Brussels, 5 September 2024
The European Commission has published today a Staff Working Document (‘SWD’) summarising the findings of the evaluation of the EU Regulations which lay out the procedures for the application of EU competition rules (Regulation 1/2003and Regulation 773/2004, together the ‘Regulations’).
The Regulations set out the procedural framework for the implementation of EU competition rules laid down in Articles 101 and Article 102 of the Treaty on the Functioning of the EU (‘TFEU’). They have played a crucial role in the enforcement of EU antitrust rules since their entry into force 20 years ago.
Between 1 May 2004 and August 2024, the Commission has adopted 225 enforcement decisions, either finding an infringement of EU competition rules or accepting commitments that would remove its preliminary concerns. The Commission has imposed fines of over €42 billion under Regulation 1/2003, approximately €37 billion of which has been upheld by the EU Courts. Between 2012 and 2021, the estimated total customer savings from all cartel and antitrust interventions by the Commission were between €50 to €87 billion.
Main findings of the evaluation
The evaluation has shown that:
- The Regulations have generallyachieved their objectiveofeffective, efficientanduniform application of EU competition rules. They continue to have EU added value and remain relevant.
- The main changes brought about by Regulation 1/2003 consisted in:
- First, theremoval of the old systemthat required thenotificationof agreements to the Commission in order for companies to benefit from an exemption under Article 101(3) TFEU, is viewed very positively.
- Second, the implementation of a decentralised system ofparallel enforcementof EU competition rules by the Commission and NCAs, whichled to more effective enforcement. NCAs and the Commission have together adopted over 1,650 decisions of which more than 85% were adopted by NCAs. This shows that NCAs have become key enforcers of EU competition law together with the Commission.
- The European Competition Network (‘ECN’)has been pivotal to achieving a uniform and effective application of EU competition rules, even if the cooperation within the ECN could be enhanced further. The evaluation showed the need to avoid unnecessary parallel investigations and further improve the relationship between EU and national competition laws to ensure a coherent enforcement of all available legal instruments.
- The evaluation also underlines the need for fasterinvestigations.It identified several issues, some of which are connected to digitalisation, which may impact the effectiveness of investigation tools and powers that were written for ‘paper world’ investigations. For example, the system of creating and granting access to a non-confidential version of the Commission’s file in order to ensure parties’ rights of defence was conceived at a time when investigations were much smaller in size. With the proliferation of data and larger files that we are looking at, the creation of a non-confidential version of the file creates a significant burden on parties, information providers and the Commission alike.
During the evaluation, the Commission collected evidence to understand how the Regulations have functioned since they entered into force in 2004. This evidence included feedback gathered in a public consultation, in a conference organised by the Commission on the 20 years of Regulation 1/2003 and in a stakeholder workshop. The Commission also commissioned an external evaluation support study. The final report of the support study is also published today together with the summaries of the National Competition Authorities (‘NCAs’) feedback and the stakeholder workshop.
In parallel, the Commission has adopted today a Report to the Council and the European Parliament on the legal framework for and the use of interim measures by NCAs. Interim measures ensure that competition is preserved while an antitrust investigation is ongoing. The ECN+ Directive provides the NCAs with a minimum set of enforcement powers, including the power to impose interim measures. The report finds that NCAs that make more use of interim measures often have lighter procedural rules, sometimes coupled with less stringent legal requirements to impose those measures.
Next steps
During the next months, the Commission will reflect on the evaluation results and decide whether to launch a process for the revision of the Regulations.
Background
Article 101 TFEU prohibits agreements between companies that restrict competition. Article 102 TFEU prohibits abusive conduct by companies that have a dominant position on a particular market.
