Remedies in European antitrust law

Antitrust Law Journal

Volumn 76, Issue 1, 2009, Pages 43-63

  Hellström, Per ^a   Maier Rigaud, Frank ^a   Bulst, Friedrich Wenzel ^a  

^a UNIVERSITY OF BONN   (Germany)

Author keywords

[No Author keywords available]

Indexed keywords

EID: 70350445404     PISSN: 00036056     EISSN: None     Source Type: Journal    
DOI: None     Document Type: Conference Paper

References (83)

1. For a comprehensive account of antitrust remedies in Europe
2. see Philip Lowe & Frank Maier-Rigaud, Quo Vadis Antitrust Remedies, in 2007 Fordham Competition L. Inst. 597 (Barry E. Hawk ed., 2008) ;
3. OECD, Competition Comm., Remedies and Sanctions in Abuse of Dominance Cases, DAF/COMP (2006) 19 (May 15, 2007), available at http://www.oecd.org/ dataoecd/20/17/38623413.pdf.
4. See Council Regulation (EC) No 1/2003, 2003 O. J. (L 1) 1, 9 (explaining the implementation of the rules on competition laid down in Articles 81 and 82 of the Treaty).
5. Id. art. 7 (1) ;
6. see id. art. 9 (1) ("Where the Commission intends to adopt a decision requiring that an infringement be brought to an end and the undertakings concerned offer commitments to meet the concerns expressed to them by the Commission in its preliminary assessment, the Commission may by decision make those commitments binding on the undertakings. Such a decision may be adopted for a specified period and shall conclude that there are no longer grounds for action by the Commission. ") ;
7. see also Lowe & Maier-Rigaud, supra note 1 (discussing Articles 7, 8, and 9).
8. Council Regulation 1/2003, supra note 2, art. 7 (1).
9. See infra Part V. B.
10. See infra Part VII. D.
11. See OECD, supra note 1, at 20 (noting it may be useful to think of remedies as measures that aim to stop a defendant's conduct and its anticompetitive effects, prevent their recurrence, and restore competition. Sanctions can be thought of as measures that aim to deter unlawful conduct and perhaps to compensate victims.").
12. See Council Regulation 1/2003, supra note 2, art. 23;
13. Guidelines on the Method of Setting Fines Imposed Pursuant to Article 23 (2) (a) of Regulation No 1/2003, 2006 O. J. (C 210) 2, 2-5.
14. See Thomas O. Barnett, Section 2 Remedies: A Necessary Challenge, in 2007 Fordham Competition L. Inst., supra note 1, at 549, 554.
15. The Latin origin of the word remedy is remedium, derived from the term mederi (i.e., to heal).
16. See Howard A. Shelanski, Participant in Panel Discussion on Remedies and Sanctions for Unlawful Unilateral Conduct at the Thirty-fourth Annual Fordham Competition Law Institute Conference on International Antitrust Law & Policy, in 2007 Fordham Competition L. Inst., supra note 1, at 614.
17. See Council Regulation 1/2003, supra note 2, art. 24.
18. See Commission Notice on the Handling of Complaints by the Commission Under Articles 81 and 82 of the EC Treaty, 2004 O. J. (C 101) 65;
19. European Comm'n, Report on Competition Policy 2005 at 25-27 (2007), available at http://ec.europa.eu/competition/annual-reports/2005/en. pdf.
20. See Case C-119/97P, Ufex v. Comm'n, 1999 E. C. R. I-1341, ¶¶ 93-94 ("the Commission is required to assess in each case how serious the alleged interferences with competition are and how persistent their consequences are. That obligation means in particular that it must take into account the duration and extent of the infringements complained of and their effect on the competition situation in the Community, " and "[i]f anti-cornpetitive effects continue after the practices which caused them have ceased, the Commission thus remains competent under Articles 2, 3 (g) and [82] of the Treaty to act with a view to eliminating or neutralising them.").
21. Such an order is, in any event, merely declaratory because this obligation follows from the direct effect of Article 82 EC.
22. See Joined Cases 6 & 7/73, Istituto Chemioterapico Italiano S.p. A & Commercial Solvents Corp. v. Comm'n, 1974 E. C. R. 223, ¶ 45.
