Member States’ Interest in the Enforcement of EU Competition Law
Summary (3 min read)
1 Introduction
- Even though competition law has always formed a core pillar of the European integration process, for several decades EU and national competition laws have developed along each other with little interaction.
- 1 The Regulation has decentralised the public enforcement of Articles 101 and 102 TFEU by delegating enforcement powers to national competition authorities (NCAs) and national courts.
- This chapter provides the first critical assessment of the way in which Member States incorporated national interests in the enforcement of Article 101 TFEU.
- This position was clearly formulated in a 1993 Commission policy report, noting that "the grant of a derogation from the ban on restrictive agreements requires assessment of complex economic situation and the exercise of considerable discretionary power, particularly where different objectives of the EC Treaty are involved.
2.2 The Decentralised Enforcement System of Regulation 1/2003
- Regulation 1/2003 has fundamentally changed the enforcement system in order to relieve the Commission of its increasing administrative burden and make the overall enforcement more effective.
- First, the Regulation shifted the enforcement from a notification to a self-assessment regime.
- Second, it decentralised the enforcement by entrusting the NCAs and national courts with power to apply Articles 101 and 102 TFEU in parallel to the Commission.
- As such, decentralisation was seen as an important component to provide a stronger and more democratic political support to the EU competition policy (European Commission 1999, points 10, 21).
- As Riley pointed out in 2003, "[E]ven when institutional and political independence is granted by the state it can find other means of ensuring that a NCA will be directed to protect specific national interests.[…].
European Commission 2017).
- Industry stakeholders, as well as the European Parliament and the Member States, pointed out that decentralised enforcement should not lead to re-nationalisation of EU competition policy (European Parliament 2016, 16; European Commission 2000, point 6.1; German Monopolies Commission 2000, 37; UK Parliament 2000, paragraphs 11, 150).
- Rather, the enforcement system must continue to ensure that Article 101 TFEU is applied in a uniform manner throughout the EU, despite differences in national laws and polices (European Parliament 2016, 16).
3.1.1 Substantive National Laws Limiting the Enforcement of Specific Agreements
- Member States can shield an agreement form the prohibition of Article 101 TFEU by adopting substantive laws that explicitly limit EU competition law in favour of the protection of a national interest.
- The Hungarian example concerns the adoption of a line of legislations in which the national parliament limited the application of Article 101 TFEU to agreements in certain economic sectors.
- In the Watermelon case, 16 the Hungarian NCA examined an agreement between large retail supermarkets with the participation of the association of watermelon farmers.
- The new provision also provided for a special procedure for agricultural products that were not granted an exemption.
- The Court confirmed the NCA's decision, noting that the amendment could only entail that the federal state's activity does no longer violated German competition law.
3.1.2 Procedural Provisions -National de minimis Rules
- Finally, also national procedural rules can limit the application of EU competition law in favour of promoting national interests.
- The so-called de minimis rules in national laws are a good example of how Member States can protect, among others, SMEs from the general application of EU and national competition laws.
- 34 Commission Notice on agreements of minor importance which do not fall within the meaning of Article 85 (1) of the Treaty establishing the European Community, [1997] OJ C372/04.
- This table shows that most Member States opted for a de minimis rule that is based on quantitative criteria, identical (France, UK, a presumption in Germany) or similar to those in the Commission's notices.
- Since the NCAs have a wide margin of discretion to decide if an agreement affects trade between Member States (Botta et al. 2015, 1249 and 1271), the above national de minimis rules may apply in practice to cases that could have been investigated as Article 101 TFEU infringements.
3.2.1 Application of Article 101(1) TFEU
- The Commission has mostly applied Article 101(1) TFEU as a jurisdictional provision which is confined to determining whether EU or national competition law should be applied (i.e., whether an agreement affects trade between Member States) (Odudu 2006, 101; Goyder 2009, 110-114).
- Throughout the years, the Court of Justice established in its relevant jurisprudence a balance between Member States powers and EU competition law.
