# EUR-Lex - 52014DC0453 - EN

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# 52014DC0453

**COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL Ten Years of Antitrust Enforcement under Regulation 1/2003: Achievements and Future Perspectives /* COM/2014/0453 final */**

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COMMUNICATION FROM THE COMMISSION TO
THE EUROPEAN PARLIAMENT AND THE COUNCIL

Ten Years of Antitrust Enforcement under
Regulation 1/2003: 
Achievements and Future Perspectives

1. 
Introduction

1. 
Regulation 1/2003[1] was a landmark reform which comprehensively overhauled the procedures for the application of Articles 101 and 102 TFEU
("EU competition rules"). It introduced an
enforcement system that is based on the direct application of the EU
competition rules in their entirety. It empowered Member States’ competition
authorities ("NCAs") and national courts to apply all aspects of the
EU competition rules, in addition to the European Commission. It also
introduced new, close forms of cooperation between the Commission and NCAs,
notably in the framework of the European Competition Network ("ECN").

2. 
To mark ten years of enforcement of Regulation
1/2003, this Communication: (1) provides a facts based review of public
enforcement during this period by the Commission and the NCAs; and (2) examines
some key aspects of enforcement by the NCAs, in particular institutional and
procedural issues, with a view to its further enhancement. It is to be read in
conjunction with the accompanying Commission Staff Working Documents which
contain a more detailed review.

3. 
The Communication builds on the Report on five
years of functioning of Regulation 1/2003. It found that the new system has
positively contributed to the stronger enforcement of the EU competition rules,
but that some aspects merited further evaluation, such as divergences in
procedures and fining powers.[2]

2. 
Ten Years of Antitrust Enforcement under
Regulation 1/2003

4. 
Regulation 1/2003 has given the Commission
greater scope to set its priorities, enabling it to devote more resources to
investigating cases and conducting inquiries in key sectors of the economy
suffering from market distortions, as well as less conventional forms of
anticompetitive behaviour in new sectors, which can be of particular importance
to consumers.

5. 
Regulation 1/2003 also equipped the Commission
with a renewed set of enforcement powers, including enhanced investigation
powers and commitment decisions, which have been regularly employed.

6. 
The new enforcement system largely relies on
market players assessing the compatibility of their conduct with the EU competition
rules and on targeted ex post enforcement action by competition
authorities. In support of this, the Commission has given extensive general
guidance to assist undertakings and national enforcers. The Commission had
already adopted a set of notices on a range of substantive and procedural
matters at the time of the entry into application of Regulation 1/2003. It
subsequently adopted revised block exemption regulations and accompanying
guidelines concerning the application of Article 101 TFEU to horizontal,
vertical and technology transfer agreements. This system of self-assessment
framed by the extensive guidance provided by the Commission has worked well and
stakeholders have adapted to the new system without major difficulties.
Moreover, the Commission issued a guidance paper on its priorities in the
application of Article 102 TFEU to exclusionary abuses. It also adopted new
guidelines on setting fines, a new leniency notice, a notice on settlements in
cartel cases, an information note on inability to pay and a notice on best
practices in antitrust cases.[3]

7. 
Regulation 1/2003 has considerably enhanced the
enforcement of the EU competition rules by NCAs and national courts. NCAs and
national courts not only have the power to apply the EU competition rules in
full: they are obliged to do so when agreements or conduct are capable of
affecting trade between Member States. These changes have considerably boosted
enforcement of the EU competition rules by NCAs. The Regulation also introduced
cooperation tools and obligations to ensure efficient work sharing and
effective cooperation in the handling of cases and to foster coherent
application. Building on these mechanisms, the ECN
has developed into a multi-faceted forum for exchanges of experience on the application
of substantive competition law as well as on convergence of procedures and
sanctions. National courts play an essential role in the private enforcement of
the EU competition rules. The Commission has sought to improve the
effectiveness of private damages claims brought before national courts and a
Directive on antitrust damages actions will be adopted soon.[4]

8. 
There are now multiple enforcers of the EU
competition rules, which has led to their much wider application. In the period
covered from 1 May 2004 to 31 December 2013, the application of the EU
competition rules has grown at a remarkable rate, with approximately 780 cases
being investigated by the Commission (122) and the NCAs (665). Enforcement by
the NCAs has developed in a broadly coherent manner.

