TY - JOUR
AU - Carovano,, Gabriele
AB - Looking at the OECD 2014 Recommendation concerning International Cooperation on Competition Investigations and Proceedings (the ‘OECD 2014 Recommendation’), and the extensive work done by the OECD Competition Division in recent years on fostering international cooperation, this paper looks at options that could help to improve the effectiveness of the European Competition Network (ECN). Specifically, the paper discusses four proposals (enlarging (i) ECN membership and (ii) scope, (iii) creating a one-stop-shop leniency system, (iv) enhancing investigative assistance) to tackle the challenges for international cooperation brought on by the digitalisation of the economy, increased market integration, the economic crisis, and Brexit. I. What ECN for the next decade? The ECN was established to ensure that European competition rules were applied uniformly and consistently within the European Union. About 20 years after its establishment, the ECN can be claimed to be a success story and the most advanced example of regional competition cooperation frameworks of the world, being among the few frameworks capable of enabling close cooperation at both the investigative and decision-making stage, as well as enabling joint or parallel investigations.1 Since its creation, thanks to its agile structure based on topic-specific working groups, the ECN has constantly increased its outputs by issuing recommendations, resolutions, sector-specific reports, and ex-post enforcement assessment reports. Although non-binding, all ECN work products have been thoroughly used by its members and some, due to their substantial value, have also inspired legislative reforms. While initially, some may have doubted about the ECN and its mission, its achievements have by far exceeded expectations. Although some may argue that to be successful the ECN should simply continue to do what it does and not change, others argue that it should evolve to become a truly regional cooperation platform at the service of the competition authorities (CAs) in the region and not only a mechanism of coordination of the decentralized application of European competition rules.2 The last 10 years have witnessed a substantial disruption of market structures, dynamics, and the modalities in which competition law is perceived and enforced. The pandemic, the economic crisis, new waves of protectionism, and the digitalisation of the economy have somehow affected the level of trust in competition, in its ability to deliver consumers’ welfare, and in the institutions (ECN included) whose task is to preserve competitive markets.3 The digitalisation of the economy is changing the ‘competition game’ by causing the emergence of a new type of firms that overcome traditional operational constraints, cut across industries, drive new value, growth, and innovation. In recent years, we have witnessed new AI-driven firms conquer and transform entire markets, industries become increasingly interconnected, value delivered for AI-driven firms increases, and non-digital actors shrink to the benefit of few digital superpowers. Evidence of a more concentrated, winner-take-most world already exists.4 In this fluid scenario, competition policy responses have been fragmented and multifaceted. Proposals range from calling for more competition5 to arguing that excessive competition can backfire, spiraling into a race to the bottom.6 Some suggest expanding the scope of competition law, by introducing new and wider standards than the consumer welfare standard; others go in the opposite direction, advocating for a traditional economic-based enforcement.7 Whereas others, conscious of the competition enforcement limits, advocate for regulatory interventions, some recommend cautiousness, and refrain from desiring extensive regulation.8 Besides the intricacy of this new ‘AI-powered competition’, the enforcement of competition law is further complicated by the growing number of multinational players, cross-border cases, and ever-increasing number of countries adopting competition law regimes. Consequently, international cooperation has increased over the last decade and will be crucial in the coming years. As Andreas Mundt, the Chairman of the German Federal Cartel Office, put it so eloquently: ‘effective and efficient international cooperation is not only desirable, but necessary.’9 In this complex environment and amidst criticisms that the current ‘balancing of error costs’ may tilt in the favour of under-enforcement,10 CAs are actively engaged in addressing competitive concerns. However, the ECN has appeared to suffer on a few occasions, the Booking.com case being the most discussed one.11 