19 November 2020

EU Competition Policy

The European Court of Auditors' report The Commission’s EU merger control and antitrust proceedings: a need to scale up market oversight states 

I The Treaty on the Functioning of the European Union protects fair competition of companies in the EU internal market and in the interest of consumers. To this end, the Commission enjoys significant investigative and decision-making powers whereby it can prohibit anti-competitive agreements between companies or act against companies that abuse their position in the internal market (known as "antitrust proceedings"). The Commission also reviews larger concentrations of companies for their impact on competition in the internal market (known as "merger control"). 

II Both the Commission and the national competition authorities (NCAs) in the EU Member States can directly enforce EU competition rules in antitrust cases affecting trade between Member States. The Commission has defined criteria for allocating cases between the Member States and the Commission. 

III This is the first audit we carried out on the Commission’s role as enforcer in the areas of merger and antitrust. Over the last 10 years, EU competition enforcement has experienced significant changes in market dynamics and been at the centre of public interest and debate. In our audit, we looked at whether the Commission, through its Directorate General for Competition, enforced EU competition rules in its merger control and antitrust proceedings well. To this end, we examined the Commission’s detection and investigation capacity, and how it used its enforcement powers in merger control and antitrust proceedings. We also examined how the Commission cooperated with the NCAs, how it reported on the results of its enforcement activities, and how it received feedback. Our report highlights issues which may have an impact on the Commission’s success now and in the future. 

IV We found that overall the Commission made good use of its enforcement powers in merger control and antitrust proceedings and addressed competition concerns with its decisions. However, improvements are necessary in a number of areas. 

V In order not to depend solely on complaints received, the Commission acted on its own initiative to identify problems potentially affecting the internal market. However, it did not invest appropriate resources in monitoring markets. Incentives put in place to encourage self-reporting of cases worked but numbers have fallen since 2015. By prioritising cases, the Commission allocated resources to relevant investigations but this was not based on a clear weighting of criteria ensuring the selection of cases with the highest risk. 

VI Merger control absorbed a substantial part of the available resources. The Commission successfully applied a simplified procedure but still needs to act upon further streamlining measures. We also found that the turnover-based thresholds used for deciding whether a transaction would affect competition in the internal market may not ensure that all significant transactions are subject to the Commission’s review. 

VII The Commission’s antitrust decisions addressed competition concerns but investigations were generally lengthy. As antitrust enforcement only takes place after a competition problem has arisen, the duration of the proceedings might negatively affect the effectiveness of the decisions. The Commission took action to speed up its antitrust proceedings but also had to cope with complex investigations. This was particularly the case for the new digital markets where traditional assumptions of effective competition needed to be adapted and where the effectiveness of the existing legal tools for intervention had to be evaluated. The Commission has also not yet updated its guidelines and notices to improve legal certainty for companies active in these markets and to support the NCAs in their own decision-making. 

VIII Effective enforcement requires deterrent fines. The level of the fines imposed by the Commission for the infringement of competition rules is among the highest in the world. However, the impact of large fines depends on the size of the companies concerned, the probability that infringements are detected, the potential for profits associated with the infringements, and the duration of the Commission’s investigations. So far, the Commission has not evaluated the deterrent effect of its fines. 

IX NCAs take most of the decisions in cases where EU antitrust rules apply. The NCAs and the Commission cooperated well in the European Competition Network, with the exception of market monitoring and enforcement priorities which had not been closely coordinated. A mechanism for efficient allocation of antitrust cases between the Commission and NCAs was not used in an optimal way 

X The Commission defined the objectives to be achieved only in a very general way. Along with a lack of suitable data to monitor results, this made it challenging to assess the performance of the enforcement activities. Although ex post evaluations of the effectiveness of its work would support better decision-making and better allocation of resources, the Commission did not regularly carry them out. The Commission’s reporting on the results of its enforcement action still focuses on activity rather than on impact and there is currently no regular, independent assessment of the performance of competition authorities in the EU. 

XI We make a number of recommendations that aim at strengthening the Commission’s capacity to

  • increase the probability of detection of infringements; 

  • increase the effectiveness of competition enforcement; 

  • use the potential of the European Competition Network better; and 

  • improve performance reporting.