As markets become increasingly cross-border, the landscape for EU competition enforcement is evolving. The review of Regulation 1/2003 offers a unique chance to take the next step: from coordination to genuine cooperation, through joint investigations and joint decisions.
The success of coordination
The more than two-decade-old Regulation 1/2003 marked a turning point in EU competition law enforcement for both the European Commission and the National Competition Authorities (“NCAs”), like ACM. It established a decentralized enforcement system, in which enforcement actions are allocated between the European Commission and the NCAs based on who is the ‘particularly well-placed authority’. By creating a framework for coordination between the Commission and NCAs, the Regulation ensured a largely consistent and robust application of the EU competition rules throughout the EU.
I believe the founding fathers and mothers of this new framework were visionaries. Over the past two decades, it has delivered beyond expectation on its primary objective: providing a solid basis for case allocation as well as enabling all NCAs to contribute meaningfully to the enforcement of EU competition law within their territories. The overwhelming majority (85%) of public EU competition law enforcement cases is now brought by NCAs.
But the world has moved on. To be ready for the next two decades, we need another step change. The upcoming revision of Regulation 1/2003 provides a unique opportunity to make the EU competition law enforcement framework future-ready again. In that context, we should enhance the current coordination model with a model for cooperation through the introduction of joint investigation teams and even joint decisions.
The need for a step change: from coordination to cooperation
As a result of the, admittedly still imperfect, internal market, companies become even more active cross-border, often starting in adjacent geographical markets. Also, the increased enforcement experience of NCAs leads to more opportunities for complainants and gives NCAs the confidence to take on more complicated cross-border cases. Both developments lead to more ‘regional cases’. Regional cases are cross-border cases regarding infringements of the EU competition rules that do not have a full EU-wide effect but that only affect a limited number of Member States. These Member States can be geographically close, for example in the case of market-sharing or territorial supply constraints among suppliers and retailers in the Benelux, Nordics, or Baltics. But regional cases can also appear in geographically dispersed Member States because of identical business practices that are, for example, the result of similar regulatory environments or market preferences, like in excessive pharmaceutical pricing cases.
Currently, two routes are open to tackle regional cases. The Commission could open an investigation, but if only a limited number of Member States is affected, it’s likely that it will (and should) prioritize cases with clear EU-wide relevance, due to its limited resources. The alternative is that the relevant NCAs take up these cases in parallel. And while coordination of EU enforcement and case allocation among the authorities has generally worked well, parallel investigations into identical or similar conduct by the same companies often lead to the risk of diverging outcomes, double jeopardy, and are particularly burdensome for companies under investigation and complainants. Moreover, parallel investigations are inefficient, where NCAs also face resource constraints. In short, coordination alone no longer suffices. An enforcement gap in regional cases is a serious risk.
First step: cooperation through joint investigative teams
Joint Investigative Teams (“JITs”) in which its members conduct a truly joint investigation would provide a structural contribution to strengthening cooperation among NCAs. This would deal with the potential inefficiencies of multiple NCAs performing parallel factual investigations. The option to conduct cases through JITs should have a clear legal basis, like the JITs between the Commission and NCAs under the Digital Markets Act (DMA), in criminal matters (Europol), and in banking supervision (EBU). Regulation 1/2003 is a logical place for such basis.
JITs form a promising and efficient avenue to enhance cooperation among NCAs. NCAs already share information on the basis of Regulation 1/2003. A JIT would be a logical next step. Since last year, NCAs work with the Commission in JITs under the DMA, allowing for the effective pooling of resources and expertise in specific geographic and product markets. By analogy, extending this model to EU competition cases and to cooperation among NCAs could provide significant benefits, especially given the inherently cross-border nature of regional cases. Such cooperation can be set up for cases concerning cartels and abuses of dominance, but also for sector inquiries.
Flexibility in JIT models and cooperation among NCAs allow them to tailor the form of cooperation to the needs and circumstances of each individual case. More integration would necessitate stronger communication channels, clear coordination mechanisms (which will also provide clarity for companies involved in the case) and careful planning to avoid duplication and gaps in responsibilities. A balanced approach provides NCAs with a menu of cooperation options that would help JITs remain efficient, cost-effective and proportionate to the nature of the case.
Members of a JIT use their individual (national) powers to collect evidence that will be shared among the members. Each member will keep a separate but identical file. This will also allow for judicial review of the application of these powers and access to the file in each of the relevant Member States. The end product that a JIT delivers can be a joint statement of objections or a similar document stating facts and qualifications, or a joint report in the case of a sector inquiry. Subsequently, it is up to each member of the JIT to organize the next steps, like organizing a hearing, access to the file, and ultimately taking a formal decision, according to their respective national laws.
The step change: joint decisions
JITs can create significant efficiencies for its members, companies under investigation and complainants alike, although the final national stage of the proceedings will still require the parallel deployment of similar resources. In addition, the risk of divergent outcomes and double jeopardy remain. So joint decisions are necessary for a true step change. There are broadly speaking three options to get to joint decisions. Admittedly, none of these options is easy to achieve from a legal perspective and without stirring controversy, but the history of the EU and Regulation 1/2003 shows that sometimes bold steps are not only necessary but also possible.
Option 1: Commission decision
Under the first option, only the Commission would take a decision following a JIT investigation and statement of objections, regardless of whether it was part of the JIT or not. This would ensure uniformity and avoid the risk of divergent outcomes and double jeopardy, while relying on the JIT for evidence-gathering and analysis. A downside of this option is that it requires the deployment of Commission resources for the stage after the statement of objections, while it is already resource-constrained. Will the Commission have sufficient incentives to prioritize regional JIT cases and will NCAs have sufficient incentives to conduct JIT investigations, while the decision will ultimately be taken by the Commission?
Option 2: Multiple near-identical NCA decisions
The second option would allow NCAs to jointly investigate a case through a JIT, each follow their national procedures prior to taking a decision, and coordinate on the text of a near-identical decision. Under this option, each individual NCA formally adopts a separate decision, preferably at the same time. This decentralized model preserves national autonomy in decision-making and procedure, while remedies, like the level of fines, could be adapted to local contexts. It is clear that such coordination can be complex in practice but this also depends on the number of NCAs involved and the procedural differences between the respective Member States. One option is that not all members of the JIT participate in the coordination of the decisions. A downside is that divergent outcomes are still possible as judicial review of the decisions will take place in each national jurisdiction separately.
Option 3: One joint decision
The third option for a joint decision is a truly joint decision model. The members of the JIT adopt a single decision based on the procedure set out in Regulation 1/2003. This option would require the most drastic overhaul of the procedural framework and, undoubtedly, deep constitutional thinking at the EU and national level, but it would foster genuine EU joint enforcement, while creating efficiencies, avoiding the risks of divergent outcomes and double jeopardy, and with sufficient procedural safeguards.
One final thought
Particularly regarding joint decisions, I have no doubt that some skeptic readers will accuse me of, at best, idealism or, at worst, naivety. And they may be right. But I see courage and inspiration in the many people who (through their idealism and vision) have created and strengthened the European Union over time. Their perseverance against all odds in building an “ever closer Union” has brought us further than anyone had imagined at the time.
