Communication from the Commission - Report on Competition in Professional Services
Date: 2004-02-09
Institutions: European Commission
Subjects: EU Member State, EU law, competition, competition law, liberal profession, report

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 9.2.2004 
COM(2004) 83 final 

COMMUNICATION FROM THE COMMISSION 

Report on Competition in Professional Services 

EN 

   EN 

 
 
 
  
COMMUNICATION FROM THE COMMISSION 

Report on Competition in Professional Services 

Table of Contents 

Executive Summary ................................................................................................................... 3 

1. 

2. 

2.1. 

2.2. 

3. 

4. 

4.1. 

4.2. 

4.3. 

4.4. 

4.5. 

5. 

5.1. 

5.2. 

6. 

6.1. 

6.2. 

6.3. 

Introduction and scope ................................................................................................. 5 

Background .................................................................................................................. 6 

General context ............................................................................................................ 6 

The importance of professional services for the EU economy .................................... 7 

Commission Action in the field of competition for professional services................... 7 

Restrictive regulation in the Liberal Professions ......................................................... 9 

Fixed Prices................................................................................................................ 10 

Recommended Prices ................................................................................................. 12 

Advertising Restrictions............................................................................................. 13 

Entry Restrictions and Reserved Tasks...................................................................... 15 

Business Structure Regulations.................................................................................. 16 

Possible application of EC Competition Rules .......................................................... 17 

Liability of the members of the professions............................................................... 17 

Liability of Member States......................................................................................... 21 

Next steps towards modernisation ............................................................................. 22 

Review of existing rules by the regulators................................................................. 23 

Enforcement in the European Competition Network................................................. 24 

Final Remarks ............................................................................................................ 24 

2 

 
 
  
 
 
EXECUTIVE SUMMARY 

Liberal  professions  are  occupations  requiring  special  training  in  the  liberal  arts  or  sciences. 
This report concentrates on the professions which have so far been analysed in some detail by 
the  Commission,  namely 
lawyers,  notaries,  accountants,  architects,  engineers  and 
pharmacists. The sector is usually characterised by a high level of regulation, in the form of 
either  State  regulation  or  self-regulation  by  professional  bodies.  The  main  purpose  of  this 
report is to set out the Commission’s thinking from the perspective of competition policy on 
the scope to reform or modernise specific professional rules. 

The Lisbon European Council in March 2000 adopted an economic reform programme with 
the aim of making the EU the most competitive and dynamic knowledge-based economy in 
the  world  by  2010.  Professional  services  have  an  important  role  to  play  to  improve  the 
competitiveness of the European economy, as they are inputs for the economy and business, 
so  their  quality  and  competitiveness  have  important  spill  over  effects.  Professional  services 
are also important because of their direct import for consumers. 

The  five  main  categories  of  potentially  restrictive  regulation  in  the  EU  professions  are:  (i) 
price fixing, (ii) recommended prices, (iii) advertising regulations, (iv) entry requirements and 
reserved  rights,  and  (v)  regulations  governing  business  structure  and  multi-disciplinary 
practices. 

On  the  one  hand,  a  significant  body  of  empirical  research  shows,  the  negative  effects  that 
excessive or outdated restrictive regulations may have for consumers. Such regulations may 
eliminate  or  limit  competition  between  service  providers  and  thus  reduce  the  incentives  for 
professionals  to  work  cost-efficiently,  to  lower  prices,  to  increase  quality  or  to  offer 
innovative services.  

On  the  other  hand,  there  are  essentially  three  reasons  why  some  regulation  of  professional 
services  can  be  necessary:  asymmetry  of  information  between  customers  and  service 
providers,  as  a  defining  feature  of  professional  services  is  that  they  require  practitioners  to 
display a high level of technical knowledge which consumers may not have; externalities, as 
these  services  might  have  an  impact  on  third  parties;  and  certain  professional  services  are 
deemed  to  produce  ‘public  goods’  that  are  of  value  for  society  in  general.  Proponents  of 
restrictive  regulations  argue  therefore  that  such  regulations  are  designed  to  maintain  the 
quality of professional services and to protect consumers from malpractice.  

While  the  Commission  acknowledges  that  some  regulation  in  this  sector  is  justified,  it 
believes that in some cases more pro competitive mechanisms can and should be used instead 
of certain traditional restrictive rules.  

As a matter of Community competition law it is necessary to distinguish between the potential 
liability of professional bodies and that of the Member States.  

Regulations  adopted  by  professional  bodies  are  decisions  of  associations  of  undertakings 
capable  of  infringing  the  prohibition  contained  in  Article  81  EC.  Regulations  which  are 
objectively  necessary  to  guarantee  the  proper  practice  of  the  profession,  as  organised  in  the 
Member State concerned, fall however outside the scope of the prohibition.  

3 

 
 
  
 
State regulation which imposes or favours anti-competitive conduct or reinforces its effects, 
infringes Articles 3(1)(g), 10(2) and 81 EC. Where a State delegates its policy-making power 
to  a  professional  association  without  sufficient  safeguards,  that  is  without  clearly  indicating 
the public interest objectives to respect, without retaining the last word and without control of 
the implementation, the Member State can also be held liable for any resulting infringement. 

Ultimately,  in  the  Commission’s  view,  in  all  scrutiny  of  professional  regulation  a 
proportionality test should be applied. Rules must be objectively necessary to attain a clearly 
articulated  and  legitimate  public  interest  objective  and  they  must  be  the  mechanism  least 
restrictive of competition to achieve that objective. Such rules serve the interests of users and 
of the professionals alike.  

The Commission invites all involved to make a joint effort to reform or eliminate those rules 
which are unjustified. Regulatory authorities in the Member States and professional bodies are 
invited to review existing rules taking into consideration whether those rules are necessary for 
the  public  interest,  whether  they  are  proportionate  and  whether  they  are  justified.  The 
Commission also suggests to explore together with all involved the need to put in place pro-
competitive  and  transparency  enhancing  accompanying  mechanisms  to  strengthen  consumer 
empowerment.  

From  an  enforcement  perspective  from  May  2004  onwards,  the  national  competition 
authorities and the national courts will have a more prominent role in assessing the legality of 
rules and regulations in the professions. To the extent that competition restrictions have their 
centre of gravity in a Member State, administrative enforcement of the EC competition rules 
in the liberal professions will then be mainly the task of national competition authorities. The 
Commission will however also continue to carry out casework where appropriate. A coherent 
application  of  Articles  81  and  82  will  be  guaranteed  through  co-ordination  in  the  European 
Competition Network.  

The  Commission  will  report  in  2005  on  progress  in  eliminating  restrictive  and  unjustified 
rules. 

4 

 
 
  
 
1. 

1. 

2. 

3. 

4. 

5. 

6. 

7. 

1 

INTRODUCTION AND SCOPE 

Liberal  professions  are  occupations  requiring  special  training  in  the  liberal  arts  or 
sciences,  for  example  lawyers,  notaries,  engineers,  architects,  accountants  and 
pharmacists. The sector is usually characterised by a high level of regulation, in the 
form  of  either  State  regulation  or  self-regulation  by  professional  bodies.  This 
regulation can affect, inter alia, the numbers of entrants into the profession; the prices 
professionals may charge and the permitted charging arrangements (e.g. contingency 
fees);  the  organisational  structure  of  professional  service  undertakings;  their  ability 
to advertise; and the tasks which are reserved for the members of the profession.  

As  regards  self-regulation  by  the  professions  Article  81  (1)  of  the  EC  Treaty 
prohibits  ‘all  agreements  between  undertakings,  decisions  by  association  of 
undertakings and concerted practices which may affect trade between Member States 
and  which  have  as  their  object  or  effect  the  prevention,  restriction  or  distortion  of 
competition within the common market’.  

As regards State regulation Article 10(2) of the EC Treaty prohibits measures of the 
Member States which could jeopardise the attainment of the objectives of the Treaty. 
Read  in  conjunction  with  Articles  3(1)(g)  EC  (which  refers  to  the  objective  of  a 
system  of  undistorted  competition  in  the  internal  market)  and  Article  81  EC,  those 
provisions  require  Member  States  not  to  introduce  or  maintain  in  force  measures, 
even  of  a  legislative  or  regulatory  nature,  which  may  render  ineffective  the 
competition rules applicable to undertakings. 

