Plus ça change, plus c’est la même chose: Revised EU de minimis notice retains % thresholds, clarifies per se rule

Nothing new: the newly-revised de minimis Notice of the European Commission isn’t that novel

The revised Notice (after its 1997 and 2001 predecessors) retains the 10% and 15% market-share thresholds for agreements between horizontal and non-horizontal competitors, respectively, which create a safe harbor from EC prosecution for an Art. 101(1) violation.  The document merely adds formal color and substance to the issue of what types of agreements fall within its “safe harbor” and which fall outside that umbrella.

Unsurprisingly, the Staff Guidance paper accompanying the Notice explains the prohibited hallmark per se (or “by object”) category of agreements succinctly as follows, also adding minimum-RPM, bid rigging, collective boycotts and particularly injurious information-sharing arrangements:

The three classical “by object” restrictions in agreements between competitors are price fixing, output limitation and market sharing (sharing of geographical or product markets or customers).

Not binding on Member States

Importantly, as its predecessors, the Notice does NOT have binding effect on EU member states’ competition authorities, but ONLY on the EU Commission and its DG COMP.  As the European Court of Justice held in its Expedia judgment (case C-226/11):

27      It also follows from the objectives pursued by the de minimis notice, as mentioned in paragraph 4 thereof, that it is not intended to be binding on the competition authorities and the courts of the Member States.

28      It is apparent from that paragraph, first, that the purpose of that notice is to make transparent the manner in which the Commission, acting as the competition authority of the European Union, will itself apply Article 101 TFEU. Consequently, by the de minimis notice, the Commission imposes a limit on the exercise of its discretion and must not depart from the content of that notice without being in breach of the general principles of law, in particular the principles of equal treatment and the protection of legitimate expectations (see, to that effect, Joined Cases C‑189/02 P, C‑202/02 P, C‑205/02 P to C‑208/02 P and C‑213/02 P Dansk Rørindustri and Others v Commission [2005] ECR I‑5425, paragraph 211). Furthermore, it intends to give guidance to the courts and authorities of the Member States in their application of that article.

29      Consequently, and as the Court has already had occasion to point out, a Commission notice, such as the de minimis notice, is not binding in relation to the Member States (see, to that effect, Case C‑360/09 Pfleiderer [2011] ECR I‑0000, paragraph 21).

30      Accordingly, that notice was published in 2001 in the ‘C’ series of the Official Journal of the European Union, which, by contrast with the ‘L’ series of the Official Journal, is not intended for the publication of legally binding measures, but only of information, recommendations and opinions concerning the European Union (see, by analogy, Case C‑410/09 Polska Telefonia Cyfrowa [2011] ECR I‑0000, paragraph 35).

31      Consequently, in order to determine whether or not a restriction of competition is appreciable, the competition authority of a Member State may take into account the thresholds established in paragraph 7 of the de minimis notice but is not required to do so. Such thresholds are no more than factors among others that may enable that authority to determine whether or not a restriction is appreciable by reference to the actual circumstances of the agreement.

 

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European Union DG COMP report for FY 2013

The European Commission just published its 2013 competition policy report, commending its own initiatives and their effect on the internal market.

Spoiler alert: according to the horse’s own mouth, the Commission has found that its competition-law accomplishments (cartels/antitrust enforcement, merger control, the EU-specific notion of state aid, etc.) were stellar.  The EU internal market is now — 10 years into the EC’s antitrust regulation no. 1/2002 — a model of competitiveness, according to the Report, available here in PDF.

The Report takes a slightly different tack from prior years, focussing more on IP issues (FRAND, SEPs, yet still no mention of Non-practicing Entities (NPEs)/patent trolls).  It also revels in legislative “milestones,” both historical and current:

2013 saw two important milestones for EU competition policy. Firstly, Regulation 1/2003, when adopted, ushered in a new era in the enforcement of EU antitrust rules and has now, a decade later, led to a stocktaking and reflection for further improvements. Secondly, on 11 June, the Commission adopted a Proposal for a Directive on antitrust damages actions – a long-awaited measure by stakeholders and a policy priority for the current Commission.

