6 - 6 - Procedure (16_59).txt

Well, hello and welcome to the final
lecture on the EU Competition Law course.
In this short session,
I'll be discussing, a much more
practical approach to the enforcement
of European Union Competition law.
In other words, we're going to be looking
at, how does the commission carry out
an investigation and exactly what powers
does the commission have in order to,
reach a conclusion of an investigation,
and
following from that,
what are the potential punishments and
penalties related to an infringement
of European Union competition law?
I should start by saying that since 2004,
we've seen a modernization,
of our competition procedure.
And this has led to a set of new rules,
being brought in that apply
the antitrust procedures.
And we find these in Council regulation
number one of 2003, which I of course,
have no doubt that you have all read
before tuning in for this lecture.
And if you have you'll know that
the objective of the new regulation,
is to ensure that we have a much more
effective enforcement of European Union
competition rules, and the enforcement
of this is in line with the objectives
of our competition laws, namely in
the interest of consumers and businesses.
At the same time,
the new rules ease the administrative
bourdon of firms doing business in Europe.
We now have a decentralized
application of competition rules and
the strengthening of control for
the commission, being able to
lighten their administrative workload and
allowing the commission to concentrate,
its resources on the enforcement of the
most serious competition infringements.
In other words, companies are a lot,
more free now to decide where and
when their activities fall inside and
outside, of European Union competition,
meaning that the commission now has
the ability to focus predominantly,
on the most serious of
offenses of competition law.
Article 4 of the regulation,
number one 2003,
provides that the purpose of
applying Articles 101 and 102.
The commission shall have the powers
provided for by the regulation.
In other words, Article 4 allows
the remaining articles of the regulation,
to come alive for the commission.
And what we see in the regulation,
very briefly,
is that between articles seven and
ten the types of
decisions that the commission is
empowered to adopt are set out.
It is these provisions, and
the powers of investigation vested in
the commission under articles 18 to 21,
that are really the drivers
enabling the commission to effectively
enforce European Union competition rules.
The powers of the European commission.
What are they?
Why do we have them?
Well we have them to ensure that the rules
of competition, concerning agreements,
decisions of undertakings, and restrictive
practices and abuse of dominant position,
are applied in a way that allows
the commission to conduct thorough
investigations, and only impose
penalties where such penalties,
are based on decisions made
following thorough investigations.
The commissioner, of course,
chooses when to exercise these powers,
and this usually occurs following
a complaint from you or me, or
from another company, or from competitors.
And it gives the European
Union Commission, the power to
find an infringement under articles 101 or
102.
They are, in fact, able to make
the decision of guilt or innocence,
if you like to put it very simply.
More than this,
they can enter into a decision finding and
terminating an infringement.
Where the commission has found
that such an infringement occurs,
they can adopt a decision requiring
the undertaking or association of
undertaking concerned to bring a
particular action or agreement, to an end.
They can act very quickly, through
inter-remedies such as an injunction.
Of course an injunction
is a decision ordering
the undertaking to stop doing
what it is that they're doing.
We have the ability.
To communicate,
to negotiate with the commission.
A company can offer
commitments to a commission.
We saw this,
when we discussed article 102.
You saw this, very briefly,
in a different context,
when you looked at, the commission's
ability under the merger regulation.
Here we have companies,
can offer commitments to the commission
rather than allowing a full investigation,
we have the communication channels open
between the two and
we allow the commission and
the undertaking to reach an agreement,
taking into account the market and
the opinions of those players on
the market, particular actions offered by
the undertaking to the commission,
to allay those anti-competitive
concerns that the commission has brought,
to their intention.
Where the commission make such a decision,
those commitments become binding,
completely on the undertaking
offering such commitments.
On top of this the commission
can make a decision finding that
articles 101 and 102, well,
they're simply inapplicable.
Here the commission has
a wide array of reasons,
for which it may make such a decision.
It could be within the public interest.
It could be based very specifically
on the facts of a particular case.
It could well be that the conditions
of article 101 are not met.
Or, that the commissioners convinced
that article 101-3 are applicable.
But this is all fine,
it's not all about the commission.
The regulation also makes specific,
reference to the European Union
charter of Fundamental Rights.
More importantly,
we insure, within Europe,
that where the commission opens
an investigation against a company or
a group of undertakings, that they
have the proper right of defense.
So of course the commission does not
take these decisions in insolation.
Because before taking any decision, which
will have an effect on an undertaking or
an association of undertakings,
they are given the opportunity to be heard
on the aspects to which the commission
has raised as objectionable behavior.
The parties also have the right of
access to the commission's file.
Provided of course that it doesn't result
in business secrets being divulged or
leaked out.
Moreover the commission allows for
a hearing.
