Ministers to underline concerns over ‘flaws’ in Monti blueprint

Date: 30/11/00

By Peter Chapman

EU INDUSTRY ministers will next week air a growing list of concerns over European Commission plans to give Union anti-trust rules their first major overhaul for 40 years.

On the table at the ministerial meeting will be a draft regulation unveiled by competition chief Mario Monti this summer which aims to devolve responsibility for vetting most of the day-to-day cases to member states, freeing up his overstretched officials to fight 'hardcore' pan-EU cartels.

Diplomats say that during the first detailed debate on the proposed reforms, ministers will tell Monti that this approach is fine in principle - but will warn him that the devil lies in the detail.

The crux of Monti's blueprint is a proposal to abandon the 'notification' system which places the biggest burden on Commis-sion competition officials. Under the current regime, the EU executive has the sole power to exempt companies from tough Union anti-trust rules outlawing cartels and collusion if it concludes that their agreements with rivals are too insignificant to damage the single market.

The result is that businesses flood the Commission with 'notifications' of small agree-ments which have little adverse impact on competition. Although few formal decisions are taken, the Commission often sends companies a 'comfort letter' saying that the deals are not, at first glance, a problem and that they can continue. The act of notifying the Commission also means firms would not face fines should their deal be actually deemed unacceptable.

In contrast, the new regime would make firms and their lawyers responsible for deciding whether their activities comply with EU rules, although their findings could be challenged in court by rivals or consumers.

But diplomats say a number of member states are concerned about a clause inserted at the request of Germany which would allow the Commission to insist that firms still send it details of agreements for inclusion in a public 'cartel register', which would be made available to third parties if they subsequently caused competition problems.

They fear that as a result, companies would still face much of the red tape they do now - in a proposal which was intended to cut it - whilst failing to offer the legal protection from fines or the feedback on the legality of their deals which notifying the Commission currently gives.

To fill this vacuum, some governments are likely to argue for a system under which firms can still get legal guidance on complex or 'big ticket' agreements where the stakes are so huge that the companies cannot risk anything going wrong. "In some situations there may be a need for some legal certainty, for example if there is a tricky piece of law, or if we are talking about a new product which has never been examined before, or if a company is going to bet the ranch on a particular agreement," explained one diplomat. He added that this would avoid the US situation where firms rely more on their own lawyers' advice, and complicated litigation is the norm.

Another Monti proposal raising temperatures in capitals is a move which would force national regulators to give EU competition law precedence over domestic rules in all local cases which involved trade between member states.

Ministers are likely to claim that this would undermine swathes of national legislation in the competition field. "Some member states have particular requirements for particular sectors, for example the utilities, and they would not like them to be wrecked," said one diplomat.

EU industry ministers are due to air a growing list of concerns over European Commission plans to give Union anti-trust rules their first major overhaul for 40 years. On the table at the ministerial meeting will be a draft regulation unveiled by competition chief Mario Monti in summer 2000 which aims to devolve responsibility for vetting most of the day-to-day cases to Member States, freeing up his overstretched officials to fight 'hardcore' pan-EU cartels.