COMMISSION STAFF WORKING DOCUMENT Enhancing competition enforcement by the Member States' competition authorities: institutional and procedural issues Accompanying the document COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL Ten Years of Antitrust Enforcement under Regulation 1/2003: Achievements and Future Perspectives
Date: 2014-07-09
Institutions: European Commission
Subjects: EU competition policy, EU law - national law, application of EU law, economic concentration, economic sanctions, merger control













EUR-Lex - 52014SC0231 - EN











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52014SC0231

COMMISSION STAFF WORKING DOCUMENT Enhancing competition enforcement by the Member States' competition authorities: institutional and procedural issues Accompanying the document COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL Ten Years of Antitrust Enforcement under Regulation 1/2003: Achievements and Future Perspectives /* SWD/2014/0231 final */









COMMISSION STAFF WORKING DOCUMENT
Enhancing competition enforcement by the
Member States' competition authorities: institutional and procedural issues
Accompanying the document
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 which
entered into application in May 2004, ushered in a new system for the application of Articles 101 and 102 TFEU (the “EU
competition rules”).[1]
2.                 
The recent anniversary of ten years of
application of Regulation 1/2003 makes this a timely moment to: (1) provide a
facts-based evaluation of enforcement by the Commission and the Member States'
competition authorities ("NCAs") during the last decade; and (2)
examine some key aspects of enforcement by the NCAs. This Staff Working
Document, which accompanies the Communication on Ten Years of Antitrust
Enforcement under Regulation 1/2003: Achievements and Future Perspectives (the
“Communication”), addresses aspect (2), in particular institutional and
procedural issues, with a view to enhancing enforcement by the NCAs.[2]
3.                 
Regulation 1/2003 constituted a major reform of
antitrust procedures in the EU. Article 3 of Regulation 1/2003 requires all
enforcers in the EU (the European Commission, national competition authorities
("NCAs") and national courts) to apply the EU competition rules to
agreements and practices that are capable of affecting trade between Member
States. The European Competition Network ("ECN") has been created as
the framework for close cooperation between the NCAs and the Commission.[3]
Consultation and cooperation tools have been introduced to ensure the effective
and coherent application of the common competition rules.[4] 
4.                 
As set out in detail in the Staff Working
Document on Ten Years of Antitrust Enforcement under Regulation 1/2003, the
Commission and the NCAs can together look back on a considerable enforcement
record, with more than 780 enforcement decisions applying the EU competition
rules, underpinned by policy and horizontal work to enhance cooperation.
5.                 
Regulation 1/2003 has brought about a landmark
change in the way the European competition law is enforced. The EU competition
rules have to a large extent become the “law of the land” for the whole of the
EU. Cooperation in the ECN has contributed towards ensuring their coherent
application. The network is an innovative model of governance for the
implementation of EU law by the Commission and the NCAs. 
6.                 
The NCAs have become an essential pillar of the
application of the EU competition rules. That being said, there is still scope
for further improvements to ensure the effective enforcement of EU competition
rules by the NCAs, including by reinforcing their institutional position
and through further convergence of national procedures and fines.
7.                 
This document reports on the initiatives which
have been taken by way of follow up to the Report on the functioning of Regulation
1/2003 of 2009.[5]
Moreover, it analyses a range of areas that: (1) were not addressed by Regulation
1/2003; (2) were addressed in a general way while a need for a detailed
response has subsequently arisen in practice or; (3) have emerged as new
issues. 
8.                 
The structure of this document is as follows:
Chapter 2 looks into the institutional position of the NCAs. Chapters 3 and 4
address the level of convergence achieved, and  the remaining diversity, with
respect to procedures and sanctions for the application of the EU competition
rules by NCAs. This includes the development of leniency programmes and the
interface of public enforcement of the EU competition rules against
undertakings with the imposition of sanctions on individuals, notably under Member
States' criminal law provisions that cover the same conduct. 

2                   
INSTITUTIONAL POSITION OF NCAs 
2.1             
Institutional set-up of NCAs

9.                 
All NCAs enforce
the same substantial rules, i.e. Articles 101 and 102 TFEU, but their
institutional set-up varies and each NCA has its own specificities. EU law
leaves Member States a large degree of flexibility for the design of their competition
enforcement regimes. The basic requirement as regards the institutional
framework of competition enforcement in the Member States is contained in
Article 35 of Regulation 1/2003. It only requires that the Member States
designate the competition authority or authorities responsible for the
application of the EU competition rules in such a way that the provisions of
the Regulation are effectively complied with. While this provision clearly aims
at ensuring the effective application of EU competition rules by putting in
place an NCA (or more than one) in each Member State, Regulation 1/2003
refrains from imposing any specific requirements concerning the NCAs, except
that they comply with the mechanisms of the Regulation. Nevertheless, the
limited case law of the Court of Justice of the European Union on Article 35
suggests that this very general provision may require granting powers to NCAs
which were ruled out, or were not foreseen, by the national legislator.[6]
In addition, Member States are bound to respect general principles of EU law, such as
the principles of effectiveness and equivalence as well as requirements arising
from fundamental rights. These principles can have a concrete impact on the
national procedural or institutional framework.
10.             
At present, two basic institutional models can
be distinguished among the NCAs.[7]
The most common institutional model within the ECN is the administrative model
where a single administrative authority investigates cases and takes
enforcement decisions subject to judicial control. It currently exists for all,
or part, of the types of decisions taken in the large majority of Member
States, with variations in the internal structures of the authorities.[8]
Two main configurations can be distinguished within this model, which are
almost evenly divided among the different jurisdictions. The first involves a
functional separation between the investigative and decision-making activities
of the single administrative institution whereby the inquiry is carried out by
investigation services and the final decision is adopted by a
board/college/council of this administrative institution. Within this
structure, there may be significant differences in terms of internal
organisation and relationship between the different bodies. For example, in France and Spain a full functional separation between investigative and decision-making bodies has
been set up, where their respective competences are carried out independently
from one another. The second configuration follows a more unitary structure and
does not have different bodies carrying out different steps in the procedure
although there may be different divisions (e.g. a Competition department and a
Legal department) inside these authorities that deal with separate aspects of
the same case.
11.             
A small minority of other Member States operate
a judicial model, where, in essence, an administrative authority carries out
the investigation and then brings the cases before a court, either for a
decision on substance and on sanctions (if any)[9]
or in relation to the imposition of sanctions only.[10]
The 'dual' administrative model, where one body is in charge of the
investigation into cases and hands them over at the end of the investigation to
another body in charge of decision-making, previously also existed in a number
of Member States. However, they have all moved to the single administrative
model.[11]
Irrespective of the institutional model, decisions of
NCAs are subject to judicial review – most often including more than one tier
of appeal.[12]


2.2             
Independence and
adequate resources

12.             
In order to ensure effective enforcement
of the EU competition rules, it is generally accepted that NCAs should be independent when exercising their functions. Independence means that the authority's decisions are free from external influence and
based on the application and interpretation of the competition rules relying on
legal and economic arguments. In the vast majority of Member States, the NCAs
benefit from a certain degree of independence but the extent of their
independence and equally the degree of supervision exercised by other state
bodies varies. Many NCAs are designated in national law as independent state
bodies and formally established as either an administrative authority or an
agency. In addition, around half of the NCAs have legal personality.
13.             
In terms of accountability, which is generally
seen as an important counterpart for a state body's independence, almost all
NCAs are obliged to report on their activities of the previous year, mostly in
the form of submitting an annual report to the parliament or (part of) the executive
branch. In addition, some NCAs may have to appear before a parliamentary
committee or have to submit an annual plan for the upcoming year. 
14.             
The majority of NCAs are not subject to
supervision by another state body. However, a number of NCAs are formally
assigned to, or come under the responsibility of, a minister or ministry.
Moreover, some NCAs may in principle be subject to general supervision or to
general instructions by the executive branch or parliament although, such
supervision may not have been exercised in practice, or at least not recently.
In addition, the degree of supervision differs and may range from guiding and
coordinating the NCA's activities or outlining the NCA's activities without
intervening or deciding on individual cases or on the actual application of the
law, to giving instructions regarding the general application of the law or
regarding budgetary issues or general policy matters which is also directed to
other governmental institutions. In a number of Member States, the minister may
instruct the NCA, for example, to carry out sector inquiries or competition
studies or analyses, which the NCA cannot otherwise initiate itself, but
without, however, directing the outcome. The minister may also instruct the NCA
to investigate a particular case or examine the need for interim measures.[13] 
15.             
The vast majority of NCAs also enjoy operational,
organisational and financial independence. Operational independence is foreseen
for most NCAs in carrying out their duties, for example, by explicitly
excluding interference by, or instructions from, other state bodies or other
persons when investigating and deciding on individual competition cases. The
large majority of NCAs also decide on their internal organisation and they have
a separate budget allocation in the overall state budget for which they have
budgetary autonomy to spend. However, while most NCAs have a separate budget
line, a few NCAs generate their own income. Only the Italian NCA is exclusively
funded through its own income consisting of a mandatory contribution levied on companies
with an annual turnover above 50 million EUR. The contribution is equal to 0.08
per thousand of the turnover of such companies and it cannot exceed 100 times
the minimum contribution equal to 4,000 EUR. The Greek NCA receives a 1‰ contributory fee on the initial share capital of a corporation
or the amount of any share capital increase thereof. This contribution comes on
top of its allocation from the state budget. This is also the case for the few
other NCAs which have additional own income from
charging merger notification fees or administrative
fees in the framework of access to file or from
miscellaneous non-core activities. 
16.             
Almost all NCAs employ their own staff, mostly
under the general civil service rules. However, the NCAs' staff in two Member
States is formally employed by another state body and put at the NCAs'
disposal. Logically, the vast majority of NCAs are responsible for the
selection and recruitment of their staff.
17.             
The body appointing the top management or board
members of the NCA differs between the Member States. Formal appointment is
most often the responsibility of the executive branch and is almost equally
divided among the government, the competent minister, the President/Head of
State or, exceptionally, the Prime Minister. In a few Member States, the top
management or board members of the NCA are appointed by parliament or,
exceptionally, by a general body in charge of public service appointments.
Appointments of the top management or members of the board are for the large
majority of NCAs based on specific criteria in the competition law or the
general civil service framework but with differing level of detail. In a
minority of Member States, there are no criteria laid down for the appointment
of the top management or members of the board of the NCA.
18.             
The mandate of the top management or members of
the board varies from a fixed term of three years up to, exceptionally, an
indefinite term with in between fixed periods of four, five, six and seven
years. Moreover, in case of a fixed term, in the majority of Member States their
mandate is renewable either once or without limitations. In most jurisdictions,
the NCAs' top management or board members are appointed for a renewable period
of five years. In two Member States their mandate is limited to one term of six
or seven years respectively.
19.             
Specific rules on conflicts of interests and/or
incompatibilities exist for the NCAs' top management or board members of a
large majority of NCAs. One NCA adopted its own code of conduct on conflicts of
interests based on its general power to organize its own structure. In some
Member States, the top management or members of the board are subject to
conflicts of interests requirements contained in the general civil service
rules or anti-corruption legislation. Such rules may involve different types of
obligations. Examples include a general duty of information regarding their
interests, abstaining from matters involving such interests and general or
specific incompatibilities with other activities in the public sector, such as
exercising an elected public mandate, and/or the private sector, mainly in
terms of conducting business activities or participating in a management or
supervisory board. Exceptions may apply, for example, for educational or
scientific activities.
20.             
Finally, the legal framework of the large
majority of NCAs contains specific rules on the early dismissal of the top
management or members of the board either in the competition law or, in a few
jurisdictions, in the applicable general civil service rules. Common grounds
for early dismissal include the impossibility to perform their duties, conflicts
of interests, disregarding professional secrecy, disciplinary sanctions,
criminal conviction and personal reasons. Such specific rules on early dismissal
do not exist in two Member States so that the prime minister or government, respectively,
can dismiss the top management of the NCA without any limitation. Early
dismissal is not foreseen in two Member States and in another Member State the top management of the NCA, which has the status of federal civil servants,
cannot be dismissed but only be relocated to another comparable position in the
federal administration.
21.             
The attribution of sufficient staff and budget
to NCAs is a fundamental precondition for each authority to be able to
effectively enforce the EU competition rules. In terms of financial and human
resources, significant differences exist among NCAs. Particularly the
competition authorities in the smaller Members States suffer from limited
financial resources or very low staff numbers. However, these NCAs also need to
have the same basic equipment, both in terms of facilities and a minimum level
of core personnel, as NCAs in larger Member States in order to be able to
effectively enforce the competition rules. 
22.             
Moreover, in the current budgetary and economic
context, reforms of the competition enforcement framework in the Member States
may impact on financial and human resources. Member States are responsible for
ensuring that their competition authorities are adequately equipped for their
duties and able to act under suitable conditions for the execution of their
tasks. In 2010, an ECN Resolution called upon them to continue guaranteeing
effective competition enforcement including in times of budgetary constraints.[14]

2.3             
Portfolios of NCAs: Combining competition
enforcement and other functions

23.             
Developments can be
observed in relation to the overall portfolio of NCAs. While certain NCAs have
for a long time combined competition enforcement and other functions (e.g. the
Italian and the Polish NCAs with competition and consumers protection
functions), there appears to be a recent dynamic in this area. Over the past
years competition enforcement and consumer protection functions have become
integrated in one single authority in Denmark, Finland and Malta and such changes are currently contemplated in Ireland.[15] In the UK, the Office of Fair Trading ("OFT") for many years combined competition supervision
with consumer protection functions. However, it shared its competition supervision
functions with the Competition Commission and the sectoral regulators. The Competition
and Markets Authority ("CMA") has recently been set up, which joins
the Competition Commission and the competition functions of the OFT.[16]
The CMA also keeps certain consumer functions of the OFT[17]
and the sectoral regulators retain concurrent competition powers which include
the power to apply the EU competition rules. 
24.             
Moreover, in the Netherlands the energy and
transport regulatory functions were already integrated in the competition
authority which was recently further merged with the consumer authority as well
as with the postal and telecoms regulator. This type of combination between
sectoral regulatory functions and competition supervision already exists in Estonia, where the competition authority acts also as the sectoral regulator for the energy,
postal, railway, telecoms and water sector. A similar merger has been decided
in Spain which brings together the competition authority and six sectoral
regulators in charge of airports, energy, postal, railways and telecom sectors
into one organisation, the Comisíon Nacional de los Mercados y la
Competencia (CNMC).[18]
25.             
As a result, in terms of competences, a minority
of NCAs remain exclusively responsible for competition enforcement, covering
both antitrust and merger control, while the majority of NCAs now have
additional competences in various areas including, inter alia, consumer
protection, public procurement and the supervision of liberalised sectors such
as energy, post, telecommunications and railways.
26.             
Such merging of authorities is part of a Member State's discretion and is often motivated by a search for synergies and efficiency
gains. 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 of the additional competences granted
to the NCAs, or to a reduction in the means assigned to competition
supervision. 

2.4             
Comparison with other policy areas

27.             
EU legislation in related policy areas, such as
telecommunications,[19]
energy[20]
and railways,[21]
contains a number of requirements regarding the national supervisory
authorities. This includes, in the first place, an explicit requirement for the
Member States to guarantee the independence of the authority and to ensure that
it exercises its powers impartially and transparently. In addition, the staff
of these authorities are explicitly precluded from seeking or taking
instructions from any other body when carrying out their tasks and the top
management or board members may only be dismissed if they no longer fulfil the
conditions required for the performance of their duties (or have been found
guilty of misconduct).
28.             
Moreover, the respective directives oblige the
Member States to grant the authority a separate annual budget or separate annual
budget allocations, with autonomy in the implementation thereof, and to
allocate adequate financial and human resources to carry out its duties, which may
include active cooperation at EU level.
29.             
A more general independence requirement applies
in the area of data protection where the EU legal framework explicitly provides
that the national supervisory authorities "shall act with complete
independence in exercising the functions entrusted to them".[22]
Recent case-law of the Court of Justice indicates that such an independence
guarantee is intended to ensure the effectiveness and reliability of the
supervision of compliance with data protection rules. It precludes not only any
influence exercised by the supervised bodies but also any directions or any
other external influence, whether direct or indirect, including by the State.[23]
The authority should therefore fall outside the classic hierarchical
administration and be independent of the government. However, this does not
exclude all accountability by the authority to other bodies. For example, certain
parliamentary control over such authorities remains possible.[24]
30.             
In Commission v. Austria, the Court has
added that operational independence,[25]
although an essential condition, is not sufficient to ensure complete independence.[26]
It requires that the head of the authority maintains no service-related link
with or is not supervised by the government to avoid any suspicion of
partiality. An organisational overlap between the supervisory authority and the
government is incompatible with the requirement of independence as it prevents
the former from being above all suspicion of partiality. The same applies where
the (head of) government has a right to be informed at all times by the top
management or board of the supervisory authority of all aspects of its work.
Such an unconditional and broad right to information is also liable to subject
it to direct influence. The attribution of the necessary equipment and staff
must also not prevent them from acting with complete independence. This is not
the case if the staff consists of officials who are subject to supervision by
the government.
31.             
In a recent judgment regarding the independence
of the Hungarian data protection authority the Court again emphasised that
"the mere risk that the State scrutinising authorities could exercise a
political influence over the decisions of the supervisory authorities is enough
to hinder the latter in the independent performance of their tasks".[27] In
particular, the Court noted that the threat of early dismissal of the head of
the authority could have such a negative effect. Therefore, the independence
requirement includes the need for the head of the authority to be able to serve
its full term and premature termination should only be imposed in accordance
with the rules and safeguards, in the sense of overriding and objectively
verifiable reasons, foreseen in the applicable legal framework. As the
underlying case involved a restructuring or changing of the institutional model
of an existing authority, the Court emphasised that this does not qualify as an
objective justification. While Member States are free to choose the appropriate
institutional model and alter it, this should not affect its independence and,
in particular, the guarantee that the head of the authority can serve his/her
full term. Recent legislative proposals in the field of data protection consolidate
the case law of the Court of Justice on independence and add more specific
requirements.[28]
32.             
Where competition
enforcement and sectoral regulatory functions are integrated in a single
authority, the question arises whether such integrated authority has to comply
with the most stringent requirements for all its functions and, thus, whether
its competition enforcement function could benefit from a spill over effect of
the sectoral requirements. The recent liberalisation directive for the railway
sector addresses this scenario and explicitly confirms such extended
application in requiring that the integrated authority fulfils the sector
specific independence requirements.