EU Parliament votes in favour of private antitrust damages initiative

The European Parliament gave its green light to the Commission private-damages Directive today:

Brussels, 17 April 2014

Antitrust: Commission welcomes Parliament vote to facilitate damages claims by victims of antitrust violations

The European Parliament has approved a proposal for a Directive which will help citizens and companies claim damages if they are victims of infringements of the EU antitrust rules, such as cartels and abuses of dominant market positions. The Directive is based on a proposal by the Commission of June 2013 (see IP/13/525 and MEMO/13/531), and aims to remove a number of practical difficulties which victims frequently face when they try to obtain compensation for the harm they have suffered. In particular, it will give victims easier access to evidence they need to prove the damage and more time to make their claims. At the same time it ensures that the effectiveness of the tools used by competition authorities to enforce antitrust rules, in particular leniency and settlement programmes, is preserved. The proposal is now sent to the EU Council of Ministers for final approval. See also MEMO/14/310.

Commission VicePresident in charge of competition policy Joaquín Almunia said, “The vote by the European Parliament is great news for European citizens and businesses harmed by antitrust violations. The Directive will help to make the right to full compensation a reality in the EU, by removing the practical obstacles that victims face today. When the Directive is adopted and implemented, obtaining redress will become easier for them, especially after a competition authority has found and sanctioned an infringement.”

The EU Court of Justice has recognised the right for victims of antitrust infringements to be compensated for the harm suffered. However, due to national procedural obstacles and legal uncertainty, only few victims actually obtain compensation. Moreover, national rules are widely diverging across Europe and, as a result, the chances of victims to obtain compensation greatly depend on which Member State they happen to live in. The Directive aims to remove these obstacles. Main improvements include:

  • National courts can order companies to disclose evidence when victims claim compensation. The courts will ensure that such disclosure orders are proportionate and that confidential information is duly protected.
  • A final decision of a national competition authority finding an infringement will automatically constitute proof before courts of the same Member State in which the infringement occurred.
  • Victims will have at least 1 year to claim damages once an infringement decision by a competition authority has become final.
  • If an infringement has caused price increases and these have been “passed on” along the distribution chain, those who suffered the harm in the end will be the ones entitled to claim compensation.
  • Consensual settlements between victims and infringing companies will be made easier by clarifying their interplay with court actions. This will allow a faster and less costly resolution of disputes.

Private damages actions before courts and public enforcement of antitrust rules by competition authorities (whether the Commission or national authorities) are complementary tools. Through the Directive they will reinforce each other, on the one hand to achievefull compensation for victims (including lost profits and interest) and, on the other, to enhance the key role of competition authorities in investigating and sanctioning infringements, thus achieving deterrence. In particular, cooperation between companies and competition authorities under so-called “leniency” programmes plays a key role in the detection and sanctioning of infringements of competition rules. Without such cooperation, many infringements would never be discovered in the first place, and in many cases, it is therefore the successful enforcement of competition rules by a public authority that will enable victims to subsequently seek and obtain compensation. As a result, the Directive contains a number of safeguards to ensure that facilitating damages actions does not diminish the incentives for companies to cooperate with competition authorities (see MEMO/14/310).

Next Steps

Today’s plenary vote in first reading was the European Parliament’s final step in the procedure. Approval by the Council will complete the legislative procedure. Once the Directive has been officially adopted, Member States will have two years to implement the provisions in their legal systems.

The full text of the Directive is available here:

http://ec.europa.eu/competition/antitrust/actionsdamages/documents.html

Background

In June 2013, the Commission submitted its proposal to the European Parliament and the Council (see IP/13/525 and MEMO/13/531). After both co-legislators discussed the proposal and suggested amendments, informal meetings between the three institutions (so-called trilogues) were launched in February to achieve a compromise text. Representatives of Member States’ governments agreed to the final compromise text at the end of March.

 

How a BRICS country defeats EU Commission & the rule of law

A parallel post from sister blog AfricanAntitrust.com:

South Stream pipeline

South Stream pipeline

According to various reports, the European Commission (specifically, its top management in the energy DG [Oettinger] and its president [Barroso], as well as others) has caved to the Russian energy powerhouse GAZPROM.

How does this relate to competition?  The pending antitrust investigation by Mr. Almunia, already hamstrung, is clearly hampered by this development from its adjacent energy DG. One Commissioner has caved, and another (a lame duck by now, who has already announced his retirement from the entire realm of politics) will not even bring a conclusion to his DG’s investigation into GAZPROM. Putin and his friends at the gas giant have (now successfully) challenged the European energy and competition ministers, effectively saying to them: “We will break your laws, and there isn’t a thing you can do about it.”

This is the story of how a BRICS country state-owned enterprise (or at least de facto SOE) is fully capable of defeating the “rule of law” that European proponents of the superiority of Western legal systems often tout. Is EU law hard and fast? Unbreakable? Strictly enforced? Without exceptions, for special friends (or powerful foes)?

