The ECN+ Directive as an effective tool to strengthen National Competition Authorities as effective enforcers of Articles 101 and 102 TFEU and its implications for the effectiveness of the German Bundeskartellamt
by
Johanna J. Rippel
joh.rippel@gmail.com Student Number: 12859796
Faculty of Law
LLM of European Competition Law and Regulation (International and European Law)
Supervised by:
Dr. Kati Cseres
ABSTRACT
The decentralised enforcement system introduced by Regulation 1/2003 put National Competition Authorities (NCAs) right in the middle of the enforcement map of EU competition laws as soon to be the primary enforcers of EU competition laws. The last 15 years have shown the difficulties that accompany such a multi-level enforcement system. As the procedural and institutional design of EU competition law enforcement on Member State level still is mostly governed by the respective national laws under the principle of procedural autonomy, divergence is one of the main concerns in thriving for a more uniform and effective competition law enforcement. With the ECN+ Directive the Commission introduced a set of minimum harmonisation requirements that should ultimately make NCAs more efficient in enforcing Art. 101 and 102 TFEU.
The aim of this thesis is to critically analyse whether and how the ECN+ Directive will achieve its objective of making NCAs more effective competition law enforcers. As a preliminary concern, the effectiveness of EU competition law enforcement and its enforcers will be evaluated. In doing so, I will first provide a general understanding of the notion of effectiveness in the field of competition law enforcement before analysing the way the Commission interpreted the issues that resulted from the various evaluations on the institutional and procedural aspects of NCAs, in the years leading up to the adoption of Directive 2019/1. This will lead to the conclusion that the prevailing procedural divergence could hinder the achievement of full effectiveness of the NCAs.
After a theoretical approach, the second part will conduct a case study on the implementation of the Directive into German Law and its implications for the Bundeskartellamt to the effectiveness of the ECN+ Directive from a practical perspective. It is concluded that the changes for the BKartA in regards to institutional aspects are marginal which leads to a final discussion on whether further procedural harmonisation would have increased the effectiveness of NCAs and EU competition law enforcement.
To ensure that the NCAs are sufficiently empowered to effectively apply the EU competition rules in a way that decreases the divergence in investigation and fining outcomes to a minimum will require further harmonisation on EU level. The prevention of continued divergence in enforcement practices based on the institutional design and powers of NCAs necessitates a set of basic guidelines that the ECN+ Directive fails to deliver.
TABLE OF ABBREVIATIONS Commission AG European Commission Advocate Generale ARC Art.
Act against Restraints of Competition Article
BKartA Bundeskartellamt
ECJ European Court of Justice
ECN European Competition Network
ECN+ Directive Directive 2019/1/EU of the European Parliament and the Council of 11 December 2018 to empower the competition authorities of the Member States to be more effective enforcers and to ensure the proper functioning of the internal market [2019] OJ L 11/3
EP European Parliament
EU European Union
GWB Gesetz gegen Wettbewerbsbeschränkungen
IA Impact Assessment
n note
NCA/NCAs National Competition Authority
p. page
para. paragraph
Regulation 1/2003 Council Regulation (EC) 1/2003 of 16 December 2002 on the implementation of the rules on competition laid down in Articles 81 and 82 of the Treaty [2003] OJ L 1
TEU Treaty on the European Union
TABLE OF CONTENT
ABSTRACT _______________________________________________________________ 2 TABLE OF ABBREVIATIONS ______________________________________________ 3 A. INTRODUCTION _____________________________________________________ 6 B. DEVELOPMENTAL PERSPECTIVE OF EUROPEAN COMPETITION LAW _ 8
I. Reformation through Regulation 1/2003 - The Modernisation Regulation ______________________ 8
1. The European Competition Network ____________________________________________________ 8 2. Multi-level Governance and Its Difficulties _______________________________________________ 9 3. Voluntary convergence ______________________________________________________________ 10
II. Directive 2019/1 (ECN+ Directive) _____________________________________________________ 11
C. THE EFFECTIVENESS OF EU COMPETITION LAW ENFORCEMENT AND ITS ENFORCERS ________________________________________________________ 11
I. The concept of effectiveness in regards to law enforcement _________________________________ 12 II. ECN+ Directive as a tool to making competition law enforcement more effective _______________ 13
1. Assessing the effectiveness of the ECN+ Directive ________________________________________ 13 a) Retrospection of Regulation 1/2003 _________________________________________________ 13 aa) Commission’s Five-Year Report _____________________________________________ 13 bb) Commission’s 10-Year Report ______________________________________________ 14 cc) Resolutions of the European Parliament _________________________________________ 14 b) Anticipation of further harmonisation (ECN+ Directive) _________________________________ 15 aa) 2010 ECN Resolution of resources ___________________________________________ 15 bb) ECN Recommendation on the power to set priorities _____________________________ 16 cc) Public Consultations & Impact Assessment ______________________________________ 16 c) Interim Conclusion on the developments leading up to the adoption of the ECN+ Directive _____ 17 2. Objectives and goals of the Directive and their achievement ________________________________ 17 a) (More) Effective Competition Law Enforcers __________________________________________ 17 b) Institutions and their relevance for the effectiveness of competition law enforcement __________ 18 3. Institutional and procedural aspects: Independence, accountability and priority setting ____________ 19 a) Independence of NCAs ___________________________________________________________ 19 aa) Independence from government, other state bodies and politics ____________________ 20 bb) Independence from economic operators and business interest ______________________ 20 cc) Independence under the ECN+ Directive ________________________________________ 21 b) Accountability __________________________________________________________________ 22 aa) Accountability under the ECN+ Directive _____________________________________ 23 bb) Judicial accountability _____________________________________________________ 23 c) Power to set priorities ____________________________________________________________ 24 aa) Discretion ______________________________________________________________ 25 bb) Prioritization under the ECN+ Directive _______________________________________ 25
III. Conclusion _________________________________________________________________________ 26
I. Overview of the organization of the BKartA and its enforcement practice ____________________ 27
1. The Bundeskartellamt (BKartA) ______________________________________________________ 27 2. Supreme Land Authorities (Landeskartellbehörden) _______________________________________ 28 3. The Federal Ministry for Economic Affairs and Energy ____________________________________ 28
II. The BKartA as effective competition law enforcer before and after the implementation of the ECN+ Directive ________________________________________________________________________________ 28
1. Independence of the BKartA prior to the implementation of the ECN+ Directive ________________ 28 a) Ministerial Authorization __________________________________________________________ 29 b) General instructions given by the Minister (Section 52 ARC) _____________________________ 30 c) Independence of supreme Land authorities ____________________________________________ 30 2. Independence of the BKartA after the implementation of the ECN+ Directive __________________ 30 a) Changes in regards to the supreme Land authorities _____________________________________ 31 b) Changes in regards to the ministerial authorisation ______________________________________ 31 c) No changes in regards to the general instructions _______________________________________ 31 3. Accountability ____________________________________________________________________ 32 a) Political accountability ___________________________________________________________ 32 b) Judicial accountability ____________________________________________________________ 32 4. The power to set priorities ___________________________________________________________ 32 a) Positive priority setting ___________________________________________________________ 32 b) Negative priority setting __________________________________________________________ 33 c) Priority setting after the implementation of the ECN+ Directive ___________________________ 33
III. Conclusion _________________________________________________________________________ 34
E. THE NEED FOR (EVEN) FURTHER HARMONISATION __________________ 34
I. The triad of harmonisation principles ___________________________________________________ 34
1. Principle of Procedural Autonomy _____________________________________________________ 35 2. Principles of Effectiveness & Equivalence ______________________________________________ 35
II. “United in diversity” _________________________________________________________________ 36
1. Consistency rather than uniformity ____________________________________________________ 37 2. The Commission pushing for further convergence of procedural rules _________________________ 37 F. CONCLUSION _______________________________________________________ 38 G. BIBLIOGRAPHY _____________________________________________________ 40
A. Introduction
Effective competition law enforcement requires effective competition law enforcers. This concept, as simple as is sounds, has had its issues over the past, and now, in light of the ECN+ Directive it seems a new area of more effective competition law authorities lies ahead. While Art. 101 and 102 TFEU have remained essentially the same since they were first enacted, the rules governing their enforcement have undergone numerous changes in recent years and lastly with the newly adopted Directive 2019/1 (or ECN+ Directive).1 The modernisation of EU competition law enforcement policies resulted in an.