There is thus potential tension between, on the one hand, the need for a certain level 
of  regulation  in  these  professions  and,  on  the  other,  the  competition  rules  of  the 
Treaty. 

The goal of this report is to set out why action in the field of professions is needed 
from a competition policy perspective (section 2), to report on what the Commission 
has done so far (section 3), to present the Commission's intermediary findings on key 
restrictions  and  their  alleged  public  interest  justifications  (section  4)  and  on  the 
Community  legal  framework  within  which  those  restrictions  have  to  be  analysed 
(section  5)  and,  finally,  to  propose  a  future  course  of  action  to  promote  the 
elimination of unjustified restrictions (section 6). 

This report concentrates only on the professions which have so far been analysed in 
some  detail,  namely  lawyers,  notaries,  accountants,  architects,  engineers  and 
pharmacists.  Similar  conclusions  could  be  reached  concerning  neighbouring 
professions,  where  they  exist  (for  example,  tax  advisers,  estate  agents).  Medical 
professions are not covered by this report1. Moreover, the Commission has limited its 
fact-finding so far to the current EU 15 Member States. 

Since  the  Commission  finds  that  important  progress  can  be  made  using  other 
mechanisms,  it  does  not  at  this  stage  explore  the  potential  use  of  Article  86  EC. 

The OECD is carrying out ongoing work on competition in professional services, including some of the 
professions not covered here. 

5 

 
 
  
 
                                                 
Neither  does  the  Commission  consider  it  necessary  to  discuss  in  this  report  the 
potential application of Article 82 EC or of the Merger Regulation2. 

2. 

BACKGROUND 

2.1. 

General context 

8. 

9. 

10. 

2 

3 

4 

5 

6 

7 

8 

The  Lisbon  European  Council  in  March  2000  adopted  an  economic  reform 
programme  with  the  aim  of  making  the  EU  the  most  competitive  and  dynamic 
knowledge-based  economy  in  the  world  by  2010.  In  that  connection  the  European 
Council  highlighted  the  key  role  of  services  in  the  economy  and  their  potential  for 
growth and employment. 

Services are the main motor of growth in the EU, accounting for 54% of GDP3 and 
for 67% of those in employment. A key part of the Lisbon programme is therefore 
the “Internal Market Strategy for Services” which aims to create a fully functioning 
internal  market  for  all  service  providers4.  In  that  context  the  Commission  has  just 
adopted  a  Proposal  for  a  Directive  on  services  in  the  Internal  market5,  including 
professional  services,  based  upon  a  mixture  of  mutual  recognition,  administrative 
cooperation, harmonisation where strictly necessary, and the encouragement of self-
regulation. As far as regulated professions are concerned, this proposal complements 
the Proposal for a Directive on recognition of professional qualifications6 adopted by 
the Commission in March 2002 which awaits the completion of its first reading. The 
proposal  consolidates  and  improves  the  current  regime  of  mutual  recognition  of 
professional  qualifications,  covering  a  range  of  parallel 
including 
simplification  of  cross  border  provision  of  services.  The  European  Parliament  has 
also recognised the importance of professional services7. 

issues, 

The recent Commission Communication on the Competitiveness of business related 
services  and  their  contribution  to  the  performance  of  European  enterprises8 
highlights the contribution of business related services, and in particular knowledge – 
intensive  business  services,  to  the  Lisbon  objectives  of  employment  growth  and 
competitiveness  of  the  European  economy.  The  measures  proposed  by  the 
Communication include the promotion of continuous learning and updating of skills, 
the integration of ICT into business processes in order to improve productivity, and 
the promotion of service quality and voluntary standards for the cross-border supply 
of services.  

Council Regulation (EEC) 4064/89, OJ L 395, 30.12.1989; substituted from 1 May 2004 with Council 
Regulation  (EC)  No  139/2004  of  20  January  2004  on  the  control  of  concentrations  between 
undertakings, OJ L 24 of 29.01.2004. 
Source: Eurostat (2002) European business: facts and figures. Services include construction but exclude 
social services and public administration. 
Communication from the Commission to the Council and the European Parliament, An Internal Market 
Strategy for Services, COM (2000) 888 final, 29.12.2000. 
Proposal  for  a  Directive  of  the  European  Parliament  and  of  the  Council  on  Services  in  the  Internal 
Market COM (2004) 002 of 13.1.2004. 
Proposal  for  a  Directive  of  the  European  Parliament  and  of  the  Council  on  the  recognition  of 
professional qualifications, COM (2002) 119 final of 7.3.2002. 
European Parliament resolution on market regulations and competition rules for the liberal professions, 
16.12.2003. 
The competitiveness of business-related services and their contribution to the performance of European 
enterprises COM(2003) 747 final, 4.12.2003. 

6 

 
 
  
 
                                                 
2.2. 

The importance of professional services for the EU economy 

11. 

12. 

13. 

14. 

3. 

15. 

9 

10 
11 

12 

Professional services have an important role to play to improve the competitiveness 
of the European economy. Exact data about the sector is not available, but probably 
about  a  third  of  employment  in  ‘other  business  services'  should  be  ascribed  to 
professional services9. Other business activities employed over ten million people in 
2002  in  the  EU,  corresponding  to  6.4%  of  the  workforce;  however  it  employed 
disproportionately  more  high  skilled  workers,  accounting  for  10%  of  overall  high 
skill  employment10.  The  sector  had  a  turnover  of  around  980  billion  Euros  and 
created around 500 billion Euros of total valued added for EU15 in 2001. It is also a 
growing sector: ‘Other business services’ turnover grew by a record 5% in the first 
half of 2003, while employment grew by 0.7 %11.  

Moreover, professional services are important inputs for the economy and business, 
so  their  quality  and  competitiveness  have  spill  over  effects  across  the  whole 
economy. The Italian Antitrust Authority has estimated that in Italy an average of 6% 
costs  of  exporting  firms  are  due  to  professional  services.  Thus  greater  variety  in 
prices and quality, as well as greater innovation in professional services could go a 
long  way  in  improving  the  competitiveness  of  European  enterprises  and  fostering 
GDP growth in the EU.  

Professional services are also important because of their direct import for consumers. 
Competition for professional services will continue to take place mainly at the local 
level for the foreseeable future. Greater choice in the range of services available and 
their prices empowers  users to choose  for  themselves  the  combination of price  and 
quality which better suits their needs.  

In  a  recent  study  on  the  economic  impact  of  regulation  in  the  field  of  liberal 
professions in the different Member States commissioned by DG Competition12, the 
data  seems  to  indicate  that  light  regulation  is  not  a  hindrance  but  rather  a  spur  to 
overall  wealth  creation.  In  countries  with  low  degrees  of  regulation,  there  are 
proportionally  higher  numbers  of  practising  professionals  generating  a  relatively 
higher overall turnover.  

COMMISSION  ACTION  IN  THE  FIELD  OF  COMPETITION  FOR  PROFESSIONAL 
SERVICES  

In order to obtain a better understanding of the regulation of liberal professions and 
its effects the Commission has undertaken in 2002 and 2003 a substantial stocktaking 
exercise. 

Category 74 of the NACE classification ‘Other business activities’ which includes legal, accounting and 
auditing  activities;  consultancy;  market  research;  business  and  management  consultancy;  holdings 
architectural and engineering activities and related technical consultancy; technical testing and analysis; 
advertising;  labour  recruitment  and  provision  of  personnel;  investigation  and  security  activities; 
industrial cleaning and miscellaneous others. 
Source: EU Labour Force Survey Eurostat. 
Source:  Eurostat,  Developments  for  services  during  the  second  quarter  of  2003,  Statistics  in  focus 
36/2003. 
“Economic Impact of regulation in the field of liberal professions in different EU Member States”, Ian 
Paterson, Marcel Fink, Anthony Ogus, Institute for Advanced Studies, Vienna, January 2003.  

7 

 
 
  
 
                                                 
16. 

First, in order to gather structured information on different regulatory regimes and on 
their  economic  effects,  the  Competition  Directorate  General  commissioned  in  2002 
the  independent  study  mentioned  above  which  was  published  on  the  internet  in 
March 2003. It showed significantly different levels of regulation between Member 
States and also between different professions (Figure 1). It also found that there was 
no indication of malfunctioning of markets in relatively less regulated countries. On 
the  contrary,  the  conclusion  of  the  study  was  that  more  freedom  in  the  professions 
would allow more overall wealth creation. 