As a result, some argued that the ECN may need an upgrade in the coming decade to avoid the suffering of architectural inertia, to respond effectively to the disruptive changes mentioned above, and to continue to play a central role in shaping the EU competition regime.12 Having said all of this, whether and when the ECN effectively needs an upgrade is not for this author to say. More humbly, this paper’s purpose is to look at the ECN through the lens of the OECD 2014 Recommendation concerning International Cooperation on Competition Investigations and Proceedings (OECD 2014 Recommendation) and the extensive and innovative work done by the OECD in recent years on promoting enhanced enforcement cooperation. Based on these premises, I discuss four ideas for the future of the ECN. II. Proposal n. 1—enlarging ECN membership, outreach, and transparency The work of the OECD points towards the importance and effectiveness of regional competition platforms. Such regional platforms provide significant potential for participating jurisdictions, as they can count on regional-wide political and economic support for effective competition enforcement at the regional level.13 The ECN is the most advanced regional competition cooperation platform. However, it has the potential to evolve into a truly regional cooperation platform by opening its membership to CAs of countries that are not a member of the European Union (or at least not yet). This way, the ECN could integrate CAs of countries that are negotiating either their accession (Turkey, Albania, Montenegro, Serbia, etc.) or departure from the EU (UK). The admission of these CAs could take countless configurations. Powers and procedures could vary based on membership status. Additionally, the ECN could welcome the contribution of external Non-Governmental Advisors (NGAs) for its activities unrelated to case enforcement cooperation. Welcoming these ‘new’ voices—well known in the context of the International Competition Network (ICN)—while enriching and enhancing the knowledge, expertise, and diversity available to the network, and help at the same in further disseminating the ECN’s outputs, improving outreach, and impact. Although NGAs should not participate in case allocation deliberations and exchanges of information, their involvement in ECN policy discussions could improve the currently perceived lack of transparency of the network.14 Greater transparency in ECN activities will greatly benefit the ECN’s policy discussions, removing criticisms of a merely ‘technocratic’ nature of such policy decisions.15 III. Proposal n. 2—expanding the scope of the ECN The ECN includes only CAs of the EU and the European Commission and it provides means to ensure the effective and consistent application of European competition rules, which enjoy decentralised application by European CAs. The ECN, however, does not include in its scope cooperation on merger cases nor on parallel antitrust cases purely opened under national competition laws. Reforms of the ECN could also provide the opportunity to expand its scope, thus including the missing pillar of cooperation in merger cases or in antitrust cases having a purely national dimension. Such reforms will provide significant efficiencies given that the number of cross-border mergers is registering a growing trend and already represents almost half of all mergers. Such an extension of the ECN’s scope would be in line with the evolution of other multilateral regional frameworks, which have jurisdiction on merger and ‘purely national’ cases.16 Recently, for instance, ‘merger and purely national competences’ were attributed to the renewed Nordic Cooperation Network. The renewed Nordic Cooperation Agreement, indeed, by leveraging the OECD 2014 Recommendation, has created a new framework more advanced (at least in theory) than the ECN itself since, differently from Regulation n. 1/2003, it also allows the exchange of confidential information in merger cases and in cases exclusively having a national dimension.17 IV. Proposal n. 3—ECN as one-stop-shop for the EU leniency programme As leniency programmes multiply across jurisdictions, the differences existing among them and the uncertainties as to the actual possibility to obtain the same benefits from applications in multiple jurisdictions may ultimately deter leniency applications in the first place. The problem is serious as the number of cross-border cartels is steeply growing18 and the percentage of cartels detected through leniency applications vary around 80 per cent in Europe.19 When firms seek leniency in multiple jurisdictions, the cumulative costs of multiple filings frequently exceed the benefits.20 