It allows the undertaking to come
forward and orally plead their case.
Should be said though,
that the commission, or
national competition authorities acting
under the commission's command for
that matter, are not under an obligation
to divulge information that they have
acquired or exchanged internally.
So here we see that
undertakings are entitled to
information that the commission relies on.
But what about the investigation?
What about before the decision is made?
Well, the commission has a wide
range of powers of investigation.
They can conduct sector inquiries.
So, they could choose a particular sector,
such as the pharmaceutical sector.
Where they find that the trade or
the trend of trade between member states,
suggest that there could be circumstances
that lead to an anti competitive or
a distorted competition on
that particular market.
They can request information.
They may, by request or
by decision, ask undertakings and
associations of undertakings to
provide them with information that
the commission feels is necessary for
them to fulfill their duties and
to carry out their investigation,
under this regulation.
Because, companies and people may
have information that is necessary,
or helpful, to either the commission or
to the undertaking concern.
So, very often, it is in the interest of
the parties to cooperate with the
commission to try to resolve the matter.
I should also say that
the commission has the ability and,
the competence to ask governments and
national competition authorities for
any information, it requires to
carry out their investigative duties.
The commission can take statements.
They can interview any natural or legal
person, who consents to be interviewed.
So of course there is no, legal obligation
on you as an employee of an undertaking,
to sit down and
be interviewed by the commission.
Your rights, of defense, are protected.
Perhaps the most, spoken about,
power of the commission is their
ability to conduct inspections.
Well what does this mean?
Well it means that the commission can
conduct, what they deem to be any
necessary inspection of any undertaking or
association of undertakings, and
more importantly these companies are
required to submit to such inspections.
So these means in practical
terms that the commissioner is
entitled to enter the premises,
the land or
any means of transport, of undertakings
and associations of undertakings,
including the homes of directors,
managers, or other staff members.
Of course, they can only do so
in conjunction with national law,
and if a reasonable suspicion exists,
that books or other records related to
the business and the subject matter of
the inspection might be held there.
The commissioner is entitled to examine
books, other records, to take copies or
extracts of books or records,
to seal up business premises,
for later inspection,
to mirror computers and hard drive,
servers and to take that information
back to the commission and
to go through it as part
of their investigations.
It doesn't mean
that the commission can simply knock on
your door and come in any day they want.
They have to exercise their power in
accordance with the rights of defense,
with this regulation.
They have to have written authorization
specifying the subject matter, and
the purpose of the inspection, and
the possible penalties of non-compliance.
The European competitional authority
also works very closely with
national competition authorities.
And it may well be that national
competition authorities act on behalf of
the commission in carrying out
these information gathering
investigative duties.
However, once the investigation is all
done and a decision is taken, and if such
a decision means that the commissioners
have the view that an undertaking, or
an association of undertakings has indeed
breached European Union competition law,
one of the biggest, penalties that
the commission can impose of the fines,
financial fines.
And these can be imposed
on undertakings to a total,
not exceeding 10% of their total turnover
realized in the preceeding business year.
That could be quite substantial finings.
The fine acts as a serious detriment to
breaching Article 101 or two of the TFEU.
In addition to this, the commission is
able to, place periodic penalty payments
on undertakings or association of
undertakings, of course not exceeding
5% of their average daily turnover
in the preceding business year.
In order to compel, the company's
to put an end to an infringement,
to comply with a decision ordering
interim measures, to comply with
a commitment that the commission has
made a decision to make finding, or
to supply complete and correct information
which the commission has requested.
And the undertaking is for one reason or
another, not playing
ball with the Commission.
Or, until such a time as an undertaking
submits to an inspection,
which the Commission has ordered.
So here we see that the, the
investigative, the decision-making powers
under Regulation 1/2003 create
a huge framework within
which the Commission has vast
powers both to investigate and
to deal with infringements of
the Union competition rules.
Their decision, however, is not final.
The courts play a role, in this.
And the courts' role in this is to
review the Commission's decisions.
Have the commission acted
within the confines of the law?
Have the commission respected
the rights of defense of companies?
Have the commission imposed the correct
level of final penalty on the undertakers?
So, once the commission has
false powers of investigation,
has great powers to impose fines or
order commitments.
This is not done in isolation.
The courts act as a judicial handbreak
on the powers of the commission.
Well, that's really all we have time for.
I suggest that you,
carry out the additional reading,
which is attached to this lecture.
This is a highly topical area, and it's
very often a tension between companies not
wanting to give up too much information
to the commission service to
self-incriminate themselves, and the
commission really looking, to get as much
information as possible so as to reach
the fairest and most just of decisions.
Whichever side you fall on, you will
no doubt find opposing opinions in
the reading that we have sent
forward with this lecture.