The International Journal Of Competition Policy And Regulation Vol 15 Issue 5 JUNE rating enforcement

Transcription

1 The International Journal Of Competition Policy And Regulation Vol 15 Issue 5 JUNE 2012 rating enforcement THE ANNUAL RANKING OF THE WORLD S LEADING COMPETITION AUTHORITIES

2 LawBusinessResearchLtd 87LancasterRoad LondonW111QQ UnitedKingdom Fax: RatingEnforcement GlobalCompetitionReviewhaspublishedits 11 th annualsurveyoftheworld sleadingcompetitionauthorities France s Competition Authority makes the leap to a five-star rating this year. An exceptional year in terms of enforcement, merger control and competition policy saw the agency become one of the world s elite competition authorities. TheEuropeanCommission sdgcompetitionretainsitsfive starrating despitea 2.3billiondropincartelfinesthisyear. TheUK sofficeoffairtradingisdowngradedtofourstarsafteradismalyear foritscartelenforcementprogramme. Germany sfederalcartelofficeandfrance scompetitionauthorityjointhe elitefive starcompetitionagenciesafterseveralyearsofexcellentperformance inallareasofcompetitionenforcement. TheUSDepartmentofJustice santitrustdivisionhasaverysuccessfulyear inandoutofcourt ensuringitkeepsitsplaceamongtheelitefive star agencies. Japan sfairtradecommissionispromotedtofour and a halfstars,in particularforitsaggressiveandsuccessfulcartelenforcementefforts,butalso itsexcellentmergercontrolwork. Spain snationalcompetitioncommissionbecomesafour starenforcerafter rampingupitsenforcementprogrammeandimprovingitsoperations allinthe faceofgovernment widecutbacks. SouthAfrica scompetitioncommissionisknockedbacktothreestarsafter theenforcer sheadline grabbingcartelcasescrumbleincourt. Denmark scompetitionauthorityloseshalfastar takingitsratingdownto threestars afterasomewhatlacklustreyear. Turkey scompetitionauthorityappearsinratingenforcementforthefirst time,earningtwo and a halfstars. RatingEnforcementprovidesinformedcommentandanalysisofeachauthority s successes andfailures in2011.thisisbasedondetailedinformationsupplied togcrbytheauthorities,aswellastheviewsofspecialistsineachjurisdiction. Wealsoconsultourextensivecoverageofworldwidecompetitionenforcement throughouttheyear.

3 Agency Elite European Commission s Directorate General for Competition France s Competition Authority Germany s Federal Cartel Office UK s Competition Commission US Department of Justice s antitrust division US Federal Trade Commission Very good Japan s Fair Trade Commission Australia s Competition & Consumer Commission Korea s Fair Trade Commission The Netherlands Competition Authority Spain s National Competition Commission UK s Office of Fair Trading Good Brazil s CADE Canada s Competition Bureau Italy s Competition Authority New Zealand s Commerce Commission Austria s Competition Authority Brazil s SDE The Czech Republic s Office for the Protection of Competition Denmark s Competition and Consumer Authority Finland s Competition Authority Hungary s Competition Authority Israel s Antitrust Authority Norway s Competition Authority Poland s Office of Competition and Consumer Protection Portugal s Competition Authority Russia s Federal Antimonopoly Service South Africa s Competition Commission Sweden s Competition Authority Switzerland s Competition Commission Fair Belgium s Competition Authority Brazil s SEAE Chile s National Economic Prosecutor s Office Greece s Competition Commission Ireland s Competition Authority Mexico s Federal Competition Commission Pakistan s Competition Commission Turkey s Competition Authority (new entrant) Lithuania s Competition Authority Slovakia s Antimonopoly Office Star Rating

