CONTAGIOUS EFFICIENCY: THE GROWING RELIANCE ON U.S

CONTAGIOUS EFFICIENCY: THE GROWING RELIANCE ON U.S.-STYLE ANTITRUST

SETTLEMENTS IN EU LAW

George Stephanov Georgiev*

This paper analyzes the impact of the introduction of U.S.-style antitrust settlement procedures in EU law, which occurred in 2004 as part of an ambitious antitrust modernisation program. After documenting the lack of a settlement tradition in EU law or the legal systems of EU member states, I argue that the new procedures were transplanted without sufficient tailoring. Relying on lessons from the longstanding U.S. experience with antitrust settlements and on original evidence from the EU’s own approach since 2004, I analyze the effects from the introduction of settlements at three interconnected levels of antitrust enforcement: at the EU level, at the member state level, and at the level of transatlantic antitrust cooperation. I find that the use of settlements leads to distortions in enforcement incentives, that it threatens to shift the EU system towards further bureaucratization, and that it is interfering with many of the original goals of the antitrust modernisation program.

* J.D., Yale Law School, June 2007. For helpful comments and discussions, I thank Alvin Klevorick, Peter Oliver, Russell Pittman, Susan Rose-Ackerman, and James Q. Whitman. Parts of this project were funded by research grants from the Yale EU Studies Program and the Yale Center for Law, Economics, and Public Policy. An expanded version of this paper will appear as an article in the December 2007 issue of the Utah Law Review. Except where otherwise noted, the paper describes institutional practices and the state of the law as of August 31, 2007. Any errors or omissions are my own. Contact information: [email protected].

TABLE OF CONTENTS: I. INTRODUCTION ........................................................................................................ 1

II. THE EVOLVING STRUCTURE OF THE EU ANTITRUST REGIME................ 4 A. THE ORIGINAL DESIGN OF EU ANTITRUST LAW............................................................... 5 B. MODERNISATION THROUGH TAILORED TRANSPLANTATION............................................. 7

1. The Road to Modernisation.................................................................................... 8 2. The Modernisation Package and Its U.S. Sources................................................ 10 3. Tailored and Untailored Legal Transplants.......................................................... 12

III. ANTITRUST SETTLEMENTS IN EU LAW: HISTORY, SOURCES, AND CURRENT USE ......................................................................................................... 16

A. SOURCES IN NATIONAL AND EU LAW............................................................................. 16 B. AD HOC SETTLEMENTS UNDER REGULATION 17/62 ........................................................ 18 C. THE COMMISSION’S USE OF U.S.-STYLE SETTLEMENTS SINCE 2004 .............................. 20

1. Legal Basis and U.S. Parallels ............................................................................. 20 2. The Commission’s Application of the New Provisions ....................................... 23

IV. ANTITRUST SETTLEMENTS IN U.S. LAW......................................................... 28 A. THE HISTORY AND STRUCTURE OF THE U.S. FRAMEWORK............................................. 28 B. THEORETICAL VIEWS ON SETTLEMENTS IN U.S. LAW..................................................... 33

V. EFFECTS OF THE RELIANCE ON U.S.-STYLE ANTITRUST SETTLEMENTS IN EU LAW: THREE DIMENSIONS ....................................... 34

A. ANTITRUST ENFORCEMENT AT THE EU LEVEL ............................................................... 34 1. Diminished Transparency .................................................................................... 34 2. Reduction of Legal Certainty ............................................................................... 37 3. Systemic Implications .......................................................................................... 38

B. ANTITRUST ENFORCEMENT AT THE MEMBER STATE LEVEL ........................................... 44 C. TRANSATLANTIC ANTITRUST COOPERATION .................................................................. 45

VI. A CAUTIONARY NOTE........................................................................................... 47 A. CONTAGIOUS EFFICIENCY AND UNTAILORED TRANSPLANTATION ................................. 47 B. REVISITING THE GOALS OF MODERNISATION.................................................................. 48 C. RECALIBRATING BENEFITS AND COSTS........................................................................... 50

VII. CONCLUSION ........................................................................................................... 51

Contagious Efficiency: The Growing Reliance on U.S.-Style Antitrust Settlements in EU Law 1