Enforcement decisions - May 2004 to December 2013

COM: 122                                                   NCA:
665

9. 
The Commission and the NCAs have prioritised the
most serious and harmful anticompetitive practices, in particular, cartels,
which account for a substantial proportion of their enforcement record. A
sizeable portion of their activities was also dedicated to tackling abuses of
dominant position in liberalised markets such as energy, telecom and transport,
in particular, practices tending to exclude competitors from the market.

10. 
The considerable joint enforcement record of the
Commission and the NCAs is analysed from a number of perspectives: (1) the
types of infringements tackled; (2) the sectors on which enforcement has
focused; and (3) the type of procedures used.

Enforcement
activity by infringement

11. 
The Commission has prioritised the fight against
cartels, the most pernicious anti-competitive infringement. For the Commission,
this represents almost 48% of its enforcement activity. The Commission and the
NCAs have developed and adapted their leniency programmes which are an
important tool to detect cartels and have reinforced their capabilities to
investigate cartels, in particular through new technologies and means to
effectively gather digital data.

12. 
Other horizontal agreements account for 15% of
the Commission's enforcement record. The Commission has dealt with practices
with significant repercussions for consumers, such as non-compete clauses in
the telecoms sector and horizontal price-setting in the payments sector.
Vertical agreements represent 9% of the Commission's activities and include
anti-competitive restraints between car manufacturers and their after-sales
partners aimed at foreclosing independent repairers from the aftersales market.

13. 
Similar to the Commission, the NCAs also
concentrated their enforcement efforts on cartels (27%). In addition, the NCAs
tackled a significant number of other horizontal practices (19%), including
stand-alone exchanges of information where the information exchange did not
form part of a broader cartel agreement. The NCAs were also very active in
addressing vertical practices (27%), in particular, resale price maintenance,
anti-competitive forms of exclusive distribution and exclusive purchasing and
restrictions of parallel trade.

14. 
With respect to the application of Article 102
TFEU, this accounts for 20% of the Commission's enforcement record. The main
focus has been on exclusionary practices (84%), which foreclose competitors or
limit effective competition. The Commission has tackled exclusionary practices
such as refusal to deal, rebates, tying/bundling practices, margin squeeze and
exclusivity clauses, as well as less conventional forms, such as making
payments for the postponement or cancellation of the launch of a competitor's
products. Cases involving exploitative abuses (16%), such as excessive prices,
were less frequently pursued. Similarly, the majority of NCAs’ envisaged
decisions concerned exclusionary abuses (65%). They also tackled a high
proportion of cases involving both exclusionary and exploitative abuses (22%)
and cases involving exploitative abuses only (15%). Exclusionary practices
examined by the NCAs include the full range of classical abuses, as well as
less typical forms such as the denigration of competitors’ products. Cases
brought by the NCAs against exploitative abuses include excessive pricing by
dominant energy producers and excessive tariffs imposed by collecting societies.

Enforcement
activity by sector

15. 
A breakdown of the Commission’s and NCAs’
enforcement activities by sector shows that while a broad range of products and
services is covered, a number of key sectors have featured prominently.

COM                                                NCAs

16. 
The sector most investigated by the Commission
and the NCAs is basic and manufacturing industries (42 and 92 decisions,
respectively). This largely reflects the prioritisation of the fight against
cartels which have mostly been detected in this sector.

17. 
Both the Commission and the NCAs have
concentrated on recently liberalised sectors or sectors in the process of
liberalisation, such as telecoms, media, energy and transport, which are often
characterised by high market concentration and/or the presence of dominant
operators. For example, energy is the second sector with the most decisions (18
and 80 for the Commission and the NCAs respectively).

18. 
The NCAs have been particularly active in the
transport (69) and food (70) sectors. Other key areas of enforcement have been
media (66), telecoms (48), consumer goods (42), other services (35) and the liberal
professions (31). The Commission was very active in the IT sector (12), which
is important for the growth of the EU economy and where many of the players
have a global reach. The remaining 50 decisions of the Commission are spread
across 13 different sectors, with food and retail accounting for the highest
number (8).

Enforcement activity
by procedure

19. 
For both the Commission and the NCAs,
prohibition decisions are the most important means of enforcing the EU
competition rules. The use of prohibition decisions by the Commission was
facilitated by the introduction of the cartels settlement procedure. Such
expedited procedures also exist in a number of Member States.

20. 
Regulation 1/2003 equipped the Commission with
an enhanced set of enforcement tools, notably, the ability to take decisions
making commitments offered by parties binding and enforceable under Article 9.
This power has since been rolled out for virtually all NCAs, meaning that
prohibition and commitment decisions are the principal tools used in the ECN.

