Neelie Kroes
Member of the European Commission in charge of Competition Policy

Taking Competition Seriously - Anti-Trust Reform in Europe

International Bar Association / European Commission Conference `Anti-trust reform in Europe: a year in practice'
Brussels, 10 ^th March 2005

Ladies and gentlemen,

I am delighted to add my own words of welcome to those of Michael Reynolds. It is my pleasure to be able to address so many members of the judiciary, national and European enforcers and other legal practitioners.

Over the next two days we will exchange our respective experience of how the reformed anti-trust regime is working in practice. And together we will look at how - collectively and individually - we can use the new arrangements more and more effectively and thereby ensure that Europe remains in the vanguard of global antitrust enforcement.

The Lisbon context

And our shared mission has never been more pressing. Europe urgently needs to increase its competitiveness; to deliver more growth and more jobs. European Heads of State and Government will be in Brussels at the end of the month to agree just how to achieve these goals by renewing the economic and social reform process started in Lisbon in the year 2000.

The European Commission believes that the only way forward is through a partnership which mobilises support for change by bringing together stakeholders at all levels - institutions, Member States, businesses, citizens. A partnership to guarantee that the Union's economic development is both sustained and sustainable.

Every one of us in the European anti-trust community has a part to play in that partnership. Each of us within our own sphere of responsibilities has a duty to have the courage to use the competition policy tools at our disposal effectively. Together we can make a significant contribution to delivering an attractive environment for growth and jobs. We can help ensure that Europeans get the most out of our unique internal market.

I would encourage you to keep this thought firmly in mind over the next two days. The use we make of the new anti-trust rules is a key testing ground for how seriously Europe takes competition and competitiveness.

Evaluation of the modernisation of the anti-trust regime

Ten months ago the world of European anti-trust enforcement was radically reformed, a reform which in my view was well-justified. Our new regime is characterised by more proactive enforcement, increased co-operation and better priority setting. I would like to pay tribute to Mario Monti i, whose enthusiasm and pure hard work guaranteed that all the necessary regulatory instruments were in place by 1 May 2004.

I have been in post for just over three months, yet I can honestly say that I have already seen the concrete benefits of these new rules.

Decentralisation and the network of competition authorities

The first success has been the creation of a network between all national competition authorities who, together with national courts, have the power alongside the Commission, to apply EU competition rules. Enforcement is thus no longer dependent on the European Commission alone. Eleven cartel decisions have been taken under Article 81 since 1 May 2004. Five were taken by national authorities, and six were taken by the Commission. Of the nine Article 82 decisions, eight were taken by national authorities and just one by the Commission.

Modernisation has not only had an impact on national competition authorities. National judges too have increased jurisdiction over competition matters. Where judges so wish, the Commission is always on hand to give opinions on specific cases. I would encourage you to make use of this facility as and when you find it appropriate and useful. I also very much support networking activities such as those organised by the Association of European Competition Law Judges and the Presidents of European Supreme Courts. And I am very pleased that an increasing number of judges are taking up the training which is on offer to support modernisation. In this year alone, over 700 judges will receive competition law training thanks to projects co-financed by the European Commission. I will keep the operation of this programme under close review, in the light of experience, in order to ensure that it keeps pace with the developing training needs.

But perhaps the most significant success of decentralisation has been the way it has provided a real opening for an unprecedented degree of co-operation and exchange between authorities. Authorities are now getting together in both formal working groups and informal meetings. Together we discuss anti-trust law and economics, as well as problems in individual sectors. Cooperation within the network is also paying dividends in terms of determining which authorities are well placed to take forward particular cases.

Pooling resources for more effective and efficient enforcement

This networking has produced real results in terms of more effective enforcement and more efficient use of our collective resources. I would like to stress that pragmatism and a sense of common strategy have to be the basis of all our cooperation. Those who operate illegal activities are adept at collaborating across borders to achieve their own ends. We must be as motivated and as industrious in our own coordination efforts. For my part, I am convinced that this means there is absolutely no question of turf wars here. I can assure you that while I am Commissioner, my sole concern will be making sure the enforcement job is done by whichever authority is well-placed to do it.

Pooling and exchanging information promotes effective enforcement action. Recently several Member States' competition authorities received complaints from customers suggesting that a cartel was operating in the flat glass sector. The authorities sat down and put the individual pieces of the jigsaw puzzle together. On seeing the full picture emerge, they concluded that the scope of the case might call for Commission action. As a result, the Commission carried out inspections last month.

