ERU, Alm.del - 2019-20 - Bilag 342: EMs notat samt høringssvar vedr. Kommissionens foreløbige konsekvensanalyse af at introducere et "New Competition Tool", fra erhvervsministeren

Erhvervsudvalget 2019-20
ERU Alm.del Bilag 342
Offentligt

29. June 2020

Inception Impact Assessment for a New Competition Tool (‘NCT’).

Danish Comments.

The Danish Government appreciates the opportunity to comment on the EU

Commission’s Inception

Impact Assessment for a New Competition Tool

(‘NCT’).

The Danish Government supports the general objective of the proposed

legislative initiative, which consists in ensuring fair and undistorted com-

petition in the single market. We believe that a fair and effective competi-

tion policy is a cornerstone of the single market and a pre-requisite to bol-

ster EU global competitiveness in the future.

Furthermore, the Danish Government considers the current competition

framework effective in terms of handling anti-competitive behaviors in the

platform economy, but recognizes that there is a need to update elements

of the competition framework in order to ensure even stronger enforcement

in the digital age. In this sense, it is important to evaluate the opportunity

to introduce policy options beyond traditional competition rules, especially

when the existing legal framework is considered insufficient in term of han-

dling the emergence of new structural competition problems, or at least to

address them in an effective manner.

However, the Danish Government highlights the need to prevent overlaps

between traditional competition enforcement, ex ante regulatory frame-

work and the New Competition Tool. Therefore, the Commission should

make clear in the impact assessment

there are overlaps and

where

these

exist. The Commission should also put forward suggestions on how to

solve those overlaps and be willing to abandon one or more of the initia-

tives. In this regard, the Danish Government highlights the need for careful

coordination between the impact assessments led by DG GROW, DG

CNECT and DG COMP.

The Danish Government perceives the proposed New Competition Tool as

a substantial innovation in the enforcement of EU competition law, as the

Commission would be able to intervene

ex ante

against certain market

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structures or perceived market failures and to impose remedies without the

need to prove any infringement of competition rules.

NCT would thus alter the traditional

ex post

paradigm that has character-

ized EU competition law enforcement over the past 60 years. Therefore,

the Danish Government believes that such significant enlargement of the

Commission’s power of intervention has to come with adequate

procedural

safeguards and proportionality checks. Furthermore, we invite the Com-

mission to evaluate the likely impact of the proposed New Competition

Tool on fundamental rights and due process, and to clarify the level of en-

gagement of the involved undertakings and National Competition Author-

ities (NCAs).

Danish Government encourages an attentive consideration and further clar-

ification of five main aspects relating to the New Competition Tool,

namely: i) the scope of application; ii) the threshold test for initiating an

investigation; iii) procedural safeguards and fundamental rights; iv) the im-

position of remedies; v) the interaction with other policy instruments and

NCAs.

1. The scope of application

The Danish Government invites the Commission to clarify the possible

scope of application of the New Competition Tool and the four policy op-

tions envisaged by the Commission to adopt either a

horizontal

(Options 1

and 3) or a

limited

(Options 2 and 4)

scope of application.

In option 1 and

3, the New Competition Tool would be applicable across all sectors, while

options 2 and 4 would be triggered only in presence of characteristics like

extreme economies of scale and scope, strong network effects, zero pricing

and data. While these characteristics can produce very efficient companies,

they also may favor a decrease in competition and “winner-takes-most”

scenarios, and are typical of digital and digitally-enabled markets.

In our view, the Commission should provide a sound justification for ex-

panding the use of the New Competition Tool across the entire economy.

In fact, albeit extreme economies of scale, data dependency and strong net-

work effects could also emerge in traditional markets, the presence of such

features appears to be less pervasive than in digital industries.

2. The applicable test for initiating an investigation

The Danish Government urges the Commission to clarify the threshold test

for triggering a market investigation. Particularly, in case of a market struc-

ture-based competition tool (Options 3 and 4), the Commission should de-

lineate the

type of structural problems

that the New Competition Tool

could tackle. The Commission should also explain its use in case of tacit

collusion - a situation that does not need to involve any collusion in the

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legal sense or communication between the parties - which usually falls out-

side the reach of EU competition law.

Further, it should be noticed that the concept of dominance, often identified

through market shares, comes with the benefit of increasing legal certainty

and predictability, since it is easier for companies to assess whether they

are dominant and thus potentially the target of an investigation. This in-

creases business trust and, arguably, the willingness to invest. The Danish

Government encourages the Commission to evaluate the effect that a mar-

ket structure-based competition tool (Option 3 and 4) could have on invest-

ment and innovation incentives, especially where an undertaking, notwith-

standing the absence of any infringement, could be imposed significant

remedies such as divestiture of assets or structural separation.

3. Procedural safeguards and fundamental rights

The Danish Government invites the Commission to clarify the level of en-

gagement accorded to the undertakings active on the market concerned, es-

pecially with regard to their rights of defense and the right to judicial re-

view. In this sense, the Commission should clarify whether the New Com-

petition Tool will allow e.g. to conduct oral hearings, thus giving the pos-

sibility

to an undertaking to respond to the Commission’s findings. Fur-

thermore, the Commission ought to explain several aspects relating to the

proposed new legislative initiative, including whether the Commission will

launch this instrument ex officio or also in response of complaints, or which

traditional investigative and enforcement tools can be used (e.g. unan-

nounced inspections or interim measures).

4. The imposition of remedies

The Danish Government urges the Commission to cast light on the legal

standard adopted for the imposition of remedies. Particularly, the Commis-

sion should clarify what will trigger such intervention (e.g.

actual

po-

tential

anti-competitive effects, or rather

an “adverse

effect on competition”

such as in the UK).

Furthermore, the Commission needs to identify the range of available rem-

edies that it is willing to adopt, and the circumstances which make it pos-

sible to apply a structural (e.g. forced divestitures) rather than a behavioral

remedy (e.g. transparency obligations or codes of conduct). Further ques-

tions revolve around the role of the Commission in overseeing the imple-

mentation of the remedies adopted; the possibility to impose fines in case

of an undertaking not compliance with the remedy imposed; and the possi-

bility to review a remedy in case of new market circumstances.

5. The interaction with other policy instruments and NCAs

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The Danish Government encourages the Commission to provide clear in-

dications with regard to the interaction of the New Competition Tool with

existing competition policy tools. In fact, besides situations of potential en-

forcement gaps, there are circumstances where the New Competition Tool

could overlap with other existing tools. This includes the presence of a

highly concentrated market, which could be investigated through a tradi-

tional sector inquiry. Furthermore, in case of a dominance-based competi-

tion tool (Options 1 and 2), a unilateral behavior by a dominant undertaking

could be addressed under Art.102 TFEU. The Commission should thus fur-

ther clarify the kind of problems for which the New Competition Tool has

been designed, and how it intends to prioritize its use over other possible

enforcement tools.

Finally, the Danish Government invites the Commission to consider care-

fully firstly, whether the exercise of the New Investigative Tool will over-

rule NCAs’ power to act, and secondly, whether in case of effects on trade

between member states, NCAs could apply this same tool at national level,

also taking into consideration its possible impact in terms of fragmentation.

We hope these comments will be useful for your further work. The Danish

Ministry of Industry, Business and Financial Affairs would be at your disposal

to further elaboration or any follow-up questions you may have.