Sebastian Jungermann October 13 2022 20 years on: should EU competition law be amended? Arnecke Sibeth Dabelstein | Competition & Antitrust - European Union Sebastian Jungermann Competition & Antitrust IntroductionEU Regulations 1/2003 and 773/2004EvaluationExempting leniency applicants from liability for damagesEmpowering national competition authoritiesDigital platformsUnbundlingGuidance lettersCommentIntroductionOn 30 June 2022, the European Commission launched a public consultation. Some 20 years after the introduction of EU Regulation 1/2003 and EU Regulation 773/2004, interested parties had until 6 October 2022 to comment on whether they should be supplemented or amended, and if so, how this should be actioned.The primary EU antitrust law is regulated in articles 101 and 102 of the Treaty on the Functioning of the European Union (TFEU). According to article 103(1) of the TFEU the European Council is empowered to adopt accompanying regulations or directives. In February 1962, the Council made use of this authorisation for the first time, thus creating the conditions for the development of a Community policy in the field of competition law. In addition to investigative powers, procedural provisions were introduced with EU Regulation 17/62. Since then, infringements could be sanctioned by prohibition orders or fine decisions. Individual exemptions could be issued upon request. Additionally, as a complementary element required by the rule of law, the right to be heard and other rights were introduced to protect the companies concerned.In the mid-1990s, the Commission began an analysis of the effectiveness and practicability of Regulation 17/62. In its white paper of May 1999, it identified considerable deficits and recommended, above all, a transition from the notification and exemption system to the legal exception system.EU Regulations 1/2003 and 773/2004Finally, EU Regulation 1/2003 came into force on 1 May 2004. Systematically quite similar to EU Regulation 17/62, EU Regulation 1/2003 also contains provisions on the Commission's decision-making and investigative powers as well as procedural rights of affected companies. It introduced new provisions on the efficient design of the system change to the legal exception. A further decentralisation of the application of EU antitrust law was also intended. At the same time, coordination between the Commission and the antitrust authorities of the member states as well as between the Commission and the courts of the member states was to be improved.In addition, the Commission was empowered by article 33 of EU Regulation 1/2003 to issue further implementing provisions. It made use of this power, EU Regulation 773/2004 entered into force on 1 May 2004 and EU Regulations 2842/98, 2843/98 and 3385/94 were repealed.EvaluationIn April 2009, the Commission presented a report on the functioning of EU Regulation 1/2003 and stated that the regulation had proved its worth, and did not see any need for amendments or additions. Another communication was issued by the Commission in July 2014 to the European Parliament, describing the achievements and future perspectives after having made use of Regulation 1/2003 for 10 years.Now, almost 20 years have passed since the adoption of EU Regulation 1/2003 and the question arises whether there is a need for further amendments. Whether there is a concrete need for changes or additions is questionable. EU Regulation 1/2003 and EU Regulation 773/2004 have proven their worth and show that the Commission has a suitable toolbox at its disposal for effective enforcement of the antitrust rules. Even if one or the other Commission decision is overturned or referred back by the courts, the Commission's work appears effective, and the system works.Exempting leniency applicants from liability for damages Currently discussed issues of EU antitrust law also touch more on substantive law and less on procedural law. One issue, for example, exempting leniency applicants not only from fines but also from liability for damages, is not an issue for procedural rules but for substantive law and constitutional law.Empowering national competition authoritiesOther issues, such as strengthening the powers of national competition authorities, have been successfully addressed by the EU ECN+ Directive. Remaining deficits in some member states still need to be addressed, but within member states, not by amending EU procedural law.Digital platforms There are also complaints that antitrust proceedings take too long, that digital issues require more modern rules and that the Commission does not react quickly enough. This is not due to procedural law, however, but to the complexity of new business models and technologies, the need for extensive investigations and the need to adequately assess complex defense submissions. Article 8 of EU Regulation 1/2003 provides the Commission with the possibility of interim measures. The problem is not the rules, but the complexity of the facts and limited resources. The latter can be better remedied by increasing staff. And for so-called "gatekeepers", the Digital Markets Act is being introduced, addressing the problems in the platform economy. In antitrust law, moreover, various presumptions and shifts in the burden of proof in favour of the Commission have already been introduced, and further tightening would be problematic in terms of the rule of law.Unbundling In Germany, for example, unbundling, which is discussed every year, has long been available to the Commission under article 7(1) of EU Regulation 1/2003. A fine provision in theory, but hardly enforceable in practice. Nevertheless, there is no reason to change or delete it.Guidance lettersThere is also discussion of extending Commission decisions on the inapplicability of the ban on cartels under article 10 sentence 1 of EU Regulation 1/2003, arguing that the provision is too narrow and hardly applicable. This is correct, but in practice it is not a major problem, as so-called "guidance letters" or "comfort letters" have proven their worth as an alternative lately (see Medicines for Europe, Ecorys Europe EEIG-GEIE/SPI, GAIA-X and BMW/Daimler/VW following the car emission case). Since such comfort or guidance letters have been rare or not existing since 2004, the Commission just adopted a more flexible antitrust Informal Guidance Notice on 3 October 2022. This notice shall allow companies to seek informal guidance on the application of EU competition rules to novel or unresolved questions. The revised Informal Guidance Notice provides for more flexible conditions and aims at increasing legal certainty, to the benefit of businesses seeking the guidance when assessing the legality of their actions under EU competition rules. Informal guidance will take the form of "guidance letters" from now on. In these informal guidance letters, the Commission informs the companies that, on the basis of its preliminary examination, the intended and described cooperation does not raise any competition concerns.Comment Overall, it is clear that the Commission has adapted its antitrust enforcement measures well to new technologies, rapidly advancing market developments and changing business practices.There seems to be no need for any changes or amendments.For further information on this topic please contact Sebastian Jungermann at Arnecke Sibeth Dabelstein by telephone (+49 69 979885 465) or email ([email protected]). The Arnecke Sibeth Dabelstein website can be accessed at www.asd-law.com.