A New Approach to Antitrust Enforcement: Restructuring and Rationalisation
| Author | Patrick O'Reilly |
| Position | Senior Sophister Law Student, Trinity College, Dublin |
| Pages | 141-179 |
A
NEW
APPROACH
TO
EC
ANTITRUST
ENFORCEMENT:
RESTRUCTURING
AND
RATIONALISATION
PATRICK
O'
REILLY*
Introduction
The
enforcement
apparatus
of
EC
competition
law
is
about
to
undergo
the
most
fundamental change
since
Regulation
No.
17
was
enacted
in
1962.1
Under consideration
is
the
continued existence
of
the
notification
and
authorisation
system.
In its
White
Paper
on
Modernisation
of
the Rules
Implementing
Articles
85
and
862
of
the
EC
Treaty,
3 the
Commission
states:
"the
continued application
of
Regulation
No.
17
as
drawn
up
in
1962,
with
its
highly
centralised
system
of
prior authorisation,
is
no
longer
consistent
with
the
effective
supervision
of
competition".
4
The
Commission
therefore
proposes
some
very
radical
changes,
the
key
thrust
of
which will
be
decentralisation
and,
most
significantly,
the
removal
of
the
Commission's
monopoly
in
applying
the
exemption
provisions
of
Article
81(3)
to
practices
that
have
fallen foul
of
Article
81
(1).
This
article aims
to
trace
the
evolution
of
the
present
enforcement
structures, both
public
and
private,
and
to
critically
examine
their
operation.
It will
be
argued
that the
system
as
it
now
works
is
inefficient
and
poorly constructed.
The article will
begin
by
looking
at
the
historical
choices
that
have
brought about
the
current system,
and
at the
consequences
such
choices
have
had
for
the
development
and
effectiveness
of
the
Community's
competition
policies.
It
is
then
proposed
to
examine
a
number
of
problems
at
the
heart
of
the
enforcement
structure
in
particular
those
relating
to
efficiency,
the
role
of
private
enforcement,
and
the
structure
of
Article
81
itself.
Finally,
the
remainder
of
the
article
will be
devoted
to
considering
the
Commission's
proposals
for
change
and
to
an
Senior
Sophister
Law
Student,
Trinity College, Dublin.
Council
Regulation
17/62/EC
of
6
February
1962
implementing
Articles
85
and
86
of
the
Treaty, OJ
(Spec.
ed.)
13/204,
21
February
1962.
2
Since the
Treaty
of
Amsterdam,
Articles
85
and
86
have
been
renamed
as
Articles
81
and
82
respectively. These
new
numberings
will be
used
throughout
the
Article.
3
OJ
C
132/1,
12
May
1999;
[1999]
5
CMLR
208.
Hereafter
referred
to
as
the
White
Paper.
4
White
Paper,
at
para.
9.
©
2001
Patrick
O'Reilly
and
Dublin
University
Law
Society
Trinity
College
Law
Review
assessment
of
the
likelihood
of
their
leading
to
a
more
realistic
and
effective
system
of
enforcement.
Monopolising
Antitrust
The
present
system
begins
with
the
supposition
that
there
are
certain
practices and
agreements
between
undertakings
that
restrict competition
and
should therefore
be
declared
void. There
are,
however,
benefits
to
be
derived
from
some
such
practices
and
agreements (primarily efficiency
gains)
that
make them
beneficial,
so
that
in
some
instances it
is
considered
desirable
to
lift
the
initial
prohibition.
The
expression
of
the
prohibition
on
anti-competitive behaviour
is
found
in
Article
8
1(1).
It prohibits:
[Als
incompatible with
the
common
market: all
agreements
between
undertakings,
decisions
by
associations
of
undertakings
and
concerted
practices
which
may affect
trade
between
Member
States
and
which
have
as
their object
or
effect
the
prevention, restriction
or
distortion
of
competition
within
the
common market.
Its
effect,
according
to
Article
81(2),
is
to
render
such
agreements
"automatically
void".
The
difficult issue however,
for
the
contracting
Member States
in
1958,
was
how
to
lift
that
prohibition
where
it
was
considered desirable
so
to
do.
Two
broad options
presented themselves.
5
Both
involved
the
elaboration
of
criteria relating
to
benefits that
must
accrue
from the
restrictive
practice
before
excusing
it.
The manner
in
which
those criteria
were
to
operate however
was
of
critical
importance.