Regulation 1/2003 and its Implementing Regulation 773/2004 establish a procedural framework aimed at ensuring the effective and uniform application of Articles 101 and 102 of the TFEU. At the time of its adoption, Regulation 1/2003 represented a major reform of the way EU antitrust rules were enforced. In particular, it: (i) introduced a system of direct application of antitrust rules, (ii) empowered Member States to apply all aspects of the rules, (iii) strengthened the cooperation between the Commission and the NCAs, and (iv) enhanced the enforcement tools for the Commission to be better equipped to detect and address breaches of the EU antitrust rules.
After 20 years of experience in the application of the Regulations, the Commission launched the evaluation to assess whether the Regulations remain fit for purpose, before considering whether any amendment to the Regulations might be necessary. The evaluation is part of a broader review in the area of EU competition law launched in recent years. It also follows theFive-YearandTen-Yearreports on the functioning of Regulation 1/2003.
For more information
More information is available on the Commission’s competition website, on the dedicated Regulation 1/2003 evaluation webpage, which contains all stakeholder contributions submitted in the context of the evaluation, summaries of the different consultation activities and the final report of the evaluation support study, as well as in the relevant Q&A document.
See also the dedicated ECN+ Directive webpage, which contains the Report of the Commission to the Council and the European Parliament on the legal framework for and the use of interim measures by national competition authorities.
Quote(s)
Source – EU Commission
EU Commission Q&A on the findings of evaluation of EU antitrust enforcement framework
Brussels, 5 September 2024
1. Why has the Commission evaluated Regulations 1/2003 and 773/2004 (the “Regulations”) now?
The Commission launched an evaluation of the Regulations in March 2022 to assess whether they remain fit for purpose after more than 20 years of antitrust enforcement. The evaluation is part of a broader review in the area of EU competition law launched in recent years (see for example, the adoption in 2022 of the new Vertical Block Exemption Regulation, accompanied by the Vertical Guidelines, which replaced the 2010 rules, the adoption in 2023 of the new Horizontal Block Exemption Regulations on R&D agreements and specialisation agreements and the horizontal guidelines, which replaced the 2010 rules, and the ongoing review of the Technology Transfer Bock Exemption Regulation and related Guidelines on technology transfer agreements, as well as). It also follows the Five-Year and Ten-Year reports on the functioning of Regulation 1/2003.
The evaluation sought evidence to assess in the light of 20 years of experience the important changes brought about by Regulation 1/2003 – namely the abolition of notifications and the decentralisation of competition law enforcement – but also more specifically the suitability of the Commission’s powers in a context of digitalisation. The evaluation focused on certain specific topics: (i) the Commission’s investigative powers; (ii) the procedural rights of parties to investigations and of third parties; (iii) the Commission’s decision-making powers; and (iv) the Commission’s cooperation with National Competition Authorities (‘NCAs’) and national courts.
The evaluation also took stock of the relationship between EU and national competition rules and the functioning of the European Competition Network (‘ECN’), in a context of growing co-enforcement of EU competition rules with NCAs.
The ECN+ Directive, that has now been transposed in almost all Member States, has provided a relevant backdrop for the evaluation, both in terms of the ever-closer cooperation within the ECN but also because NCAs now have some powers that go beyond those of the Commission.2.
2. On what grounds were the conclusions of the Staff Working Document (‘SWD’) drawn?
The conclusions presented in the SWD are underpinned by several activities performed to gather evidence for the evaluation.
As a first step, a public consultation was launched and, in parallel, an internal survey within the ECN took place.
An evaluation support study that collected additional evidence and views was also commissioned. This study involved: (i) over 250 expert interviews with external lawyers and in-house counsels; (ii) desk research; and (iii) collecting and analysing data from the Commission, NCAs and non-EU jurisdictions. The study provides input on (i) the general application of the Regulations, (ii) the investigative tools, (iii) the decision-making powers, (iv) the procedural rights of parties and third parties during investigations and (v) the functioning of the ECN and NCA procedural features.
