CONCURENTA
STUDII, CERCETÃRI ªI ANALIZEPRIVIND PROTECÞIA
CONCURENÞEI ECONOMICE
CONSILIUL CONCURENÞEI - ROMÂNIA
Nr. 1 – 2010
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COMPETITION
SURVEY
STUDIES, RESEARCHES AND ANALYSES RELATING TO
ECONOMIC COMPETITION
COMPETITION COUNCIL - ROMANIA
No.1 – 2010
COMPETITION SURVEY
STUDIES, RESEARCHES AND ANALYSES RELATING TO ECONOMIC COMPETITION
COMPETITION COUNCIL - ROMANIA
No. 1 - 2010
COMPETITION SURVEYStudies and researches relating to economic competitionCOMPETITION COUNCIL - ROMANIA
Patronage and sponsorship by the COMPETITION COUNCIL - ROMANIAPiaţa Presei Libere nr. 1, sector 1, 013701, Bucureşti, Româniae-mail: [email protected]
Managing boardBogdan-Marius Ct. Chiriţoiu - minister, presidentOtilian B. Neagoe - secretary of state, vice-president Alexe Şt. Gavrilă - secretary of state, vice-presidentŞtefan P. Neagoe - under-secretary of state, competition councillor Valentin V. Mircea - under-secretary of state, competition councillor Dan N. Ionescu - under-secretary of state, competition councillor Iozsef-Nandor P. Nemenyi - under-secretary of state, competition councillorVasile Şeclăman – general secretaryCOMPETITION COUNCIL - ROMANIA
Edition co-ordinatorIozsef-Nandor P. Nemenyi - under-secretary of state, competition councillor COMPETITION COUNCIL - ROMANIA
Editorial boardGheorghe Rădulescu – head of unitOvidiu Felecan – senior competition inspectorDaniel Dumitru Stan – senior competition inspectorClaudiu Mosessohn – competition inspectorCOMPETITION COUNCIL - ROMANIA
Ion Stegăroiu – rector, “Valahia” University TargovisteDan Ţop – chief of department, Faculty of Juridical Sciences “VALAHIA” UNIVERSITY TARGOVISTE
Editorial offi cePiaţa Presei Libere nr. 1, sector 1, 013701, Bucureşti, RomâniaConsiliul Concurenţei Direcţia Teritorialăe-mail: [email protected]
ISSN 1842 – 2705Copyright©2010Competition Council - Romania
Bibliotheca Edition credentials approuved by National Council of Scientifi c University Research (CNCSIS) under notifi cation no. 1142/30.06.2003, reviewed 2010; e-mail: [email protected]
Opinions within the papers are personal appreciations of the authors and do not necessarily represent COMPETITION COUNCIL assessments.
We will continue the policy of institution credibility consolidation, taking into account that we are not only a Romanian institution, but we represent the competition policy of the European Union. Consolidation must be the key-term of the following years.
Bogdan M. Chiriţoiu President of the Competition Council - Romania
Publications of the kind bring added value for competition advocacy and signifi cantly contribute to further spreading and developing a common competition culture. We warmly welcome the initiative you have undertaken.
Ales MusilHead of Unit, D.G. Competition A4 – European
Commission - In charge for the European Competition Network
TABLE OF CONTENTS
Call for papers / p. 7
1. The Romanian Competition Council Priorities for 2010 / p. 9Bogdan Marius Chiritoiu, President, Competition Council - Romania(English version: Doina Mesteacăn, competition inspector, Competition
Council - Romania)
2. From the OECD „waiting room”, a warning on the peak defi cits and on the overlapped (simultaneous) crisis in the Europe / p. 13
Neményi P. Iózsef-Nándor, Competion councillor, Competition Council - Romania
(English version: Doina Mesteacăn, competition inspector, Competition Council - Romania)
3. The Report on Functioning of Regulation 1/2003 (view expressed in February 2010) / p. 16
Ales Musil, Head of Unit, European Competition Network, DG Competition, European Commission
4. Dimensions of competition policy and law in emerging economies (Part one) / p. 20Pradeep S. Mehta, Secretary General - CUTS, India S. Chakravarthy, Fellow - CUTS Centre for Competition
5. A brief compendium about the Competition Policy of the European Union for the next years / p. 38
Ştefan P. Neagoe, competition counsillorGheorghe Radulescu, directorCompetition Council, Romania(English version: Ovidiu Felecan, competition inspector, Competition Council -
Romania)
6. Competition law and intellectual property rights: the current situation of parallel trade in pharmaceuticals (Part two) / p. 56
Andreea Gavrilă, scientifi c consultant, Competition Council - Romania
7. The evolution of state aids granted in Romania during the last years, seen in the context of the community policy / p. 62
Daniel Diaconescu, directorPhD. Constanta Dumitrescu, competition inspector Competion Council - Romania(English version: Bogdan Popa, competition inspector - Competition Council,
Romania)
8. L’impact de la crise economique mondiale sur la politique de la concurrence – un exemple pour les economies emergentes (Première partie) / p. 67
Drd. Daniel-Dumitru Stan, inspecteur de concurrence Conseil de la Concurrence, RoumanieProf. dr. Delia Popescu - Université “Valahia” de Târgovişte
9. The electricity market – infl uences of EU’s energy policy on electricity prices / p. 85Ph.D. student Mihaela DUMITRESCU, competition inspector, Competition
Council - Romania
10. The evaluation of the control over an undertaking from the perspective of the Companies Law 31/1990 / p. 93
Valentin V. Mircea, competition councillorCompetition Council, Romania
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CALL FOR PAPERS
Dear colleagues, fellows, friends, present and future collaborators from Romania, from other Member States of the European Union and from all other countries of the world,
offi cials and public clerks from competition authorities and from other community and national authorities and institutions, magistrates from community and national courts, academics, attorneys-at-law, publicists, business, professional and consumer associations representatives, etc.,
everybody who knows something, or who wants to know, or who has something to say about the ample interdisciplinary fi eld of economic competition,
are invited to send papers/articles for publishing within our journal (which is inteded to be a quarterly review).
The selected papers will be published on our expenses; the respective issue will be send to the author by regular mail (one copy); the journal is also available on www.competition.ro (Romanian Competition Council site) and on other sites to be communicated.
We apologize for the time being the editorial board is able to process contributed papers only in English and French, in which languages we ask you to be so kind to submit your paper (we will provide a translation in Romanian). The Romanian collaborators are asked to send us also a translation in English or French.
If you are reading this, that means you are reading our journal;if you are reading our journal, that means you are our present or future collaborator.
We are awaiting for you,
Editorial board
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The Romanian Competition Council Prioritiesfor 2010
Bogdan Marius Chiritoiu, PresidentCompetition Council, Romania
English version: Doina Mesteacăn - competition inspectorCompetition Council - Romania
Important reference points: - re-launching of the economic growth, and the lasting growth; - State Aids controlling and continuous surveillance on the national level; - maintaining of the competition even over the crisis period of time; - analysis of certain sensitive sectors – power, drugs (medicines), retail,
road building, etc. - inclusively concerning the pricing policy; - project budgeting, and ensuring of the competition authority institution-
al efficiency, through a new national strategy.
The 2010 national priority will be the economic (growth) re-launching, a far-reaching approaching which is requiring a concerted action of all the decision making factors in the public administration field. The Competition Council will cooperate with the Government, acting as a favoring factor for the pro-competition attitude and for the fair play in the State aid field.
The competition authority is intending to take part into the promoting of new legislative initiatives, to start new specific actions, and to open new inves-tigations on competition issues, with a view to contribute to the ensuring of auspicious conditions for the 1,3-1,5% economic growth (stipulated into the national consolidated budget).
The effects of the economical-financial crisis have been rapidly world-wide spread, and Romania has faced important difficulties, both into the bank-ing system, and into the real economy, registering a substantial slowdown of the economic growth.
All the companies are facing difficulties generated by the credits scarcity, the most seriously affected being the smaller ones; the credits scarcity has had negative
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Yeffects on short and medium term, but especially on long term, by the delaying of the starting for the planned investment or by the abandoning of some investment among the already started ones. In this context, the Competition Council is staying at the State aid grantors disposal, intending to closely cooperate with them, in order to work out State aid schemes able to comply with the requirements for getting up the European Commission approval, and whose applying would contribute to the solving of the current problems within the national economy.
On the national level, the Competition Council is the authority empow-ered to facilitate the observance of the community State aid rules, by the en-hancing of the functioning mechanisms aimed at the alignment to the commu-nity regulations. In order to forestall and to counteract the negative effects on the Romanian economy generated by the economic-financial crisis, through the supporting of the access to the financing, State Aid specific measures have been worked out and implemented on the basis of the Community Temporary Framework for the State aid measures, such as: - the EximBank State aid scheme aimed at the guarantees granting to under-
takings being in difficulty on the very moment of the guarantee requesting, without having been in a such situation before the 1st of July 2008;
- the guarantees scheme aimed at the Ford company (Euros 320 millions); - the scheme aiming to create the national general framework for the increas-
ing of the de minimis aids ceiling from Euros 200,000 to Euros 500,000.In the context of the current economical-financial crisis, the Romanian
Competition Council is militating for the applying of the competition policy as a remedy of the crisis breaking. As a result of the competition stimulating, of the competition intensity increasing, as well as of the powerful pressures de-veloped on the market, the degree of the companies competitiveness is increas-ing, having beneficial effects for the prices reducing on the market, and for the stimulating of the population consumption.
The main priority of the national competition authority is to fight cartels. Aiming to adequately answer (adapt itself) to the permanent changes into the economic environment, the Competition Council is developing its own flexibil-ity and adaptability, for instance within the developing of the process intended to the continuous modernising of the leniency policy regulating framework.
Besides the leniency policy well-known elements – immunity from fines, and the reducing of the fine amount in the event of cooperation of the applicant company with the competition authority – some new elements have been intro-duced, such as the unitary treatment of the previous leniency applications sent to many Member States of the European Union, and the marker system (con-sisting in the granting of an ordering number and of a period of grace for the applicants which are intending to supply as more as possible new (additional) information, enabling them to fil in the immunity requesting application).
Among the important objectives of the Competition Council are ranging the consistent and unflinching implementing of the competition legislation, as well as the improving of the possible market failures by the legislative frame-
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work usage, their implementing being done without harming the independent decision making and behaviour of the private companies.
As new actions of the Competition Council should be mentioned the more than 20 open investigations, some of them being open within previously untackled fields (auctions into the army field). We have got some “classical” acting fields (the mobile telephony market or the television services one), but also some areas wherein we are enhancing our knowledge about the field (the power sector or the medicines one); these investigations have been open less than 4 months ago. We are intending to remain watchful in front of any resale price agreements, as well as in front of any anticompetitive or exclusive claus-es forbidden by the law.
We are also intending to intensify both the two traditional activity direc-tions (the anticompetitive practices finding out and sanctioning, and the ensuring of the State Aids compliance with the European legislation), and the actions aimed at the promoting of some regulations with possible beneficial effects into the key economic sectors. Therefore, we’ll keep on the promoting of the mea-sures identified into the Report worked out in partnership with the Romanian Academical Society, during the 2009 autumn, having as priority the economic growth – through the removing of the commission for anticipatory reimburse-ment within the banking field, and by the opening to the competition of the lib-eral professions, especially of the notary one.
Other future priorities of the Competition Council are the analysing of some key sectors, such as the retail sector or the energy one.
Into the retale sector, the following vulnerable competitive areas should be analysed: negotiation force (power) within the relationship between the pro-ducers and the retailers; prices establishing manner, and prices discounting applied policy; possible agreements between the large retailers and the produc-ers. Such sector is requiring a permanent monitoring, in order to forestall the possible distortions with direct impact on the final consumer.
Although the energy sector in Romania has been considered to be com-petitive comparatively to those in other neighbouring countries, some of the lat-est measures could have risky consequences, by a serious limiting of the compe-tition into this field. For instance, the case of setting up of two large energy companies, as well as that of the contracts outside the market which are benefit-ing from a preferential treatment. The competitiveness of the energy sector should be ensured through the accomplishing of the two following conditions: the activities having a natural monopoly character to be separated from those wherein the competition may arise and develop, and the market opening aiming to ensure to the consumers the possibility to freely choose their suppliers.
Another important objective of the Competition Council is the improv-ing of the inter-institutional available tools and mechanisms. In this context, it should be mentioned the setting up – in February 2010 – of an Interministerial Council aimed at the coordinating of the State aid activity, whose secretariat tasks will be provided by the Competition Council.
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YAiming to ensure the enhancing of our ability (power), we have initiated
a measure for the improving of the tools used at the normative acts elaborating and justifying (“substantiating notes”), taking over an OECD instrument, so as to facilitate the identifying of both the legislative proposals having possible anticompetitive effects, and of those with possible negative consequences by the infringement of the community State aid specific rules.
As concerns our internal developing, it should be mentioned that the 2010 budgetary strategy has aimed two targets: comprising of the fixes ex-penses into the projects costs, as well as the increasing of the percentage of the activities financed through the programs/projects up to almost 50% from the total budget allocated to the institution. It should be noticed that the 27 projects which will be developed during the year 2010 will totalize a budget represent-ing 50% out of the amounts allocated to the Competition Council.
Among the results which should be the target of our activity during the year 2010 could be mentioned the following: implementing of a performance management, with an analysis of the individual abilities and competences; de-veloping of investigations aimed at the market knowledge; establishing of sev-eral indicators useful in the market monitoring; establishing of the State aids impact within some important areas (restructuring, deprived areas, etc.).
We believe that, as the year 2009 has been considered – for Romania – the IMF (International Monetary Fund) year, and the year of getting up of the needful credits for the financial crisis administering, the 2010 year might be considered by the economic analysts “the Competition Council year”.
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From the OECD „waiting room”, a warning on the peak deficits and on the overlapped
(simultaneous) crisis in the Europe
(closing of the text on 5 March 2010)
Ph.D. Neményi P. Iózsef-Nándor, Competion councillor, Competition Council - Romania
English version: Doina Mesteacăn - competition inspectorCompetition Council - Romania
The 5th anniversary Meeting of the OECD Regional Competition Centre took place recently (1-3 March, 2010), in Budapest.
We selected a few conclusions couched into this Forum – considering them as worthy of being taken into account both by the Romanian Competition Authority, and by the Moldavian one. They are mentionned below.
We watched, for almost 3 years, at the overlapping (concomitance) of several crisis (the financial, the economic, and the governing one) in the new Member States of the European Union that have the option for a „functionning market economy at the end of the transition period”. (!?)
The banking market has, unfortunately, same profile as the economy and its specific players, in each State (Romania, as well as the neighbouring coun-tries: Bulgaria, Hungary, Croatia, etc.).
We might say that, over the period 2008-2010, the Romanian banking institutions and the State authorities hadn’t taken the essential measures aimed at the banks controlling and surveillance, in order to inhibit the exaggerate tendance of getting into debt - specific for the population, as well as for the inefficient undertakings.
The above mentioned deficiencies induced, in the context of an in-tense but unsustainable economic growth, the public finance deteriorating, so that Romania wasn’t capable to collect the strictly required taxes and duties for the ensuring of a balanced budgeting. Meanwhile, the banks reg-istered very high profits, hardly to be analyzed, understood and explained for an economist.
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YThe tremendous budgetary deficits in the Europe have created, inside the
whole European Union (from Greece to Portugal, and, respectively, from Ireland to Spain), more and more alarming social problems.
The OECD is warning about the necessity to review the economic strat-egies for labour employment and for free trading, as well as the energy strate-gy, and, respectively, the strategies concerning the health services, and the scientific research, and is proposing a large social dialogue and multilateral experience exchanges (civil society – authorities).
The OECD is also warning about the peak budgetary deficits, drawing attention on the thorough crisis developed in the context of the tremendous national debt of Greece (but of other countries too), and is recommending the use of the USA, the UK, and the Japan assistance for the managing of the me-dium term public debt.
If the public debt of the OECD Member States increases, in 2010, to 8% of the GDP, their Governments will have to work out new strategies aimed at the breaking of the crisis. The OECD is also intending to inform about this is-sue the Member States of the „G 20” group – high developed capitalistic coun-tries which will supply, for the year 2011, the technical assistance and the sources needful in order to ensure a balanced budgeting in each State. The re-financing of the public debt represents a pressing liability of the State, aimed at the economic collapse forestalling. (!)
The process aimed at the amending of the national budgets could jeop-ardize, in the States which are suffering a thorough crisis, the economic recov-ery foreseen in December 2009. We consider that anticipation (prevision) too optimistic, as we have, for 6 quarters, watched at an inadequately managed economic recession. Our rhetorical question would be: „And what’s next?”
The main conclusion of the Budapest meeting was elementary: more competition into all the fields of activity in the society, and forcing of the interest rates reducing, in order to enable the credit granting re-launching into the real economy. The credit granting moved too much away from the real economy, because of the newcomers (banks arrived from abroad, whose strat-egy was typical for the „globalisation era”, and could be explained only by speculative and hedging reasons).
The expansion of the large banks have been, in many countries, so much, as it has induced a competition disturbing, representing a threatening both for the economic stability, and for the „Euro Area”.
The Australia and New Zeeland representative into the OECD pointed out the need for a multisectoral analysis, as the economical reasoning, the po-litical one, and, respectively, the social one are neither harmonious, nor syn-chronized, having jeopardizing effects (first of all, for the new countries which are preparing for their accession to the European Union: Ukraine, Georgia, Republic of Serbia, and Republic of Moldova, etc.).
Some authors spoke about „the discret magic of the European absurdi-ty”, based upon the farce which „is playing” in Greece, under the excuse of its
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rescuing. Although the Hellenic Republic is a country belonging to the Euro Area, it registered an aberant degree of indebtedness, and the IMF – as well as the Federal Republic of Germany – can’t refuse to grant it the requested cred-its, even if the available moral and material guarnatees are insufficient.
Until the finding out of viable sources and solutions, we have nothing to do but keeping a positive thinking, taking into consideration that Greece was an „aberant exeption”, which based, for an over 10 years period (using mysti-fied official statistics), upon an excessive cheap liquidity (liquidness). And now, in the 2010 spring, it has a pressing necessity (like a need of oxygen) to get a credit of almost Euros 45-50 billion (at least), which would be possible only through a lot of diplomatic endeavours, and controversial compromises.
The OECD message for Greece (for Romania, implicitly) is that the for-eign investment couldn’t be stimulated without substantial and thorough struc-tural reforms; and without foreign investment the liquidity crisis and the pos-sible budgetary deficit - placed much over 3% - would continue.
Our mission is to inhance the supporting of the population confidence, hoping that, in the near future, will arise neither new financial crisis, nor exces-sive economic growth from inadequately managed banking credits. In the com-plex context of the poverty deepening, of the increasing unemployment, and of the State finances incapacity to support the public policies (health, social pro-tection, education, etc.), competition might be an available remedy, if the law is fully applied, in the benefit of the majority part of population, being implemented on the basis of the Romanian Constitution.
Remark:
OECD (OCDE) means the Organisation for Economic Cooperation and Development As known, the OECD members are the following: Commonwealth of Australia, Republic of Austria, Kingdom of Belgium, Canada, Czech Republic, Republic of Korea, Kingdom of Denmark, Swiss Confederation, Republic of Finland, French Republic, Federal Republic of Germany, Hellenic Republic, Ireland, Republic of Iceland, Italian Republic, Japan, Grand Duchy of Luxembourg, United Kingdom of Great Britain and Northern Ireland, United Mexican States, Kingdom of the Netherlands, New Zealand, Kingdom of Norway, Republic of Poland, Portuguese Republic, Slovak Republic, Kingdom of Spain, Kingdom of Sweden, United States of America, Republic of Turkey, and Republic of Hungary; the Republic of Chile signed the accession treaty in January 2010, its Parliamnent having to ratify this paper.The 30 OECD’ Member States hold, together, almost 60% out of the world econ-omy, 70% out of the world trade, and 20% of the world population.Romania isn’t, yet, an OECD’ Member State; we have declared our option of be-coming an OECD Member, but for the moment have only the right to participate into the organisation meetings (having advisory vote), and most likely we’ll accomplish the required conditions in order to receive the membership during the year 2012.
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The Report on Functioning of Regulation 1/2003
(view expressed in February 2010)
Ales MusilHead of Unit, European Competition Network, DG Competition, European Commission
(All views expressed in this article are strictly personal, and should not be construed as refl ecting the opinion of the European Commission)
Ref.: Communication from the Commission to the European Parliament and the Council - Report on the functioning of Regulation 1/2003 - SEC(2009)574 - Brussels, 29.4.2009.
It is widely recognized that the entry into force of the Regulation 1/2003 on 1 May 2004 was a landmark reform, amounting to the most far-reaching overhaul of the EC antitrust procedures since 1962. Its implementation has simplified and strengthened antitrust enforcement in several key ways.
First, abolishing the practice of notifying business agreements to the Commission has ended bureaucracy and legal costs for companies and enabled the Commission to focus its resources on the important fight against cartels and other serious violations of antitrust rules.
Second, empowering national competition authorities and courts to ap-ply the EC antitrust rules in an effective manner means that there has been a huge increase of the application of the EC antitrust rules by a multiplicity of enforcers.
Third, the Regulation establishes a more level playing field for busi-nesses operating cross-border as all competition enforcers, including the na-tional competition authorities and national courts, which are obliged to apply EC antitrust rules to cases that affect trade between Member States.
Fourth, the Regulation enables close cooperation between the Commission and national competition authorities in the European Competition Network (ECN).
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Fifth, the Regulation equips the Commission with enhanced investiga-tion tools so that it can better detect breaches of the EC antitrust rules.
Given the ground-breaking novelty of this system, the Regulation fore-saw a period of five years for the Commission and the other stakeholders to gather meaningful experience before a report could be made on its functioning. Article 44 of Regulation 1/2003 stipulates that the Commission shall report to the Council and Parliament by 1 May 2009. Such a Report was published on 29 April 2009, based on taking stock of experience with the new system and examining how the principal objectives of the Regulation, i.e. effective and coherent enforcement of the EC competition rules, have so far been met. The Report on the first five years of functioning of Regulation 1/2003 has launched a broad debate with stakeholders. This has largely confirmed that the Commission has a mature system of antitrust enforcement. In a limited number of areas the Report, which is accompanied by the Staff Working Paper, high-lights aspects which merit further evaluation, but leaves open the question of whether any amendment to the existing rules or practice is required. It will serve as a basis for the Commission to assess, in a further stage, whether it is appropriate to take further policy initiatives.
From the Commission’s perspective, the functioning of Regulation 1/2003 has overall been very positive. The impact of Regulation 1/2003 has led to a profound change in the enforcement of the EC antitrust rules. Regulation 1/2003 brought about a quantum leap in terms of the application and enforce-ment levels of Articles 81 and 82. The fact that more than 300 envisaged deci-sions have so far been shared by the national competition authorities within the ECN gives a clear indication of the enhanced enforcement of Community com-petition rules, as they are being applied on a scale which the Commission could evidently not have achieved on its own.
The Commission has also benefited from its enhanced investigation pow-ers. For example, it has used its new tool of taking binding commitment decisions under Article 9 on several occasions. Thanks to commitments, the Commission can get through more cases and therefore prevent more harm. By also avoiding delays in the implementation of remedies the Commission can have a swift mar-ket impact, which is its ultimate aim. Two recent cases - E.ON and RWE can serve as good example of this approach. The commitments which the Commission ob-tained in these cases are making the clearest recent steps towards opening up European electricity and gas markets. At this moment, the Commission is testing commitments by another European energy giant, GDF-Suez.