One
option
was to
endow
an
administrative authority
with
the
power
to
hold,
by
constitutive
decision
that
the
ban
on
anti-competitive
practices
would
not
apply
in
a
particular
case
where
the
conditions
for lifting
the
prohibition
were
satisfied.
Thus,
an
agreement
that
fell
foul
of
Article
81(1), but
which otherwise
possessed
the
necessary
redeeming
features
entitling it
to
be
excused,
would
still
not
be
deemed
valid
and
enforceable
unless
this
named
authority declared
that
this
should
be
so.
Such
a
system
would
necessarily
require
some
means
of
notifying
agreements
falling
within
the
ambit
of
Article
81(1)
to
the
exempting
authority
for
its
consideration.
6
This
was
the
prior authorisation
system.
5
White
Paper,
at
para.
11.
6
In
such
a
system deciding
the breath
of
the
prohibition
is
crucial,
as it
determines
the number
of
agreements
that
will
require
exemption
-and
consequently, notification.
[Vol.
4
A
New
Approach
to
EC
Antitrust
Enforcement
The
other option
was to have
a
directly
applicable
legal
exception
to
the
prohibition.
No
requirement would
exist
in
such
a
system
for
any
administrative clearance
of
agreements.
Although
an
agreement
could
come
within
the
ambit
of
Article
81(1),
so
long
as
it
satisfied
the
criteria
for
exemption,
the
agreement
was
valid
ab
initio
-
no
administrative
decision
to
that
effect being required. Businesses
would
undertake their
own
assessment
of
their compliance
with
the
terms
of
both
prohibition
and
exception,
and
would
to
a
greater extent
bear
the
risks
of
non-compliance.
It
is
the
Commission's
contention
that Article
81(3),
which
states
the
conditions
for
lifting
the
application
of
Article 81(1), leaves
it
open to
the
Community
institutions
themselves
to
adopt either
type
of
system.
7
The
Community
made
this
decision
in
favour
of
prior authorisation
in
1962
when
Regulation
17
took
effect.
Its
main features are
the
infamous
notification requirements
in
respect
of
all
agreements deemed
to
fall
within
the
application
of
Article
81(1),
and
most
significant
of
all,
the
rule
(until
recently
considered sacrosanct),
that
only
the
Commission could grant
an
exemption
to
such
agreements.
The choice
in
favour
of
prior
authorisation
was
justifiable
in
1962
for
a
variety
of
reasons.
The
scope
of
the
task
facing
the
Community
at
that
time
was
considerable.
With
the
exception
of
Germany,
there
existed
no
significant competition culture within
the
original
six
Member
States,
8
but
an
effective
antitrust
regime
was
deemed
essential
to
the
nascent common
market.'
Protectionist
laws were
not
the
only obstacles
to
completing
the
project;
anti-competitive domestic business
practices
also
threatened
to
reinforce
the
separation
and
protection
of
domestic markets. The
centralised prior
authorisation
system
presented
certain advantages
for
a
7
According
to
the
Commission
the
wording
of
Article
81(3):
[i]s
the
result
of
a
compromise
between
the
delegations favouring
a
directly applicable
exception system
and those
favouring
a
prior authorisation system. Whilst
those
in
favour
of
an
authorisation
system
proposed
wording
along
the lines
of
'restrictive
practices
may be
declared
valid',
agreement
was
eventually reached
on
a
negative
wording:
'the
provisions
of
paragraph
1
may,
however,
be
declared
inapplicable.
By
opting
for this
negative
approach, Article
85(3)
allows
the
Community legislator
the
freedom
to
choose
between
an
authorisation system
and
a
directly
applicable
exception
system.
White
Paper,
at
para.
12.
This interpretation
is
disputed
by two
Member
States,
Austria
and
Germany.
See
White
Paper
on
Reform
of
Regulation
17:
Summary
of
the
Observations
(hereafter referred
to as the
Summary
of
the
Observations)
<http://www.europa.eu.int/comm/competition/antitrust
/others/wp
on-modemisation/summary-observations.html>
(visited
12
February 2001).
It
is
their contention
that
the
wording
of
Article
81
permits
only
a
system
of
prior
authorisation.
8
Germany had
enacted
the
Law
Against Restraints
of
Competition
(Gesetz
gegen
Wettbewerbsbeschrankungen)
in 1958.
9
On
the history
and
evolution
of
EC
competition
law
see
Goyder,
EC
Competition
Law
(3
rd
ed.,
Clarendon
Press,
1998),
at
17-71.
20011
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