I. INTRODUCTION The European Commission, the executive arm of the European Union, has had the

power to enforce the antitrust provisions of the EU Treaty since 1962,1 but procedures for the settlement of antitrust cases were not a part of EU legislation until May 1, 2004, when Council Regulation 1/2003 entered into force.2 For the 42 intervening years, relatively few EU antitrust investigations ended with the extraction of informal commitments rather than by full-fledged adjudication, and the procedures governing those settlements were entirely ad hoc. This marked a key difference between the EU antitrust enforcement regime and that of the United States, where over 95 percent of antitrust cases are settled via consent decrees. A distinct invention of American law, consent decrees do not represent an adjudication on the merits, but instead close a case by negotiating certain concessions and by noting that the party under investigation denies any substantive allegations of wrongdoing. In the United States, settlements have come to be viewed as one of the cornerstones of the modern regulatory state; they represent a reflection of the need for a balance between full-fledged adjudication and administrative efficiency.3

The set of procedures governing antitrust settlements in the European Union was introduced as part of a much larger overhaul of EU competition law,4 usually referred to as “modernisation.”5 During the forty months in which the new settlement mechanism has been available, the European Commission has employed it in thirteen cases, and there are indicators suggesting that settlements will become more widespread in the future. The most commonly cited advantages of the new procedure are all motivated on efficiency grounds; they include the better use of limited administrative resources, the ability to conclude open investigations in a much quicker and less procedurally constrained fashion, and availability of more creative and effective remedies.6 Despite such advantages, however, the European Commission’s application of the settlement procedures thus far raises a number of questions about the desirability of settlements and about their interaction with other aspects of EU competition

1 Council Regulation (EEC) No. 17/62, 13 J.O. 204 (1962), O.J. Eng. Spec. Ed. 1959-62, at 87. 2 Council Regulation (EC) No. 1/2003 on the implementation of the Rules on Competition laid down in

Articles 81 and 82 of the Treaty, 2003 O.J. (L 1) 1. The Regulation uses the term “commitments” instead of settlements. See Part III(C) infra.

3 See, e.g., David Luban, Settlements and the Erosion of the Public Realm, 83 GEO. L.J. 2619 (1995) (arguing that an accelerated adjudication rate is unsustainable because of the confusion and bad law that would result).

4 The paper uses the terms “antitrust law” and “competition law” interchangeably. 5 See Mario Monti, EU Competition Policy After May 2004, in 2003 ANNUAL PROCEEDINGS OF THE

FORDHAM CORPORATE LAW INSTITUTE 403-13 (Barry Hawk ed., 2004). 6 See Christopher J. Cook, Commitment Decisions: The Law and Practice Under Article 9, 29(2)

WORLD COMPETITION 209 (2006).


law.7 The European Court of First Instance (CFI) began to answer some of these questions in a July 2007 ruling,8 but the vast majority of them have not been examined on a systemic level or in a comparative dimension.

The newly-introduced settlement provisions, along with the vast majority of legal innovations in the 2004 modernization package bear remarkable resemblance to equivalent provisions in U.S. antitrust law. Even though no scholar has yet identified them as such, they are legal transplants, products of a process defined as “the moving of a rule or system of law from one country to another.”9 U.S. antitrust law was an attractive source of borrowing because of its perceived effectiveness and its closer alignment with modern economic theories placing efficiency at the center of competition policy. A number of developments in EU law prior to the introduction of the modernisation package suggested that the EU antitrust regime should move precisely in the direction of greater efficiency.10

Most legal transplants introduced as part of the modernisation program were subjected to advance discussion and were carefully tailored to fit the structural and historical idiosyncrasies of EU law. For various reasons, a few transplants were imported without much careful forethought; the new settlement provisions belong to this second group. There, the lure of greater administrative efficiency might have blinded the Commission into proposing legal rules that are poorly-suited to the EU context and that will have far-reaching negative effects on several levels.

The lack of tailoring ignored the longstanding U.S. experience with settlements. Over the past one hundred years,11 settlements have become a key element of the U.S. antitrust enforcement regime and have commanded both praise and criticism. Even though settlements in general have sometimes been condemned as “a capitulation to the conditions of mass society [that] should be neither encouraged nor praised,”12 in the antitrust context, they have helped strike a dynamic and useful balance between public and private enforcement. The current U.S. settlements framework is the product of this longstanding experience. It started as

7 For ease of reference and consistent with common practice, this paper uses “European Union law”

instead of “European Community law,” even though antitrust law technically falls in the latter category.

8 See Case T-170/06, Alrosa v. European Commission, Judgment of the Court of First Instance of July 11, 2007; available at www.curia.eu.int [hereinafter Court of First Instance, Alrosa Judgment]. An appeal is pending at the ECJ (Case C-441/07).

