GCLC, Brussels, 1 February 2016
"Check against delivery"
Thank you for that introduction. Thank you in particular to Damien Gerard and Professor Massimo Merola for inviting me to be with you today.
As I've got to know the community of competition experts over the last 15 months, I’ve been impressed by your determination to deal with the big questions. It's good to see that the GCLC conference this year takes on the most fundamental question of all: what is a restriction of competition?
I hope you all agree on the answer!
In return, I thought I should take on the fundamental question for antitrust enforcers. Which cases should we pursue?
Like every public authority, the Commission’s resources are limited.
There are more than 25 million businesses in the EU. And the Commission has about 250 staff working on antitrust. There’s no way we can police every possible breach of the rules.
So how to use our resources is one of the most important decisions that I have to make as competition commissioner.
The role of the ECN
Of course, we don't enforce the competition rules alone. Since 2004, the national competition authorities have taken 85% of all decisions that applied EU competition law.
To do an even better job, they need the right tools. They need:
- Strong investigative powers, to collect evidence.
- Effective leniency programmes, to encourage companies to come clean about their involvement in cartels.
- The power to impose appropriate fines, to deter law-breaking.
- And legal guarantees of their independence when enforcing EU competition law, to secure public trust.
Some national authorities have told me they don't have all the powers they need. If so, then once our public consultation is finished, I'm willing to propose legislation to fix those problems.
Here in the Commission, we also need our procedures to be as efficient as they can be.
Antitrust procedures do take time. Time to dig up evidence, time to analyse it, time to reach decisions in a way that respects the right of companies to defend themselves.
But the more time we spend on each case, the fewer cases we can deal with. So if companies are willing to cooperate with us in a way that makes the procedures more efficient, I want to encourage that.
We should reward companies that admit to having broken the law, especially when they come up with remedies to make the markets more competitive, or companies that provide evidence voluntarily.
Because the faster we can wrap up a case and restore competition to the market, the less consumers will suffer. And to get that result, I think it's worth cutting the fines we impose.
Our guidelines allow us to reduce fines for companies that cooperate. But it's been more than a decade since the Commission last used that possibility outside cartels. I think it's time we looked seriously at how we can use it more. And I'm open for discussions with companies that are willing to cooperate.
But even then, we still need to prioritise.
That's especially true in antitrust, which is no longer driven by notifications. Instead, a lot of our cases start as complaints from the public or from competitors. So we take complaints very seriously – but we also need to decide which ones to take forward, and which ones to reject.
Fortunately, we have the power to decide not to pursue complaints that are not priorities. That allows us to focus. But we always explain why we've decided not to pursue a complaint. And that decision doesn't stop complainants taking their concerns to national competition authorities or national courts.
I think you can pick the most important cases by asking three questions.
First, will the case improve people’s lives? For example, will it make a key sector - like energy or the digital economy - work better?
Second, will it have an impact beyond the case itself? For example, will it help companies understand what they need to do to stay on the right side of competition law?
And third, am I the right person to deal with it? Or would the national authorities, or one of my colleagues in the College of Commissioners, be in a better position to address the matter by other tools than competition instruments?
Not every case needs to tick all three boxes. Focusing on key sectors, for example, doesn't mean that other industries are free to ignore the competition rules. But overall, I have tried to keep those three objectives in mind.
Let me say a few words about each of them.
Making key sectors work better
At the start of this Commission, President Juncker insisted that we weren't going to try to do everything. Instead, we were going to focus on the ten most important priorities, including energy, financial services and the digital economy.
Those sectors were chosen for a reason.
They produce essential inputs that the rest of the economy depends on.
And they face problems some of which can only be fixed at the European level.
So these Commission priorities are also priorities for competition enforcement.
We need secure, affordable, low-carbon energy. Otherwise, we will very soon find that our way of life is not sustainable.
To achieve that, we need to make sure energy can flow easily between EU countries. That will help us reach our climate goals - and achieve energy security - at much lower cost.