Identifying which authority is well placed to handle a case is only one part of the picture. Proactive work sharing also offers new opportunities in terms of efficiency and effectiveness. The action of the Commission and that of a Member State competition authority can often complement each other. One concrete example is the handling of the simultaneous complaints against Deutsche Post received by both the Commission and the German Bundeskartellamt.

Deutsche Post's actions were based on a provision of the German postal legislation which was already the subject of a Commission procedure under Article 86 EC. In this case, it was agreed that the most effective and efficient way forward would be for the Commission to continue its Article 86 procedure and for the Bundeskartellamt to continue the antitrust complaint. The combined efforts enabled both the Commission and the Bundeskartellamt to take their respective decisions within a very short timeframe.

Greater alignment of policy and practice

Looking beyond individual cases, modernisation has produced increasing coherence in the policies and practices of EU competition authorities. National competition laws are increasingly aligned with EU competition law: Member States are leaving behind their notification systems and leniency programmes are now in place in 17 Member States. Furthermore, we are engaged in a constructive exchange of views on draft decisions bringing about a convergence in the application of Articles 81 and 82.

Overall evaluation of reformed regime

I am therefore convinced that it was right to change the focus of EU competition law enforcement from a system of central control to one of co-operation. And I am convinced that during the next five years we will watch the fruits of the new system ripen still further, in a virtuous circle of more and better enforcement.

I have said it before, and I will say it again today. There is no need for further root and branch reform of the anti-trust regime now in place. But it is essential that we stay on the front foot. And that means getting out there, implementing the new rules well and building on our experience to actively promote good competitive practice in the internal market.

Building on the new regime - promoting competitive practice

I am convinced that we cannot simply hang around waiting to correct anti-competitive behaviour once the damage has already been done. I want to see such behaviour stopped at source. That means not just enforcing the rules, but changing hearts and minds too.

One by-product of the reform is that the Commission has been freed of the need to deal with antitrust notifications. That gives us more scope for setting new proactive priorities. It is my job to make sure that we choose these priorities responsibly, on the basis of discussions with stakeholders including national authorities. I want you, the practitioners, to help us identify areas where there are particular problems or where Commission intervention might add particular value. Together we have to work for a business environment which not only allows cross-border competition but which actually induces and favours competition, new entry and innovation.

Sector inquiries

Secondly, as part of the renewed Lisbon Strategy, I intend to use the powers under Regulation 1/2003, allowing the Commission to conduct investigations in sectors where competition does not appear to be functioning as well as it might. I would like to make a start in sectors such as financial services and energy, both markets which are key to the EU's overall competitiveness. In that context I would encourage you to let us know when you find that regulatory barriers - at both Community and national level - unnecessarily, and often unintentionally, hold back competition in these areas. And I would be most interested in hearing about and learning from the experience of those authorities which have already undertaken similar reviews in relation to the respective national markets.

The European Commission will go into these sectoral investigations with an open mind and constructive approach. Where we identify obstacles to competition - be it regulation, State aid, private barriers - we will propose solutions, working closely with national administrations, regulatory bodies and competition authorities.

Competition screening

Secondly, I think we can do more to make our legislation more conducive to competition. The Commission's proposals for a renewed Lisbon programme include a commitment to systematically examine the impact of proposed new EU legislation on competitiveness. The aim is to gauge the competitive impact of the proposed measures and to ensure that they do not undermine the interests of consumers or the growth of the European economy. And as well as building competitiveness testing into European impact assessment, I would also encourage Member States to think about competition issues when developing their own national rules.

Changing hearts and minds

Thirdly, and this is the most difficult part, I do believe that we need to begin changing general perception of the competition rules.

You - the judges, enforcers, advisors and businesspeople - already understand the benefits of competition: increased innovation, lower prices and a stronger economy. And you know how the competition rules can secure these benefits.

But more generally, I am not sure that this message comes across as clearly as it should. We all have a role to play as communicators. Yes, it is vitally important to explain in general terms how Europe works: its legislation, its institutions, the Constitution. But we must also keep on setting out the more down-to-earth ways in which long-standing policies such as competition make a real difference to the lives of every EU citizen. It is up to us to explain how competition spurs innovation so that people can buy better goods and better services; how competition lowers prices so that people can make their money go further; how competition strengthens the economy, so that people can have better, more secure jobs.

