Antitrust Alert: EU Advocate General Suggests Limitations to the Powers of EU National Competition Authorities

In the European Union (EU), competition law enforcement is in the hands of both the European Commission based in Brussels and the network of 27 national competition authorities (NCAs) in the Member States.  Since the decentralisation of EU competition law in 2004, NCAs in Europe have had jurisdiction to fully apply the primary EU competition provisions, Articles 101 and 102 TFEU.  However, given the lack of procedural harmonisation across the Member States, various issues have arisen on the extent of NCA powers and obligations when enforcing EU law.  A recent opinion from an Advocate General at the EU Court of Justice (the Court) addresses the extent to which a NCA can issue a declaration that conduct does not violate EU law, a "negative clearance decision."  If the Court follows that opinion, it will have important implications for companies under investigation by NCAs. 

National competition authorities' issuance of negative clearance decisions

Prior to 2004, the European Commission was the sole authority in the EU with the right to grant negative clearance decisions relating to Articles 101 and 102 TFEU.  It was clear that NCAs did not have the authority to declare that conduct was not an EU law violation.  Implemented in 2004, the modernised procedural rules on EU antitrust enforcement curtailed the ability of the European Commission to grant negative clearance – and required companies to "self assess" the legality of their conduct in the first instance.  The 2004 reforms also granted NCAs five broad decision-making powers when applying Articles 101 or 102 TFEU: 

• requiring that an infringement be brought to an end;
• ordering interim measures,
• accepting commitments,
• imposing fines, periodic penalty payments or any other penalty provided in their national law, and
• deciding that there are no grounds for NCA action.

A recent case before a Polish court raised the question of whether NCAs also have the power to grant negative clearance.  The Polish NCA had investigated Telekomunikacja Polska for a breach of Article 102 TFEU.  However, it ultimately concluded that the conduct did not constitute an abuse and adopted a decision under national law that the undertaking had not acted in restraint of competition; in contrast, the Polish NCA only held that there were no grounds for action under Article 102 TFEU.  A third party, Tele2 Polska, appealed the latter decision, contending that the Polish NCA "should have adopted a decision of a declaratory nature to the effect that there was no restrictive practice under Article 102 TFEU, since it had adopted a decision to that effect under national law." 

Advocate General Mazak's recent Opinion before the Court concluded that "a competition authority of a Member State is not empowered to take a decision stating that a practice does not restrict competition within the meaning of Article 102 TFEU in a case in which it has found…that the undertaking did not breach the prohibition of abuse of a dominant position under that Treaty provision."  Under this Opinion, in light of the role of the European Commission to ensure a uniform, coherent and consistent application of EU competition law, national competition authorities may only close proceedings where they believe no infringement has occurred under the TFEU.

Although an Advocate General's opinion is not binding on the Court, it is a strong indication of the likely direction of the Court. The Court's judgment is expected in 2011.

Consequences of the recent opinion

At first sight, this position reflects the European Commission's current enforcement practice under EU law.  Companies are required to self-assess the legality of their actions under EU law, and negative clearance cannot be obtained at the EU level. On one hand, therefore, this opinion merely reflects the EU-level position.

On the other hand, the restraint on NCA powers to grant negative clearance may mean that parties could be left in a position of genuine legal uncertainty.  First, simply closing proceedings does not clearly signal the legality of particular conduct.  Secondly, and unlike at EU level, there is a threat of private enforcement at national level – a policy that the Commission is actively seeking to encourage.  The absence of negative clearance may also encourage private enforcement actions or allow such actions to continue even though the NCA found no breach and believed that there was none.

Our prior Alert on the European Commission's approach to private enforcement may be found here. 

Lawyer Contacts

For more information, please contact your principal Jones Day representative or either of the lawyers listed below.

Vincent Brophy
Brussels / London
+ 32.2.645.15.35 / +44.20.7039.5192
vbrophy@jonesday.com

Marcus Pollard
Brussels
+32 2 645 14 11
mpollard@jonesday.com

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