The Constitutional Limits of EU Competition Law—United in Diversity

• Author: Chris Townley,Alexander H. Türk
• Published date: 01 June 2019
• Date: 01 June 2019
• DOI: 10.1177/0003603X19844626
• Subject Matter: Articles

Article

The Constitutional Limits

of EU Competition Law—

United in Diversity

Chris Townley* and Alexander H. Tu

¨rk*

Abstract

The allocation of legislative and executive competences in multilevel governance structures affects

who controls norms. Over the last two decades we see a general trend in EU law, towards “flexibility,

mixity and differentiation.” Yet many think that EU competition policy and enforcement marches to a

different tune. Competence is rarely discussed there and, when it is, most assume that uniformity is

desirable. This article discusses the EU constitutional system as it relates to competition policy and

enforcement. It investigates what choices the EU Treaties make about diversity. As with many constitu-

tional arrangements, the EU Treaties sometimes leave space for others to decide. In these spaces we

advocate answers, based on our understanding of the constitutional settlement between the EU and the

Member States.This has major implications for,amongst others: the Commission’s power to relieve the

Member States’ national competitionauthorities (NCAs) of their competence to apply Articles101 and

102 of the Treaty on the Functioning of the European Union (TFEU); the vires of EU merger control

outside of the remit of Articles 101 and 102 TFEU; Commission efforts to make the NCAs more inde-

pendent of political influence; andthe resolution of conflicts between EU and nationalcompetition rules.

Keywords

EU, European Union, competition law, antitrust, constitutional law, uniformity, diversity, competences

I. Introduction

Many national and EU competition decisions in Europe today have cross-border effects. The received

wisdom is that increasing uniformity in these assessments (and the way that they are performed) is

important.

1

Uniformity helps to provide legal certainty, achieve the internal market, and reduce

*King’s College London, London, UK

Corresponding Author:

Chris Townley, King’s College London, Strand, London, WC2R 2LS, UK.

Email: chris.townley@kcl.ac.uk

1. This is explicit in European Parliament, Resolution on the Commission White Paper on Modernis ation of the Rules

Implementing Articles 85 and 86 of the EC Treaty (COM(1999) 101 & C5-0105/1999 & 1999/2108(COS)) (1999) {6;

AG Maz´ak’sOpinion in Case C-375/09 Prezes Urz ˛edu Ochrony Konkurencji i Konsument´ow v. Tele2 Polska sp. zoo, now

Netia SA w Warszawie EU: C:2010:743 {14; Luis Ortiz Blanco & Alfonso Lamadrid de Pablo, EU Competition Law

The Antitrust Bulletin

2019, Vol. 64(2) 235-283

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compliance costs. This may imply that central decision making, or at least the uniform implementation

of a centrally generated competition policy, is good.

Yet competition assessments are riddled with value judgments (about goals, methods, procedures,

and institutional structures

2

). Monti reminds us that Member States have sometimes raised objections

based on competence issues in the competition field, especi ally where the Commission has been

driving towards liberalization (think of telecoms or energy markets) or acting in sensitive areas (such

as merger control), challenging Member States’ powers to undertake industrial policy, for example.

3

Different Member States (and their citizens) have different opinions on the appropriate balance

between competing values. There are also many other benefits of diverse policy-making in competi-

tion law, such as the positive impact that this can have on learning, in the longer term, or Hayek’s

knowledge problem.

