Seminar 10: Decentralisation

In this seminar we look at procedural issues. In brief: originally EU competition law was enforced exclusively by the European Commission, which played a role analogous to a Federal agency (with the caveat that ultimately every decision is subject to political ‘interference’ given the composition of the Commission).  With Regulation 1/2003 (which came into force on the day of the EU’s Eastward enlargement on 1 May 2004), National Competition Authorities were required to apply EU competition law. All of a sudden the EU had a number of national enforcers. Wils gives the Commission’s position on what this has achieved in ten years.  Wilks and Svetiev look at a particular aspect of this decentralised enforcement from two differing perspectives: Wilks focuses on the role of the European Competition Network, while Svetiev considers the possibilities of experimentalist governance in this setup.

Wils ‘Ten Years of Regulation 1/2003: A Retrospective (2013) 4(4) Journal of European Competition Law and Practice 293

Wilks ‘The European Competition Network: What has changed?’ (2007) available here

Svetiev ‘Networked Competition Governance in the EU: Delegation, Decentralization or Experimentalist Architecture?’, in Experimentalist Governance in the European Union, Charles F. Sabel & Jonathan Zeitlin, eds. (Oxford University Press, 2010) (available online via the EUI library)

 

6 comments on “Seminar 10: Decentralisation

  1. Katrine Lillerud says:

    Ten Years of Regulation 1/2003: A Retrospective (Wils)
    Apart from the modernization reform’s decentralization strategy to deal with the increasing caseload the Commission also increased the levels of “internal quality control”, reflected by the creation of the office of the Chief Economist in 2003 (which reflects the “more economic approach”) (p. 300).

    The European Competition Network: What has changed? (Wilks)
    According to Wilks the modernization reform of 1/2003 constitutes “the most important transition in the fifty years of EU competition evolution” since it affects the operation of the agencies particularly the national once, and increased the effectiveness of enforcement on the hand of the DG COMP. (p.1) It is described to have at least three dimensions (i) an administrative, (ii) policy and (iii) constitutional dimension.

    Criticism is, however, given to the “shadowy” nature of the ECN, due to the lack of transparency, which in turns leads to few comment on it operation and whether it is indeed a success. (p.4) The ECN is portrayed to result in political and normative solidarity. If it becomes to unified this strength of solidarity could become problematic if, since DG COMP has developed a particular policy stance in the form of a neoliberal interpretation of competition policy which, although supported by competition agencies themselves is not necessarily supported by the “industrial policy protagonists” (p.19)

    Wilks does, nevertheless, see the modernization reform to reveal a “pragmatic neo-classical model of competition law” since he considers that it does not pursue perfect competition, but rather a ‘workable competition’ system across the Member States. The “more economic approach” has become increasingly sophisticated (since the 2003 Chief Economist?) and reflects the neo-classical model of competition law enforcement, with its focus on economic efficiency assessed through the tools of welfare economics. (p. 11) But is this really a reflection on pragmatism of the Commission or is it rather apathy from the Commission’s side of a too demanding task? However, the main feature of the modernization seems to be the creation of a platform for the creation of a “common competition culture” via the ECN, which has according to the author resulted in a de-politicization of competition law (at national level?).

    Networked Competition Governance in the EU: Delegation, Decentralization or Experimentalist Architecture? (Svetiev)
    The most important observation is that as a result of the modernization reform the national laws have over time become substantially similar in content and procedure to that of European competition law. (p.79) The delegation (or decentralization) of responsibilities to NCA’s according to Svetiev achieves two main purposes: Firstly, it ensures competition law to be enforced without increasing DG COMP. Secondly, it gives NCA an active role in the implementation process (maybe especial though the ECN?)

    However, the criticism is that the current discussions of the delegation/decentralization views fail to question the functionality of this new regulatory design, since it does not appear to be clear (i) who the responsible regulator is (whether supranational or national) as it lacks accesses the knowledge about underlying regulatory problems and possible solutions, knowledge which is essential for both rule writing and enforcement. It also fails to provide an account of (ii) how the regulatory mechanism copes with an underlying environment that is both uncertain and highly dynamic and (iii) the also fail to address underlying accountability problems. (p.82) But maybe this is discussed in the non-transparent ECN multilateral meetings that are non- transparent?