2.5             
Strengthening position of NCAs in Programme
Countries and in the framework of the European Semester

33.             
In the absence of any explicit requirements
concerning NCAs in Regulation 1/2003 or, in the case of an integrated
authority, any extended application of sector specific requirements, there are
no EU law provisions which explicitly oblige Member States to ensure the
independence of the NCAs and to require the grant of sufficient resources.
Nonetheless, the competition enforcement regimes in several Member States have
been strengthened in the framework of the Memorandum of Understanding of
Specific Economic Policy Conditionality (“MoU') with the Member States
benefiting from a financial-assistance programme (the so-called “Programme countries”)
or following country specific recommendations in the framework of the European
Semester. 
34.             
For example, the MoU with Greece addressed the issue of enhancing the independence and continuity of the NCA.[29] In
this context, the new competition law provides for the appointment of both its
President and Vice-President by parliament and the decoupling of their mandates
from the electoral cycle. Furthermore, the competition authority in Ireland was hindered in its task of effectively enforcing the competition rules due to a
strong reduction in its resources. Therefore, the MoU with Ireland specified that the effective functioning of the Irish competition authority must be ensured
which eventually led to the partial restoration of the pre-crisis staffing
level.[30]
Similarly, the MoU with Portugal provided that sufficient and stable resources should
be allocated to the NCA.[31]
The MoU with Portugal also led to the adoption of a framework law on national
regulatory authorities which provides for general principles on the structure,
functioning and financing of administrative authorities in Portugal, including the NCA.[32]
35.             
The institutional position of NCAs has also been
addressed in the context of the European Semester with the aim of ensuring
effective competition enforcement in all Member States as they contribute to
fostering competition as a growth-enhancing policy.[33] Over
the past couple of years, priority has been given to clear-cut shortcomings in
the position of the NCA and the degree of independence. This has contributed to
the reform process in those Member States where the NCA was still (partly)
incorporated in a ministry as this could raise doubts regarding its
independence from the State. Both Belgium and Slovenia have now established an
independent administrative authority separate from the ministry.
36.             
In addition, the need for equipping competition
authorities with adequate resources has been emphasised as this may affect the
NCA's ability to expand its enforcement actions and to lend institutional
weight to competition-increasing reform efforts. This was the case for Austria, Belgium, Latvia, Luxemburg, Malta and Slovenia, where the NCAs suffer from low staffing
levels or limited financial resources compared to other NCAs. Notwithstanding
these difficulties, the NCAs in these Member States have contributed to the
increased enforcement of the EU competition rules.
37.             
The establishment of the new CNMC in Spain, merging the Spanish NCA with six sectoral regulators, has also been subject to close
monitoring in the context of the European Semester, inter alia regarding its
independence, financial and human resources and the division of functions
between the regulator and the competent ministries. In relying on the EU legal
framework for sectoral supervisory authorities, Spain was called upon to ensure
the effectiveness, autonomy and independence of the newly created authority. 
38.             
While these initiatives have been broadly
successful and it is clear that the European Semester can make a useful contribution
to enhancing the position of NCAs, they are Member State specific and
recommendatory in nature.

2.6             
Evaluation 

39.             
The position of the NCAs has evolved in the
direction of more autonomy and effectiveness and many national laws already contain
specific safeguards to ensure the independence and impartiality of NCAs. Such guarantees
emphasize their importance for effective competition enforcement, strengthen
the NCAs' position vis-à-vis the Member States and very importantly strengthen
the legitimacy of their action vis-à-vis stakeholders, including national
parliaments and citizens. However, there are no explicit requirements in EU law
to ensure: (1) minimum guarantees of independence so that NCAs are able to execute their tasks in an impartial and
independent manner; and (2) the effective and sustained operation of NCAs by
means of sufficient human and financial resources.
40.             
As set out in the Communication, 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.

3                   
CONVERGENCE OF PROCEDURES
3.1             
Overview

41.             
Under Regulation 1/2003, NCAs and national
courts have an obligation to apply the EU competition rules to agreements and
practices that are capable of affecting trade between Member States. The same
substantive rules, i.e. Articles 101 and 102 TFEU, are applicable to
agreements, decisions of associations of undertakings, concerted practices and conduct
which is prohibited by Article 102 TFEU.[34] The ECN
cooperation tools are regularly used to ensure the coherent application of the
common rules.[35]
 
42.             
The application of the EU competition rules by a
multitude of enforcers throughout the EU is one of the major successes of
Regulation 1/2003. Stakeholders from the legal and business communities have
largely confirmed that Regulation 1/2003 has positively contributed to the
creation of a level playing field. 
43.             
However, the situation is more complex in
relation to procedures and sanctions for the application of the EU competition
rules in the Member States, as they are not harmonised by Regulation 1/2003.
They are only subject to general principles of EU law, in particular, the
principles of effectiveness and equivalence, as well as the observance of the
fundamental rights enshrined in the Charter of Fundamental Rights of the
European Union and the European Convention on Human Rights where applicable. This
means that the procedures and sanctions used by the NCAs to apply Articles 101
and 102 TFEU are largely governed by national law. Accordingly, Member States
apply the same substantive rules according to divergent procedures and they may
impose a variety of sanctions. 
44.             
The 2009 Report on Regulation 1/2003 found that
despite the significant degree of voluntary convergence of Member States' laws
with the system set out for the Commission in Regulation 1/2003, divergences in
Member States' enforcement systems remain on important aspects. It concluded
that this aspect may merit further examination and reflection. There are
recurring calls by stakeholders to enhance convergence in the ECN on procedures
and sanctions. 
45.             
Currently many basic elements of investigation
and decision-making powers and procedures, which are the main working tools of
competition authorities, are present in the vast majority of jurisdictions.
However, divergence subsists for some fundamental questions, e.g. whether
competition authorities have the power to set priorities or to inspect
non-business premises. This results in a dispersed picture where NCAs have
strong and convergent powers in some fields but are non-convergent in others. 
46.             
There are also differences in the rules
governing the procedural steps, which can significantly affect the scope of investigative
and decision-making powers, e.g. powers to inspect, to request information or
to take commitment decisions. For example, some NCAs when adopting a
prohibition decision cannot impose behavioural or structural remedies.
Differences also exist with regard to the procedural rights of parties under
investigation, e.g. different scope of the privilege against self-incrimination
for undertakings, and the enforcement measures and sanctions related to
non-compliance with decisions, e.g. some NCAs do not have the power to impose
fines directly in case of non-compliance with a commitment decision.
Difficulties also persist with regard to the notification by NCAs of
administrative acts in other Member States, as well as the enforcement of NCA
decisions imposing fines across the territory of the EU.
47.             
Such divergence means that while some NCAs are
better equipped than others, the vast majority of authorities do not have a
complete set of powers at their disposal which are comprehensive in scope and
are effective. 