Figure 1:Index of level of regulation in EU Member States

n
o
i
t
a
l
u
g
e
r

f
o
s
l
e
v
e
L

35
30
25
20
15
10
5
0

Ireland UK

Netherlands
Finland
Denmark

Sweden

Belgium

France

Luxembourg
Germany
Spain

Austria

Engineers

Architects

Accountants

Lawyers

Pharmacists

Italy

Source: IHS Study.  
Note: Greece and Portugal are not included because of a lack of data on certain professions. 

17. 

18. 

19. 

Second, as a follow-up of the study the Commission services launched an invitation 
to comment, on 27 March, on “Regulation in Liberal Professions and its Effects”. An 
overview of the nearly 250 responses received, as well as of the rules and regulations 
existing  in  the  15  Member  States  was  made  available  on  the  internet13.  The 
stocktaking exercise was closed by a Conference on the Regulation of Professional 
Services held on 28 October in Brussels which brought together 260 representatives 
of  the  professions,  their  clients,  consumer  organisations,  competition  authorities, 
policy makers as well as the academic world. 

During and after the stocktaking exercise the Commission co-operated closely with 
other competition authorities. Regulation of professional services was discussed for 
example  in  the  meeting  between  the  Directors  General  of  National  Competition 
Authorities  on  18  June  and  19  November  2003.  A  meeting  with  the  experts  from 
National Competition Authorities was held in November 2003 to discuss a common 
approach in this field.  

The  stocktaking  exercise  allowed  the  Commission  to  evaluate  the  different  market 
failures  existing  in  these  sectors  and  the  different  answers  brought  to  them  in 
different  regulatory  regimes.  The  various  parties  concerned  also  brought  new 
elements  to  the  debate,  such  as  the  diverse  cultural  sensitivities  and  the  need  to 
empower consumers. 

13 

These and other related documents are accessible at: 
http://europa.eu.int/comm/competition/liberalization/conference/libprofconference.htm. 

8 

 
 
  
 
                                                 
 
 
20. 

21. 

4. 

22. 

23. 

24. 

25. 

14 

15 

In parallel, the Commission carried out traditional casework. Ten years after its first 
decision  condemning  the  fixed  tariffs  for  professional  services  –  in  that  case  those 
provided  by  Italian  customs  agents14  –  the  Commission  is  disappointed  to  see  that 
minimum  price  levels  still  persist.  This  is  why  on  3  November  2003  it  sent  the 
Belgian  Architects’  Association  a  statement  of  objections  informing  it  that  its 
recommended  minimum  fee  scale  could  constitute  a  violation  of  EU  competition 
rules and that a fine could be imposed. 

The Commission is not alone in examining closely existing restrictions in the field of 
professional  services.  It  has  coordinated  its  work  with  National  Competition 
Authorities  since  June  2002.  In  terms  of  specific  cases,  almost  all  National 
Competition  Authorities  have  dealt  with  notifications  for  clearance  or  exemption 
under  national  competition  law  or  complaints  against  the  conduct  of  professional 
bodies.  The  most  common  cases  have  been  against  price-fixing  by  professional 
associations,  although  action  against  discriminatory  conditions  of  access  to  the 
profession, boycotting practices and advertising restrictions has also been taken. Five 
National  Competition  Authorities  (Denmark,  Ireland,  Netherlands,  Finland,  UK) 
have taken or are taking a general programme of action to bring reform to this sector, 
in particular to forbid price-fixing arrangements or recommended tariffs.  

RESTRICTIVE REGULATION IN THE LIBERAL PROFESSIONS 

Restrictive regulations in the liberal professions include licensing restrictions such as 
entry  requirements  and  reserved  tasks,  as  well  as  rules  governing  conduct  such  as 
price  regulation,  advertising  restrictions,  and  regulation  of  business  structure.  Such 
restrictions  may  eliminate  or  limit  competition  between  service  providers  and  thus 
reduce  the  incentives  for  professionals  to  work  cost-efficiently,  to  lower  prices,  to 
increase  quality  or  to  offer  innovative  services.  Price  regulation,  advertising 
restrictions  and  entry  barriers  may  for  example  allow  prices  to  remain  above 
competitive  levels.  Business  structure  regulations  may  inhibit  the  development  of 
innovative services and cost-effective business models. 

A significant body of empirical research15 shows the negative effects that excessive 
regulation may have for consumers. That research suggests that excessive regulation 
of  advertising  and  licensing  has,  in  certain  cases,  led  to  lower  quality  and  higher 
prices in professional services markets. Conversely, the loosening of anti-competitive 
restrictions has had positive effects on prices and quality. 

On  the  other  hand  there  are  essentially  three  reasons  why  some  regulation  of 
professional services may be necessary.  

The first is based on the concept of “asymmetry of information” between customers 
and service providers. A defining feature of professional services is that they require 
practitioners  to  display  a  high  level  of  technical  knowledge.  Consumers  may  not 
have this knowledge and therefore find it difficult to judge the quality of the services 

93/438/EEC: Commission Decision of 30 June 1993 relating to a proceeding pursuant to Article 85 of 
the EEC Treaty (IV/33.407 - CNSD) OJ L 203, 13.08.1993 p. 27.  
See OECD Journal of Competition Law and Policy No. 4, February 2002, “Competition in Professional 
Services”, 
report 
http://www.oecd.org/dataoecd/35/4/1920231.pdf. See also the references in footnotes 18 and 19.  

the  OECD 

publication 

Internet 

p.56 

and 

full 

57, 

for 

to 

9 

 
 
  
 
                                                 
26. 

27. 

28. 

29. 

30. 

they  purchase.  Professional  services  are  “credence  goods”  the  quality  of  which 
cannot  easily  be  judged  either  by  prior  observation  or,  in  some  markets,  by 
consumption or use. 

The second argument is based on the concept of “externalities”. In certain markets, 
the  provision  of  a  service  may  have  an  impact  on  third  parties  as  well  as  the 
purchaser of the service. An inaccurate audit may mislead creditors or investors. A 
poorly constructed building may jeopardise public safety. There is a danger that the 
providers  and  purchasers  of  these  services  fail  to  take  proper  account  of  these 
external effects. 

The third argument is based on the concept of “public goods”. Certain professional 
services are deemed to produce public goods that are of value for society in general. 
These might include the correct administration of justice or the development of high 
quality  urban  environments.  There  is  a  danger  that  without  regulation  some 
professional  services  markets  might  undersupply  or  inadequately  supply  public 
goods. 

In certain  circumstances, these  problems  may  lead  to  market  failure  such  as  under-
supply, over-supply or the provision of poor quality services. Restrictive regulations 
have  therefore  been  justified  as  being  designed  to  maintain  the  quality  of 
professional  services  and  to  protect  consumers  from  malpractice.  For  example, 
licensing  restrictions  may  preclude  incompetent  or  poorly  qualified  practitioners 
from  offering  services,  while  disciplinary  procedures  can  be  used  to  sanction 
providers  whose  quality  fails  to  meet  minimum  standards.  Advertising  restrictions 
can be used to protect consumers from misleading publicity. 

In  its  resolution  on  market  regulation  and  competition  rules  for  the  liberal 
professions,  the  European  Parliament  concluded  that  'from  a  general  point  of  view 
rules  are  necessary  in  the  specific  context  of  each  profession,  in  particular  those 
relating to the organisation, qualifications, professional ethics, supervision, liability, 
impartiality and competence of the members of the profession or designed to prevent 
conflicts of interest and misleading advertising, provided that they give end users the 
assurance that they are provided with the necessary guarantees in relation to integrity 
and experience, and do not constitute restrictions on competition'16.  

The  following  subsections  consider  individually  the  five  main  categories  of 
restrictions  in  the  EU  professions:  (i)  price  fixing,  (ii)  recommended  prices,  (iii) 
advertising  regulations,  (iv)  entry  requirements  and  reserved  rights,  and  (v) 
regulations  governing  business  structure  and  multi-disciplinary  practices.  Each 
section  provides  a  brief  overview  of  arguments  for  and  against  the  category  in 
question and gives indications about the possible scope for relaxing existing rules. 

