Author (Person) | Jones, Tim |
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Series Title | European Voice |
Series Details | Vol 6, No.42, 16.11.00, p21 |
Publication Date | 16/11/2000 |
Content Type | News |
Date: 16/11/00 By HUMAN rights laws are usually penned with the individual underdog in mind. Traditionally, these conventions are designed for the tortured prisoner, the disregarded voter or the prejudged minority and not for multinationals with battalions of lawyers and their eyes on the ideal merger prize. At least, not until now. The European Commission's directorate-general for competition has an image problem. After blocking the giant telecoms merger between WorldCom and Sprint and the three-way music production and distribution tie-up between AOL, Time Warner and EMI, the department is being increasingly criticised as over-powerful. Even worse, some commentators believe that Competition Commissioner Mario Monti is making up law on the hoof to break up American conglomerates in favour of EU rivals such as the new Vivendi-Universal challenger. The suspicion has taken root to such an extent that an editorial in The Industry Standard magazine recently posed the question: "Is Europe out to get the States?" Corporate lawyers and a handful of policy-makers are beginning to sense that the balance of power between firms and the Commission's merger task force has see-sawed too far - so much so that existing merger-vetting practices might even violate Article Six of the European Convention on Human Rights. This states that "everyone is entitled to a fair and public hearing within a reasonable time by an independent and impartial tribunal established by law", with rights to prompt and clear explanation of accusations, and adequate time to prepare a defence and examine witnesses. Merger investigations are time-limited. The task force examines take-overs for a month for evidence that they will lead to dominance in sectoral and geographical markets and, if they do, launches a four-month period of negotiations with the companies involved to address these concerns. Monti has set these deadlines in stone after his predecessor Karel van Miert warned him that many firms were indulging in brinkmanship by waiting until the 11th hour to offer real concessions. "The trouble is that this is very much the way DG Competition sees it," says a lawyer recently involved in one of these high-stakes poker games who disputes this interpretation of events. "It is sometimes tactics but usually, the kind of concessions they want are not offered because we do not agree with them on their definitions of markets affected, the need for divestment rather than undertakings and so on." Another institutional lawyer claimed the "dice are loaded in favour of the Commission so that companies concede rather than fight" - a view expressed loudly by WorldCom's chief Bernie Ebbers and, four years ago, by executives from aerospace goliath Boeing. When firms are utterly convinced that they are in the right - and they would not have proposed the merger if they |were not, say their lawyers - they often believe their arguments are not given a fair hearing. This suspicion was fuelled in September when John Temple Lang, a senior official appointed by Monti only four months earlier as a 'hearing officer' for parties in competition cases, resigned. Monti himself realises he has a problem. "In view of the important function of DG Competition and the sometimes far-reaching effects of Commission decisions in the field of competition, particular attention has to be paid to the respect of procedural rights of parties," he said in May as he appointed Temple Lang and announced an internal inquiry into the role of hearing officers. Holders of this post, which was originally created in 1982, organise hearings of all parties involved in a merger or cartel case and report directly to the Commissioner and director-general for competition. Once the EU's time-limited merger regulation took force in 1990, the Commission beefed up the role of the hearing officer, taking into account the recommendations of an inquiry by the Union scrutiny committee of the House of Lords, the UK parliament's second chamber, in 1993. The UK committee said hearing officers should be senior A2-grade officials, should be "irremovable except for serious professional misconduct" and should remain on the staff of the Commission's anti-trust department to allow easy "informal consultation" with case officers. The panel also recommended that officers be given powers to help resolve procedural disputes between all parties including access to documents, deadlines and 'full disclosure' of cases. Their final recommendation - that the hearing officer's report should be sent to all parties - was not accepted and is unlikely to be adopted by the current inquiry. Temple Lang told a Lords' follow-up inquiry, which will produce a new set of recommendations for Monti's review by the end of this month, that he favours publication of the report. But Bernd Langeheine, who heads the competition department's unit dealing with the economic and legal aspects of anti-trust policy, told the same hearings earlier this month: "The hearing officer's role is not to be quasi-judicial but to ensure fair procedure. If the report is sent to the parties, then this would imply a procedure of appeal to the hearing officer against the Commission and that would create institutional problems." In its own inquiry into the officer's role, the Commission is concentrating on minor changes. At the moment, they are appointed as an A2-grade official with an 'understanding' that they are approaching retirement and will therefore not seek reappointment. The competition directorate-general will consider formalising this understanding. More radical proposals, such as making the officer an employee of the European Court of First Instance rather than the Commission, are off the agenda for now. While Deputy Director-General Jean-François Pons told the Lords' panel that this was "a possibility" in the future, both he and Langeheine warned that an external hearing officer would have to deal with the competition department in a "much more formalised way". This, they argued, would undermine the officers' access to documents and regular updating on developments in cases. The Commission intends to finish its inquiry by early next year. Together with new guidelines on remedies which will satisfy competition officials and a clear rulebook to prevent 'collective dominance' by a group of companies, Monti hopes that reforming the hearing officer's role will be enough to satisfy increasingly angry multinationals. If not, he may find himself in Strasbourg at the European Court of Human Rights. Major feature. |
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Subject Categories | Internal Markets |
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