81 st Lunch Talk of the Global Competition Law Center Markus Röhrig – April 28, 2016 The ECN+ Initiative: Outcome and Challenges of the Commission Consultation

Background, Purpose and Scope of Consultation Create a truly common competition enforcement area and a level playing field for companies throughout the EU Focus on identifying and remedying a perceived lack of NCAs’ enforcement powers Areas of potential concern -Resources and independence of the NCAs -Adequate competition toolbox -Effective fines on companies -Leniency programs Due process and rights of a defense remain out of scope 2

The German NCA – Bundeskartellamt (BKartA) Resources, Independence Quasi-judicial structure Independent decision divisions (Beschluss- abteilungen), shielded from political influence Staff c. 350; budget c. 28m € (2014) Active role in competition advocacy 3 Effective Fines Fines up to 10% of the group-wide turnover Specific rules on parental liability, succession, setting the level of fines Competition Toobox Investigations target individuals, companies; at least technically individuals are primary targets Administrative fines have a quasi-criminal nature in Germany BKartA generally has the same investigative powers as a public prosecutor Leniency Program Highly effective leniency program introduced in 2000, substantially revised in 2006

Broadining the Scope of the Commission‘s Review Strengthening Due Process and Rights of Defense Within the enforcement framework established by Regulation 1/2003 -It is for the Member States to designate the national enforcement authorities and the procedural rules under which they conduct their enforcement activities -Subject to the obligation to ensure that the EU competition laws are effectively complied with However, Member States also need to ensure that fundamental rights are observed (see ECJ, Case C-439/08 – VEBIC) Due process and rights of defense addressed in 2014 Commission Staff Working Paper and 2013 ECN Recommendations, but not pursued in the consulation process Broadening and re-focusing the review of the existing enforcement mechanism -Consult with NCAs and other stakeholders to what extent NCAs give full effect to due process and rights of defense -Consider whether the Commission can learn anything from the NCAs‘ so as to further improve its own enforcement regime -Be mindful of the principle of subsidiarity and national enforcement traditions 4

Some Scope for Improvement... On-site Inspections Germany Officials are allowed to enter all rooms and seize documents / digital data Paper documents are seized (entire binders), only limited possibility to make copies Cursory review of binders may be possible at the end of the inspection Only summary of seized documents and devices listed in dawn raid protocol Rather in-transparent process which limits rights of defense, no obligation to cooperate But search warrant issued by court needed, thus judicial safeguard part of the process prior to inspection Commission Investigators are allowed to enter all rooms and copy documents / digital data Page-by-page review of documents; only copies are taken Selected documents are made available for review prior to conclusion of on-site visit Detailed dawn raid protocol, copy of electronic data More transparent process, allows companies to prepare their defense more swiftly But inspection based on decision issued by Commission, lack of ex ante judicial review and safeguards 5 Make available copies of doc‘s Improve instructions during inspection

Some Scope for Improvement... Review of Digital Evidence Germany Officials may seize hardware; devices (phones, laptops) are returned a few days after hard drives have been copied Investigators will generally search data at the BKartA’s premises; outside-counsel has no right to attend the screening (in exceptional circumstances the BKartA will agree to counsel being present) Search terms are provided when the investigation has been completed Less transparent process, with limited ability of counsel to enforce rights of defense if necessary Commission No right to seize hardware, only right to make copies; companies receive an identical copy of the data carrier which contains selected documents Officials generally screen electronic data on undertaking’s premises; post-inspection review of digital data is the exception (sealed envelope procedure applies); outside-counsel has right to attend More transparent process; more efficient safeguards to ensure compliance with legal privilege 6 Screening on-site

Some Scope for Improvement... Legal Privilege and Access to file Germany Legal privilege does generally not apply Only communication between outside counsel and client after initiation of specific proceedings is protected; communication between outside counsel and client prior to inspection unlikely to be privileged Communication of in-house counsel generally not privileged Access to file granted to un-redacted file to outside counsel Commission Communication between outside EU counsel and client is privileged; also communication in which in-house counsel forwards and explains advice of outside counsel Communication is protected irrespective of whether it occurred prior to or after the Commission had launched an investigation Communication of in-house counsel generally not privileged Access to file granted to a redacted file 7 Uniform rules on legal privilege In-house counsel

Conclusions In order to create a genuinely level playing field the ECN+ initiative should be extended to a review of the state-of-play with respect to due process and rights of defense The Commission should continue close discussions with NCAs to learn from their experience and be open to adopt changes to its own investigative and enforcement powers. 2. Ten years after the entry into force of Regulation 1/2003, there is certainly scope, and indeed need, to strengthen companies’ fundamental rights in competition law proceedings, both at the NCA and at the Commission level. 3.