Commission announces reforms of competition investigation procedures

Companies being investigated for allegedly abusing a dominant market position or entering into anti-competitive agreements will be told if financial penalties are being considered in a move to be more "transparent" and "fair" during competition proceedings, the Commission said.

The European Commission is responsible for investigating competition-restricting agreements and abuse of dominant market position under the Treaty on the Functioning of the European Union (TFEU). The European Commission appoint case teams to undertake these investigations.

After gathering information on companies' activities, and before adopting a final decision on its findings, the case team is obliged to provide the investigated parties with a 'Statement of Objections' detailing their provisional findings. The case team's report must include "all the information they need to defend themselves effectively and to comment on the allegations made against them". The Commission has now said that that information must also include details of potential fines and the case team's justification for it.

"The Statement of Objections will clearly indicate whether the Commission intends to impose fines on the undertakings, should the objections be upheld," updated 'best practice' guidance (42-page / 204KB PDF) on the Commission's competition investigation procedures said.

"In the Statement of Objections the Commission will indicate the essential facts and matters of law which may result in the imposition of a fine, such as the duration and gravity of the infringement and that the infringement was committed intentionally or by negligence. The Statement of Objections will also mention in a sufficiently precise manner that certain facts may give rise to aggravating circumstances and, to the extent possible, to attenuating circumstances," it said.

The Commission also said that 'state of play' meetings will now be open to parties accused of being involved in cartel arrangements. These voluntary meetings are designed to provide parties involved a forum for "open and frank" discussion, the Commission said.

Companies subject to the Commission's antitrust investigations have the right to raise objections about the case team's processes and findings with an independent 'hearing officer' within the Commission. The hearing officer now has new powers to force the Commission to inform parties if they are subject to an investigation into an alleged abuse of a dominant market position or entering into an anti-competitive agreement, the Commission said.

"Undertakings or associations of undertakings subject to an investigative measure by the Commission ... shall have the right to be informed of their procedural status, namely whether they are subject to an investigation and, if so, the subject matter and purpose of that investigation," the Commission said in detailing (18-page / 59KB PDF) the function and terms of reference of the hearing officer in certain competition proceedings.

"If such an undertaking or association of undertakings considers that it has not been properly informed by the Directorate-General for Competition of its procedural status, it may refer the matter to the hearing officer for resolution. The hearing officer shall take a decision that the Directorate-General for Competition will inform the undertaking or association of undertakings that made the request of their procedural status," the Commission said.

If parties believe responding to an information request from the case team will lead to self-incrimination they can now ask the hearing to issue a "reasoned recommendation" to support their belief, the Commission said. A person has a right not to answer questions or hand over information if it would incriminate them.

"In appropriate cases, and having regard to the need to avoid undue delay in proceedings, the hearing officer may make a reasoned recommendation as to whether the privilege against self-incrimination applies and inform the director responsible of the conclusions drawn, to be taken into account in case of any decision taken subsequently," the Commission said.

Under the TFEU "all agreements between undertakings, decisions by associations of undertakings and concerted practices which may affect trade between member states and which have as their object or effect the prevention, restriction or distortion of competition with the internal market" are generally prohibited.

Exceptions apply if the agreements can be shown to contribute to "improving the production or distribution of goods or to promoting technical or economic progress, while allowing consumers a fair share of the resulting benefit" providing any restrictions that are imposed are "indispensable to the attainment of these objectives" and do not create the situation where competition can be eliminated "in respect of a substantial part of the products in question".

The TFEU also prohibits companies from abusing a dominant market position, including by "directly or indirectly imposing unfair purchase or selling prices or other unfair trading conditions; limiting production, markets or technical development to the prejudice of consumers; applying dissimilar conditions to equivalent transactions with other trading parties, thereby placing them at a competitive disadvantage; making the conclusion of contracts subject to acceptance by the other parties of supplementary obligations which, by their nature or according to commercial usage, have no connection with the subject of such contracts," it states.