Importantly for the Commission, one of the main consequences of Regulation 1/2003 has been to enable it to take a proactive approach. This is reflected in the increasing use of sector inquiries which have been launched since modernization in complex and economically very significant sectors: energy, financial services and pharmaceuticals. Such inquiries, whilst extreme-ly resource intensive, bring enormous value in terms of the Commission’s un-derstanding of these activities. As a competition authority in the 21st century
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Yfacing ever more sophisticated issues, it is essential that the Commission can be engaged in this way.
The Commission has also relied on its power to take oral statements under Article 19 and has invoked its power (once) to carry out a search in a private home.
However, that is not to say that everything has functioned to our full sat-isfaction. For example, it was controversial that Article 3 provides for a level playing field and a single legal standard for companies operating cross-border solely for Article 81, with Member States remaining free to apply national law provisions to unilateral conduct that are stricter than Article 82. It can be ques-tioned whether it is appropriate to have Article 81 as the “EU’s law of the land” for agreements and practices that affect trade between Member States, whereas companies engaged in unilateral conduct remain potentially subject to stricter national rules. At the time of making the Regulation, the main laws of this type were present in Germany and France. In the meantime, it appears that a number of newer Member States (e.g. Hungary, Slovakia and Latvia) have introduced or have considered adopting such measures. Against this background, one of the issues of the Report on Regulation 1/2003 was to what extent these laws have been applied, whether they have to be factored into business decisions and if the stakeholders consider this to constitute a problem in practice.
Another issue that has given rise to some contention is the fact that the NCAs enforce Articles 81 and 82 EC according to their national procedural laws. Regulation 1/2003 left the Member States freedom to determine both the scope of their decisions (e.g. whether to impose structural remedies, what type and level of sanctions) and the procedural requirements that must be respected, subject only to the Community law principles of effectiveness and equivalence. There has been significant voluntary convergence of national with EU law since the entry into force of Regulation 1/2003, for example, a large number of Member States have enacted national laws enabling NCAs to adopt commit-ment decisions which are broadly modeled on Article 9. Nevertheless, differ-ences remain, e.g. with respect to investigation and fining powers and the han-dling of complaints. Even for matters where there is prima facie a high degree of convergence, as for commitment decisions, there will often still be more detailed aspects of the procedural framework that differ. For instance some Member States laws set a time limit for commitments to be submitted. Some Member State laws foresee a market test, others not.
Also, certain criticisms about due process and the conduct of investiga-tions in antitrust proceeding were highlighted by some stakeholders. Some of these criticisms reflect a misunderstanding of the Commission’s existing pro-cedures. There may be a need for further clarification on how the Commission is applying the Regulation 1/2003 in practice.
Also, there is a clear need to continue firmly rebutting the criticisms against the nature of the Commission’s institutional structure (e.g. Commission as inves-tigator, prosecutor, jury and judge, prosecutorial bias, non-conformity with the
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European Convention on Human Rights, etc.) and reaffirm that the current en-forcement system is fully compatible with Article 6 ECHR and the case law of the European Courts.
Also, the Commission’s practice with regard to fines has been exten-sively raised in replies to the stakeholder consultation, mostly pointing to both the level and legal questions of principle. Regulation 1/2003 essentially took over from Regulation 17 the legal basis for imposing fines for breaches of the substantive competition rules. In accordance with Article 23(2), the Commission may impose fines on infringing undertakings and associations of undertakings that do not exceed 10% of their total turnover in the preceding business year. Fines with sufficient deterrent effect, coupled with an effective leniency pro-gram, constitute the most efficient weapon in the Commission’s armory to fight cartels. In particular, deterrent fines prevent companies from entering into cartel agreements and entice cartelists to blow the whistle on existing cartels in return for immunity or a reduced fine under the leniency notice.
In the context of the level of fines, it is noteworthy that the Community Courts have reviewed a great number of fines imposed by the Commission and did not find the level of fines to be disproportionate or excessive. In the view of the Commission, the fines were not deterrent enough in previous decades. Now, taking better account of the economic impacts of the anticompetitive behavior, the Commission fines in order to deter, linking the fine to the rele-vant sales of the infringing company. And if the Commission catches recidi-vists (the recent French glass company Saint-Gobain is a good example) the fine increases are severe. Because of the adoption of a clear policy basis for deterrent fines and a focus on the most serious infringements the fines have increased. Moreover, it is a well-known fact that several Member States have introduced sanctions on individuals for serious breaches of competition law (in particular cartels). Such measures include notably custodial sanctions and non-pecuniary sanctions on individuals, e.g. disqualification orders.
Finally, divergences of Member States’ enforcement systems remain on important aspects such as fines, criminal sanctions, liability in groups of un-dertakings, liability of associations of undertakings, succession of undertak-ings, prescription periods and the standard of proof, the power to impose struc-tural remedies, as well as the ability of Member States’ competition authorities to formally set enforcement priorities. These aspects will merit further exami-nation and reflection as an important part of the horizontal work of the Commission, national competition authorities and the European Competition Network.
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Dimensions of competition policy and law in emerging economies
Part one
Pradeep S. Mehta, Secretary General - CUTS, India S. Chakravarthy, Fellow - CUTS Centre for Competition
Comments have been received (and suitably incorporated) from - Eleanor Fox, Professor of Law, New York University, US; - Taimoon Stewart, Senior Adviser, Business Development Offi ce, University
of West Indies, Trinidad & Tobago; - S L Rao, Chairman, Institute for Social and Economic Change, Bangalore; - Kenneth Davidson, Consultant on Competition Policy and Law, US.Cornelius Dube and Siddhartha Mitra of CUTS contributed signifi cantly to
this paper.
AbstractEmerging economies are characterised by fast transformation and
rapid economic growth. Competition law and policy should help these economies enhance their growth prospects by promoting efficiency in resource allocation and production and enhance consumer welfare. However, the pursuit of competition policy in emerging economies is complicated by the need to achieve economies of scale through an indus-trial policy and the needs of the developing world to tackle the economic might of the developed world, through inter-country cooperation.
This paper shows that a happy compromise between competition and industrial policy and efforts to stimulate co-operation is not only desir-able but possible. Some of the methods recommended here include se-lective and varying sectoral emphasis on competition policy as well as exemptions and exclusions in its application. The development experi-ences of present day developed countries such as Japan and Korea and emerging China are analysed to yield useful lessons in this regard.
The paper identifies inadequate awareness and lack of competition culture as stumbling blocks to the successful adoption of competition policy and law by emerging economies. It, therefore, urges gradualism in adop-tion of competition reforms and calls for efforts in competition advocacy and education which are in sync with the pace of reform. The paper also goes on to clarify implementation modalities, such as the shaping of the content of competition policy and law and the empowerment of competition authorities needed for effective implementation of the competition law.
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Key words: Emerging economies, competition policy and law, in-dustrial policy, economic reforms.
Abbreviations
AMA - Anti-monopoly ActASEAN - Association of Southeast Asian NationsCADE - The Economic Defence Administration CouncilCAT - Competition Appeallate TribunalCCI - Competition Commission of IndiaCFC - Federal Competition CommissionCOMESA - Common Market for Eastern and Southern AfricaCPA - Competition Principles AgreementCSOs - Civil Society OrganisationsCUTS - Consumer Unity & Trust SocietyDGAD - Director General, Dumping and Allied DutiesECOWAS - Economic Community of West African StatesGATS - General Agreement on Trade in ServicesGATT - General Agreement on Tariffs and TradeGDP - Gross Domestic ProductGNI - Gross National IncomeIFC - International Finance CorporationIGO - Intergovernmental OrganisationsIPRs - Intellectual Property RightsITO - International Trade OrganisationJFTC - Japanese Fair Trade CommissionKFTC - Korea Fair Trade CommissionKPPU - Business Competition Supervisory CommissionM&As - Mergers and AcquisitionsMCOT - Mass Communications Organisation of ThailandMITI - Ministry of International Trade and IndustryMNCs - Multinational CorporationsMRFTA - Monopoly Regulation and Fair Trade ActMRTP - Monopolies and Restrictive Trade PracticesMRTPO - Monopolies and Restrictive Trade Practices OrdinanceNCP - National Competition PolicyNTBs - Non-tariff BarriersPNCE - The National Programme for Economic CompetitionPPP - Purchasing Power ParityPRC - People’s Republic of ChinaR&D - Research and DevelopmentRBP - Restrictive Business PracticeRTAs - Regional Trade AgreementsSADC - Southern African Development CommunitySBDC - Brazilian System for Protection of CompetitionSDE - Economic Law Offi ceSEAE - Economic Monitoring Secretariat
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YSIC - Superintendent of Industry and CommerceSoEs - State-owned EnterprisesSPS - Sanitary and Phyto-sanitaryTCA - Trade Competition ActTRIMs - Trade Related Investment MeasuresTRIPs - Trade Related Aspects of Intellectual Property RightsUBC - United Broadcasting CorporationUNCTAD - United Nations Conference on Trade and DevelopmentUSSR - Union of Soviet Socialist RepublicWAEMU - West African Economic and Monetary UnionWTO - World Trade Organisation
1. Introduction
The term ‘emerging market’ was originally coined by the IFC to describe a fairly narrow list of middle to higher income economies in the developing world with stock markets that were open to foreign participation. The term’s meaning has since been expanded to include other developing countries.
Alternatively, emerging economies have been defined as “those regions of the world that are experiencing rapid informationalisation under conditions of limited or partial industrialisation”. This framework allows us to explain how the non-industrialised nations of the world are achieving unprecedented economic growth using new energy, telecommunications and information technologies [1].
In this paper, we use a classification of emerging economies that has been adopted by The Economist. The list of emerging economies, as recognised by this newspaper, is listed in Table 1, which also provides us information on the per capita gross national income (GNI) at purchasing power parity (PPP) of various emerging economies as well as literacy levels and school life expec-tancy. Note that in 2007, the per capita income of the emerging economies varies from US$ 2,740 in India to US$ 14,400 in the Russian Federation.
Most developed countries have a per capita income exceeding US$ 20,000 and some even have incomes in excess of US$ 30,000 per capita. Thus, emerging economies include those on the threshold of being classified as de-veloped economies as well as others who still have a long way to go. What is common among these is their fast rate of transformation and rapid rates of economic growth. Table 1 shows that most of these economies exhibited per capita income growth of six percent and above, which is much higher than the 0-3 percent growth rate exhibited by most developed countries. The outliers are Poland and Mexico, with negative growth rates.
While developed countries are characterised by practically 100 percent literacy, in emerging economies, the literacy rate varies a lot, from a low of 55 percent for Pakistan to 100 percent for the Russian Federation. The average literacy rate of the emerging economies listed here is 90 percent. India and Pakistan stand out from the rest with literacy rates below 70 percent; the next lowest literacy rate is for South Africa with 88 percent. If we look at school life
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expectancy [2], which can be defined for the layman as “average years of schooling that a person expects to undergo”, it varies from seven in case of Pakistan to 15 in case of Argentina, Uruguay and Poland; in a developed coun-try like US this has a value of 16. The average for the emerging economies listed here is 12.67 years.
Table 1: Development Characteristics of Emerging Economies
Country LiteracyRate*
GNI PPP in
2007 (US$)
GNI Country
Rank
School LifeExpectancy
(years)
Growth Rate in %
of GNI(2006 to
2007)Argentina 98 12,990 72 15 11.3Brazil 91 9,370 94 14 7.7Chile 97 12,590 74 14 11.4China 93 5,370 119 11 15.2Colombia 94 6,640 109 12 8.3India 66 2,740 118 10 11.3Indonesia 91 3,580 152 11 8,1Malaysia 92 13,570 142 13 11.5Mexico 92 12,580 69 13 -44.6Pakistan 55 2,750 75 7 14.1Peru 90 7,240 155 14 11,5Phlippines 93 3,730 102 12 8.7Poland 99 9,840 139 15 -30.9Russian Federation 100 14,400 70 14 13.1South Africa 88 9,560 68 13 7.4Thailand 94 7,880 93 13 5.9Uruguay 98 - 100 15 -Venezuela 93 11,920 77 12 8.6
* as a percentage of population aged 15 and aboveSource: from World Bank data (World Development Indicators, 2009, online).
Thus, if we compare emerging economies to developed countries, these are characterised by faster growth and transformation, but lower levels of afflu-ence, literacy and education. The lower levels of affluence dictate that these countries keep on growing fast in the future with adequate protection of con-sumer welfare. This implies that the economic system needs to sustain eco-nomic growth through fair competition, i.e. competition which is based only on firms vying with each other for expansion of their market shares through effi-ciency increases, rather than unfair or obstructive buying or selling practices.
However, because of lack of exposure to competition issues and enforce-ment coupled with low levels of education and literacy, awareness of competi-tion issues culture’ among various groups of stakeholders might be weak. For
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Ythese countries to continue growing fast and not get bogged down by anticom-petitive practices, advocacy, which promotes such awareness and culture, is essential.
Most emerging economies set in motion initiatives for economic liber-alisation either during the 1980s or 1990s. Prior to the initiatives, significant government involvement alongside dominance of large stateowned enterprises (SoEs) characterised their approach and policies. The economic liberalisation process was characterised by a shift from a ‘command-control’ regime to a ‘market economy’. Such a shift implied more economic freedom for consum-ers and producers, more consumer welfare and less state intervention. This transition called for structural changes and new policy regimes which conse-quently faced major challenges.
The liberalisation process, coupled with the globalisation drive, also entailed that companies in the emerging economies had to compete with those from coun-tries that were much more developed compared to them.
As the liberalisation process progressed, there was a realisation and even a consensus among policy makers and economists that if left to its own devices, a market economy could give rise to some undesirable outcomes. Anti-competitive practices are a case in point. It was realised that without any regula-tion, large firms, including multinational corporations (MNCs), may capture the market at the expense of smaller producers through anti-competitive practices.
One desirable solution that emerged was the fostering of ‘fair competi-tion’ in the market, through competition policy instruments. Emerging econo-mies also found themselves having to decide whether they should promote competition just for the sake of having fair competition in the market or wheth-er they should only promote competition, resulting in development. That would imply that competition would be discouraged in the event that it did not pro-mote economic development within national boundaries – for instance, com-petition with foreign companies.
The accepted mechanism for fostering competition in the market is through various flanking policies and the enactment and enforcement of a com-petition law. Competition law seeks to promote fair competition by ensuring that (a) the market is not captured by a few large sellers/players (regulation of mergers and acquisitions); (b) firms in a dominant position do not abuse their dominance, to the detriment of the other smaller firms; and (c) market players do not enter into collusive arrangements that stifle competition in the market.
However, developing economies have a lot of sectoral variations, com-pared to their developed counterparts; some sectors are more modern like west-ern developed economies, while some are moderately developed. There are also several socio-economic and political factors that are given prominence in these economies and policies have to be aligned to be in conformity with them. Thus, competition law enforcement had to be adjusted to address such varia-tions, resulting in competition regimes that are different from those in devel-oped countries.
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Competition policy is defined as “those government measures that di-rectly affect the behaviour of enterprises and the structure of industry [3]”. Competition policy involves a set of policies that enhance competition in local and national markets and further consumer interest. The latter is served as competition law enforcement is often instrumental in providing the right to choice – one of the eight rights contained in the United Nations Guidelines for Consumer Protection [4] – adopted by the UN General Assembly in 1985 and amended in 1999.
Competition policy encompasses a liberalised trade policy, relaxed for-eign investment and ownership requirements and economic deregulation. It includes a competition law which is designed to prevent anti-competitive busi-ness practices. An effective competition regime promotes fair competition to facilitate a business environment characterised by static and dynamic efficien-cy in resource allocation and checks on abuse of market power. The idea is to not only ensure that firms compete, but do so fairly, without trying to capture the market through mergers, abuse of dominance or collusion.
2. Competition law. Enforcement’s response to shifts in competition paradigms.
There are three main alternative competition paradigms that can be identi-fied: structuralist, contestability and Chicago. According to the structuralist school, market structure, namely the degree of concentration, is the main deter-minant of market performance. Monopoly is considered bad, because it is likely to distort prices and efficient resource allocation. Thus, the structuralist approach to competition is characterised by interventionist approaches such as per se pro-hibitions, divestitures in concentrated markets and large discretionary powers for competition authorities. US antitrust policy during 1950-1970 and EC competi-tion policy during 1960-1990 are good examples.
Proponents of the contestability school, initiated by Baumol in the early 1980s, by contrast, focus on free entry to markets, rather than on market shares. According to them, as long as markets remain contestable (easy entry and easy exit), the potential entry/competitive pressures of new competitors is/are likely to ensure efficiency and prevent monopolists from raising prices above competitive levels or compromising quality. However, it is acknowledged that it is only Chicago School that believes in the relevance of contestability theory for firm behaviour. This theory has, by and large, not stood the test of empirical scrutiny.
Chicago school economists reject the structuralist approach and view monopolies as a sign of superior efficiency, provided the monopoly is not due to governmental barriers to market entry. It is their view that monopoly profits are temporary and will operate as an incentive for competitors to become more efficient [5]. The US antitrust policy between 1970 and 1990 can fit into the category.
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YThe period after 1990, particularly the late 1990s, normally referred to as
‘post-Chicago’, was characterised by the increasing popularity of game theory and behavioural economics, in which the simplistic modelling of human behaviour gave way to more complex depictions, with greater emphasis on empirical rele-vance of economic theories.
The mentioned schools of thought have fashioned the competition re-gimes of various countries over the years. Canada was the first country in the world to adopt a competition law in 1889. The second country to adopt a com-petition law was the US in 1890 (Sherman Act, 1890). Due to better implemen-tation of the antitrust law in the US, it is widely believed that it was the first country in the world to have a competition law. What compelled the US and Canada to have competition laws is the demand by agrarian interests to fight the collusive behaviour of merchants engaged in trading and distribution of farm goods and livestock. Collusive alliances were also called trusts and, hence, the Sherman Act is called an antitrust statute. Over time, the US has moved from a structure-oriented approach to a conductoriented approach [6], realising that implementation of competition law needed to focus on behaviour of enterprises, rather than their structure.
Competition laws are not static. These have constantly been evolving and responding to the needs and thinking of the times. Most early competition laws were designed for countries in a less globalised world. During the 1950’s, the thinking on the subject emphasised the primacy of market structure. Subsequently, with the so-called New Industrial Economics, the emphasis rightly shifted from structure to the conduct of firms and, more recently, to concern with their strategic behaviour. The shift of focus from market structure per se to firm behaviour and conduct is now well-established in the implemen-tation of competition law worldwide.
It is, however, important to note that even during the 1960s, antitrust drew inferences about anti-competitive conduct not just from market shares but also actual evidence of market behaviour. Moreover, even presently (in the foreseeable future), the use of market shares is (likely to be) widely prevalent in inferring the legality of conduct and merger analysis.
In most countries, if not all, the competition authority would find it easier to analyse the structure of enterprises than their behaviour, as the effort involves analyses of available and securable firm-level data and information. Importance, however, needs to be given to how the behaviour of enterprises affects competi-tion and consumer interest. Study and analysis of behaviour does not lend itself to any arithmetical formulae and, consequently, is more difficult.
Analysis of conduct and behaviour by the competition authority is a big challenge for all developing countries, as it is more complex than structural analysis. It may be added here that the former requires more resources than the latter. As in the case of US, many developing countries, including emerging economies, have been graduating to emphasis on behaviour, rather than struc-ture, of enterprises in implementing their competition laws.
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India, where a new competition law (Competition Act, 2002), which em-phasises a behavioural approach, has been enacted in place of the previously structuralist anti-monopoly Monopolies and Restrictive Trade Practices (MRTP) Act, 1969, is a case in point. Over the past decades, the latter did not promote growth or competition in the market place. SoEs or parastatals were encouraged and generally kept out of the ambit of competition law.
Pakistan is another example. Prior to the current Competition Ordinance, 2007, Pakistan had the Monopolies and Restrictive Trade Practices (Control and Prevention) Ordinance [7] (MRTPO) 1970, aimed at regulating undue concentra-tion of economic power and monopoly power. The Competition Ordinance, 2007, is a modern law, with focus on conduct, rather than structure, through control of abuse of market dominance and certain types of anti-competitive agreements.
Likewise, after the collapse of the Iron Curtain, the socialist economies of the erstwhile Soviet Union adopted the market economy paradigm, despite ideological differences with the concept. While earlier, prices and commodity supplies were under the strict management and surveillance of the State, later the adoption of the market economy paradigm resulted in the drafting and adoption of competition legislation. The competition laws emphasised con-sumer protection, regulation of monopolies, including natural monopolies, and regulation of misleading advertisements and deceptive marketing.
A question germane to this paper relates to the kind of competition re-gime that is suited to the needs of emerging economies. While a consensus is developing on the suitability of behavioural competition law to modern needs, the jury is still out, not only on the ideal content of competition laws but also on the issue of developing institutional, systemic and penal structures to ensure its enforcement in emerging economies.
3. Evolution of competition regimes in emerging economies
The various political and economic issues surrounding enforcement of competition regimes in emerging economies can be best understood by tracing the history of competition laws in emerging economies. Annexure 1 summaris-es in brief how competition laws have evolved in the 17 emerging economies, already given in Table 1. As shown in the Annexure, only two of them, the Philippines and Malaysia, do not have a competition law. The years of first adoption of competition laws range from 1923 (Argentina) to 2000 (Uruguay). Only three emerging economies, Mexico, Indonesia and Peru, took a quick ap-proach to competition law, being the only emerging economies with a history of one law which was not repealed.
In all the other emerging economies with competition laws, a gradual approach was preferred, where the current competition law is a result of at least one previous law which was enacted with deliberate exemptions, to ensure that the law would be compatible with the existing economic policies.
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YIndia and Pakistan, for example, enacted structure-based, as opposed to
conduct-based, laws in 1969 and 1970, respectively, which were best suited to the pursuit of socialist policies, only to opt for new behavioural laws after fully embracing liberalisation and market-oriented reforms.
The same trend can be witnessed in Brazil, where the competition law was enacted at a very early stage, but with a very broad focus only partly deal-ing with anti-competitive practices, but mainly on crimes against the general economy. The law had to be changed to be fully focused on anti-competitive practices only after market-oriented reforms had been fully embraced.
The road to competition law was relatively longer in countries such as Argentina and South Africa, where competition laws were adopted quite early, but the laws proved inadequate for tackling competition issues and resulted in many repeals for new laws.
Russia is a unique example — although it only embraced competition re-forms very late in the early 1990s, it has had several competition laws, more than almost any other emerging economy which had adopted competition reforms earlier. Russia adopted a big bang approach to reforming its economy, through deregulation and privatisation, which only resulted in several private monopo-lies. Thus, the need to have an appropriate law was an evolving exercise.
A common trend in all emerging economies, however, is that the period before the adoption of competition laws was characterised by heavy govern-ment intervention, which was reduced to minimal levels after the adoption of competition laws. Some of the competition laws were not fully implemented after adoption – a result of lack of political will due to other conflicting priori-ties and lack of consumer awareness. This is true of countries such as Argentina, Colombia, South Africa, Thailand and Uruguay.
The conclusion from the evolution of competition laws in emerging economies is that competition law objectives often conflict with other devel-opmental or political economy-driven objectives. This leads to half-hearted pursuit of competition law objectives.