4

This might mean that some Member State diversity is important, even in the application of Articles

101 and 102 of the Treaty on the Functioning of the European Union (TFEU) (these provisions can be

applied by the European Commission, as well as the Member States’ courts and competition

Enforcement: Elements for a Discussion on Effectiveness And Unifo rmity,in INTERNATIONAL ANTITRUST LAW &POLICY:

FORDHAM COMPETITION LAW, ch. 4, at 46–47 (2011); Firat Cengiz, Multi- Level Governance in Competition Policy: The

European Competition Network,35E

UR.L.REV. 661 (2010); ALISON JONES &BRENDA SUFRIN,EUCOMPETITION LAW (5th

ed., 2014); PHILIP LOWE,THE ROLE OF THE COMMISSION IN THE MODERNISATION OF EC COMPETITION LAW (2004); Koen Lenaerts,

Modernisation of the Application and Enforcement of European Competition Law: An Introductory Overview,in

MODERNISATION OF EUROPEAN COMPETITION LAW at 36–37 (2002); Giuseppe Tesauro, The Relationship Between National

Competition Authorities and Their Respective Governments in the Context of the Modernisation Initiative,in

CONSTRUCTING THE EU NETWORK OF COMPETITION AUTHORITIES at 273 (Claus Dieter Ehlerm ann & Isabela Atanasiu eds.,

2002); David Gerber, Modernising European Compe tition Law: A Developmental Perspective, 22 ECLR 12 2, 123–26

(2001); Suzanne Kingston, A “New Divisio n of Responsabilities” in the Proposed Regulation to Modernise the Rules

Implementing Articles 81 and 82 EC? A Warnin g Call,22E

UR.COMPETITION L. REV. 340 ( 2001); Alexander Schaub,

Modernization of EC Competition Law: Reform of Regulation No. 17,23FORDHAM INT’LL.J. 752, 764 (1999); and

Richard Whish, National Courts and the White Paper: A Commentary,in THE MODERNISATION OF EUROPEAN COMPETITION

LAW:THE NEXT TEN YEARS at 77 (Claus Dieter Ehlermann ed., 1999). Others seem to assume that uniformity is desirable,

RICHARD WHISH &DAVID BAILEY,COMPETITIONLAW at 288 (7th ed., 2012); John Temple Lang, The Duties of Co-operation of

National Courts Under European Union Law: Principles and Unresolved Issues,in LINCOLN’SINN LECTURES ON EUROPEAN

LAW AND HUMAN RIGHTS at 70 (Thomas Sharpe QC ed., 2012); OFT, Article 101(3) - A Discussion of Narrow Versus Broad

Definition of Benefits at 3 (Office of Fair Trading ed., 2010); JOANNA GOYDER &ALBERTINA ALBORS-LLORENS,GOYDER’SEC

COMPETITION LAW at 526 (5th ed., 2008); Ian Forrester, Diversity and Consistency: Can They Cohabit? in CONSTRUCTING THE

EU NETWORK OF COMPETITION AUTHORITIES at 342–43 (Claus Dieter Ehlermann & Isabela Atanasiu eds., 2002); Monti, in

EUROPEAN COMPETITION LAW ANNUAL 2002 - CONSTRUCTING THE EU NETWORK OF COMPETITION AUTHORITIES at 8 (Claus-Dieter

Ehlermann & Isabela Atanasiu eds., 2002); Mario Siragusa, The Commission’s Position Within the Network: The Perspective

of the Legal Practitioners,in CONSTRUCTING THE EU NETWORK OF COMPETITION AUTHORITIES at 33, 256–57 (Claus Dieter

Ehlermann & Isabela Atanasiu eds., 2002); Eur. Comm’n, Commission Explanatory Memorandum, Proposal for a Council

Regulation Implementing Articles 81 and 82 of the T reaty, 6–7, 14 (2000); and Hanns Nehl, Changes in Legi slation:

Constitutional Reform an d the Role of the Administrat or,in THE MODERNISATION OF EUROPEAN COMPETITION LAW:THE

NEXT TEN YEARS at 22–26 (Claus Dieter Ehlermann ed., 1999).