It is up to us to show that when we break up cartels, it is to stop money being stolen from customers' pockets. That when we prohibit mergers it is not out of some blind opposition to large companies. Our rules are very clear: in merger control size does not matter. What is pertinent is whether sound economic analysis proves that the merged entity will trample its competitors and ignore its customers. Such mergers are unacceptable and will be stopped, whether the companies concerned are large or small.

Finally, we need to set out the case for why the only sustainable option for long-term economic success is based on national and European companies which are able and keen to compete at home. It is these companies - the ones which have proven themselves by fighting and winning in open and fair domestic and European markets - which have the innovative edge and resourcefulness needed to go on to compete and succeed at global level.

Anti-cartel practice

The fight against cartels is one key area of our work which provides ample opportunity to put the spotlight on the general costs of anti-competitive practice.

Over the past years greater priority has been given to anti-cartel work. The leniency programme has been made more attractive. The sheer number of decisions taken - and the fines imposed for serious infringements - have a significant deterrent effect.

I am determined to build on the work that has already been done, to give that work an even higher priority, and to ensure that the right resources are in place to do it. A new Directorate devoted exclusively to cartel enforcement is intended to be set up in DG Competition. The Directorate would bring together the resources - the people and the investigative and procedural expertise - needed for effective action against cartels. With Philip Lowe, I would see the creation of this new Directorate as a very concrete expression of the zero tolerance policy the European Commission is committed to implement in the face of this most damaging type of anti-competitive practice.

The Commission leniency programme is proving to be an efficient and successful tool to detect and punish cartels, destabilising those that exist and preventing those that might otherwise be created. During 2004 the Commission received 49 applications for leniency in 25 different cases.

I have already mentioned that separate leniency programmes are now in place in 17 Member States. I welcome this evolution. I am, however, aware that the present system of multiple filings with all relevant authorities within the ECN costs time and money and that differences between programmes might dissuade potential applicants from applying. It is in our interest to listen to the signals given by the business and legal community and to tackle all obstacles that might jeopardize the success of our programme, and I am keen to look at what can be done.

We will therefore see whether measures could be taken to avoid the need for - or at least facilitate - multiple filings within the EU. Such a fundamental change will require serious consideration and discussions with all concerned actors: Member States, the Commission and the business and legal community. We will need to think carefully about all the implications, including important issues about enforcement at national and EU level. It is a debate I would very much encourage you to take part in.

Finally, I am of course very aware that in a global economy, enforcers have to start thinking global. Cartels often operate seamlessly across borders. Enforcement agencies therefore have to intensify their cooperation across borders as well. I attach particular importance to the work of the International Competition Network's working group on cartels. I look forward to presenting, together with our colleagues from the Hungarian Competition Authority, the first results of the multilateral working group at the forthcoming 4th Annual Conference of the ICN in Bonn in June.

Private enforcement

I would like to conclude with some thoughts about private enforcement. I know that the concept has to be treated with care. It means something very different to an American ear than to a European one. According to some, in the United States, there are too many frivolous lawsuits. In Europe, private enforcement barely exists.

The study which the Commission published last September characterised private enforcement in Europe as "totally underdeveloped". There have been only a very limited number of successful damages awards for breaches of EU competition law in the last forty years. This means that the comprehensive enforcement of the competition rules is not yet complete - not enough use is made of the courts. More importantly, the victims of anti-competitive activity are not being compensated for their losses. And finally, underdevelopment of private enforcement means that the deterrent effect of the competition rules is not as great as it could be.

As with leniency, private enforcement raises a number of tricky issues. But it is important, and by the end of this year the European Commission will present a Green Paper setting out options for improving the current system of private enforcement.

Concluding comments

It is clear that much has been achieved since 1 May 2004, and the credit goes to Mario Monti, Philip Lowe and his people in DG Competition, and you, national competition authorities, national judges and practitioners across Europe.

The challenge now is to make sure that the new anti-trust regime is used as effectively and efficiently as possible. The competition rules are a powerful tool to increase innovation and competitiveness. We can make the most of them through co-operation and work-sharing in the network of competition authorities, though pushing forward in the fight against cartels, and through better focussing the Commission's enforcement activity on the most harmful anti-competitive practices.

And we all have a role to play as competition advocates. For my part, I want to look back in five years' time and be able to say that during that period everyone - prime ministers, chief executives and citizens - took competition seriously. Competition is the central driver for competitiveness and growth. So if we are serious about fundamental social and environmental objectives, we have no choice but to take competition seriously.

Ladies and gentlemen, thank you for listening so attentively, and I hope you enjoy the rest of the conference.