Σάββατο, 30 Ιουλίου 2011

Η προσαρμογή της πολιτικής ανταγωνισμού στις απαιτήσεις του Μνημονίου

Η Προϊσταμένη της διεύθυνσης νομικής τεκμηρίωσης της Επιτροπής Ανταγωνισμού κα Λευκοθέα Ντέκα και ο Εισηγητής της Επιτροπής κ. Δημήτρης Λουκάς δημοσίευσαν ένα άρθρο για τις διαρθρωτικές αλλαγές που επέφερε το Μνημόνιο Κατανόησης (Μνημόνιο) στον τομέα του ανταγωνισμού στη χώρα μας.

Μεταξύ άλλων, επισημαίνεται στο άρθρο η αναμόρφωση του δικαίου του ανταγωνισμού (Ν. 3959/2011) με στόχο την αποτελεσματικότερη λειτουργία της Επιτροπής και ειδικότερα η πλήρης εναρμόνιση με τον Κανονισμό 1/2003 όσον αφορά την κατάργηση γνωστοποίησης συμφωνιών και συμπράξεων κατά το άρθρο 21 του προϊσχύοντος νόμου 703/77, η εισαγωγή ενός συστήματος «προτεραιοποίησης» των υποθέσεων και η ενδυνάμωση της ανεξαρτησίας της Επιτροπής.

Ακολουθεί ολόκληρο το σχετικό άρθρο, διαθέσιμο και στο διαδίκτυο στη διεύθυνση www.concurrences.com (No37538).

The Memorandum of Understanding on specific economic and competition policy conditionality for granting financial assistance: Greek point of view

1. Introduction

Faced with the current economic crisis, the Hellenic Competition Commission (HCC) has a crucial role to play in safeguarding the conditions of effective competition and in fostering a genuine “competition culture” in Greece. Free and undistorted competition is a key remedy for the Greek economy, troubled for many decades by the syndromes of a small market economy (considerable barriers to entry, oligopolistic structures with high transparency, collectivist business culture, strong industrial families etc) and a tradition of regulatory state intervention.

The three-year Economic Adjustment Programme [1], pledged on 2 May 2010 by the European Commission, the European Central Bank (ECB) and the International Monetary Fund (IMF), was designed with the objective of reverting Greece’s low standing on sovereign debt markets (mainly as a result of high public deficit and debt that weakened its overall fiscal position), while further accommodating the need to preserve the stability of the Euro zone. In particular, it included a variety of fiscal measures, as well as structural reforms aimed at enhancing the overall competitiveness of the Greek economy. Acknowledging the HCC’s central role in the efforts to strengthen the functioning of the Greek economy, the Economic Adjustment Programme also included a competition-related component providing for key reforms of the Greek Competition Act. Albeit the enhanced enforcement record of the HCC in recent years, the proposed revision of the Greek Competition Act aimed at further consolidating the deterrent and overall systemic effect of its enforcement action, focusing notably on procedural efficiency and independence.

The relevant commitment included in the Economic Adjustment Programme, coupled with the political will to pursue the stated objectives reflected therein, resulted in probably what can be characterized as the best piece of competition legislation ever introduced in Greece, since its accession to the EEC.

2. Commitment in the context of the Economic Adjustment Programme

In particular, the commitment agreed upon by the Greek government in the context of the Economic Adjustment Programme included the abolition of the notification system for anti-competitive agreements that would allow a full-fledged pass-on to the “legal exemption” regime (as established by Regulation 1/2003 [2]), the introduction of a prioritisation system regarding complaints that would enhance the HCC’s competence to reject complaints, the strengthening of the HCC’s members independence and the establishment of a more reasonable time-frame for the resolution of cases [3].

The above requirements of the Economic Adjustment Programme reflected the problems and shortcomings previously identified both by the legal and business community and the HCC itself, mainly in the context of previous legislative reforms. These problems mainly evolved around two axes: prioritization and administrative burdens.

Under Law 703/1977, the HCC enjoyed minimum discretion in setting its strategic objectives; tied by the principle of legality which entailed a strict obligation to investigate and rule on all complaints seized with, in the chronological order filed before it, the Authority strived to balance between, on the one hand, an “as efficient as possible” enforcement on the basis of an operational plan with concrete deliverables and, on the other hand, tight deadlines of up to 8 months for examining and ruling on even unfounded complaints. This tight time-frame for the investigation, deliberations and issuance of decisions essentially disregarded the fact that alleged infringements of competition rules normally require an in-depth investigation in order to reach a well-informed decision that meets the requisite standard of proof. Thus, case selection based on the criterion of public interest was rather the exception, the rule being overburdening the scarce available human resources with complaints of minimum input for the Authority’s enforcement action.

