Related Position Paper: The chemical industry's response and proposals on the Commission's White Paper regarding the Modernisation of the Rules implementing Articles 81 & 82 of the Treaty (23/09/1999)

• The Commission argues (point 6 of the Executive Summary) that the notification system is used by companies not only to get legal security, "but also to block private action before national courts and national competition authorities.". CEFIC is not aware that this phenomenon occurs often and would like the Commission to give factual information on it.

• In paragraph 7 of the White Paper, the Commission points out, regarding the new countries to join the EU, that any proposal to modify the current system "must take account of the fact that those countries, with administrative structures that are still not very familiar with the concepts of market and free enterprise, will have to apply them as part of the "acquis communautaire". That is exactly one of the reasons for CEFIC to believe that the decentralisation, as included in the proposals of the White Paper, is not desirable.

• The White Paper fails to address the question of resources and their allocation. Although the Commission indicates at several paragraphs its current problems, not having enough personnel for example, and the contemplated ones associated with the entrance of new Member States, it does not analyse the impact of the new system on the Commission itself (any valuable co-ordination system would require quite a number of people) and the Member States (as most of the burden would be transferred to them), with the consequence for them to engage additional resources.

• The Commission mentions (paragraph 78) that "The use of market share thresholds will allow the Commission to eliminate the straight-jacket effect of the current regulations and cover the vast majority of agreements, and in particular those concluded by small and medium-sized undertakings.". This is certainly not true for the chemical industry, in view of the structure of most of its markets (including those of many SMEs), for which the use of market share thresholds only adds uncertainty and would stimulate the need to receive reassurance from the Commission. Furthermore, it does not follow that the straight jacket effect will be eliminated by the use of market share thresholds.

• The Commission proposes that national courts should perform analysis under Article 81(3) (paragraph 78). It is questionable, however, whether national judges will invariably enjoy the training and experience required to apply EU competition law effectively and consistently. In addition, they may not always be able to perform the economic analysis, involving possibly the EU level.

• The Commission indicates (paragraph 78) that the fact that Article 81, as a whole, will be applied by national authorities and courts will accelerate the convergence of national laws and Community law, "and thus simplify undertakings’ determination of commercial strategy.". CEFIC is of the opinion that to accelerate such convergence, the Commission has other means to reform the system than imposing one that at the same time would totally weaken the Single Market. In addition, rather than simplifying the determination of a commercial strategy, the proposed system would on the contrary make it more difficult for companies to devise EU-wide strategies, since they will need to tailor such strategies to the possible differing interpretations of EU competition law that national authorities and courts may develop.

• At paragraph 88, the Commission says that it would only take positive decisions in "exceptional cases, on grounds of general interest.". As explained above this will only cover decisions that the Commission may choose, and not necessarily those that would prove indispensable for companies.

• In the White Paper the Commission proposes decentralisation, but fails to address the many problems that companies would be faced in their daily life of managing competition matters, at national rather than EU level, such as for example :

  • forum shopping,
  • languages,
  • different procedures in each Member States,
  • validity of the decisions adopted by one national authority towards the other. In a recently published document of the Bundeskartellamt, it was mentioned that bilateral recognition of those decisions –in order to have EU-wide recognition- would require the signature of 105 agreements.

• At paragraph 92 and others, the Commission mentions the possible circulation of confidential business information. It is clear that appropriate rules should be in place, and that any information considered as restricted in one instance, may not be circulated to the other.

• The Commission recognises (paragraph 94) that 7 Members States have not yet empowered their national authorities to apply EU competition law. Therefore, CEFIC fails to understand, when about half of the total number of these authorities lack experience concerning the application of Articles 81 & 82, why the Commission should propose such a decentralisation.

• The Commission points out (paragraph 102) that, so far, parallel application of Articles 81 & 82 has given rise to very few problems. The Commission did not however enquire with companies who are the prime users of the system. In addition, it seems that in some of the national courts decisions, when possible, judges did not use EU competition law arguments. This trend, if intensified, may lead to less and less application of EU competition law.

• The remedies proposed by the Commission (paragraph 104), to use Articles 226 and 234 would mean increasing the burden in terms of time and money of companies. CEFIC believes it is not a suitable answer to the enormous problems to be created by the system proposed by the Commission.

• The system proposed by the Commission would lack transparency and this would impact on legal certainty as well. How would a company in one Member State be informed of the intervention of the national authority in an other one regarding agreements similar to those which that company has (paragraph 105) ?

• Paragraphs 112 – 114 on the possibility for inspectors to either question any employee while conducting an inquiry at a company, or to summon them afterwards, raise serious issues.
  
  It is submitted that the need for such an extension of powers is not so evident and it should in any case be counter balanced with the legitimate respect of the rights of defence.

• The Commission in the White Paper proposes that the new system be based on self assessment of agreements by companies. This would lead to companies placing greater demands on in-house lawyers, since there would be an increased need for legal opinion.
  
  If, however in-house lawyers do not enjoy, as a corollary, the benefit of legal privilege, this will inhibit them from undertaking normal legal opinion and may induce companies increasingly to use outside counsel. As a consequence, this would reinforce the restriction of freedom of a company to choose the lawyer who will deal with its competition cases. This may impact negatively on the competitiveness of companies in the EU, and in particular SMEs.
  
  Therefore, CEFIC is of the opinion that it becomes even more unjustifiable to continue to refuse legal privilege to in-house lawyers.

• In paragraph 116, the Commission suggests allowing outside counsel properly authorised to reply directly to Article 11 letters. This may also, without any objective justification, reinforce the de facto monopoly of outside counsels, to the detriment of in-house lawyers.

• As regards paragraphs 117 to 122, CEFIC acknowledges the importance which the Commission attaches to formal complaints and the Commission’s desire to improve the procedure to this regard. In this context, CEFIC suggests that the Commission should, while improving the system, address the fact that complaints have sometimes been used to abuse the system (eg to unduly delay a case).

• The Commission is proposing that "where an association of undertakings is responsible for an infringement the undertakings that were members of that association at the time the infringement was committed are to be liable jointly and severally for payment of the fine." (paragraph 128). The mere fact to be member of an association should not be sufficient to be jointly and severally liable. This is inherently unfair and against the very principle of presumption of innocence.
  
  Moreover, the same paragraph suggests that in order to respect the right of defence, the members of associations would have to be informed -by publication in the Official Journal- of the initiation of the proceedings (and the sending of a statement of objections). Such early publication goes against the legitimate rights of defence of the association itself.
  
  Firstly, it would create a discrimination between the treatment of companies and associations, in particular for those registered, since the Commission does not provide for informing of the shareholders of registered companies. Secondly, it negates the legitimate rights of defence of the associations, who are accused publicly, even before being able to answer. Thirdly, CEFIC understands that associations have a duty of information towards their members if a procedure is initiated and a statement of objection sent.