Luxembourg: Reinforcement Of The Competition Council - Law Of 23 October 2011 On Competition

Last Updated: 26 April 2012
Article by Emmanuelle Ragot

Considering the new leverages which the Law confers to the Council, it seems that the legislator has approached a new level of competition enforcement, resulting in an increase in efficiency of the individual procedure as well as the tightening of the implementation of competition rules.

It is now possible for the Council to seize itself in competition matters; the delays between the seizure and the judgment will be considerably reduced.

Although the new standards ensure the rationalisation of the Competition authority and will be beneficial to the economy, the companies will have to face new hurdles, such as how to adopt an adequate solution in order to cope with the pressure evolving from the Council. The companies shall, therefore, develop strategies, such as evaluating of their own situation and thinking about how to handle situations like the potential arrival of a Council commissioner at their premises or how to draft a correct response towards a letter of information.

The Law of 23 October 20111 (The "Law") entered into force on 1 February 2012 and abrogated the laws of 11 March 2004 and 17 May 2004 on competition.

Indeed, the Law confirms:

  1. The main principles of competition law;
  2. The cartel prohibition listed in its article 3; and
  3. The prohibition of abuse of dominant position listed in its article 5.

A modification appeared to be necessary in order to reinforce the authority of the Competition Council and to extend its prerogatives.

The reform mainly reorganises the Luxembourgish competition authorities by merging the competition inspectorate (Inspection de la concurrence) with the Competition Council (Conseil de la concurrence), thus making one sole competent authority having both investigative and decision-making powers.

In fact, in governance of the law of 17 May 2004, the competition inspectorate was in charge of investigating any violation of the competition law; whereas, the Competition Council, which is an AAI (autorité administrative indépendante), had the power to sanction the infringements and make decisions.

Another principle of the Law is the extension of the powers and duties of the Competition Council (I).

The mission field of the Competition Council now expressly includes issuing opinions on draft laws and regulations. Further, it may conduct sector inquiries and define market circumstances which suggest that competition is restricted or distorted.

The Law also provides an amendment of procedural rules (II) aimed at improving the effectiveness of the action of the competition authority in individual procedures of research and assessing penalty against offenses.

In addition to this, the Law considers the competition legislation as an educational issue (III).

(I) Extension of the power of the Council

The Law aims at providing the Competition Council with all necessary means for identifying competition problems and the necessary instruments with which to seek remedy in case of competition risks.

After years of discussion on the ideal structure of a competition authority, the Law has decided on the fusion of the Council and the Competition Inspectorate.

The Council is now also able to lead sector inquiries as mentioned in article 30 of the Law. By application of this article, the Council is able to respond to evolutions which could be harmful to the freedom of commerce. If the Council assumes an anti-competitive evolution, it may now be able to investigate on a specific sector of the market. During such inquiry, the Council is allowed to require all necessary information from the concerning players related to article 3, 4 and 5 of the Law.

At the end of the inspection, the Council may publish the report of its research and invite other parties to share their opinion. If the inquiry reveals any inconsistencies in relation with anti-competitive behavior/conduct, it may launch an investigation on the grounds of article 10 of the Law, which enables the procedure of self-referral, as mentioned in part (II) or which enables the Council to seize itself for any matters of violation of the competition law.

Another feature of the Council is its advisory section, expressly mentioned in article 29. The Council may issue an advisory on its own initiative or upon the demand of the minister, for all questions in relation with competition.

The Council is consulted for future bills on competition or any regulations establishing a new legal framework. Such an intervention in the legislation process helps to promote the principles of competition among Luxembourg's economy. The know-how of the Council will be taken into account in order to adapt the legal system in terms of the market.

Not only is the Competition Council competent with regard to investigating infringements on the competition law, it is also capable of sanctioning any offenders. Furthermore, the Competition Council has the ambiguous mission of advising the legislator; thereby, it contributes to the development of the competition legislation.

(II) Procedural advancement

The main modifications of the Law are of a procedural nature. The main idea was to reinforce the effectiveness of the competition authority.

With separate powers and tasks, the former competition authorities failed to act appropriately in some cases: investigations took a long time, and not every violation was sanctioned. The Law seeks remedy to the impasse caused by this duality of authorities by merging the functions of both entities into the Competition Council.

Another consequence of the Law is the self-referral power that the Council has from now on. Article 6(5)(a) and 10 of the Law give the Competition Council the right to investigate violations of the law (article 3 to 5) on its own initiative. Article 10 states that the Council may intervene on its own initiative, on the demand of any interested person having a legitimate interest in the affair, or on the demand of the competent minister. However, the committal order (acte de saisine) must contain a detailed description of the alleged offenses and their constitutive elements.

This new application seems to be the solution for the numerous conflicts of interest that occurred between the Competition Council and the competition inspectorate in the past.

(III) Educational issue

Article 6(5)(d) of the Law states that the Competition Council may inform the companies through formal letters of orientation with regard to new issues of interpretation of the articles 3, 4, and 5 of the law. This procedure could be very helpful for the companies.

Footnote

1. Mémorial A dated 28 October  2011, n°218, pages 3756 et seq.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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