So we were very concerned when we discovered that Bulgarian Energy Holding, the incumbent electricity company in Bulgaria, was selling power to traders using contracts that let them resell it either only in Bulgaria, or only abroad. We resolved that issue last December, thanks to commitments from the company to set up a liquid power exchange that will make it possible to trade electricity anonymously, with no way to check where it is resold.
Achieving an impact beyond the case itself
On the other hand, sometimes a case can be a priority regardless of the sector, if it can help improve compliance.
For example, a case might set a precedent that clarifies how we interpret the law. We can’t deliver definitive interpretations - that's the job of the European courts. But we can still give valuable guidance to businesses.
When we choose this type of case, what matters is the principle. Not just the case itself.
So a smaller case might still make a good precedent. In fact, it might be a better choice than a big case which will take longer to complete.
Applying the rules to new situations
Precedents can be especially important to help companies understand how the rules apply to new settings.
Before the Commission's decisions in the Motorola and Samsung cases, there was a lot of uncertainty about how competition law applied to the standard-essential patents which you need to build, say, a 3G phone. Now, I think the principle is clear: companies that own these patents can't go back on the promises to license on fair, reasonable and non-discriminatory terms that allowed their technology to be included in a standard in the first place, if there's a willing licensee on the other side. And the European Court has confirmed that principle in its Huawei case.
You might say that guidelines can be a more efficient way than cases to provide guidance and legal certainty. But formulating appropriate guidelines is much easier once we've done cases in the area in question.
Reminding businesses of the rules
Sometimes, even though the rules are clear, we might still need to remind businesses what they can and can't do under competition law.
Take e-commerce. Online trade is booming, but cross-border purchases haven't really taken off. Less than a tenth of SMEs do cross-border e-commerce, even though online trade puts a potential market of 500 million people on their doorstep.
Part of the problem seems to be contracts that stop retailers selling cross-border. We’ve seen that sort of restriction offline, and the rules are well known. So if this type of restrictive contract has reappeared online, it might be time to remind businesses of the limits to what they can put in their contracts.
Our e-commerce sector inquiry will help us understand how widespread these restrictions are, and whether there could be competition law issues with them. To kick off the discussion, I plan to publish an issues paper on geo-blocking and EU competition law before Easter.
A single case can also have a big impact when it deters lawbreaking.
Our leniency programme gives companies a strong incentive to tell us about cartels and save themselves a big fine. So leniency is a major source of information for our work against cartels.
But it's sometimes important to pursue cases that don't start with a leniency application. Otherwise, cartelists might come to think that they were safe as long as everyone stayed silent.
In December 2014, we fined a cartel of envelope producers. The fine that we imposed certainly wasn't among the largest cartel fines in history. But what mattered was the deterrent effect. Because this was a case that we launched on our own initiative.
We also sometimes need to act even when a breach of the rules has already come to an end. That sort of case can deter others from doing the same thing – not to mention helping those who suffered to claim damages.
Competition law: the right tool?
The third question I always ask myself is whether competition enforcement by the European Commission is the right tool for the job.
Not every case of unfairness is a matter for competition law. We won't prioritise cases that are not really about competition.
On the other hand, if competition enforcement is really needed, we won't say no just because the sector is not one of our priorities.
Take our investigation into the rules of the International Skating Union.
I imagine that some were surprised that we opened proceedings in that case. And I would understand that. Disputes about sporting rules happen all the time. Most of them are not for competition law to deal with.
For example, differences about how a sport is run are normally best handled by the national courts.
But our International Skating Union case is different. We’re asking a question that is strictly about competition. Is the International Skating Union using lifetime bans to enforce a monopoly on organising skating events?
Setting priorities always comes at a cost.
There are some things that we won't be able to pursue. Things that may be very important to those involved.
But when our resources are limited, we need to use them where it counts. Where our actions can do the most to ensure that markets work in the interests of citizens and consumers.