3.2             
Convergence by 'soft tools' – achievements and
limitations

48.             
Voluntary convergence can be achieved if Member
States decide to align their procedures and/or sanctions with a common EU
model, despite the absence of harmonisation by legislation. Indeed, many Member
States have voluntarily aligned their procedures for the enforcement of
competition law to a greater or lesser extent with those set out for the
Commission in Regulation 1/2003. 
49.             
Procedural convergence has been enhanced in the
context of agreements on financial support from the EU with the Programme
Countries. In Greece, a new comprehensive competition law was adopted, which,
inter alia, empowered the Greek NCA to reject complaints and set priorities and
thereby address its backlog of cases. In Portugal, a new competition law was
adopted which provides for major improvements, including the introduction of
priority setting and more effective investigatory powers for the NCA. In
Ireland, changes to the competition law made against the backdrop of the MoU
mean that binding commitment decisions can now be reached, with penalties
available for failure to comply (as opposed to the mere possibility of reaching
informal non-binding settlements, as was hitherto the case). 
50.             
Other reforms have been spurred by
recommendations in the framework of the European Semester. For example, in Austria, the powers of the NCA were enhanced, including in particular the right to search
and seal companies' premises, to issue requests for information and to sanction
non- or misinformation in response to such requests. 
51.             
Outside the European Semester framework,
bilateral contacts have been used to foster convergence, often prompted by
requests from NCAs for informal reactions to policy measures under preparation.
Examples include consultations from NCAs on draft leniency programmes.
52.             
Importantly, multilateral work within the ECN
has been a major catalyst in encouraging Member States and/or NCAs to ensure
greater convergence. This has resulted in the production of comparative reports
as well as policy and guidance documents aimed at enhancing convergence in the
areas of procedures, leniency and fines, as is explained further below.
53.             
However, there are limits to what can be
achieved by voluntary convergence and 'soft tools' developed in the ECN, as
well as the means to foster convergence in the context of cross-cutting EU
programmes. Where procedural differences are rooted in national legal
traditions, national fundamental right standards or other general principles,
it may be difficult to achieve convergence with a common standard through the
use of 'soft tools', including in the context of economic adjustment
programmes. For example, in Ireland, the NCA does not have the ability to seek
the imposition of civil/administrative fines for the breach of either EU or
national competition rules. It can do so solely in criminal proceedings, involving
trial by jury which in practice means that prosecutions are only brought
against hard-core cartels. In view of avoiding any situation of under-enforcement
of the competition rules in Ireland, a provision in the MoU with Ireland tried to address this issue. However, it appears that the power to impose civil/administrative
sanctions will only be introduced if this would be made mandatory through EU legislation. 

54.             
The fact that virtually all NCAs do not have a
complete set of powers at their disposal which are comprehensive in scope and are
effective, impinges on their ability to effectively apply the EU competition
rules. It also results in costs for undertakings operating cross-border as they
have to acquaint themselves with the different procedural rules which apply in
different Member States. Divergences in procedures also reduce predictability
for such businesses. Another issue of concern is that the level of convergence
achieved to date remains fragile, as changes in national laws or practices could
result in the roll-back of improvements which have been made at any time. 

3.3             
Investigative and decision-making procedures

55.             
By way of follow up to the 2009 Report on
Regulation 1/2003, the ECN made a detailed inventory of the investigation and
decision-making procedures for competition enforcement which exist in the
Member States. The Reports, which were published in November 2012, provided a
clear overview of the status quo in the ECN for the first time.[36]

56.             
In view of the divergences identified in these
Reports, work was launched in the ECN to promote voluntary convergence through
the joint production of a set of ECN Recommendations. A set of seven ECN
Recommendations on key enforcement powers were endorsed in 2013.[37] These
Recommendations are intended to serve as a 'soft' framework of reference which
competition authorities can use as an advocacy tool vis-à-vis policymakers, and
thereby help ensure that all authorities are equipped with a complete and
effective competition toolkit. While these soft tools cannot overcome
constitutional impediments, obstacles flowing from national legal traditions or
from national case law, the Recommendations show that there is a considerable
degree of consensus within the ECN on the procedural tools which authorities
must have to be able to effectively apply competition law. 
57.             
Work in the ECN has focussed on key aspects of
competition proceedings from their initiation to the decision making and
enforcement phase. 
58.             
Two main strands are important in this regard: (1)
ensuring that NCAs have all necessary powers at their disposal, e.g. some NCAs cannot
inspect non-business premises or adopt commitment decisions; and (2) ensuring
that these powers are comprehensive and effective, e.g. although the majority
of NCAs have the power to carry out inspections, some NCAs do not have
the power to seal premises, to effectively gather digital evidence and/or to inspect
non-suspected undertakings etc. Similarly, some NCAs have powers that cannot be
effectively enforced, e.g. they cannot effectively sanction non-compliance with
a commitment decision or a decision ordering interim measures or they are
unable to enforce their powers to inspect, e.g. they cannot request the
assistance of the police if an undertaking refuses to submit to an inspection
or otherwise swiftly and effectively overcome opposition. 
59.             
The following aspects have been identified
within the ECN as forming key components of the toolbox that authorities should
have at their disposal:
a.      
Priority setting:
there is a need for further convergence on the ability of the authorities to
set priorities in the exercise of their tasks and maximise administrative
efficiency when choosing which cases to pursue. Progress has been made in this
regard in Greece and Portugal, where the NCAs are now able to set their
priorities and to reject complaints without the need for a detailed
investigation on substance. However, some NCAs still have a legal duty to
consider all complaints and requests for interim measures received. The ECN
Recommendation on the power to set priorities advocates for authorities to have
greater flexibility to choose which cases to investigate. 
a.      
The basic set of effective investigation
tools: namely (1) the power to inspect business premises, (2) the power to
inspect non-business premises and (3) the power to issue requests for
information. Here, there is generally a common basis, although some authorities
lack essential powers, e.g. to inspect non-business premises or to issue
binding and enforceable requests for information. A number of authorities also
do not have the right to carry out interviews. 
Some authorities
have limited investigative powers, for example, they lack the power to seal
premises. The power to effectively collect digital evidence is increasingly
important in carrying out inspections. A number of authorities face limitations
in this regard. For instance, some authorities cannot gather digital data
stored on mobile phones or cannot take forensic images or face other limitations
depending on where and how data is stored, e.g. when information is accessible
for the undertaking from the inspected premises, but the storage media is
claimed to be physically located outside the territory of the authority. 
Some
authorities do not have the means to effectively enforce their powers to
inspect and overcome opposition (e.g. by calling on the assistance of the
police) or their investigation powers are not backed up by sanctions or only by
sanctions set at a very low level or they lack the means to compel compliance
e.g. periodic penalty payments. 
b.     
Core
decision-making powers: there are a number of decision-making
powers which a competition authority must have:
                                           
i.           
The
power to adopt prohibition decisions, which includes the possibility to impose
behavioural or structural remedies. The power to impose such remedies can be an
important tool to bring infringements to an end, prevent their recurrence and
restore competition in the market. Some authorities do not have the (explicit) power
to impose behavioural or structural remedies.
                                         
ii.           
The
ability to adopt commitment decisions. While the majority of authorities have
the power to adopt commitment decision, they do so according to a large variety
of procedures. It is important that the advantages of commitment decisions,
i.e. securing swift changes to the market and procedural economies can be fully
realised in all jurisdictions. This is particularly important in light of the
increasingly significant role played by commitment decisions in the ECN (around
25% of envisaged decisions submitted to the Commission pursuant to
Article 11(4) of Regulation 1/2003).  
                                       
iii.           
The
ability to adopt interim measures is an important tool for competition
authorities to ensure that during an investigation no irreparable harm to
competition is caused which cannot be remedied by a decision taken at the
conclusion of the proceedings. Not all authorities have an explicit legal basis
to adopt interim measures. Moreover, interim measures are currently not adopted
according to a common minimum substantive standard.  
                                       
iv.           
The
ability to enforce decisions of all the types listed above and to compel
compliance therewith. A number of authorities do not have effective sanctions
at their disposal to sanction non-compliance with decisions, which can
significantly impinge on their effectiveness, e.g. undertakings may easily
enter into commitments which cannot be enforced and therefore no market change
ensues. Other instruments for ensuring compliance are also lacking in some
jurisdictions, e.g. the power to monitor compliance by means such as the
appointment of a trustee.

3.4             
Evaluation

60.             
In conclusion, despite the absence of explicit requirements
in EU law for the procedures used by NCAs when applying the EU competition
rules, voluntary convergence with the procedures set out for the Commission in Regulation
1/2003 has occurred in virtually all jurisdictions. However, the degree of
convergence on procedures differs and divergence subsists even for some
fundamental powers. This means that while some NCAs are better equipped than
others, the vast majority do not have a complete set of powers at their
disposal to apply Articles 101 and 102 TFEU, which are comprehensive in scope
and are effective in all respects. This impinges on the ability of NCAs to effectively
apply the EU competition rules. Soft tools developed within the ECN are helpful
in facilitating further convergence, but not where divergences are rooted in constitutional
rules or national legal traditions. Undertakings operating cross-border incur costs
in terms of acquainting themselves with the different procedural rules which
apply in different jurisdictions. Divergences in procedures also reduce
predictability for such businesses. Another issue of concern is that achievements
made to date are fragile as there is nothing to prevent changes in national
laws or practices that weaken the powers of the NCAs.
61.             
As set out in the Communication, 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.

