Do EU and U.K. Antitrust “Bite”?: A Hard Look at “Soft” Enforcement and Negotiated Penalty Settlements

• Published date: 01 September 2023
• DOI: http://doi.org/10.1177/0003603X231180245
• Author: Or Brook
• Date: 01 September 2023
• Subject Matter: Articles

https://doi.org/10.1177/0003603X231180245

The Antitrust Bulletin

2023, Vol. 68(3) 477 –518

© The Author(s) 2023

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DOI: 10.1177/0003603X231180245

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Article

Do EU and U.K. Antitrust “Bite”?:

A Hard Look at “Soft” Enforcement

and Negotiated Penalty Settlements

Or Brook*

Abstract

EU and U.K. antitrust are contingent upon rigorous enforcement and the imposition of sanctions.

Hard enforcement is key; antitrust loses its effect when it does not “bite.” Soft instruments (non-

adversarial, informal) and negotiated penalty settlements may be used, but authorities are expected to

exercise self-restraint. This article reveals that despite the prevalence of hard-enforcement rhetoric,

the vast majority of actions taken by the European Commission (1958–2021) and German, Dutch,

and U.K. antitrust authorities (2004–2021) were not fully adversarial. The hard-enforcement actions,

moreover, were confined to limited practices and sectors. Despite the prominence of non-fully

adversarial instruments in Europe, and in striking contrast to the United States, only limited attention

was devoted to their existence and implications. Urging to take a hard look at soft enforcement and

negotiated penalty settlements, the article systematically records the enforcement instruments and

their particularities, questions their effectiveness, and calls to align enforcement theory to practice.

Keywords

antitrust, hard enforcement, soft enforcement, negotiated penalty settlements

In October 2018, the (then vice) president of the General Court of the European Union (GC), Judge

Marc van der Woude, heavily criticized the Dutch competition authority for “losing its bite.”1 In a

speech in front of the Dutch Association of Competition Law, he noted that the authority has hardly

issued infringement decisions or imposed fines for (EU and national) antitrust infringements. Instead,

the authority devoted much of its efforts toward soft enforcement actions, such as issuing informal

opinions, warning letters, and negotiated remedies.

*Associate Professor, Competition Law and Policy and Deputy-Director, Centre for Business Law and Practice, University of

Leeds, Leeds, UK; Director, UK branch of the International Academic Society for Competition Law (ASCOLA), UK

Corresponding Author:

Or Brook, Associate Professor, Competition Law and Policy and Deputy-Director, Centre for Business Law and Practice,

University of Leeds, Leeds LS2 9JT, UK.

Email: o.brook@leeds.ac.uk

1180245ABXXXX10.1177/0003603X231180245The Antitrust BulletinBrook

research-article2023

1. Marc van der Woude, Ontwikkelingen Mededingingsrecht—Mededingingsbeleid en mededingingsrecht, Speech at the

Annual Conference of the Dutch Association of Competition Law (Oct. 4, 2018), http://www.congresmededingingsrecht.

nl/public/presentaties2018/opening_m_vd_woude.pdf. The speech was also cited by Eric van Damme, Mededinging en de

man-vrouw verhouding, (5) Markt en Mededinging, 181–183 (2018).

478 The Antitrust Bulletin 68(3)

2. Eur. Comm’n, Proposal for a Directive to Empower the Competition Authorities of the Member States to Be More Effective

Enforcers and to Ensure the Proper Functioning of the Internal Market, COM/2017/0142 final (Mar. 22, 2017) [hereinafter

ECN+ Directive Proposal], 16.

3. van der Woude, supra note 1, at 5.

4. As elaborated in Part II, the term soft enforcement is limited in this article to non-binding non-fully adversarial enforce-

ment actions directed at a specific anti-competitive behavior of specific firms. The article does not discuss soft law instru-

ments such as guidelines and notices, which are directed at abstract categories of anti-competitive conducts.

5. For definition and research design, see Part I.

6. See Parts III–V.

7. Council Regulation No. 1/2003, 2003 O.J. (L 1) 1 (on the implementation of the rules on competition in Articles 81 and 82

of the Treaty) [hereinafter Regulation 1/2003]. See Part III.C.