23. "Mesure corrective" in French, "Abhilfemaßname" in German. The French text reads: "elle peut leur imposer toute mesure corrective... qui soit proportionnée à l'infraction commise et nécessaire pour faire cesser effectivement l'infraction. " The German text reads: "Sie kann ihnen hierzu alle erforderlichen Abhilfemaßnamen... vorschreiben, the gegenüber der festgestellteh Zuwiderhandlung verhältnismäßig und für eine wirksame Abstellung der Zuwiderhandlung erforderlich sind."
24. See Charles A. James, The Real Microsoft Case and Settlement, Antitrust, Fall 2001, at 58, 60;
25. Barnett, supra note 9, at 551 ("While a remedy might not be limited to conduct that is identical to the conduct that constituted the violation, it should be limited to conduct that is closely related.") ;
26. see also Carl Shapiro, Microsoft: A Remedial Failure, 75 Antitrust L. J. 739, 740 (2009).
27. Council Regulation 1/2003, supra note 2, art. 7 (1).
28. On the concepts of "equally effective" and "burdensome, "
29. see Michael Adam & Frank Maier-Rigaud, The Law and Economics of Article 82 EC and the Commission Guidance Paper on Exclusionary Conduct, 1 J. Competition L. (ZWeR-Zeitschrift für Wettbewerbsrecht) 131 (2009).
30. See Charter of Fundamental Rights of the European Union, 2000 O. J. (C 364) 1, arts. 16 & 17;
31. infra Part V. A.
32. See, e.g., William Breit & Kenneth G. Elzinga, Antitrust Penalty Reform: An Economic Analysis (1986) (noting in this context the very long-term perspective underlying the optimal deterrence model) ;
33. Herbert Hovenkamp, Antitrust's Protected Classes, 88 Mich. L. Rev. 1 (1989) (critiquing this long-term approach).
34. See Wouter P. J. Wils, Efficiency and Justice in European Antitrust Enforcement 173-79 (2008).
35. See infra Part VII (discussing this point in more detail).
36. See Lowe & Maier-Rigaud, supra note 1.
37. Even in cases where efforts fail to design a remedy going beyond a cease and desist order (as discussed infra Part VII), the Commission has the possibility to impose a cease and desist order coupled with a fine.
38. Case T-201/04, Microsoft Corp. v. Comm'n, 2007 E. C. R. II-3601, ¶ 1276.
39. See Case C-308/04 P, SGL Carbon AG v. Comm'n, 2006 E. C. R. I-5977, ¶ 108 (Eur. Ct. Justice) ("So far as the appellant's argument relating to the freedom to conduct business and the right to property is concerned, it is sufficient to note that those principles are subject to public-interest restrictions and that they cannot be relevant in the context of setting a fine for an infringement of Community competition law.").
40. Case 52/84, Comm'n v. Kingdom of Belgium, 1986 E. C. R. 89, ¶ 14;
41. Case C-499/99, Comm'n v. Kingdom of Spain, 2002 E. C. R. I-6031, ¶ 38.
42. See Case T-24/90, Automec v. Comm'n, 1992 E. C. R. II-2223, ¶¶ 51-52.
43. See, e.g., Case IV/26811-Continental Can Co., Comm'n Decision (Dec. 9, 1971), 1972 O. J. (L 7) 25.
44. In Commercial Solvents, the European Court of Justice expressly recognized that the Commission may require the undertaking concerned to submit to it proposals with a view to bringing the situation into conformity with the requirements of the Treaty. Joined Cases 6 & 7/73, Istituto Chemioterapico Italiano S.p. A & Commercial Solvents Corp. v. Comm'n, 1974 E. C. R. 223, ¶ 45.
45. This was done in the Microsoft case regarding an appropriate tying remedy, where Microsoft was asked to comment on a "must carry" and an "unbundling" remedy.
46. See Shapiro, supra note 18, at 748.
47. Joined Cases 92 & 93/87, Comm'n v. French Republic et al., 1989 E. C. R. 405, ¶ 22 (Eur. Ct. Justice).
48. See Council Regulation 1/2003, supra note 2, arts. 7 (1) & 9 (1).