9 ALAN WATSON, LEGAL TRANSPLANTS: AN APPROACH TO COMPARATIVE LAW 22 (2d ed. 1993) [hereinafter WATSON, LEGAL TRANSPLANTS].

10 For the purposes of this paper, the emphasis on efficiency in the regulatory realm indicates a general preference for modes of policymaking and adjudication that produce the greatest economic benefits at the lowest possible costs. Scholars, regulators and practitioners sometimes use “efficiency” more loosely to refer to the swiftness or effectiveness of regulation.

11 The first U.S. antitrust consent decree was entered in 1906 in United States v. Otis Elevator Co., 1 DECREES & JUDGMENTS IN FED. ANTITRUST CAS. 107 (N.D. Cal. 1906).

12 Owen M. Fiss, Against Settlement, 93 YALE L. J. 1073 (1984).


an unstructured system that gave the Department of Justice virtually unlimited discretion. Following a set of controversies in the 1970s, it evolved to incorporate greater procedural safeguards. Nonetheless, the Department of Justice and the Federal Trade Commission today enjoy substantial autonomy, despite the detailed statutory framework. The European Commission copied both the specific U.S. procedures and the mode of administration employed by the U.S. agencies, but failed to consider many of the attendant idiosyncrasies and performance problems. More importantly, it did not appreciate the fact that the U.S. framework embodies a tradeoff between the more obvious efficiency benefits of settlements and their (substantial but often hidden) costs.

Regardless of their potential costs, the new EU settlement procedures have been very attractive for the European Commission and for companies under investigation. This has led to a level of use that has surpassed the Commission’s initial expectations and to a growing reliance on settlements in lieu of other, more formal and burdensome procedures. The effects from these changes have occurred along three dimensions: within the EU competition law framework, within the national antitrust regimes of individual EU member states, and within the framework of transatlantic antitrust cooperation. The real and potential impacts of settlements are substantial on all three levels. Within the EU antitrust system, they have led to distortions in the Commission’s enforcement priorities and incentives as well as to reductions in legal certainty and transparency. More dangerously, settlements have set the stage for a systemic shift towards the further bureaucratization of the EU antitrust framework.

In their interaction with the antitrust regimes of national member states, settlements are working to reverse the decentralization drive that was a key goal of the modernisation program. In so doing, they are also suppressing the emergence of a viable system of private antitrust enforcement across the EU. Finally, on the level of transatlantic antitrust cooperation, settlements could lead to a need for deeper cooperation and, under certain conditions, to more frequent conflicts between the antitrust authorities of the two jurisdictions.

From the outset, I should emphasize that this paper does not take the position that an emphasis on administrative efficiency or the consideration of economic efficiency in antitrust enforcement is wrong or undesirable. To the contrary, both of these manifestations of efficiency are a hallmark of good government and a crucial element of today’s democratic imperative. The “efficiency” of U.S. antitrust enforcement is called “contagious” because the U.S. system has been so successful on many levels and has come to be viewed as a model that should be emulated unconditionally. The claim I put forward is fairly specific: that the wholesale importation of antitrust settlement provisions from the U.S. system without the required procedural and substantive tailoring has started to have negative effects on the EU antitrust enforcement regime.

The paper proceeds as follows: Part II presents the evolving structure of antitrust


adjudication in EU law and identifies the specific elements of the modernization package that were borrowed from the United States, with or without the requisite tailoring. This is the first in-depth account of the parallels between the newly-modernized EU regime and the U.S. antitrust regime and also the first analysis of the modernisation program as a process of tailored transplantation. Part III considers the prior use of antitrust settlements under EU law and uncovers a move towards a greater reliance on settlements in the national systems of several EU member states. Part III also details the specific parallels between EU and U.S. settlement provisions, and then uses original data to analyze the Commission’s approach to settlements since their introduction in May 2004. Part IV turns to the United States and reviews the longstanding American experience with antitrust settlements, paying particular attention to the functional equivalents of problems that might arise in the EU. Part V analyzes the likely effects of the EU’s growing reliance on U.S.-style antitrust settlements upon three closely intertwined systems of antitrust enforcement: the EU’s own competition law regime, the regimes of individual EU member states, and the intergovernmental U.S.-EU antitrust system. Part VI suggests a way to evaluate the desirability of settlements in EU law that takes into account their unique costs and benefits and the original goals of the modernisation program. Part VII concludes.