Subsequently, infringers may be discouraged from applying.21 This occurs also in Europe, despite the partial harmonisation secured by the ECN Plus Directive since, by codifying the DHL jurisprudence,22 the Directive did not deliver the ‘one-stop-shop system’ for leniency applications and/or for markers advocated by many.23 Consequently, leniency applicants to the EC still have no guarantee that they will not be investigated by other NCAs not knowing whether the EC will actually initiate proceedings (wholly or partly) thus relieving other EU CAs’ jurisdiction.24 On the contrary, a one-stop-shop system would reassure applicants that the benefits from the application would materialise in every jurisdiction associated with the one-stop-shop system. Although ‘one-stop-shop systems’ have their costs25 and present pros and cons,26 the OECD 2014 Recommendation invites jurisdictions to further integrate leniency programmes. As such, the establishment of a ‘one-stop-shop system’ for leniency/markers applications within the ECN, while further incentivising leniency applications, will also enable greater NCAs’ international cooperation in fighting cross-border cartels. V. Proposal n. 4—enhancing opportunities for investigative assistance The last proposal concerns the ECN’s mechanisms that influence investigative assistance and parallel investigation decisions, a key element of the OECD 2014 Recommendation. The existing work allocation mechanism27 was established to minimise the number of CAs involved in a single case as a caution against departures from the conventional application of EU competition law to protect national interests. The progress realised by the ECN Plus Directive on investigative assistance must be acknowledged. Particularly significant are the provisions concerning: (i) NCAs’ powers to carry out inspections or interviews on behalf of others NCAs and exchange and use them as evidence; (ii) the conditions for legal assistance with requests for notification of preliminary objections (and other documents) or for the enforcement fines or periodic penalty payments decisions; (iii) NCAs’ margin of discretion when refusing assistance requests; (iv) the distribution of the costs generated by investigative assistance requests. Despite these important features of the ECN, there might still be room for improvement. For example, the ECN could encourage other forms of investigative assistance or enhanced cooperation such as: (i) joint or parallel investigations or joint sector inquiries/market studies,28 (ii) case-specific staff secondments,29 (iii) rewarding schemes to ensure timely and effective mutual assistance, (iv) mechanisms to extend—on a voluntary basis—NCAs’ enforcement decisions effects in other Member States whose NCAs will not prosecute identical cases for lack of resources, expertise, or reasons of priority/opportunities.30 VI. Conclusions In less than 20 years, the ECN has become the most developed and effective example of regional competition cooperation framework in the world, being among the few frameworks capable of enabling close cooperation at both the investigative and decision-making stage. As such, the creation of the ECN is undoubtedly a success story both in terms of the quality and quantity of its activities. However, despite its many remarkable achievements, the ECN might still offer scope for improvement. Specifically, the ECN could expand its membership and geographical extension, by also admitting CAs from non-EU countries and NGAs, and scope, by allowing its cooperation mechanisms to be used also in parallel merger investigations and in purely national antirust cases. Similarly, the ECN could encourage new forms of enhanced cooperation, e.g. one-stop-shop system for leniency programmes, or further incentivise existing ones, by making joint or parallel investigations/market studies the rule rather than the exception. The OECD work on international cooperation, and particularly the OECD 2014 Recommendation, offer an opportunity to reflect on how the ECN could evolve in a fuller regional cooperation platform and become the blueprint for other similar regional initiatives around the world. Reforms on the scope and reach of the coexisting operation mechanisms will benefit not only the ECN itself and its members but also millions of European consumers. Footnotes 1 A. Capobianco, and G. Carovano (2019), Foreword-Cooperation Between NCAs: An Overview of EU and National Case law, e-Competition Bulletin, Concurrences. 2 G. Carovano, (2018), The ECN Grand Chamber: Updating the ECN to Face the Challenges of the Online World, 2:3 ECRL. 3 A. Tyrie (2019), Is competition enough? Competition for consumers, on behalf of consumers. 