49. Interchange fees are charged by a cardholder's bank (the issuing bank) to a merchant's bank (the acquiring bank) for each sales transaction at a merchant outlet with a payment card. When a cardholder uses a payment card to buy from a merchant, the merchant receives from the acquiring bank the retail price less a merchant service charge. This merchant service charge is the price a merchant must pay to his bank for accepting cards as means of payment. The issuing bank, in turn, pays the acquiring bank the retail price minus the MIF.
50. See infra text accompanying note 38. The retail price is deducted from the bank account of its customer.
51. See Press Release, European Comm'n, Antitrust: Commission Prohibits MasterCard's Intra-EEA Multilateral Interchange Fees-Frequently Asked Questions (Dec. 19, 2007) (Memo/07/590) (providing more details on the MasterCard MIF case).
52. See id.
53. Id.
54. Note that the obligation to end certain infringing behavior may in fact be akin to the obligation to actively take certain measures (e.g., in refusal to supply cases).
55. Case COMP/C-3/37.792-Microsoft Corp., Comm'n Decision, 2007 O. J. (L 32) 23 (Mar. 24, 2004) (Microsoft Commission Decision 2004), available in full at http://ec.europa. eu/competition/antitrust/cases/decisions/37792/en. pdf, aff'd, Case T-201/04, Microsoft Corp. v. Comm'n, 2007 E. C. R. II-3601 (Ct. First Instance).
56. See Microsoft Commission Decision 2004, supra note 40, art. 5.
57. See Case 97/744, Italian Ports Legislation Relating to Employment, Comm'n Decision, 1997 O. J. (L 301) 17 (Raso).
58. See Case C-18/88, Régie des Télégraphies et des Téléphones (RTT) v. GB-Inno-BM S. A., 1991 E. C. R. I-5941 (Eur. Ct. Justice) (RTT).
59. Raso, 1997 O. J. (L 301) 17, ¶ 30 (c).
60. In Raso, it is stated that "even separating the two roles would not be sufficient if it occurred within the same group. It would be necessary for the two undertakings with separate roles to be entirely independent."
61. Id. ¶ 30 (f).
62. Thereby, the Commission clearly declined legal unbundling/information firewall types of remedies. In RTT the Court similarly concluded that "the maintenance of effective competition... require[s] that the drawing up of technical specifications... and the granting of type-approval must be carried out by a body which is independent...." RTT, 1991 E. C. R. I-5941, ¶ 26. It should be noted that structural remedies were immediately considered proportional despite the fact that both cases had Article 86 aspects and behavioral remedies had not been tried.
63. See COMP/39.388-German Electricity Wholesale Market & COMP/39.389-German Electricity Balancing Market, Comm'n Decision (Nov. 26, 2008), 2009 O. J. (C 36) 8 (summary), available in full at http://ec.europa.eu/ competition/antitrust/cases/decisions/39388/en. pdf;
64. see also Press Release, European Comm'n, Antitrust: Commission Opens German Electricity Market to Competition (Nov. 26, 2008) (IP/08/1774).
65. The merit curve depicts the variable cost per MWh of different generation plants in · ascending order. It is the electricity market supply curve. Figures 1 and 2 depict the typical shape of this so-called merit curve.
66. In terms of Figure 1 and Figure 2, this implies that the shaded areas are reduced via divestiture to a size below that of area B, the lost profit of withdrawing plant A. In that case, the quantity effect dominates the price effect-capacity withdrawals would only be profitable if electricity producers collude and devise a mechanism to compensate those that withdraw.
67. Press Release, European Comm'n, Antitrust: Commission Welcomes RWE Proposals for Structural Remedies to Increase Competition in German Gas Market (May 31, 2008) (Memo/08/355).