4                   
CONVERGENCE IN THE AREA OF SANCTIONS
4.1             
Fines
4.1.1       
Need for effective fines

62.             
Fines on undertakings are a central tool in the
enforcement of the EU competition rules for both the Commission and NCAs. The
purpose of fines is to punish undertakings which have infringed competition
rules and also to deter the same and other undertakings from engaging in or
continuing illegal behaviour. At present, EU law does not regulate or harmonise
sanctions imposed by NCAs for breach of the EU competition rules. It is for the
Member States to ensure that they provide for sanctions which are effective,
proportionate and dissuasive.[38]
63.             
NCAs are generally equipped with powers to
impose sanctions on undertakings and associations of undertakings. In 2008, the
European Competition Authorities endorsed "Principles for Convergence".[39]
Those principles, together with the Commission's 2006 Fines Guidelines,
have inspired the design of the guidelines of a number of NCAs relating to the
setting of administrative pecuniary sanctions on undertakings.[40]
64.             
In 2009, the Court of Justice ruled that the
effectiveness of the penalties imposed by the national or EU competition
authorities is a condition for the coherent application of EU competition
rules.[41]
More recently, the Court has clarified that a competition authority’s decision
not to impose a fine for an intentional or negligent infringement of the EU
competition rules could only exceptionally be justified provided that it does
not undermine the requirement of effective and uniform application of Article
101 TFEU.[42]
This can be the case where the principle of the protection of legitimate
expectations applies, or where the undertaking concerned has participated in a
leniency programme.
65.             
The need for sufficiently deterrent fines across
the EU has also been emphasised by the Commission in the context of the European
Semester vis-à-vis Member States which did not provide for effective fines. As
a result, in 2013 Denmark significantly increased the fines that can be imposed
on both undertakings and natural persons.[43]
  Finland has commissioned a survey looking into the possibility of introducing
personal criminal responsibility for forbidden cartels in addition to the
current administrative system.
66.             
Whatever the mix of sanctions available in a Member State, it is generally recognized that there can be no effective public enforcement in
the antitrust field without deterrent civil/administrative sanctions on undertakings.[44] This
is confirmed by experience in Ireland where currently a purely criminal system
of antitrust sanctions is in force and the competition authority does not have
the ability to seek the imposition of civil/administrative fines for the breach
of either the EU or national competition rules. 
67.             
In a small number of Member States, the imposition
of fines on undertakings is conditional on finding liability of natural persons,
which complicates the enforcement of the EU competition rules. 

4.1.2       
Convergence in the area of fines

68.             
Sustained attention to the need to provide for effective
fines for infringements of the EU competition rules, has led to a high level of
voluntary convergence in the manner fines are being determined in the Member
States, with a large majority of authorities operating a similar basic
methodology for determining the amount of the fines.
69.             
The vast majority of NCAs use a basic amount
method, whereby most of them draw on a base consisting of the undertaking’s
relevant value of sales which is further modulated to take into account the
gravity and the duration of the infringement. Almost all NCAs also take into
consideration both aggravating and mitigating circumstances.
70.             
A majority of the NCAs may also increase the
fine to ensure a sufficient deterrent effect on the basis of a specific
criterion independent from the assessment of gravity of the infringement or
that of aggravating circumstances. Most of them base their assessment on the
economic strength of the group to which the infringer belongs. Lastly, fines in
almost all jurisdictions are subject to a legal maximum of ten percent of the
turnover in a given year which applies as a “cap” to limit the fine imposed.[45]
71.             
Nevertheless, significant divergences still
exist with regard to specific steps in the fines calculation, such as the base
used for calculating the basic amount of the fine, the method for taking into
account gravity and duration and the interpretation and level of the maximum
amount of the fine, which may all have an impact on the actual amount of fines
imposed. 
72.             
Amongst the NCAs that use a basic amount to
calculate the fine, some base their calculation on the undertaking’s total
turnover instead of the value of sales. This also affects the actual percentage
ranges applied to reflect the gravity of the infringement where substantially
lower percentages are used by NCAs relying on total turnover while the maximum
percentage (ranges) also vary to some extent for those competition authorities
using the value of sales.
73.             
A similar divergence can be observed with regard
to duration where different methods are used by the NCAs. For instance, some
NCAs apply a 100% uplift for each year of infringement or an increase by a
specified band depending on the number of years of infringement.[46] Another
example of factoring in duration involves relying on a base which comprises the
total sales or turnover achieved during the period of infringement. A large
number of Member States identify a limited number of aggravating and mitigating
circumstances but usually the list is not exhaustive.
74.             
Furthermore, some NCAs still lack the power to
impose fines on associations of undertakings. Among the competition authorities
who may fine associations of undertakings, there is an even split between those
that only consider the association’s turnover (or fees received) and those that
may consider its members’ turnover as well where the activity of the
association is conducted on behalf of or to the benefit of the members which
pursue an economic activity. Divergences in terms of prescription periods are
also to be found.
75.             
The legal maximum of ten percent is in a number
of Member States regarded not as a cap but as an 'upper frame' which is only
relevant for the most serious infringements, so that fines for less serious
infringements are set at a lower level. This approach has recently been
confirmed by the German Federal Supreme Court regarding the German legal basis
for fines which is very similar to the legal basis for the Commission’s fines
in Article 23 of Regulation 1/2003. In its judgment the German court explicitly
rejected the notion of the ten percent legal maximum as a cap and instead
interprets it as the upper end of a frame in which the individual fine has to
be calculated and where the upper end is only relevant for the most serious
infringements. This judgment has led the German NCA to suspend the application
of its fining guidelines which were similar to those of the Commission. In
addition, the turnover used to determine the legal maximum may vary between the
  Member States, where most rely on the worldwide turnover and some on the
national turnover (sometimes including export sales) or the total turnover in
the affected market.
76.             
Finally, a coherent interpretation of the
concept of undertaking is crucial for the consistent application of the EU
competition rules. Fundamental issues concerning the potential addressees of a
fining decision and liability issues pose problems in a number of
jurisdictions. The basic concept of undertaking relied on by NCAs which is
relevant for establishing parental liability and economic succession, is not
always entirely convergent with the notion of undertaking as is contained in
Articles 101 and 102 TFEU and interpreted by the EU Courts. While in many
Member States the possibility exists for the competition authority to apply the
EU competition rules to undertakings as a whole, including entities directly
involved in the infringement as well as parent companies that exercised
decisive influence over them, in line with the case law of the EU Courts and
the decisional practice of the Commission, some NCAs are not in a position to
apply this notion of parental liability, including the presumption of exercise
of decisive influence.[47]
In addition, while legal succession is generally recognised for determining the
addressees of fines decisions, economic succession is much less generally accepted.

4.1.3       
Evaluation

77.             
As set out in the Communication, in order 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.

4.2             
Leniency
4.2.1       
Convergence in the leniency area: a
long-standing priority of the ECN

78.             
The entry into application of Regulation 1/2003
coincided with, and contributed to, a general stepping up of enforcement
against secret cartels.[48]
By 2004, leniency programmes were increasingly recognised as an important tool
to detect secret cartels.[49]
At the same time, the creation of the ECN enhanced information-sharing among
enforcers in the EU and the possibility to re-allocate cases to another
well-placed authority within the Network was introduced, including the possible
re-allocation of cases from the Commission to one or several NCAs. 
79.             
Against this background, potential leniency
applicants are encouraged to seek leniency coverage from all authorities in the
ECN that may be competent and well-placed to act on a given case. As a leniency
application to one authority cannot be considered as an application to any
other authority, this means in practice that leniency applicants need to file
for leniency separately with each authority that may be well-placed to act.[50]

80.             
Stakeholder concerns related to the need for
such multiple applications have been addressed by the ECN Model Leniency
Programme (“MLP”).[51]
The MLP was created to further increase the effectiveness of leniency
programmes; it provides the Member States / the NCAs with a cohesive model of
rules and procedures. As a result, virtually all Member States have introduced
leniency programmes[52]
and a significant process of alignment with the MLP has taken place, even
though certain divergences remain.[53]
All leniency programmes cover at least secret cartels while some go further
(e.g. covering certain vertical hard core restraints). 
81.             
Importantly, the MLP undertook to alleviate the
burden of multiple filings in cases where the Commission is particularly well
placed to deal with a case, i.e. when cartels have effects on competition in
more than three Member States.[54]
To this end, it introduced the system of summary applications. This allows undertakings
that are applying for leniency with the Commission to file simplified
applications with NCAs to reserve a place in the leniency queue should the case
(or part of it) ultimately be pursued by the NCA e.g. as a result of the
Commission not pursuing the case and one or more NCAs taking it up (re-allocation).
Summary applications were introduced in virtually all Member States.[55]
Under the 2012 revision of the MLP, the availability of summary applications has
been extended from the sole immunity applicant to all leniency applicants, so
as to take account of the fact that a case may be re-allocated at a stage when
more than one undertaking has already applied for leniency within the ECN.[56]
 