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Annexure 1
Competition RegimeRemarks
1. Argentina
The fi rst Act was passed in 1923 (Bill 11.210)
New legislation (Decree-Law 22.262) passed in1980
Several legislative proposals on competition were introduced and discussed in the Parliament during 1990sFinally, in September 1999, a new Competition Act (Bill 25.156) was passed
Though amendments were introduced to make it more effective, the Act has seldom been enforced The law did not include a list of prohibitions of restrictive practices. M&As regulations were also missingHowever, not enough political will was gathered to pass a new Competition Act contributing Regulation for its implementation could, however, only be adopted a year after the expiration of the deadline established by the National Assembly for this purpose
2. Brazil
Law No. 1.521 passed on December 26, 1951
Law No. 4.237, of September 10, 1962, established the Conselho Administrativo de Defensa Econômica (CADE)
The modern era of competition policy in Brazil began in 1994 with Law No. 8.884 of 1994
Although containing antitrust provisions, its aim was to change provisions of the current law on crimes against the general economyCADE was established as a federal authority which reports to the Ministry of JusticeThe law established the Brazilian System for Protection of Competition (SBDC), which comprises of CADE; Economic Law Offi ce (SDE); and Economic Monitoring Secretariat (SEAE)
3. Chile
The Anti-monopoly law was fi rst enacted in 1959
The 1959 law was reformulated as the ‘Law for the Defence of Free Competition’ and adopted in December 1973
Law No. 19.911 was offi cially published on November 14, 2003, and came into effect on May 13, 2004
This occurred following an international mission that had recommended abandoning price controlsThis was due to several drawbacks in the 1959 competition law
With globalisation, new technologies and concentration of market competition issues became more complex. This modern law created a Competition Tribunal, which replaced the Preventive and Antitrust Commissions
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Y4. Colombia
The fi rst competition legislation was Article 1 of Law No. 155 of 1959
The law was amended by Article 1 of Decree no. 3.307 of 1963In 1992, Decree No. 2.153 was issued by which the pro-competition legislation was updated
Though the Law dates back to 1959, the fundamental application of competition policy had not been initiated fully by 1992
Through Decree No. 2. 153, the Superintendent of Industry and Commerce (SIC) was restructured, subordinate to the Commerce, Industry and Tourism Department
5. India
The fi rst competition law was the Monopolies and Restrictive Trade Practices Act (MRTP Act), 1969
The Act was amended in 1984 to bring unfair trade practices within its ambitThe MRTP Act was amended again in 1991 to remove provisions for prior approvals for mergers
The Parliament passed the new law in December 2002, named the Competition Act 2002, establishing the Competition Commission of IndiaThe Act was amended by the Competition(Amendment) Act, 2007, amending 41 out of 66 clauses
A regulatory authority called the MRTP Commission was established to enforce the law. It was, however, a licensing law, rather than a competition law. Secondly, it had no penalty powers, but could only order cease and desist
The provision of regulating mergers was dropped in 1991 as part of the overall reforms agenda. The MRTP Act was enacted at a time when India had the policy of ‘command and control’ paradigm for the administration of the economic activities of the country and was no longer appropriate under liberalisation. For the fi rst fi ve years, the Competition Commission of India (CCI) engaged in advocacy
The amendment followed two writ petitions challenging the constitution of the established to enforce the law. The MRTPC is now set to shut down after the establishment of the CCI, which wields similar powers. However, the cases pending before the MRTPC will now be transferred to the newly set up Competition Appeallate Tribunal (CAT).
6. Indonezia
The Law on Prohibition of Monopolistic Practices and Unfair Business (the AMA – Antimonopoly Act), Law No. 5/1999 was the fi rst and only competition lawThe Supervisory Body for Business Competition (KPPU) was established by the Parliament, on June 07, 2000, as a watchdog to monitor whether business practices are in line with Law No. 5/1999
Heavy government intervention, with the markets being unable to function properly characterised the period before the law
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7. Malaysia
Malaysia does not have a competition law as yet
However, some sector-specifi c regulations are in place, which have some impact on competition. Currently a draft law is being debated within the government, without any public participation
8. Mexico
The Mexican competition law, the Federal Law of Economic Competition was approved in December 1992 and came into force in June 1993. It establishes a Federal Competition Commission (CFC) to enforce the law
The law could only be enacted in 1992, despite the fact that the Constitution of 1857 established the prohibition of monopolies. The law is being vigorously enforced
9. Pakistan
The Monopolies and Restrictive Trade Practices (Control and Prevention) Ordinance (MRTPO) in February 1970 was the fi rst competition lawThe law was discarded for the currentCompetition Ordinance, 2007, which is amodern law
Having been established in the 1970s, like India, this was also suitable for command and control regimes, rather than modern timesUnlike the old one, focus is on conduct, rather than structure
10. Peru
Legislative Decree 701, enacted in 1991 as part of the 1990’s reforms is the competition law for Peru, mirrored EU competition law. In 1992, the Peruvian competition agency, INDECOPI, was created, opening its doors in 1993
In 1997, the Anti-monopoly and Anti-oligopoly Law for the Electricity Industry (Law 26876) was passed for implementing merger control in the electricity industry
INDECOPI was given responsibility over the Competition Law, the Law against Unfair Competition, the Consumer Protection Law and the Law for the Elimination of Bureaucratic Barriers. It was also given competence over Bankruptcy, Standardisation, Accreditation and Intellectual PropertyINDECOPI was empowered to enforce this electricity merger control law
11. Philippines
There is currently no comprehensive competition law for the Philippines
However, some legislations such as Article 186 of the Revised Penal Code R.A. 3815 (1930) and the Republic Act, 3247 (An Act to Prohibit Monopolies and Combinations in Restraint of Trade) (1961) can be regarded as piecemeal approaches to competition law
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Y12. Poland
In 1987, the Act on Counteracting Monopolistic Practices in National Economy was enactedThe Act on Counteracting Monopolistic Practices (The Anti-monopoly Act) was enacted in February 1990
In December 2000, the Act on Competition and Consumer Protection was enacted
In July 2002, the Act on Competition andConsumer Protection was amended
This was the fi rst attempt to introduce some regulations in the centrally planned economyAlthough largely based on the EU model, it also included solutions designed specifi cally for Poland, as a transition economyIn view of Poland’s incoming accession to the European Union and necessity to harmonise national regulations with the European law, the need for a new competition law was feltThis was within the framework of adaptation of Polish regulations to the EU law
13. Russia [57]
In 1990, the fi rst Russian competition authority was created – the State Committee for Antimonopoly Policy and the Support of New Economic StructuresThe Law “On Competition and the Restriction of Monopolistic Activity on Goods Markets” was passed in 1991A Law “On the Limitation of MonopolisticActivity in the Union of Soviet Socialist Republic (USSR)” was adopted on July 10, 1991The competition authority led an effort that resulted in the passage of the law “On Natural Monopolies” in 1995
Decree No. 191 “On the State Programme of De-monopolisation of the Economy and Development of Competition on the Markets of the Russian Federation” was passed in March 1994
In June 1999, the Federal Law of the Russian Federation No. 117-FZ “On the Protection of Competition on the Market for Financial Services,” was passed
The new Russian Federal Law on the Protection of Competition (Competition Law) entered into force in October 2006, replacing the two separate laws on fi nancial and commodity markets (1991 and 1999, respectively)
This marked a turning point from the hitherto centrally planned oriented economic norms
The laws contained relatively mild sanctions for most violations, preferring cease and desist orders
The 1995 legislation introduced the concept of natural monopoly and contained a narrow defi nition of natural monopolyThe competition authority was assigned to elaborate broad “de-monopolisation plans,” directed toward the elimination of structural barriers to competition, the creation of infrastructure and the facilitation of entry in highly concentrated marketsThe 1999 law was, in part, as a response to fi nancial manipulations and anticompetitive behaviour by banks and fi nancial institutions that was revealed during the crisisThe 2006 law ensured more effi cient control of competition by the Russian competition authorities
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14. South Africa
The fi rst attempt at competition law was in 1949, when the Undue Restraint of Trade Act No.59 was adoptedThis was repealed by the Regulation of Monopolistic Conditions Act, 1955 (Act No. 24 of 1955) administered by the Board of Trade and IndustriesAgain, this was repealed by the Maintenance and Promotion of Competition Act 1979 (Act No. 96 of 1979) which was administered by the Competition Board
The Competition Act, 1998 (Act No, 89 of 1998) (“the Competition Act” or “the Act”) was passed by Parliament in September 1998 and is the current legislation
However, the 1955 Act was widely regarded as a feeble piece of legislation [58]
However, the two decades of the existence of the 1979 Act were characterised by an increasing concentration of economic power and widespread abuse, hence it was a failure [59]Being vigorously enforced, this current law has proven to be quite effective
15. Thailand
The Price Control and Anti-monopoly Act B.E. 2522 AD of 1979 was the fi rst competition lawThe Price Control and Anti-monopoly Act was later replaced by two laws: Trade Competition Act (TCA) B.E. 2542 AD 1999 and the Goods and Services Price Control Act B.E. 2542 AD 1999
This was in response to the public outcry of the widespread collusive behaviour of businessmenThis was after the realisation that the promotion of a market-based economy would need a strong competition culture in the markets and that 1979 Act was outdated and did not suit the economic scenario of the time. Alas, there is no proper enforcement for lack of political will
16. Uruguay
In June of 2000, the fi rst competition law, Law 17.243 was passed
Act 17.296 of February 16, 2001 completed the previous Act and established the penalties to be applied by the Administration to the companies in defaultThe laws were repealed by Law Number 18,159, “Law of Promotion and Defence of Competition”, on July 10, 2007
It contained three articles (13 to 15) which set forth, for the fi rst time, the basic general rules of the Uruguayan antitrust law [60]
This is the current law, which repealed the previous laws as they were not enforced effectively [61]
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17. Venezuela
The Law to Promote and Protect the Exercise of Free Competition, G.O Nº 34.880 was the fi rst competition law enacted in 1992Some regulations were also put in place and these include Rule Nº 1 to Promote and Protect the Exercise of Free Competition (1993) and Rule Nº 2 to Promote and Protect the Exercise of Free Competition (1996)
This was in addition to several provisions in the constitution relating to competition
The Superintendent for the Promotion and Protection of the Free Competition (Pro-Competencia) is the organisation that administers the competition law. It has functional autonomy, but administratively, it is under the Production and Commerce Ministry
(To follow)
Endnotes
1. http://www.emergingeconomyreport.com/ 2. School life expectancy is defined as the total number of years of schooling which
a child of a certain age can expect to receive in the future, assuming that the probability of his or her being enrolled in school at any particular age is equal to the current enrolment ratio for that age.
3. Khemani, R.S. and Mark A. Dutz, ‘The Instruments of Competition Policy and Their Relevance for Economic Policy’, PSD Occasional Paper No. 26, World Bank, Washington DC, 1996.
4. UNCTAD (2001), United Nations Guidelines for Consumer Protection, United Nations, New York and Geneva.
5. Scherer F.M. and David Ross – ‘Industrial Market Structure and Economic Performance’ – 3rd ed. Houghton Mifflin Company, Boston, 1990.
6. For a history on competition policy in several countries over the centuries, see Ewing - ‘Competition Rules for the 21st Century: Principles from America’s Experience’, Kluwer Law International, The Hague, 2003. Also see Mehta and Evenett: ‘Promoting Competition around the World: A Diversity of Rationales and Approaches’ in ‘Competition Regimes in the World – A Civil Society Report’, CUTS International, 2006. and also reproduced as a Briefing Paper: http://cutsc-cier. org/pdf/ECPL-6-2006.pdf.
7. In Pakistan, often, Ordinances are never passed by the Parliament as laws, but yet remain functional. This style has become the norm for many such laws. This system has been inherited from the military governments that it has been under for many years, even though the same has been intermittent.
8. Evenett, Simon – ‘Competition, Competition Law and Development in the Asia-pacific Region’ – An Issues Paper (revised version), Oxford University, UK, 2004.
9. Porter, M. et al – ‘Can Japan Compete?’ Basic Books, 2000. 10. Amsden, A.H. and Singh, A. – ‘The Optimal Degree of Competition and Dynamic
Efficiency in Japan and Korea’, European Economic Review, 38, p 941 to 951, 1994. 11. Supra note 9. 12. Akinori Uesugi (2005), Secretary General, JFTC at http://www.jftc.go.jp/e-page/
policyupdates/speeches/050420uesugi.pdf
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13. Ibid. 14. Ibid. 15. Taylor, V (2000), ‘Re-regulating Japanese Transaction: The Competition Law
Dimension’, in ‘Implication of Recent Japanese Legal Reforms’, Pacific Economic Papers No.302.
16. Cases from H. Stephen Harris, Jr. (PowerPoint Presentation) ‘IP and Competition Law Developments in Japan’ available at http://www.ftc.gov/opp/intellect/020523harris.pdf
17. Ibid. 18. Watanabe E, (2002) ‘Regulation on setting technology standards under the anti-
monopoly law of Japan’, Washington University Global Studies Law Review [Vol. 1:263 2002].
19. Kamiyama H (2008), ‘Recent Developments on the Anti-monopoly Act and JFTC’s Guidelines in Japan’.
20. Rodrik D – ‘Trade and Industrial Policy Reform’ in T N Srinivasan et al (editors), ‘Handbook of Developing Economics’, Vol III, 1995.
21. Supra note 9. 22. Nolan, P – ‘China and the Global Economy’, Palgrave, 2001. 23. Jiang – ‘Promoting Competition and Maintaining Monopoly: Dual Functions of
Chinese Industrial Policies during Economic Transition’, Washington University, Global Studies Law Review, 2002.
24. Ibid. 25. Supra note 9. 26. Laffont, J. – ‘Competition, Information and Development’, Paper for the Annual
World Bank Conference on Development Economics, Washington DC, April, 1998.
27. Quoted in Ramaiya, A. – ‘Guide to the Companies Act’ – Wadhwa and Company, Agra, India, 1992.
28. OECD – ‘The Objectives of Competition Law and Policy’ – Note by the Secretariat, OECD, Paris, 2003.
29. See paper presented by Swaminathan S Aiyar to the Expert Group appointed by the Ministry of Commerce, Government of India, to study the Interface between Competition and Trade Policies, Indian Institute of Foreign Trade, New Delhi, 1998.
30. Fingleton John, ‘Political Economy Insights from Competition Policy in Ireland’ – Fordham Corporate Law Institute, 2001.
31. ‘Considering the Public Interest under the National Competition Policy’, National Competition Council, Melbourne, November 1996, ‘National Competition Policy: Some Impacts on Society and the Economy’, National Competition Council, Melbourne, January 1999, and Annual Report 1999-2000, National Competition Council, Melbourne, August, 2000.
32. World Bank – ‘The East Asian Miracle: Economic Growth and Public Policy’, Oxford University Press, 1993.
33. Lau, L.J. – ‘The Role of Government in Economic Development: Some Observations from the Experience of China, Hong Kong [China], and [Chinese Taipei]’, in Aoki, M, Kim, H and Okuno-Fujiwara, M., editors, ‘The Role of Government in East Asian Economic Development’, Clarendon Press, 1996, p. 41-73.
34. OECD – ‘Competition Policy in Small Economies’ – Estonia’s submission to ‘OECD’s Global Economic Forum on Competition’, document no. CCNM/GF/COMP/WD (2003) 5, 2003.
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Y 35. Kroes, Neelie – ‘Cross-border Mergers and Energy Markets’ – Speech by Neelie
Kroes, Member of the European Commission, in charge of Competition Policy, at Villa d’Este Forum on ‘Intelligence 2006 on the World, Europe and Italy’, Cernobbia, Italy, September 02, 2006. Please see: http://www.globalcompetition-review.com/news/news_item.cfm?item_id=4247
36. see: http://www.arcelor.com. 37. http://www.inthesetimes.com/article/2962/the_caracas_consensus/ 38. See Rajagopal (2006), ‘Competition Vs Cooperation: Analysing Strategy Dilemma
in Business Growth under Changing Social Paradigms’, ITESM Working Paper 05/2006.
39. Perry W. Buffington (1986), ‘Competition vs. Co-operation’, at website http://www.charleswarner.us/articles/competit.htm
40. Kohn Alfie (1986), ‘No Contest: The Case against Competition’, as discussed in Rajagopal (2006).
41. Dubey J. and Patel R. (2004), ‘Small Wonders of the Indian Market’, Journal of Consumer Behaviour,4(2).
42. See note 39. 43. See note 39. 44. See ‘Supplementary Note’ of S. Chakravarthy in the ‘Report of the High Level
Committee on Competition Policy and Law’, Department of Company Affairs, Government of India, New Delhi, 2000.
45. ‘Empirical Evidence of the Benefits from applying Competition Law and Policy Principles to Economic Development in order to attain Greater Efficiency in International Trade and Development’ – UNCTAD Report, Geneva, September 18, 1997.
46. Note presented by the Competition Commission of India to the Standing Committee on Finance, Lok Sabha Secretariat, No. 36/2/2006/FC, dated July 10, New Delhi, 2006.
47. For instance, the adoption of a competition law in Egypt was opposed strongly by a leading ruling party parliamentarian who was also the owner of steel mills, see Chapter on Egypt in the ‘Competition Regimes in the World – A Civil Society Report’, CUTS International & INCSOC, 2006.
48. Max Everest-Phillips (2009), ‘Tackling the Tyranny of Vested Interests’, in ‘Politics Triumphs Economics’, Academic Foundation and CUTS International, Jaipur.
49. ‘Competition Regimes in the World – A Civil Society Report’, CUTS Centre for Competition, Investment & Economic Regulation, Jaipur, India, p. ix, 2006.
50. ‘Competition Boosts Corporate Governance’ – Shyam Khemani and Chad Leechor, Global Competition Review, February - March 2000.
51. Iwata, K. – ‘Competition Policy and Unfair Trade Measures’ – Trade and Tariffs, January 1997 and Messerlin P.A. – ‘Competition Policy and Anti-Dumping Reform: An Exercise in Transition’ – ‘The World Trading System: Challenges Ahead’ – (ed) J.Scott, Institute for International Economics, 1996.
52. See ‘Dictionary of Trade Policy Terms’ – Walter Goode – Centre for International Economic Studies, University of Adelaide.
53. Bhagwati, Jagdish N., and Srinivasan, T.N. – ‘Foreign Trade Regimes and Economic Development: India’, Special Conference Series on Foreign Trade Regimes and Economic Development, New York: National Bureau of Economic Research, 1975.
54. Verma, Sunny and Subramanian, Ganapathy – ‘Anti-dumping Duty on Chinese Silk’, Economic Times, Hyderabad, November 20, 2006.
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55. CUTS – ‘Pulling up our Socks’ Jaipur, India, 2003. 56. Ibid. 57. Based on OECD (2004), ‘Russia – Peer Review of Competition Law and Policy’
and ‘Russian Competition Law: Overview and Recent Developments’, European Antitrust Review 2009.
58. Nandi Mokoena (2009), Chapter on Evolution of competition policy and law in South Africa, “Why Countries Adopt a Second Competition Law?”, CUTS International (forthcoming).
59. Ibid. 60. Gerardo Caffera, ‘Antitrust Law in Uruguay. A brief overview’ at http://www.ag-
internet.com/push_news_one_two/ antitrust.pdf 61. D. Daniel Sokol (2007) ‘Uruguayan Law of Promotion and Defence of Competition
Enacted’ at http://lawprofessors.typepad.com/ antitrustprof_blog/ 2007/10/uru-guayan-law-o.html
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A brief compendium about the Competition Policy of the European Union for the next years
Ştefan P. Neagoe, competition counsillor Gheorghe Radulescu, directorCompetition Council, Romania
English version: Ovidiu Felecan, competition inspectorCompetition Council, Romania
A. Present study’s claim
1. The Treaty on the Functioning of the European Union is a genuine constitutional text-body, not excepted the concision and the extreme generali-sation of statements. So being, as any other Constitution (or Magna Charta), it is permanently under clarification and adjunction on multiple ways, e.g.:
- toned implementation of Treaty’s provisions, circumstances after cases, by European Union institutions, including the European Commission and in-clusively Decisions on competition matters;
- clarifications and adjunctions of the European Treaty within the Judgments of the European Court of Justice, inclusively on competition mat-ters (especially the „references for a preliminary ruling”, which are mandatory for national instances);
- releasing European rules (Regulations, etc.) grounding on Treaty’s pro-visions, inclusively on competition matters.
2. No doubt this intensive and vital working produces important impacts on the Union and on each Member State.
3. Amongst the other acting ways, it is very important to contemplate the factual, pointwise and toned implementation of Treaty’s provisions by the European Commission within our area of interest.
Contextually and remembering praxis from half a century history of European Union, we envisage as enough axiomatic the fact that every manag-ing competition EC team did hall-mark, has signed all over implementing ways and performances and factual results.
4. Considering the dawn 2010 team change-over within an economic crisis ambient of extreme seriousness, the authors of the present research will try,
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sketchily and provisory for this time, to mark some empirical plausible orienta-tions towards the proximate future of the European Union Competition Policy.
B. Prolegomena
5. In February 25, 2009, within a conference in Brussels of the European Economic Advisory Group, Joaquín Almunia, European Commissioner in charge of Economic and Monetary Affairs (appointed in 2004), released some important allegations (especially in crisis time) [1], from which we quote:
a. This is clearly the worst financial crisis since 1929. It is also complex. Its origins lie both in macroeconomic failings - through the compression of interest rates and the build up of huge global imbalances – and in serious short-comings in the financial sector, including the systemic failure of financial reg-ulation and supervision to properly identify and manage risks in international financial markets.
There will be an ongoing debate about what exactly went wrong and putting right those failings will be the focus of our efforts over the next years. However, right now the central challenge we face is to contain the immediate crisis and implement policies for recovery.
b. The crisis has its roots in the financial system and the recession is be-ing transmitted to the real economy very rapidly through financial channels; the crisis has now reached the point where the real economy is harming the banks, not just the other way around.
c. However, less important than the model that each Member State choos-es, is the fact that all programs should abide by a set of common principles.
6. În June 5, 2009, within a conference in Warsaw [2], the same European Commissioner stated the following:
a. Regarding fiscal policy. The crisis is causing budget deficits and debts to mount across the EU.
All member states will have to prepare concrete strategies for budget consoli-dation once growth returns in order to maintain sustainable public finances in the long term.
In this respect, the Stability and Growth Pact [16] is instrumental to pro-vide clear guidance in the current situation to help Member States find the right balance between stimulating jobs and growth in the short term while maintain-ing sound and sustainable fiscal policies in medium to long term.
The Pact should also guide Member States as they carry out fiscal con-solidation in the next years.
b. Regarding structural reforms. Productivity boosting measures are key to underpin a recovery and to pro-
mote integration and income convergence in the longer term. For new Member States, investment in infrastructure is particularly important. Further efforts to complete the single market, and to make labour, product and service markets more
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Yflexible and public administration more efficient would attract investment and boost growth and jobs.
Improving education and skills should remain a key priority. One useful lesson we have learned from the catching up process is that while physical capital can be upgraded relatively quickly, increasing human capital takes lon-ger. Better education together with active labour market policies would also help address problems of long term unemployment. Moreover, investment in R&D and innovation should not be curtailed in the current situation.
c. As a final, more general point, the EU must enhance their country surveillance. If the crisis has taught us one lesson, it is to monitor more close-ly the build up of vulnerabilities and risk in our economic and financial sys-tems and to act before it is too late. We need to use the framework of the Stability and Growth Pact and of the Lisbon Strategy to detect developments like the build up of macro-economic imbalances early and launch effective policies to address them.
7. Contextually, we note an instructional quotation from the statement by European Commissioner Joaquin Almunia on Romania, dated January 27, 2010 [3]:
“I commend the Romanian authorities and the Romanian people for the efforts made during this global crisis to limit the deterioration of the budget deficit and to preserve macro-economic stability. The multilateral assistance package, including the €5 billion loan by the European Union, has helped improve the economic conditions and outlook in Romania by easing financial tensions and external financing pressures. But the recent improvements would not have been possible without the measures adopted, and accepted, by the Romanian society… This year should see a return to growth in the EU and in Romania but the effort needs to continue, notably for what concerns the bud-get deficit, to ensure a stronger and more sustainable economic activity in the future”.