Since the adoption of Regulation 1/2003 NCAs have become the primary enforcers of the European rules on anti-competitive practices. Between 2004 and 2019 the Commission and the NCAs together issued 1297 decisions of which the National Competition Authorities have produced 1179.2 These numbers demonstrate the extensive amplification of the role and function of the NCAs.
However, even though Regulation 1/2003 and the introduction of the European Competition Network resulted in a highly acclaimed success, certain gaps and limitations remained. While the substantive EU rules that are to be enforced are the same, the procedural rules and the institutional settings that form the framework of enforcement have been much less harmonised and reveal a challenging landscape for comparative analysis.3 Under the principle of procedural autonomy, the enforcement procedures within the Member States are largely governed by national laws. As a consequence, companies engaging in anti-competitive practices could face very different outcomes of proceedings depending on the Member States in which they are active.
Now, almost 15 years later, the ECN+ Directive tries to tackle these differences and foresees an even broader harmonisation of the enforcement of Articles 101 and 102 TFEU. Its major aim is the empowerment of the NCAs to become more effective enforcers and to ensure the proper functioning of the internal market. Such effectiveness, in the Commission’s view, relies greatly on a uniform application throughout the EU which in turn requires certain institutional standards of the NCAs, such as their degree of independence, their accountability and their ability to set enforcement priorities.
1 Helene Andersson, ‘ECN Plus – Should the New EU Directive Empowering National Competition Authorities Be All About Effectiveness?’ (Social Science Research Network 2017) SSRN Scholarly Paper ID 3038652
<https://papers.ssrn.com/abstract=3038652> accessed 22 May 2020.
2 European Commission’s website, Statistics, https://ec.europa.eu/competition/ecn/statistics.html.
3 K Cseres, ‘Comparing Laws in the Enforcement of EU and National Competition Laws’ (2010) 3 European Journal of Legal Studies <https://dare.uva.nl/search?identifier=a15014c0-61e1-4847-9830-79cc90eeac5c> accessed 3 July 2020.
Even before the end of its implementation phase the ECN+ Directive has raised various issues in regards to its effectiveness in making NCAs more effective enforcers. While it introduces a general, theoretical framework through minimum harmonisation, the practical implementation and realisation of the overall objective throughout the various Member States is a different story.
Against this background this research aims to examine whether the ECN+ Directive constitutes an effective mean to empower the NCAs to be more effective enforcers of the EU competition rules. The underlying research question is formulated as follows:
How does the ECN+ Directive and its implementation in Germany lead to an improved and more effective competition enforcement?
In the process of finding an answer to this question, this thesis will in a first step evaluate what effective competition law enforcement generally entails and how the ECN+ Directive contributes to its improvement. It will examine the effectiveness of NCA enforcement from an institutional perspective and within this approach I will focus on the mechanisms that ensure the NCAs’ independence, accountability and their power to set priorities. While sufficient resources and effective investigative tools play an equally important role in defining effective competition law enforcers, they will not be addressed here.
While the aforementioned discussions will be mostly theoretically the succeeding chapter will then consist of a case study on the basis of the implementation of the ECN+ Directive in Germany through the 10th GWB amendment and its effects on the effectiveness of the German competition authority. Again, the focus will lie on the degree of independence, accountability and the Bundeskartellamt’s ability to set priorities. This practical example will allow a more evidence-based conclusion on whether the ECN+ can in fact serve as a tool to promote the NCAs as effective competition law enforcers.
To conclude this research, the last chapter will go on to take a more critical stance towards the effectiveness of Directive 2019/1 and will essentially ask, whether further reaching harmonisation could have led to an even higher degree of effectiveness in competition law enforcement.
B. Developmental perspective of European Competition Law
Before being able to answer the question on why there is a need for more effective competition law enforcement, one must consider the historical development of European Competition Law and in particular its enforcement.
I. Reformation through Regulation 1/2003 - The Modernisation Regulation
With Regulation 1/2003 came a radical change in the way in which the EU antitrust prohibitions, contained in Articles 101 and 102 TFEU, were enforced.4
The centralized system was abolished and replaced by a system of decentralized ex post enforcement, in which the European Commission and the competition authorities of the EU Member States, forming together the European Competition Network (hereinafter “ECN”), pursue infringements of Articles 101 and 102 TFEU.5 The core of the reform was the replacement of an obsolete centralized notification and authorization system for Article 81(3) EC by a directly applicable exception system. Furthermore, the enforcement powers of the Commission were strengthened and renewed, for example in regards to investigations.
According to some voices Regulation 1/2003 had created a consistent and comprehensive policy approach and changed the role of the national competition authorities significantly.6 However, some more sceptical opinions had also strongly criticised and questioned the actual success of the decentralised enforcement system.7 The following two sections will analyse the issues that accompanied Regulation 1/2003 in regards to the multi-level governance structure and the convergence of procedural and institutional rules.
1. The European Competition Network
Amongst the many novelties that arrived with Regulation 1/2003, it is the ECN that has shaped and will continue to shape EU competition law enforcement in a decisive manner. Its main function is to provide the infrastructure for cooperation between the NCAs and the Commission, to contribute to the emergence of a common competition culture in Europe and
4 Wouter PJ Wils, ‘Ten Years of Regulation 1/2003 - A Retrospective’ (Social Science Research Network 2013) SSRN Scholarly Paper ID 2274013 <https://papers.ssrn.com/abstract=2274013> accessed 29 May 2020.
