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 annulment by the General Court of the European Commission’s decision to block the takeover of TNT by UPS. The Court found that the European Commission had infringed UPS’ rights of defense by not disclosing the final amendments to its econometric model to the parties. According to the Court, the EU regulator thereby committed an undeniable procedural error, infringing 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 economics evidence in administrative proceedings. They agree with the Court’s conclusion that the need to meet tight deadlines invoked by the European Commission does not have to hinder timely access to file. 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 because recent developments in the statistical and econometric methods have led to their increased application in merger control.

Positive Competition 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 for the need to scrutinize the economic analyses made by the Commission in the context of its investigations. Furthermore, they propose to implement several positive changes in 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, if requested by the parties, extend the Phase 1 and Phase 2 of proceedings. The current pre-notification procedure is inherently unequal as the merging parties are strongly encouraged to disclose their economic arguments while facing very limited transparency on the Commission’s thinking and approach. Such asymmetry can make parties excessively cautious to reveal their analysis as the Commission could turn it against them without giving the parties the opportunity to respond to its assessment of this evidence.
• Introduce an opportunity for a second submission from the parties after the reply to the Statement of Objection. This would follow a procedure akin to the traditional Court proceedings, where the parties can use a second round of pleadings to further develop their arguments or, alternatively, waive this right to speed up the process.
• Enhance 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 these changes would create incentives for the parties and competition enforcers to engage in a positive dialogue on substance early in the proceedings. This would enhance both the quality and the timeliness of merger control in Europe.
If you would like to discuss with the authors about their proposals, please feel free to contact them.

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