82.             
The summary application mechanism came in
response to a recurrent criticism from stakeholders that there is no "real
one-stop-shop for leniency" in the ECN, whereby an undertaking would only
need to apply for leniency at the Commission or one NCA in order to obtain
coverage in the entire EU. 
83.             
This issue has been thoroughly contemplated as
from 2005 without there being a simple answer. A single entry point at the
Commission would entail a considerable re-centralisation of the enforcement
system and run counter to the concept of empowering the NCAs as enforcers,
which was a major objective pursued by Regulation 1/2003. On the other hand, a
decentralised system with the mutual recognition of leniency applications would
not be workable, as it would require a high degree of harmonisation of the
rules and extensive coordination in practice for every step of the leniency
application process to ensure harmonious application of the rules. Against this
background, the ECN opted for the summary application system which has been
enhanced by the review of the MLP in 2012. 
84.             
In addition to the alignment of ECN leniency
policy through the MLP, ECN members have stepped up cooperation in cases and regularly
exchange experience in the ECN Cartels working group. 
85.             
A further challenge in this area arose from the
discussion on the conditions under which leniency material can be disclosed and
used in the context of the civil damages actions before national courts, as
illustrated by the Pfleiderer judgment.[57] This issue
is addressed in the Commission's Proposal for a Directive on Actions for
Damages of 11 June 2013.[58]
The proposal deals inter alia with the interface of public and private
enforcement in the context of disclosure orders by national courts and the use in
damages actions of information obtained through access to file. The approach
taken is based on an assessment that the (non-)disclosure of leniency material
in the context of damages claims could only be addressed through legislative
action. Indeed, the non-binding nature of the MLP was expressly underlined by
the ECJ in Pfleiderer. 

4.2.2       
Evaluation 

86.             
In conclusion, though the level of convergence
in the field of leniency is exemplary, there are limitations. As in other
areas, achievements made through 'soft' convergence remain fragile and soft
instruments are not helpful where divergences are rooted in national legal
traditions. Further issues that arise in the context of leniency programmes for
the enforcement of the EU competition rules include public access to documents,
rights of defence/right to a fair trial before national and EU courts and the
interface with criminal enforcement (see below). As far as private damages
claims before national courts are concerned, some of these issues will be addressed
by the Directive on Actions for Damages once it is finally adopted. 
87.             
As set out in the Communication, 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. Therefore, it is necessary to ensure that the
achievements made in leniency programmes are secured.
88.             
Work on convergence in relation to more detailed
elements of leniency policy as well as the practical implementation of leniency
programmes and cooperation between enforcers in the Network should continue
within the ECN. 

4.3             
Criminal interface
4.3.1       
Overview of sanctions on individuals and
enforcement record

89.             
Over and above the common base formed by the
possibility to impose fines on undertakings in all competition law systems in
the EU, the vast majority of Member States provide for one or more type of
sanctions on individuals in respect of breaches of competition law. These
sanctions take multiple forms and range from fines on individuals that are
imposed by a competition authority at one end of the spectrum to custodial
sanctions imposed in a classical criminal-style procedure involving a prosecutor
and court at the other end. Moreover, the classification of sanctions on
individuals in national law (as administrative, civil, criminal or other)
varies and depends on the categories in national law.[59]
Consequently, while custodial sanctions are generally qualified as being of a criminal
nature, pecuniary sanctions can be of either an administrative or criminal
nature while disqualification orders are qualified as either administrative,
civil or criminal.
90.             
In terms of the legal rules applicable, a
relatively large number of Member States provide for sanctions on individuals
for all types of competition infringements, covering both restrictive
agreements and abuse of a dominant position. The type and level of sanctions
and their qualification can differ according to the type and gravity of the
infringement. For example, custodial sanctions may be foreseen for individuals
involved in hard-core cartels, while other competition infringements may be
sanctioned with a (criminal) fine.  Moreover, specific types of criminal
infringements are foreseen in a few Member States for cartel type behaviour and
in others for a particular type of cartel, namely bid rigging. 
91.             
Moreover, the difference in the qualification of
sanctions for individuals at national level has an impact on the type of
enforcement system in place for imposing such sanctions. Administrative fines
on individuals are imposed by some NCAs in the same way as fines on
undertakings. Custodial sanctions and criminal fines are imposed by a
(criminal) court after the case has been investigated and brought to its
attention by a public prosecutor. Public prosecutors may often be informed by
the NCA of the case as the latter may have an obligation to report criminal
offences. Generally, public prosecutors have at least similar or more
far-reaching investigative powers than NCAs. In some Member States public
prosecutors have an obligation to pursue criminal facts which come to their
attention, while in others public prosecutors have discretion in choosing the
cases they bring to the court's attention. In a few Member States, custodial
sanctions are also imposed by a criminal court but the case is prosecuted by
the NCA either in all cases or for certain types of offences. 
92.             
Although sanctions on individuals for
competition infringements exist in many Member States, such sanctions play a
limited role in practice. Administrative fines on individuals, where they
exist, are more frequently imposed than (classical) criminal sanctions of which
there is generally very little experience in the EU.
93.             
The reasons for the relative lack of pursuit of
classical criminal enforcement in the competition field in Europe, where such
rules exist, may be manifold and could relate to the complexity of competition
cases, the amount of documentation to be processed, the standard of proof, and a
lack of resources at the level of public prosecutors and/or courts.
94.             
Some direct experience with criminal enforcement
exists in Ireland where under the Competition Act 2002, the Director of Public
Prosecutions has obtained over 30 convictions against undertakings and
individuals involved in hard core cartel activity. Fines totalling
approximately €600,000 have been imposed and individuals have been sentenced to
terms of imprisonment of up to 12 months. In the UK, the Enterprise Act
introduced criminal sanctions for cartels in 2002[60] and
convictions have been obtained in the renowned Marine Hoses case.[61] 
95.             
Overall, there does not seem to be a clear
consensus about the merits of criminalisation. Whereas the threat of classical
criminal sanctions and notably custodial sanctions is often seen as a strong factor
of deterrence, it appears that - based on the available information - classical
criminal procedures, where they exist in the EU, have only very rarely resulted
in successful prosecution in the competition field or led to significant
penalties. A range of Member States have examined the introduction of classical
criminal sanctions in recent years and have opted not to do so after thorough
deliberation (e.g. Belgium, the Netherlands and Sweden[62]
where an expert committee was set up to consider the question).

4.3.2       
Interplay with corporate leniency programmes in
the EU

96.             
While many Member States foresee sanctions on
individuals for competition infringements, such sanctions and, in particular, classical
criminal sanctions, currently play a limited role in practice.
97.             
However, even the mere threat of sanctions for
individuals can be counter-productive for corporate leniency programmes if they
are not accompanied by an effective leniency option for the individuals
concerned: the legal risks for the individuals involved can have a stifling
effect on the willingness of undertakings to report cartels to the authorities.
It can also reflect negatively on their possibilities to collect information
internally from employees in order to prepare for corporate leniency
applications. This issue has been repeatedly signalled by stakeholders/legal
community as one of the main concerns which, if not resolved, would have a chilling
effect on leniency applications.  
98.             
This is exacerbated by the fact that
investigations against individuals are not always in the same hands as the
follow up to corporate leniency applications. Often such investigations are
outside the competence of NCAs. For example, bid-rigging in Germany or Italy would be prosecuted by a public prosecutor, not the NCA. In other jurisdictions,
like the UK and Ireland, the NCA is competent to investigate both the conduct
of undertakings and individuals, though different departments may be involved
with "Chinese walls" between them, as in the UK. 
99.             
The chilling effect that may arise from a threat
of sanctions on individuals in one Member State reaches beyond the territory of
one Member State. Notably charges against individuals on the basis of classical
criminal rules can most often be brought in a Member State irrespective of any leniency
application made by an undertaking to the Commission and/or to one or several
NCAs and of the work sharing between these authorities, depending on the national
rules on criminal jurisdiction and the features of the case. After an
inspection or another investigatory measure has been carried out, the
investigation by a competition authority may become publically known, which may
spur investigations by public prosecutors in the same or in other Member
States. 
100.         
Conversely, adequate leniency protection for
individuals may encourage them (and their employers) to cooperate with
authorities, remove the hindrance that the threat of separate sanctions on
individuals can create for employees in providing input to undertakings'
applications and may form an additional source of leniency applications. 
101.         
Most national leniency programmes only address –
if at all – the interplay of individual sanctions with their own corporate
leniency programme. However, there are a few Member States that have dealt with
this interplay outside their jurisdiction:  
a.      
Approach in the UK
The CMA's
leniency programme sets out particular arrangements aimed at safeguarding the
Commission's leniency programme. Employees of undertakings cooperating with the
Commission receive/may receive immunity from criminal penalties.[63] Moreover,
the CMA and the competent sectoral regulators will not apply for a competition
disqualification order against any current director whose company has benefited
from leniency in respect of the activities to which the grant of leniency
relates, including for leniency granted by the Commission.[64]
b.     
Approach in Sweden 
The Swedish competition
authority may bring proceedings leading to a trading prohibition against an
individual who seriously failed to fulfil his or her professional obligations by
being involved in cartel activity contrary to Article 101 TFEU and/or the
national equivalent rule. However, persons who hold a position at an
undertaking that is granted immunity from or reduction of a competition
administrative fine will be granted immunity from such trading prohibition.
This also applies if the immunity or reduction has been granted by another NCA or
by the Commission.[65]