5 ibid.
6 Inter alia Philipp Lowe, Enforcers Roundtable - Independence and competition authorities, Fordham Competition Law Institute Annual Conference 2008.
7 Giorgio Monti, ‘Independence, Interdependence and Legitimacy: The EU Commission, National Competition Authorities, and the European Competition Network’ (2014) Working Paper <http://cadmus.eui.eu//handle/1814/29218> accessed 29 May 2020.
lastly, to protect the consistency of the EU competition law regime.8 Contrary to almost all of the characteristics of a successful network design in political science literature at that time, the ECN was designed centrally and largely to the desire of the Commission.9
2. Multi-level Governance and Its Difficulties
The decentralization led to a multi-level governance enforcement system between the EU Commission and the various NCAs. With this modernization, as an unintentional side-effect so to speak, EU competition law enforcement had become prone to the general systemic problems that would typically arise within such multi-level governance systems.10 In the context of Regulation 1/2003, these difficulties lie within the interplay of the centrifugal force, as the Member States are pulling towards their national legal systems, and centripetal forces, as the Commission is pushing towards a more uniform and consistent application.11
While Regulation 1/2003 laid down some basic rules on the powers of the NCAs, it did not formally intervene with the national procedures and remained silent on the specifics of their institutional design.
Pursuant Art. 5 of Regulation 1/2003, which has been referred to as a very rudimentary rule, all NCAs were given the mandate to apply Art. 101 and 102 TFEU including the powers to adopt decision and to bring infringements to an end.12 However, they were free to do so using their own national rules under the principle of procedural autonomy and could impose remedies and sanctions that are available in their respective legal systems.13 As a consequence, competition law enforcement relied primarily on the effectiveness of the national administrative procedures in regards to the enforcement of EU competition rules.14
Art. 35 of Regulation 1/2003 was drafted in a similarly rudimentary way and merely stated the requirement that Member States should designate their competition authority in a way that would effectively comply with the provisions of the regulation. The question on how Member
8 Firat Cengiz, ‘Regulation 1/2003 Revisited’ (Social Science Research Network 2009) SSRN Scholarly Paper ID 1512527 <https://papers.ssrn.com/abstract=1512527> accessed 10 June 2020.
9 F Cengiz, ‘Multi-Level Governance in Competition Policy: The European Competition Network’ (2010) 35 European Law Review 660.
10 Cengiz (n 9).
11 ibid, at 35, see also K. Cseres, ‘The Implementation of the ECN+ Directive in Hungary and Lessons Beyond’ [2019] SSRN Electronic Journal, at 3.
12 Jurgita Malinauskaite, ‘Development of EU Competition Law Enforcement from an Historical Perspective: A Call for Harmonisation from the EU’ in Jurgita Malinauskaite (ed), Harmonisation of EU Competition Law Enforcement (Springer International Publishing 2020) <https://doi.org/10.1007/978-3-030-30233-7_4> accessed 10 June 2020.
13 Kati Cseres, ‘The Implementation of the ECN+ Directive in Hungary and Lessons Beyond’ [2019] SSRN Electronic Journal, at 3, <https://www.ssrn.com/abstract=3489903> accessed 22 May 2020.
States were expected to empower these authorities was again left unaddressed.15 The significant divergence between the substantive and procedural rules within competition law enforcement led to an uneven enforcement of the EU competition provisions, which could ultimately undermine the effectiveness of EU competition law enforcement.16
Various cases on this matter that came before the ECJ confirmed the existence of fundamental legal disparities in the way NCAs apply Art. 101 and 102 TFEU under their respective domestic procedural rules. Special attention can be attributed to the Dutch case T-Mobile Netherlands
and Others, more specifically to the opinion of AG Kokott, who argued that the uniform
application of the European competition rules is of fundamental importance.17 3. Voluntary convergence
Voluntary convergence can be achieved if Member States decide to align their procedures and sanctions with a common EU model, despite the absence of harmonisation by legislation.18 For EU competition law it was in light of the absence of legislative harmonizing measures in regards to procedural rules, that various Member States began to align their procedures with a common EU model. Such convergence arose in the form of voluntary convergence by Member States, procedural convergence in the context of agreements, bilateral contracts and multilateral work with in the ECN.19 Together with the ECN, the Commission served as a driving force behind this procedural convergence and gradually steered national procedural rules towards the Commission’s procedural model.20 With its Five-Year-Report on the functioning of Regulation 1/2003, the Commission expressed the intention of harmonising national procedural rules through soft harmonisation or the adoption of certain minimum standards.21 Over the following years the ECN continuously monitored the convergence amongst the Member States and published its results in multiple reports and recommendations.22 However, where procedural differences are rooted in national legal traditions, national fundamental right standards or other
15 Giorgio Monti, ‘Independence, Interdependence and Legitimacy: The EU Commission, National Competition Authorities, and the European Competition Network’ (2014) Working Paper <http://cadmus.eui.eu//handle/1814/29218> accessed 29 May 2020.
16 ibid.
17 Opinion of AG Kokott delivered on 19 February 2009 in case C-8/08, T-Mobile Netherlands and Others, ECR I-4529, para. 85.
18 Commission Staff Working Paper, Enhancing competition enforcement by the Member States' competition authorities: institutional and procedural issues, SWD(2014)231, para. 48.
19 Cseres (n 18), at 7, See also Commission Staff Working Paper (n 18), para. 48-50 and ECN Investigative Powers Report and Decision Making Powers Report (2012).
20 ibid.
21 European Commission, “Commission Staff Working Paper of 29 April 2009 accompanying the Report on the Functioning of Regulation 1/2003” SEC(2009) 574 final, para. 207.
22 See ECN Report (n 19), ECN Recommendation on Investigative Powers: Enforcement Measures and Sanctions in the context of Inspection and Requests for Information (2013).
general principles, it may be difficult to achieve convergence with a common standard through the use of “soft tools”, including in the context of economic adjustment programs.23
Despite the high level of voluntary harmonisation towards the European model, the developments following the adoption of Regulation 1/2003 reflect a top-down regulatory framework with hierarchical governance mechanisms.24 The remaining differences were considered to substantially affect the scope of investigative and decision-making powers and the need for further harmonisation of EU competition law enforcement was expressed by various stakeholders, which ultimately led to the adoption of the ECN+ Directive.25
II. Directive 2019/1 (ECN+ Directive)
In light of the different outcomes of proceedings within the various Member States, the calls for further harmonisation, especially in regards to the role of the NCAs, were not left unheard and only 15 years after the adoption of Reg. 1/2003, the Council presented Directive 2019/1 to empower the competition authorities of the Member States to be more effective enforcers.26 The following chapter will include a detailed assessment of the ECN+ Directive and its implications for the ever-evolving process of shaping EU competition law enforcement. Despite minimum safeguards for NCA’s independence, accountability and resources, the Directive set out minimum harmonisation rules allowing NCAs to have common investigative, decision-making (notably fining decisions) and enforcement powers.27 Furthermore, it harmonises leniency programs including the coordination of national leniency programs, addresses mutual assistance among NCAs and the role of NCAs before national courts. It also seeks to strengthen the cooperation between NCAs and the Commission within the ECN.
