Due process has been erroneously considered to be an obstacle to effective competition enforcement. In a recent article in the Journal of European Competition Law & Practice, Positive Competition experts Aleksandra Boutin, Xavier Boutin and Tamara Nicolaescu  share ideas on how to improve the quality, timeliness, predictability, transparency and fairness of merger proceedings in Europe – all at once.

Back in January 2019, the Court of Justice of the European Union upheld the General Courts annulment of the European Commission’s decision to block the acquisition of TNT by UPS. The Court found that the European Commission had violated UPS’ rights of defence by not disclosing the final changes to its econometric model to the parties. According to the Court, the EU regulator thus committed an undeniable procedural error, infringing on the parties’ fundamental rights to a fair hearing.

In a recent article published in the Journal of European Competition Law & Practice, the authors review the main findings of the COJ’s judgment regarding the use of economic evidence in administrative proceedings. They agree with the Court’s conclusion that the need to comply with the tight deadlines invoked by the European Commission need not to prevent timely access to files. For merger proceedings to be fair and efficient, companies should be given sufficient time to replicate and critically assess the Commission’s economic analysis, at a point in time when they can still influence the administrative proceedings. This is particularly important as recent developments in the statistical and econometric methods have led to their increased application in merger control.

Positive Competition’s experts highlight the importance of the COJ’s judgment as it enhances procedural standards for due process in administrative proceedings. The authors welcome the Court’s recommendation to scrutinise the economic analyses by the Commission in the context of its investigations. Furthermore, they propose to implement several positive changes to the current merger control framework that would allow for a more constructive, evidence-based dialogue between enforcers, merging parties and competition practitioners:

• Shorten the pre-notification phase and instead extend Phase 1 and Phase 2 of proceedings at the parties’ request. The current pre-notification procedure is inherently asymmetrical given that the merging parties are strongly encouraged to disclose their economic arguments while they are subject to very limited transparency over the Commission’s reasoning and approach. This asymmetry can make parties overly cautious about disclosing their analysis as the Commission could turn it against them without allowing the parties to respond to its assessment of this evidence.
• Introduce an opportunity for the parties to make a second submission after responding to the Statement of Objection. This would follow a procedure similar to traditional court proceedings, where the parties could use a second round of pleadings to further develop their arguments or, alternatively, waive this right to speed up the process.
• Strengthen the role of the Commission’s oral hearings where both the Commission’s and the parties’ experts can be cross-examined on equal terms, with respect to the substantive arguments of their competitive assessments.

The authors believe that these changes would create incentives for the parties and competition enforcers to engage in a positive dialogue at an early stage of the procedure. This would improve both the quality and the timeliness of merger control in Europe.

If you would like to discuss the proposal with the authors, please do not hesitate to contact them.

Please visit the JECLP’s website to read the full article.