    The positive aspects of the ECN is that it can provide the correct network for a disciplined comparison of measures and results, enabling the NCA to learn through monitoring the successes and failures of peer authorities. (p.116)

  2. Maria Ana Barata says:

    Wils’ 2007 paper provides us an overview about ECN role within European Competition policy, whereas Wils’ 2013 paper shares an historical glimpse of the issue of Regulation 1/2003:

    The working group started in 1997 was responsible for the issue of a White Paper in 1999 and later for the new legislation on the implementation of the rules on competition laid down in articles 82 and 83 of the Treaty (i.e. the EC Regulation 1/2003 of 16 December 2002), where a decentralisation effort was pursued. Better explained in Wils’ 2013 paper, the issue of this Council Regulation “rebrought” to the European debate the tension towards (i) centralising powers in the EC, or (ii) decentralising powers between the Member States (through the NCAs) and the EU (through the EC). As a consequence, it also resurrected the discussion between 2 enforcement systems: (a) a centralised notification and authorisation system (the so-called German-model, proposed by the European Commission and followed by the Council in Regulation 17); and (b) a directly applicable exception system (suggested by the French since the 60s and later adopted in 2003 as per suggestion of the Modernisation Group).

    When assessing the successful path carried out by the ECN, Wils argues that specific features of the competition sector (such as politics involved and normative coherence) were key contributions, and which therefore hinder a “direct exportation” of the ECN model to other areas (where such features do not exist). In a provoking tone, the author goes further on arguing that the Modernisation package was a proxy for EC to extend its influence of competition policy across EU (by serving someone’s interests).

    In the 2007 article, the author concludes that ECN has been functioning in a coherent and effective way, although only 3 years of analysis were taken in consideration (given its implementation in 2004 within the “Modernisation” movement of competition policy in EU). One of the weaknesses presented by Wils to the role played by the ECN is the lack of a holistic approach towards competition policy, but rather specific activities are targeted by this network (only under current articles 101 and 102 TFEU).

    Finally, regarding the shift from public enforcement to private enforcement with the 2005 Green Paper, which later on was pushed back with the 2008 Green Paper, it is interesting to realise that the direction was then again inverted, since in 2014 a new directive on damages was issued: Directive 2014/14/EU (obviously, the author could not include this reference, because the article was published in 2013).

  3. Anna Nowak says:

    In general, I found Wilks’s article very interesting. However, I wish the author had provided some explanation to his division of ECN countries into „leagues”. I completely ignore why some countries are “problematic” but not yet “good” or “problematic” but better that “ineffectual” (is this division completely arbitrary?); yet, I have no idea how to understand these notions and what is their practical meaning.

    In the conclusion, Wilks brings up the issue of the accountability deficit and even though at first regard I felt that I disagreed, the issue was not explained enough to make me understand what the author meant – it is about the Commission or about national regulatory agencies and how does the reform accentuates the accountability deficit? I wish there was more on this point. Luckily, the Svetiev’s article made the accountability issue clearer. Still, I do not feel convinced how the accountability problem is worsened and compared to what – the problem is that the national agencies have the power to apply Article 101 or that they belong to ECN which is “directed” by the Commission? And the accountability strengthening or weakening shouldn’t be measured in the relation “Commission-national agencies” rather than “national agencies as agents of Commission-national agencies as agents of Member States”? I don’t think I got the line of reasoning of both authors.

    With regard to Wils’s article, it was useful in order to realise that the prospected decrease in the number of prohibition decisions as well as the liberation of Commission’s resources have not taken place.

  4. Alexandre Ruiz says:

    These three articles are a good starting point to analyse the real functioning of the European Competition Network. I would be interested in linking this procedural aspect with competition policy, because I wonder whether a particular structure of collaboration between competition agencies is more likely and prone to accept one particular ‘antitrust religion’ than another. Thus, my main question for this seminar is to what extent the design of the ECN has favoured or encouraged the fact that EU Competition has uncritically moved towards progressive-like approaches.

    From Wilks’ paper, one lesson that we can draw is that the Commission has become even more powerful after the decentralization process (p. 6). Moreover, the Commission has moved towards a micro-economic policy (Wilks, p. 14), which one could label as Chicagoan in very broad terms. Now, my feeling is the fact that the Commission monitors what National Authorities do leaves no room for alternative policies. In this sense, the ECN would work as channel through which the micro-economic perspective filters into National systems.