4.1. 

Fixed Prices 

31. 

16 

The fees charged for professional services are negotiated freely between practitioners 
and  clients  in  most  Member  States.  However,  fixed  prices  and  maximum  and 
minimum prices remain in place in a small number of cases. These are indicated in 
Table  1,  which  represents  the  current  Commission  knowledge.  Fixed  prices  or 

European Parliament resolution on market regulations and competition rules for the liberal professions, 
16.12.2003. 

10 

 
 
  
 
                                                 
32. 

33. 

34. 

35. 

36. 

minimum  prices  are  the  regulatory  instruments  that  are  likely  to  have  the  most 
detrimental effects on competition, eradicating or seriously reducing the benefits that 
competitive markets deliver for consumers. 

According  to  some  professional  associations,  fixed  prices  provide  a  mechanism  to 
ensure  low  prices.  However,  economic  theory  suggests  that,  within  an  otherwise 
competitive market, price regulation is unlikely to ensure prices that are lower than 
competitive levels. 

Professional  associations  have  also  argued  that  fixed  prices  protect  the  quality  of 
services.  However,  fixed  prices  cannot  prevent  unscrupulous  practitioners  from 
offering  poor  quality  services.  Nor  do  they  remove  the  financial  incentives  for 
practitioners  to  reduce  quality  and  costs.  Moreover,  there  are  a  variety  of  less 
restrictive  mechanisms  to  maintain  quality  and  protect  consumers.  For  example, 
measures  to  improve  the  availability  and  quality  of  information  about  professional 
services could contribute to empower consumers to make more informed purchasing 
decisions. 

Over the last two decades, a number of Member States have abolished fixed prices in 
the  liberal  professions.  In  the  1970s  and  1980s,  for  example,  fixed  prices  were 
abolished  for  conveyancing  and  architectural  services  in  the  United  Kingdom.  In 
France,  likewise,  fixed  prices  for  legal  services  have  been  dismantled.  The  legal, 
accountancy,  engineering  and  architectural  professions  now  function  effectively 
without fixed prices in most Member States. This suggests that price controls are not 
an essential regulatory instrument for these professions and that other less restrictive 
mechanisms might provide an effective means of maintaining high standards. 

It is possible that maximum prices might protect consumers from excessive charges 
in markets with high entry barriers and a lack of effective competition. However, this 
does not appear to be true for the majority of the EU professions. 

One possible exception might be the Latin notary profession, where price regulation 
is  combined  with  other  regulations  such  as  quantitative  entry  restrictions  and 
advertising prohibitions that seriously restrict competition. In this market, regulators 
might  need  to  take  a  more  holistic  approach  to  reform.  The  removal  of  price 
regulation  might,  for  example,  need  to  be  accompanied  by  other  pro-competitive 
reforms, such as the relaxation of quantitative entry and advertising restrictions. 

11 

 
 
  
 
Table  1:  Overview  of  countries  and  professions  with  fixed,  minimum  or  maximum 
prices 

Profession 

Fixed Prices 

Minimum Prices  Maximum Prices 

Accountancy / 
Audit 

Tax 
Consultants 

Architects 

Engineers 

Lawyers 

Notaries 

Italy (for public 
accountants) 

Italy (for public 
accountants) 

Greece and 
Portugal (for 
statutory audit) 

Germany 

Italy, Germany 

Germany 

Italy, Germany, 
Luxembourg 

Germany 

Italy, Austria, 
Germany. 

Italy 

Belgium, France, 
Germany, Spain, 
Greece 

Austria, Belgium, 
France, Germany, 
Greece, Italy, 
Netherlands, Spain  

Source:  the  Study  mentioned  in  note  12  and  information  provided  by  professional  bodies  and/or  national 
competition authorities. Pharmacists not included. 

4.2. 

Recommended Prices 

37. 

38. 

39. 

Recommended prices are published for certain legal, accountancy, architectural and 
engineering  services  in  a  minority  of  Member  States  (Table  2).  Recommended 
prices, like fixed prices, may have a significant negative effect on competition. First, 
recommended  prices  may  facilitate  the  co-ordination  of  prices  between  service 
providers. Secondly, they can mislead consumers about reasonable price levels. 

Professional  associations  have  suggested 
that  recommended  prices  provide 
consumers  with  useful  information  about  the  average  costs  of  services.  They  have 
also  suggested  that  recommended  prices  reduce  the  costs  of  setting  or  negotiating 
fees on an individual basis and serve as a guide for practitioners who lack experience 
of  determining  fees.  They  might  also  reduce  the  transaction  costs  of  negotiating 
prices for complex services. 

In  markets  where  search  costs  are  high,  it  may  indeed  be  advantageous  for 
consumers  to  have  access  to  accurate  information  about  typical  prices.  However, 
there  are  alternative  methods  of  providing  price  information.  For  example,  the 
publication  of  historical  or  survey-based  price  information  by  independent  parties 
(such as a consumer organisation) might provide a more trustworthy price guide for 
consumers, which distorts competition to a lesser extent. 

40. 

It appears moreover unlikely that professionals would need to rely on recommended 
prices in order to set fees. Professionals, like other service providers, generally gain, 

12 

 
 
  
 
 
 
 
 
 
 
 
or  hire,  the  business  experience  needed  to  set  fees.  There  are  a  variety  of  less 
restrictive  mechanisms  such  as  historical  or  survey-based  price  information  for 
reducing transaction costs. 

41. 

A number of countries have removed recommended prices for professional services 
in  the  last  two  decades.  In  the  late  1980s,  for  example,  the  Finnish  Competition 
Authority  instigated  the  removal  of  recommended  prices  in  the  legal,  architectural 
and  other  professions.  In  the  late  1990s,  recommended  prices  were  removed  for 
lawyers  in  the  Netherlands  and  for  architects  in  France.  In  the  last  two  years, 
recommended  prices  have  also  been  abolished  for  architects  and  construction 
companies in the United Kingdom. 

Table 2: Overview of countries and professions with recommended prices 

Profession 

Recommended Prices 

Accountancy / Audit 

Austria, Portugal, Greece 

Architects 

Engineers 

Lawyers 

Notaries 

Austria, Belgium, Denmark, Ireland, Germany, Spain 

Austria, Luxembourg 

Austria, Portugal, Spain 

Austria, Belgium 

Source: the Study mentioned in note 12 and information provided by professional bodies and/or national 
competition authorities. Pharmacists not included.  

4.3. 

Advertising Restrictions 

42. 

43. 

A  large  number  of  the  EU  professions  are  subject  to  sector-specific  advertising 
regulation  (Table  3).  In  some  cases  advertising  as  such  is  prohibited.  In  others, 
specific  media  or  advertising  methods  such  as  radio  advertising,  television 
advertising or “cold calling” or specific types of advertising content are proscribed. 
In certain cases, there is a lack of clarity in existing advertising regulations which, in 
itself, may deter professionals from employing certain advertising methods. 

According to economic theory, advertising may facilitate competition by informing 
consumers  about  different  products  and  allowing  them  to  make  better  informed 
purchasing  decisions.  Advertising  restrictions  may  thus  reduce  competition  by 
increasing the costs of gaining information about different products, making it more 
difficult for consumers to search for the quality and price that best meets their needs. 
It  is  also  widely  recognised  that  advertising,  and  in  particular  comparative 
advertising, can be a crucial competitive tool for new firms entering the market and 
for existing firms to launch new products17. 

44. 

The proponents of advertising restrictions emphasise the asymmetry of information 
between  practitioners  and  consumers  of  professional  services.  According  to  this 

17 

See  Directive  97/55/EC  of  6  October  1997  amending  Directive  84/450/EEC  concerning  misleading 
advertising so as to include comparative advertising, OJ No L 290, 23.10.1997, p 18. 

13 

 
 
  
 
                                                 
45. 

46. 

argument,  consumers  find  it  difficult  to  assess  information  about  professional 
services  and  therefore  need  particular  protection  from  misleading  or  manipulative 
claims. 