4 FRANCE IMPROVING COMPETITION AUTHORITY It s been another strong year for France s Competition Authority. Its reputation as a tough and competent antitrust enforcer has further grown under the leadership of Bruno Lasserre. Last year saw an abundance of significant merger decisions and cartel investigations, and French competition lawyers say that, for the most part, the authority got them right. The authority maintains good international relationships with other national competition authorities and the European Commission, and is very active in organisations such as the International Competition Network. As such, competition lawyers in France say that over the past year the authority has been blazing a trail for others to follow, including DG Comp, in key areas of competition law. The authority is pushing the commission to be better, says one Paris-based practitioner. The enforcer s landmark decision in the merger between broadcasters Canal Plus and TPS is one example. The merger was originally completed in 2006, after the authority agreed to it, but imposed 59 commitments. In September 2011, however, the agency fined Canal Plus 30 million for failing to comply with 10 of the remedies and, in an unprecedented move, forced the company resubmit the merger after withdrawing its approval. It is the first time in Europe that such a decision has been made, and is a stark illustration of the authority s no-nonsense attitude to remedies in mergers. It remains to be seen whether the decision will be approved once more. It was a very brave move, and shows the authority is unafraid to take risks, says one lawyer GCR spoke to. Others, however, say the authority could be more timely when analysing mergers, as some deals are eventually abandoned because they spend too long at Phase I without any indication from the authority as to what its next move will be. Simple mergers go very well, but the more complex ones can be difficult, says one lawyer. Much improvement could be brought. That said, of the seven cases that went to an in-depth review, the authority approved all of them with remedies, which suggests it is prepared to take a pragmatic approach to difficult mergers. The authority is growing. After hiring 19 specialised staff in 2010, the authority added another 25 in 2011, with just nine leaving. The authority s staff are experienced, too, with almost a third of its core team having spent at least five years in the private sector. In antitrust enforcement, the authority continued to be as aggressive and determined as ever. Cartel fines reached 420 million, similar to 2010, and includes the authority s highest-ever fine in a cartel case triggered by a leniency application. It fined Colgate Palmolive, Henkel and Procter & Gamble, France s largest detergent producers, 361 million for cartel activity. The authority also agreed a settlement in the long-running interbank fees case, in which the banks agreed to reduce their charges on card payments. It was France s first change in inter-bank fees for more than 20 years. But there were some notable defeats too, including the Paris Court of Appeal overturning the authority s 20 million fine against Vivendi and France Telecom issued in 2004 for margin squeeze. Despite this, the authority has an impressive record at court: in 36 competition decisions since 2009, the Supreme Court has quashed 20 of the Court of Appeals rulings against the authority. Appeals brought in 2011 are currently pending. With fine levels steadily increasing over recent years, some private practitioners wonder if France s Competition Authority has taken a leaf out of DG Comp s book. In a bid to improve the transparency behind its fining decisions, the authority released guidelines last March outlining the process by which it calculates them, and which double as a reference tool for parties arguing against the agency. They are binding on the authority. Similarly, and again illustrating its innovative approach to competition enforcement, the authority released further guidelines on its approach to settlements and compliance, and became the first European competition agency to reward compliance programmes with a fine reduction, something DG Comp has so far avoided. The substance of the guidelines has certainly caused controversy, but lawyers welcome the authority s originality and attempt to improve transparency. The authority s experienced staff, who are generally well thought-of by private practitioners, remain open to discussions around the guidelines when parties are considering settlement options. This helps to improve cooperation between the authority and the private competition bar, lawyers say. It is more advanced in several areas than other European competition agencies, summarises one Parisian competition lawyer. 60 global competition review