II. THE EVOLVING STRUCTURE OF THE EU ANTITRUST REGIME The enforcement of competition law at the European level is currently considered the

second most developed of the EU’s common policies and the one with the greatest impact on firms both inside and outside of the common market.13 EU competition law is based on two broadly-drafted Articles in the Treaty of Rome14 and has developed over the years through a number of more specific Regulations and Notices issued by the Council and the Commission, as well as through the antitrust decisions of the Court of First Instance and the European Court of Justice (ECJ).15 What began in 1962 as a modest regime primarily intended to remove industrial practices standing in the way of the common market has evolved into a complex body of law that is increasingly concerned with the maximization of consumer welfare and that frequently has extraterritorial implications. As a result of the 2004 modernisation program, the current regime contains many rules and policies that were borrowed from U.S. law, with or without tailoring to the specific EU context.

13 JOSEPHINE STEINER & LORNA WOODS, EC LAW 395 (8th ed. 2003) (agricultural policy identified as

most developed). 14 Articles 81 and 82 (originally 85 and 86) of the Treaty Establishing the European Economic

Community (Mar. 25, 1957) [hereinafter EEC Treaty]. 15 Throughout the paper, I use “the courts” to refer to both the CFI and the ECJ.


A. The Original Design of EU Antitrust Law The structural foundations of EU antitrust law were laid down by Council Regulation

17/62, which established the procedural framework for enforcing the EEC Treaty’s general prohibitions against restrictive agreements and cartels (Article 81(1)), and the abuse of a dominant market position (Article 82).16 The origins of these Treaty provisions have been traced by some to equivalent provisions in U.S. antitrust law;17 an alternative view suggests that European competition law was borne out of the ideas of European politicians and intellectuals, and particularly the members of the German ordoliberal school of economic thought.18

The drafters of Regulation 17/62 had to choose between two approaches to implementing Article 81. Under the first one, the article would apply to all agreements which contained some competitive restriction as part of a larger scheme intended to be pro-competitive. To gain legality, such agreements would have to rely on the exemptions available in Article 81(3). Under the second approach, the Commission would have to look only for “bad agreements” and then use a U.S.-style “rule of reason” analysis to determine their legality in light of the totality of their terms and purposes. The Regulation adopted the former approach and thus created an enforcement regime which commentators have described as “very cumbersome” and involving “quirky procedural features.”19 Companies were required to “notify” to the Commission all practices which were “restrictive” within the meaning of Article 81(1), and which therefore relied on the four cumulative exculpatory provisions contained in Article 81(3).20

The benefit of such notification was that it exempted the parties to an agreement from fines for conduct that was consistent with the notified agreement, but that was subsequently found to infringe EU antitrust law.21 The Commission of course did not (and could not) look into all of these notifications. Instead, it issued individual exemption decisions (for specific companies), and block exemption regulations (for entire industries). The actual performance of this regime ultimately did not provide companies with the full legal certainty contemplated by the Regulation. Because the issuance of specific exemptions was procedurally burdensome,

16 EEC Treaty, supra note 14. 17 See, e.g., Joel Davidow, The Worldwide Influence of United States Antitrust, 35 ANTITRUST BULL. 603

(1990). 18 David J. Gerber, Constitutionalizing the Economy: German Neo-liberalism, Competition Law and the

“New” Europe, 42 AM. J. COMP. L. 25, 71-74 (1994). 19 Ian Forrester, Modernization of EC Competition Law, 23 FORDHAM INT’L L.J. 1028, 1030-34, 1037

(2000). 20 Regulation 17/62, supra note 1, Article 4(1). 21 Id., Article 15(1).


it was reserved only for flagship cases.22 In a sense, the Commission’s formal intervention was legally indispensable, but practically unavailable, and so companies sought to rely on informal comfort letters.

These “shortcomings” were politically tolerable because the primary concern of the Commission during the early years of EU antitrust enforcement was not the promotion of legal certainty or economic efficiency, but rather the creation of an internal market, the arch-goal of European integration.23 In line with this, during the first three decades of the EU competition law regime the Commission’s docket was dominated by cases involving goods distribution restrictions and arrangements that hinder cross-border selling activities by traders.24 Competition was used as a tool for economic integration, even at the cost of neglecting some traditional areas of antitrust enforcement such as fighting cartels.25 Despite its heavy workload, the Commission warded off proposals for reform that would have allowed national competition authorities and courts to duplicate some of its functions, out of fear that this would produce inconsistencies across member states.26

The political goals of early EU competition law were openly acknowledged by Commission officials and recognized by academic commentators. The 1987 Report on Competition Policy listed “broad political significance” among the three criteria used by the Commission in setting enforcement priorities.27 Even in the early 1990s, the then-Commissioner for Competition noted that “[t]he ‘Chicago School’ approach currently in favour in the USA is not directly relevant to EC competition policy. Chicago does not need to worry about creating a single market. Rather, it presupposes the existence of an integrated market.”28 Evaluated with regard to the goal of creating a common market, the original model was a success. A number of protectionist national restrictions and market-sharing agreements were struck down and companies were ensured market access across the EU.

The 1989 Merger Regulation was among the first major signs of the evolution of EU competition law. In part modeled after the U.S. regime set up by the 1976 Hart-Scott Rodino Act,29 the Regulation imposed mandatory pre-merger notification requirements for certain large transactions and empowered the Commission to investigate and block mergers that

22 Forrester, supra note 19, at 1032. 23 The Single European Act defines the “internal market” as “an area without internal frontiers in which

the free movement of goods, persons, services, and capital is ensured in accordance with the provisions of the Treaty.” Treaty of the European Union, Article 14.

24 See, e.g., Joined Cases 56/64 & 58/64, Establissements Consten SARL & Grundig-Verkaufs-GmbH v. Commission, 1966 E.C.R. 299.

25 Forrester, supra note 19, at 1034. 26 Id., at 1036. 27 EUROPEAN COMMISSION, XVII REPORT ON COMPETITION POLICY (1987), at ¶9. 28 SIR LEON BRITTON, EUROPEAN COMPETITION POLICY: KEEPING THE PLAYING-FIELD LEVEL 3 (1992). 29 15 U.S.C. § 18a (2007).


would create or enhance a dominant market position.30 In contrast to the enforcement of Articles 81 and 82 under Regulation 17/62, the Merger Regulation allowed the antitrust authority to dispose of cases in a speedy manner and was therefore branded as a success. As one commentator noted, “the Commission showed that it was able to deliver on time and with clarity scores of decisions in a wide variety of industries to the general satisfaction of the business community.”31

In sum, from its very inception EU competition law was concerned not only with economic, but also with political and social goals, and was therefore distinct from U.S. antitrust law. In the early years, the conceptual differences between the two systems were acknowledged, but were not viewed as a problem and did not give rise to pressures for international harmonization or the introduction of specific reforms in either model. This “peaceful coexistence” began to wither away with the rise of transatlantic mergers and global cartels in the 1990s. In a few landmark cases, the two regimes produced different outcomes on virtually identical facts,32 thereby transforming the dissonance between the U.S. and EU antitrust models from a purely academic question into a practical matter carrying serious economic implications.

B. Modernisation Through Tailored Transplantation

In 1999, the European Commission published a White Paper on the Modernisation of

the Rules Implementing Articles 81 and 82 of the EC Treaty33 and set in motion a wide-ranging program for the substantive, procedural, and institutional reform of the EU antitrust enforcement regime. The precise content of the modernisation package suggests that the EU has engaged in a process I call tailored transplantation: the transposition – after some adjustment – of procedural and substantive elements from U.S. law onto EU competition law.

Thus far, the literature has described modernisation as a process of harmonization or convergence, rather than transplantation.34 Such a characterization is hardly incomprehensible,

30 Council Regulation No. 4064/89 on the Control of Concentrations Between Undertakings, 1989 O.J.

(L 257) 90. 31 Forrester, supra note 19, at 1038. 32 The first in a series of examples in the merger area was the 1997 Boeing/McDonnell Douglas merger

(approved by the Commission but only after the imposition of stringent behavioral remedies). In the non-merger area, compare the Second Circuit’s finding in Virgin Atlantic v. British Airways, 257 F.3d 256 (2001) (incentive agreements and fidelity rebates not an antitrust violation), with the CFI’s judgment in Case T-219/99, British Airways v. Commission, 2003 E.C.R. II-5917 (holding that the same fidelity rebates are illegal).

33 European Commission, White Paper on Modernisation of the Rules Implementing Articles 85 and 86 of the EC Treaty, COM (99) 101 Final (Apr. 1999), 1999 O.J. (C 132) 1 [hereinafter Modernisation White Paper].