C. The Effectiveness of EU competition law enforcement and its enforcers
The aim of this chapter is to determine whether the ECN+ Directive can be described as an effective tool in the process of making NCAs more effective competition law enforcers. On the one hand, effectiveness as a concept is directly connected to the fundamental goals of European competition policy and concerns the actual success of enforcement efforts in keeping markets competitive.28 On the other hand, the effectiveness of the competition authorities
23 Commission Staff Working Paper (n 18), para 53.
24 Cseres, ‘The Implementation of the ECN+ Directive in Hungary and Lessons Beyond’ (n 15).
25 Konrad Ost, ‘From Regulation 1 to Regulation 2: National Enforcement of EU Cartel Prohibition and the Need for Further Convergence’ (2014) 5 Journal of European Competition Law & Practice 125.
26 Directive 2019/1/EU of the European Parliament and the Council of 11 December 2018 to empower the competition authorities of the Member States to be more effective enforcers and to ensure the proper functioning of the internal market [2019] OJ L 11/3 (ECN+ Directive).
27 Rizzuto (n 20), at 582. 28 Cengiz (n 9).
determines whether the NCAs are able to effectively enforce competition rules. In this regard it is crucial that a certain minimum level of guarantees of independence, resources, and enforcement and fining powers is guaranteed.29 According to the Commission, Regulation 1/2003 lacked the necessary provisions and the years after its introduction showed that an uneven enforcement emerged within EU competition law enforcement.
To answer the question of whether Directive 2019/1 can be seen as a tool to make EU competition law enforcement more effective, a first step requires to define effectiveness and to understand what is meant when we refer to the effectiveness of competition law enforcement.
I. The concept of effectiveness in regards to law enforcement
Despite the rhetoric, it remains a fact that effectiveness is one of the least understood terms in the legal vocabulary.30 In its abstract form, effectiveness can be seen as a neutral, relative and fluid principle, empty in terms of substantive content.31 Only when put in a specific context it contributes clarification to its meaning.32 Its function is then to ensure the connection between objectives and results rather than to indicate which objectives or which results are desirable.33 Therefore, effectiveness is inherently linked to the environment in which it is placed.34
EU competition law enforcement seems to be all about “effectiveness”. Regulation 1/2003 as well as Directive 2019/1 are characterized by a conspicuously frequent usage of the terms “effectiveness”, “effective” and “effectively” while both are staying clear of any definition.35 The effectiveness of competition law enforcement, and law enforcement in general, is inherently linked to the laws and rules that are being enforced by the relevant authorities and their objectives.
The main objective underlying the application of Art. 101 and 102 TFEU is the creation of a genuine single market, promoting the overall goal of competitive markets, jobs and economic growth. With this in mind, effectiveness in the context of competition law enforcement needs to be understood as the achievement of the overall goal of realising the full potential of an internal market free from any distortions of competition.
29 Directive (EU) 2019/1, recital 3.
30 Maria Mousmouti, ‘Introduction to the Symposium on Effective Law and Regulation’ (2018) 9 European Journal of Risk Regulation 387.
31 ibid. 32 ibid. 33 ibid.
34 Helen Xanthaki, ‘An Enlightened Approach to Legislative Scrutiny: Focusing on Effectiveness’ (2018) 9 European Journal of Risk Regulation 431.
An effective competition law enforcement is therefore a key aspect of realising the full potential of the internal market goal.36
The ECN does play a crucial part in ensuring an effective competition law enforcement throughout the Union. It can be argued that the cooperation between the NCAs, as well as the cooperation between the NCAs and the Commission, would be made easier if there were a higher degree of procedural convergence among the domestic laws and competition regimes.37
II. ECN+ Directive as a tool to making competition law enforcement more effective 1. Assessing the effectiveness of the ECN+ Directive
For determining whether the ECN+ Directive contributes to making competition law enforcement more effective I will focus on the various approaches the Commission has employed since the adoption of Regulation 1/2003, which then finally led to the adoption of Directive 2019/1. This should answer the question of whether there was sufficient, evidence-based groundwork to justify further harmonisation in this field. Within this section I will distinguish between a retrospective part, which monitored the functioning of Regulation 1/2003, and an anticipatory part, which prepared the adoption of further harmonisation measures. 38
a) Retrospection of Regulation 1/2003
aa) Commission’s Five-Year Report
Art. 44 of Regulation 1/2003 required from the Commission to report to the European Parliament and the Council on the functioning of Regulation 1/2003 five years after its introduction.39 In its 2009 report the Commission concluded that the regulation had significantly improved the enforcement of Articles 101 and 102 TFEU and that it enabled the Commission to become more proactive and to tackle weaknesses in the competitiveness of key sectors of the economy in a focused way.40 Even though stakeholders in the context of the public consultation accompanying this Report have called strongly for further harmonisation of procedures, the Commission considered the differences in the institutional and procedural rules
36 Explanatory Memorandum of Directive 2019/1 of 22 March 2017, COM(2017) 142 final, p. 1.
37 Frédéric Jenny, ‘Does the Effectiveness of the EU Network of Competition Authorities Depend on a Certain Degree of Homogeneity within Its Membership’, European Competition Law Annual 2002: Constructing the EU Network of
Competition Authorities (Hart Publishing), at 208.
38 Jeffrey Rachlinski, ‘Evidence-Based Law’ (2011) 96 Cornell Law Review 901. 39 Art. 44 of Regulation (EC) 1/2003.
40 Communication from the Commission to the European Parliament and the Council – Report on the functioning of Regulation 1/2003, COM(2009)206 of 29 April 2009, para. 41.
to not impede the functioning of Regulation 1/2003 as such and it was further referred that many Member States have voluntarily aligned elements of their procedures with Commission procedures as laid down by the Regulation.41 However, the Commission also pointed out that the ability of national competition authorities to formally set enforcement priorities remains one of the aspects on which divergence between the Member States’ enforcement systems is especially visible.42 The report itself left the question open of whether any amendment to the existing rules or practice is required and was only seen as a basis for the Commission to assess, in a further stage, whether it would be appropriate to take further policy initiatives.43
bb) Commission’s 10-Year Report
Five years after the first Commission’s report, the previous approach seemed to have changed and in 2013 the Commission identified the divergences in the institutional settings of the NCAs and national procedures and sanctions as obstacles to the effective enforcement of EU competition law. It suggested that further progress should be achieved in the future to reinforce the institutional position of the NCAs and to ensure convergence of national procedures and sanctions in the application to infringement decisions of the EU competition rules.44
cc) Resolutions of the European Parliament
Before looking at the relevant resolutions of the European Parliament (hereinafter “EP”), it seems worthy to explore the general role of the EP in the field of competition law a bit more closely.
