Article 81 EC and public policy

Author (Person)
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Series Details Volume 39, Number 5, Pages 1057-1099
Publication Date October 2002
ISSN 0165-0750
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In reaching decisions in competition cases, the European Commission sometimes takes into account matters unrelated to the protection of competition but designed to contribute to the economic policy of the Community in a wider sense. In principle, this practice is justifiable: for one thing, the European Court of Justice has regularly held that the competition rules must be read in the context of the wider ambitions of the Community, set out in Articles 2 and 3 EC; secondly, a number of provisions in Part III of the Treaty (which details Community policies) provide that in the implementation of some Community measures, regard shall be had to other Community policies.

Therefore competition policy cannot be implemented in a vacuum, but must be consistent with the development of the European project. More specifically, in the context of exemptions granted under Article 81(3) EC, the Commission must consider (inter alia) whether the agreement “contributes to improving the production or distribution of goods or to promoting technical or economic progress.” This phrase is sufficiently open textured to allow for factors like employment or industrial policy to be included in a decision whether to exempt an anticompetitive agreement. But potentially the scope of factors which can justify exemption under Article 81(3) is extremely wide, as the Court of First Instance suggested in Métropole:

“Admittedly, in the context of an overall assessment, the Commission is entitled to base itself on considerations connected with the pursuit of the public interest in order to grant exemption under Art. 81(3)”

The Commission’s extraordinary power to exempt agreements which restrict competition but confer other benefits in the public interest raises three questions: (1) which public policy factors count? (2) how are public policy factors addressed in competition cases? Does the Commission balance the restriction of competition with the promotion of other public policy considerations? Or do the public policy factors “trump” the competition considerations? Or is there another way in which public policy factors are taken into account? (3) Following on from the previous questions, are all public policy factors appraised in the same way, or do some “count” more than others? The first question has been addressed on numerous occasions. However, at least insofar as the English language literature is concerned, there have been very few systematic studies of the relative weights of different public policy arguments. Moreover, recent significant decisions by the Commission and Court warrant a comprehensive reexamination.

A review at this time is also important in view of the proposal to give direct effect to Article 81(3) EC, which will give power to national courts and national competition authorities, some with little experience in competition law matters, to review the legality of agreements in the light of non-competition considerations. This proposal provokes a further question: (4) should the role of public policy factors reviewed in Article 81(3) change in this enlarged competition law regime? In order to address these questions, the first four parts of the paper analyse the criteria which have been used to assess whether Article 81 has been infringed and the criteria upon which an exemption might be granted. In part two, we establish the three “core” aims of EC competition policy. These are the three public policy criteria which are used to examine the legality of every agreement under Article 81(1) and the possibility of an exemption under Article 81(3). In part three we consider the influence of factors which relate to other EC policies; in part four we examine the role that considerations specific to a particular industry or sector have had; and in the fifth section the role of considerations that relate to the public interest of a Member State. These four sections will explore how the Commission has taken these public policy considerations into account in determining the application of Article 81. Throughout the paper I will use the term “public policy” to refer to considerations of the collective goals of a community as a whole, goals that, in the case of the EC, are identified in the Treaties.

The final section refutes the suggestion that the scope of Article 81(3) should be narrowed to exclude certain public policy factors by showing that the consideration of such factors is an important and necessary mechanism in EC Law. The conclusion suggests that the most effective way of retaining the Commission’s power to take public policy considerations into account in a way that will also allow for an effective decentralization of competition policy requires a more sophisticated approach than that proposed in the White Paper on Modernization. The reform of Regulation 17 (which is concerned with procedural and not substantive matters), should be accompanied by a redraft of Article 81(3) – which embodies the substantive criteria for assessing agreements.

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