Although the legislative reform of 2009 partially aligned the Greek regime with the self-assessment regime of the EU by abolishing the negative exemption system, nonetheless it retained an obligation to notify all likely restrictive agreements for the sole purpose of “mapping the market”, thus introducing an ex lege self-standing obligation, no longer linked with the benefit of exemption. Furthermore, it retained a post-merger notification requirement regarding smaller merger & acquisitions. Such notification requirements and/or formalities, which were retained in the Greek Competition Act even after the adoption of the modernisation package by the European Commission, burdened disproportionately the Authority’s scarce personnel with bureaucratic procedures and inelastic “quick-look” checks of everyday business transactions with no added value. The horizontal administrative burden entailed for both the authority and companies, even after successive legislative efforts to simplify such requirements, called for their total abolition, as provided for by the Economic Adjustment Programme.

3. The revision of the Greek Competition Act

With a view to realizing the commitment agreed upon in the context of the Economic Adjustment Programme, a Legislative Drafting Committee (“Expert Committee”) was set up by the Ministry of Economy, Competitiveness and Maritime Affairs (YPOIAN) on 2/2/2010 [4], with the task of proposing specific amendments to the Greek Competition Act (Law 703/1977). The Expert Committee, headed by the President of the HCC Mr. Kyritsakis, mostly comprised professors of law and economics, as well as representatives of the HCC and the Ministry. The Committee concluded its work on 19/7/2010 and submitted its proposals to the Ministry. Following a public consultation, as well as extensive cooperation with the European Commission [5], the HCC and amongst Members of the Parliament, Law 3959/2011 on the protection of free competition (hereinafter “the new Act”) was adopted and published at the Government Gazette on 20/4/2011.

Most proposals of the Expert Committee were ultimately incorporated into the new Act.

4. Key features of the new Act

The new Competition Act does not entail any significant change with respect to substantive law provisions. Articles 1 and 2 of the new Competition Act (Law 3959/2011), dealing respectively with restrictive agreements and abuse of dominance, essentially mirror Articles 1 and 2 of the previous Act (Law 703/1977, as amended), which in turn mirror Articles 101 and 102 TFEU. Similarly, the substantive provisions on merger control (notably pertaining to the substantial-lessening-of-competition test for assessing notified mergers) are not affected.

However, the new Act introduces several provisions of procedural nature, which affect significantly the institutional framework and working methods of the HCC. These provisions aim at increasing the effectiveness of the HCC and strengthening its independence, while further promoting harmonisation with EU competition law and practice. Moreover, they address, with varying degree, all conditionality requirements envisaged in the Greece’s Economic Adjustment Programme negotiated and agreed upon with the European Commission, the ECB and the IMF (see section 2 above), as well as other issues which had previously been identified by the HCC as problematic and/or warranting corrective action.

In particular, the adopted revisions revolve around six (6) key themes:

Institutional arrangements and strengthening of HCC’s independence,

Increasing efficiency of enforcement action,

Further alignment with EU procedures and practice,

Judicial review of HCC decisions,

Criminalisation, and

Enhanced cooperation with ministries and other agencies, notably concerning regulatory obstacles to competition

Each of these themes is further addressed below.

4.1 Institutional arrangements and strengthening of independence

The new Act preserves the status of the HCC as an independent administrative authority, exclusively responsible for the enforcement of national and EU competition rules. It further maintains the dualist structure of the Authority, comprising two bodies: the Directorate General for Competition (“Directorate-General”) which is essentially conducting the investigations, and the HCC Board which is the decision-making arm of the Authority. The new Act also preserves the role of the four (4) Commissioners – Rapporteurs and Members of the HCC Board, who serve on a full-time basis. The latter are not just members of the decision-making body, the HCC Board, but further supervise the drafting of the Report – Proposal for each case that is introduced to the HCC for resolution (be it a statement of objections, a rejection of a complaint or a recommendation that no further action is needed). In the context of drafting each Report – Proposal, the Commissioner-Rapporteur is assisted by members of the Directorate-General assigned to that specific case. Furthermore, the new system maintains the rule that HCC Board members shall be “individuals of recognised standing, as well as of scientific formation and professional ability in law and in economics, particularly as regards competition-related matters”, in contrast with the system prior to 2009, when the HCC Board included representatives of trade unions, employers’ associations and other business association groups.

