Chillin'Competition

The first instalment of this series (see here) – and the paper on which it is based (see here) – identify a mismatch between the reality of contemporary enforcement – where the adequate design and implementation of remedies is crucial to its success – and the ‘law in the books’, which assume a world in which the difficulty lies with detecting and establishing an infringement.

The obvious follow-up question is how the ‘law in the books’ (which is another way of saying Regulation 1/2003) can be changed to ensure that remedial intervention is effective.

The first step towards effectiveness is to acknowledge that ‘principles-based remedies’ hinder, rather than facilitate, enforcement. This point was already discussed at some length last time. The new iteration of Regulation 1/2003 should require the European Commission to provide the details of how the infringement is to be brought to an end.

The above point could draw inspiration from the framework that is already followed in relation to commitment decisions. The context is obviously different, but the fact that the obligations are specified in detail under Article 9 provide a clear template on what remedies should look like, in particular in cases that demand regulatory-like action. A quick look at recent decisions (such as this one) shows how granular the specification of commitments can get (as they should, given the concerns they address).

A second step towards effective enforcement would be to introduce a specific framework for the design of the remedies. This aspect is so central to the meaningful application of Articles 101 and 102 TFEU that is cannot be an afterthought in a procedure primarily conceived to establishing an infringement.

Again, this dedicated framework could draw inspiration from the one already applying when a firm proposes commitments to the European Commission.

Another source of inspiration is the Digital Markets Act, if only because this instruments acknowledges that a regulatory obligation is not always the end of the road, and that effective enforcement occasionally requires specification (as well as a formal apparatus allowing for it, such as the various avenues enshrined in Article 8 of the DMA).

The introduction of a formal framework for the specification of remedies would improve the current landscape in two ways (in addition to improving the effectiveness of remedies, that is). Third parties, who are not currently involved in the design of the remedy in any meaningful way, would be allowed to participate in the process.

The move would also provide greater clarity to firms subject to the remedies. By specifying, ex ante and in detail, how an undertaking is to meet its obligations, the state of perpetual uncertainty around compliance (which has become apparent in some recent cases) would be avoided.

The proposed framework is designed to balance these concerns with the requirements of the case law (pursuant to which the Commission cannot require the firm to bring the infringement to an end in a particular way if there are less intrusive means to achieve the same result)

The framework is summarised in the figure below.

The Commission would specify in detail the (structural or behavioural) obligations it plans to impose to bring the infringement effectively to an end, which would then be subject to a market test (along the lines of what is already done under Article 9 of Regulation 1/2003).

Following the market test, the Commission would give the chance to the undertaking subject to the proceedings to present a counterproposal to the (potentially revised) remedies. Only following this step (intended to bring the framework in line with the case law) would the Commission make the final version of the remedies binding upon the undertaking.