5 regarding its new enforcement powers in merger control and sector inquiries. * Some case officers are dedicated both to mergers and to antitrust, to ensure a consistent framework and approach to both fields. Head of agency: Bruno Lasserre Previous employment: Judge at the French Administrative Supreme Court and former president of the Competition Council Mandate expires: March 2014 Total staff: 200 Staff working on competition enforcement: 168 Percentage focused on competition: 84% Non-administrative staff: 135 Percentage who are lawyers: 52% Percentage who are economists: 25% Percentage who are others: 23% Other areas of focus: Sector inquiries, market studies and public opinions, and recommendations to policy-makers and market players on how best to comply with competition law. Stand-alone bureau of economics: Yes No. with PhDs in economics: 12 Name of chief economist: Thibaud Vergé Average age of staff: 39 Average tenure: 5 years Budget: 20 million Amount spent on salary: 15.2 million Percentage of budget spent on salary: 76% No. of staff who left: 9 No. of staff who retired: 1 No. of staff who remained in civil service: 6 No. of staff who joined from the civil service: 10 No. of staff who joined in 2011: 25 Number who have spent at least 5 years in private practice: 41 Percentage of staff who left: 7% Percentage who retired: 11% Percentage who remained in civil service: 67% Percentage who joined from civil service: 40% Percentage who joined in 2011: 19% Priorities No. of staff working on mergers: 34* No. of staff working on other matters: 101* Percentage of staff working on mergers: 25* Percentage of staff working on others matters: 75* Sectoral priorities in 2011: Retail trade & e-commerce, media, telecoms, banking & financial services, transport. Sectoral priorities for 2012: Retail trade & e-commerce, media, food, pharmaceuticals, banking & financial services, transport. Performance assessment: Under the French fiscal rules, all administrative authorities are subject to an annual performance assessment sent to the French parliament which, in turn, assesses the results achieved when it agrees the budget for the following year. Conclusion of assessment: In 2011, both the National Assembly and the Senate welcomed in particular the authority s activities in the retail distribution and banking sectors, as well as the authority s guidelines on fines and compliance programmes. The National Assembly also conducted a review of the 2008 reform of the French competition enforcement system. It called for a deterrent fining policy and praised the authority s achievements Mergers No. of mergers filed: 255 No. of mergers that led to in-depth review: 2 No. of filed mergers challenged: 7 No. of challenged mergers blocked: 0 No. of challenged mergers resolved with remedies: 7 Percentage of filed mergers that led to in-depth review: 1% Percentage of filed mergers challenged: 3% Percentage of challenged mergers blocked: 0% Percentage of challenged mergers resolved with remedies: 100% Anti-cartel No. of leniency applications: 9 No. of dawn raids: 9 No. of cartel decisions: 8 Total fines in 2011: million Average fine per cartel: 52.5 million Average length of cartel investigation: 18 months Fines collected by: The state Fines go to: State budget Abuse of dominance Highest no. of abuse of dominance cases under way in 2011: 46 No. of abuse of dominance investigations launched in 2011: 26 No. rolled over: 20 No. of files closed: 9 Average length of investigation: 18 months Longest-running investigation: 5.5 years Explanation for its duration: The case was first examined by the authority s board in March In May 2009, the board considered that the file was incomplete and sent it back to the investigation services. Complex issues are involved in this case, in particular complex economic studies, thus requiring an in-depth investigation. A decision is foreseen in the course of Criminal enforcement Criminal enforcement track: Yes Offences punishable by imprisonment: Bid rigging and hard-core cartels. Maximum sentences: Four years in prison and a 75,000 fine. Individual sentences imposed: Criminal judges have imposed suspended jail sentences on more than 50 individuals guilty of an antitrust offence. Most cases were however not stand-alone antitrust cases. Longest prison sentence: 18 months 2011 prison time: N/A Organisational change Structural change: No Leadership change: No New powers: No Budget change: Decrease of 400,