Art. 17 (6) TEU foresees the EP’s competence to hold the Commission politically accountable. Besides this strong political link between the Commission and the EP, the EP has the competence to censure the Commission and ultimately even dismiss it.45 Compared to other internal market policies the EP has relatively limited legislative and supervisory powers when it comes to EU competition law. It is the only exclusive Union competence in which the EP’s legislative power is purely consultative. The ability to effectively hold the Commission
41 Kati Cseres, ‘The Implementation of the ECN+ Directive in Hungary and Lessons Beyond’ (Social Science Research Network 2019) SSRN Scholarly Paper ID 3489903 <https://papers.ssrn.com/abstract=3489903> accessed 10 June 2020; see
also Malinauskaite (n 20).
42 Communication from the Commission to the European Parliament and the Council – Report on the functioning of Regulation 1/2003, COM(2009)206 of 29 April 2009, para. 33.
43 ibid, para. 43.
44 Wouter PJ Wils, ‘Competition Authorities: Towards More Independence and Prioritisation? – The European Commission’s “ECN” Proposal for a Directive to Empower the Competition Authorities of the Member States to Be More Effective Enforcers’ (Social Science Research Network 2017) SSRN Scholarly Paper ID 3000260
<https://papers.ssrn.com/abstract=3000260> accessed 23 May 2020. 45 Art. 201 TFEU.
accountable for its actions and policy choices is often rendered difficult in practice due to the information asymmetry between the two institutions.46
In the past, the EP has been a strong advocate for more transparency in the work of the Commission and for a more proactive role for the EP in the development of competition policy.47 The various reports and resolutions concerning the Commission’s annual reports on competition policy show an increasing rhetoric for a co-legislative function of the EP to overcome any democratic deficits.48 In its latest report on the annual competition policy report of 2019 the EP “stresses its desire to play a greater role in determining and developing the general framework for competition policy and notes that the EP should be more involved in order to be more prepared for its role as co-legislator.”49
In regards to the effectiveness of the NCAs, the EP repeatedly addressed the paramount importance of the independence of the NCAs in various resolutions issued between 2012 and 2015. While Member States were urged to ensure the independence of all NCAs from governmental influence and sufficient resources in order for them to effectively perform their duties50, the Commission should monitor this independence closely.51 In this regard the EP also maintains that EU should actively promote the substantive and procedural convergence of competition rules in the international sphere, as international cooperation is essential for the consistency and interoperability in the implementation of competition policy by various competent authorities, which in turn can help increase the effectiveness of research and create a level playing field.52
b) Anticipation of further harmonisation (ECN+ Directive)
aa) 2010 ECN Resolution of resources
Further examination and reflection thus followed in 2010 when the ECN published its Resolution of the Meeting of Heads of the European competition authorities.53 It was the ECN’s
46 Outhuisje and Cseres (n 67), see also F Cengiz, ‘Multi-Level Governance in Competition Policy: The European Competition Network’ (2010) 35 European Law Review 660, at 677.
47 Outhuisje and Cseres (n 67), at 99. 48 ibid, at 100.
49 European Parliament resolution of 31 December 2019 on the Annual Report on EU Competition Policy (2019/2131(INI)), para. 87.
50 European Parliament resolution of 11 December 2013 on the Annual Report on EU Competition Policy (2013/2075(INI)), para. 32.
51 European Parliament resolution of 10 March 2015 on the Annual Report on EU Competition Policy (2014/2158(INI)), para. 8.
52 European Parliament resolution (n 50), para. 29.
53 Resolution of the Meeting of Heads of the European competition authorities of 16 November 2010, “Competition authorities in the European Union – the continued need for effective institutions”, accessible at
view that the “competition authorities need to be adequately equipped for their tasks and be able to act under suitable conditions for the execution of their tasks, in an impartial and independent manner”.54
bb) ECN Recommendation on the power to set priorities
In 2013, the ECN published seven recommendations on key investigative and decision-making powers of the NCAs. One of these recommendations dealt with the NCAs’ ability to set priorities and contained general principles on which the authorities considered to be relevant to ensure the effective enforcement of the EU competition rules within the ECN.55
These recommendations are intended to be used as advocacy tools vis-à-vis policymakers. They set out the ECN’s position on the powers authorities in the network should have in their competition toolbox.
cc) Public Consultations & Impact Assessment
Preceding the adoption of the proposed Directive, the Commission commenced a public consultation on empowering the NCAs to be more effective enforcers. In response to the public consultation, the situation where EU secondary law explicitly safeguards the independence of national sectoral regulators but not of NCAs was described as “an anomaly that should disappear”.56
The proposal of the ECN+ Directive also encompassed a Commission Staff Working Document containing the results of an Impact Assessment (IA) of the proposal.57
In regards to the independence of NCAs, the IA speaks of a genuine risk of influence by other state bodies, where state owned companies or activities by state bodies are subject of an investigation by the NCA or where its enforcement action would interfere with other public interest”.58 As to prioritisation, the IA mentions that a majority of the NCAs are not able to set their priorities and cannot reject complaints without substantive investigation.59
54 Ibid.
55 ECN Recommendation on the power to set priorities (December 2013), accessible at https://ec.europa.eu/competition/ecn/documents.html
56 Consultation response by the American Chamber of Commerce to the European Union (AmCham EU), at 3; see also consultation response by the French Competition Authority, at 15 and 20, and consultation response by the Lithuanian Competition Authority, at 13, 15 and 16, all accessible at
http://ec.europa.eu/competition/consultations/2015_effective_enforcers/index_en.html.
57 Commission Staff Working Document, Impact Assessment accompanying the Proposal for a Directive of the European Parliament and of the Council to empower the competition authorities of the Member States to be more effective enforcers and to ensure the proper functioning of the internal market, SWD(2017) 114 of 22 March 2017.
58 Ibid, Part 1/2, at 26; see also Wils (n 44).
c) Interim Conclusion on the developments leading up to the adoption of the ECN+ Directive
All of the above-mentioned contributed significantly to the adoption of Directive 2019/1. They had shown that the decentralised enforcement system introduced by Reg. 1/2003 lacked the necessary tools and guarantees for the NCAs to effectively enforce Art. 101 and 102 TFEU. The crucial importance of the NCAs’ independence, accountability and the positive effect priority setting can have on effective competition law enforcement on Member State level visualised the need for further legislative action on behalf of the Commission. While there have been not specific examples that show a negative correlation between the inability to reject complaints based on priority reasons and the effectiveness of enforcement, certain stakeholders did report that the lack of priority setting ability prevents them from focusing on the most harmful infringements.60
It can be concluded, that the combination of various reports, consultations with stakeholders and assessments and recommendation of the ECN, both from a retrospective and from an anticipatory perspective, enabled the Commission to outline the main weaknesses of the enforcement system under Reg. 1/2003.