8. In June 26, 2009, within a Chatham House Conference, Neelie Kroes, European Commissioner in charge of Compettition, stated wich is for now a tenet of the European Commission, that is [4]:
“We’ve made competition policy part of the solution, rather than the problem, by bringing parties together, put a stop to potential subsidy races and being as flexible as we can without undoing the basic principles of competition policy…This will require sensible compromises, and consistent application of the competition rules.”
9. It is relevant for our research that, during his mandate as European Commissioner in charge of Economic and Monetary Affairs, Joaquin Almunia was regarded as the “guardian of a stability and growth” pact that big countries had begun to flout even before the credit crunch saw public debts and deficits explode. As the crisis spread, he was generally perceived as calm, serious and tough, extending aid to struggling EU countries but also warning large Member States about the consequences of rash actions [5].
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C. The new EC competition team
10. On 27 November 2009, José Manuel Barroso, President of the European Commission, nominated Joaquín Almunia Amann, the Spanish Commissioner in charge of Economic and Monetary Affairs, to serve as the new Competition Commissioner to replace Neelie Kroes, who has been Competition Commissioner since 2004.
On February 9, 2010, the new group of European Commissioners was ap-proved by the European Parliament, and took office on February 10. They will remain in office until October 31, 2014.
11. For the next five years, the European Union’s antitrust enforcement will be headed by Joaquín Almunia, former European Commissioner for Economic and Monetary Affairs with extensive experience gained from poli-tics in Spain where he occupied several top positions, including that of party leader (Appendix). Almunia has a long and distinguished career in politics, academics and Parliament
In his appointment of Almunia to Competition Commissioner, Commission President José Manuel Barroso pointed out the determination and courage with which Almunia had addressed difficult issues with national gov-ernments. We are quoting President Barroso “Almunia was one of the most competent commissioners of the last five years” and also, regarding his ap-pointment as one of the EC Vice-presidents „It was good to give him this re-sponsibility... It’s a recognition of his excellent work” [10]
In general, Almunia is seen as Barroso’s choice of a close ally for a key position.
12. Commissioner Almunia’s nomination has generally been welcomed. So, Charles Grant, director of the London-based research group Centre
for European Reform, described Mr. Almunia as a “very intelligent man” who “gets on with people … He’s also somebody who understands the importance of competition policy and free markets.”
Great consultation law firms in competition asserted as follows: - Cleary Gottlieb: “Mr. Almunia ... is considered to be a thoughtful, care-
ful, hard-working, and clear-minded regulator… He is a “believer in markets” who is not thought to have disagreed with any of the decisions proposed by Commissioner Kroes.” [11].
- Dechert: “As the monetary commissioner, Almunia earned respect for scrutinizing the Member States’ public finances and their budgetary poli-cies during the global financial crisis... Commissioner Almunia’s aca-demic preparation, expertise and his previous experience in the economy post, seem to be a good blend to drive the Competition Commission in a reasonable, but also diplomatic way....Almunia knows the Commission inside out.” [12].
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Y - McDermott Will & Emery: “Commission President José Manuel Barroso
pointed out the determination and courage with which Almunia had ad-dressed difficult issues with national governments… “ [13].
- Jones Day: “Commission’s officials who have worked closely with Mr. Almunia say he is a competent and reflective person, who “likes to get into the details of his dossiers” and carefully listens and evaluates pros and cons before making any important decision. Several persons inside the Commission have stated that, due to his solid economic and legal background, he will be able rapidly to familiarize himself with the com-petition portfolio and gain the confidence of the services that report to him.” [14].
- Morgan Lewis: “Almunia ... earned widespread praise for his handling of the economic crisis and gained a solid reputation for independence and fiscal prudence....” [15].
13. Who is this hard economist turned politician (with degrees from Deusto, The Sorbonne and Harvard - law, economics & government), why was his nomination getting such universal approval despite an apparent lack of com-petition experience and what can we expect from him? This our study intends to highlight some preliminary clarifications about the above third question.
14. A crucial question is whether the appointment of Almunia will mean more focus on economics in competition cases.
Almunia, himself an economist, has appointed another economist, Carlos Martinez-Mongay (form Head of unit in DG Economic and Financial Affairs dealing with Bulgaria, Greece, Spain, Cyprus and Portugal) as his Chef de Cabinet. In addition, the new Director General of DG Competition, Alexander Italianer from the Netherlands (former Deputy Chef de Cabinet for President Barroso and Deputy Secretary General of the Commission), who replaces Philip Lowe, is also an economist.
In addition to these senior personnel changes, the groups of Commission officials dealing with state aid in the transport and energy sectors have been moved to DG COMP from, respectively, the Directorate-Generals for Transport and Energy.
D. EU competition policy while changing the team
15. Within a half-century competition policy has developed into a powerful instrument for enforcing a set of fundamental rules across Europe. The impact and significance of EU competition came into prominence in both internal and exter-nal dimensions - providing a consistent set of rules through a coherent implemen-tation of competition law and spreading the competition culture across Europe, and also allowing that Europe speaks with one voice globally on competition matters.
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Europe has been at the forefront of competition policy and has been referred to as the world’s leading jurisdiction in antitrust matters, including the major pol-icy challenges ahead that need to be addressed, e.g.: - To enforce state aid rules and to keep the rules of competition policy
intact and firmly enforced in times of economic crisis. There are no grounds for compromise on competition policy principles, as the current rules are well equipped to deal with the crisis (this applies in particular to the area of state aid). It is to avoid “throwing the baby out with the bathwater” and to keep markets fair and open.
- To continue the policy of a “more economic approach” and to focus on markets and consumer benefit (the so-called „consumer surplus stan-dard”) in order to preserve competition, not competitors.
- To strengthen the role of efficiencies in merger control when approving or blocking mergers and to clarify which dynamic efficiencies are ac-ceptable (such as innovation and fixed costs savings).
- To tone the EC approaches of relevant market definition. Relevant mar-ket definition in competition matters currently emphasises demand-side substitutability (customers), by contrast with the business view of mar-kets, which puts more emphasis on the supply side (competitors).
- To protect consumers through effective competition, rather than by direct regulatory intervention, and also to address suatainable interfaces with direct regulatory authorities for protecting consumers.16. Almunia replaced Dutch Commissioner Neelie Kroes, which has
been Competition Commissioner since 2004 (actually she has been desig-nated Commissioner for Digital Agenda - in fact the telecommunications portfolio).
Ms. Kroes endured a lot of criticism when she was appointed Competition Commissioner for her limited “Brussels” experience and for her alleged con-flicts of interest with industry but, finally, she has been characterised by her strong personality and strict approach, most notably for imposing high fines against large companies such as Intel Corporation and Microsoft.
During Ms. Kroes’s tenure, the EC has imposed cartel fines of almost €10 billion (compared to cartel fines of €3.8 billion imposed by her predeces-sor Mario Monti between 1999 and 2004). So, in 2008 she imposed the high-est-ever cartel fine (€896 million) against a single company, Saint Gobain.
The EC has also imposed record breaking fines on companies accused of abusing their dominance, including a €899 million penalty on Microsoft and a recent €1.06 billion fine levied against Intel.
Ms Kroes also blocked two high-profile transactions: the takeover by Ryanair of the Irish airline Aer Lingus and the acquisition by energy groups Energias de Portugal and ENI of Gás de Portugal, the incumbent Portuguese gas operator. The EC is currently conducting a controversial investigation into the acquisition of Sun Microsystems by Oracle (the U.S. Department of Justice has already approved this transaction).
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YBut, it is also to remember that certain members of the European
Parliament have openly stated that high fines are inappropriate in the current economic environment, because they endanger the viability of companies and may have negative effects on the growth and jobs agenda [14].
Maintaining the record of Commissioner Kroes will nevertheless be challenging, as she is widely viewed as having been an effective and accom-plished Competition Commissioner who cemented DG COMP’s position as one of the world’s leading antitrust agencies.
17. Due to criticisms, and to his political and trade-unionist background, some commentators believe that Mr. Almunia might be more sensitive than his predecessor to social and job-related concerns in making cartel and abuse of dominant position enforcement decisions.
It is also to emphasise that in succeeding Kroes, Almunia inherits a large backlog of state aid cases regarding state guarantees and recapitalization mea-sures in the EU banking and financial sector. In November 2009, Kroes noted that “the aid element of crisis support to business is at least €220 billion, and the total liabilities governments have taken on are around one trillion euros.”
18. Alexander Italianer, the new Director General of DG Competition, per-formed recently a comprehensive anlysis on the state of the Competition Policy inside the EU [20], from which we undertake bellow tight ideation and quotations.
18.1. Competition policy and in particular State aid control, has been a leading instrument in helping to stabilise markets after the outbreak of the crisis. The key focus was to maintain the integrity of the internal market.
In order to address difficulties arising from the credit crunch for the real economy, the so-called temporary framework was put in place, to allow Member States to provide subsidised loans, loan guarantees, and small amounts of direct aid to the actors of the real economy.
Restructuring plans of financial institutions having received support have been and are still being discussed with Member States. The purpose is to minimize the distortions of competition that might result from the large-scale award of aid to these financial institutions and to ensure their long-term viabil-ity without state support.
At the outset of the crisis, there was pressure on the Commission to set aside the State aid rules in the same way as Franklin Roosevelt put aside anti-trust laws in the beginning of the New Deal, but then it was recognized that there was a need to enforce common rules to avoid the disintegration of the Internal market. In this respect, the German Chancellor Angela Merkel com-mented in a speech on 18 January 2010 [21]: “‘just try to imagine how much protectionism there would have been across Europe in the absence of Brussels and DG Competition. I know that we may sometimes feel angry towards DG Competition; I have experienced that myself. But overall the Commission en-sured that free trade and the internal market could function to a fair degree”.
18.2. “Unfortunately”, says Alexander Italianer, “we are not there yet. After having played a role in stabilising market conditions, State aid rules and
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policy will need to play a key role in the exit from the crisis. As the economy becomes more self-sustaining and financial stability is gradually returning, en-suring a successful phasing out of support measures to financial institutions and the wider economy is of paramount importance. As the recovery is still fragile this will not be easy but I believe that when the crisis comes to an end, the exceptional measures put in place to deal with the crisis, and which were based on an exceptional legal basis, will also need to come to an end”.
18.3. The link between effective competition and economic growth is particularly important in times of economic recession and when evaluating the strategy for recovery.
18.4. Effective competition drives companies to innovate and be effi-cient. But competition enforcement can only be effective if its policy instru-ments are kept up-to-date and brought in line with market developments.
A good example: two of the most important cross-cutting instruments as regards the application of our competition rules, the block exemption regula-tion for vertical agreements, as well as the review of the guidelines for hori-zontal agreements. Both these cross-cutting texts are up for review.
Regarding the first, the changes resulting from the review concern two major developments: the possible consequences of the market power of buyers and the increase in on-line sales (internet sales). About the review of the hori-zontal guidelines, that will not modify the broad lines of the existing frame-work from 10 years ago; but the attempt is to adapt it to market developments and clarify some issues such as Research and Development, joint production, joint purchasing or commercialization, standardisation and exchange of infor-mation, etc.
18.5. Competition policy has a key role to play when it comes to the ef-ficient allocation and effective use of increasingly scarce resources: for ex-ample it can have an incentive effect on investment in energy infrastructure. Enforcement of competition rules against major electricity incumbent compa-nies has contributed to new investors undertaking infrastructure investment.
18.6. There is a clear right of companies and consumers to obtain com-pensation for the damage caused by infringements to the competition rules. Victims’ right to compensation and effective redress under the Treaty has been recalled by the Court of Justice several times. It is an essential part of ensuring the full effectiveness of the EU competition rules.
18.7. The European Competition Network has been at the vanguard of developments in governance, also compared to other areas. It is a network of public authorities that apply the same substantive law, which is already a re-markable achievement. The fostering of leniency programmes in all Member States through the adoption of the model leniency programme is one example of this. There is always room for improvement of course. For instance, there are still important steps forward that could be made in terms of convergence when it comes to issues such as procedures, sanctions or the analysis of unilat-eral conduct. And also, one might for instance consider applying a network
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Yapproach for mergers as well, and to further enhance cooperation with na-tional courts.
18.8. On a global level, the International Competition Network has been a success too in fostering relationships with competition authorities around the world (e.g. the strong bilateral relationship with the United States authorities such as the Department of Justice and the Federal Trade Commission).
18.9. DG Competition has recently produced a draft document on best practices in antitrust proceedings, part of which is of immediate application. This draft was accompanied by a draft paper by the Chief Economist on the best practices on the submission of economic evidence. As a complement to those, the Hearing Officers have for the first time prepared guidance on their current role. The three documents have been published for public consultation which has just ended.
18.10. The current guidelines on fines which have been in force for just over three years were revised at the time because under the previous guidelines fines were insufficiently deterrent. Until now, there have been no court judg-ments on decisions in which the revised guidelines have been applied so it is early stages to draw meaningful lessons from their application. But the 10 per cent ceiling on worldwide turnover already laid down in 1962 is rarely met even under the current guidelines, and due account is taken of the value of the goods or services which are directly concerned by the infringement - so the fines reflect the economic importance of that infringement. The duration of the infringement is also fully taken on board.
Any call for lower fines justified by the crisis is doubtful; anticompeti-tive behaviour in time of crisis brings with it more serious consequences than in normal times and there is therefore no reason to relax the rules. Moreover, the fines relate to past behaviour and the possible rents that were obtained at the time. Of course, EC hase paid due attention to inability to pay claims from companies in dire financial situations and it will continue to do so.
E. New Commissioner’s EU Competition Policy approach - preliminary auto determination
19. Since the weekly meetings of the Commission are not public and discussions are confidential [6] and voting records cannot be assessed, al-though it appears Alnunia (before his nomination as Competition Commissioner) has been supportive of – or at least not opposed to – the main antitrust decisions adopted under Commissioner Kroes’ watch, with the pos-sible exception of State aid, where he is thought to have favored a somewhat more lenient approach.
In October 2004, the Committee on Economic and Monetary Affairs held a public hearing with Commissioner Almunia, in preparation for which he re-sponded to a written questionnaire. Among other things, he indicated support
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for a united, socially advanced, and economically competitive Europe. He also believes that the economic problems of the EU are related to its low growth rate, limited capacity to react to economic shocks, and failure to implement sufficient structural measures to tackle low levels of productivity and job creation.
Some speeches of Joaquin Almunia as European Commissioner for Economic and Monetary Affairs provide further insight into his views on com-petition policy. So:
- strong competition enforcement, the liberalization of network indus-tries, and the spread of the Internet have helped to increase productivity [7];
- the EU should uphold the competition rules that underpin the Single Market and is strongly against trade barriers [8];
- in respect of network industries, effective competition has been ham-pered by dominant incumbents [9].
He also supported liberalization in postal services, energy, and telecom-munications.
20. And also, in December 2009, in a Wall Street Journal editorial ana-lysing the lessons of the financial crisis, Mr Almunia claimed that:
“…what remained of the Reagan and Thatcher ideological heritage – the aversion to any attempt to correct the undesirable effects of the “laissez-faire, laissez-aller” approach – has collapsed. The period we are entering will be characterized by a more active involvement of the public sector in the economy” [17].
21. We will undertake bellow ideation and quotations from two speeches of Almunia, on 15 February 2010 at the first yearly conference of Concurrences Revue [24] and on 9 March 2010, Brussels, at the International Forum on EU Competition Law about the EU Antitrust policy [22].
21.1. (In order to keep the exact meaning we will quote here the french original speech): «La vision que j’ai pour la politique de la concurrence en Europe est profondément liée à ma vision politique d’une Europe unie, de paix et de stabilité, de liberté et de démocratie, bénéficiant d’une économie de marché à la fois efficace et juste. Ma première priorité en tant que Commissaire à la concurrence reste la même que sous mon mandat précédent de Commissaire aux affaires économiques et monétaires: surmonter la crise financière et économique à court terme, et faire en sorte que l’Europe, ses citoyens et ses entreprises en ressortent mieux équipées pour atteindre une croissance équilibrée à long terme, qui favorise notre compétitivité et la création d’emplois.» [24].
21.2. Competition policy is a tool that can help us overcome the crisis. In the heat of the crisis it helped minimise the distortions created by government intervention in the markets, preserved the Single Market, and averted protection-ist moves at national level. Going forward, competition policy, and in particular State aid policy, are key to helping achieve an exit from state support, and a re-turn to normal market functioning. More broadly, competition policy is funda-mental to the Commission’s new EU 2020 strategy to achieve a new period of growth and dynamism in Europe [23], strategy which aims to focus Member
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YState and Commission action on four key principles: innovation, competitive-ness, protection of the environment and social cohesion.
Competition policy can contribute significantly to each of those objec-tives, e.g.: - Effective competition leads companies to innovate, to adapt their busi-
ness strategies to customer demands and to make investments for the longer term.
- Competition on the merits gives companies the tools to succeed, in Europe and internationally, by enhancing their competitiveness.
- Competition and competition rules contribute to the efficient allocation and cost-effective use of increasingly scarce resources – for instance energy sources – helping to preserve the environment and encouraging necessary long-term investments.
- As society benefits from effective competition: it helps to create the con-ditions for long-term growth by companies – including SMEs; it elimi-nates the “private taxation”, which is what the prices practii benefit of lower prices, better choice and better quality of goods and services.21.3. The EC success in the field of competition must be built on sound
legal and economic analysis, as well as on fair and transparent procedures. 21.4. The key is a modern approach to antitrust enforcement, which fo-
cuses on preventing or putting an end to consumer harm, rather than protecting “competitors” as such. This approach means: - to maintain enforcement against cartels as an important priority: these
practices are detrimental to customers – be they industrial or final cus-tomers – and they prevent the emergence of new and innovative compa-nies on mature markets;
- for other antitrust infringements (e.g. abuses) and for mergers, a modern approach to competition enforcement means that our investigations must be based on sophisticated economic analysis, but also on a qualitative knowledge of the market realities and on a good understanding of cus-tomer demands;
- competition enforcement – in particular in the field of mergers – must seek effective, viable, and sustainable solutions to remedying competi-tion problems. 21.5. (In order to keep the exact meaning we will quote here the french
original speech): „Je veux travailler pour la mise en place d’une véritable “cul-ture de concurrence” au sein des entreprises européennes... Les entreprises doivent assumer la responsabilité de leurs comportements et prendre toutes les mesures nécessaires pour éviter les comportements illégaux… La Commission européenne doit… s’efforcer de mieux communiquer, convaincre et propager les bienfaits de la concurrence » [24].
21.6. There can be no sustainable growth within Europe without effec-tive competition in the internal market. This is what drives companies to in-novate and to expand, for the benefit of consumers, businesses, and the
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European economy as a whole, and those goals can be achieved through robust – but fair – enforcement policy, a sound legislative framework, and competi-tion advocacy.
22. To underline the above, we will quote from the written answers of Almunia on 22.12.2009 to the European Parliament (as Commissioner-designate for Competitio) [26]:
22.1. The core priority will be to use all tools of competition policy to make markets deliver more benefits to consumers, businesses and society as a whole. Commission’s powers will be used to protect and foster competition in the internal market as a means to promote the welfare of European consumers, to improve the competitiveness of European companies and to contribute to sustainable growth and employment creation.
It will be taken action against companies or governments when it will be find evidence of unlawful behaviour – be it anti-competitive agreements be-tween competitors, abusive behaviour by dominant companies, attempts by governments to distort competition in the internal market by means of unlawful State aid, or in case of measures concerning public or private undertakings to which the Member States grant special or exclusive rights.
It will be prevented mergers when they would significantly impede com-petition, harming consumers and competitiveness.
22.2. Competition policy has to support a successful exit from the crisis while maintaining a level playing field and safeguarding the internal market. At the same time, the crisis has made clearer that a revision of the State aid procedural framework is needed. All instruments in the competition policy toolbox must be used to contribute to making the EU a sustainable social market economy.
Many of the relevant policy guidelines will have to be revised during the next mandate, and the competition policy will be an important driver to achieve the Commission’s vision of the EU in 2020 [23]. Growth must be based on knowledge, skills and innovation – and State aid guidelines for research and development aim at promoting them. Growth must be green and socially inclu-sive – and State aid guidelines for environmental protection, for training and for delivering high-quality services of general economic interest will help achieving this. Finally, growth must be based on open and competitive markets – and enforcing the competition rules in key areas like energy, information technology and transport will support this.
22.3. As regards the management of the financial and economic crisis, the Commission has over the past year put a framework in place that provides trans-parency on how the Commission applies the state aid rules in the banking sector. For the real economy, the Temporary Framework for State Aid adopted in December 2008 [27], with afterwards modifications and amendments, gives Member States the necessary flexibility to channel substantial funds to the worst-affected companies and sectors, while at the same time protecting the internal market from undue distortions of competition. These frameworks continue to be
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Yapplied consistently, including as support measures are gradually phased out in due course in line with the implementation of the wider exit strategy.
22.4. It is the time to explore more in depth the issue of antitrust dam-ages and the compensation of victims, bearing in mind the necessity of safe-guards to prevent us from the kind of excessive litigation often experienced e.g. in the US.
23. The official mandate of Almunia [25] condenses all the above.
F. Preliminary opinions
24. As we already claimed, every managing competition EC team has signed all over implementing ways and performances and factual results. But several oth-er factors will be important in shaping the activity of the new team, e.g.:
a. EU commissioners act within a well-defined legal and institutional framework. Irrespective of what commissioners may think, Treaty obligations require to press for open markets and to enforce competition policy. That also means that the Commission usually defends the principles of the single market against EU governments or industry groups that lobby for protection.
b. The broad orientation of the economic policy is unlikely to change (it will continue to defend the single market, free trade and a tough competition policy), but the new team of European commissioners may not be quite as enthusiastic for free markets as the outgoing team.
c. The economic policies of the Commission and the EU as a whole will inevitably reflect the ruling economic backdrop of slow growth and high un-employment. National governments and the European Parliament may there-fore push the Commission to more social than liberal approaches [28].
d. The national governments have a big influence over the rules and policies that the EU adopts. At every stage in the lawmaking and/or enforce-ment process, EC need to take account of the interests and sensitivities of the member-states (particularly the big ones). However, competition policy is the only area where the EC can take significant initiatives without the permission of governments.
e. Given the economic crisis, many European firms risk bankruptcy. Member States governments that are coping with high unemployment and with “unfair” competition from emerging economies such as China will be tempted to rescue big firms in trouble. There is a risk that they could succeed in pushing the Commission to interpret state aid rules much more flexibly; although such leniency could make sense for individual EU companies and countries (if only in the short term), it would not benefit the European economy as a whole. Bail-outs of struggling firms would exacerbate the problem of over-capacity, there-by reducing profitability and future investment; governments risk retarding the reallocation of resources from underperforming sectors to faster-growing and high-tech ones that is needed to boost productivity.
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f. The crisis has had three major adverse consequences for the single mar-ket: it exposed the fragility of member-states’ support for some of the key prin-ciples of the internal market; it sapped public support for competition and open markets; it revealed certain aspects of the single market – particularly the ar-rangements for cross-border banking – to be unworkable without major reform.