The above features signify a clear policy choice since 2009 to soften the strict separation between the investigatory and decision-making functions of the Authority, with a view to increasing the efficiency of the administrative procedure. As a result, the Greek institutional arrangements moved closer to the monist systems (followed by the majority of EU Member States), but preserved – in parallel – basic quasi-judicial characteristics (including the exchange of rounds of written pleadings and a fully-fledged oral hearing before a separate decision-making body, with rights to examine witnesses, cross-examine etc.). Overall, the new institutional framework attempts to render investigations better-oriented and more effective, while introducing additional check & balances and increasing the accountability of the decision-making body.

The new Act moves in the same direction, the emphasis put on measures aimed at increasing the independence of HCC members – as agreed upon in the context of the Economic Adjustment Programme. The Members of the HCC’s Board (the decision-making body of the Authority) are decreased from 9 to 8. Aside from the President and the 4 Commissioner-Rapporteurs who continue to serve on a full-time basis, a new post of Vice-President is introduced (also serving on a full-time basis). Unlike the past, the Commissioner-Rapporteur can no longer vote during HCC Board deliberations with respect to those specific cases previously assigned to him/her (at an earlier stage of the procedure).

The President and the Vice-President are selected by the Parliament’s Chamber of Presidents, thus ensuring broader parliamentary consensus. All other Members, including the 4 Commissioner-Rapporteurs, are selected by the Minister of Economy following a hearing before the Parliamentary Committee of Institutions and Transparency. Moreover, the term in office of all Members of the HCC’s Board is extended from 3 to 5 years, in order to decouple it from election cycles and strengthen continuity of operations. No changes are made to the organisation and structure of the Directorate-General (the investigative arm of the Authority).

4.2 Increasing efficiency of enforcement action

The new Act also introduces several provisions as regards the prioritization of cases and the streamlining of the envisaged deadlines for handling those cases prioritized.

In particular, the HCC’s ability to set strategic goals and to prioritize important cases is enhanced significantly, with a view to increasing the systemic effect of its enforcement action. The prioritisation of cases will now be firmly based on the criterion of public interest. The HCC is required to assess the public interest considerations arising from each individual case in light of the estimated impact of the practices in question on the functioning of effective competition, and especially on consumers. Other factors, such as the human resources available and the number of pending cases, can also be taken into account. More importantly, complaints are also to be assessed on the same basis, thereby strengthening the coherent treatment of pending cases.

As regards procedural steps to be taken, the new Act specifies that the HCC Board shall issue a decision outlining the criteria for the prioritization of cases and the setting of strategic goals (essentially, a “Notice on Enforcement Priorities”). The President shall introduce before the HCC Board those cases meeting the priority criteria as outlined in the HCC’s Notice, following a recommendation by the Directorate-General. The HCC has already initiated a public consultation on a draft Notice, which proposes that priority be given to ex officio investigations or complaints pertaining to: (a) hardcore restrictions (price-fixing, market sharing and sales or production restrictions) of national scope, especially in cases of horizontal agreements (cartels), taking particularly into account the market position of the undertakings involved, the structure of the relevant market and the estimated number of the affected consumers; (b) products and services of key importance to the Greek consumer, where the anticompetitive practice under examination may have a significant impact on the increase of prices and/or the quality of the products/services supplied (especially as compared to other EU Member States); and (c) anticompetitive practices with likely cumulative effect. According to the draft Notice, the prioritisation of a particular case will also depend on the resources available to the Authority, the possibility of establishing proof of an infringement, the necessity of providing guidance on novel issues, as well as the assessment of whether the HCC is the best-placed body to act (particularly comparing to the competence of national courts).

Aside from the envisaged Notice on Enforcement Priorities, the new Act provides for an internal management tool in the form of a “point-system” for the investigation of cases by the Directorate-General. In particular, the Directorate-General shall investigate pending cases according to their ranking on the basis of a point system, which essentially exemplifies and quantifies the priority criteria set out in the Notice. Each case shall be awarded points based on that system. The new Act stipulates that the point system is intended solely for internal use (such that the ranking of each individual case at the investigation phase is not made public, nor notified to the complainant), in an apparent attempt to immunize the system from litigation, i.e. discovery and/or judicial challenges by interested parties. It further specifies that the ranking of individual cases may be revised, where deemed reasonable, by decision of the Director General, upon approval by the HCC Board.