2. Objectives and goals of the Directive and their achievement
The next section, pertains to the objectives of the ECN+ Directive and whether their achievement can be realised. This degree of achievement or potential achievement will provide a better understanding of whether the Directive can make competition law enforcement more effective.
a) (More) Effective Competition Law Enforcers
As its title suggests, Directive 2019/1 aims at empowering the competition authorities of the Member States to be more effective enforcers and to ensure the proper functioning of the internal market while not imposing one size fits all, so as to allow taking into account Member States’ legal traditions and institutional specificities. According to the Explanatory Memorandum of Directive 2019/1, this objective can be achieved if the NCAs have the necessary guarantees of independence, resources and enforcement and fining powers.61 Removing national obstacles which prevent NCAs from enforcing effectively will help remove distortions to competition in the internal market and stop consumers and businesses, including
60 See for example the Bundeskartellamt in its reply to the public consultation. 61 Explanatory Memorandum (n 36), at 3.
SMEs, being put at a disadvantage and suffering detriment from such measures. Moreover, enabling NCAs to effectively provide each other with mutual assistance will ensure a more level playing field and safeguard close cooperation within the ECN.62
b) Institutions and their relevance for the effectiveness of competition law enforcement
The overall effectiveness of EU competition law enforcement is built on various aspects, such as an effective fining system, mutual assistance between the NCAs and effective leniency programs throughout the EU. However, within this research I will be examining the effectiveness of competition law enforcement solely from an institutional and procedural perspective, and thus focus on their independence, accountability and their ability to set priorities.
Procedural rights and effective law enforcement are not inherently antithetical.63 On the contrary, procedural rules can contribute to the effectiveness of an enforcement system by enhancing the accuracy of the outcome of the enforcement proceedings, and thus their deterrent effect and by enhancing the perceived fairness of the law.64
The differences in the institutional design between the various Member States can render even the most effective competition laws insufficient to ensure the competition goals if they are not enforced by appropriately designed institutions.65 In the case of EU competition laws, the effectiveness of the enforcement is to a certain extent dependent on the institutional set-up of the national competition authorities. Having a broad diversity between institutions and procedures can lead to diverse substantive outcomes, which in turn can go against the overall objective of a competitive internal market.66 In legal systems, where the competition authorities have adequate financial resources, are independent from political or other influences and have been vested not only with far-reaching investigatory tools but also with the power to impose sanctions on competition law offenders, the competition rules will be applied more effectively than in those countries where the agencies are dependent on political institutions or have not been empowered with the same adequate enforcement powers or resources.67 Accordingly, the first Article of Directive 2019/1 sets out certain rules to ensure that national competition
62 Ibid., at 3, 4.
63 Angela Wigger, ‘Competition for Competitiveness: The Politics of the Transformation of the EU Competition Regime: Academisch Proefschrift’ (Vrije Universiteit 2008), at 281.
64 Wouter PJ Wils, ‘Fundamental Procedural Rights and Effective Enforcement of Articles 101 and 102 TFEU in the European Competition Network’ (Social Science Research Network 2019).
65 Pisarkiewicz and Botta (n 75).
66 David J Gerber, ‘Competition Law and the Institutional Embeddedness of Economics’ (Social Science Research Network 2008), at 24; Cseres, ‘The Implementation of the ECN+ Directive in Hungary and Lessons Beyond’ (n 21), at 17.
authorities have the necessary guarantees of independence, resources and enforcement and fining powers to be able to effectively apply Articles 101 and 102 TFEU.68 The wording suggests that effective competition law enforcement is based on independent NCAs, which have enough personal and financial resources as well as sufficient enforcement and fining powers. The NCAs, according to an analogy to sport used by North, can be considered as the players of one team playing for the same goal, which is the prevention of distortions of competition within the internal market by enforcing Art. 101 and 102 TFEU.69 Whether or not they can win, depends largely on the skill of the players and the knowledge they possess of the game.70 While the German BKartA has had a longstanding and established competition law enforcement practice it possesses more knowledge than NCAs that have only been formed at a later point. Therefore, the differences in the institutional framework of NCAs can have a significant influence on the effectiveness of EU competition law enforcement.
3. Institutional and procedural aspects: Independence, accountability and priority setting As mentioned in the introduction, this analysis solely focuses on the implications of the institutional changes introduces by the ECN+ Directive in regards to independence, accountability and the power to set priorities. The following section will thus discuss from a general perspective, the implications these three aspects have for the effectiveness of competition law enforcement and most importantly on the effectiveness of its enforcers.
a) Independence of NCAs
The ECJ has held that in relation to a public body, the term independence normally means a status which ensures that the body concerned can act completely freely, without taking instruction or being out under any pressure.71
Independence of authorities that are empowered to enforce EU legislation can be found in almost all areas where the Commission delegates power to the Member States. EU directives in the areas of electricity, natural gas, electronic communications and railways already encompass provisions safeguarding the independence and resources of national regulatory authorities comparable to those foreseen for the NCAs in Art. 4 and Art. 5 of the ECN+ Directive.72 In Member States where the competition authority is part of an integrated
68 Art. 1 of Directive 2019/1.
69 Douglass C North, Institutions, Institutional Change and Economic Performance (Cambridge University Press 1990). 70 Ibid.
administrative body that is at the same time responsible for the regulation of electricity, natural gas, electronic communications or railways, that authority is already today subject to the requirements on independence and resources contained in the corresponding EU directives.73 During the public consultation, in advance of the proposal for the new ECN+ Directive, some NCAs, in particular Member States such as Germany and Italy, reported of incidents and their experiences which led them to the conclusion that the independence of certain NCAs was not guaranteed.74
aa) Independence from government, other state bodies and politics
It is generally accepted, that the independent competition authorities are one of the main pillars on which an effective competition law enforcement is build and it is not new knowledge, that the politically independent competition agencies ensure the credibility of competition policy as it the agency is in a better position to act in the public interest without interference from the government.75 The NCA’s independence from national governments and from political interference is particularly important as many independent NCAs are often still part of a ministry.76 The Impact Assessment which accompanied the European Commission’s 2017 proposal for the Directive mentioned in particular that “a genuine risk of influence by other state bodies exists where state-owned companies or activities by state bodies are subject of an investigation by the NCA or where its enforcement action would interfere with other public interests”.77
bb) Independence from economic operators and business interest
The independence of NCAs is particularly important given that most competition systems are not self-supporting but are constantly threatened by individual interests.78 Despite the many general public benefits from a regulated and competitive market, there are always incentives for individual companies or sectors to avoid competition. There is thus a large consensus that
73 ibid.