2. Superficially, there is a lot of agreement amongst competition officials, practitioners, and academics that the goals of the

competition rules should focus on consumer welfare. However, there is significant disparity in the way that competition

authorities in Europe interpret consumer welfare, such as whether to focus on short or long term gains; see,for example,NM

A

& ICN, COMPETITION ENFORCEMENT AND CONSUMER WELFARE:SETTING THE AGENDA (2011). In addition, the relevance of public

policy goals in competition law, such as employment and environmental considerations, is also treated in different ways

across the EU. For more details see CHRISTOPHER TOWNLEY,AFRAMEWORK FOR EUROPEAN COMPETITION LAW:CO-ORDINATED

DIVERSITY at introduction and Part A (2018). The reference to “methods” is about how best to achieve the competition law

aims, once these are clear.

3. GiorgioMonti, Legislative and Executive Competences in Competition Law,in THE QUESTION OF COMPETENCE IN THE EUROPEAN

UNION at 102 (Loı

¨c Azoulai ed., 2014).

4. TOWNLEY,supra note 2, at Part A.

236 The Antitrust Bulletin 64(2)

authorities).

5

Nevertheless, there must be some balance between coherence, as a basic condition for the

internal market, and respect for local preferences.

6

So, the allocation of competition competences in multilevel governance structures, like the EU, is

important. de B´

urca and Scott have said that, in the EU, there has been a lot of talk about “uniformity,

homogeneity and one-dimensional integration.” Yet since the 1990s, the focus is shifting more towards

“flexibility, mixity and differentiation.”

7

Such a change can be seen in the EU free movement rules,

economic policy, social policy, labor law, culture and environmental protection.

8

However, as we have

seen, this is not a story that we find in competition policy and enforcement in the EU. Competence in

this area is rarely discussed, and when it is discussed, most of the literature proceeds from the (often

unarticulated) assumption that uniformity is desirable.

9

Many saw competition as an area of shared

legislative competence before the Lisbon Treaty 2007.

10

There is a widespread belief that this treaty

shifted the entire competition field to an area of exclusive EU legislative competence, which would be

in line with a uniformity discource.

11

Despite this, the Member States still legislate on substantive and

procedural competition matters. This causes much confusion.

5. Ulf Bo¨ge, The Bundeskartellamt and the Competition Authorities of the German La

¨nder,in CONSTRUCTING THE EU NETWORK

OF COMPETITION AUTHORITIES at 167 (Claus Dieter Ehlermann & Isabela Atanasiu eds., 2002); John Fingleton, The

Distribution and Attribution of Cases Among the Members of the Network: The Perspective of the Commission/NCAs,in

CONSTRUCTING THE EU NETWORK OF COMPETITION AUTHORITIES 180 (Claus Dieter Ehlermann & Isabela Atanasiu eds., 2002);

Roland Sturm, Networking in Unchartered Territory: The Relationship Between the Members of the Network and Their

National Governments,in CONSTRUCTING THE EU NETWORK OF COMPETITION AUTHORITIES at 174 (Claus Dieter Ehlermann &

Isabela Atanasiu eds., 2002); although their focus is not disagreements on aims, but methods.

6. MAARTJE DE VISSER,NETWORK-BASED GOVERNANCE IN EC LAW at xxiii (2009); and TOWNLEY,supra note 2.

7. Gr ´ainne de B´

urca & Joanne Scott, Introduction,in CONSTITUTIONAL CHANGE IN THE EU: FROM UNIFORMITY TO FLEXIBILITY?at2

(Gr´ainne de B´

urca & Joanne Scott eds., 2000).