- Another exception under Article 101(1) TFEU that reflects a balance between competition interests and national interests is the concept of "inherent restrictions".
- They can decide what type of national interests can justify an exception and determine the applicable balance between competition and other national interests.
3.2.2 Applying Article 101(3) TFEU
- Similarly to Article 101(1) TFEU exceptions, the manner in which the NCAs apply Article 101(3) TFEU has an impact on the leeway available under EU competition law for giving effect to the national interests of the Member States.
- As summarised in The first group of NCAs applied Article 101(3) TFEU in a manner that does not leave room for consideration of national interests.
- Similar to the Commission's approach following modernisation, they argued that the application of the Treaty provision is limited to taking into account economic efficiencies relating to the specific product or service and market.
- Accordingly, in addition to economic efficiencies, the NCA was willing to consider national industrial policy considerations related to security of supply, bargaining power, functioning of online platforms, and the elimination of "white spots" in internet access.
- The above overview demonstrates that national application of Article 101(3) TFEU allow for different opportunities for incorporating national interests under competition rules.
4 Conclusions
- This chapter analysed how Member States interests' may manifest in the enforcement of EU competition law.
- It provides that the term could include a wide range of policies, including environmental protection, public health, fair trade production, and animal welfare, ACM ( 2014 lie between compliance and particularism with EU legal obligations, the chapter comes to the following conclusions.
- This chapter demonstrated that the decentralised enforcement system of EU competition law also provides significant opportunities for the Member States to push their particular national interests.
- Second, some of the NCAs applied Article 101 so as to bring its enforcement in line with their national view on competition policy.
- This chapter have confirmed that the national rules have led to far-reaching outcomes.
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Citations
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References
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"Member States’ Interest in the Enfo..." refers background in this paper
...The Dutch NCA’s approach to sustainability agreements provides an illustrative example of how national application of Article 101(3) can secure a leeway for local interests (ACM 2014, paragraph 2.6; see also Claassen and Gerbrandy (2016), 3)....
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...65 ICN (2011), 33; ACM (2014), paragraph 2.6; Claassen and Gerbrandy (2016), 3. accepting restrictive agreements that have a positive impact on the competitive structure and process (Heitzer 2008, 4; ICN 2011, 19)....
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14 citations
"Member States’ Interest in the Enfo..." refers background in this paper
...One example of this type of exception under Article 101(1) is the so-called “State action defense” or effet utile doctrine (see Gyselen 1989; Castillo de la Torre 2005; Cruz 2007; Blomme 2007; Gerard 2010)....
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13 citations
13 citations
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Frequently Asked Questions (6)
Q2. What is the meaning of Article 3(1) of the Act?
45 Article 3(1) of the Act provides: “Agreements between competing undertakings and decisions by associations of undertakings, whose subject matter is the rationalisation of economic activities through cooperation among enterprises, fulfill the conditions of Section 2(1) if: a) competition on the market is not significantly affected thereby, and 2) the agreement or the decision serves to improve the competitiveness of small or medium-sized enterprises.”
Q3. What is the role of national interest in the enforcement of EU competition law?
the role of national interest in the enforcement of EU competition law has so far only received attention in the fields of merger control and State aid rules (see Jones and Davies 2015; Reader 2016), which are still enforced in a centralised manner by the Commission.
Q4. What was the reason for the Commission’s objection to the revised rule?
the Commission objected to this change and noted that the revised rule could have removed hard-core restrictions that affect trade between Member States from the scope of Article 101 TFEU (Dutch Parliament 2010).
Q5. What is the effect of the German rule on the competitiveness of SMEs?
It follows qualitative criteria and requires examining whether an agreement has the effect of rationalising economic activities and serves to improve the competitiveness of SMEs.
Q6. What was the basis for the application of the de minimis rule?
OJ C372/04, paragraph 19.late 1990s, the basis for the application of the de minimis rule changed from the size of the relevant undertaking to its market power.