6 Priority setting Setting goals and priorities: The authority s long-term goals were set by the president at the start of his five-year term in 2009, and presented to both the houses of parliament and the wider public. These are meant to run for the entire period of the presidency. They break down into enforcement, advocacy and policy priorities that are set each year with executive board members and, where relevant, senior management. Such priorities may of course roll-over from one year to the next where needed. The board constantly monitors priorities to balance longterm objectives with the need for the agency to adapt to market circumstances and to the broader institutional and consumer context. Allocation of resources: Roughly 55 per cent of the authority s resources are now allocated to activities that correspond to legal obligations, such as handling merger reviews and government requests for opinions on draft legislation. The remaining resources are allocated to projects deemed strategic or beneficial by the authority itself, and those it launches on its own initiative. These include: launching ex officio antitrust cases; delivering ex officio market studies, sector inquiries and public opinions and recommendations; publishing guidance documents; and contributing to European and international initiatives or networking with other agencies on a bilateral basis. Staff, time and money are earmarked to such projects pursuant to a merit-based assessment that takes into consideration a range of criteria: likely outcome for the agency, consumers, businesses and EU/ international competition community; balance between costs and benefits including market impact and non-market impact leadership, communication; strategic importance of the sector at hand for the French or European economy; consistency with broader portfolio of agency initiatives and past track record; and information gathered through formal or informal complaints. Public expectations are also a criterion, given the need for competition agencies to constantly be in touch with society. Depending on the project, the authority s prioritisation process may include not only leadership and managers, but also peers and stakeholders. Long-term strategy and training Evaluation methods: A comprehensive set of measures has been implemented to evaluate the authority s performance since its major reform of 2009 took place, and has remained in force from then on. The systematic evaluation of the implementation of antitrust and merger remedies has also been strengthened, which resulted in two fining decisions in 2011 for non-compliance. Furthermore, investigation services meet twice a year to draw lessons from past enforcement and examine the challenges for the next six months to come. This complements the traditional monthly de-briefing session that involves the entire agency. How do you rate yourself? Looking back at the years that have elapsed since the major reform of 2009, four major results have been achieved and have given our agency a new profile. The first is a proactive competition policy, thanks to our completed toolkit. We have made wide use of our new ability to launch ex officio investigations and sector inquiries or public recommendations, especially in areas where consumer welfare is directly at stake either in terms of economic sectors or in geographical terms, such as remote overseas territories. Second, we have made a leap in terms of transparency. We published substantial guidelines after an open and frank public consultation without shying away from difficulties. Stakeholders may now rely on a precise methodology on substantive issues, such as the setting of fines and the approach to compliance programmes, and on procedural aspects. In the latter field, we had already adopted notices on leniency and commitments, and we just published a notice on settlements that codifies a long-standing practice with over 30 cases handled under this procedure since This effort of transparency also touches on sectoral issues; the authority set up a steering committee aimed at establishing a French tourist test for payment cards. Third, we carried out our leniency programme in a landmark case involving transnational cartelists that agreed on prices of daily consumer goods in the detergent sector. Fourth, we kept a very vigilant eye on the implementation of remedies, in antitrust as well as in the merger area. We are the first agency in Europe that withdrew a clearance decision for this reason. That decision also involved an appropriate fine and attracted much public comment, as it regarded the pay-tv sector where the new entity that resulted from a 2006 merger-tomonopoly broke its commitments. Lastly, in 2011, the authority set up task forces that gather the economic and legal services, senior managers and case handlers to examine issues such as taking stock of the existing approach to settlements, or the implementation of the new notice on fines. Ensuring stability: The measures launched in 2009 were reviewed in 2011 and found to be satisfactory. In addition, new measures were launched in 2010, such as increasing individual and collective financial incentives for the staff, as well as providing additional responsibilities for senior case handlers in terms of knowledge management and maximising the dissemination of experience gained from secondments to the European Commission or foreign antitrust agencies. A comprehensive database of decisions and preparatory acts as well as internal notes on case law, European decisional practice and economic and legal literature is constantly made available to all the staff. All these measures are now implemented on a permanent basis. Moreover, in 2011, the chief economist held a mandatory, twoday seminar for all case handlers, mid and senior management on economic issues. Such an internal seminar, meant to improve knowledge-sharing within the agency, is to be organised on an annual basis. 62 global competition review

7 Results Key achievements: Achieving decisive enforcement in key economic sectors for consumers. Strengthening competition work through antitrust enforcement initiatives, opinions and guidance and calls for legislative reform. In 2011, the authority provided guidance to promote a level playing field in diverse sectors, such as the management of railways stations by the incumbent operator or the online betting sector newly opened to competition. We also opened two sector inquiries in the car maintenance and e-commerce sectors. Publishing three sets of final or draft guidelines on antitrust fines, settlements and compliance programmes, and providing for extensive and systematic public consultation of all stakeholders before taking a final decision. For the first time in Europe, the authority withdrew a merger clearance decision and fined parties that had failed to comply with their commitments in the pay-tv sector. The authority set up a steering committee to define the tourist test for payment cards, and promoted its use for setting an adequate and competition-friendly level of multilateral interchange fees. In the international arena, the authority was appointed co-chair of the advocacy working group of the International Competition Network. In 2011, the authority reaped the fruit of its 2010 market monitoring and advocacy activity. As a result of the 2010 sector inquiry on cross-selling, Orange, the incumbent telecom operator, concluded a 3G domestic roaming agreement with a new entrant in the mobile market, Free, which will significantly spur competition in this market. The December 2010 sector inquiry on food retail distribution directly inspired a draft bill, which is currently being debated in parliament. Appeals success: Of the 21 challengeable decisions taken in 2011, six of them were challenged. They remain pending before the Paris Court of Appeal. 63