25. Following the above review, the authors of the present study con-sider that, for the time being, some possible foreground concerns of the new ruling EU competition policy team towards effective proceedings could be:
a. Consistency, flexibility and determination to back up a sustainable social market economy.
b. To follow up Competition rules enforcement in order to underlay the lodestar that Competition Policy is part of the solution (but not of the problem) for exit from the crisis. Principal orientations: flexibility, gradual damping of subsi-dies (synchronized gradual removal of the exceptional measures), rational com-promise solutions on legal basis and consistent implementation of regulations.
c. To preserve and to enforce the competition rules aggregate within the framework of their permanent dynamical examination and reinforcing.
d. To enhance ex-ante (community and national) survey, particularly sec-torial investigations. If the crisis has taught us one lesson (one more time), it is to monitor more closely the build up of vulnerabilities and risk in our eco-nomic and financial systems and to act before it is too late - a very good ex-ample about the priority of prevention over executing.
e. By the aid of competition protection tools, tracking and blocking of the return flow, that is the real economy to harm the banks.
f. To follow up the principled and empirical reinforcing of State Aid back up for Member States in need, but increasing the warning about the conse-quences of rash actions and also tightening the obstruction of ineffective or harmful operations; to emphasize control on State Aid in the transport and energy sectors.
g. To deepen economic approach of competition cases, envisaging also social configuration; to substantiate investigations (especially about dominant abuses and concentrations) on composite economic analyses, on calitative fa-miliarity with market verity and on a good appreciation of consumer concerns; to strengthen the role of efficiencies in merger control when approving or blocking mergers and to clarify which dynamic efficiencies are acceptable (such as innovation and fixed costs savings); to strenghten antitrust enforce-ment rather towards consumer protection than market competitors.
h. Reinforcement of antitrust without to attenuate fines for any doubtful call for lower fines justified by the crisis; the 10 per cent ceiling on worldwide turnover is rarely met; due account must be taken of the value of the goods or services which are directly concerned by the infringement - so the fines reflect the economic importance of that infringement; the duration of the infringement must be also fully taken on board; to meet and to bring into force effective and sustainable remedies, and to balance fines and remedies.
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Yi. To keep anticartel fight as the core of antitrust.j. To tone the approaches of relevant market definition - relevant market
definition in competition matters currently emphasises demand-side substitut-ability (customers), by contrast with the business view of markets, which puts more emphasis on the supply side (competitors).
k. To introduce and to back up the concept of best practices in antitrust proceedings.
l. To increase labour towards competition education and advocacy, be-cause “people have a right to learn the advantages of a fully functioning market and to see why some activities need to be subsidised”; “advocacy is vital, it’s not in the treaty, but it is vital.”
m. About the private enforcement of antitrust in order to compensate harms of natural/legal persons, Almunia is open to the idea of a system of “col-lective redress”, and also to introduce a mechanism for non-legal, non-litigious solutions for cases which don’t need collective redress.
Bibliography
1. Almunia, J., The European Economy and the Crisis: policies for recovery, Report on the European Economy, Conference EEAG (European Economic Advisory Group), Brussels, 25 February 2009, Ref. Speech/09/75.
2. Almunia, J., 20 years since the collapse of communism: Progress and priorities for Central and Eastern Europe Address, at Conference: “20 years after the col-lapse of the socialist economy: transformation, economic growth and conver-gence in Poland and other Central and Eastern European countries”, Warsaw, 5 June 2009, Ref. Speech/09/287.
3. Statement by European Commissioner Joaquin Almunia on Romania, Ref. MEMO/10/17, 27/01/2010.
4. Kroes, N., How can the EU contribute to a more prosperous future?, Address at Chatham House Conference: “Competition Policy after the credit crunch” London, 26 June 2009, Ref. Speech/ 09/315.
5. The Economist, September 24, 2009. 6. Commission Decision of 15 November 2005 amending its Rules of Procedure,
Article 9 (2005/960/EC, Euratom). 7. Almunia, J., Speech to Foro ABC, Madrid, July 9, 2004. 8. Almunia, J., A Recipe for Recovery: the European Response to the Financial
Crisis, 2nd Brussels International Economic Forum, Brussels, November 11, 2008.
9. Almunia, J., The Future of Public Services in the Single Market, BDI, DIHK, BDE-Conference, Brussels, November 22, 2007.
10. El País, November 28, 2009. 11. www.cgsh.com (Cleary Gottlieb Steen & Hamilton LLP). 12. www.dechert.com (Dechert LLP). 13. www.mwe.com (McDermott Will & Emery). 14. www.jonesday.com (Jones Day). 15. www.morganlewis.com (Morgan, Lewis & Bockius). 16. Stability and Growth Pact, European Commission, Economic and Financial
Affairs, ec.europa.eu/economy_finance.
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17. www.lexology.com (Globe Business Publishing Ltd.). 18. Europe’s economic priorities 2010-2015, Memos to the new Commission, Edited
by André Sapi, Bruegel 2009, www.bruegel.org. 19. www.crowell.com (Crowell & Moring). 20. Italianer,A., Challenges for European Competition Policy, Speech to the
International Forum Competition Law of the Studienvereinigung Kartellrecht, 9 March 2010.
21. Merkel, A., Speech on “Wirtschaftsgespräch 2010”, Düsseldorf, 18 January 2010, www.bunderegierung.de.
22. Almunia, J., EU Antitrust policy: the road ahead, Speech at the International Forum on EU Competition Law, 9 March 2010, Brussels, Ref. SPEECH/10/81.
23. Consultation on the future “EU 2020” strategy, Commission of the European Communities, Commission working document, Brussels, 24.11.2009, COM(2009)647 final
24. Almunia, J., La politique de la Concurrence de l’UE en 2010 et au-delà, New Frontiers of Antitrust, 1ère Conférence annuelle de la revue Concurrences, Assemblée Nationale, Paris, le 15 février 2010, Ref. SPEECH/10/25.
25. EUROPA, European Commission, Commission 2010-2014, Joaquín Almunia, Mandate.
26. European Parliament 2009 - 2014, Notice to Members, Hearing with Joaquín ALMUNIA, Commissioner-designate for Competition (written answers), The Secretariat, CM\800213EN.doc, PE431.087v01-00, 22.12.2009.
27. Communication from the commission, Temporary Community framework for State aid measures to support access to finance in the current financial and economic crisis, OJ C 83, 7.4.2009, p. 1–15, with afterwards modifications and amendments.
28. Barysch, K., and oths., The new Commission’s economic philosophy, Centre for European Reform, February 2010, London UK, www.cer.org.uk.
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Y Appendix
Joaquin Almunia AmannCompetition Commissioner
- Born June 17, 1948 in Bilbao, Spain- Married, two children- Graduated in Law and Economics at the University of Deusto
(Bilbao)- Follow-up studies at L’École Pratique des Hautes Études de Paris- “Senior managers in Government” program at the Kennedy
School of Government, Harvard University- Associate Lecturer at the University of Alcalá de Henares
(Madrid) on Employment and Social Security Law- Member of the Federal Committee of the PSOE- 1972-1975, Economist at the Council Bureau of the Spanish
Chambers of Commerce in Brussels- 1976-1979, Chief economist for UGT, a Spanish trade union - 1979-2004, Member of the Spanish Parliament- 1982-1986, Minister of Employment and Social Security (the
youngest Minister - only 34 at the time - of the new Socialist Government)- 1986-1991, Minister of Public Administration- Director of the research program on “Equality and redistribution
of income” at the Fundación Argentaria (1991-1994)- 1994-1997, Spokesperson of the Socialist Parliamentary Group- 1997-2000, Leader of the PSOE- 2000 elections: Socialist candidate for Prime Minister- Founder (2002) and Director of the progressive think tank
“Laboratorio de Alternativas”- Since April 2004: Member of the European Commission: (April
2004-February 2010: Commissioner for economic and monetary affairs)
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- He is a member of the executive committee of a non-governmen-tal organization, Diálogo Europeo, ASBL; a member of the Global Progress Commission, the Advisory Committee of the Fundación para la Relaciones Exteriores y el Diálogo Exterior (FRIDE), and the Organization for Economic Cooperation and Development (OECD) Latin American Outlook Advisory Board; adviser of the Fundacion Argentaria.
- He is also patron of the following foundations: the Fundación Pablo Iglesias, the Fundación Catalana de Gas, the Fundación Jaime Vera, Euroamérica, Alternativas, Cear, Abril Martorell, Carlos de Amberes, the Instituto Complutense de Estudios Internacionales(ICEI), UBUNTU; and Honorary Member of the Boards of the Policy Network and the Fundación de Estudios Financieros.
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Competition law and intellectual propertyrights: the current situation of parallel
trade in pharmaceuticals
Part two
Andreea Gavrilă, scientifi c consultant Competition Council, Romania
Abstract Intellectual property rights (IPRs) are legal property rights over
creations of the mind, both artistic and commercial, and the correspond-ing fields of law [1]. Under intellectual property law, owners are granted certain exclusive rights to a variety of intangible assets, such as musical, literary, and artistic works; ideas, discoveries and inventions; and words, phrases, symbols, and designs. Common types of intellectual property include copyrights, trademarks, patents, industrial design rights and trade secrets.
Keywords: competition, intellectual property rights, parallel trade, pharmaceutical sector.
4. Debating parallel trade
The issue on whether to prevent or agree to parallel trade is well dis-puted for what concerns the single European Market as it raises strong conflicts between intellectual property and competition law. On the one side the owner of property rights considers parallel trade has a detrimental effect and therefore opposes parallel trade, and on the other the parallel trader brings claims into its support. Arguments exist in favour of both claims.
Due to national price regulations on pharmaceuticals there are drugs price differences among Member States. As a result, the issue of parallel trade has become particularly relevant with respect to the industry of pharmaceuti-cals for its implications on the social and public sphere, other than the eco-nomic one.
The research-based pharmaceutical industry, through its various Federations and Associations [2], is lobbying for its restraint arguing that [3]:
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- Welfare gains of consumers are relatively little from parallel trade, as price differences are not substantial because the majority of benefits go to parallel traders;
- Pharmaceutical industry undergoes profits significant losses which oblig-es it to reduce investments in R&D activities, therefore losing the incen-tive in innovation.Keeping in mind that “any welfare gains to consumers resulting from
parallel imports causing lower prices must entail welfare losses to producers” , the natural consequence when the balance of the welfare gains tip too much towards the consumers’ side is that not only the quality of the products would be affected but also the continued supply of quality innovations [5]. It happens when the welfare losses started to undermine the incentive for producers to invest in innovation [6]. This is true when the country allowing parallel trade forms a large part of the international market for the producers’ products [7]: - Parallel importers frequently have to repackage medicines and (in order to
translate instructions in the local language), thus interfering with the integ-rity of the product, potentially affecting its safety and quality, and increas-ing the risk of counterfeiting and piracy; other imported products carry printed instructions in a foreign language, causing patient confusion.The worst case would be not only that the parallel traders do not contribute,
they even destroy the goodwill of the products by not taking sufficient measures to ensure the quality of the products [8]. These make it necessary for the producers to have the ability to impose vertical restraints.
It has been argued that “intellectual property [right] is not an appropriate tool through which vertical restraints may be enforced and it may be preferable to leave [producers] to regulate their distribution networks through contracts rather than restrictions on parallel trade” [9]. Some counter arguments to this are given by Barfield and Groombridge. They mentioned that restrictions on parallel trade are more reliable than private contractual enforcement of vertical restraints because: “there are difficulties in tracing the source of parallel im-ports and hence the party in breach of the contract; and the ineffectiveness of contractual remedies.” [10].
The arguments in favour of parallel trade recognise the benefits that are brought by parallel trade: - It ensures competition and encourages the completion of a single market
by helping harmonizing products’ prices among States; - Especially in countries in which pharmaceutical prices are high, it may
lower drugs’ cost; - Given the pharmaceutical companies’ very high profits, the EU parallel
trade - with its market share of 1,4% - can only redistribute a small part of these industry profits towards the consumers in the member states [11].The EU legal framework supporting parallel trade has restricted the ac-
tions pharmaceutical companies can take to hinder parallel trade [12]. The opinion of the EU is that parallel trade, based on the principle of free move-
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Yment of goods, has contributed to the development and strengthening of the EU Internal Market. Increasing amount and diversity of products at different pric-es move from one national market to the other and are thus available to the purchaser. A ruling of the EU Court states that “in completing the Internal Market as an area without internal frontiers in which free competition is to be ensured, parallel imports play an important role in preventing the compartmen-talization of national markets” [13]. Nonetheless, recent case law provided pharmaceutical companies with a means to restrict parallel trade without in-fringing EU law. Three relevant cases wherein an undertaking unilaterally ad-opted a supply quota system to restrict parallel trade are the Bayer (Adalat) case [14], the Syfait I [15] and Syfait II [16] cases. The famous judgment of the EU Court of Justice in the Bayer v Adalat case ruled that the imposition of a supply quota system – under which Bayer unilaterally limited supplies to exporting wholesalers – did not constitute an “agreement” to restrict parallel trade and could not, therefore, be prohibited under Art. 81. More recently how-ever, the EU Court adopted a vague position towards pharmaceutical compa-nies, with its judgment in Syfait II.
5. Conclusions
Competition authorities have shown themselves willing to strongly in-tervene in the pharmaceuticals sector and to censure conduct covered by the IPRs and different regulation systems.
Among the analysed competition cases, the Syfait I and II cases present a special situation. This is because they specifically relate to the pharmaceuti-cal sector and more precisely to the incidence of IPRs. The ECJ ruling in Syfait II case confirms that pharmaceutical companies have a legitimate commercial interest in preventing parallel trade and as a result they must be able to protect it even if they are in a dominant position. Whether or not a refusal to supply an order is not in breach of EC Competition law depends on whether the order of the parallel exporter is “ordinary.” They definition of “ordinary” was left open to significant debate.
European competition law aims at eliminating trade barriers, promoting research and technical development, and achieving a high level of health care protection and accessibility for the benefit of consumers. In the literature, hin-dering parallel trade, even if it concerns the pharmaceutical sector, has been considered an obstacle in the way of intra-community trade and a restriction to intra-brand trade. From this point of view, these unilateral practices have tra-ditionally drawn the attention of the competition authorities.
The difference in price for the same drug in various EU countries, which constitutes the main cause of parallel trade, exists precisely because of the dif-ferent regulation systems and the economic power of the respective states. The involvement of the health insurance systems through reimbursing expenses,
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partially or entirely, as well as the consumer’s purchasing power constitute important elements which determine the level of the price resulting through applying the regulations in the field. The ability for pharmaceutical companies to charge excessive prices is limited by national regulations on pricing of me-dicinal products. If parallel trade undercuts the profits that they are legitimate-ly entitled to based on the prices allowed under national regulations, this would be as if imposing “double taxation” on them. This might undermine their in-vestment in research and development, which in turn might result in reduced innovation and further competitiveness.
The pharmaceutical sector constitutes a major public interest because of the need to assure de facto and economic accessibility to medical prescription drugs. Directly tied with the public budget, the pharmaceutical sector is strict-ly regulated. The difference of price between different geographic markets, but which refer to the same drug, will continue to induce the development of paral-lel trade.
In conclusion, the regulation of prices of drugs by each Member State has as its main effects:- Delaying the entry of the newest drugs on certain national markets, with un-
favourable impact on the public health- Forces the drug producers discriminate through price between the citizens of
the various Member States, not always by practicing the lowest prices in the poorest countries.One possible way for solving this problem is by having a uniform policy
on pricing of medicinal products in the EC [17]. Another possible way for solv-ing this problem is by removal of national regulations on pricing of medicinal products altogether [18]. “Work is currently on-going on the potential for con-vergence of national pricing and reimbursement schemes”, “taking place with-in the Pharmaceutical Forum (2005-2008), which is a collaborative effort be-tween Directorate-General Enterprise and Directorate-General Health and Consumer Protection.” [19].
Unifying drugs’ recognition procedures and the marketing licence ob-tained in a Member State in all the other member states would increase the speed of obtaining the marketing authorisation and would reduce the produc-ers’ authorisation costs. Also, this would lead to the protection of profits right-ful to the owners of patents and implicitly encourage innovation.
Instituting this rule at community level would give the possibility to develop a single market in the drugs’ case as well. Moreover, regulating the prices should take place by a uniform formula, maybe of the price-cap type, which would allow establishing some prices under a certain level, so that they will not be considered excessive by the competition authorities and would also allow participating at auctions under competitive circumstances with other similar drugs produced by other producers, as the case may be.
It is possible that the unitary regulations at EU level - in what prices and marketing authorisations are concerned - could end the anti-competitive prac-
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Ytice of hindering parallel trade of drugs producers who, through inhibition mea-sures, ensure the necessary profits for investments and sustaining the research-innovation process.
However, a uniform policy on pricing of medicinal products in the EC or the removal of national regulations on pricing of medicinal products altogeth-er “is unlikely [to materialize] in the short term, as it would mean repealing national price controls” [20], and member states would have to come to an agreement on the policy or the removal [21].
The authorities must continue to be vigilant in what the behaviour of these firms on the market is concerned and especially to analyse, from the point of view of the public interest – the effects recently discovered on the market during the initial investigation of the European Commission in the pharmaceu-tics sector [22].
Other ways for solving this problem would be possible if a supply quota system, i.e. restriction of supply in order to restrict parallel trade, which would normally be caught under Article 82 EC, is capable of being justified.
Out of all the practices found by the EC, only in the case of parallel trade with drugs protected by patents can it be analysed the perspective that anti-parallel trade practices might not be subject to competition law. Thus, the con-tribution to the development of the pharmaceutical industry and the high de-gree of innovation in this domain is recognised, even though the system could limit up to elimination the intra-community parallel trade. However, it is vital for the pharmaceutical industry to remain competitive therefore the sector can-not be exempt from the competition rules.
Often, private measures can transform into anti-trust practices, which have the purpose to hinder the market entrance of the generics at the protection patent’s expiry date. This is the reason why it is preferable that the authorities and not the pharmaceutical companies find the remedy.
The position of the Commission is that parallel trade could foster EU market integration and therefore restrictions on it are unacceptable. Any mea-sure taken to hinder parallel trade is inconsistent with the single market goal and would violate a core tenet of EU competition law. However, the Syfait II ruling shows that the ECJ will not blindly pursue the broad goal of market in-tegration when specific features of a case (here, national price controls on pharmaceutical products) may require a more nuanced approach that allows some restrictions on parallel trade.
Bibliography
1. Richard Raysman, Edward A. Pisacreta şi Kenneth A. Adler, Brevetarea proprietăţii intelectuale: Forme şi analiză, Law Journal Press, 1999-2008.
2. Federaţia Europeană a Industriei şi Asociaţiilor Farmaceutice (FEIAF), Asociaţia Europeană a Companiilor Euro-Farmaceutice (AECEF), Asociaţia Europeană a Medicamentelor Generice (AEMG), Asociaţia Europeană a Angrosiştilor Tuturor Liniilor Farmaceutice (AEATLF).
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3. “Comerţul Paralel cu Medicamente” publicat pe EurActiv.com (17 Aug 2004): (http://www.euractiv.com/en/health/parallel-trade-medicines/article-117528).
4. Miranda Forsyth & Warwick A. Rothnie, Importurile paralele, în Interfaţa dintre drepturi de proprietate intelectuală şi politica de concurenţă 429, 436 (Steven D. Anderman ed., 2007).
5. Id., la 432-433. 6. Idem. 7. Idem. 8. Miranda Forsyth & Warwick A. Rothnie, Importurile paralele, în Interfaţa dintre
drepturi de proprietate intelectuală şi politica de concurenţă 429, (Steven D. Anderman ed., 2007), at 433-434.
9. Id., at 436. 10. Claude E. Barfield & Mark A. Groombridge, Speţa Economică de Control al
Deţinătorului de Asupra Importurilor Paralele, 1(6) J. WORLD INTELL. PROP. 903-939 (1998).
11. “Comerţul Paralel al Produselor Farmaceutice” Comisia UE, Direcţia Generală de Companii şi Industrie: http://ec.europa.eu/enterprise/pharmaceuticals/smarket/pdf/eaepc-parallel-trade.pdf
12. “Comerţul Paralel în Europa şi SUA: Provocare faţă în faţă cu Pharma” (Datamonitor, 21 Apr 2006).
13. Curtea Europeană de Justiţie: Verdictul Curţii (alineatul 63) în speţa C 44/01 (8 Aprilie 2003) http://eur- lex.europa.eu/LexUriServ/ LexUriServ.do?uri= CELEX:62001J0044:EN:HTML.
14. Curtea Europeană de Justiţie: Verdictul Curţii în speţa Bayer vs Adalat (6 Jan 2004):http://curia.europa.eu/ jurisp/cgi-bin/gettext.pl?lang =en&num = 79959893C19010002&doc= T&ouvert=T&séance =ARRET &where=().
15. Speţa C-53/03, Synetairismos Farmakopoion Aitolias & Akarnanias (Syfait) s. GlaxoSmithKline, 2005 E.C.R. I-4609.
16. Speţe comune C-468/06 to C-478/06 Sot. Lélos kai Sia (aşa-zisul Syfait II dat fiind că faptele erau similare celor din speţa Syfait I).
17. Jacob Arfwedson, Re-importul (Comerţul paralel) in Domeniul Farmaceutic, Institutul pentru Politica Inovării: Raportul politicii #182 10 (2004): http://www.ipi.org/ipi/IPIPublications.nsf/PublicationLookupFullTextPDF/4A9821E11C0B539086256ED60072AB13/$File/PR182-ParallelTrade.pdf?OpenElement.
18. CHRISTOPHER STOTHERS, COMERŢUL PARALEL ÎN EUROPA 123 (2007). 19. de Souza, supra nota 2, la 42. 20. Arfwedson, supra nota 133, la 10, a se vedea Stothers, supra nota 14. 21. Idem. 22. Comisia Europeană, Problema Sectorului Farmaceutic, Raport preliminar (DG
Concurenţă, Documentul de lucru al personalului), 28 Noiembrie 2008.
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The evolution of state aids grantedin Romania during the last years,
seen in the context of the community policy
Daniel Diaconescu, directorPhD. Constanta Dumitrescu, competition inspector Competion Council - Romania
English version: Bogdan Popa, competition inspector - Competition Council, Romania
Abstract
The Inventory of state aids granted in Romania between 2006 and 2008 presents the general image of the evolution of different state aids, grouped in sectors of activity, objectives and their distinctive nature. Starting with the year 2005 there has been recorded a tendency of reduc-ing these aids, highlighted in the country’s GDP. The horizontal aids re-corded a relatively constant level while the sector specific aids have re-duced their weight in the total amount of state aid during the analyzed period, aligning them to the objectives of the community policy. The as-cending trend of state aids under the form of budgetary expenses at the expense of those under the form of revenues renouncement is according to the European Commission’s requests.
Key words: state aid, nature, inventory, objectives, budgetary ex-penses, revenues renouncement.
The Inventory of state aids granted in Romania between 2006 and 2008, inventory conducted by the Competition Council, represents a synthetic situation of the state aids granted in Romania, grouped by sectors of activity, by state aid objectives and by the nature of the measures granted.
The Inventory was realized according to the provisions of G.E.O. no. 117/2006 regarding the national procedures within the state aid field, approved by Law no. 137/2007 (Redactional Note: national regulations), based on the reports received from state aid grantors, respectively approx. 250 grantors (out of which 230 authorities of the local public administration, respectively city
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halls, local and county councils).The interpretation of the data contained by the Inventory presents a gen-
eral image of the evolution of different types of state aids, of sectors of activ-ity which required aid, while at the same time sets off the future objectives that Romania has to fulfill in order to align itself to the strategy adopted by the European Union through the Lisbon Agenda in 2000.