There  is  however  an  increasing  body  of  empirical  evidence  which  highlights  the 
potentially negative effects of some advertising restrictions18. This research suggests 
that  advertising  restrictions  may  under  certain  circumstances  increase  the  fees  for 
professional services without having a positive effect on the quality of those services. 
The  implication  of  these  findings  is  that  advertising  restrictions  as  such  do  not, 
necessarily,  provide  an  appropriate  response  to  asymmetry  of  information  in 
professional  services.  Conversely,  truthful  and  objective  advertising  may  actually 
help consumers to overcome the asymmetry and to make more informed purchasing 
decisions. 

Over  the  last  two  decades,  a  number  of  Member  States  have  relaxed  advertising 
restrictions  in  the  professions.  In  the  1970s,  for  example,  advertising  restrictions 
were removed for the legal and accountancy professions in the United Kingdom. In 
the 1990s, restrictive advertising rules were removed for the legal, accountancy and 
architectural  professions  in  Denmark.  In  the  last  few  years,  strict  advertising  bans 
have also been relaxed for the professions in Germany. 

Table  3:  Overview  of  countries  and  professions  with  significant  Advertising 
restrictions  

Profession 

Effective Advertising 
Prohibition 

Significant Advertising Restrictions 

Accountancy  

France 

Audit 

France, Luxembourg, 
Portugal, Spain,  

Architects 

Italy, Luxembourg 

Belgium, Germany, Italy, 
Luxembourg, Portugal,  

Belgium, Germany, Greece, Italy  

Ireland, Germany, Netherlands, 
Austria, Greece  

Engineers 

 Luxembourg 

Italy, Greece, Ireland 

Lawyers 

Notaries 

Pharmacists 

Greece, Portugal, 
Ireland (for barristers)  

Austria, Belgium, France, Ireland (for 
solicitors), Italy, Luxembourg, Spain 

France, Italy, Spain, 
Greece 

 Ireland, Portugal, 
Greece 

Austria, Germany 

Áustria, France, Luxembourg? 

Source:  the  Study  mentioned  in  footnote  12  and  information  provided  by  professional  bodies  and/or  national 
competition authorities. 

18 

Research  on  advertising  restrictions  in  the  legal  profession,  for  example,  is  summarised  by  Stephen, 
F.H.  and  J.H.  Love,  ‘Regulation  of  the  Legal  Profession’,  in  B.  Bouckaert  and  G.  De  Geest  (eds) 
Encyclopedia  of  Law  and  Economics,  Volume  III:  The  Regulation  of  Contracts,  Cheltenham,  2000, 
p.987-1017. 

14 

 
 
  
 
                                                 
47. 

The accountancy and technical professions now function effectively without the need 
for  any  significant  sector-specific  advertising  restrictions  in  a  large  number  of 
Member  States.  This  suggests  that  sector  specific  advertising  restrictions  in  these 
professions  may  not  be  essential  for  protecting  consumers  from  misleading  claims. 
Likewise, the legal, notary and pharmacy professions are able to conduct most forms 
of  advertising  in  a  number  of  Member  States.  The  professions  remain,  of  course, 
subject to general legislation that prevents untruthful or deceptive advertising. 

4.4. 

Entry Restrictions and Reserved Tasks 

48. 

49. 

50. 

51. 

52. 

53. 

19 

The professions are subject to qualitative entry restrictions in  most Member  States. 
These can take the form of minimum periods of education, professional examinations 
and  minimum  periods  of  professional  experience.  In  many  cases,  entry  restrictions 
are coupled with reserved rights to provide certain services. In some Member States 
the  pharmacy  and  notary  professions  are  even  subject  to  quantitative  entry 
restrictions based on demographic or geographic criteria. 

Qualitative  entry  restrictions,  combined  with  reserved  rights,  ensure  that  only 
practitioners  with  appropriate  qualifications  and  competence  can  carry  out  certain 
tasks.  They  may  thus  make  an  important  contribution  for  ensuring  the  quality  of 
professional services.  

However,  excessive  licensing  regulation  is  likely  to  reduce  the  supply  of  service 
providers,  with  negative  consequences  for  competition  and  quality  of  service. 
Empirical  research  has  shown  that,  in  some  cases,  excessive  licensing  restrictions 
have  led  to  higher  prices  without  ensuring  higher  quality.  In  a  report  of  1990,  for 
example, the US Federal Trade Commission assessed a range of empirical studies on 
licensing  restrictions.  It  concluded  that,  while  a  few  studies  indicated  that  higher 
quality  might  result  from  business  practice  restrictions,  a  majority  of  studies  found 
quality to be unaffected by licensing or business practice restrictions associated with 
licensing. In some circumstances, licensing restrictions even had a negative effect on 
quality.19 

Conversely, in some countries the loosening of restrictions in some professions has 
led  to  lower  prices  without  any  apparent  detriment  to  quality.  In  Australia,  for 
example,  the  removal  of  lawyers’  reserved  rights  to  provide  conveyancing  services 
and the barristers’ monopoly in courtroom work contributed to a 12% drop in overall 
legal  costs.  In  the  United  Kingdom,  the  loosening  of  reserved  rights  to  provide 
conveyancing services in the 1980s also led to lower prices. In the Netherlands, the 
abolition of entry restrictions for real estate agents in the late 1990s led to an increase 
in new entrants, lower prices for real estate transactions and more flexible provision 
of services. 

These  experiences  suggest  that  licensing  regulations  might,  in  some  cases,  be 
excessively  restrictive  and  that  consumers  might  benefit  from  a  relaxation  of  the 
existing rules. 

First, there might be scope to lower entry requirements in cases where they appear to 
be disproportionate to the complexity of the profession’s tasks. 

Cox C. and S. Foster, “The Costs and Benefits of Occupational Regulation” Bureau of Economics Staff 
Report to the Federal Trade Commission, 1990, p. 26-27. 

15 

 
 
  
 
                                                 
54. 

55. 

56. 

57. 

58. 

Secondly,  there  might  be  scope  to  narrow  a  profession’s  reserved  tasks.  In  certain 
circumstances, highly qualified professions hold, in addition to their core activities, 
reserved rights to carry out other less complex services. In some Member States, for 
example,  lawyers  or  notaries  have  an  exclusive  right  to  provide  conveyancing  and 
probate services as well as an exclusive right to provide legal advice. In such cases, a 
wider group of service providers might be able to carry out the less complex tasks. 

Thirdly, there might be scope to remove reserved rights in cases where there are less 
restrictive mechanisms to guarantee quality. In some markets it might for example be 
possible  to  guarantee  quality  also  through  independent  accreditation  or  quality 
controls. In such markets, consumers would be free to choose whether they wish to 
use a qualified or accredited service provider. 

Quantitative  entry  restrictions  reduce  the  number  of  service  providers  and  thus 
consumer choice and supply. In certain cases, moreover, quantitative restrictions can 
create local monopolies.  

It  has  been  argued  that  quantitative  restrictions  based  on  demographic  criteria  are 
necessary to safeguard access to important services. First, it has been suggested that 
quantitative  restrictions  increase  profitability,  protecting  the  viability  of  outlets  in 
sparsely  populated  areas.  Secondly,  it  has  been  argued  that  quantitative  restrictions 
halt the redistribution of services away from sparsely populated areas (for example, 
pharmacists and notaries). 

In  view  of  their  potentially  significant  detrimental  effects  it  should  however  be 
examined whether there are less restrictive and more transparent means (e.g. public 
service  compensations)  to  guarantee  the  provision  of  such  services  in  sparsely 
populated areas. In any event, such quantitative entry restrictions do not appear to be 
justified for areas which are not sparsely populated and where there is therefore no 
danger of under-supply. 

4.5. 

Business Structure Regulations 

59. 

60. 

61. 

A  number  of  professions  are  subject  to  sector-specific  regulations  on  business 
structure.  These  regulations  can  restrict  the  ownership  structure  of  professional 
services companies, the scope for collaboration with other professions and, in some 
cases, the opening of branches, franchises or chains. 

Business structure regulations may have a negative economic impact if they inhibit 
providers  from  developing  new  services  or  cost-efficient  business  models.  For 
example,  these  regulations  might  inhibit  lawyers  and  accountants  from  providing 
integrated legal and accountancy advice for tax issues or prevent the development of 
one-stop shops for professional services in rural areas. Certain ownership regulations 
such as prohibition of incorporation can also reduce access to capital in professional 
services markets, hindering new entry and expansion. 

