EU shirks prosecutions in favour of easy settlements

On 3rd March 2014, the European Commission’s Antitrust Department (DG Comp) published an important policy paper which provides an interesting insight into when the Commission chooses to pursue cases either under the traditional prohibition decision procedure or the commitment procedure.

In enforcing the EU competition rules DG Comp can make use of two procedures:

(i) Prohibition procedure:- Under this procedure the Commission passes a prohibition decision under Article 7 of Council Regulation 1/2003 condemning the offensive conduct and usually imposing substantial fines up to 10% of the relevant companies worldwide turnover; or

(ii) Commitment procedure:- This procedure allows the Commission to pass a decision under Article 9 of Council Regulation 1/2003 accepting commitments from the parties to amend their future behaviour. Failure by the parties giving commitments to observe the terms of a commitments decision allows the Commission to fine the parties for their non-compliance. The Commission heavily fined Microsoft in 2013 for such a non-compliance. An increasingly important distinction is also that the parties provide their commitments to the Commission without any admission of liability on their part.

The Commission’s increased use of the commitments decision procedure is controversial. Many lawyers have called for a clearer more comprehensive legal framework for the use of commitment decisions.

The Commission has taken 34 commitment decisions between 2004-2014 and passed only 19 prohibition decisions over a corresponding period. Some critics argue that the use of the commitments decision procedure allows parties to escape lightly from rigorous antitrust scrutiny of their behaviour without any financial penalty and without admission of liability.

For the Commission as primary antitrust enforcer, the commitments procedure allows them to close their file quickly on difficult cases which the parties would otherwise contest long and hard. Whilst commitment decisions may not provide strong precedent value they do boost the efficiency of the Commission in its role as competition watchdog allowing them to turn their attention to many more cases than they would otherwise do.

However it seems somewhat counter-intuitive that at the same time as the Commission is encouraging aggrieved companies which have suffered loss from anti-competitive behaviour to commence private damage actions in the national courts through the draft Anti-trust Damages Directive, it is increasing its use of commitments decisions permitting parties accused of serious anti-competitive conduct to close down an investigation without any admission of liability. This admission of liability is an essential part of encouraging follow-on actions in the EU. Not many litigants would be prepared to launch a private damages action without an admission of liability or a binding decision to that effect from a competition regulator.

The policy paper gives the Commission’s justification for using each type of decision and explains the reasons for choosing one over the other. Whilst the Commission emphasises that it will retain a wide margin of discretion over which type of procedure to use, it states that it will not proceed to a commitments procedure in case involving serious infringements of competition law where the law is clear and the commitments decision would really be only confirming a party’s willingness to comply with the law (e.g. committing not to share markets or not to apply resale price maintenance). It explains “solving this type of case with a commitment decision is both useless (the law applies anyway) and detrimental to effective enforcement”.

In contrast, an commitments decision is more appropriate when the primary target of the enforcement action is not punishment for past behaviour, but adjusting future commercial conduct. The Commission comments that for this reason commitment decisions provide an attractive option for use in fast-moving markets, where the speed of enforcement is crucial for the effectiveness of the commitments.

If the companies concerned are not willing to offer appropriate commitments, the Commission will proceed via the Article 7 prohibition procedure.

A full copy of the policy paper can be found at: