Joaquin Almunia took charge of the EU’s competition portfolio in February of 2010. Celebration of the first of his four years in office is, therefore, now imminent. It is not too early , therefore, to consider whether there are signs of an emerging “Almunist” approach to competition law in the European Community.
Unbeknown to most in the United States, no doubt, October 21, 2010, was the annual European Competition Day. Commissioner Almunia marked the occasion by making a major speech - the EU competition law equivalent of a “State of the Union” address. For those interested in antitrust enforcement policy direction in the EU, this event provided an excellent opportunity to sift Almunia’s words for evidence of new directions, telling points of emphasis, etc. - i.e., whether a personalized Almunia agenda, is beginning to take shape.
Before examining the text of this important speech, however, it is worth, first, taking note of the current political climate in Europe. Most commentators agree that the economic uncertainty prevalent during the last few years has not gone away. While there are indications of stronger economic performance within the so-called Euro-zone as a whole, some national economies continue to struggle. The current furor surrounding the multibillion Euro bail-out of the Republic of Ireland is a case in point. Competition policy, unlike many of its other economic counterparts, is considered a force for good in such circumstances. It is, for example, an excellent non-fiscal source of government income, particularly when looked at from the perspective of the EU’s budget, via sanctions for antitrust violations. The European Commission (the “Commission”) raised more than billion in fines during the first six months of Almunia’s term, which compares favorably to the 1.6 billion levied during calendar 2009. It can also, in the right hands, be used as a mechanism for encouraging economic activity either through an enlightened state aid approach or as a bulldozer of barriers created by cartelists, abusive monopolists, and dominant entities. This, therefore, is a good time to be he EU Commissioner for competition.
So with this background in mind, what did Commissioner Almunia say? Among the subjects he covered, those that will be summarized below relate to private actions; cartels; other enforcement activity; the digital agenda; and state aid.
Private antitrust suits have been the subject of considerable discussion for many months. In the words of Commissioner Almunia, “[a]ll EU citizens and businesses should enjoy the right to obtain compensation for damages caused by a breach of EU law” but he added, at the present time “in reality their rights depend on where they live in Europe.” This reform program is one that Almunia inherited from his predecessor, Neelie Kroes. It is clear from his comments that he is planning to move forward with the concept, but what is not so obvious is whether he is doing so out of conviction or convenience - it is, of course, easier to continue a reform initiative than it is to start one from scratch.
The obstacles that face progress in this arena are formidable. Almunia referred to the need to avoid the excesses of the U.S. system and in particular, vexatious litigation. He recognized that the most that the EU Commission can do is establish only guiding principles, while leaving Member States free to incorporate those into national law in a manner consistent with their “... respective legal traditions.” In a breath, he summed up the principal concern of those who oppose EU action in this area and the reason why it is unlikely to lead to much change. Expect progress by inches.
Cartels are the predominant source of EU fining income and the favored targets for past Commissioners, most notably Karl Van Miert and Mario Monti. In his speech, Commissioner Almunia chose to highlight two recent innovations with regard to Commission fining policy, namely ability to pay and settlements. While it is of interest that Almunia focused on two areas where the Commission has shown a forgiving nature, he accompanied his remarks with the usual rhetoric about how cartels “…hurt consumers and reduce the competitiveness of the industrial users of the products for which the price is illegally fixed.” It is still possible, however, that Commissioner Almunia was trying to extend an olive branch of sorts to Europe’s business sector that has become increasingly concerned by the ever increasing level of fines. It is interesting that the case that Almunia cited as an example of one where the Commission had taken account of companies’ ability to pay, the Bathroom Fittings case, is being vigorously appealed, even by those companies that benefited from fine reductions. Indeed, most of the Commission’s recent cartel decisions are on appeal. Significantly, it is taking up to seven years for the General Court, the EU’s first instance court, to render judgment. Given that the Commission’s fining policy changed quite dramatically in 2006 with the publication of new Guidance, the market still has some time to wait until the EU’s courts hand down the first of their verdicts on the Commission’s more aggressive policy on fining levels. In the meantime, the Commission, and Commissioner Almunia himself, has to ensure that they do not get so carried away with the revenue raising powers at the Commission’s disposal that Commissioner Almunia is accused of choking off part of any future economic recovery through an excess of zeal.
Other Enforcement Activity
It is difficult to detect much by way of a theme in what Commissioner Almunia had to say with regard to non-merger enforcement, because he presented more of a random listing of notable recent Commission triumphs in the energy, air transport, mining and telecommunications markets. Two of the examples provided by the Commissioner, however, were cases where the Commission managed to persuade two high profile corporate players - namely Rio Tinto and Apple - to reconsider parts of their respective commercial operations without the Commission having to commence formal enforcement proceedings. In the past, the Commission has shown itself to be reluctant to use its powers ex officio, preferring instead to rely on a rich diet of complaints. This passive approach, some suggested, has meant that the Commission ended up simply ignoring possible major violations. It remains to be seen whether Commissioner Almunia’s choice of examples is mere happenstance or whether he indeed favors a looser, more reactive, approach to competition enforcement, i.e., one seeking to improve markets.
The one sector, to the extent that it can continue to be described as a single, stand-alone area of activity, that Commissioner Almunia picked out for special comment is the so-called “digital economy.” It is clear that the Commissioner is determined to protect the Internet from abuse and ensure that it is free to provide the benefits that he clearly believes it is capable of achieving. In his words: “[o]ur goals include: keeping digital platforms as open as possible; having operators respect the net-neutrality principle; and strengthening the digital single market in Europe…” The last part of that thought is a clear warning to those suppliers in the EU who are desperately trying to find ways to prevent the Internet from eroding the pricing differentials they have painstakingly maintained since the creation of the EU’s not-so-Single Market. Expect significant Commission activity, both regulatory and enforcement, over the coming months in the digital area.
Finally, the Commissioner acknowledged that steps have to be taken at the right time to roll back the special state aid regime that the Commission established to help tackle the financial crisis. This, he said, should be “neither too abrupt - because we are not out of the woods yet - nor too slow, because that would dangerous in the medium term.” He went on to explain what he intends to do in the immediate future “…to prepare the shift to the post crisis regime,” which includes ensuring that every candidate will soon be required to submit a restructuring plan, irrespective of whether the institution is considered to be sound or distressed
Commissioner Almunia’s remarks concerning state aid provide a partial answer to the question whether an Almunist approach is emerging. For the time being, everything that he does is colored by the continuing economic crisis. Until such time as this has dissipated, Almunia is a Commissioner driven mostly by events outside of his control. He is not truly free to be his own man and so for the time being it may be unfair to try and detect any form of agenda.
Nevertheless, there are still hints as to where Commissioner Almunia might be headed. Unlike his predecessors, he would appear to be somewhat less interested in the razzamatazz involved in targeting big corporate names, and more in the detailed mechanics of competition policy and its capacity to mend markets. Companies trading in the EU can expect a more interventionist micro-management approach, with the Commission zeroing in on certain sectors (e.g., e-commerce, energy, transportation) with the intention of cleaning house. While it is still too early to tell for sure, there is every reason to expect that by the time the Commissioner’s four years are up, the word “Almunist” will have entered the anti-trust lexicon.