Banana Republic Brussels

The answer to the rhetorical questions posed above is – quite clearly as of today at least – a resounding “no“:

The EU has caved. EU laws can be broken. Without any consequences.

Until recently, the GAZPROM contracts for its “South Stream” Project violated EU law, according to prior statements of the relevant EU Commissioners and their spokespeople. The main concerns (here from the energy perspective, not the competition issues) were:

  • ownership unbundling rules violated by Gazprom being both a producer and a supplier of gas that owns simultaneously production capacity and its own transmission network
  • 3d-party non-discriminatory access endangered by Gazprom being exclusive shipper
  • South Stream’s pricing structure violates EU energy tariff rules

Yet, after some diplomatic prodding and economic threats, the Commission now has changed its tune and is literally giving GAZPROM a “get-out-of-jail-free card.”

“Gunther Oettinger, the European Commissioner for Energy, told Vedomosti newspaper that Moscow and Brussels will find a solution to honor previous intergovernmental agreements Gazprom has made with European transit countries.” (Source: Vedomosti newspaper, as quoted by rt.com)

Contrast this with what Mr. Oettinger said back in 2011 (note that he also (1) called South Stream a “phantom project” and essentially didn’t believe the Russians would go ahead with its construction in 2012, and (2) was quite clear in his understanding of how market participants operate: “money talks,” baby!):

I understand that certain EU Member States entered into bilateral agreements with the Russian Federation which may partially contradict these principles. If this is true, these Member States will nevertheless have to apply the internal market rules and they are under an obligation to bring their IGAs in line with the EU legislation. (Source: His own speech)

Even more tellingly, contrast the green light now given to the project with Mr. Oettinger’s spokespersons’ statements from December 2013 and even August 2013:

“The Commission has looked into these intergovernmental agreements and came to the conclusion that none of the agreements is in compliance with EU law,” Borchardt said.

“That is the reason why we have told these states that they are under the obligation, either coming from the EU treaties, or from the Energy Community treaty, that they have to ask for re-negotiation with Russia, to bring the intergovernmental agreements in line with EU law,” he added. (Source: EurActiv)

Lesson (not) learned

How to wrap up a piece that essentially sounds the death knell of the rule of law in the EU, especially in Brussels? The key take-away here may be this:

Very simply put: any BRICS or BRICS-like country negotiator dealing with an official EU delegate as his or her counterparty should keep the “GAZPROM incident” in mind when faced with a lecture on the superiority and objectivity of EU law over whichever domestic judicial system may be at issue.

Revamped Belgian Competition Authority: A more powerful national enforcer?

Whether or not this month’s revamping of the Belgian Competition Authority will create a more effective enforcer remains to be seen.

From personal experience, Belgian bureaucrats are neither the most efficient, nor the most diligent, as government employees go… And the national authority pales in comparison with the EU’s DG COMP, of course, which is housed only a few kilometers away in the European Quarter of Brussels, yet one of the leading antitrust enforcers worldwide…

Yet, the changes to the watchdog and its powers include several important structural elements that may herald a more streamlined process: for instance, removal from the oversight of the economic ministry, the elimination of the external tribunal that used to have the final say in the agency’s decisions, as well as a new settlement procedure and a potentially shorter investigative process.  In addition, individual financial (not criminal, though) liability may be incurred by participants in hardcore restrictive practices, such as price-fixing cartels or market allocation.

From this month onward, the internal Competition College will not only hear the case but also make a final decision, after the Authority’s separate investigative team has concluded its investigation and made its recommendation for how to dispose of the case.  The NCA body (“Autorité belge de la concurrence” or “Belgische Mededingingsautoriteit“) will, of course, remain on the innately inefficient side of things, as it will have to be multi-lingual, accounting for proceedings to be held French, Flemish/Dutch, and German.

On the personnel front, Jacques Steenbergen will remain the president and Alexis Walckiers the chief economist.  The current in-house counsel and auditor at Dexia bank, Veronique Thirion, will be appointed the NCA’s general prosecutor.

European Union Competition Report released by EU Commission

EU Commission

EU Commission releases 2012 “Competition Report”

The Commission has released its 43rd Report on Competition, including an instructive Staff Working Paper.  The Report itself is similar in nature to the US DOJ Antitrust Division’s Annual Report.

Worth a read to any competition law practitioner…