68. See COMP/39.402-RWE Gas Foreclosure, Comm'n Decision (Mar. 18, 2009), 2009 O. J. (C 133) 10, 10-11, available in full at http://ec.europa.eu/ competition/antitrust/cases/decisions/39402/en. pdf. In that case, the Commission came to the preliminary view that RWE might have infringed EC Treaty rules on the abuse of a dominant market position (Article 82), notably by two types of behaviour: • firstly, RWE may have refused access to its network, notably by various means related to RWE TSO's capacity management. RWE may have pursued a strategy aimed at systematically keeping the transport capacity on its gas network for itself; • secondly, RWE may have intentionally set its transmission tariffs at an artificially high level in order to squeeze RWE's competitors' margins. Such a "margin squeeze" has the effect of preventing even a competitor as efficient as RWE from competing effectively on the downstream gas supply markets or limiting competitors' or potential entrants' ability to remain in or enter the market. To address the Commission's competition concerns, RWE committed to divest its existing Western German high-pressure gas transmission network, including the necessary personnel and ancillary assets and services. Without control over the transmission network, RWE will no longer be able to favour its own supply business. The Commission also ensured that the purchaser of the network will have no incentives to favour its own supply business, since the network can only be divested to purchasers which do not give rise to prima facie competition concerns. Press Release, European Comm'n, Antitrust: Commission Opens German Gas Market to Competition by Accepting Commitments from RWE to Divest Transmission Network (Mar. 18, 2009) (IP/09/410).
69. See also Press Release, RWE, RWE Seeks Setdement with European Commission (May 31, 2008), available at http://www.rwe.com/generator.aspx/presse/language= en/id=76864?pmid=4002210.
70. See Press Release, European Comm'n, Antitrust: Commission Confirms Sending Statement of Objections to ENI Concerning Italian Gas Market (Mar. 19, 2009) (Memo/09/120).
71. Council Regulation 1/2003, supra note 2, art. 7 (1) (emphasis added).
72. Some commentators refer to restoring the situation ex ante, but ex ante does not necessarily equal the situation but for. Ex ante is a step (or many steps) back in time whereas but for refers to a counterfactual scenario had the infringement not taken place. If the purpose of the remedy is to eliminate a distortion of competition, but for seems to be the more appropriate aim, and therefore the more appropriate term. While ex ante will often be a proxy for but for, it is not the aim of the remedy.
73. On the importance of not prohibiting competition on the merits and not undermining the incentive to compete
74. see Gregory J. Werden, Remedies for Exclusionary Conduct Should Protect and Preserve the Competitive Process, infra this issue, 76 Antitrust L. J. 65 (2009) (stating, in Parts III. B and III. C that remedies for exclusionary conduct should protect and preserve the competitive process).
75. See Shapiro, supra note 18, at 748-53.
76. See Case C-119/97, Ufex et al. v. Comm'n, 1999 E. C. R. I-1341.
77. See text at the beginning of Part VII.
78. Note that remedying distributive effects is distinct from imposing a fine or other sanctions on the company.
79. European Comm'n, White Paper on Damages Actions for Breach of the EC Antitrust Rules, COM (2008) 165 final (Apr. 2, 2008), available at http://ec.europa.eu/competition/anti trust/actionsdamages/files-white-paper/ whitepaper-en. pdf.
80. See also Friedrich Wenzel Bulst, Of Arms and Armour-The European Commission's White Paper on Damages Actions for Breach of EC Antitrust Law, 2008 Bucerius L. J. 81 (detailed discussion of the White Paper), available at http://www.lawjournal.de and http://papers.ssrn. com/sol3/papers.cfm? abstract-id=1162811.
81. Note that Article 8 of Regulation 1/2003 allows the Commission to order interim measures under certain circumstances.
82. See Lowe & Maier-Rigaud, supra note 1, at 601-09.
83. This may be the case despite compliance with the first remedy (i.e., if that remedy turns out not to have been sufficient) or due to a lack of compliance with that remedy, in which case Article 24 proceedings may have to be coordinated with monitoring compliance with the second remedy.