    The question then is whether delegated National Agencies can challenge the more economic approach of the Commission. Theoretically, if National Agencies are independent and EU competition law enforcement is decentralized, they could take a different approach. From the principal-agent perspective, it would be like if the agent could challenge the principal’s policy. However, if we say that National Competition Authorities are totally dependent from the Commission, and that the Commission is the dominant enforcer, then it may also mean that the Commission is the ideological dominant. It may be that the European Competition Network is not really a network for co-operation, but a straitjacket where National Agencies have no autonomy at all.

    Perhaps here Art. 3(2) is key. It allows Member States to adopt a stricter approach to abuse of dominance, but not for Art. 101 cases. If National Agencies can take a more hands-off approach in 101 cases, does this allow them to adopt competition policies that are closer to the ‘more economic approach’? Does Art. 3(2) mean that, therefore, National Agencies can be more conservative towards 102 but more progressive towards 101?

  5. Maria de la Cuesta says:

    Today’s readings give us an interesting picture of the decentralized system of enforcement in EU competition law. Two things have caught my attention. Firstly, I find very interesting Svetiev’s account of the network approach to competition as a model of experimental governance, in which the role of the
    Commission would not be that of the central authority retaining control of the decision-making and the development of competition policy, as the headmaster among national competition authorities in exercise of their delegated powers. Rather, the network is seen as a place of consultation and peer review, in which national authorities retain considerable autonomy to experiment in response to a rapidly evolving environment.
    I wonder if this approach does well at explaining the relation between the Commission and the national authorities, not so much in procedural but in substantive matters. In particular, there is a question that keeps haunting me ever since one of the first sessions of the seminar. If we take article 3 of the Regulation 1/2003, it permits member states to keep stricter national rules on unilateral conduct, while fully harmonizing concerted practices (article 3(2)). This gives way to the possibility of member states adopting rules on abuse of economic dependence or abuse or relative power, in which the threshold for dominance is not determined by the overall position of the firm in the market, but by the power held by the dominant firm in a bilateral relation. My main difficulty here is that I am not sure if these stricter rules on unilateral conduct could, as a matter of fact, introduce also some kind of additional variation at the national level on the regulation of concerted practices, or if this is just an imaginary problem. I am thinking of the following situation: a vertical agreement between a supplier and a distributor in which there is some sort of exclusivity supply clause, exempted under art. 101.3 TFEU, but in which the supplier is in a situation of relative dominance with regard to the distributor, so that in theory, it would be possible to think of a national rule on unilateral conduct forbidding the agreement which is permitted under Article 101(3). If this were possible, I wonder how the application of national rules on abuse of economic dependence occurs, and how it relates to private enforcement of anti competitive agreements by parties to the agreement which find themselves in a situation of relative subordination or economic dependence. If this is a plausible scenario at all, of which I am not sure, what would it tell us about the decentralized model of competition law, if anything at all, and would it be confirming the notion that there is not a single monolithic vision of EU competition law, but instead ample space for experimentation in the peer-monitoring environment of the European competition network?

  6. Magdalen Reeder says:

    From the Wils article, I got the impression that even after modernization, EU Competition Law enforcement is still quite cohesive, and that the European Commission is still exerting a fair amount of top down authority on the NCAs. Svetiev points out that remedies still vary widely among the Member States. He also seems to view the modernized enforcement as significantly less centralized than it was previously, and sees this as a positive development. He says that Europe is still undecided about whether its competition law will continue to move in the more economic direction, or take a different approach. Less centralized enforcement allows for creativity and experimentation.

    Svetiev’s positive view of less centralized enforcement was particularly interesting to me, because I felt like that was one of the downsides of U.S. competition law. It sometimes seems like the United States has thrown up its hands when it comes to enforcement at all, and Haw’s article convinced me early on in the course that a single agency should have more enforcement and rulemaking authority over antitrust in the U.S. However, U.S. antitrust enforcement is extremely decentralized, not just because both the DOJ and the FTC enforce it, but because many of the cases are between private parties and decided by courts. To what extent do individual decisions in the U.S. vary when it comes to approaches to competition law enforcement? Or are there not enough that make it to trial or such strong authority from the Supreme Court for there to be real experimentation? Wils points out that National Courts also have a role in European enforcement—to what extent does their application of the law match the NCAs and European Commission?

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