A conference marking 20 years of Regulation 1/2003 was also organised in June 2023. A targeted stakeholder workshop took place in October 2023, providing an opportunity for an in-depth reflection on some of the topics raised during the public consultation. In particular, the following topics were discussed in six break-out sessions and the results were presented and discussed with all participants in two plenary sessions: (i) the Commission’s evidence-gathering toolbox, (ii) protecting confidentiality and granting access to the file, (iii) complaints and third-party participation in proceedings, (iv) tools for prompt intervention (interim measures and commitments), (v) remedies and fines, and (vi) ECN and national courts.
Finally, all these sources of evidence were assessed against the Commission’s own experience as enforcer and user of the Regulations to identify trends in the performance of the Regulations.
3. How many stakeholders participated in the public consultation?
The public consultation led to the submission (through the online survey) of 43 contributions, 19 of which were submitted through the general questionnaire and 24 through the detailed questionnaire. Additionally, 8 stakeholders submitted documents directly to the relevant functional mailbox. Other 11 stakeholders submitted their contributions directly on the dedicated Better Regulation page. NCAs provided input via a targeted questionnaire. The identified stakeholder groups included companies of different sizes and sectors, based in different EU Member States and beyond, business associations, consumer associations, law firms and lawyers with expertise in applying EU antitrust rules and procedures, NCAs, other public authorities, and academics. A factual summary including detailed information of the public consultation stakeholders and the contributions is available on the Have your say website.
4. What are the main conclusions of the SWD?
The Regulations have performed well. The abolition of the notification system has led to cost savings for the Commission and for businesses. The process has been generally smooth as businesses and their advisers have adapted well to the direct application of Article 101(3) of the Treaty on the Functioning of the European Union (‘TFEU’). Guidance, however, remains important for stakeholders (either through guidelines or decision-making practice).
The Regulations created a framework for true co-enforcement of EU competition rules by the Commission, NCAs and national courts. By decentralising enforcement, the Regulations have paved the way for NCAs to become effective enforcers of EU competition rules. The same is true for national courts that have become increasingly important for enforcing these rules. Decentralised enforcement has been supported by the creation of the ECN, which has allowed NCAs and the Commission to work together to ensure coordination and an appropriate allocation of work among competition authorities. While the objective of a uniform and effective application of EU competition rules has been achieved overall, the evaluation results pointed to some concerns with the effectiveness of the coordination within the ECN.
The changes to the Commission’s procedures introduced by the Regulations have also been useful and have enabled the Commission to effectively enforce EU competition rules. The rules have also proven to be resilient, given that they still provide a good framework for competition enforcement 20 years after coming into force. However, the economy’s digitisation and globalisation, increased complexity of antitrust investigations and the need to adopt decisions faster raise questions about the effectiveness and efficiency of certain aspects of the Commission’s procedures, such as the Commission’s investigative tools, specifically requests for information, inspections and the power to take statements; the Commission’s decision-making powers, in particular as regards interim measures, remedies and certain fines; and the procedures for granting access to file and rejecting formal complaints that will not be investigated further.
The evaluation also shows that the procedures set out by the Regulations may now be inconsistent with, or lagging behind, other more recent legislation in some limited respects, such as the ECN+ Directive or the Digital Markets Act. For example, under the ECN+ Directive, NCAs now have certain powers that the Commission does not have, such as the power to summon for an interview.
5. Are the current Regulations fit for purpose in the digital era? How has digitalisation impacted antitrust procedures?
Digitalisation has profoundly changed the way businesses operate. Most of the investigative powers of the Commission date from the time of Regulation 17 and are more than sixty years old. Digitalisation has specifically affected every aspect of the Commission’s investigations. The increase in data has meant that the collection, review and processing of available evidence has become a very complex and burdensome exercise for the Commission (but also businesses). Business records are no longer physical nor are they stored in a physical format on company premises, but they are often hosted in the cloud or stored on servers, accessible through professional or private laptops computers and mobile phones (to also allow for remote working). The proliferation of data created and collected adds significantly to the size of the Commission’s files, making the non-confidential file preparation and access to file increasingly complex.