On the other hand, it is argued that business structure and ownership regulations may 
be  necessary  to  ensure  practitioners’  personal  responsibility  and  liability  towards 
clients  and  avoid  conflicts  of  interest.  It  has  also  been  suggested  that  these 
regulations  may  be  necessary  to  ensure  practitioners’  independence.  If  professional 
service  companies  were  controlled  or  influenced  by  non-professionals,  this  might 
compromise practitioners’ judgement or respect for professional values.  

16 

 
 
  
 
62. 

63. 

64. 

5. 

65. 

In the Commission’s view business structure regulations appear to be least justifiable 
in cases where they restrict the scope for collaboration between members of the same 
profession.  Collaboration  between  members  of  the  same  profession  would  appear 
less likely to reduce the profession’s independence or ethical standards. 

Business  structure  regulations  appear  likewise  to  be  less  justifiable  in  professions 
where  there  is  no  overriding  need  to  protect  practitioners’  independence.  The 
architectural  and  engineering  professions,  for  example,  function  effectively  without 
these regulations in most Member States. It therefore appears unlikely that business 
structure regulations are essential to protect consumers of these services. 

Business structure regulations appear to be more justifiable in markets where there is 
a strong need to protect practitioners’ independence or personal liability. There might 
however  be  alternative  mechanisms  for  protecting  independence  and  ethical 
standards  which  are  less  restrictive  of  competition.  In  some  markets,  stringent 
ownership  restrictions  might  therefore  be  replaced  or  partially  replaced  by  less 
restrictive rules. 

POSSIBLE APPLICATION OF EC COMPETITION RULES 

Anti-competitive rules and regulations in the sector of liberal professions are found 
both in measures adopted by professional associations and in legislative or regulatory 
instruments  adopted  by  public  authorities.  A  distinction  must  therefore  be  made 
between (i) the liability of the members of the professions and of their associations 
under Article 81 and (ii) the liability of Member States under Articles 3 (1) (g), 10 
and 81. 

5.1. 

Liability of the members of the professions  

5.1.1.  Members of the professions as undertakings 

66. 

Article  81  applies  to  undertakings.  It  is  settled  case  law  that  the  concept  of 
undertaking encompasses every entity engaged in an economic activity, regardless of 
its  legal  status  and  the  way  in  which  it  is  financed.20  Any  activity  consisting  of 
offering goods or services on a particular market is an economic activity.21  

67. 

Three situations are outside the scope of application of Article 81: 

(1) 

in  principle  no  economic  activity  is  involved  where  the  State  carries  out 
activities that the market could not provide; 22 

20 

21 
22 

Case C-41/90 Höfner and Elser [1991] ECR I -1979, para 21, and Case C-309/99 Wouters [2002] ECR 
I -1577., para 46. 
Case C-35/96, Commission v. Italy (CNSD) [1998] ECR I -03851, para 36. 
Cases  C-160/91  Poucet  [1993]  ECR  I  -637.  (compulsory  social  security  system  scheme  based  on 
principle of solidarity is not  an undertaking) and Case C-218/00 CISAL di Battistello  [2002] ECR I -
00691. See on the other hand Case C-67/96 Albany [1999] ECR I -5863. (system based on principle of 
capitalisation is an undertaking) and Case C-180/98, Pavlov [2000] ECR I -06451. 

17 

 
 
  
 
                                                 
(2) 

the  exercise  of  public  authority  is  also  not  an  economic  activity;23  however, 
the concept of undertaking is relative: a given entity may be engaged partially 
in an economic activity and partially exercise public authority; 24 in so far as 
it is engaged in an economic activity it is subject to the competition rules. 

(3) 

employees are not to be considered as undertakings 25.  

68. 

It follows that members of the liberal professions, insofar as they are not employees, 
are  engaged  in  an  economic  activity  because  they  provide  services  against 
remuneration on  markets26. Neither the fact that the activity is intellectual, requires 
authorisation and can be pursued in the absence of a combination of material, non-
material  and  human  resources27,  nor  the  complexity  and  technical  nature  of  the 
services  provided  nor  the  fact  that  the  profession  is  regulated28,  can  alter  that 
conclusion. 

5.1.2. 

Self-regulation as decision of an association of undertakings 

69. 

70. 

71. 

23 

24 

25 

26 

27 
28 
29 
30 
31 
32 
33 
34 

A professional body acts as an association of undertakings for the purposes of Article 
81 when it is regulating the economic behaviour of the members of the profession29. 
This  is  true  even  where  professionals  with  employee  status  are  admitted,  since 
professional  bodies  normally  and  predominantly  represent  independent  members  of 
the profession. 

It makes no difference that some professional bodies have public law status30 or have 
certain  public  interest  tasks  to  perform31  or  allege  that  they  act  in  the  public 
interest.32 

A  body  regulating  professional  conduct  is  however  not  an  association  of 
undertakings if it is composed of a majority of representatives of public authorities 
and it is required to observe pre-defined public interest criteria.33 Rules adopted by a 
professional body can only be regarded as State measures, if the State has defined the 
public-interest criteria and the essential principles with which the rules must comply 
and if the State retained its power to adopt decisions in the last resort.34 

Case  C-364/92,  Eurocontrol,  [1994]  ECR  I  -0043  para  30,  and  C-343/95,  Calì  e  Figli  1997  ECR  I  -
1547.paras 22-23. 
This was the case for the public employment office in Höfner (op cit note 20), the airport authority in 
Case  C-82/01  P  Aéroports  de  Paris  [2002]  ECR  II  -3929  and  the  city  of  Trier  in  Case  C-475/99 
Ambulanz Glöckner [2001] ECR I-08089. .  
Opinion of Advocate General Jacobs in C-180/98 and C-184/98 Pavlov op cit note 22 and judgment in 
Case C-22/98, Becu [1999] ECR I -4449. 
Indeed, the Court confirmed in Wouters op cit note 20, para 48, that lawyers offer, for a fee, services in 
the form of legal assistance and representation of clients in legal proceedings. Similar reasoning applies 
for  other  professions,  such  as  customs  agents  in  the  two  CNSD  (T-  513/93  and  C-35/96)  cases  and 
medical specialist doctors in Pavlov op cit note 22. 
CNSD, op cit note 21, para 38. 
Wouters, op cit note 20, para 49. 
Wouters, op cit note 20, para 64. 
Wouters, op cit note 20, paras 65 and 66. 
Advocate General Léger in his Opinion in Case C-35/99 Arduino, [2002] ECR I -01529, para 56. 
Advocate General Jacobs in his Opinion in Albany op cit note 22. 
Wouters, op cit note 20 paras 61-64 and Arduino op cit note 31, paras 37-39. 
Wouters, op cit note 20, para 68. 

18 

 
 
  
 
                                                 
5.1.3. 

Self-regulation as a restriction of competition 

72. 

Section 4 of the present report lists typical restrictions of competition in the field of 
professional  services.  The  Commission  already  examined  and  condemned  fixed 
tariffs  for  Italian  customs  agents35  and  Spanish  industrial  property  agents.36  It 
recently sent a statement of objections against the recommended fee scale established 
by the Belgian association of architects. The Commission also examined the code of 
conduct  of  the  Institute  of  Professional  Representatives  before  the  European  Patent 
Office.37 It found that a number of restraints were purely deontological rules and as 
such  outside  the  scope  of  Article  81  but  that  the  restriction  on  comparative 
advertising  could  only  be  temporarily  maintained  after  exemption  under  Article 
81(3). 

5.1.4.  Effect on trade between Member-States 

73. 

Professional  regulations  are  liable  to  have  an  appreciable  effect  on  trade  between 
Member States at least where the professional regulation covers a whole country.38 

5.1.5.  The “Wouters exception” 

74. 

According  to  the  Wouters  judgment  of  the  European  Court  of  Justice  not  every 
agreement between undertakings or every decision of an association of undertakings 
which restricts competition necessarily infringes Article 81(1) of the Treaty. In that 
case there was no infringement of Article 81 (1) of the Treaty, since the professional 
regulation in issue, despite the effects restrictive of competition that were inherent in 
it,  was  necessary  for  the  proper  practice  of  the  profession,  as  organised  in  the 
Member State concerned.39 

75. 

