Competition rules threaten chaos

UK courts are ill-equipped to work with European Commission proposals updating rules controlling anti-competitive behaviour, says Jonathan EvansNational competition authorities, courts, lawyers and businesses throughout the EU face upheaval if European Commission proposals for an overhaul of EU competition rules come into force unamended.Last September, the commission published its draft regulation on modernisation of the rules which control anti-competitive behaviour by business.

These are radical proposals to decentralise the regime which tackles restrictive trade agreements and the abuse of market power under articles 81 and 82 of the Treaty of Rome.The commission plans to abolish the system of notification and authorisation of agreements and share the task of enforcement with national competition authorities and courts.

It will try to ensure even application of the rules by establishing a network between itself and the national competition authorities and by developingco-operation with national courts.The aim is to protect competition by refocusing commission action on enforcement, and to create a more level playing field and more consistent application of EU competition law while giving companies a level of legal certainty.While the European Parliament fully endorses the commissions desire for reform, I fear that the proposals as they stand will fail to achieve these aims and could damage the single market, reduce legal certainty, and increase the regulatory burden on business.A decentralised system could lead to inconsistent application of competition rules and so, where an agreement may affect trade between member states, the proposal stipulates that European competition law must be applied by national authorities to the exclusion of national competition law.

This is fundamental to any changes in the competition rules if member states do not accept it, then it is back to the drawing board.The proposed regime fails to provide adequate legal certainty for businesses and legal practitioners.

Self-assessment in the decentralised system may be satisfactory in many situations, but certainly not in all.

Businesses will be required to register their agreements with the commission, but will receive no benefit in return.

The commission will no longer be available to take positive decisions in specific cases, except for those which are in the community public interest.

This leaves it with wide discretion as to when it will take positive decisions, leaving the majority of companies without sufficient legal certainty.The effective operation of the regime presupposes that national courts and competition authorities are equipped to deal with cases under articles 81 and 82, which is not necessarily the case.

UK courts do not have experience in this area.Furthermore, clarification is needed as to how cases will be allocated and how consistency of decisions will be maintained throughout the community.

The commission, national authorities and national courts will all be involved in taking decisions on European competition law, which means potentially hundreds of organisations, yet the proposals do not specify which takes precedence.It is essential that consistent criteria are outlined in the regulations to avoid multiple proceedings and forum shopping.The consistency of decision-making across member states poses concerns, as there is no guarantee that a decision in one member state will apply in another.

In an attempt to ensure consistent application of the rules, the commission retains the right to intervene in any case in national courts to offer advice, but this could raise constitutional issues across the community.The proposals depend on an effective network for exchanging information but unless there is harmonisation of rules to make it effective, it is difficult to see how the system will work in practice.Solicitor Jonathan Evans is a UK MEP and the European Parliaments rapporteur on competition policy.

He is a former Corporate Affairs Minister at the DTI and former director of insurance at Eversheds in London