4.4             
Evaluation

102.         
In sum, while experience with classical criminal
sanctions in the EU remains limited, a large number of Member States provide
for sanctions on individuals in different forms. Currently,
adequate arrangements to protect employees of undertakings from individual
sanctions if they cooperate under the corporate leniency programme of a NCA or
the Commission exist only in a few Member States. In view of maintaining the attractiveness of corporate leniency policies, it is therefore appropriate to consider possibilities to address the
issue of interplay between corporate leniency programmes and sanctions on
individuals that exist at Member State level.
TABLE
OF CONTENTS
1            INTRODUCTION.. 3
2            INSTITUTIONAL
POSITION OF NCAs. 4
2.1         Institutional set-up of NCAs. 4
2.2         Independence
and adequate resources. 6
2.3         Portfolios
of NCAs: Combining competition
enforcement and other functions. 8
2.4         Comparison
with other policy areas. 10
2.5         Strengthening
position of NCAs in Programme Countries and in the framework of the European
Semester 12
2.6         Evaluation. 13
3            CONVERGENCE
OF PROCEDURES. 14
3.1         Overview.. 14
3.2         Convergence
by 'soft tools' – achievements and limitations. 15
3.3         Investigative
and decision-making procedures. 16
3.4         Evaluation. 18
4            CONVERGENCE
IN THE AREA OF SANCTIONS. 19
4.1         Fines. 19
4.1.1      Need
for effective fines. 19
4.1.2      Convergence
in the area of fines. 20
4.1.3      Evaluation. 22
4.2         Leniency. 23
4.2.1      Convergence
in the leniency area: a long-standing priority of the ECN.. 23
4.2.2      Evaluation. 25
4.3         Criminal
interface. 25
4.3.1      Overview
of sanctions on individuals and enforcement record. 25
4.3.2      Interplay
with corporate leniency programmes in the EU.. 27
4.4         Evaluation. 28
[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, in particular Recitals 1-8 and
Articles1-3 and 5. See also the White Paper on Modernisation of the Rules
implementing Articles 85 and 86 of the EC Treaty of 28.04.1999, OJ C 132 of 12.05.1999, p. 1, and the proposal for
a Council Regulation on the implementation of the rules on competition laid
down in Articles 81 and 82 of the Treaty and amending
Regulations (EEC) No 1017/68, (EEC) No 2988/74, (EEC) No 4056/86 and (EEC) No
3975/87 of 27.9.2000, OJ C 365 E, 19.12.2000,
p.284.
[2]           For aspect (1) see the other Staff Working Document
accompanying the Communication: Ten Years of Antitrust Enforcement under
Regulation 1/2003, SWD(2014) 230 (the “Staff Working Document on Ten Years of
Antitrust Enforcement under Regulation 1/2003”). 
[3]           Recital 15 of Regulation 1/2003 and the Notice on
cooperation within the Network of Competition Authorities, OJ C101, 27.04.2004,
p. 43 (the “Network Notice”).
[4]           Notably, Articles 11, 12, 13 and
22 of Regulation 1/2003.
[5]           Report on the functioning of Regulation 1/2003, COM(2009)
206 final and the accompanying Staff Working Paper SEC(2009) 574 final ("2009
Report on Regulation 1/2003"), see the Internet (http://ec.europa.eu/competition/antitrust/legislation/regulations.html).
[6]           In Case C-439/08, VEBIC, [2010] ECR I-2471, the ECJ had to rule on whether Regulation 1/2003 requires that an
NCA should be able to defend its own decisions before the national review
courts. At the time, Belgian law did not allow the NCA to appear as defendant at
the appeal stage. The ECJ held that national provisions that prevent a NCA from
defending its own decision in judicial proceedings are contrary to the
obligation in Article 35 of Regulation 1/2003 of ensuring the effective
application of Articles 101 and 102 TFEU.
[7]           Network Notice, paragraph 2.
[8]            This is the case for Belgium, Bulgaria, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Italy, Lithuania, Latvia, Luxembourg, Malta, the Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden, the United Kingdom and the European
Commission. See ECN Decision-Making Powers Report, see
the Internet (http://ec.europa.eu/competition/ecn/documents.html). See also ECN
Brief, Special Issue, A look inside the ECN: its members and its work, December
2010, see the Internet (http://ec.europa.eu/competition/ecn/brief/05_2010/brief_special.pdf).
[9]           This is the case in Austria, Estonia (in criminal
proceedings) Ireland and Sweden (cases involving the imposition of a fine).
Where the Swedish NCA considers that the material circumstances regarding an infringement
are clear, it may issue a fine order in cases that are not contested by the
undertakings subject to the fine order.
[10]          Denmark (except for administrative fines) and Finland.
[11]          Already at the time of the 2009 Report on the Functioning
of Regulation 1/2003, Estonia, France and Spain had departed from such a
system, see the 2009 Report on Regulation 1/2003 – Staff Working Paper, paragraph
192. In the meantime, Belgium, Luxemburg and Malta have also changed their
set-up and opted for a single administrative authority.
[12]          See further the ECN Decision-Making Powers Report, see the
Internet (http://ec.europa.eu/competition/ecn/documents.html).
However, in at least one Member State, the NCA is not the body defending its
decisions imposing fines when they are appealed. 
[13]          In a number of Member States a specific form of government
intervention exists in merger cases. It usually means that the government or
competent minister may intervene on public interest grounds after the NCA has
analysed the merger's impact on consumers and businesses. In one Member State, the Prime Minister may declare a merger to be of state interest and, as a
consequence, exempt from competition scrutiny by the NCA.
[14]          Resolution
of the meeting of Heads of European competition authorities of 16 November 2010
on Competition authorities in the European Union – the continued need for
effective institutions, see the Internet (http://ec.europa.eu/competition/ecn/ncas.pdf).
[15]          Competition Authority Strategy Statement 2012-2014
(pending amalgamation), see the Internet (http://www.tca.ie/images/uploaded/documents/Strategy%20Statement%202012-2014%20FINAL%20(signed).pdf).
[16]          Enterprise and
Regulatory Reform Bill, see the Internet (http://news.bis.gov.uk/Press-Releases/Enterprise-and-Regulatory-Reform-Bill-published-67a68.aspx).
[17]          A greater role has been granted to
the local authority Trading Standards Services ("TSS") in the
enforcement of consumer protection law at national level. That being said, the
CMA, similar to the OFT, retains all of its previous consumer enforcement
powers but will tend to use them only where breaches of consumer protection law
point to systemic failures in a market.
[18]          Law 3/2013 of 4 June 2013.
[19]          See Article 3 of Directive 2002/21 of the European
Parliament and of the Council of 7 March 2002 on a common regulatory framework
for electronic communications networks and services, OJ 2002, L 108, 33 as
amended by Directive 2009/140 of the European and of the Council of 25 November
2009, OJ 2009, L 337, 37.
[20]          See Article 35 of Directive 2009/72 of the European
Parliament and of the Council of 13 July 2009 concerning common rules for the
internal market in electricity and repealing Directive 2003/54, OJ 2009, L 211,
55.
[21]          See Article 55 of Directive 2012/34 of the European
Parliament and of the Council of 21 November 2012 establishing a single
European railway area, OJ 2012, L343, 32.
[22]          Article 28 of Directive 95/46 of the European Parliament
and of the Council of 24 October 1995 on the protection of individuals with
regard to the processing of personal data and on the free movement of such
data, OJ 1995, L 281, 31. See also Article 43 of Regulation No 45/2001 of the
European Parliament and of the Council of 18 December 2000 on the protection of
individuals with regard to the processing of personal data by the Community
institutions and bodies and on the free movement of such data, OJ 2001, L 8, 1
and Article 8(3) of the Charter of Fundamental Rights of the European Union
which provides that compliance with the rules on personal data protection set
out in Article 8(1) and (2) shall be subject to control by an independent
authority. 
[23]          Case C-518/07 Commission v. Germany [2010] ECR
I-1885.
[24]          Such parliamentary control may be exercised, for example,
through the definition of their powers, the appointment of the management of
these authorities and by obliging it to report its activities to the
parliament.
[25]          Operational independence means that the members of the
authority are independent and are not bound by instructions of any kind in the
performance of their duties.
[26]          Judgment of 16 October 2012 in Case C-614/10, Commission
v. Austria.
[27]          Judgment of 8 April 2014 in Case C-288/12, Commission
v. Hungary.
[28]          Articles 47 to 49 of the proposal for a Regulation of the
European Parliament and of the Council on the protection of individuals with
regard to the processing of personal data and on the free movement of such data
(General Data Protection Regulation), COM(2012) 11 final of 25.1.2012, and
Articles 40 to 42 of the proposal for a Directive of the European Parliament
and of the Council on the protection of individuals with regard to the
processing of personal data by competent authorities for the purposes of
prevention, investigation, detection or prosecution of criminal offences or the
execution of criminal penalties, and the free movement of such data, COM(2012)
10 final of 25.1.2012.
[29]          See the Internet
             (http://ec.europa.eu/economy_finance/assistance_eu_ms/greek_loan_facility/index_en.htm).
[30]          See the Internet (http://ec.europa.eu/economy_finance/assistance_eu_ms/ireland/index_en.htm).
[31]          See the Internet (http://ec.europa.eu/economy_finance/assistance_eu_ms/portugal/index_en.htm).
[32]          This has still to be implemented through the adoption of
by-laws.
[33]          See the Internet (http://ec.europa.eu/europe2020/index_en.htm).
[34]          For unilateral conduct, stricter national laws are still
permissible pursuant to Article 3(2) of Regulation 1/2003.
[35]          See the Staff Working Document on Ten Years of Antitrust
Enforcement under Regulation 1/2003, section IV.
[36]          See the two ECN Reports on Investigative and Decision-Making
Powers, see the Internet (http://ec.europa.eu/competition/ecn/documents.html).
[37]          See the Internet (http://ec.europa.eu/competition/ecn/documents.html#powers).
The ECN endorsed Recommendations on: 
o   
Investigative Powers, Enforcement Measures and
Sanctions in the context of Inspections and Requests for Information, 
o   
The Power to Collect Digital Evidence, including
by Forensic Means, 
o   
Assistance in Inspections conducted under
Articles 22(1) of Regulation (EC) No 1/2003
o   
The Power to set Priorities
o   
Interim Measures
o   
Commitment Procedures
o   
The Power to Impose Structural Remedies
[38]          Case 68/88, Commission v Greece, [1989] ECR 2965,
paragraphs 23 - 25.
[39]               Pecuniary sanctions imposed on undertakings for infringements of
antitrust law: principles for convergence, ECA (European Competition
Authorities) document published in May 2008, see the Internet (http://www.bundeskartellamt.de/wDeutsch/download/pdf/ECA/ECA_principles_for_convergence.pdf; http://www.autoritedelaconcurrence.fr/doc/eca_principles_uk.pdf).
[40]               See for instance, concerning sanctions imposed by the French NCA:
see the Internet (http://www.autoritedelaconcurrence.fr/doc/communique_sanctions_concurrence_16mai2011_fr.pdf),
for sanctions imposed by the UK NCA: see the Internet (http://www.oft.gov.uk/shared_oft/business_leaflets/ca98_guidelines/oft423.pdf)
and for sanctions imposed by the Spanish NCA see the Internet (http://www.cnmc.es/Portals/0/Ficheros/cnmc/normativa/COMUNICACION%20DE%20LA%20COMISION%20NACIONAL%20DE%20LA%20COMPETENCIA%20SOBRE%20LA%20CUANTIFICACION%20DE%20LAS%20SANCIONES%5B1%5D.pdf).
[41]          Case C-429/07 Inspecteur van de Belastingdienst v X BV
[2009] ECR I-04833, in particular, paragraph 37.
[42]          Judgment of 18 June 2013 in Case C-681/11 Schenker
& Co, paragraphs 36, 40/41, 46 and 50.
[43]          Denmark groups infringements into the following
categories: (i) less serious, (ii) serious and (iii) very serious. For the
first group (less serious), the legislative amendment results in a ten-fold
increase in possible fines for undertakings. For so-called serious
infringements, the increase in the amount of fines on undertakings is also
ten-fold. For very serious infringements the lowest possible fine has been
increased by 33 per cent. In addition, the amendment substantially increased
possible fines on natural persons and foresees prison terms of up to 18 months
for participation in secret cartels. When specific aggravating circumstances
are present, a natural person could be imprisoned for up to six years.
[44]          In the vast majority of EU Member States pecuniary
sanctions on undertakings in the context of public enforcement of the EU
competition rules fall outside the scope of classical criminal law; fines and
the procedures leading to their imposition may be qualified as civil,
administrative, misdemeanour, or similar depending on the categories of
national laws.
[45]          On 11 February 2014, the Dutch Minister of Economic
Affairs announced his intention to introduce draft legislation to amend the
rules on fines in two ways. Firstly, the legal maximum for cartel fines would
be raised from the current ten percent of the undertaking's worldwide turnover
in the preceding business year to ten percent of the undertaking's turnover
achieved during the cartel infringement, subject to a maximum duration of four
years. Secondly, the level of the legal maximum would be doubled in case of
recidivism.
[46]          For example, increasing the base by up to 50% when the
infringement lasts between one and five years and by up to ten percent for each
additional year.
[47]          Case C-97/08 P AkzoNobel NV and others v
Commission [2009] ECR I-8237.
[48]               The Regulation removed
the former notification system with a view to enable the Commission to
concentrate its resources on curbing the most serious infringements; cf.
Recital 3. 
[49]          Cf. the Network Notice paragraph
37.
[50]          Paragraph 38 of the Network Notice. The Notice also
introduced certain limitations on the exchange of leniency information between
authorities.
[51]          The original MLP was endorsed by the heads of authorities
in 2006. It was amended in 2012. See the Internet (http://ec.europa.eu/competition/ecn/model_leniency_en.pdf).
By endorsing the MLP, the heads of the ECN authorities have agreed to use their
best efforts to align their current and future leniency programmes and
practices with the MLP.
[52]          Malta is in the process of adopting its first leniency
programme. 
[53]          Cf. the 2009 ECN Report on
the state of convergence in the leniency field, see the Internet (http://ec.europa.eu/competition/ecn/model_leniency_programme.pdf).
[54]          Cf. paragraph 14 of the Network Notice. 
[55]          NCAs in 26 Member States accept summary applications. Summary
applications are also proposed in Malta, which is in the process of introducing
its first leniency programme. For the list of NCAs which accept summary
applications, see the Internet (http://ec.europa.eu/competition/ecn/mlp_2012_language_regime_en.pdf).