21. 
The primary purpose of commitment decisions is
to preserve effective competition by addressing the potentially
anti-competitive practices and to ensure a quick outcome on the market.
Commitment decisions allow for the quicker resolution of competition concerns
on a more cooperative basis. Such decisions have often been adopted in
fast-moving markets and/or in markets that are in the process of
liberalisation. Whether an authority follows a particular enforcement route is
based on a number of factors. A prohibition decision may be adopted if the case
calls for the imposition of fines to sanction past behaviour, if the only
remedy available is the cessation of the anti-competitive behaviour or if there
is a need for a clear legal precedent. Equally, the use of commitment decisions
depends on whether the parties offer effective, clear and precise commitments.

Commitment
and Prohibition Decisions

COM                                      NCAs

Cooperation with
national courts

22. 
Under Regulation 1/2003 national courts have
become an important arm of application of the EU competition rules. The
Regulation foresees a number of mechanisms to promote coherent application by
national courts. Under Article 15 national courts can request the Commission's
opinion on questions concerning the application of the EU competition rules.
From 2004 to 2013 the Commission has provided 26 opinions. The Commission can
also participate as amicus curiae in national court proceedings. The Commission
has made use of this tool on 13 occasions in eight Member States. The
Regulation contains a mechanism by which the Commission is informed of national
court judgments but it has not worked optimally.[5]

3. 
enhancing competition enforcement by the NCAs:
institutional and procedural issues

23. 
Regulation 1/2003 has brought about a landmark
change in the way in which EU competition law is enforced. The EU competition
rules have to a large extent become the “law of the land” through-out
the EU. NCAs have become a key pillar of the application of the EU competition
rules. This has meant that the work carried out in the ECN has become
increasingly important to ensure coherent enforcement and to allow stakeholders
to benefit from a more level playing field.

24. 
After ten years of working together, a
substantial level of convergence in the application of the rules has been
achieved but divergences subsist. They are largely due to differences in the
institutional position of NCAs and in national procedures and sanctions. These
issues were largely left open by Regulation 1/2003, subject to the EU law
principles of effectiveness and equivalence.

25. 
To enhance EU competition enforcement for the
future, the institutional position of NCAs needs to be reinforced while at the
same time ensuring further convergence of national procedures and sanctions
applying to infringements of EU antitrust rules. Both aspects are key to
achieving a truly common competition enforcement area in the EU. This
Communication identifies a number of areas in which further progress should be
made in the future.

Institutional
Position of the NCAs

26. 
EU law leaves Member States a large degree of
flexibility for the design of their competition regimes. Despite the lack of
specific EU law requirements, the position of the NCAs has evolved in the
direction of more autonomy and effectiveness. Many national laws contain
specific safeguards to ensure the independence and impartiality of NCAs. For
instance, recent reforms in Cyprus, Ireland, Greece and Portugal have strengthened the position of the NCAs.[6] Reforms have been recommended in other Member States to strengthen
the institutional position and resources of NCAs in the framework of the
European Semester.[7] The Commission has closely followed instances
where NCAs were merged with other regulators. Such amalgamation of competences
should not lead to a weakening of competition enforcement or a reduction in the
means assigned to competition supervision.

27. 
To ensure the effective enforcement of the EU
competition rules, NCAs should be independent when exercising their functions
and should have adequate resources. Challenges in this regard still persist, in
particular concerning the autonomy of NCAs vis-à-vis their respective
governments, and appointments and dismissals of NCA management or
decision-makers. Issues have also arisen with regard to ensuring sufficient
human and financial resources. This is reflected in the ECN Resolution of Heads
of Authorities on the continued need for effective institutions which was
adopted against the backdrop of cuts in the resources of several authorities.[8] The Resolution underlined, inter alia, the need for appropriate
infrastructure and expert resources.

28. 
Furthermore, the achievements made to date
remain fragile and can be rolled back at any time. This can be contrasted with
related policy areas, such as the telecoms, energy and railway sectors, where
EU law already provides for a number of requirements regarding independence, financial
and human resources of the national supervisory authorities.