8. Id.;JohnDonahue&MarkPollack,Centralisationand Its Discontents:The Rhythms of Federalism in the UnitedStates and the

EuropeanUnion,in THE FEDERALVISION:LEGITIMACYAND LEVELS OF GOVERNANCE IN THE UNITEDSTATES AND THE EUROPEAN UNION at

110–11 (KalypsoNicolaı

¨dis & RobertHowse eds., 2001); Catherine Barnard,Flexibility and Social Policy,inCONSTITUTIONAL

CHANGE IN THE EU: FROM UNIFORMITY TO FLEXIBILITY? (Gr´ainne De B´

urca & Joanne Scott eds., 2000); Gr´ainne de B ´

urca,

Differentiationwithin the “Core”? The Case of the Internal Market,inCONSTITUTIONAL CHANGE IN THE EU: FROM UNIFORMITY

TO FLEXIBILITY?at 133–34, 140 (Gr´ainne De B ´

urca & JoanneScott eds., 2000); Jo Shaw, Constitutionalis m and Flexibility in t he

EU: Developinga Rational Approach,in CONSTITUTIONALCHANGE IN THE EU: FROM UNIFORMITYTO FLEXIBILITY? at 340 (Gr´ainne

De B´

urca & Joanne Scott eds., 2000);Stephen Weatherill, Finding Space for CloserCo-operation in the Field of Culture,in

CONSTITUTIONALCHANGE IN THE EU: FROM UNIFORMITYTO FLEXIBILITY? at 237–38 and 235–55 (Gr´ainne De B´

urca & Joanne Scott

eds., 2000);CATHERINE BARNARD &SIMON DEAKIN,MARKET ACCESSAND REGULATORY COMPETITION(Catherine Barnard & Joanne

Scott eds., 2001); Imelda Maher & Dermot Hodson, The Open Method as a New Mode of Governance: The Case of Soft

EconomicPolicy Co-ordination,39J.C

OMMON MARKETSTUD. at 719, 722 (2001);John Peterson & Laurence O’Toole,Federal

Governancein the United States and the EuropeanUnion: A Policy Network Perspective,inTHE FEDERAL VISION:LEGITIMACY

AND LEVELS IF GOVERNANCEIN THE UNITED STATES AND THE EUROPEAN UNION at 312 (KalypsoNicolaı

¨dis & Robert Howse eds.,

2001);and Peter Lindseth, Democratic Legit imacy and the Administrative Cha racter of Supranationalism: The Example of the

European Community,99C

OLUM.L.REV. 628 , 670–71 (1999).

9. Two excellent exceptions are Monti, supra note 3; and Yane Svetiev, Networked Competition Governance in the EU:

Delegation, Decentralisation, or Experimentalist Architecture? in EXPERIMENTALIST GOVERNANCE IN THE EUROPEAN UNION:

TOWARDS A NEW ARCHITECTURE (Charles Sabel & Jonathan Zeitlin eds., 2010).

10. Monti , supra note 3, at 105–11 (legislative competences) and 114–18 (executive competence); and LAURENCE IDOT,

L’APPLICATION DU PRINCIPE DE LA SUBSIDIARIT´eDANS LEDROIT DE LACONCURRENCE at 5 (Georg Ress & Torsten Stein eds.,

1993), except in relation to merger s and state aids; Lucia Serena Rossi, Does t he Lisbon Treaty Provide a Cl earer

Separation of Competences Between EU and Member States? in EU LAW AFTER LISBON at 99 (Andrea Biondi et al. eds.,

2012); Robert Schu

¨tze, Dual Federalism Constitutionalised: The Emergence of Exclusive Competences in the EC Legal

Order,32EUR.L.REV.3, 20 (2007); Armin von Bogdandy & Ju

¨rgen Bast, The Federal Order of Competences,in PRINCIPLES

OF EUROPEAN CONSTITUTIONAL LAW at 306–7 (Armin von Bogdandy & Ju

¨rgen Bast eds., 2011); and FIRAT CENGIZ,ANTITRUST

FEDERALISM IN THE EU AND THE US at 78–80 (2013).

11. See,e.g., Monti, supra note 3, at 106–7, and references made there; Robert Schu

¨tze, From Rome to Lisbon: “Executive

Federalism” in the (New) European Union, 47 CMLREV 1385 (2010); and Serena Rossi, supra note 10, at 99.

Townley and Tu

¨rk 237