The Court took several steps in coming to that conclusion:40 

–  Account must first of all be taken of the overall context in which the decision of 
the  association  of  undertakings  was  taken  or  produces  its  effects.  More 
particularly, account must be taken of its objectives, which are connected with the 
need  to  make  rules  relating  to  organisation,  qualifications,  professional  ethics, 
supervision  and  liability,  in  order  to  ensure  that  the  ultimate  consumers  of 
professional services and a specific public interest purpose are provided with the 
necessary guarantees in relation to integrity and experience.  

–  It  has  then  to  be  considered  whether  the  consequential  effects  restrictive  of 
competition are inherent in the pursuit of those objectives and if they are therefore 
necessary in order to ensure the proper practice of the profession, as it is organised 
in the Member State concerned. 

35 
36 

37 

38 
39 
40 

Commission Decision of 30.6.1993 93/438/EEC CNSD.,(OJ L 203, 13.08.1993.  
Commission Decision of 30.1.1995 95/188/EC (OJ L 12 , 02.06.1995) relating to a proceeding under 
Article 85 of the EC Treaty (IV/33.686 - Coapi), , p.37. 
Commission Decision of 7.4.1999 1999/267/EC (OJ L 106, 23.04.1999), p.14 relating to a proceeding 
pursuant to Article 85 of the EC Treaty (IV/36.147 EPI code of conduct), . See also judgment of the 
Court of First Instance in case T-144/99 Commission v Netherlands ¨[2001] ECR I - 03541. 
Wouters, op cit note 20, para 95 and Arduino op cit note 31, para 33. 
Wouters, op cit note 20, para 110. 
Wouters , op cit note 20, paragraphs 97-110. 

19 

 
 
  
 
                                                 
–  The  effects  restrictive  of  competition  must  not  go  beyond  what  is  necessary  in 

order to ensure the proper practice of the profession (proportionality test). 

5.1.6. 

State compulsion as a defence 

76. 

77. 

78. 

79. 

Undertakings are not liable under Article 81 where the State by measures of public 
authority requires them to engage in anti-competitive conduct. 41 In such a situation, 
they cannot be held accountable for infringement of Articles 81 EC42. 

This  State  compulsion  defence,  operates  only  where  the  State  requires  certain 
behaviour.43 Consequently, if a national law merely allows, encourages or makes it 
easier for undertakings to engage in autonomous anti-competitive conduct, the State 
compulsion defence can not operate.44 

Moreover,  even  where  the  State  requires  the  undertakings  to  engage  in  anti-
competitive  conduct,  if  the  undertakings  remain  at  least  partially  capable  to 
autonomously  restrict  competition  -  for  example  because  they  enjoy  a  margin  of 
discretion in the implementation of the national legislation45 -, both the undertakings 
and  the  State  can  be  held  liable.  Indeed,  State  legislation  which  requires  economic 
actors  to  engage  in  anti-competitive  conduct  may  itself  infringe  the  EC  Treaty, 
namely Articles 3(1)(g), 10(2) and 81/82 (see below).  

In its recent Consorzio Industrie Fiammiferi or CIF judgment the European Court of 
justice decided that where undertakings engage in conduct contrary to Article 81(1) 
and where that conduct is required or facilitated by State measures which themselves 
infringe  Articles  3(1)(g),  10(2),  and  81/82,  a  national  competition  authority  has  a 
duty to disapply those State measures and give effect to Article 81. The consequence 
of  that  judgment  is  that  when  a  decision  by  a  national  competition  authority  to 
disapply national legislation has become definitive, the State compulsion defence is 
no longer available.46 For the period prior to the decision to disapply the legislation, 
the  State  compulsion  defence  is  valid  and  the  undertakings  enjoy  immunity  from 
fines and also immunity from damage claims (see also section 5.1.8 below).47 

5.1.7.  Article 81(3) 

80. 

Some  rules  which  fall  under  Article  81(1)  and  do  not  come  under  the  “Wouters 
exception” might nevertheless benefit from an exemption under Article 81(3) if they 
fulfil the conditions laid down therein. 

5.1.8.  Possible enforcement action 

81. 

Where  a  regulation  adopted  by  a  professional  association  infringes  Article  81  the 
Commission can require the association concerned to cease the infringement and/or 

41 
42 
43 
44 

45 
46 
47 

Case C-13/77, GB-Inno-BM.[1997] ECR I-02115 . 
Case C-198/01, Consorzio Industrie Fiammiferi (CIF) [2003] ECR I- OOOO para. 51. 
C-359/95 P and C-379/95 P, Ladbroke [1997] ECR I-6265, paras 33 and 34. 
42.Joined cases T-191/98, T-212/98 to T-214/98, Atlantic Container Line v. Commission [2003] ECR 
II-0000. 
Case T-513/93, CNSD [2001] ECR II -1807, para 71-72. 
CIF, op cit note 42, para 55. 
CIF, op cit note 42 para 54. 

20 

 
 
  
 
                                                 
82. 

83. 

impose  fines.  National  competition  authorities  have  similar  administrative 
enforcement powers. 

Where  undertakings  engage  in  conduct  contrary  to  Article  81(1)  and  where  that 
conduct  is  required  by  State  measures  which  are  themselves  contrary  to  Articles 
3(1)(g), 10(2) and 81/82 EC it follows from the recent CIF judgment that a national 
competition authority has a duty to “disapply” the national legislation and give effect 
to Article 81. In such a case, as regards past conduct, for reasons of legal certainty, 
the  undertakings  concerned  cannot  be  exposed  to  any  penalties  (criminal  or 
administrative).  As  regards  future  conduct,  the  national  competition  authority  is 
however  free  to  order  the  undertakings  concerned  to  cease,  and  desist  from,  the 
conduct in question and impose fines in respect of conduct subsequent to the decision 
to disapply the national legislation. 

An infringement of Article 81, which has direct effect, can also have consequences 
for proceedings before national courts. In the first place, those negatively affected by 
professional  rules  contrary  to  Article  81  may  request  injunctions  and/or  introduce 
actions  for  damages.  Where  the  conduct  contrary  to  Article  81  was  required  by 
national  legislation,  which  is itself  contrary  to  Article  3(1)(g),  10(2)  and  81/82,  for 
reasons  of  legal  certainty  the  conduct  in  question  cannot  trigger  the  award  of 
damages  for  the  period  before  the  anti-competitive  national  law  was  disapplied. 
Secondly,  according  to  Article  81(2)  of  the  Treaty,  any  agreement  or  decision  of 
undertakings  prohibited  pursuant  to  Article  81,  is  void.  The  nullity  of  professional 
rules  which  are  contrary  to  Article  81  can  therefore  be  invoked  as  a  defence  in 
proceedings concerning the enforcement of those rules. 

5.2. 

Liability of Member States  

84. 

85. 

86. 

Article  81  is,  in  itself,  concerned  solely  with  the  conduct  of  undertakings  and  not 
with  laws  or  regulations  emanating  from  Member  States.  Nonetheless,  read  in 
conjunction  with  Article  10(2)  and  with  Article  3(1)(g)  of  the  Treaty,  Article  81 
“requires the Member States not to introduce or maintain in force measures, even of 
a legislative or regulatory nature, which may render ineffective the competition rules 
applicable to undertakings”48. 

On  that  basis,  the  Court  has  stated  repeatedly  that  if  a  Member  State  requires  or 
favours  the  adoption  of  agreements,  decisions  or  concerted  practices  contrary  to 
Article  81  or  reinforces  their  effects,  or  divests  its  own  rules  of  the  character  of 
legislation  by  delegating  to  private  economic  operators  responsibility  for  taking 
decisions affecting the economic sphere, it can be held liable under Articles 3(1)(g), 
10 and 8149. 

The Arduino judgment suggests that State measures delegating regulatory powers to 
private operators could be challenged under Articles 3(1)(g), 10(2) and 81 unless the 
public  authorities  have  the  final  word  and  exercise  effective  control  of  the 
implementation. In the Arduino case, the participation of the professional association 
in fee-setting was limited to proposing a draft tariff and the competent minister had 
the power to amend the tariff, and therefore there was no challengeable delegation to 

48 
49 

Arduino, op cit note31 para 34.  
Arduino op cit note 31 paras 34-35.  

