential to centralise decisions in order to apply European rules under Articles 85 and 86 of the Treaty of Rome. If, today, this is no longer needed, it is because we have a real "competition culture" in Europe. All Member States have a national competition authority, and these bodies have increasingly affirmed their importance. Judicial practice has gradually developed thanks to the decisions of the European Commission and the Court of Justice, completed by many policy papers (guidelines, communications, annual reports by the Commission), and makes up an impressive whole that has amply clarified what is lawful and above all what is not lawful. It is therefore possible to:
- abolish the obligation of notifying agreements between undertakings, by freeing companies of the burden of red tape obligations. Undertakings have sufficient elements to assess their behaviour themselves;
- entrust national competition authorities with the task of practical implementation of European rules, that is, the monitoring of agreements submitted or put to them;
- and thus release the Commission of the obligation to examine all the agreements concluded between undertakings - an examination that monopolised a large number of civil servants. This had become of no purpose, as banned agreements are never notified anyway. Commission services must discover them themselves, on the basis of denunciation or press information or investigation, when the companies carefully hide their dealings as they are aware of the illegal nature of their behaviour. These services could then focus their effort on prosecuting serious infringement.
An unfounded accusation. When the Commission had first of all announced (in its Green Paper of 1999) and then proposed (towards the end of 2000) this revolution, the major superficial accusation made on all sides was nothing less than that of wanting to renationalise European competition policy. This accusation did not resist the analyses of the Economic and Social Committee (opinion of March 2001), or of the European Parliament (opinion of September 2001), or of the Member States (preparation of the Council's agreement). It did not stand up to it because the contrary was true, as proved by the following elements:
- national tribunals will base their decisions exclusively on the provisions of Articles 81 and 82 of the Treaty (formerly Articles 85 and 86) in all affairs of European importance, that is, which affect trade between Member States. Thus, the risk of parallel application of national standards, which are sometimes contradictory, will be eliminated. This (as Mario Monti had underlined) will "give rise to a homogenous European competition area, providing undertakings with better legal security".
- the "homogenous area" effect will be strengthened by the fact that the national courts will become relevant for also applying regulations on derogations to the ban on agreements, under paragraph 3 of Article 81 (the famous "block exemptions"), which will impose enlargement and deepening of the economic analyses on the impact of concerted practices;
- the Commission will set in place a "network of European Competition Authorities" (ECN) that brings together the national jurisdictions and the Commission itself and which will allow systematic coordination of analyses and decisions. The Commission will be at the centre of the ECN with the responsibility, as guardian of the Treaties, for ensuring that national decisions are in conformity with European competition rules and that these rules are applied in a uniform manner;
- the Commission will continue to intervene directly each time it regards it appropriate, especially (but not only) regarding cartels the effects of which are sensitive in more than three Member States, it could suspend national procedures concerning a case that is already being examined by the national authorities of another Member State or the Commission itself, it could itself take-on a particular case and continue to draw up communications and guidelines defining directions for the attention of national authorities and companies;
- the Court of First Instance and Justice will obviously continue to exercise their roles to the full at Community level.
We understand why the Economic and Social Committee (which represents industrial, social and legal circles) nor the EP nor the Council feared re-nationalisation of competition policy, even though at the same time this false fear or false argument were still heard, alongside fantasy interpretations of the effect of the reform on business.
Mario Monti's only regret. The text that was the subject of political agreement in Council was in part revised and improved in relation to the initial draft, which is quite normal and complies with the "Community method". The opinion of the Economic and Social Committee, the parliamentary debate (even though in this field the EP does not yet have the power of co-decision with the Council), and negotiations between Member States were precisely aimed at allowing for institutional opinions to be taken into consideration. In fact, the Commission marked its agreement on the text to have emerged from the examination procedure. On one point alone did Mario Monti express his disappointment: ministers did not take on board his request of handing the Commission the responsibility of establishing, through Council authorisation, the group exemption regulations, which allows to authorise in block, under certain well-defined conditions of entire groups of agreements between companies. The latest case that has been much spoken about is that of automobile distribution for which the Commission did have authorisation: it made the conditions of automatic approval more restrictive and severe, but the exemption itself was extended for ten or so years (see this section of 2 October). Professor Monti considers that - in anticipation of the transfer of vigilance to national authorities over implementation of the rules of exemption - it would have been appropriate to give the Commission the responsibility of itself establishing these rules, so as, notably, to avoid their being the subject of bargaining between Member States or exchanges of concessions, whereas it is not an appropriate area for compromises between national interests.
Behind the Council's negative attitude there also lurks an institutional concern of the European Parliament by which authorisation for the Commission to legislate directly should be limited to implementing rules, as it is a procedure that escapes Parliament's legislative powers (which is seeking to secure co-decision with the Council in the field of competition, from which it is currently excluded even though the Commission does involve it on a regular basis).
Two false problems. The one aspect of the new regulation that has especially received the press' attention is the provision that allows the Commission to inspect the homes of managers. Several newspapers have devoted headlines to this. When the Commission proposed it, reactions were rather negative, even though its aim is to have police or legal powers. In fact, the Commission's services had no difficulty in proving, with examples at hand, that certain companies urged their managers not to leave certain delicate files in the office, so that Commission investigators could not get hold of them. That is what convinced the Council to look favourably on the Commission's request, with the appropriate precautions and legal control.
The problem of countries candidates for accession has been raised by certain observers. It took 40 years for the anti-trust authorities of Member States to be able themselves to manage the provisions of the Treaty that prohibit cartels and abuses of a dominant position: how will countries that have only recently become market economies be able to do so by1 May 2004? Mario Monti's answer is reassuring. In certain countries of central and eastern Europe, national anti-trust authorities have existed from the early 90s, and apply competition rules identical or similar to Articles 81 and 82 of the EU Treaty. The Commission will assist these countries and help them be able to correctly apply the rules of competition, and it has no doubt that they will succeed.
The unnecessary precaution. Need it be reminded that the radical reform of competition policy regarding cartels and abuse of dominant positions, now decided and that will be fully in force by May 2004, has not relation with the review of the "mergers" regulation? This latter review is also ongoing. Mr. Monti will urge the Commission to approve, before Christmas, the Council's proposal on the subject, and he has fully anticipated the guidelines and contents of it (see this section of 13 November, and our bulletin of 26 November, p.5). But the two issues are separate.
(F.R.)