29. 
It is necessary to ensure that NCAs can execute
their tasks in an impartial and independent manner. For this purpose, minimum
guarantees are needed to ensure the independence of NCAs and their management
or board members and to have NCAs endowed with sufficient human and financial
resources. Important aspects in this respect are the grant of a separate budget
with budgetary autonomy for NCAs, clear and transparent appointment procedures
for the NCA's management or board members on the basis of merit, guarantees
ensuring that dismissals can only take place on objective grounds unrelated to
the decision-making of the NCA and rules on conflicts of interest and
incompatibilities for the NCA's management or board.

Convergence
of procedures

30. 
The procedures for the application of the EU
competition rules by NCAs are largely governed by national law, subject to
general principles of EU law, in particular the principles of effectiveness and
equivalence. This means that NCAs apply the EU competition rules on the basis
of different procedures.

31. 
Many Member States have voluntarily aligned
their procedures to a greater or lesser extent with the procedural rules set
out for the Commission in Regulation 1/2003. Multilateral work within the ECN
has been a catalyst in promoting greater convergence. By way of follow-up to
the 2009 Report, seven ECN Recommendations on key enforcement powers were
endorsed in 2013.[9] These Recommendations are intended to serve as advocacy tool which
NCAs can use vis-à-vis policymakers to help ensure that they are equipped with
an effective competition toolkit.

32. 
Currently, differences still subsist throughout
the EU. While most NCAs now have the same main working tools as the Commission,
some still lack fundamental powers, such as to inspect non-business premises.
Not all NCAs have express powers to set their enforcement priorities, i.e. to
choose which cases to investigate. There are also differences in the scope of
investigative powers, e.g. NCAs may have the power to inspect but they cannot
seal premises or effectively gather digital evidence. Similarly, all NCAs have
the power to adopt prohibition decisions but some cannot impose structural
remedies. Some NCAs cannot effectively sanction non-compliance with a
commitment decision or enforce their powers to inspect.

33. 
The ECN Recommendations are very useful in
practice but where procedural differences are rooted in national legal regimes
and traditions, convergence cannot always be achieved by such soft tools.
Moreover, achievements made in terms of securing convergence can always be
rolled back. Differences in procedural rules lead to legal costs and
uncertainty for undertakings operating cross-border.

34. 
It is necessary to ensure that all NCAs have a
complete set of powers at their disposal, which are comprehensive in scope and
are effective. Important elements are the core investigative powers, the right
of NCAs to set enforcement priorities, key decision-making powers and the
necessary enforcement and fining powers to compel compliance with investigative
and decision-making powers.

Enhancing
the effectiveness of sanctions

a.       Fines

35. 
EU law does not regulate or harmonise sanctions
for breach of the EU antitrust rules. It is for the Member States to ensure
that they provide for sanctions which are effective, proportionate and
dissuasive. Whatever sanctions a jurisdiction applies, it is generally
recognised that antitrust enforcement cannot be effective if it is not possible
to impose deterrent civil/administrative fines on undertakings.

36. 
Sustained attention to having effective fines
has helped to achieve a high level of voluntary convergence, with many NCAs
operating a similar basic methodology for setting fines. Divergences still
exist with regard to the underlying principles of the fines calculation, such
as the base used for calculating the basic amount of the fine and the method
for taking into account gravity and duration.

37. 
More upstream, fundamental issues concerning the
potential addressees of a fine and liability issues pose problems. Firstly, in
one Member State it is currently not possible to impose deterrent
civil/administrative fines on undertakings. Secondly, the basic concept of
"undertaking" used for the calculation of the fine is not always
convergent with the EU law concept of undertaking as interpreted by the EU
Courts, which may have consequences for establishing parental liability and
economic succession. Furthermore, some NCAs still lack the power to impose
fines on associations of undertakings. Finally, the legal maximum of the
undertaking's turnover is construed and applied differently in some Member
States. Differences of the types cited can lead to very divergent outcomes in
terms of fines, some of which may not achieve the desired deterrent effect.

38. 
To make enforcement of the EU antitrust rules
more convergent and effective throughout the EU, it is necessary to ensure that
all NCAs have effective powers to impose deterrent fines on undertakings and on
associations of undertakings. Important aspects in this regard are ensuring
that NCAs can impose effective civil/administrative fines on undertakings and
associations of undertakings for breaches of the EU competition rules; ensuring
that basic fining rules are in place taking into account gravity and duration
of the infringement and foreseeing a uniform legal maximum; and ensuring that
fines can be imposed on undertakings, in line with the constant case law of the
EU courts, in particular, on issues such as parental liability and succession.
Any measures taken to this end would need to find the right balance between
increased convergence of the basic rules for fines and an appropriate degree of
flexibility for NCAs when imposing fines in individual cases.

b.       Leniency

39. 
The ECN Model Leniency Programme (MLP)[10] is a good illustration of how the ECN is able to develop effective
policy tools. The MLP sets out how to design a state-of-the-art leniency
programme. This has been a major catalyst in encouraging virtually all Member States and/or NCAs to introduce and develop their own leniency policies. There has
been a significant degree of alignment with the MLP and work is on-going to
implement the refinements made in the 2012 revision of the MLP.