21 

 
 
  
 
                                                 
private  operators.  In  the  Commission’s  view  State  measures  delegating  regulatory 
powers which do not clearly define the public interest objectives to be pursued by the 
regulation  and/or  by  which  the  State  effectively  waives  its  power  to  take  the 
decisions  of  last  resort  or  to  control  implementation  can  therefore  be  challenged 
under those rules.  

87. 

Based on the above principles, the Commission’s view is that the following can be 
challenged under Art. 3(1)(g), 10 (2) an 81 and 82 EC: 

–  “rubberstamp  approvals”,  including  simple  validations  and  tacit  approvals, 
granted  by  Member  States  for  agreements  or  decisions  where  the  legislative 
procedures  in  force  do  not  provide  for  checks  and  balances  and/or  for  the 
authority to carry out consultations; 

–  practices whereby the authorities of a Member State are only entitled to reject or 
endorse  the  proposals  of  professional  bodies  without  being  able  to  alter  their 
content or substitute their own decisions for these proposals. 

A  proportionality  test  would  seem  appropriate  to  assess  to  what  extent  an  anti-
competitive professional regulations truly serves the public interest. For this purpose 
it would be useful that each rule had an explicitly stated objective and an explanation 
how the chosen regulatory measure is the least restrictive mechanism to effectively 
attain the stated objective. 

Where a State adopts or maintains in force measures which are contrary to Articles 
3(1)(g), 10 and 81 the Commission and other Member States can start infringement 
proceedings  under  Articles  226  and  227.  Moreover,  by  virtue  of  the  primacy  of 
Community  law,  national  courts  and  national  administrative  bodies  have  a  duty  to 
interpret  State  regulations  in  the  light  of  those  Community  provisions  and,  if 
necessary, a duty to disapply State regulations which are in conflict with the Treaty. 
According to the already quoted CIF judgment the latter duty applies also in cases in 
which national competition authorities investigate conduct of undertakings required 
by  State  legislation  to  engage  in  the  conduct  under  investigation.  Finally,  persons 
negatively  affected  by  the  State  measures  in  issue  can  introduce  an  action  for 
damages against the Member State for breach of Community law.  

NEXT STEPS TOWARDS MODERNISATION 

In  the  present  report  the  Commission  has  identified  those  groups  of  regulatory 
restrictions in the professions which have the biggest potential to harm competition 
without  being  objectively  justified.  Accordingly  the  Commission  would  like  to  see 
those restrictions reviewed and, where they are not objectively justified, removed or 
replaced by less restrictive rules. 

The review and, where necessary, the reform of potentially restrictive existing rules 
and  regulations  will  require  the  concerted  efforts  of  all  actors  involved,  each  in  its 
area  of  competence.  This  section  considers  how  the  different  actors  (competition 
authorities,  regulatory  authorities,  professional  bodies)  can  contribute  to  those  joint 
efforts. 

88. 

89. 

6. 

90. 

91. 

22 

 
 
  
 
6.1. 

Review of existing rules by the regulators 

92. 

93. 

94. 

95. 

96. 

97. 

The Commission believes that the best way to achieve overall change would be by 
voluntary action of those responsible for setting the existing restrictions. They should 
carry out a thorough analysis of the need for reform in the respective professions and 
of the compatibility of existing rules with competition law principles. As highlighted 
above,  restrictive  regulations  are  adopted  and  maintained  in  force  directly  by  the 
State or by professional bodies. 

The  Commission  invites  therefore,  first,  the regulatory  authorities  of  the  Member 
States  to  review  the  legislation  or  regulations  within  their  remit.  They  should  in 
particular  consider  whether the existing restrictions pursue a clearly articulated and 
legitimate  public  interest  objective,  whether  they  are  necessary  to  achieve  that 
objective and whether there are no less restrictive means to achieve this. 

The Commission also invites all professional bodies to start a similar review of their 
rules  and  regulations.  They  should  apply  the  same  proportionality  test  as  the 
regulatory  authorities  of  the  Member  States  and,  where  necessary,  change  existing 
rules or propose changes. 

The Commission proposes to discuss during 2004 with the European organisations of 
professional bodies on their understanding of the public interest in their domain and 
how  it  could  be  achieved  with  more  pro  competitive  mechanisms.  Consumer 
organisations will also be consulted. The Commission invites National Competition 
Authorities to do the same at national level where they have not yet started to do so. 

The  Commission  will  continue  to  monitor  consumers'  opinions  on  the  advantages 
and  disadvantages  of  this  type  of  regulation.  The  Commission  also  intends  to 
continue  to  research  the  relationships  between  levels  of  regulation  and  economic 
outcomes (prices and quality), as well as consumer satisfaction. 

Experience of past modernisation efforts in the field of professional services in some 
Member States shows that a simple elimination of anti-competitive mechanisms may 
not  be  enough  to  bring  about  more  competition  to  this  sector.  Consequently  both 
regulatory  authorities  and  professional  bodies  should  explore  the  need  to  use  pro-
competitive  accompanying  mechanisms which  increase  transparency  and  enhance 
consumer  empowerment.  Such  mechanisms  could  include,  for  instance,  active 
monitoring  by  consumer  associations,  collection  and  publication  of  survey  based 
historical data or public announcements of the abolition of tariffs. The Commission 
intends  to  investigate  the  impact  of  different  alternatives  where  they  have  been 
implemented  and  as  a  first  step,  it  will  explore  with  consumer  organisations  at 
European level how to define best practice. 

98. 

The  Commission  will  extend  its  fact-finding  to  the  ten  acceding  Member  States  in 
2004.  

23 

 
 
  
 
6.2. 

Enforcement in the European Competition Network 

99. 

100. 

101. 

From May 2004 onwards, following the entry into force of Regulation 1/200350, the 
national competition authorities and the national courts will have a more prominent 
role  in  assessing  the  legality  of  rules  and  regulations  in  the  professions.  They 
themselves  can  decide  on  the  compatibility  of  an  agreement,  decision  or  practice 
with  Article  81,  paragraph  1,  and  also  apply  Article  81,  paragraph  3,  which  will 
entail an exemption from the general prohibition of anti-competitive agreements.  

To the extent that competition restrictions have their centre of gravity in a Member 
State,  administrative  enforcement  of  the  EC  competition  rules  in  the  liberal 
professions  should  then  be  mainly  the  task  of  national  competition  authorities.  The 
Commission will continue to carry out casework where appropriate.  

The  Commission  intends  to  monitor  progress  and  ensure  a  coherent  application  of 
Articles 81 and 82 through co-ordination in the European Competition Network. In 
particular market monitoring will be organised and carried out together with national 
competition  experts,  as  well  as  with  experts  from  national  regulatory  and  other 
authorities.  

102. 

The  Commission  also  proposes  to  discuss  with  national  regulatory  authorities  the 
necessity, proportionality and justification of existing regulation. At a later stage, if 
necessary, the Commission does not exclude infringement procedures. 

6.3. 

Final Remarks 

103. 

104. 

The  Commission  will  report  in  2005  on  progress  achieved  in  eliminating  the 
restrictions  identified  above,  or  on  the  justifications  for  these  rules  that  have  been 
demonstrated.  To  this  end,  the  Commission  will  contact  by  the  end  of  the  year  to 
regulatory authorities to ask them to report on any measure they have adopted which 
falls within the scope of this Report. Any explicit justification of the restrictive rules 
which they wish to maintain should then be communicated to the Commission. 

The Commission concludes by repeating that the efforts of all concerned parties are 
needed  to  improve  the  regulatory  environment  in  which  providers  of  professional 
services operate in Europe. An environment in which quality and ethical behaviour 
are  guaranteed  through  more  pro-competitive  mechanisms  will  allow  the  liberal 
professions to innovate and to increase the quality and choice of their services. More 
efficient  and  competitive  professional  services  will  benefit  consumers  directly  and, 
as  key  inputs  for  other  businesses  they  will  also  bring  greater  productivity  to  the 
economy as a whole, thus contributing to the Lisbon agenda of making Europe the 
most dynamic knowledge based economy in the world. 

50 

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 L 1 of 4.1.2003, p. 1),  

24