Antitrust & Competition Policy Blog

Editor: D. Daniel Sokol
University of Florida
Levin College of Law

Friday, December 16, 2011

Best and Even Better Practices in the European Commitment Procedure after Alrosa: The Dangers of Abandoning the ‘Struggle for Competition Law’

Posted by D. Daniel Sokol

 Florian Wagner-von Papp, University College London Faculty of Laws has posted Best and Even Better Practices in the European Commitment Procedure after Alrosa: The Dangers of Abandoning the ‘Struggle for Competition Law’.

ABSTRACT: Where the EU Commission has concerns about possibly anticompetitive conduct, Article 9 Regulation 1/2003 empowers the Commission to accept commitments from the undertakings concerned, provided that these commitments meet the concerns; if the Commission accepts the commitments, it makes them binding on the undertakings and concludes that there are ‘no longer grounds for action’ (the ‘commitment procedure’). This commitment procedure is part of a wider trend that promotes what one could call ‘consensual competition law enforcement’. The underlying problem of consensual competition law enforcement is that it departs from the traditional public-law paradigm of an authoritative top-down command in favour of a consensual dispute resolution mechanism. As a result, it is uncertain to what extent the traditional safeguards against such authoritative commands developed in public law – such as the principle of proportionality – continue to apply to this hybrid procedure; the ‘voluntary’ nature of commitments may instead suggest a hands-off approach.

In the Alrosa case, both the General Court and the Court of Justice of the European Union (CJEU) had the opportunity to adjudicate on the degree of protection to be afforded to the undertakings against disproportionate commitments. The General Court implicitly considered the public-law character of commitment decisions to govern the analysis, and as a consequence required the Commission to afford the undertakings procedural protections similar to those available in infringement procedures. In contrast, Advocate General Kokott and the CJEU stressed the consensual (‘voluntary’) aspect of the commitment procedure. The strictures of the rule of law were relaxed with the argument that the parties could sufficiently protect themselves against disproportionate remedies in the course of the negotiations. After all, nobody forces undertakings to offer commitments to the Commission.

The article starts by outlining the underlying problem of the commitment decision as a hybrid measure between unilateral command and contract, and the extent to which commitment negotiations differ from contracting between private parties (Parts 2 and 3). Parts 4 and 5 give a brief overview of the respective advantages and disadvantages of infringement procedures and commitment procedures. Part 6 describes the Alrosa judgments of the General Court and the CJEU. I will then discuss, in Part 7, why the growing reliance on consensual competition law enforcement is problematic, before concluding in Part 8.

The main criticism is that the current lack of external or internal constraints on the Commission in the commitment procedure may result in a vicious circle, leading to ever more commitment decisions and ever fewer infringement decisions. Undertakings start to extrapolate their obligations from commitment decisions and non-binding guidelines that do not authoritatively state the law. This reliance on ‘quasi case law’ increases the Commission’s discretion in future negotiations. The incentives for the Commission to resort to the commitment procedure are especially strong in cases involving novel legal issues, that is in cases in which the benefit of legal certainty provided by an infringement decision would be particularly strong. There is a danger that the struggle for law is abandoned in favor of discretionary case-to-case negotiations.

There are two ways out of this vicious circle. One is to make infringement decisions more attractive for the Commission by increasing the Commission’s discretion in devising proactive remedies. The other way is to impose more constraints on the Commission in the commitment procedure. Since the legislator and the Court have largely abandoned their role in constraining the Commission’s discretion in the commitment procedure, it now falls to the Commission to exercise self-restraint, not only in individual cases, but by issuing self-binding guidelines.

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