More crucially, the new Act provides for the possibility of rejecting complaints that get a low priority ranking according to the point system. In particular, the Authority may stipulate at the formation of the point system that it will not examine cases awarded low priority points in the future, thereby dismissing the case by an expedited procedure (reasoned decision issued by the President of the HCC and notified to the complainant within 30 days, following a recommendation by the Directorate-General). This is the first time that national competition legislation provides explicitly for the possibility of rejecting complaints on priority grounds.

Overall, the emphasis placed by the new Act on prioritization signals the departure from the previous regime where the HCC was essentially bound to review all complaints largely on the basis of their chronological order, thereby hampering its ability to select cases pursuant to sound public interest criteria. This is a much welcomed revision of the law, which is likely to enhance the efficiency of the HCC’s operations.

Nonetheless, significant risks remain. The legislator did not give the Authority maximum (full) discretion in prioritizing cases and rejecting complaints for lack of interest. Instead, it opted for a moderate approach, by setting out a kind of structured framework for assessing the degree of priority to be given to complaints, based on pre-defined criteria that confine the exercise of the HCC’s discretion in that respect. The new point system may, thus, prove to be quite rigid in practice, thereby maintaining (at least part of) the administrative burden on the Authority and delaying its responsiveness to changing realities in the marketplace. Moreover, albeit the apparent attempt to minimize ensuing litigation risks, interested parties will be certainly seeking explanations as to the reasoning for the HCC’s ranking of individual cases or even access to the ranking table maintained by the Authority. Given the HCC’s firm resistance to any such disclosure attempts by the parties, administrative courts may soon be called to interpret the relevant provisions of the new Act.

The new Act further establishes a more reasonable time-frame for the resolution of investigations, by extending the deadlines for the issuance of decisions, from 6 months to 12 months, with a possibility of an extension by 2 additional months. The deadline starts from the introduction of each case to the HCC Board, following its prioritization (if the relevant criteria of the Notice and the point system are met). Therefore, there is still considerable room for investigating a case prior to its prioritization and its subsequent introduction before the HCC Board. Moreover, based on well-established case-law, these deadlines are to be interpreted with a degree of flexibility, as they are meant to incite the Authority to act timely within their boundaries. Overall, the legislative revision in question is consistent with the decisional practice of other National Competition Authorities and of the European Commission, where it is acknowledged that suspected infringements of competition rules normally require an in-depth investigation in order to reach a well-informed decision that meets the requisite standard of proof. It also satisfies the relevant proviso agreed upon in the context of the Economic Adjustment Programme (see section 2 above), which essentially reflected criticism previously raised by both the HCC and the European Commission.

As an aside, the new Act introduced provisions regarding (a) the improvement of the cooperation between the HCC and sectoral regulatory agencies; (b) the HCC’s ability to initiate external audits; (c) the application by analogy of EU block exemption regulations in the national context; and (d) the HCC’s discretion to issue more notices and guidelines on the implementation of law, thus facilitating self-assessment by companies.

4.3 Judicial review of HCC decisions

The new Act provides that specialised competition chambers can be established at the Athens Administrative Court of Appeals, the aim being to further enhance the effectiveness of judicial review. Under the current regime, the Athens Administrative Court of Appeals conducts a full-blown review of the HCC decisions, while judgments rendered by the said court may be brought for further judicial review (control of legality) before the Council of State (Supreme Administrative Court – Conseil d’Etat).

The new Act further introduces provisions aimed at streamlining the procedure for the suspension of fines upon appeal, such that a greater proportion of the fines imposed are paid pending the appeal process. In particular, pending the appeal process, fines can only be suspended for up to 80% of the amount (unless the HCC decision is deemed manifestly unfounded, in which case the total amount can be suspended). There has already been some criticism as to the constitutionality of the said provision, on the basis that it unduly restricts the power of the Court to suspend the total amount of fines for likely irreparable harm to the undertaking concerned. It remains to be seen whether this condition will be challenged before administrative courts.

4.4 Criminalisation

It should be specified at the outset that criminal sanctions pertaining to violations of competition law can only be imposed by the criminal courts, and not the HCC (which imposes administrative sanctions).

Prior to the new Act, criminal fines (€15,000 to €150,000) could be imposed on any natural person, who – acting individually or as representative of a legal entity - infringed competition rules. In case of recidivism, the above limits would be doubled. In addition to the above pecuniary fines, the law provided for an imprisonment sentence (from at least 6 months to 5 years) in case of an involvement in a cartel infringement.

Under the new Act, criminal penalties become stricter, with a view to increasing the overall deterrent effect of the competition rules. Involvement in a cartel is punishable by an imprisonment sentence ranging from at least 2 to 5 years, as well as by a pecuniary sanction now ranging from €100,000 to €1,000,000.