As it is mentioned in the European Commission’s Report regarding the policy within the field of competition during 2008, the general level of state aid (within EU-27) has decreased from over 2% of the GDP during the 80’s to approximately 0,5% of the GDP in 2007.
It is observed (Table no. 1) that also in Romania, the level of state aid (except agriculture, fishery, transport, SGEIs and de minimis aids) has recorded a decreasing trend during the last several years, commencing with the year 2005.
Thus, from a level of 2,02% of the GDP recorded in 2004, it reached 0,54% and 0,51% in 2005 and 2006 respectively, further decreasing to 0.21% of the GDP in 2007.
Table no. 1. National state aid (annual sums)
National state aid* 2004 2005 2006 2007 2008
Thousand Lei 4.982.552,96 1.561.984,17 1.749.679,53 845.398,98 947.463,17
Thousand Euro** 1.229.285,36 431.077,93 496.433,40 253.318,25 257.274,06
Weight of the national state aid in the GDP %
2,02 0,54 0,51 0,21 0,19
* Except agriculture, fi shery, transport, SGEIs and de minimis aids** Calculated upon the annual average exchange rate between the Romanian Leu
(RON)and the Euro
The analysis of the results of the centralization included in the Inventory of state aids granted in Romania between 2006 and 2008, further shows the fact that the level of state aid decreases, the state aid granted in Romania in 2008 representing 0,19% of the GDP, being in amount of 947.463,17 thousand Lei (RON).
While regarding the structure of state aids based on objectives granted in Romania in 2008, it has been noticed that the level of horizontal aids in the total state aid granted (except agriculture, fishery, transport, SGEIs and de minimis aids) maintained itself at a rather constant level at around 45%, in the past couple of years (Table 2).
This category of state aids include aids for research-development, envi-ronmental protection, SMEs, rescuing-restructuring, fighting against unem-ployment, professional education, and is regarded as being less harmful from a competitive point of view.
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YOut of the horizontal aids granted in Romania, according to the Inventory,
the ones granted for research-development have encountered an ascending trend. Thus, if in 2007 these aids were accountable for 17,61% of the total aids, in 2008 they represented 25,15%, while at the European Union level (EU-27) research-development represented in 2007 only 15% of the total state aids (ex-cept agriculture, fishery, transport, SGEIs and de minimis aids) [1].
Table no. 2. National state aid.(structure according to the primary objective in 2007 and 2008)
Classifi cation of state aids 2007 2008Horizontal objectives Thousand Lei 381.228,08 424.638,65
Thousand Euro 114.232,49 115.306,34
Percent (%)* 45,09 44,82Regional objectives Thousand Lei 67.581,84 154.225,62
Thousand Euro 20.250,45 41.878,41
Percent (%)* 7,99 16,28SUBTOTAL according to the European Commission’s Scoreboard Thousand Lei 448.809,92 578.864,27
Thousand Euro 134.482,94 157.184,75
Percent (%)* 53,09 61,10
Sectorial objectives (except the transport sector) Thousand Lei 396.589,06 368.598,90
Thousand Euro 118.835,30 100.089,31
Percent (%)* 46,91 38,90
GENERAL TOTAL Thousand Lei 845.398,98 947.463,17Thousand Euro 253.318,25 257.274,06Percent (%)* 100,00 100,00
*percent in total state aid except agriculture, fi shery, transport, SGEIs and de minimis aids
The aids granted for regional development have also encountered an as-cending trend, from 7,99% out of the total state aid (except agriculture, fishery, transport, SGEIs and de minimis aids) in 2007 to 16,28% in 2008 (Table no. 2).
This thing was due in part to the 8 state aid schemes which caused effects in 2008, out of the 11 schemes initiated during 2007, also mentioned in the Commission’s Scoreboard in the autumn of 2008.
These state aid schemes, excepted from notification, for which there have been sent to the European Commission the forms of notification accord-ing to the procedure regulation [2], aim at stimulating the investments and in-directly at creating new work places.
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An analyze of the horizontal aids from the European Commission’s perspective, respectively of the state aids granted for horizontal objectives of common interest, addressed to the market failures (in which the regional aids were also included), shows that in recent years, Romania has followed the trend of the European Union.
Thus, if at the EU-27 level these aids were representing in the middle of the 90’s approx. 50% of the total aids (except agriculture, fishery, transport, SGEIs and de minimis aids) [3] while reaching 80% in 2007, in Romania the weight of the horizontal aids raised from 53,09% in 2007 to 61,1% in 2008 (Table no.2).
Regarding the sector-specific aids (steel, ship building, auto vehicles, coal, synthetic fibers and wires, tourism, financial services), in 2008 they rep-resent 38,90% out of the total state aids granted in Romania (except agricul-ture, fishery, transport, SGEIs and de minimis aids), decreasing from the previ-ous year’s weight (46,91% in 2007), hereby aligning to the requests from the State Aid Action Plan, adopted by the European Commission in 2005.
From analyzing the Inventory it has been determined that within the sector-specific aids, in 2008 and in 2007 as well, the aids granted for the coal industry have the largest weight, the other sectors not receiving any more aids.
The state aids granted by the local public authorities for compensating the services of general economic interest – SGEI have held in the analyzed period the most significant part of the total state aid (except agriculture, fishery and transport), respectively 55,71% in 2008 and 60,33% in 2007 (Table no. 3)
Table no. 3. Other identifi ed state aid objectives
2007 2008State aids granted for SGEIs Thousand Lei 1.471.507,27 1.309.279,66
Thousand Euro 440.927,48 355.521,67
Percent (%)* 60,33 55,71
De minimis aids Thousand Lei 122.204,08 93.453,59
Thousand Euro 36.617,65 25.376,38
Percent (%)* 5,01 3,98
*percent in total state aid except agriculture, fi shery, transport
Analyzing the nature of state aids, it demonstrates that in 2008 the state aids granted as budgetary expenses (subsidies, grants, capital participations) represented 96,60% (compared to 85,61% which was in 2007) of the national aid (except agriculture, fishery, transport, SGEIs and de minimis aids), while the aids granted as revenues renouncement (fiscal facilities and guarantees) represented 3,40% of the total state aid (except agriculture, fishery, transport, SGEIs and de minimis aids), decreasing from 14,39% which was registered in 2007 (Table no.4). The positive trend started right with the year 2005, when the expenses overcame the renouncements.
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Table no. 4. The structure of the national aid based on the nature of the aid
2007 2008STATE AID (except agriculture, fi shery, transport, SGEIs and de minimis aids)
Thousand Lei Thousand Lei
TOTAL 845.398,98 947.463,17out of which:Revenues renouncement 121.620,36 32.194,31Weight in NA* 14.39 3,40out of which:Exemptions and allowances from paying fi scal obligations 94.286,47 17.564,08Weight in NA* 11,15 1,85Exemptions and allowances from paying the supplementary charges for the delay of payment 27.333,89 14.630,23
Weight in NA* 3,23 1,54Granting state guarantees 0,00 0,00Weight in NA* 0,00 0,00Budgetary expenses 723.778,62 915.268,86Weight in NA* 85,61 96,60out of which:subsidies, allowances, bonuses, subsidized interest, other non-refundable sums 660.576,62 852.739,86
Weight in NA* 78,14 90,00Equity participations and debt conversions 63.202,00 62.529,00Weight in NA* 7,48 6,60Budgetary credits 0,00 0,00Weight in NA* 0,00 0,00
* NA = national state aid (except agriculture, fi shery, transport, SGEIs and de minimis aids)
The data included in the Inventory is the basis for “The annual report of state aids granted between 2006 and 2008” according to the provisions of article 23 of G.E.O. no.117/2006 regarding national procedures within the state aid field, report which will give in return a more detailed analyze of all state aids granted in Romania.
Notes:
1. Data taken from the European Commission’s Scoreboard – autumn edition, 2008. 2. Regulation no.659/1999 regarding the rules for applying the provisions of art.93
of the EC Treaty, published in the Official Journal L83/1999, with subsequent modifications and completions.
3. Data retrieved from the Commission’s Report regarding the policy in the field of competition in 2008.
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L’impact de la crise economique mondialesur la politique de la concurrence – un exemple
pour les economies emergentes
Première partie
Drd. Daniel-Dumitru Stan, inspecteur de concurrence - Conseil de la Concurrence, RoumanieProf. dr. Delia Popescu - Université “Valahia” de Târgovişte
Résumé
L’étude porte sur une question particulièrement complexe, pragma-tique, d’enquêter sur l’influence que la politique de la concurrence a sur la durée et l’intensité de la crise économique, et si, pendant l’actuelle crise économique mondiale on est en mesure de mettre en œuvre des poli-tiques pour la protection de la concurrence économique dans les pays à économies émergentes.
Les lignes générales de l’analyse sont :- Les crises financières considérées comme des crises économiques; - L’hostilité manifeste de la crise financière à la concurrence économique; - La réglementation et le libéralisme au cours des périodes de crise; - Assouplissement des règles de concurrence envers les établisse-
ments financiers (en particulier dans les aides d’Etat) - les droits économiques, juridiques et administratifs - des limites;
- Les atouts de la politique de concurrence en période de crise: vigi-lance, flexibilité, cohérence, conséquence;
- Applicabilité des conclusions pour les pays en cours de développement. En essayant de concevoir certains problèmes de prévision, la con-
clusion de l’étude tend à mettre en évidence la capacité de la politique de la concurrence d’être un outil de production afin d’atténuer la crise économique et de réduire la durée des crises économiques pour les économies réelles et émergentes.
Mots-clés: crise économique mondiale, politique de concurrence, mondialisation, économies émergentes.
I. Introduction
1. Les auteurs de cette étude visent, premièrement, à révéler quelques opinions sur l’application pratique des règles de concurrence de l’Union Européenne (UE) dans la crise économique actuelle. Toutefois, il est possible
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Yque, vu la complexité de la présente étude, on puisse extraire d’autres opinions clairement visibles et pertinentes.
2. Comme une déclaration de principe, nous soutenons la règle fonda-mentale conformément à la quelle il est nécessaire pour les autorités de la concurrence dans le monde entier d’être toujours en mesure de répondre à tous les grands défis - comme, d’ailleurs, ils l’ont toujours fait. Dans le même temps, nous considérons que aujourd’hui il est plus important que jamais d’aborder avec la plus grande efficacité les fonctions essentielles de la compé-tition nationale/de l’Union Europeene/globale, à savoir promouvoir la culture de la concurrence.
3. La politique de concurrence est une matière vivante dans les États-Unis depuis plus d’un siècle; en Europe depuis 50 ans seulement - pour l’UE, pour les États membres (EM), pour les consommateurs et pour les entreprises qui respectent les réglementations légales.
Au début des années 90 du siècle dernier, le nombre des autorités de concurrence dans le monde d’aujourd’hui est arrivé à approximativent 100. La tendance à la hausse continue (par exemple, les récentes réglementations natio-nales antitrust ont été légalisées en Inde et en Chine), y compris la plupart des économies développées ou en cours de développement - et cela à cause d’une unique et universelle raison pragmatique: parce que la politique de la concur-rence contribue à l’augmentation et / ou à la protection de la prospérité écono-mique. Cette déclaration n’est pas un dogme, ni une partie d’un laboratoire des théories économiques, la concurrence et la politique de la concurrence fonc-tionne en réalité [1].
4. Récemment, dans notre domaine d’intérêt ont eu lieu des événements importants.
Tout d’abord, la “crise du crédit” (banking crise financière) a marqué le marché, les acteurs politiques et le grand public.
En outre (et bien avant) son impact sur l’économie réelle, la crise finan-cière et bancaire a atténué la confiance générale tant en termes de marché libre et en ce qui concerne l’intervention de l’État. Surtout que la première mesure de crise a été la rapide intervention des Etats (sous la forme d’aides d’État) dans certains marchés importants des services financiers et bancaires.
5. Pour faire une première constatation, il est clair qu’une “crise de cré-dit”, c’est-à-dire une crise financière, une crise survenue sur le marché impor-tant des services financiers et bancaires (crise grande ou petite ou “sans précé-dent”) a été et sera toujours un précurseur bruyant d’une crise économique (crise grande ou petite ou “sans précédent”).
6. Plus tard, comme un résultat direct de la crise du crédit “(et d’une combinaison d’autres dommages socio-économiques), beaucoup d’économies de première main (et / ou de deuxième main) ont ralenti leur rythme pendant la crise économique ou sont entrées même en récession. [2]
En avril 2009, le Fonds monétaire international (FMI) a estimé que le volume global des échanges commerciaux pourrait baisser de minimum 11% en
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2009 et rester au même niveau en 2010. Cette estimation se réfère, par exemple pour les pays en développement, à des centaines de milliards de dollars en ex-portations non réalisées, ce qui signifie la disparition soudaine de l’un des prin-cipaux fondements du développement dans l’ère moderne. Pendant ce temps, la Conférence des Nations Unies sur le commerce et le développement (CNUCED) a estimé que les exportations des pays en développement vont diminuer d’au moins 15,5% en 2009, bien que aux sommet du la novembre 2008 et d’avril 2009, les leaders des premières vingt économies mondiales aient plaide contre l’élévation de nouvelles barrières qui fassent obstacle au commerce. [3]
Les prix des denrées alimentaires et du carburant ont doublé de 2007 à 2008, malgré toutes les interventions testées sur le marché par certains pays – parfois la tendance à la hausse des prix a été temporairement arrêté, mais l’ins-tallation de la crise économique a jeté de tels tests dans le ridicule. La récession économique accroît la pression du public sur la politique d’intervention directe de l’État concernant les entreprises en difficulté, et par rapport au chômage et à la vulnérabilité des consommateurs [4].
La crise économique mondiale coûte effectivement des milliers de mil-liards de dollars, elle mène à la récession économique, à la disparition de mil-lions d’emplois, à la perte de confiance dans le marché libre, à l’anéantisse-ment des espérances concernant l’aplatissement des pointes de pauvreté etc.
7. En ce qui nous concerne, nous déclarons que nous somme d’accord avec l’idée avancée par M. Guria, Secrétaire Général de l’OCDE, selon lequel il semble que des défauts du “comportement éthique des entreprises” pourraient être des causes “dans l’épicentre de ce tremblement de terre financier et économique” [5].
8. Nous traversons un chute de système qui n’a pas été provoquée, par exemple, par attaque terroriste ou par la manipulation du prix du pétrole en hausse par certain groupe de pays.
Ainsi, en mettant l’accent sur la crise financière, nous pensons que il est raisonnable de présumer que la grande majorité de l’ampleur de cette crise a été créée par le système économique même dans le cadre duquel elle s’est dé-veloppée système possible d’avoir été miné par une combinaison toxique entre les comportements non concurrentiels des diverses compagnes (y compris les compagnies bancaires/financières de premier ordre), la réglementation et la surveillance défectueuse, les déficiences de l’activité de certaines institutions nationales et internationals etc.
9. Il est probable que, autour de la crise économique, on a créé une per-ception erronée du rôle et de la place des grandes institutions financières. Une perception qui semble indiquer que les grandes banques et d’autres grands acteurs des marchés financiers ont été, en quelque sorte, des “victimes” prises au dépourvu par les machinations incorrectes de certains créanciers hypothé-caires de la première ligne de crédit, et en ne pouvait pas prévoir de tels actifs toxiques et les finales qui ont touché, en fin de compte leurs propres bilans.
Il semble cependant que, de cette image, des grandes banques et sociétés d’investissement, américaines et européennes en tant que victimes innocentes,
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II. La crise financière et bancaire, la crise économique et la réponse des autorités de concurrence
10. Selon un ancien modèle, quand la majorité des acteurs économiques vont mal, une partie demeurée valable cherche à s’appuyer sur les exceptions des règles de la concurrence. Pourrait-elle cette acception être juste, en parti-culier lorsque les opérateurs concernés, les banques sont dans une plus ou moins grande ou “sans précédent” crise financière? [7]
11. La crise actuelle a été lancée sur la base de la vaste expansion des 10 dernières années des moyens financiers et des bilans bancaires (actifs et passifs aux capitaux propres) des banques et d’autres établissements financiers – voir le Rapport de Stabilité en Octobre 2008 de la Banque d’Angleterre [8], dont nous citons la conclusion:
“La période du rapport précédent a été caractérisée par une grande ins-tabilité financière. Bien que les principes fondamentaux de cette turbulence aient été formées lors de l’explosion du crédit, la faiblesse des soldes bancaires a été accentuée par l’augmentation de l’instabilité macroéconomique et des risques contractuels directs. Tout cela a conduit au blocage des marchés de capitaux, l’affaiblissement catastrophique des institutions financières et à la propagation de la perception se rapportant à la sous-capitalisation des banque de la Grande Bretagne et du monde entier.
Le considérable ensemble de mesures prises par les autorités en Grande-Bretagne et dans le monde a essayé de remédier aux faiblesses structurales de ces deux soldes, à l’origine et à leur développement. Toutefois, la magnitude des interventions directes du gouvernement et des banques centrales depuis le début de cette crise implique une certaine difficulté à trouver des solutions intermédiaires, concernant les tentatives d’une banque de fixer son bilan moyen terme. Et essayant de chercher plus loin dans l’avenir, le passé montre claire-ment la nécessité de revoir la réglementation prudentielle destinée à diminuer le risque systémique dans le domaine financier. ”
12. Le fait que les banques (les services financiers et bancaires) ont des caractéristiques de marché du produit - service et des plus pertinentes de mar-ché différentes de celles des autres secteurs de l’activité économique dans le-quel les autorités de la concurrence sont plus habituées à évoluer, peut justifier, à titre exceptionnel, certaines aides exceptionnelles de l’État, avec l’avis des autorités. Et cela d’autant plus que les défauts financiers et bancaires isolés
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(survenant dans une même banque ou un petit groupe de banques) présentent un risque élevé de diffusion, à la fois dans le système et dans l’ensemble de l’économie.
L’intervention directe du gouvernement dans la restauration du service des banques, basée sur de solides conditions de la concurrence, pourrait per-mettre à ces banques de reprendre la fonction de base pour l’ensemble de l’éco-nomie - ce qui pourrait être (dans certains cas) une action plus productive que l’action des aides d’État à la faillite des entreprises.
13. Outre la restauration du système financier et bancaire concurrentiel et efficace, on peut définir au moins trois grands axes de réponse profession-nelle des autorités de concurrence pour les agents économiques en difficulté en se référant à la crise économique, à savoir: - aviser les aides d’État (ayant l’expertise professionnelle nécessaire et
pour obtenir d’urgence et sans obstruction de la CE l’autorisation); - permettre la répartition des profits de monopole, par l’autorisation de fu-
sions économiques ayant d’éventuelles conséquences anticoncurrentielles; - être moins exigeant sur les principes fondamentaux de la législation antitrust.
Quelle que soit l’hypothèse choisie, la seule chose certaine est que le paie-ment effectif de toute variante de politique de concurrence adopté sera fait par les particuliers et/ou les personnes juridiques qui paient des taxes et des impôts (y compris tout paiement de prix de monopole par les consommateurs directs).
Toutefois, quelle que soit la variante il y a danger d’endommager à long terme l’efficacité économique et la compétition [9].
III. Règlement et libéralisme dans l’Union européenne lors de la crise économique
14. Tout d’abord, nous présentons l’exemple suivant.Très tôt - bien avant que quiconque aurait pu prévoir la prochaine crise
économique dans l’UE (et l’aide de État reste toujours la première défense contre la crise) -, la CE a approuvé 6 (six) des paquets individuels d’aides d’État au sauvetage de plusieurs banques (considérés comme des «problèmes individuels» exigeant «des solutions adéquates»). L’exemple que j’ai choisi ici est l’un de ceux autorisés pour les banques européennes exposées à la crise « des subprimes » aux Etats-Unis - ce qui signifiait à l’époque, qu’un nombre de plus en plus grand de clients n’ont prépayés les crédites hypothécaires à haut risque (c’est-à-dire différents de la normale par des taux d’intérêt des prêts et des frais plus élevés), clients que des banques américaines avaient attirés á ces prêts avec le mirage de ce refinancement qu’elles n’ont pas été en mesure de payer plus tard - et / ou dépendantes de la propre insécurité des hypothèques.
Ainsi, le 5 Décembre 2007, la CE a approuvé pour la Northern Rock [10] les aides d’État que la Grand Bretagne avait octroyées dès le 17 Septembre et le 9 Octobre 2007, compte tenu du fait que les mesures satisfont aux disposi-
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Ytions relatives aux aides d’État pour le sauvetage des entreprises en difficulté du Communique des CE (Le Guide. ..) du 01/10/2004 [11].
Le 17 Mars 2008, la Grande Bretagne a notifié à la CE un plan de res-tructuration de Northern Rock. Le 2 avril 2008, la CE a ouvert une enquête officielle “en profondeur” pour la pleine appréciation sur les perspectives de Northern Rock pour revenir à la visibilité à long terme, au sein de la même décision d’enquête, la CE a approuvé encore une autre mesure visant à sauver la même banque (voir aussi [12]).
Le Commissaire de la concurrence de CE, Neelie Kroes, a déclaré à propos de ce qui précède: «L’ouverture d’une enquêtes officielles par la CE sur les mesures prises par la Grande-Bretagne envers la restructuration de Northern Rock est nécessaire pour garantir la légalité, compte tenu de l’ampleur des aides d’État, des conditions de base en usage sur les marchés financiers et des risques de distorsion de concurrence ».
15. Qui et comment a agi ultérieurement dans l’UE?Vers la même époque, l’Union a organisé plusieurs actions de concerta-
tion économique – vue le «Pacte de stabilité et de développement (Stability and Growth Pact)», coordonné par des représentants des États membres du Conseil de l’Économie et des Finances (Economic and Financial Affairs Council - ECOFIN) - à savoir, le 7 Octobre 2008, date à laquelle les États membres ont établis le système de principes de la réaction à la crise [13].
Le 10 Octobre 2008, lors d’une réunion de la “Eurogroupe” (les Etats membres de l’UE qui ont adopté l’euro comme monnaie), ces principes ont été traduits dans un plan d’action concertée [14], adopté avec une extrême célérité par le Conseil européen des 15-16 Octobre 2008 [15].
16. Dans ce contexte, la décision du Conseil européen de poursuivre la mise en œuvre des règles européennes de concurrence, s’est manifesté par l’au-torisation accordée à CE de jouer un rôle essentiel - dans la conception des plans généraux de l’Union aux delà de la récupé-
ration et - pour venir à l’appui des mesures individuelles de sauvetage envisagées
par les États membres.17. Nous citons les conclusions de la présidence du Conseil européen [15]: «Il est nécessaire dans les circonstances actuelles, de poursuivre a mettre
en œuvre la réglementation européenne, afin de soutenir l’action rapide et flexible. Dans ce contexte, le Conseil européen soutient l’application par le CE de la réglementation communautaire sur la politique de concurrence (notam-ment sur les aides d’État), en continuant à appliquer les principes du marché commun et des aides d’Etat.»
18. Le 7 Mai 2009, la CE a étendu l’enquête “en profondeur” lancée dans le cadre des aides d’État du traité européen consolidé (CEC) (enquête lancée le 2 avril 2008 sur l’ensemble des aides de l’état de la Grande-Bretagne pour Northern Rock) à la suite des modifications notifiées par le Royaume-Uni, le 30 Mars 2009 [16].
