Necessity of European Cartel Authority still questionable

Date: 09/11/1995

By Ian S Forrester QC

ENFORCEMENT of the competition rules is almost the only field (anti-dumping is another) where European Commission officials have the power to receive complaints, conduct investigations and impose penalties.

Whether the Commission should continue to do so is one of the topics to be settled at the Intergovernmental Conference next year.

Pressure for the creation of a European Cartel Authority comes principally from Germany, whose ministers and officials claim that decision-making on competition matters by the Commission is too political.

Dieter Wolf, President of Germany's national competition authority, the BKA, objected recently to the fact that the 20 Commissioners may vote upon draft competition decisions proposed by the competition Directorate-General (DG IV) and the Competition Commissioner.

Wolf proposes the establishment of a European Cartel Authority which would be independent and would pay attention only to competition considerations, instead of bringing such legal matters within the political arena. In response to these grumbling threats, DGIV has been making efforts to be more industry-friendly, efficient, transparent and predictable.

Would it be good for the resources of DGIV to be neither privatised nor nationalised, but spun off upon the creation of a new, truly independent agency? I have some doubts.

First, it is not obvious that the problem is as serious as German critics suggest. Most competition decisions in application of Articles 85 and 86 give rise to controversy, legal submissions, lobbying and (more rarely) intervention by a government. However, the making of plausible and far-fetched arguments on various grounds is perfectly normal and in no way detracts from the standing of the bureaucracy. We should not confuse the making of policy or political arguments with the tainting of the final decision by political influence. It is rare that decisions are the subject of voting by Commissioners along national lines.

The current problem is not that decision-making is too politicised, but that there are too few decisions. Because of translation delays and a process of exhaustive internal consultation worthy of a Japanese ministry, the Commission is able to take not more than 20 formal decisions per year in application of Articles 85 and 86.

It is plainly impossible that all the cross-border competition law needs of 15 countries and 370 million people can be satisfied by a small number of formal decisions.

Decisions on major mergers emerge quite smoothly and rapidly (at some cost in resources to the turnaround time for Articles 85 and 86), but commonly attract no political pressure. Very occasionally, one can see the unedifying spectacle of Commissioners casting votes for or against a national champion in a merger case. That is a rather marginal problem.

To the extent that lack of resources, translation delays and over-cautious procedures explain the low 'output' of DG IV, a European Cartel Authority would encounter exactly the same problems. To the extent that political (as opposed to legal or commercial) arguments are made during the decision-making process, would these arguments cease to be addressed to the ECA? Not likely. Would an ECA be more deaf to political/industrial arguments than the Commission in most cases? I doubt it.

That said, the application of competition rules to state aids is an area where decision-making is private, untransparent - at least to the outsider - and susceptible to political influence.

There is much that could be said about the challenge of applying transparent European competition law principles to state aids, which are usually awarded in secret, and doubtless the present regime could be improved by greater frankness.

However, it seems to me most unlikely that the member states would be willing to entrust enforcement to a neutral and non-political college of right-thinking officials in a new agency unless the agency had political masters. And that, sadly, brings us back to the beginning.

This article reflects the personal views of the author.