[56]          The ECN also agreed on a standard template for summary
applications, which companies should be able to use in all Member States and
published a list of NCAs which accept summary applications in English.
[57]               C-360/09 Pfleiderer v
Bundeskartellamt [2011] ECR I-5161.
[58]          Proposal for a Directive of the
European Parliament and of the Council on certain rules governing actions for
damages under national law for infringements of the competition law provisions
of the Member States and of the European Union, COM(2013) 404, 11.6.2013. On 17
April 2014, the European Parliament adopted a text of the Directive on
antitrust damages actions which was agreed between the European Parliament and
the Council during the ordinary legislative procedure. The agreed text of the
Directive has been sent to the Council for final approval. Once the Directive
is adopted, Member States will have two years to implement the provisions of
the Directive in their national legal systems, see the Internet (http://ec.europa.eu/competition/antitrust/actionsdamages/proposed_directive_en.html).
[59]        In the debate
about 'criminal sanctions' for competition infringements, the term 'criminal'
is often used as meaning custodial sanctions imposed through a procedure
involving public prosecutor and court/jury trial. Hereafter we will report
about sanctions on individuals in the EU more generally and will refer to the afore-mentioned
scenario as 'classical criminal' where the distinction is relevant.
[60]          See the Internet (http://www.legislation.gov.uk/ukpga/2002/40/contents).
[61]          Court of Appeal (Criminal Decision) - Case [2008] EWCA
Crim 2560 - Regina - and - Peter Whittle, Bryan Allison, David Brammar; see the
Internet (http://www.bailii.org/ew/cases/EWCA/Crim/2008/2560.html).
The case against the undertakings was pursued by the Commission, see: Decision
of 28 January 2009, Case COMP/39406 – Marine Hoses. 
[62]               “A new competition
law”, Report of the Legal Review Committee appointed by the Swedish Government,
29 November 2006, SOU 2006:99.
[63]          Section 8 of "Applications for leniency and no-action
in cartel cases. OFT's detailed guidance on the principles and process"
(originally published by the OFT and adopted by the CMA Board), see the
Internet (https://www.gov.uk/government/publications/leniency-and-no-action-applications-in-cartel-cases).
[64]          "Director disqualification orders in competition
cases, an OFT guidance document" (originally published by the OFT and
adopted by the CMA Board), see the Internet (https://www.gov.uk/government/publications/competition-disqualification-orders).
[65]               See the General
Guidelines of the Swedish Competition Authority on trading prohibition in the
event of infringements of the rules on competition (KKVFS 2012:2), paragraph
19.