74 The consultation questionnaire, all the replies to the consultation (some in redacted, anonymized form) and a summary report of the replies are accessible at http://ec.europa.eu/competition/consultations/2015_effective_enforcers/index_en.html. 75 G. B. Peters, United States competition Policy Institutions: Structural constraints and opportunities, in G.B. Doern and S. Wilks (eds.), Comparative Competition Policy: National Institutions in a Global Market, Clarendon Press, Oxford, p. 48. 76 For example, the German Competition Law Act entails a provision under which the Minister of Economic Affairs may authorize a merger between two undertakings, previously denied by the German Competition Authority.
77 Commission Staff Working Document, Impact Assessment accompanying the Proposal for a Directive of the European Parliament and of the Council to empower the competition authorities of the Member States to be more effective enforcers and to ensure the proper functioning of the internal market, SWD(2017)114 of 22 March 2017, Part 1/2, at 26.
78 The Bundeskartellamt in Bonn Organisation, Tasks and Activities, available at:
https://www.bundeskartellamt.de/SharedDocs/Publikation/EN/Brosch%C3%BCren/Brochure%20-%20About%20the%20Bundeskartellamt.pdf?__blob=publicationFile&v=20
the competition authorities should be independent from business interests. One of the fears frequently expressed is that the competition authority could be “captured” by private interests, particularly the interests of the most powerful firms that have vast resources and may exert political influence, making the authority unable to discharge its law enforcement responsibilities in a fair and equitable manner.79 In such instances, not only would the faith in free markets of the population at large and of political elites be shaken, but the competition authority could end up undermining competition by turning a blind eye anticompetitive practices or by being used strategically to prevent the emergence of potential competition, to the benefit of cartelists or dominant firms.80
cc) Independence under the ECN+ Directive
The ECN+ proposal aims to ensure that NCAs enjoy the necessary guarantees of independence to enforce the EU competition rules impartially. To that end, it provides for a number of safeguards to protect the staff and management of NCAs against external intervention or political pressure that is liable to jeopardise their independent assessment of the matters before them.81 First, Member States must ensure that they can perform their duties and exercise their powers independently from political and other external influences and that they do not seek or take any instructions from government or any other public or private entity when carrying out their duties and exercising their powers for the application of Articles 101 and 102 TFEU (Art. 4(2)(a) and (b)).
Finally, Member States have to ensure that their respective NCAs refrain from any action which is incompatible with the performance of their duties and exercise of their powers (Art. 4(2)). Recital 22 of the Directive states that “the operational independence of national administrative competition authorities should not preclude either judicial review or parliamentary supervision in accordance with national law”.82
Art. 4 (1) and (2)(a) to (d) of the ECN+ Directive introduces very general and basic minimum requirements in regards to independence. The divergence that can often be seen between de
jure independence and de facto independence of NCAs and the fact that such independence is
largely embedded in the political and administrative culture of the Member States seems to
79 Wils, ‘Competition Authorities’ (n 51). 80 Cengiz (n 10).
81 ECN+ Directive, recital 17. 82 Recital 22 ECN+ Directive.
justify such a general harmonisation approach.83 The minimum standards for their independence will most likely generate the anticipated result of creating more trust between the different NCAs, which will hopefully lead to a more effective cooperative competition law enforcement.
b) Accountability
In a speech before the Romanian Competition Council in 2017, Commissioner Vestager recalled that with “great power comes great responsibility”84 and that the most important responsibility is to obey the rule of law.85 Accountability is crucial in providing democratic means to control the conduct of independent agencies to avert a concentration of power and to make enforcement agencies more effective.86 At the same time public agencies need to be held accountable in order to ensure their credibility and the legitimacy of their actions.87 This is especially the case within an enforcement system which is built on a multi-level governance structure. The requirement of being an independent public authority should not lead to a complete absence of any control or the freedom to act as one pleases as this could easily be misused as a licence for laziness, inefficiency, dereliction of duty, intransparency, arbitrariness, self-dealing, corruption, abuse of power or self-aggrandisement.88
Therefore, it is indispensable to find a minimum yet common standard to prevent a significant impediment of accountability amongst the Member States.89 The discussion of the independence of the NCA has made it clear that the crucial issue is to determine which types of controls, interference or influence are inappropriate, and which are appropriate, to ensure that competition authorities are able to fulfil their tasks.90
The problem we see in regard to EU competition law is that the EU Commission remains an influential and important actor within the decentralised enforcement system. To clarify and ensure the consistent application of the EU competition rules, the Commission issues various soft law documents in the form of notices and guidelines, to explain its enforcement and provide guidance for undertakings.91 While these instruments are of high influence for the enforcement
83 Wils, ‘Competition Authorities’ (n 51), at 35.
84 As a reference to the “Peter Parker Principle”, a proverb popularized by the Spider-Man comic book series. 85 Speech Vestager of 18 May 2017 at the Romanian Competition Council Anniversary Even, Bucharest.
86 Miroslava Scholten, ‘“Independent, Hence Unaccountable”? - The Need for a Broader Debate on Accountability of the Executive’ (Social Science Research Network 2011).
87 Imelda Maher, ‘Networking Competition Authorities in the European Union: Diversity and Change’, European
Competition Law Annual 2002: Constructing the EU Network of Competition Authorities (Hart Publishing), at 226.
88 Wils, ‘Independence of Competition Authorities’ (n 97).
89 F Cengiz, ‘Multi-Level Governance in Competition Policy: The European Competition Network’ (2010) 35 European Law Review 660, at 677.
90 Wils (n 33), at 12.
of the competition rules, they are not legally binding upon the NCAs.92 Such soft law instruments are characterized by a deficit in democratic legitimacy which will influence the enforcement agenda of the Commission and the NCAs.93 The reason why this situation is so troubling, is that it shapes the substance of EU competition law without having a proper political accountability forum.94
The NCAs are usually held accountable by their national parliaments for their EU competition law enforcement (political accountability).95 Political accountability is generally determined by national law and the respective legal traditions.96 The ECN on the other hand cannot be held accountable either to the European Parliament or the national parliaments. As a consequence, decisions taken by the Member States within the ECN, such as regarding case allocation or information exchange, are also not accounted for.97 While other EU networks are under the obligation to publish reports and subsequently present them to the Commission and the European Parliament, any information on the work of the ECN is only provided through the Commission’s annual reports and through its own website and its newspaper.98
aa) Accountability under the ECN+ Directive
Art. 4 of the Directive does not add a substantive provision on political accountability and merely states that Member States should subject their NCAs to proportionate accountability requirements, without defining further details of what these are.99 Only the explanatory memorandum contains further explanations stating that proportionate accountability requirements include the publication by NCAs of periodic reports on their activities to a governmental or parliamentary body.100
bb) Judicial accountability
92 ibid. 93 ibid.