8. See Part III.C.

9. This lack was highlighted by CMA, Deterrent Effect of Competition Authorities Work, Literature Review 7.2–7.3 (2017)

[hereinafter CMA Deterrent Effect Report].

This overreliance on soft enforcement, the Judge maintained, goes against the very foundations of

the EU enforcement system. Referring to the ECN+ Directive Proposal,2 he observed that antitrust

rules “do not have teeth” where the European Commission (Commission) and national competition

authority (NCAs) do not impose effective sanctions for non-compliance. By neglecting to adopt formal

infringement decisions, the Dutch NCA marginalized its function and threatened its credibility.3

Yet, favoring soft over hard enforcement is far from being a unique Dutch phenomenon. This article

provides empirical evidence demonstrating that despite the strong prevalence of hard-enforcement

rhetoric in EU and U.K. antitrust, various European antitrust authorities, including the Commission

itself, have directed the vast majority of their enforcement efforts toward soft enforcement and non-

fully adversarial negotiated penalty settlements (that is, leniency and/or settlements).4 To this end, the

article surveys all of the published public enforcement actions of the European and national prohibi-

tions on anticompetitive agreements issued by the Commission (1958–2021) and the German, Dutch,

and British NCAs (May 2004–2021).5 It illustrates that while the enforcement is founded on a hard-

enforcement rhetoric, such strategy has become the exception. The enforcement overwhelmingly relied

on cooperation and negotiations between authorities and firms.

The predominance of non-fully adversarial enforcement may come as a surprise; modern EU and

U.K. antitrust systems are founded on a deterrence-based approach, assuming that law compliance is

to be achieved primarily by issuing infringement decisions and imposing high fines following an

adversarial process.6 Such a paradigm was an important driver behind the reform of EU antitrust

enforcement at the turn of the millennium. Abandoning the previous compliance-based approach,

Regulation 1/2003 calls to focus the Commission’s and NCAs’ scarce resources on pursuing and pun-

ishing the most serious antitrust violations and increasing the number of infringement decisions.7

At the same time, EU and U.K. antitrust laws provide only little guidance on the appropriate selec-

tion of enforcement targets and instruments. Antitrust authorities are generally not required to report

how they allocated their resources or justify their choices. Expected to exercise self-restraint, it is

assumed that authorities are not tempted to use non-fully adversarial instruments to gain short-term

benefits or to promote their reputation, rather than pursuing the long-term societal interest.8

Moreover, despite the central role of soft enforcement and negotiated penalty settlements in EU and

U.K. practice, thus far only limited attention was devoted to their study. In stark contrast with the exten-

sive attention given to hard enforcement, the existence and implications of the non-fully adversarial

instruments are underexplored and underreported. There has been little or no indication of how often

such enforcement instruments are being used, whether such instruments are becoming more or less

prevalent, what kind of cases they are being used in, and if and how the outcome of each case is

affected by the chosen instrument. Such indications are missing from the authorities’ annual reports,

the Commission’s reports assessing the functioning of the European Union’s multi-level enforcement

system, the discussion preceding the ECN+ Directive, and from academic literature.9 While the

Brook 479

10. Eva Lachnit, AlternAtive enforcement of competition lAw (Diss., Utrecht University 2016), 15, 17–18; Nicolas Petit &

Miguel Rato, From Hard to Soft Enforcement of EC Competition Law-A Bestiary of Sunshine Enforcement Instrument, IN

AlternAtive enforcement techniques in ec competition lAw 183 (Charles Gheur & Nicolas Petit, eds., 2008); Wouter P.

J. Wils, Settlements of EU Antitrust Investigations: Commitment Decisions under Article 9 of Regulation No. 1/2003, 20(3)

world compet. 345 (2006); Francisco Marcos, diminishing enforcement: negAtive effects for deterrence of mistAken

settlements And misguided competition promotion And AdvocAcy (IE Law School Working Paper AJ8-187-I, 2012),

https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2153894; Pablo Ibáñez Colomo, the shAping of eu competition

lAw (CUP 2018).