40. 
A well-designed leniency programme is an
essential tool for enhancing effective enforcement against the most serious
infringements, in particular secret price-fixing and market-sharing cartels.
However, there is no requirement at EU level to have a leniency programme in
place and the exemplary level of convergence can always be put into question.
It is necessary to ensure that the achievements made in leniency programmes are
secured.

c.       Interface
of corporate leniency programmes with sanctions on individuals

41. 
The majority of Member States provide for sanctions
to be imposed on individuals for breaches of competition law, over and above
fines on undertakings. If such systems do not provide for leniency for the
employees of undertakings which are considering applying for corporate
leniency, this may lead to disincentives to cooperate with authorities EU-wide.
The threat of investigations and sanctions targeted at employees may deter
potential corporate applicants from applying.

42. 
Currently, sufficient arrangements to protect
employees of undertakings from individual sanctions if they cooperate under the
corporate leniency programme of a NCA or the European Commission exist only in
a few jurisdictions. It is appropriate to consider possibilities to address the
issue of interplay between corporate leniency programmes and sanctions on
individuals that exist at Member State level.

4. 
Conclusion

43. 
Regulation 1/2003 has transformed the
competition enforcement landscape. The enforcement of the EU competition rules
has considerably increased as a result of the achievements of the Commission,
the ECN and the NCAs. The Commission has a strong enforcement record,
investigating an important number of cases and carrying out inquiries in key
sectors of the economy. It has also provided guidance for stakeholders, NCAs
and national courts. There has been a dynamic development of close cooperation
within the ECN, which has underpinned the coherent application of the EU
competition rules throughout the EU. NCAs have become a key pillar of the
application of the EU competition rules and have considerably boosted
enforcement.

44. 
All of these elements have contributed to the
effective enforcement of the EU competition rules throughout the last decade.
Competition has helped to create a wider choice for consumers of better-quality
products and services at more competitive prices. It plays a key role in
creating the conditions to boost the productivity and efficiency of European
firms, a crucial factor to enable the EU economy to be more competitive and
move towards sustainable growth.

45. 
However, it is important to build on these
achievements to create a truly common competition enforcement area in the EU.

46. 
To this end, it is necessary, in particular, to:

- 
further guarantee the independence of NCAs in
the exercise of their tasks and that they have sufficient resources;

- 
ensure that NCAs have a complete set of
effective investigative and decision-making powers at their disposal; and

- 
ensure that powers to impose effective and
proportionate fines and well-designed leniency programmes are in place in all Member
States and consider measures to avoid disincentives for corporate leniency
applicants.

The
Commission will further assess appropriate initiatives to best achieve these
goals.

[1]               Council Regulation (EC) No 1/2003 of 16 December 2002
on the implementation of the rules on competition laid down in Articles 81 and
82 of the Treaty (OJ 2003 L1, 4.1.2003, p.1).

[2]               Communication from the Commission to the European Parliament and the
Council, Report on the functioning of Regulation 1/2003 COM(2009)
206 final and the accompanying Staff Working Paper SEC(2009) 574 final
("2009 Report").

[3]               See the Internet (http://ec.europa.eu/competition/antitrust/legislation/legislation.html).

[4]               See the Internet (http://ec.europa.eu/competition/antitrust/actionsdamages/documents.html).

[5]               The Commission has received very few national court
judgments deciding on the application of the EU competition rules.

[6]               Such changes were underpinned by the Economic
Adjustment Programmes.

[7]               Communication from the Commission to the European
Parliament, the Council, the European Economic and Social Committee and the
Committee of the Regions, 2014 European Semester: Country-specific
recommendations, COM(2014) 400 final.

[8]               See the Internet (http://ec.europa.eu/competition/ecn/ncas.pdf).

[9]               See the Internet (http://ec.europa.eu/competition/ecn/documents.html).

[10]             See the Internet (http://ec.europa.eu/competition/ecn/documents.html).