Failing Markets and sector inquiries BIICL Transatlantic Antitrust Dialogue, London, 1-2 May 2007 Frank Maier-Rigaud Directorate A, Policy and Strategic Support, DG Competition, European Commission

2 Failing Markets: Sector Inquiries?! What is a failing market? “What do you do if you know something is wrong in a market but you cannot get your hands on it, i.e. you cannot open a case?” Need for a pro-active enforcement tool that is capable of eventually giving effect to Article 81 and Article 82. Sector Inquiries are such a powerful tool Advocacy by-product: Create political momentum (on EU and MS level) & stimulate regulatory solutions A warning: "I suppose it is tempting, if all you have is a hammer, to treat every problem as if it were a nail" Abraham Maslow in: The Psychology of Science (1966:15-16)

3 Sector Inquiry as Enforcement Tool 1.How does the hammer look like? (legal basis, powers and scope of the instrument) 2. How do you recognize a nail? (when to deploy the sector inquiry instrument) 3. What does it mean to be in the hammering business? (resource implications etc.) 4. What else is in the toolbox? (situating the sector inquiry instrument; Commission has many tools)

4 What is a hammer? Legal basis, powers & scope “…the Commission may conduct its inquiry into a particular sector of the economy or into a particular type of agreements across various sectors. In the course of that inquiry, the Commission may request the undertakings or associations of undertakings concerned to supply the information necessary for giving effect to Articles 81 and 82 of the Treaty and may carry out inspections necessary for that purpose.” Article 17 Regulation 1/2003 Except for Article 21 (Inspection of other premises) all powers available in the context of a case investigation apply, i.e. requests for information (18), power to take statements (19), power of inspection COMP (20) and NCA (22), periodic penalty payments (24) and fines (23).

5 How do you recognize a nail? A sector inquiry is useful in priority sectors: if not enough evidence is available to open individual cases but investigative powers are needed in complex sectors where competition problems of different levels interact if collusion is not suspected if political momentum is needed if a regulatory failure exists (externalities across MS; no regulator) If there is a link between antitrust and other Commission policies (by-product: evidence that can be put to use by NRAs, other DGs and governments)

6 What does it mean to be in the hammering business? Very resource intensive tool: Design appropriate questions Consult on the appropriateness of questions Determine addressees Send out questions and administer replies Evaluate responses Recontact firms for clarification Analyze data Formulate conclusions Organize public hearing Publish report Communication intensive tool: Close cooperation with other DGs Involvement of NCAs and NRAs Staff exchange (seconded national experts)

7 What else is in the toolbox? Sector inquiries are a very specific and resource intensive enforcement tool Important to know when the sector inquiry tool should be the preferred instrument & can appropriately and effectively deployed Sector inquiries can be very effective catalysts For comlex cases (EU or NCAs) For initiating or supporting other Commission initiatives (SANCO, TREN or MARKT) For regulatory measures by governments or NRAs In that sense the hammer analogy holds: sector inquiries are a powerful tool but not every competition problem comes in the form of a nail.

8 Conclusion Preemption of Maslow If I had a hammer I'd hammer in the morning I'd hammer in the evening All over this land … song written by Pete Seeger and Lee Hays (The Weavers) in 1949Pete SeegerLee Hays follow up: > 8 cases in energy; possibly involving structural remedies wider measures outside antitrust on a European and National level for instance consumer protection aspects in financial services.