11. Heike Schweitzer, Commitment Decisions under Art. 9 of Regulation 1/2003: The Developing EC Practice and Case Law

(European University Institute Working Paper No. Law 2008/22, 2008), https://papers.ssrn.com/sol3/papers.cfm?abstract_

id=1306245, 11; Ian Forrester, Creating New Rules or Closing Easy Cases: Policy Consequences for Public Enforcement

of Settlements under Article 9 of Regulation 1/2003, 2008 eur. competition l. Ann. 637, 646 (2008); Florian Wagner–von

Papp, Best and Even Better Practices in Commitment Procedures after Alrosa: The Dangers of Abandoning the “Struggle

for Competition Law”, 49(3) common mArk. lAw rev. 929, 961–66 (2012); Luis Ortis Alfonso Lamadrid De Pablo,

EU Competition Law Enforcement Elements for a Discussion on Effectiveness and Uniformity, IN AnnuAl proceedings

of the fordhAm corporAte lAw institute 45, at 76–78 (Barry E. Hawk ed., 2012); Melchior Wathelet, Commitment

Decisions and the Paucity of Precedent, 6(8) J. eur. compet 553, 554 (2015); mAssimo merolA & denis f. wAelbroeck,

eds., towArds An optimAl enforcement of competition rules in europe: time for A review of regulAtion 1/2003?

65 (Bruylant 2010); Ben Van Rompuy, economic efficiency: the sole concern of modern Antitrust policy? non-

efficiency considerAtions under Article 101 tfeu 274 (Kluwer Law International 2012); Damien Gerard, Negotiated

Remedies in the Modernization Era: The Limits of Effectiveness, 2013 eur. competition l. Ann. 139 (2013); wolf sAuter,

coherence in eu competition lAw, 130, 286–87 (OUP 2016); Yane Svetiev, Settling or Learning: Commitment Decisions

as a Competition Enforcement Paradigm, 33(1) 466 yeArb. eur. lAw (2014).

12. Joseph C. Gallo et al., Department of Justice Antitrust Enforcement, 1955-1997: An Empirical Study, 17(1) rev. ind.

orgAn. 75 (2000); Richard A. Posner, A Statistical Study of Antitrust Enforcement, 13(2) J. lAw. econ. 365 (1970); John

M. Connor, Anti-cartel Enforcement by the DOJ: An Appraisal, 5(1) compet. lAw rev. 89 (2008); Joshua D. Wright &

Douglas H. Ginsburg, The Economic Analysis of Antitrust Consents, 46(2) eur. J. lAw econ. 245 (2018).

13. For an interesting discussion, see George Stephanov Georgiev, Contagious Efficiency: The Growing Reliance on US-style

Antitrust Settlements in EU Law, 4 utAh lAw rev. 971, 985–92 (2007).

14. pier luigi pArcu et al., eds., privAte enforcement of eu competition lAw: the impAct of the dAmAges directive 1–14

(Edward Elgar, 2018).

15. Jean François Laborde, Cartel Damages Claims in Europe: How Courts Have Assessed Overcharges, 3 concurrences 232,

236 (2021).

Commission’s growing reliance on soft enforcement and negotiated penalty settlements was observed,10

especially in connection to commitment decisions,11 only a few have systematically mapped the prac-

tice or evaluated its implications. Such studies, furthermore, focused on a single instrument or mostly

on EU-level enforcement by the Commission.

The limited debate over antitrust enforcement strategies is striking when compared with the vast

American scholarship on non-fully adversarial instruments.12 Soft enforcement and negotiated penalty

settlements have won fierce praise as well as strong criticism in the United States. Although the

American experience immensely inspired the development of the European instruments, it is not

directly transposable. Important differences remain in the practicalities of the instruments and the

broader enforcement environment.13 One key difference pertains to the role of private enforcement. In

the United States, public soft enforcement is accompanied by rigorous private hard actions. In the

European Union, by comparison, there is no possibility of bringing private actions in front of the EU

Courts. Despite the gradual increase in the number of private actions launched in front of national

courts,14 such actions are almost exclusively limited to follow-on cases relying on public enforcement

(98% of the cases as to 2021).15 Imposition of fines by the Commission and NCAs, therefore, is the

primary measure to ensure that EU and U.K. antitrust will “bite.”

This article offers four contributions. First, it explores the law enforcement theories guiding hard

and soft enforcement and negotiated penalty settlements. After presenting the methodology in Part

I, Part II discusses the risks and promises of each strategy. Part III focuses on the theory of EU

antitrust enforcement. It undercovers the transformation in the narrative and aims: the historical