Enhanced national enforcement of competition law on the way?

In the European Parliament yesterday, EU anti-trust chief Margarethe Vestager reported on the responses of EU Member States to a consultation on proposals to bolster national enforcement of competition law. The overarching message: there is broad support for legislative reform.

By way of example, unlike other Member States, the UK has enacted a criminal offence for individuals engaged in cartel activity and has granted “concurrent” rights to sector regulators (such as the ORR, Ofgem and the CAA) to investigate suspected breaches of competition law in their relevant sectors. There are also significant differences in the NCA’s powers of investigation (for example, some NCAs cannot examine documents on electronic devices), the rules around leniency for whistle blowers and the method and level of fines that can be imposed for breaching the competition rules.

Next steps: legislative proposals to bolster and harmonise competition law enforcement across the EU?

The Commission’s consultation, launched in November 2015, sought the views of NCAs and other government departments on whether enhanced enforcement and greater harmonisation of competition law enforcement across the EU would be desirable.

It seems that there is broad support to bring the enforcement powers and tools of NCAs up to a common standard, which is likely to mean more enforcement across the EU as whole.

The jury is still out on how this objective might be achieved. Some potential options include:

• An EU Directive setting out minimum standards that must be transposed into national law. This is perhaps the most likely approach, allowing Member States flexibility in the implementation of the new regime, whilst ensuring pan-European standards for enforcement of EU competition law.
• An EU Regulation directly applicable in Members states. This seems an unlikely outcome, as it would be difficult to marry with the idiosyncrasy of the legal systems of each Member State. Both the French and UK NCAs cautioned against this approach in their submissions to the Commission earlier this year.
• More effective use of the existing European Competition Network (ECN), which brings together the European Commission and the NCAs to form “soft” harmonisation of enforcement rules. Existing work of the ECN includes the Model Leniency Programme (providing non-binding guidance on the application of national leniency programmes) and recommendations on investigative and decision-making powers. Continued used of the ECN as the sole mode of harmonisation is unpopular, only achieving support of 9% of respondents to the consultation.

The Commission’s full report on the responses to the consultation is awaited but the consultation documents suggest that new legislative proposals could be published in early 2017.

What would be the effect of a Brexit?

The UK has transposed EU competition law into national law, in so far as the conduct complained of affects trade in the UK. This means that, unless it is repealed (which is unlikely, at least in the short term), the UK will continue to apply EU competition law to suspected anti-competitive conduct in UK markets.

However, in the event of a Brexit, the UK will not be required to apply or enact any new legislation (Directive or Regulation) relating to enforcement of EU competition law. In addition, it is likely that the UK would lose its membership of the ECN and so would no longer participate in the “soft” harmonisation of EU competition law enforcement rules. This means that there is likely to be continued divergence between enforcement of competition law in in the UK and the remaining Member States of the EU.

Visit our Brexit page for more on the legal implications of Brexit for your business.