94 Oana Andreea Stefan, ‘European Competition Soft Law in European Courts: A Matter of Hard Principles’ (2008) 14 European Law Journal 753.
95 Cseres, ‘The Implementation of the ECN+ Directive in Hungary and Lessons Beyond’ (n 18), at 27. 96 Outhuisje and Cseres (n 53).
97 Cseres, ‘The Implementation of the ECN+ Directive in Hungary and Lessons Beyond’ (n 15). 98 ibid.
99 Outhuisje and Cseres (n 53).
100 Proposal for a directive of the European Parliament and of the Council to empower the competition authorities of the Member States to be more effective enforcers and to ensure the proper functioning of the internal market, COM(2017)142 final, at 23.
The ECN+ Directive does not include any provisions on judicial accountability. However, in recital 16, the Directive states that the standard requirements for independence of the NCA’s does not preclude judicial review.101 Judicial review, together with political accountability, strengthens the independence of NCA’s. As NCAs are often confronted with cases that result in some degree of political pressure, judicial accountability can serve as an effective tool for relief.102
Amongst the Member States the level of the NCA’s judicial accountability varies greatly, due to the principle of procedural autonomy, which allows for differences in the type and number of courts, expertise of the judiciary, burden and standard of proof during court procedures, and time limits.103 On EU level a concerned undertaking can file an appeal against a Commission’s decision at the General Court as the first instance and the CJEU as the second instance court.104 Overall, similar to the independence requirement, Directive 2019/1 does only introduce the most basic minimum harmonisation for the accountability of the NCAs and therefore leaves again room for diverging implementation approaches. This seems to be a recurring problem we see with this Directive. While the theoretical implications are there, it is not going that little extra step in terms of harmonisation to lay down some much needed procedural and institutional ground rules. The risk thus remains that while Member States might fully comply with the requirements, without having a significant impact on the effectiveness of competition law enforcement.105
c) Power to set priorities
There is a thin line between effective enforcers and efficient enforcers. Especially in regards to priority setting this line becomes blurred easily. While the vast majority of NCAs operate on a budget and often struggle with finite financial, human and technical resources, their duty to enforce the competition rules results in an infinite number of cases.106 This imbalance causes a significant decrease of efficiency in the functioning and operation of NCAs. It prevents them from effectively using their limited resources and from focusing their efforts on deterring and influencing behaviour that poses the greatest threat to competition and consumers.107 The NCAs’ ability to set priorities thus poses an important issue in the context of competition law
101 Recital 16 of Directive 2019/1. 102 Wils, ‘Competition Authorities’ (n 51). 103 Outhuisje and Cseres (n 67), at 111. 104 Art. 263 TFEU.
105 Cseres, ‘The Implementation of the ECN+ Directive in Hungary and Lessons Beyond’ (n 13). 106 Petit (n 98), at 48.
enforcement. However, very little is known about the theoretical foundations and the legal, political, and economic reasons underlying prioritization.
The ECN defines priority setting, at a general level, as “the ability of NCAs to prioritise and plan their work”. 108 In doing so they are advised to define priorities from a policy perspective. This includes the formulation of long, medium or short-term strategic plans relating to the NCAs overall portfolios and the allocation of resources across their areas of responsibility. On an individual level, priority setting “refers to the ability of NCAs to apply different degrees of priority to individual cases in the exercise of their enforcement powers”.109
Furthermore, a distinction can be made between positive and negative priority setting. The ability to set positive priorities includes the NCA’s competence to initiate investigations and proceedings ex officio.110 In contrast, negative priority setting refers to the possibility to reject complaints on the base that the respective NCA does not consider it to be a priority.111 Particularly, in regards to the latter a high degree of divergence between the NCAs was found. aa) Discretion
The ability to set priorities entails the discretion of NCAs to prioritize, shelve and even set aside cases on subjective grounds rather than on objective grounds which is something that most NCAs are already entitled to do.112 Finding the right balance between discretion and control is a notoriously daunting task. When we look at target discretion for example, it is certainly sensible, from a public policy standpoint, to entitle an NCA to allocate its limited resources to cases where the expected loss to consumers is the highest and in turn, to dismiss prima facie cases of lesser economic significance.
bb) Prioritization under the ECN+ Directive
Through the adoption of the ECN+ Directive priority setting is for the first time transposed into hard law. The newly introduced Art. 4(5) of the Directive states Member State have to ensure that their NCAs have the power to set positive priorities, i.e. the power to initiate investigations and proceedings on their own initiative. This does not necessarily have perceptible consequences as all NCAs were already competent to do so before the introduction of the
108 ibid, point 2. 109 Ibid, point 2.
110 Wils, ‘Competition Authorities’ (n 51). 111 ibid.
Directive.113 In addition to positive priority setting, the NCA, that were previously obliged to consider all formal complaints, shall have the power to reject such complaints on the grounds that they do not consider such complaints to be an enforcement priority.114
Under the operational independence requirements, Member States have to ensure that NCAs set their priorities independently and in the sole interest of an effective and uniform enforcement of Art. 101 and 102 TFEU.115
While making priority setting an enforcement obligation on Member State level is a very welcoming aspect of the ECN+ Directive, the legislative text fails to provide further clarification on the procedural framework and the substantive criteria of priority setting. The considerable and criticised divergence between NCAs in regards to priority setting was a driving force behind the new Art. 4(5) ECN+ Directive but without any concrete guidance, divergence will likely prevail. This becomes especially evident when considering the potential side effects that can result from the NCAs’ ability to prioritise. First, it implies a disputable choice to trade-off equality in return for a more effective enforcement system.116 Any victim affected by anti-competitive behaviour should equally benefit and rely on the thorough competition law enforcement through the NCA.117 Second, some scholars have expressed concerns as to the potential situation in which NCAs could be inclined to institute a “cherry picking” enforcement of the competition rules.118
While the ECN recommendation on priority setting can still be seen as a complementary soft law document, on which the NCAs can theoretically fall back on, in light of Art. 4(5) it seems fairly outdated. Finally, one needs to consider that no legal certainty stems from such soft law documents.
III. Conclusion
Considering the Commission’s obsession with the effectiveness of EU competition law enforcement, the modest harmonisation approach in regards to independence, accountability and priority setting that comes with the ECN+ Directive seems unexpected, especially considering the many times the Commission has stressed and pushed the need for further
113 Wouter PJ Wils, ‘Discretion and Prioritisation in Public Antitrust Enforcement, in Particular EU Antitrust Enforcement’ (Social Science Research Network 2011).
114 Art. 4(5) of Directive 2019/1. 115 Recital 17 of Directive 2019/1. 116 ibid.
117 ibid.
118 Ivo van Bael, ‘Insufficient Control of EC Competition Law Enforcement’ in Barry E Hawk, International Antitrust Law &
