Newsroom

National enforcement of European competition rules

80/04     30 April 2004

From 1 May the European competition rules can be enforced directly by national competition authorities and courts. The OFT will become a member of the network of national competition authorities (NCAs) in Europe applying Articles 81 and 82 (see note 1) of the EC Treaty in full alongside the European Commission.

The OFT will apply EC competition law to anti-competitive agreements and abuses of dominance in the UK where they may have an effect on trade between member states. In practice the enforcement of UK competition law continues as before: the Competition Act 1998 mirrors the EC competition rules (see notes 2 and 3).

Closer working ties are being developed amongst the NCAs through the establishment of a European Competition Network (ECN) (see note 4) leading to improved enforcement coordination. Members of the ECN will be able to share information to help them investigate suspected breaches of Articles 81 and 82.

Other key changes from 1 May include:

• the abolition of the notification systems for agreements under both European and national competition law
• a new power for the OFT to gather information for other competition authorities in the ECN, and vice versa
• a change in the maximum penalty for breaches of prohibitions in the Competition Act to 10 per cent of worldwide turnover, bringing it into line with the maximum for breaches of Article 81 and Article 82.

In light of the changes brought about by the Modernisation Regulation [EC1/2003], the OFT earlier this month put out for consultation proposed revisions to its competition law guidelines, related guidance and procedural rules (see note 5). Amendments have also been made to incorporate changes introduced by the Enterprise Act and to reflect experience in applying the Competition Act. The deadline for responses is 4 June 2004.

Also on May 1 the revised EC Merger Regulation and the revised Technology Transfer Block Exemption Regulation come into effect (see note 1 for the Commission's website link for further details).

NOTES 

1. Article 81(1) of the EC Treaty prohibits agreements which may affect trade between member states and which have as their object or effect the prevention, restriction or distortion of competition within the common market. However, an agreement which satisfies the conditions set out in Article 81(3) will not be prohibited under Article 81(1). Article 81(3) provides that an agreement is not prohibited if it:

'contributes to improving the production or distribution of goods or to promoting technical or economic progress, while allowing consumers a fair share of the resulting benefit, and which does not:

(a) impose on the undertakings concerned restrictions which are not indispensable to the attainment of these objectives;
(b) afford such undertakings the possibility of eliminating competition in respect of a substantial part of the products in question.'

Article 82 of the EC Treaty prohibits conduct which amounts to an abuse of a dominant position within the common market which may affect trade between member states.

See DG Competition website for further details.

2. The Chapter I prohibition and the Chapter II prohibition of the Competition Act 1998 are based on Article 81 and Article 82 of the EC Treaty respectively, and apply to anti-competitive practices which affect trade within the United Kingdom. The Government has prepared secondary legislation amending the Competition Act 1998 to reflect and facilitate the Modernisation changes and to harmonise national competition procedures. The draft secondary legislation amending the Competition Act 1998 is available from the HMSO website.

3. The sector regulators that have powers under the Competition Act 1998 concurrently with the OFT will also be responsible for enforcing Articles 81 and 82 in their sectors following the introduction of the Modernisation Regulation.

4. The European Competition Network (ECN) has been set up to facilitate close co-operation between the national competition authorities of the member states and the European Commission and to ensure an effective and consistent application of Articles 81 and 82.

5. Written comments on the consultation documents are welcomed. Where appropriate, respondents are asked to supply a brief summary of the interests and organisations they represent. The 16 documents that the OFT published for consultation on 7 April are: Modernisation (OFT442), The major provisions (OFT400a), Article 81 and the Chapter I prohibition (OFT401a), Article 82 and the Chapter II prohibition (OFT402a), Market definition (OFT403a), Powers of investigation (OFT404a), Concurrent application to regulated industries (OFT405a), Enforcement (incorporating the OFT's guidance as to the circumstances in which it may be appropriate to accept commitments) (OFT407a), Trade associations, professional bodies and self-regulating organisations (OFT408a), Assessment of conduct (OFT414a), Assessment of market power (OFT415a), Vertical agreements (OFT419a), Land agreements (OFT420a), Services of General Economic Interest Exclusion (OFT 421a), the OFT's guidance as to the appropriate amount of a penalty (OFT423a) and the Competition Act 1998 (Office of Fair Trading's Rules) Order 2004. The OFT's Guidance as to the circumstances in which it may be appropriate to accept commitments (annexed to Enforcement (OFT407a), the OFT's Guidance as to the appropriate amount of a penalty (OFT423a) and the Competition Act 1998 (Office of Fair Trading's Rules) Order 2004 require the approval of the Secretary of State prior to final publication.

Back to:2004