The intensity of remedies under Regulation 1/2003 depends to a large extent on whether they were taken in the context of infringement decisions under Article 7 or commitments under Article 9 of Regulation 1/2003. This blog post explores the question of whether this distinction is justified or should be addressed in the context of the revision of Regulation 1/2003.
Article 7 of Regulation 1/2003 provides the regulatory framework for how the Commission deals with finding and termination of infringement. Through this instrument, the Commission „may by decision require the undertakings […] to bring such infringement to an end“. To achieve this goal, the Commission may impose behavioral or structural remedies that are proportionate and necessary to end the infringement. Under Article 9 of Regulation 1/2003 however, which addresses voluntary Commitments and which in principle also address the „infringement be brought to an end“, the decision adopted by the Commission may encompass measures that go way further than those that are necessary to merely end the infringement.
Voluntary nature as justification for this asymmetry?
Due to their far-reaching scope, decisions under Article 9 of Regulation 1/2003 allow possibly significant interventions in the future organization of a market. Measures can be taken that are not only necessary to end the infringement, but (far) beyond that. There is therefore a discrepancy in the Commission’s room for maneuver, depending on whether we are dealing with an infringement decision or a commitment. This discrepancy could, of course, be justified by the fact that commitments only come about as a result of the voluntary co-operation of the undertakings concerned and that the undertakings themselves offer the measures and are therefore virtually responsible for their own fate. On the other hand, it is in my view a rather fundamental question whether competition law can (or should) intervene in market organization (such as investments in infrastructure: cf Svenska Kraftnät, AT.39351 or Transgaz, AT.40335) or whether the Commission’s options should be limited to ending infringements (and not taking any further measures) as provided for in Article 7 of Regulation 1/2003.
Commitments under Article 9 Regulation 1/2003 are appealing to undertakings for reasons of procedural efficiency, fast ending of proceedings, shorter decisions, less publicity and decreased risk of follow-on private enforcement. There are therefore incentives to offer quite far-reaching Commitments to avoid a formal proceeding that would result in an infringement decision. By means of this mechanism, the Commission achieves significant influence on the market without having to ever formally find an infringement. At the same time, the Commission – through the advantages of commitment decisions that were mentioned before – possesses strong arguments to convince undertakings to produce “good” commitments so that they may avoid an infringement decision.
No definition of competition policy goals via proposed commitments
It is a critical question whether competition law should intervene already before a violation of competition rules is found, like we may observe with the Digital Markets Act (Regulation (EU) 1925/2022) or regulated sectors such as energy or rail, where the legislator took precautions through instruments such as non-discriminatory access to infrastructure (cf for rail Article 10 of Directive 2012/34/EU). To me this is less about proportionality for the undertakings affected by the commitment. If they propose to commit to a certain future conduct or divestiture, I assume they have the resources to analyze pros and cons of the proposed commitments versus taking the risk of a continued procedure that might end with an infringement decision. More relevant is the capability of the Commission to intervene more heavily in a market where it does not have to find an infringement but at the same time is not permitted to order more than what is strictly necessary to bring found infringements to an end – but then not being entitled to order remedies that may be well suited to accommodate likely future competition concerns in this context.
It does not seem coherent that the Commission’s room for maneuver and thus the legally permissible options on shaping a market depend on the internal decisions of a market participant and its decision as to which Commitments it is willing to take to avoid further competition law proceedings. The question whether competition law should enable the Commission to actively shape a market and define future conduct of market participants is one that should not be solved on the level of competition law procedure even without the finding of an infringement.
And now?
It should be ensured – beyond the stricter approach to Commitments since the Canal+ judgment (C-132/19 P) – that Commitments are proportional and do not nudge undertakings into measures that go beyond the necessary. Of course, in this context the criterion of “necessity” may be very difficult for undertakings to assess themselves, this especially at a stage of proceedings where there might not yet be a full analysis of the economic consequences of a conduct. With a revised version of Regulation 1/2003 it would be recommendable to foresee clear boundaries for acceptable Commitments under Article 9 and/or enhanced room for remedies under Article 7. However, the line should be drawn based on a conscious decision by the legislator and not a rather vague administrative practice.
Co(E)mpetition Procedure 