4 OECD Ecoscope, Competition in the digital age, 31 March 2019; F. Calvino, C. Criscuolo (2019), ‘Business dynamics and digitalisation’, OECD Science, Technology and Industry Policy Papers, No. 62; S. Calligaris, C. Criscuolo & L. Marcolin (2018), ‘Mark-ups in the digital era’, OECD Science, Technology and Industry Working Papers, No. 2018/10. 5 H. Hovenkamp, and C. Shapiro (2018), Horizontal Mergers, Market Structure, and Burdens of Proof, Faculty Scholarship. 6 M.E. Stucke, and A. Ezrachi, Competition Overdose, Harper Collins Publishers, New York, 2020. 7 Joint Submission of Antitrust Economists, Legal Scholars, and Practitioners to the House Judiciary Committee on the State of Antitrust Law and Implications for Protecting Competition in Digital Markets, May 2020. 8 A. Lamadrid (2020), Can this be the new normal? 10 questions on the proposed new competition tool, Chillin’Competition; M.V.D. Woude (2019), Judicial Control in Complex Economic Matters, 10:7 Journal of European Competition Law & Practice. 9 A. Mundt (2017), ‘International Competition Convergence Pathways, Challenges, and Prospects for Success’, Forty-third Annual Fordham Competition Law Institute Conference on International Antitrust Law & Policy. Remarkably, also the US FTC and DOJ recently adopted the seminal Antitrust Guidelines for International Enforcement Cooperation. See M.K. Ohlhausen, (2017), Guidelines for Global Antitrust: The Three Cs—Cooperation, Comity, and Constraints, IBA 21st Annual Competition Conference. 10 UK report (2019), Unlocking digital competition; EU report (2019), Competition Policy for the digital era; Stigler Center report (2019), Stigler Committee on Digital Platforms. 11 C. Pike, and G. Carovano, Competition Law under fire: responding to competing demands for change in the case of price parity clauses and loyalty rebates, CPI September 2019 Antitrust Chronicle. 12 G. Carovano, (2018), The ECN Grand Chamber, supra. 13 OECD (2018), Regional Competition Agreements: Benefits and Challenges, DAF/COMP/GF (2018)5. 14 C. Townley, (2014), Co-ordinated Diversity: Revolutionary Suggestions for EU Competition Law (and for EU Law too), 33 Yearbook of European Law 1; KCL Research Paper No. 2014-13; G. Carovano, (2018), The ECN Grand Chamber, supra. 15 C. Townley, (2014), Co-ordinated Diversity: Revolutionary Suggestions for EU Competition Law (and for EU Law too), supra. 16 OECD (2016), Local nexus and jurisdictional thresholds in merger control, DAF/COMP/WP3 (2016)4. 17 See Articles 3 and 4 of the 2017 Nordic Co-Operation Agreement. 18 OECD International Cartels Database. 19 OECD (2018), Challenges and Co-ordination of Leniency Programmes, DAF/COMP/WP3 (2018)1. 20 BIAC contribution to the OECD Roundtable on challenges and co-ordination of leniency programmes, DAF/COMP/WP3/WD (2018)34, 23 May 2018. 21 J. Faull, A. Nikpay, (eds.) (2014), The EU Law of Competition, Oxford: Oxford University Press. 22 Case C-428/14, DHL Express (Italy) Srl and DHL Global Forwarding (Italy) SpA v Autorità Garante della Concorrenza e del Mercato, [2016], ECR I. 23 ICC proposal to ICN for a one-stop-shop for leniency markers. 24 Art. 11(6), Regulation 1/2003. 25 OECD (2014), ‘Use of markers in leniency programmes’, DAF/COMP/WP3 (2014)9. 26 OECD (2018), Challenges and Co-ordination of Leniency Programmes, supra. 27 Para n.12, ECN Cooperation Notice (2004). 28 See the Booking.com, the Sugar, and the Flour mill cases as well as the two joint market studies carried out by the French Autorité de la Concurrence and the German Bundeskartellamt on big-data and algorithmic collusion. 29 See the example of the Towage cartel case. See Section I. Capobianco, and G. Carovano (2019), Foreword-Cooperation Between NCAs: An Overview of EU and National Case Law, supra. 30 Some case law matured under the abuse of process doctrine might enable such outcome (Iberian UK Ltd v BPB Industries Plc [1996] 2 CMLR 601). See R. Nazzini, The Effect of Decisions by Competition Authorities in the European Union, Italian Antitrust Review, 2015, n.2, 68–97. © The Author(s) 2020. Published by Oxford University Press. All rights reserved. For Permissions, please email: journals.permissions@oup.com This article is published and distributed under the terms of the Oxford University Press, Standard Journals Publication Model (https://academic.oup.com/journals/pages/open_access/funder_policies/chorus/standard_publication_model)
TI - The ‘ECN Plus-Plus’: How Could it Look Like?
JO - Journal of European Competition Law & Practice
DO - 10.1093/jeclap/lpaa068
DA - 2020-11-14
UR - https://www.deepdyve.com/lp/oxford-university-press/the-ecn-plus-plus-how-could-it-look-like-fmQv8fWQYg
SP - 442
EP - 445
VL - 11
IS - 8
DP - DeepDyve
ER -