Decentralization of EC Competition Law Enforcement and Arbitration

8 Colum. J. Eur. L. 1 (2002)

Carl Baudenbacher. Prof. Dr. Jur., Judge of the Court of the European Free Trade Association, Professor at the University of St. Gallen, Visiting Professor at the University of Texas School of Law.

Imelda Higgins. Part-time Lecturer at University College Dublin, Student at the Honourable Society of King’s Inn, Dublin.


Pursuant to Article 81(1) (ex Art. 85) of the Treaty Establishing the European Community (TEC) and Article 81(2) (ex Art. 86) of the TEC, national courts may declare agreements void but have no power to grant an exemption pursuant to Article 81(3) of the TEC. However, under the so-called modernization project that has been proposed by the European Commission, Article 81 of the TEC will be applicable in its entirety by national competition authorities and national courts. This decentralization of competition law enforcement was initially presented in the Commission’s White Paper on the Modernisation of the Rules Implementing Articles 85 and 86. This White Paper was the subject of extensive discussion, and in September 2000, the Commission presented its proposal for a Council Regulation on this issue.

The introduction of a decentralized enforcement system will have significant implications for the application of the competition law provisions in the Member States. Indeed, this is one of the motivating factors behind the modernization project. As far as national courts are concerned, they will be assisted in their new enforcement tasks first by the European Court of Justice (ECJ) under the Article 234 (ex Art. 177) TEC preliminary reference procedure, and secondly by the introduction of new information and cooperation mechanisms that should allow the Commission to ensure uniform application. In this respect it appears that the Commission is worried that in and of itself Article 234 of the TEC will not be sufficient to ensure coherent application of the Community competition rules and the preservation of the unity of Community competition policy.6 Article 15(1) of the proposed Regulation therefore gives national courts the right to ask the Commission for information in its possession or for its opinion on questions concerning the application of the Community competition law rules. Pursuant to Article 15(3) of the proposal, the Commission is given the right to act as amicus curiae, i.e., to make (nonbinding) written or oral submissions to national courts on its own initiative. National courts are obliged to furnish upon request, at any time, relevant information pertaining to cases before them in which the Commission is considering making a written or oral submission or has decided to do so.

So much for the national courts. It is clear, however, that decentralization of competition policy will also have significant implications for arbitrators. Arbitration has become increasingly common as the preferred method of dispute settlement in the law of business transactions. Over the last decade, a revolution has taken place in international commercial arbitration, and there has been “an ever-broadening deferral of judicial authority to the emerging institutions of private justice. This holds true for the U.S.9 as well as for European countries. There is furthermore a clear trend toward “a-national” or “de-localized” international arbitration in Europe. As one commentator has stated:

It is possible to envisage an ideal world in which the country or place in which a particular arbitration is held makes no difference to the legal principles applied or the procedure followed. In such a world, the arbitral tribunal would be guided by an agreement of the parties, or failing such agreement, by its own judgement: it would decide the substantive matters in issue before it on the basis of the applicable law or legal rules or, if the parties so-wished, ex equo et bono; and it would make an award which was enforceable on the same conditions in any state in which the losing party had assets. Moreover, its award would be the same, uninfluenced by national laws or attitudes of mind, in whichever state the arbitral tribunal happened to sit for the purpose of conducting arbitration.”

Under the current system, it is well established that EC competition law disputes are arbitrable and that arbitrators are obliged to apply Articles 81(1) and 81(2) of the TEC in basically the same way as national courts. This obligation is to be deduced from the ECJ’s statement in Nordsee that “Community law must be observed in its entirety throughout all the territory of all the Member States; parties to a contract are not, therefore, free to create exceptions to it. One will also have to assume that an arbitrator may consider whether an alleged offense falls under a block exemption or may be given a negative clearance and express himself on the likelihood of an exemption if a respective request is pending.

Presumably, many of the same issues that have prompted the Commission to propose the introduction of assistance mechanisms for national courts will afortiori be problematic for arbitrators. Although arbitrators may arguably be in a better position than national courts to deal with complex economic issues, they may not be so adept at handling public policy issues. Nevertheless, no provision is made in the proposed Regulation for the Commission to provide assistance to arbitral bodies.

The position of arbitrators is further complicated by the fact that according to the case law of the ECJ, only certain types of arbitral bodies constitute “courts or tribunals” within the meaning of Article 234 of the TEC.5 Private arbitrators are excluded from making a reference, irrespective of whether they decide according to equity or law.

The purpose of this article is to consider whether the absence of an independent right of reference for private arbitrators is an obstacle to the consistency and uniformity of Community law, whether such a right should be introduced, and what form or forms such a right might take. The first section deals with the extent to which arbitration tribunals may, of their own right, make a preliminary reference. The second section analyses the rules applicable where questions of Community competition law arise before bodies that do not have a right to refer. On the basis of this analysis, the need for an independent right of reference for arbitrators will be considered. The third section will make some suggestions as to how such a right of reference might be granted.