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Le principal changement introduit à été la dissociation de Northern Rock, selon le plan modifié, en deux nouvelles entités: une banque «bonne» (de petite taille, contenant toutes les valeurs financières et bancaires de “bonne qualité” et le stade de l’attribution de prêts hypothécaires et des services finan-ciers bancaires pour les particuliers) - une entité visée à continuer ses activités commerciales - et une banque “mauvaise” (contenant la majorité des prêts hypothécaires accordés précédemment) destinée à être sacrifiée en tant que l’entreprise solvable, toutefois, l’Etat supportant les pertes liées aux prêts hy-pothécaires accordés précédemment à haut risque. La CE doit déterminer si les changements mentionnés permettent à long terme la revitalisation de Northern Rock en évitant des distorsions de concurrence. La CE a demande aux tiers parties, également à exprimer d’avis sur la suffisance de la proposition du plan visant à éviter des distorsions de concurrence.
Le Commissaire de concurrence de la CE, Neelie Kroes, a déclaré à propos de ce qui précède: «Afin d’assurer la légalité, il est nécessaire d’exami-ner attentivement les modifications apportées par la Grande-Bretagne dans le paquet original Northern Rock. Compte tenu de l’ampleur des aides d’État accordées, c’est la procédure normalisée.»
19. Depuis octobre 2008, une des formules préférées du Commissaire de la concurrence de la CE, Mme Neelie Kroes, est que la concurrence (en parti-culier dans le domaine des aides d’Etat) n’est pas partie de la crise mais elle fait partie de la solution de la crise économique - qui ce qui signifie que les règles nationales/ communautaires de la concurrence ne sont pas des obstacles à la résolution de la crise, mais font partie de la solution [17, 18].
20. Un autre exemple serait le cas de l’Allemagne: en octobre 2008, on a crée une entité avec la participation intégrale de l’Etat du Fonds de stabilisa-tion des marchés financiers - Fonds de stabilisation des marchés financiers ( “SoFFin) - géré par l’Agence pour stabiliser les marchés financiers et contrôlé par le Ministère fédéral allemand des Finances. Ce «fonds» de l’État a comme cible et principale revendication d’agir en tant que vecteur de l’intervention de l’Etat sur la prévention et la stabilisation des implications économiques de la crise financière et bancaire. Pour atteindre ce but, l’SoFFin a été autorisée, inter alia d’acquérir des actions aux institutions financières particulières. À cette fin, l’SoFFin est habilitée, entre autres, à acheter des actions dans des institutions financières privées.
Le 7 Mai 2009, conformément aux règles sur les aides d’État figurant dans le traité européen consolidé (TEC), la CE a ouvert une enquête «en pro-fondeur» sur les mesures prises par l’Etat allemand concernant les Hypo Real Estate AG (HRE) [19]. Cette enquête est toujours ouverte et à sa fin au moment du lancement de notre étude.
Nous citons: «C’est la première étape en vue de trouver une solution viable et à long terme, en étroite collaboration avec les autorités allemandes. La HRE a obtenu une aide de sauvetage sous la forme d’une garantie de l’État de 35 milliards €, aide approuvée par la CE le 2 Octobre 2008. Cette mesure
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Ycontinue d’être nécessaire pour garantir le financement bancaire, l’Allemagne a notifié le prolongement de la garantie pour la HRE de concert avec d’autres mesures. L’ouverture d’une enquête dans un tel cas est une action habituelle de la CE concernant toute intervention de l’État d’une telle ampleur et est destinée à fournir le cadre juridique pour les personnes concernées. En outre, on garan-tit la possibilité d’avancer des opinions et des commentaires par des tiers ... ”
Le commissaire européen à la concurrence, Neelie Kroes, a commen-té au sujet de ce qui précède: «en tenant compte de la situation difficile de la HRE et de la taille d’une aide d’État concerné, la CE a décidé de mener une enquête sur l’ensemble des aides accordées à la HRE, afin d’assurer à la fois le respect de la législation et la possibilité de transmission des avis de tiers “.
Le 15 Mai 2009, la CE a approuvé sans conditions l’acquisition de la HRE par la SoFFin dans le cadre du règlement de fusion de l’Union euro-péenne. Soulignons que c’est la première fois depuis le début de la crise ac-tuelle, que la nationalisation d’une banque a été réalisée sous la forme d’une fusion économique et en usant du règlement cité ci-dessus [20].
Il est également à souligner que c’est la première nationalisation d’une banque allemande depuis 1930 et jusqu’aujourd’hui.
21. Notons aussi le fait que, entre 25-27 mars 2009 a eu lieu une réunion, tenue à Washington DC, lors du 57 Antitrust Law Spring Meeting de l’Ameri-can Bar Association, réunion qui nous paraît extrêmement importante, prati-quement pas mentionnée par les médias jusqu’à présent (une table ronde avec la participation exclusive des hauts fonctionnaires) dont - Neelie Kroes, Commissaire à la concurrence, de la CE, l’UE - Jon Leibowitz, le nouveau président de la Federal Trade Commission,
Washington, DC, et - Thomas O. Barnett, assistant du procureur général, U. S. Department of
Justice, Antitrust Division [21]. Nous pensons que les débats ont été axés, pour la plupart, sur les impli-
cations réciproques de la crise économique actuelle et sur le travail et l’acti-vité (concertée peut-être à certains égards) des autorités de concurrence des États-Unis et de l’UE.
22. Compte tenu de la poursuite du développement de notre étude, nous enregistrons encore des faits apparemment disparates comme suit:
a. L’activité frénétique du Commissaire à la Concurrence Neelie Kroes de l’UE d’Octobre 2008 jusqu’à maintenant, pour promouvoir la protection de la concurrence économique (competition advocacy).
b. Le rapport de la CE du 25 mars 2009 sur l’exception à bloc dans le domaine de l’assurance [22], qui a recommandé la suppression de l’exonéra-tion pour 2 des 4 catégories d’accords horizontaux couverts par l’immunité.
c. Le rapport de la CE du 30 avril 2009 (au Parlement européen) sur le fonctionnement du règlement 1 / 2003, rapport qui sera fait à cette date dans le texte même de ce règlement [23].
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d. La résolution de 26 mars 2009, du Parlement européen sur le Livre blanc concernant les actions en dommages-intérêts liés à des violations des règles de concurrence de la CE - voir [24 et 25];
e. Le 23 avril 2009, la CE envoie à toutes les autorités nationales de concurrence au sein de l’UE (pour obtenir d’urgence des points de vue - la première fois à ce que nous savons, que la CE use d’urgence d’un tel cadre) le brouillon de plus de 500 pages d’une décision de sanction de l’Intel Corporation pour la violation de l’article 82 du traité CE (l’interdiction de l’abus de position dominante) [26] ; le 13 mai 2009 (en pleine crise), la CE a décidé d’imposer à l’Intel la plus grosse amende dans l’histoire de la protection de la concurrence économique dans l’UE - € 1.060.000.000 - voir [27] et [28];
f. Et quelques autres actes et faits pertinents sur l’antitrust, comme suit: - Des autorités de concurrence des États membres: - En avril 2009, l’Office fédéral de l’Allemagne a puni d’une amende deux
producteurs de gaz liquides de plus de 41 millions € pour un accord qui interdit l’accès des clients à d’autres fournisseurs [29];
- En mai 2009, l’autorité de concurrence d’Italie a puni d’une amende un consortium d’entreprises dans le domaine du recyclage des batteries (avec quelques associés processeurs) de plus de 13 millions € pour des accords interdits en matière de recyclage des batteries au plomb [30];
- En mai 2009, le Conseil de Concurrence de Belgique a puni d’une amende record de 66 millions € Belgacom pour abus de position domi-nante sur le marché national des communications mobiles [31];
- De la Cour de justice européenne (la CJCE): - Le 19 mars 2009, la Cour rejette l’action présentée par Archer Daniels
Midland Co. contre la Décision de la Cour de Première Instance de la CEJ qui avait confirme la Décision de la CE de punis d’une amende le cartel Sodium Gluconate [32];
- Le 24 avril 2009, l’avocat général Juliane Kokott a présenté à la Cour de justice un avis recommandant la confirmation de la Décision de la CE sur le montant de l’amende de 21 millions € imposées à l’entreprise chimique Akzo Nobel [33].
IV. La crise économique – justification pour la violation des dispositions du politique de la concurrence ?
23. Toute crise du crédit (crise financière) est potentiellement une poli-tique hostile à la concurrence, la mise en évidence superficielle et l’utilisation dans les commentaires de politique économique d’un groupe de soi-disant coûts très peu évidentes et non pas immédiatement visible de la restriction de la concurrence peuvent apparaitre comme des variantes momentanées extrême-ment attrayantes par rapport à beaucoup d’autres options possibles particuliè-rement inquiétante pour les politiciens, les médias et le grand public [2].
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Y24. En outre, pour de nombreuses raisons, la crise économique consécu-
tive est hostile à la fois à la concurrence effective et à la politique de la pro-mouvoir. Ainsi: - La concurrence démontre la plupart des effets favorables sur le marché
dans la direction et dans le contexte de l’augmentation de l’efficacité économique, ce qui exige du temps;
- Un effet favorable est obtenu en favorisant l’entrée sur le marché de nouvelles entreprises efficaces et en facilitant la sortie de l’économie de marché des agentes inefficaces;
- Il est possible que certains marchés concurrentiels (particulièrement les marchés de forte innovation) aient souvent d’importants avantages pour les consommateurs malgré les doutes évidents sur les prix, la qualité ou le contenu du produit (service), respectif;
- Dans les périodes difficiles (économiquement), peuvent apparaître comme étant de maximum priorité certaines actions précipitées, limitées sans aucune perspective et dépourvue de toute prévoyance à long terme, la sortie du marché de certaines entreprises en faillite peut être perçue comme extrêmement coûteuse pour la population, surtout si elles sont concentrées dans une zone d’accès restreinte;
- Il est très possible que certains coûts immédiats de la concurrence de-viennent très visibles et les bénéfices prévus à moyen et à long terme ne soient pas prises en considération.25. Ainsi, au cours de la crise économique peut apparaitre (en fait, réap-
paraitre) le faux dilemme concernant la capacité de la politique de concurrence de soutenir l’existence de puissants secteurs du commerce, de l’industrie et de la finance. Dans les périodes difficiles, le concept de la compétitivité de l’éco-nomie a toujours a affronter les anciens et les plus très utilises contre-argu-ments sur la politique de laisser-faire et sur l’accroissement de l’intervention de l’État dans l’économie (y compris et surtout les aides d’État.
26. On peut prendre en considération de nombreux points de vue sur la cause les causes de la crise économique actuelle, mais les auteurs de cette étude estiment qu’il existe un consensus au moins sur le fait que, à cet égard, il n’y avait pas d’indices sur les éventuels effets négatifs de l’application de la poli-tique de concurrence. En fait, il semble que des analystes toujours plus nom-breux soulignent le risque que toute dérogation à la stricte application des règles de la concurrence basée sur les principes économiques fondamentaux pourrait entraver les efforts de redressement pour une longue période.
En outre, certaines anti-interventions du gouvernement dans les marchés concurrentiels (mis en œuvre à court terme comme des actions en relation di-recte avec la crise économique) pourraient sérieusement fausser la concurrence pour de longues périodes ultérieures [34. Ces mesures pourraient inclure: ache-ter des paquets d’actions économique dans des banques ou même la nationali-sation de certaines banques, encourager la fusion pour créer des “méga-banques”, accorder facilement une aide d’État aux entreprises en dehors des
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sociétés financières telles que l’aviation et les fabricants d’automobiles, etc. et, en fait, l’abandon de l’application des règles de concurrence sur les ententes et les fusions douteuses [35].
Et aussi dans les périodes de crise, les consommateurs et les producteurs pourraient demander des mesures de protection contre les forces du marché, c’est-à-dire ils pouvaient demander, en fait, la subordination de la politique de concurrence à d’autres politiques de l’État centralisées.
27. Nous croyons que, par rapport à ce qui précède, il y a des questions de principe, comme suit:
Les règles de la concurrence et les autorités de la concurrence sont vrai-ment des instruments utiles seulement pour les périodes de calme, tandis que pour des périodes de crise il faut faire appel a d’autres instruments tels que les aides d’État et d’autres politiques centralisées?
Il est évident que, en temps de crise, un des premiers réflexes est de li-miter l’application des règles de concurrence, de protéger l’industrie nationale et même de tenter une sorte d’exploitation de la crise pour réaliser des avan-tages concurrentiels illusoires [36] - par exemple la limitation des importa-tions en invoquant des clauses de dumping, l’octroi des garanties de l’État seulement aux organismes nationaux, des prêts dans des conditions préféren-tielles à des banques locales etc. Et les aides d’État octroyées initialement li-mitée au secteur financier et bancaire dans le but de prévenir le risque systé-mique, sont rapidement étendues a l’industrie automobile, aux prêts immobi-liers pour les PME, aux transports aériens, l’industrie chimique etc. Dans ce contexte, apparaît une tendance qui pourrait conduire à la justification de toutes les mesures protectionnistes et des limites de toute sorte de protection de la concurrence économique.
Les conditions de la crise économique pourraient être une défense fon-dée pour les agents économiques qui auraient pu exercés des pratiques concur-rentielles interdites comme les accords concernant les prix, le partage du mar-ché et des enchères ou l’abus de position dominante?
Il est très possible que certains managers économiques, face à une réduc-tion substantielle des profits, a la nécessité de licenciements massifs, ou des stocks trop grands de produits etc. soient tenté de “corriger” au moins par des moyens non-conventionnels les relations avec les concurrents, “mettant de l’ordre” et “disciplinant le marché pour sauver l’économie“. [35].
28. Dans cette étude, nous essayerons de montrer que ces raisons (d’ail-leurs, vraies), ne peuvent être pertinentes à l’appui de procédures d’infraction aux règles de concurrence.
Il va de soi que les intérêts politiques influencent la mise en œuvre des solutions pour la crise économique - ce qui fait que certaines mesures d’ur-gence en temps de crise peuvent s’écarter de la stricte protection de la concur-rence économique. Mais il est essentiel que toute restriction de la concurrence mis en œuvre dans ces périodes critiques soit bien conçue, jugée comme tem-poraire et strictement contrôlée. La protection de la concurrence économique
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Yest une condition essentielle pour la prévention des dommages après a long terme après la réalisation du redressement économique.
L’intervention de l’État peut être nécessaire et justifiée, mais les instru-ments utilises par diverses politiques doivent avoir une position neutre et être appliqués avec le même effet pour tous les membres du groupe cible.
Une bonne politique de concurrence est suffisamment souple pour s’adapter aux objectifs d’autres politiques. Les Etats peuvent adopter, par exemple, certaines politiques industrielles visant à corriger les défaillances du marché, à stimuler le développement économique ou à incorporer des considé-rations stratégiques plus complètes. La où ils sont compatibles avec l’effica-cité économique et la promotion des intérêts à long terme des consommateurs, ces frais peuvent facilement cohabiter avec la politique de protection de la concurrence économique.
29. La crise économique ne peut jamais être une motivation pour ater-moyer ou même stopper l’évolution de la réforme structurale. Au lieu de cela, il l’appel aux principes structurels de l’économie de marché est la plus sûre et plus rapide voie pour sortir de la crise sans dommages irréparables. Et surtout lorsqu’on entrevoit des prémisses de récupération c’est le moment: - d’appliquer les règles de la concurrence avec une plus grande rigidité; - d’examiner à nouveau les mesures d’urgence approuvées au début de la
crise. 30. Une démarche au moins aussi importante est de promouvoir la pro-
tection de la concurrence économique (competition advocacy. Populariser le point de vue des autorités de concurrence en temps de crise, s’avère nécessaire et très difficile [35].
31. Dans l’UE, où les États membres ont une longue tradition en termes de participation de l’Etat dans l’économie (en tant que fournisseur de biens ou de services de base et / ou par le biais de certaines politiques économiques / commerciales / industrielles, utilisées comme des instruments plus ou moins exclusifs de croissance économique), l’ouverture (dans toutes les formes) a été le principal instrument pour créer le marché commun – la politique et les règles de la concurrence étant le centre de coagulation du projet d’Union.
En ce qui concerne les soi-disant «économies en transition (de l’Europe d’Est), les circonstances de la mise en œuvre des politiques de libéralisation économique ont eu un caractère dramatique (la marque de la direction écono-mique pour l’Etat est déjà endémique, la transition de l’économie entièrement centralisée se faisant très raide; le vide apparu permettant l’éruption des forces de marché chaotiques etc.)
Certes, en période de crise économique (mais aussi en temps nor-maux) des échecs de marché réels peuvent se produire, mais il faut toujours garder à l’esprit que la nécessité d’une libéralisation de l’ensemble de l’éco-nomie au niveau unional et national a comme base une longue pratique des échecs définitifs des économies intégralement / majoritairement planifiées par l’Etat [37].
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V. Une crise bancaire financière et une crise “sans précédent”? Nihil nove sub sole (rien de nouveau sous le soleil).
32. Les adversaires et les partisans de la mondialisation sont d’accord que les obligations commerciales assumées à un moment donné doivent être honorées. Sans l’application de la politique de concurrence à tous les niveaux, le système commercial unional ou global présente une faible crédibilité, ne peut pas jouir de l’appui politique adéquat et peut dégénérer en une sorte de guerre de jungle. Pourtant de nombreux analystes estiment que l’absence de règlements d’application équivaut à l’épanouissement des intérêts écono-miques unilatéraux. Dans le contexte de récession généralisée, certains leaders politiques de différents pays, peuvent être tentés d’appliquer, par exemple, des stratégies protectionnistes. De nombreux intervenants préviennent que ces ten-dances pourraient menacer la reprise économique et augmenter la spirale de baisse du commerce et de la stabilité économique.
La vague de protectionnisme élevé aux Etats-Unis en 1930 à cause de la législation tarifaire Smoot-Hawley est souvent citée comme un exemple désas-treux des obstacles commerciaux généralisés [38].
33. Nous allons essayer dans ce qui suit de maintenir notre plaidoyer en faveur de la politique de la concurrence en temps de crise à travers ce que l’on pourrait appeler un “soutien négatif”, concrétisé par une brève présentation des épisodes historiques qui pourrait en au moins, prendre la forme de certaines mises en garde contre d’immenses tentations temporelles de renoncer à la pro-tection de la concurrence économique.
L’actuelle crise financière et économique n’est pas sans précédent. Dans le passé, et maintenant (comme dans l’avenir), les paniques et crises finan-cières et économiques ont toujours causé des mesures hâtives et de longues analyses pleines de regrets.
34. Voir, par exemple, et la réponse des autorités et du politique à l’une des plus anciennes crises à l’époque de l’émergence moderne de l’antitrust - le TC&I et les États-Unis en 1907 [39] où l’on peut voir comment les actions urgentes peuvent produire d’importantes conséquences négatives et générer des controverses pendant de nombreuses décennies (un siècle?) après l’achè-vement de la crise, quelque nécessaires que les respectives actions aient été (ou aient semble être) à leur époque.
On peut apporter de nombreux autres arguments historiques sur l’exten-sion de la durée de la récession économique due à la détente de la politique de concurrence - par exemple aux Etats-Unis (les années ’30 du dernier siècle) et aux Japon (les années ’90 du dernier siècle) [2].
Les recherches récemment complétées par l’U (Université) CLA des États-Unis ont montré que l’assouplissement des règlements sur la concurrence des années ’30 du dernier siècle ont contribué de 7 ans au prolongement de la dépres-
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Ysion économique (la faiblesse de la concurrence a contribué à maintenir le chô-mage à environ 20% et a ralenti la relance de la croissance économique) [40].
Il convient de souligner que de nombreux accords interdits de fixation des prix avaient été, en fait, signalés et pris en considération dans la justice des États-Unis, même dans les plus graves périodes de dépression - mais les déci-sions finales à la fin de la chaîne judiciaire ont été données 10 même ans plus tard. Un des plus célèbres cas antitrust concernant l’entente de prix, États-Unis c. Socony-Vacuum Oil Co.., 310 US 150 (1940) [41], est fondé sur la grave crise de l’essence pour voitures, mais la décision de la Cour Suprême des États-Unis n’a pas été influencé par les motivations des entreprises basées sur la détérioration sévère de l’économie. Voir le cas des États-Unis c. Sugar Inst., 297 US 553 (1936) [42], où l’ou a interdit un accord d’adhésion à des prix annoncés, la motivation des entreprises respectifs étant, que “l’industrie se caractérise déjà, d’une manière objective par des conditions de concurrence réelles très déloyales et sans fondements économiques“ et que “des remises et d’autres concessions commerciales secrètes et arbitraires déjà ont été large-ment accordées“.
35. La crise du crédit affecte profondément le marché libre, les bénéfices attendus étant réduits, voire totalement perdus du fait de la participation forcée de l’Etat. On fait valoir que la suspension des règles de concurrence par l’admi-nistration Roosevelt en 1933 a augmenté la durée de la crise économique (voir [43] et [44]), et que, également l’intervention du gouvernement japonais dans les années 90 du dernier siècle, envers la direction de la restriction de la concurrence dans le domaine “des industries entrées structuralement en réces-sion” a prolongé la crise économique respective [45].
“En analysant… la stagnation de l’économie japonaise depuis 1990, il est évident que le problème n’a pas été la chute du système financier ... Le problème a été le manque de croissance de la productivité.”
36. L’effort de l’analyse en période de crise devrait être dirige vers la mise en évidence des politiques qui permettent l’accélération du taux de pro-ductivité. Bien entendu, de la crise à la crise, nous ne pouvons que faire des hypothèses à l’égard des actes et faits nécessaires a la reforme. Il est toutefois possible que le ralentissement de la productivité soit, en essence, le résultat de l’inefficacité des politiques qui subventionnent les entreprises et les industries qui sont en déclin - à la fois parce que les producteurs inefficaces assument une grande partie du produit social et aussi comme une conséquence du découra-gement des investissements destinés à accroître la productivité. L’expérience japonaise dans les années 1978-1983 apporte une certaine justification empi-rique concernant ce point de vue pour les subventions [45].
37. Comme un cas extrême, nous mettons sur le tapis l’expérience des États-Unis au cours de la première et la deuxième guerre mondiale - les plus grands conflits mondiaux, depuis l’adoption des premières règles modernes antitrust (Sherman Act), considérant qu’on peut envisager une guerre mondiale comme étant aussi une grave crise économique.
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Il convient de noter que les deux guerres mondiales ont été précédées et soutenues d’une application stricte des règles de concurrence aux États-Unis. Chaque fois la politique antitrust a soutenu les priorités de crise (la guerre) lorsque cela s’est avéré nécessaire, l’application stricte étant maintenu pour lutter contre les comportements anticoncurrentiels qui menacent les fonde-ments de la concurrence économique.
38. Les conclusions générales sont les suivantes [46]: - La législation antitrust n’empêche pas la résolution d’une crise (soit-elle
causée même par une guerre mondiale) si elle est appliquée avec la sou-plesse nécessaire;
- S’il s’avère nécessaire que les règles antitrust soient assouplies dans une certaine mesure, elles doivent être remises en vigueur intégralement dès que possible;
- Toute situation de crise (soit-elle causée par une guerre mondiale) ne peut pas motiver l’opportunisme dans la concurrence économique.L’expérience des guerres mondiales montre que en temps de crise, cer-
taines entreprises ressentent le besoin de se concentrer ou de se livrer à des pratiques de coopération afin de répondre à la crise, tandis que d’autres tentent d’éviter la concurrence exclusivement pour obtenir des avantages prives. La recherche historique montre que, même sans l’aide de techniques modernes d’analyse, les règles antitrust ont démontré même dans ces temps-la, qu’elles ont été suffisamment cohérentes et souples, à la fois pour répondre aux exi-gences du moment et pour éviter d’ouvrir les écluses a la marée des pratiques anticoncurrentielles.
