Recent economic changes and crisis in the realm of globalization have greatly widened the scope of the EU Commission's priorities. Where it used to focus mainly on acting as a driving force of the construction of an economically and politically integrated territory, it is now confronted by other rationales and priorities. In order to respond to this multitude of new specific interests of the Member States and all economic operators, a reassessment of the Commission's course of action, as well as amendments to the existing rules, and possibly to the EC Treaty, are called for. The current application of competition law provides good examples of existing inadequacies between the needs and expectations created by globalization and the Commission's traditional approach to dealing with them.
First, the Commission ought to ask itself if the priorities it has set can suitably address the issues at hand. In this respect one may wonder if the Commission is justified in considering unhindered competition as a principle which is seemingly entitled to preempt all others. For instance, the Directorate General for Competition is currently scrutinizing measures taken by the British authorities to restructure the UK mortgage bank Northern Rock. There is no doubt that the Bank of England - just like the FED when it recently chose to "bail out" Bears - was faced with an emergency situation and took steps aimed at preventing a systemic crisis that might have caused the domestic financial system to collapse. In such exceptional situations, applying stringent rules on State aids, which are a European peculiarity, is likely to put the EU at a great disadvantage compared to other countries. When undergoing a major financial, security or environmental crisis, instead of focusing on keeping up appearances and applying the EU competition rules to a situation which simply does not fit in conventional, time-consuming competition patterns, it may be preferable for the EC Treaty to provide for a derogation allowing the stability of the monetary system to preempt competition rules. Even outside emergency situations, antitrust concerns should not result in the Commission failing to look beyond its own borders and taking third countries' legal systems into account. A recent example of the need for a broader view is provided by the DG Competition's decision to make structural reforms of the energy market through ownership unbundling or equivalent measures, regardless of any guarantee of reciprocity with other countries. Indeed, under the current legal system, if no changes were brought or exceptions based on reciprocity provided, such unbundling could expose crucial industries to takeovers by foreign interests.
Second, the Commission should also reassess its implementation of the new antitrust rules based on self-assessment, which seem ill-adapted to ever-evolving economic sectors. Since the entry into force of EC Regulation 1/2003 on the implementation of the EU antitrust rules on 1st May 2004, undertakings are too often left to a large extent in the dark regarding the assessment of agreements they enter into with other companies. When they suspect their agreements may infringe Article 81(1) EC on restrictions of competition, they determine whether such an agreement fulfills the conditions for exemption set out in Article 81(3) EC. This system is aimed at decentralizing the implementation of competition law, based on the assumption that the Member States could now cope with antitrust issues thanks to their sophisticated national legal systems and to the Commission's existing caselaw. This was meant to allow the Commission to focus on the more serious anticompetitive behavior, such as cartels. Due to globalization and liberalization, numerous economic sectors are, however, evolving at a faster pace than that of the Commission's decision-making process, and the system therefore is at risk of creating an intolerable situation of legal insecurity.The difficulties for undertakings self-assessing their agreements are further complicated by unexpected changes in the Commission's approach towards agreements in certain economic sectors. In the field of air transport for instance, after encouraging cooperation amongst airlines by means of block exemptions and clearance decisions, the Commission is now using its extensive investigative powers under EC Regulation 1/2003, and has conducted a recent series of unannounced dawn raids at the premises of several carriers on suspicion of a cartel, which seemed to be based on no more evidence than the cooperation the Commission has itself encouraged. Such raids can prove both traumatizing and very damaging to a company's reputation. This is aggravated by the DG Competition's "hands-off" attitude, clearly discouraging any informal contact outside very limited circumstances. Undertakings are thus expected to do their best, while waiting for others to be condemned in order to get a fresh insight into the Commission's approach. They are to keep their fingers crossed, hoping not to be next in line, for they would then face fines up to 10 percent of their total turnover in the preceding business year! One may legitimately wonder whether - without of course reverting to the previous system of notification - the DG Competition should not be more flexible and willing to provide undertakings with advice when they are faced with unprecedented situations or when the competition authority intends to change its policy in some respect.
Thus, if the Commission is willing to continue to be at the helm of the EU and steer its component Member States and citizens through the unchartered and constantly changing demands, relationships and priorities of an unpredictable global economy, it should adjust accordingly. A stiff application of competition rules which are deemed to constitute an unquestionable all-time guide, to be followed as an evening star, will not do the trick. Appropriate changes of these competition rules, of their relative role vis-à-vis other rules, as well as greater flexibility in their implementation should lead to a better prepared Community, adjusted to a fast-moving world.
Published May 1, 2008.
