European Commission Changes its Policy on Providing Guidance on Questions of Competition Law

Qualifications

In 2004, the European Union modernised the guidelines and procedures that govern the enforcement of its competitiveness law. The entry into power of Council Regulation (EC) No 1/2003 on 1 Might 2004 introduced about the most detailed reform of the enforcement guidelines because they have been initial laid down in 1962. The EU moved from a program of centralised notification and authorisation to a decentralised technique the place the Treaty’s provisions on levels of competition legislation (Articles or blog posts 101 and 102 TFEU) have turn out to be right and completely applicable. In individual, an agreement that is included by the prohibition in Article 101(1) TFEU owing to its anti-aggressive effects but fulfills the ailments for an exemption in Short article 101(3) TFEU is now immediately valid and enforceable, without having the have to have for a prior decision to that result. The modernised program of level of competition law allows, and also calls for, companies to evaluate for by themselves the legality of their agreements and procedures and regardless of whether efficiencies and customer benefits outweigh any restriction of opposition. Organizations are commonly in a very good placement to conduct these kinds of a self-evaluation. Nevertheless, the flipside of the abolition of the notification technique is that firms have shed the possibility of implementing for an official exemption from the Fee which would validate the validity of an settlement beneath EU levels of competition legislation. Even with the considerable overall body of circumstance regulation from the courts and steering documents issued by the opposition authorities, there frequently remains a diploma of uncertainty concerning the validity and legality of personal contracts and agreements. To ease the uncertainties and threats for organizations made by the modernised program of enforcement, Regulation 1/2003 has authorised the Commission to issue, on its very own initiative, non-infringement decisions in which it finds that this is in “Community general public interest” (Article 10). Nonetheless, recourse to this kind of decisions is confined to “exceptional cases” (Recital 14), and it seems that none have at any time been taken. The Commission also posted a see presenting casual assistance to undertakings in circumstances presenting “novel or unresolved questions” (“2014 Recognize”, EU OJ C 101, 27/4/2004, p. 78 [Background]). But all over again, the needs for obtaining this kind of casual assistance were being stringent and strictly interpreted by the Commission, and as a result, this selection was rarely at any time used. Subsequent the activities of the COVID-19 overall health crisis, the place the Fee issued a couple of comfort and ease letters, the Fee seems to have realised that businesses involve steering from the competition authorities in a lot more scenarios than originally envisaged in the 2014 Detect or in Post 10 of Regulation 1/2003. It therefore peaceful the needs for informal advice in a new notice published on 3 Oct 2022 (“New Observe”, C(2022) 6925 remaining [Background]).

Facts

Whilst the Fee commonly has the capacity to situation casual advice to particular person undertakings, the New Observe nevertheless emphasises that this skill should really not interfere with the self-evaluation basic principle of Regulation 1/2003, and that any informal assistance ought to be compatible with the Commission’s enforcement priorities. The Commission has, therefore, set up a “filter” consisting of two tests that need to be passed in advance of it even considers a request for a direction letter:

Novel or unresolved problem: Whereas, under the 2014 Discover, it was important that a problem had not but been clarified by the circumstance legislation of the European courts in get to be viewed as “novel”, the New Observe perhaps lowers the essential degree of uncertainty so that it is now enough to show a lack of “sufficient” clarity from the scenario legislation or from publicly accessible general assistance at the EU amount.
Curiosity in supplying guidance: It is necessary for the Commission to obtain that community clarification of the applicability of EU competition regulation by usually means of a direction letter “would give added price with regard to authorized certainty”.

Regarding the curiosity test, the New Notice lists several elements that will need to be taken into account in this regard the second aspect is new when compared to the 2004 Steerage Observe:

Financial relevance of the items or solutions worried
Regardless of whether the goals of the settlement or the observe in issue are applicable for the achievement of the Commission’s priorities or EU pursuits
Magnitude of the investments designed or to be produced
Whether or not the settlement or exercise in concern is commonly applied in the EU.

The New Notice further clarifies that the Fee will not “normally” take into consideration a request for direction if the questions raised are comparable or equivalent to troubles lifted in a scenario pending just before the European Court of Justice, or if they are the matter of proceedings pending with the Fee, a nationwide court docket of a nationwide level of competition authority.

Ultimately the New Discover incorporates guidelines on how to request advice, in particular on the facts to be incorporated in a ask for letter. In distinction to the 2004 See, it is specified that applicants need to contain their own preliminary evaluation of (i) why the ask for raises new or unresolved concerns (ii) why there is an interest in furnishing assistance and (iii), to the very best of their skills, how EU level of competition law must be utilized in the scenario at hand.

With regards to the consequences of a assistance letter, it is clarified that an applicant stays dependable for assessing the applicability of EU opposition law, and that the clarification provided by the Fee is dependent on the accuracy and truthfulness of information presented by the applicant. A assistance letter does not make any legal rights or obligations, and it may perhaps be modified or revoked by the Commission if the community curiosity so calls for. Moreover, a assistance letter is not binding on the courts or the level of competition authorities of the Member States, which are also empowered to implement EU competitiveness regulation. What’s more, the truth that a direction letter has been issued does not preclude the Fee from subsequently investigating that same agreement or follow in a method below Regulation 1/2003. On the other hand, the Commission assures providers that it will not impose a wonderful if a company has relied in superior religion on a assistance letter.

Conclusion

Although the 2004 Observe laid down rigorous needs for the issuance of steerage letters, these criteria have been peaceful considerably by the New Recognize. In unique, the Fee now has additional flexibility to answer to a wider vary of challenges with direction letters where by it deems it pertinent to the accomplishment of the Commission’s priorities and the EU’s interests. In addition, the idea of “novel” problems has been broadened a tiny. Most importantly, in its press launch on the New Recognize, the Commission expressed the see that it would utilize extra “flexible conditions” with the intention of “increasing authorized certainty, to the benefit of businesses” (Summary). Thus, we are hopeful that the Fee will use this instrument much more generally than in the previous.