39. Il est toujours nécessaire d’avoir un besoin légitime et démontrable pour tout assouplissement des règles de la concurrence dans un secteur quelque de l’économie. Les crises ne doivent pas devenir l’occasion de l’abandon des règles de concurrence. L’histoire de la politique antitrust aux États-Unis en temps de guerre, a révélé un mélange de flexibilité extrêmement intelligent (quand il a été nécessaire) et de cohérence (quand il a été possible). Il est extrê-mement difficile de juger ponctuellement, de choisir avec soin et cohérence entre les deux tendances décrites ci-dessus, surtout lorsque le temps est court, les besoins sont énormes et la pression des médias est intense.
Mais l’histoire a montré aussi que ces choix finals peuvent être faits et sont généralement bien faits, et que la politique et le cadre réglementaire de la législation antitrust, existe depuis environ un siècle comme une ressource ayant un maximum d’accessibilité et de conformité, d’approche pragmatique et constructive à l’appui et au soutien de la réalisation des mesures nécessaires en temps de crise.
40. En conclusion, nous pouvons dire que toute crise financière est peut-être hostile à la politique de concurrence, puisque la mise en œuvre de coûts moins évidents et difficiles à quantifier, peut se produire en option particuliè-rement intéressante pour les politiciens s’inquiètent de la popularité dans leur application de mesures restrictives.
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qui concerne la capacité de la politique de concurrence de soutenir l’existence de puissants secteurs du commerce, de finance et de l’industrie. Dans les périodes difficiles, le concept d’une économie compétitive a toujours à affronter les anciens et les plus très utilisées contre-arguments sur la politique de laisser-faire et l’ac-croissement de l’intervention de l’État dans l’économie (y compris surtout les aides d’État).
Toutefois, à notre avis, la crise économique ne peut jamais être une motivation pour ralentir ou même stopper l’évolution de la réforme structu-relle de l’économie. Au contraire, il suffit d’appeler les principes structurels de l’économie de marché, qui est la plus sûre et la plus rapide voie pour sortir de la crise sans dommage irréparable. Surtout dans le moment quand sont entrevues des prémisses de récupération, il faut appliquer des règles de concurrence avec plus de rigidité et d’examiner les mesures d’urgence ap-prouvées au début de la crise.
(A suivre)
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34. Competition policy, industrial policy and national champions, Contribution submit-ted by BIAC under session I of the Global Forum on Competition, OECD, Directorate for Financial and Enterprise Affairs, Competition Committee, 19-20 February 2009.
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37. Lewis, D., The role of competition authorities in the management of economic crises, contribution to the Global Forum of Competition, OECD, Feb. 2009.
38. Stewart, T.P., United States, The Handbook of Trade Enforcement 2009, Section 3: Countries, Global Competition Review.
39. Winerman, M., Antitrust and the Crisis of ’07, Competition Survey, Studies and researches relating to economic competition, Journal of Territorial Survey Directorate, Competition Council, Romania, Anno III, No. 1(7), June 2009.
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41. U.S. Supreme Court, United States v. Socony-Vacuum Oil Co., Inc., 310 U.S. 150 (1940), http://supreme.justia.com/us.
42. Sugar Institute, Inc. v. United States, 297 U.S. 553 (1936), United States Supreme Court Opinions from Volume 297 of the United States Reports.
43. Cole, H.L. and Lee E. Ohanian, L.E.,. ‘New Deal Policies and the Persistence of the Great Depression: A General Equilibrium Analysis, Journal of Political Economy, University of Chicago Press, vol. 112(4), pages 779-816, August 2004.
44. The battle of Smoot-Hawley, A cautionary tale about how a protectionist measure opposed by all right-thinking people was passed, The Economist Newspaper Limited 2009, Dec. 18th 2008.
45. Hayashi, F., Prescott, E.C., The 1990s in Japan: A lost decade, Review of Economic Dynamics, 2002.
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The electricity market – influences ofEU’s energy policy on electricity prices
Ph.D. student Mihaela DUMITRESCU competition inspector - Competition Council, Romania
Abstract Reflected in the European Directives regarding the electricity mar-
ket, the EU’s energy policy is looking to completely opening of the mar-kets, the vertical separation of transport operations and distribution, a better regulation of access to the network, the independence of national regulatory authorities, free access in the manufacturing sector and a single European energy market. The independence of network operators has a favorable effect on prices, by promoting the efficiency of the net-works, by facilitating access to other networks and contributing to strengthening confidence in the market. The optimal use of internal en-ergy resources may therefore be a reliable method for reducing the cost of electricity production and prices electricity.
Key words: electricity market, marginal costs, electricity price.
1. Introduction
The latest reports of the European Commission show that on the 1st of July 2007 the last step in the direction of competitive energy markets was completed [1], with the complete opening of the retail markets. Although the legal perspec-tive, all consumers have the opportunity to choose suppliers and benefit from competition, in reality, due to the coexistence of open market and a regulated supply prices to end users, there are restrictions on the free and fair competition.
Price differences, regional monopols and constant congestions of trans-border networks between member states shows that market integration has not yet reached a sufficient level. In a well-integrated market, competition will keep similar prices between member states or neighboring regions [2].
Following the liberalization of electricity, customers in the EU-15 mem-ber states have benefited from the economies cumulated by prices of the order of 60 billion during 1998-2004. These savings were partially offset by increas-
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Yes in prices in future periods. Gas prices in the EU-27 have increased in the same time as oil price developments. For industrial users, prices have increased with an average of 35% between 2005 and 2006 and another 12% in 2007. The total increase from 2005 to 2007 was comparable to that for domestic custom-ers, although major price increases have been introduced mainly in 2007 [3]. There are several reasons for these developments. Because competition is still limited, competitive pressures on prices remain low. Furthermore, prices re-flect general trends, particularly regarding oil prices, which rose by more than 50% between 2005 and 2007. Given the link between gas prices and oil prices and the increasing importance of gas in energy production, oil price develop-ments affect gas prices, as well as electricity prices.
Meanwhile, there are clues which show that the independence of net-work operators has a favorable effect on prices, by promoting the efficiency of the networks, by facilitating access to other networks and contributing to strengthening confidence in the market.
2. The electricity market
The coexistence of open energy markets and the regulated prices of en-ergy is quite often meet among member states: it is met in a third of the gas markets for at least one segment of the market and also in more than half of electricity markets. For most member states that have regulated prices, the regulation is not confined to small consumers - all segments of consumers can be supplied at regulated prices [4].
Negative effects of the regulation of energy prices remain a major concern. This leads immediately to a distortion of competition and reduce liquidity on en gros markets. In the long term, regulated prices give wrong signals regarding prices for investors and thus have a negative impact on developping a new infrastructure. By setting a price that does not allow new operators entering the market supply of en-ergy at prices that cover costs, price regulation creates a barrier to the market entry for alternative suppliers, thus directly threatening the security of supply. For the French market, for example, electricity stockmarket proved to be unable to set a reference price for the market taking into account energy price regulation.
Measures for consumer protection should not be confused with the regu-latory instruments of competition, these two issues should be addressed through different means.
Once with the liberalization of electricity markets an increase is expect-ed in the interest for electricity tranzaction as active on specialized markets. Its characteristics as goods, mainly the impossibility for strorage and the con-comitant moments of “production-consumption” may lead to high volatility in the price of electricity, whose price behavior is naturally dependent on the demand, which in turn varys depending on the evolution of several factors, of which some unpredictable or difficult to predict.
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The volatility of electricity prices is also determined by the following causes: - rising demand; - production capacities to meet increased demand is limited and expensive, - fuel-price volatility.
In an efficient market, prices are adjusted according to the offer and the demand. Depending on the time horizon of the market deliverys they offer: - spot-market price - the reference for the trading of energy in time and/or
termination of financial contracts for assuring the electricity price in time; - term market price - the posibility to secure income at a later date, for a
specified period at a preset price on the day the transaction. In the long term, prices are a signal for the need to develop new energy
resources or for the development and expansion of interconnection capacity and it represents the incentive necessary for a free market to encourage these investments.
In the context of the modern approaches in recent years, energy is viewed as a product wich must be supplied at competitive prices, but also as a service, the analisys of supply and demand of energy becomes increasingly important. Knowing the demand and the offer of fuel types or on final forms of energy of thel energy markets are increasingly necessary to guide manufacturers and sup-pliers of energy, producers of equipment,for the orientation and sizing of the investments, for economic policy, etc..
Electricity is considered to be the merchandise with the most pronounced seasona characterl. Demand, supply and electricity prices are strongly influ-enced by weather conditions, by the social and economic circumstances. The most pronounced form of the sesonal character is the weekly form. This is because during the week, due to the industrial and commercial activitys, the demand and the prices are higher than in the weekends. A form almost as pro-nounced of the sesonal character is intra-day form, ex-post analysis of the curves of consumption allowing to identify certain periods of typical ranges for peak and duty emptyness.
The demand for electricity can be influenced in the following ways: - electric heating is influenced by the possibility of switching from the
heating based on fuel (replacement goods); - the amount of electricity required by household consumers is affected by
the wide variety of electronic devices on the market (complementary goods) and their sale prices
- the families with low income (individual income) are unable to buy many devices that are consuming electricity or to consume quantities of electricity. If one of the outside conditions change, then the demand for electricity
changes. The type of organization in the form of a monopol of many companies
suppliers of electricity results in “captivity” of most consumers. At a price rise, they try to decrease the demand for electricity, but the percentage changes are
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Ydifferent and lead to appreciation of the power curve wich shows a slope, mean-ing an unelastic request.
The evolution of energy demand and primary energy resources on an international level does not allow consideration of scenarios that are based on a low price of energy in the long term.
According to estimates it is espected that the energy demand in 2030 will be about 50% higher than in 2003, and oil will be 46% higher.
The factors (conditions) affecting the supply of electricity are: - production costs (are caused by the changes in the prices for resources,
changes in technology, organizational changes, government policy etc.., for example, the introduction of new technologies increases the labour produc-tivity, reducing production costs, so that the same amount of electricity can be produced, and therefore offered at a lower price);
- profitability of alternative products (concerning the electricity, the offer is influenced by the offer of substitute fuels such as gas, oil, coal, pro-vided there is the possibility of switching to the consumer the type of energy / fuel required);
- unpredictable events, including natural ones; - the producers goals (the goal to maximize profits, characteristic to the
firms in the competition, does not always have the same results with the objective of maximization of social welfare, which could be followed by a monopolistic energy industry);
- projections for future price changes.If one of the conditions changes, then the offer for electricity changes.In the short term,a higher price encourages producers to offer more be-
cause they are willing to accept higher costs per unit of product, associated with an increased production. In the long term, it adds another reason, namely that new producers will be attracted to enter the market due to product profitability.
Combining analysis of the demand curve with that of the supply of en-ergy, we can determen how the quantity and price of a product are determined in a free and competitive market. Given the influences that occur due to market structures with a monopol character specific to the energy sector from many countries or the distorsions of the economic relationships , many times the price of energy does not correspond to the point of balance is affected by taxes, subventions or other economic instruments at the disposal of governments. In reality, many parameters can be changed, resulting in displacement of both the demand curve and the curve of energy supply. It is difficult to determine the position of these curves by studying the relationship between price and quan-tity, at different moments in time.
It is however important to know the degree to which occur the size varia-tions of price and quantity of energy required or offered. The elasticity mesures the response of a variable at the modification of one of determinors and it is defined as the relationship between the proportionl changes of the quantity (de-manded or offered) and the proportional changes of the determinant.
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The balance between demand and supply of electricity is reflected by the European Commission in the Report on the progress of creating the internal market for gas and electricity [COM (2008) 192],in which there are presented for each country, peak demand recorded during 2006-2007 and the maximum generation capacity.
Table no.1 The balance between demand and supply of electricity
MWThe peak of the demand
registeredGW [5]
The maximum generation capacity
GW [6]Austria 9,481 19,182Belgium 13,73 15 ,68
Czech Republik 11,40 17,5France 86,3 116
Germany 77,8 139,5Greece 9,961 11,645Hungary 6,449 6,625
Italy 55,6 79,6Holland 14,8 21Norway 21,575 29,267Poland 24,6 35,7
Portugal 8,8 13,6Romania 8,151 15,501
Spain 42,15 83,04Sweeden 26,3 33,8
United Kingdom 61,3 78,4Source: European Comissions Comunity, Report on Progress in Creating the Internal Gas and Electricity Market ,[COM(2008) 192]
3. The marginal costs
On a liberalized market, the price at which electricity is sold is deter-mined by the most expensive source of generation (supply) designed to cover the demand. The most expensive source of supply is the one with the highest marginal cost [7]. It is important to know several features of the marginal cost.
The items listed to the electricity strongly influence the marginal cost calculation. Because at any time the electricity demand of any consumer must be satisfied , the marginal cost calculation becomes particularly important.
The demand fluctuates after the time of the year and after the hours of the day, therefore the extra demand is satisfied by the different generating units (assuming an optimal operating system). Thus, the composition of energy cost varies in each hour. Defining the time areas remains at the discretion of the analyst, and on the defined areas the average hourly values are calculated.
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YIn the energy sector there are used two categories of marginal costs:
- the marginal cost on short term - representing the cost afferent to the production of an additional unit of energy using existing production ca-pacities (thus changing only the variable costs);
- the marginal cost in the long term -represents the cost afferent to the production of an additional units of energy considering a new production capacity (changing both variable costs and fixed ones). The marginal cost in the short term should include the total cost to pro-
duce an additional unit of energy (the cost component for the energy) and the total cost resulting from changing the system reliability due to increased level of generation and reduce, therefor to the safety margin to cover any changes in the of relation between thereserves of production capacity and demand (the cost component of energy that has not been delivered).
The cost of energy that has not been delivered is represented by the ex-pected value of economic deficiencies caused by interruptions or by the insuf-ficient supply of electricity (due to damage caused by interruptions).
These cost components vary from one hour to another, being dependent on the changes concerning energy demand and the evolution of the available capacity.
The componence of cost for the energy may include fuel and variable costs of operation and maintenance. The cost of energy should be increased by the additional cost of loss of power and energy caused by the transmission and distribution to the consumer.
The marginal cost on the short term may be determined by calculating the following components: - the cost of energy depending on the cost of fuel; - the operating and maintenance cost at the generation level; - the cost of increassing energy losses in transmission and distribution.
In some countries, including Romania, the costs of electricity generation are high, the technology is obsolete and there are environmental issues wich must be resolved in the next few years and it is expected that they will have important influences on production costs. Consumers will thus be forced to bear higher prices due to increased production costs, EU standards or profit margins increase.
To reduce the social impact, for ensuring a degree of handeling the price of electricity, heat and natural gas to consumers there can be referred to some measures [8]: - strengthening the competitional energy market; - connection to the regional electricity and gas market; - optimal use of internal energy resources; - improvement of the prices and rates systems; - reduce the energy bill paid by the population and businesses by increas-
ing energy efficiency throughout the chain (generation, transmission, distribution, consumption), reduce specific consumption and use of new technologies, efficiencyin the energy sector;
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- switching to a system of direct social protection for people with reduced financial possibilities by replacing social tariff for electricity and that of the subsidy granted for the heat, with welfare only for vulnerable groups of consumers;
- increasing security in energy supply through: - diversification of sources and supply routes with oil and natural gas and
reducing the dependence on imports of energy resources; - developing the transport networks electricity and natural gas and increasing
the capacity for interconnection with neighboring countries; - increasing the storage capacity of natural gas.
The optimal use of internal energy resources may therefore be a reliable method for reducing the cost of electricity production.
Energy still remains an essential element of development in the Union but also a challenge to the EU countries regarding the impact of of the energy domain on energy prices, in the terms in wich the EU will be more exposed to instabil and increasing prices on international energy markets.
Notes:
1. If they have not been derogated. 2. Commission of the European Communities, Report on Progress in Creating the
Internal Gas and Electricity Market ,[COM(2008) 192. 3. Eurostat, yearly dates on the 1st of January. 4. ERGEG, Status review on end-user price regulation (Report on status of regula-
tory pricing for end users), 14.6.2007 (Ref: E07-CPR-08-04), ww.ergeg.org. 5. The highest demand for electricity simultaneously satisfied during the year.
Supply of energy during the peak demand may include the request satisfied by imports or altenativ request may include exports of electricity.
6. Definition IEA: generation capacity is defined as the sum capacity of all facili-ties available in a period of at least 15 hours per day. The figures reported refer to net capacity to 31 December. Net capacity does not include auxiliary services.
7. Council Competition “Competition Review” no. 1 / 2008. 8. Government Decision no. 1069/2007 on the approval of Romania’s energy strat-
egy for the period 2007-2020, Official Gazette no. 781/19 November 2007.
References:
1. Leca A., Scripcariu D., Scripcariu M. s.a. Principles of energy management, Editura Tehnica Bucuresti, 1997.
2. Velicescu,C., The electrical customers reliability in power system evaluation, Electroenergetica 41, Bucureşti, 1993.
3. Marina Badileanu, Electricity prices and value analysis, Editura Economica, Bucuresti 2001.
4. Mihaela Comanescu, European energy policy, Editura Economica, Bucuresti, 2000.
5. Commission of the European Communities, Report on Progress in Creating the Internal Gas and Electricity Market ,[COM(2008) 192].
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Y 6. Commission of the European Communities - Report on progress in creating the
internal gas and electricity market, {SEC(2009) 287}. 7. Commission of the European Communities - Report on the experience gained in
the application of the Regulation (EC) No 1228/2003 “Regulation on Cross-Border Exchanges in Electricity”.
8. Commission of the European Communities -Report on progress in creating the internal gas and electricity market {SEC(2005) 1448}.
9. Porter M. –„L`avantage concurrenciel “, Ed. Interedition, Paris, 1986. 10. Government Decision no. 1069/2007 on the approval of Romania’s energy strat-
egy for the period 2007-2020, Romanian Official Gazette no. 781/19 November 2007.
11. M.Friedman, Prix et Theorie Economique, Tendences Actualles, traduit de l’americain par Henri P. Bernard, Editure Economics, Paris, 1998.
12. Stefan Nedelea, Competition and cost, Editura ASE 2003.
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The evaluation of the control overan undertaking from the perspective
of the Companies Law 31/1990
Valentin V. Mircea, Competition councillor, Competition Council - Romania
The control is a key element for the analysis by the Competition Council of the cases submitted to its scrutiny. The control is one of the main elements particularly with respect to the evaluation of the merger operations but it is part of the methodology for analysis also in respect of the investigations for poten-tial infringements of Law 21/1996, as republished (“Law 21”).
The control is not defined as such within Law 21 but in its secondary norms, applicable to the analysis of the economical concentrations – the Regulation for the authorization of the economical concentrations („The Regulation”).
According to paragraph 4 from the Regulation, „the control, in the mean-ing of article 10, par. 2 of the law, represents the right and/or the possibility of an undertaking or individuals to exert, directly or indirectly, a determinant in-fluence over one or several undertakings”.
Although the above mentioned provision refers to article 10, para. 2 of Law 21, the concept of control may be already identified in the first paragraph of the same article, which makes reference to „a determinant influence over an undertaking or several undertakings”.
Similar provisions exist in article 3, para. 2 of the Council Regulation 139/2004 regarding the merger control: „Control shall be constituted by rights, contracts or any other means which, either separately or in combination and having regard to the considerations of fact or law involved, confer the possibil-ity of exercising decisive influence on an undertaking, in particular by:
(a) ownership or the right to use all or part of the assets of an undertaking;(b) rights or contracts which confer decisive influence on the composi-
tion, voting or decisions of the organs of an undertaking”.We highlight the superior precision of the definition provided by the
Council Regulation 139/2004, which is the result of a legislative and jurispru-dential evolution superior to the same evolution in the domestic context.
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may be included, in what regards the merger control, in a rather large frame-work. The analysis of the existence of the control implies a sharp look into all relations between the undertakings, in their specific context.
One of the best examples which is available in order to demonstrate that, in respect of analyzing the merger control, the details do matter, is the situation where the social parts in a limited liability company (SRL) are acquired, in their majority (50% + 1 of the social parts) by a single acquirer and the remain-ing social parts are held by one or several minority shareholders.
In such situations, as a rule, the notification of the economical concentra-tion is made only by the majority shareholder, based on the assumption that only he acquired control over the company, being, therefore, in the case of a single control. The situation is not as simple as it may look if one essential “detail” is taken into account, more specifically a provision from Law 31/1990 on commercial companies (“Companies Law”).
Article 192, 1-st paragraph of Companies Law provided that, in case of limited liability companies, “the general meeting of shareholders decides with the vote representing the absolute majority of the shareholders and of the social parts, except where otherwise provided in the statutes”.
This provision means practically that, in the absence of any specific provisions in the statutes, a shareholder who holds the majority of the so-cial parts – even a large majority such as 80%-90% - does not hold, in principle, a single control but we are in the presence of a joint control ! This rule from the companies legislation is defined by the doctrine as the “rule of the double majority”[1]. The rationality behind this rule is the characteristic of the limited liability companies, which include both fea-tures of the company of persons (the limited liability partnership – SNC, the limited partnership – SCS) and of the companies based on capitals, such as the joint stock company (SA) [2]. The joint control of the shareholders is, in this case, of a legal nature.
Whenever, besides the shareholder holding the absolute majority of the social parts, there is only one other shareholder, the rule of „the double major-ity” is equivalent with the unanimity.
Such special rights are granted to the minority shareholders by the law, not through the agreement of the parties. On the other hand, the shareholders may derogate from the rule through clauses which should provide an express waiver from the benefit granted to the minority shareholders by article 192 of Companies Law, 1-st paragraph from Companies Law.
The rule of the double majority has some exceptions, such as those pro-vided by article 76, 1-st paragraph, in conjunction with article 197, 3-rd para-graph from Companies Law (the situation of solving disputes between the ad-ministrators who are bound to act together) and the article 77, 1-st paragraph, in conjunction with article 197, 3-rd paragraph from Companies Law, regard-ing the election of the administrators.
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The rule of the double majority, as it results from article 192, 1-st para-graph of the Companies Law, is applicable mostly to operations of current administration. However, the rule is also applicable in case of decisions per-taining to the amendment of the statutes and the law provides an even clearer norm in this respect. As such, article, 192, 2nd paragraph of Companies Law provides that for such decisions “the vote of all the shareholders in required”, so that these decisions are to be taken with unanimity. Similarly, this rule may be waived through provisions of the statutes.
We highlight that the derogation from the rule of the double majority must exist in the statutes themselves and not in any other shareholders agree-ments. This results from the express formulation of the mentioned legal provi-sions from Companies Law, which only make reference to the statutes.
The amendment of the statutes does not have an effect, in principle, over the control of a company but such aspects must be taken into account, in the light of the freedom of the shareholders to include in the statutes other provi-sions, in addition to the minimum clauses, as provided by the Companies Law [3]. For instance, in case of the limited liability company, the creation or the winding-up of secondary places of business – branches, agencies, representative office – may require the amendment of the statutes, depending on its provisions. Such decisions may be regarded as decisions which impact the commercial and strategic behavior of an undertaking active, for example, in the distribution in-dustry, where the extent of the network of warehouses and points of sale may be crucial with respect to its prospects and evolution in the marketplace.
Notes: 1. Stanciu D. Carpenaru, Sorin David, Catalin Predoiu, Gheorghe Piperea, „Legea
societăţilor comerciale. Comentariu pe articole”, 3-rd edition, Editura CH Beck, 2006, page 602.
2. Stanciu D. Cărpenaru, „Drept comercial român”, 2nd edition, All Educaţional, 1998, page 331.
3. In case of limited liability companies, limited liability partnerships and limited part-nerships, the minimum content of the statutes is set by article 7 and in case of joint stock companies and joint stock partnerships, by article 8 of Companies Law, respectively.