6. What has been the outcome of antitrust enforcement under the Regulations?
Between 1 May 2004 and August 2024, the Commission has adopted 225 enforcement decisions, either finding an infringement of EU competition rules or accepting commitments that would remove its preliminary concerns. Under Regulation 1/2003, the Commission adopted important and at times groundbreaking decisions, including in the technology sector and the pharmaceutical sector, and in cases involving market partitioning. The Commission also adopted decisions increasing competition in former monopolistic markets, such as in the energy and transport sectors. It has investigated and fined new types of cartels. Between 1 May 2004 and end of 2022, the Commission has imposed fines of over €42 billion under Regulation 1/2003, approximately €37 billion of which has been upheld by the EU Courts. Between 2012 and 2021, the estimated total customer savings from all cartel and antitrust interventions by the Commission were between €50 to €87 billion.
7. What will the Commission do to address the challenges identified in the SWD?
The evaluation of the Regulations focused on assessing the current legal framework and does not aim to propose possible changes to the antitrust procedures. Although the evaluation concludes that the Regulations have been a success, some aspects of antitrust procedures and the Commission’s toolbox for antitrust enforcement merit further reflection.
Based on the results of the evaluation, the Commission will reflect on whether a revision of the Regulations would be necessary to ensure the optimal effectiveness of the enforcement framework for Articles 101 and 102 TFEU.
In such case, the possible ways forward to address the challenges identified may eventually be addressed in an impact assessment accompanying a Commission legislative proposal. However, the next steps and the consideration of a potential reform will be determined during the next Commission mandate.
In any case, the learnings from the evaluation, including feedback and suggestions received from stakeholders during the evaluation process, that could be addressed within the current framework of the Regulations are already being reflected on and, where relevant, taken on board.
8. Which are the specific areas identified by the Commission where there is a need for further reflection?
The purpose of the evaluation was to gather evidence on the functioning of the Regulations. The evaluation process is therefore backward-looking and the staff working document does not make any proposals for reform. However, during the evaluation process, stakeholders did provide feedback on possible areas for reform, that are feeding into the Commission’s reflections as to whether a legislative proposal might be necessary.
As regards the Commission’s procedures, the evaluation has identified the duration of proceedings as a pervasive issue with the current enforcement of antitrust rules by the Commission. As indicated in the evaluation, there is not a single factor that contributes to the duration of antitrust proceedings, which can be substantively and procedurally complex, so careful reflection is needed to see how we can address this issue most effectively.
The Commission also notes certain procedural innovations that have been introduced, for example, in the Digital Markets Act or the Foreign Subsidies Regulation that could be a useful source of inspiration for any possible reform – for example, retention orders and confidentiality rings could help speed up certain aspects of investigations. In addition, the ECN+ Directive has to some (albeit limited) extent created some differences between the powers that the Commission has and those of NCAs. This concerns, in particular, the ability to summon representatives of companies for an interview, the ability to adopt remedies on the basis of their effectiveness and the ability to impose fines for breaches of prohibition decisions.
As regards parallel enforcement of EU competition rules and cooperation within the ECN, the evaluation has pointed to potential opportunities for increased effectiveness, in particular as regards coordination in the context of parallel investigations and the optimal complementary enforcement and use of available legal instruments (including stricter national laws).
9. Why has the Commission adopted a Report to the Council and the European Parliament on the legal framework for and the use of interim measures by NCAs in parallel?
The Report to the Council and the European Parliament on the legal framework for and the use of interim measures by the NCAs is a commitment that the Commission has made in a declaration to the ECN+ Directive. The ECN+ Directive provides the NCAs with a minimum set of enforcement powers, including the power to impose interim measures. The Commission committed to conduct an analysis of whether there are means to simplify the adoption of interim measures within the ECN.
Source – EU Commission