The European Commission (EC) is currently meeting with European Union (EU) member states to discuss how to modernise the system for the implementation of EC competition rules. This follows a public consultation on proposals published by the Commission in a White Paper in April 1999.
The proposals involve the ending of the current notification and exemption system; decentralised application of the EC competition rules; and strengthened enforcement of these rules.
Current policy
Restrictive agreements and practices are dealt with by Article 81(1) of the EC Treaty, where they affect competition and trade between member states (such as agreements that fix prices or divide markets). Such agreements are void under Article 81(2) unless exempted pursuant to Article 81(3).
The EC competition regime provides for centralised enforcement of EC competition rules. The Commission can exempt restrictive practices contained in agreements under Article 81(3) of the EC Treaty, provided certain criteria are fulfilled.
To avoid the legal uncertainty of unenforceable agreements and to gain immunity from fines (Volkswagen was fined e102m (£63m) in 1998 for infringing EC competition rules), companies still ask the Commission for approval of their payments under the notification and exemption system. This system has not been significantly modified because the Commission believed that a highly centralised exemption system was necessary, as competition policy was not widely known throughout the EC.
The Commission’s primary objective was the integration of national markets. The centralised enforcement of the EC competition rules was seen as the only appropriate system. According to the Commission, the system has been successful enough to develop a ‘competition culture’ in Europe, so the need for a centralised prior authorisation system has been reduced.
Most companies know about the EC competition rules, and they make sure their policies do not contravene these rules.
But the system is not working as it should. The Commission receives about 200-250 notifications every year. Most of these agreements are seen by the Commission as not raising major competition concerns. The workload created by such notifications prevents the Commission from tackling more serious infringements of the EC competition rules, such as hardcore cartels.
The Commission has concluded that a centralised authorisation system is no longer the best way to ensure the effective application of the EC competition rules. The single market, European economic and monetary union, and continuing globalisation of the international economy have changed the EU. An increase from 15 member states to 20-25 is expected.