4.5 Opinions on regulatory measures restricting competition

Given the negative impact of regulatory obstacles to competition and the fact that they most often fall outside the scope of EU and Greek competition legislation, being qualified as state measures leaving no autonomy to business undertakings, the new Act stipulates that ministries and other government agencies may request the opinion of HCC when adopting new regulatory measures which may distort competition. This is intended to enhance the tools of regulatory impact assessment available to governmental authorities, while increasing awareness of competition law matters within the broader public administration.

The Authority also maintains the right to issue opinions/recommendations, acting on its own initiative. So far, the HCC has availed itself of that opportunity only a few times. It increasingly appears, however, that there is a pressing need for the Authority to become more active in the area of identifying state regulatory obstacles to competition. Indeed, in view of the recent financial downturn, which exposed the structural inefficiencies of the Greek economy, advocacy pertaining to this issue should be at the centre of the HCC’s policy.

The HCC was already called upon to issue an opinion on the new legislative framework pertaining to the liberalization of the regulated professions (including notaries, lawyers, accountants and engineers), which is a key component of the action plan on structural reforms. HCC’s involvement in that specific case was even envisaged as an explicit requirement in the context of the Economic Adjustment Programme.

Undoubtedly, the legislative changes in question move in the right direction. However, given the acuteness of the problem, it is critical to promote a more coherent policy in the area of regulatory impact assessment (RIA) at state level. In this context, the HCC has argued in favour of a fully-fledged system of competition assessment of current and future legislation along the key principles and procedures devised by the OECD (as notably reflected in the OECD Competition Assessment Toolkit).

4.6 Further alignment with EU procedures and practice

Finally, a number of provisions in the new Act aim at ensuring further alignment with EU procedures and practice, notably by abolishing notification requirements and/or formalities which entail horizontal burden for both companies and the Authority.

As previously mentioned, albeit the formal adoption of the “legal exemption” regime some years ago (2005), obsolete provisions reminiscent of the past had been retained in the form of notification requirements for restrictive agreements and “small” mergers. The HCC consistently maintained that they should be abolished, as they resulted in disproportionate administrative costs for the Authority, while further increasing costs for companies. However, the legislator had until now opted for preserving such notification requirements with the sole purpose of “mapping the market”. In this context, it was argued that the said notification requirements were not inconsistent with the level-playing-field rule established by paragraph 2 of Article 3 of Regulation 1/2003, as they were meant to pursue different policy objectives (i.e. the quest for proper monitoring and mapping of the marketplace). The Economic Adjustment Programme made explicit reference to the need of abolishing the notification requirements, particularly as regards restrictive agreements.

The new Act adopted concrete measures in order to ensure further alignment with EU procedures and practice, including, inter alia:

(a) the abolition of the notification requirement for “mapping” purposes, as regards all agreements which may restrict competition, thereby further promoting self-assessment by companies and attaining full harmonisation with the “legal exemption” regime established by Regulation 1/2003,

(b) the abolition of the notification requirements concerning smaller merger & acquisitions, i.e. mergers that do not meet the turnover thresholds triggering a prior notification requirement,

(c) the streamlining of the overall time-frame and corresponding deadlines for the review of mergers & acquisitions, thereby reflecting more closely the corresponding provisions of Regulation (EC) n° 139/2004, of 20 January 2004, on the control of concentrations between undertakings (ECMR), OJEU L 24, 29 January 2004, p. 1–22 ECMR,

(d) the further diversification of HCC’s investigative powers with the introduction of the sector inquiry tool, mirroring Article 17 of Regulation 1/2003, and

(e) the introduction of limitation periods for the imposition of fines, mirroring Article 25 of Regulation 1/2003.

Finally, in a similar context, the new Act removes from the scope of the HCC’s jurisdiction the prohibition of the abuse of a relationship of economic dependence. The latter provision is now incorporated into another body of civil legislation and will no longer be applied by the HCC.

[1] “The Economic Adjustment Programme for Greece”, European Economy, Occasional Papers 61, May 2010.

[2] Council Regulation (EC) n° 1/2003, of 16 December 2002, on the implementation of the rules on competition laid down in Articles 81 and 82 of the Treaty (OJEU L 1, 4 January 2003, p. 1-25).

[3] See Conditionality Requirements – Annex ΙV of the Economic Adjustment Programme.

[4] Decision No. B3-15

[5] European Commission, 10 June, 2011, COM(2011) 328 final, Annual Report on Competition Policy 2010, para. 42.