The European Commission has adopted a White Paper proposing a fundamental reform of the current system for enforcing EU competition rules.

The current system of enforcement goes back to 1962. It gave the European Commission the exclusive power to exempt restrictive practices (Article 85(3) of the EC Treaty) and companies had to notify their agreements to the European Commission prior to any exemption. At the time, this highly centralised authorisation system was necessary.

Today, because of the enlargement, Economic and Monetary Union (the Euro), the globalisation of the economy, such a centralised system will apparently no longer ensure effective application of EU competition rules.

The new system will be built on the case law and decision-making practice of the last 35 years. The European Commission proposes, the abolition of the notification and exemption system, a new regulation which would render Article 85 in its entirety directly applicable by the Commission, national competition authorities and national courts, which is already the case for Article 86 of the Treaty (abuse of dominant position).

This fundamental reform has three main objectives:

Rigorous enforcement of competition law

Commission will concentrate its limited resources on the most serious infringements of EU law and on the most important cases involving a real EU interest, the White Paper proposes strengthening the current system for enforcing the prohibition rules in Articles 85 and 86 of EC Treaty.

The European Commission proposes also to concentrate more resources on investigation of complaints since complaints from victims of anti-competitive practices are a valuable source of market information. A simplification of procedures will be necessary, in particular the introduction of a time limit of four months within which the European Commission would have to inform complainants of whether its service intends to investigate their complaints in detail. This is in the interest of the European consumers, so that they do not suffer of artificially high prices.

Effective decentralisation of its application

To strengthen the effectiveness of the EU competition rules, a more decentralised application would be achieved by a direct application of Articles 85 and 86. Thus, the European Commission, national competition authorities and national courts would have concurrent powers, in applying competition rules.

The White Paper proposes several mechanisms to ensure a coherent application of the new decentralised enforcement system. The Commission wants to remain a leader in determining EU competition policy and to keep a central role in a network of competition authorities. The Commission's right to withdraw from national competition authorities cases, in particular where there was a risk of incoherent application of the rules, would be maintained.

Moreover, several more detailed mechanisms are foreseen to prevent conflicts between decisions taken by one of the three authorities. The application of the EU competition rules by national courts would be supervised by the European Court of Justice and the Commission would help national judges to apply properly the EU competition rules.

Simplification of control procedures

To maintain a sufficient degree of legal certainty for business, the new system would allow companies to obtain civil enforcement of their contracts in national courts from the date of their conclusion if, on balance, they are pro-competitive. Centralised authorisation of individual agreements by the Commission would no longer be required. Another benefit for companies would be a more frequent application of EU competition rules by Member States authorities.

As the Commissioner responsible for competition, Mr Karel Van Miert said: « this is the last step towards a fundamental reorganisation of the enforcement system of EU competition rules... ».

The proposed reform does not affect the regime for the control of concentrations of a Community dimension, the Merger Regulation, except that production joint ventures will also be included.

Member States, other EU institutions and interested parties are invited to submit comments by 30 September 1999.

This article is based and incorporates information provided by the European Commission (Press Releases) and is intended for general information. Specialist advice should be sought before acting on it.