Making competition a capital issue

Date: 15/01/1998

By Chris Johnstone

THERE is a saying somewhere that you can measure the success of an establishment by the people it turns away.

If that is the case, the European Commission's Directorate-General for competition (DGIV) will be looking to follow the likes of pretentious restaurants and hip nightspots by improving its turn-away performance significantly over the next few months and years.

As the winds of change blow across Europe's competition landscape, with independent authorities springing up in some countries, being reinforced in others, and general moves to bring procedures into line with those of Brussels, Competition Commissioner Karel van Miert's hard-pressed officials are now looking to encourage national authorities to take more of the strain.

Wherever possible, complainants are now being pointed down the road to the Schuman roundabout and one of the avenues leading to the rest of Europe.

"The conditions for this are better now than they have been for a long time," said one highly-placed DGIV official. "The Netherlands has a sparkling new competition authority, Belgium has started to sort itself out after a long period of difficulties with a political commitment from the government to take action, and the Finns and the UK are reforming their competition laws."

Even Luxembourg is shaping a new competition law, although the Grand Duchy is not likely to have to deal with a flood of cases relating to its own tiny market.

The Commission's statement of intent about devolving more work to the regions was made at the end of last year in a non-legally binding notice thrashed out with EU member states.

The plan is to redirect complaints about abuses of dominant positions, price-fixing and cartels back to the country of origin if they have a purely national dimension.

DGIV is optimistic about the amount of work it can offload, but there are no concrete figures to back up its assumptions and there are no new powers for national authorities.

The best estimate is that competition cases make up one-third of the directorate-general's work, and perhaps one-third of those cases could be handed back to national authorities. "We are optimistic this can happen," said an EU official, although he added: "It is hard to speculate on what the actual case-load could be."

National authorities support the idea, but are quick to point out some of the pitfalls that will have to overcome.

"We do not expect a lot more cases," said a spokeswoman for the Danish competition authority, one of the handful of national bodies whose powers have recently been boosted.

Somewhat ironically, the strengthening of national competition watchdogs comes as more and more cases are found to have a cross-border rather than a national dimension, due to the EU's internal market and the spate of company acquisitions ahead of the single currency.

Business across Europe still sees the Commission as the first port of call for complaints because it is cheap and, despite all the delays, faster than national authorities.

At its simplest, launching a complaint in Brussels costs the price of a stamp, envelope and paper. Commission officials - mostly trained lawyers - will do the legwork and launch an investigation if they are convinced that there is a case. "We may be cheaper in so far as a competition investigation is cheaper than any litigation between companies," said a Commission official.

Parallel moves by Van Miert to make national courts more active in competition cases have not, as yet, produced swift results. "It is much easier, faster and cheaper to go to the Commission," said the Danish spokeswoman.

Commission officials acknowledge that there has not been a flood of cases, but a gradual increase.

Part of the reason for this may be that European companies do not like to get the gloves off when it comes to complaints. Somehow, letting the Commission intervene appears a less dirty option than taking on the opposition in the courts.

"European companies do not have the culture for litigation that you have, for example, in the US," explained the official.

However, the Brussels route is not a path to riches. DGIV cannot award damages to companies which have been injured, but only inflict fines on those that have been found guilty of breaches of the rules.

The Commission has also kept for itself key powers to grant companies exemptions from competition procedures - a formula which will continue to guarantee work for its officials.

"There will be some scepticism about the process as long as the Commission keeps sole powers for giving exemptions," said one Brussels-based lawyer.

This right to award exemptions has also led to companies treating the Commission as a type of appeal court if things seem to be going badly at national level, turning to the institution for an exemption if they do not like the feedback from national officials.

The Commission has attempted to deflect firms which take this tack, telling them that it will not look at demands for exemptions if national competition authorities have already been involved.

But German power giant RWE is challenging this in court, after it was prevented from turning to the Commission in a bid to safeguard its monopoly rights to supply power to a German town on the Dutch border following moves by the German cartel office to ban the deal. The European Court of Justice is expected to give its verdict on the appeal some time this year.

German tourism company TUI has also launched a legal challenge against the Commission after the institution rejected its demand for an exemption in similar circumstances.

Brussels officials say a relaxation of the Commission's sole right to give exemptions could be considered in the future. "The time could be coming for that to be reconsidered," said one.

Part of the problem about shedding this monopoly is the Commission's belief that it best placed to take an overview of European competition and the fact that it alone has powers to swoop and demand information across all borders.

What could be grandly described as subsidiarity in competition (applying the Maastricht Treaty principle that action should only be taken at EU level where an issue cannot be dealt with at national or regional level) comes against a backdrop of a shared approach to competition issues between the Commission and national authorities.

DGIV has no fears that national authorities will take greater powers and use them to push domestic agendas or industrial policies.

"There is a growing consensus about the rights and wrongs of competition policy which was not present in the 1970s and early 1980s," said one DGIV official.

Whether this shared approach will lead to a shared workload remains to be seen.

DG IV of the European Commission is hoping that national competition authorities will take some of its heavy workload in the near future.