34 See, e.g., Andre Fiebig, Modernization of European Competition Law as a Form of Convergence, 19 TEMP. INT’L & COMP. L.J. 63 (2005).


since borrowing from U.S. law amounts to (or – in the very least – can lead to) “Americanization,” a process that is controversial in many quarters of the European Union. Yet, true harmonization occurs when competition authorities jointly develop new policies for cooperation or coordination.35 The modernisation of EU competition law, by contrast, was a process where substantive, procedural, and administrative rules already in existence in the United States were transplanted into EU law in order to reform the antitrust enforcement regime. The United States did not change its legal rules to meet the EU halfway, something that would be required for true convergence or harmonization to obtain.36 This distinction is not merely semantic; it is crucial to understanding the evolution of the EU antitrust regime. If modernisation is viewed as a process of legal transplantation from U.S. law (rather than convergence or harmonization), the roots of specific innovations can be traced. This in turn enables the use of the U.S. experience to analyze the effects from the introduction of U.S.-style settlements into EU competition law.

The modernisation package has been in place for slightly more than three years and it is still defining its shape as the various transplants, including U.S.-style settlements, work their way through the Commission’s bureaucratic machine, the CFI and the ECJ, member state competition authorities, and member state national courts. Despite the structural differences between the U.S. and the EU legal systems and the large number of innovations introduced into EU law simultaneously, the tailoring approach adopted by the Commission suggests that the process would, on the whole, lead to improvements in the EU antitrust enforcement regime.

1. The Road to Modernisation

The reasons for the introduction of the modernisation package were not limited to the

emerging awareness of the potential clashes with the U.S. antitrust regime in high-profile cases, noted above. Rather, two separate manifestations of “efficiency” became a source of much discussion within the EU antitrust community: (1) the efficiency of the enforcement system, measured by its success in stymieing anti-competitive practices, and (2) economic efficiency as a goal of competition policy. Within both contexts, the United States was viewed as a reference point and, indeed, as a model worth emulating.

The EU efficiency discourse took place on multiple levels. In Brussels, specific criticisms of the original enforcement regime increasingly focused on the excessive compliance burden imposed by the formulaic structure of Article 81 analysis (evaluated

35 See, e.g., EC-U.S. Agreement on the Application of Their Competition Laws, 30 I.L.M. 1487 (1991);

U.S.-EC Best Practices on Cooperation in Merger Investigations (2002). 36 The only example of U.S. “learning” from the EU involves discussions at the FTC to start publishing

reports at the close of an investigation, even if no legal proceedings are brought. This is something that the Commission has long done.


against the more fluid and efficiency-focused “rule of reason” approach),37 and on the disincentives for firms to invest in innovation projects involving substantial upfront costs.38 The resource intensity of the Commission’s work methods also came under attack on administrative efficiency grounds. In addition to the burdensome notification scheme described infra, commentators noted the loss of flexibility resulting from the use of potentially overbroad group exemptions as well as the inefficient disposition of cases through non-binding comfort letters, which consumed resources but did little to promote legal certainty or advance the state of EU competition law.39

In Luxembourg, judgments of the ECJ and the CFI often resulted in the annulment of Commission actions and served as reminders of the need for reform. Most frequently, court decisions pointed to the inadequate procedural protections accorded to parties investigated by the Commission.40 In the mergers area, the working practices of the Commission came under strong criticism in 2002 when the CFI annulled the prohibition decisions in Airtours, Schneider Electric, and Tetra Laval largely due to inadequacies in the economic analysis.41 On a more substantive level, the ECJ addressed the structure of the antitrust framework itself when it affirmed the legality of private actions for monetary damages under EU competition law.42 Prior to this case from 2001, the private action mechanism had been used to a very limited extent in the EU. By contrast, private actions are central to the effectiveness of the U.S. antitrust regime since it relies on “private attorneys general” suing for treble damages as much as it does on cases brought by the federal government and individual states.43

The antitrust efficiency discourse was also influenced by two larger developments within the European Union. First, the Lisbon Strategy adopted by the European Council in 2000 signaled a renewed focus on economic growth and innovation and outlined the set of economic reforms needed to turn the EU into “the most dynamic and competitive knowledge-based economy in the world.”44 The goal now was not to build an internal market, but to realize its full potential by making it more efficient. Second, the preparations for the 2004

37 Mario Siragusa, The Millennium Approaches: Rethinking Article 85 and the Problems and Challenges

in the Design and Enforcement of EC Competition Rules, 21 FORDHAM INT’L LAW J. 650, 659-60 (1998).

38 Id., 660 n.28 (pointing out the lack of legal certainty with respect to joint ventures). 39 Id., at 662-63. 40 See, e.g., Cases T-80 et. al./89, BASF AG v. Commission (impugning a Commission decision because

it was not properly adopted in all relevant official languages); Case T-30-91, Solvay v. Commission (annulling a Commission decision because the company’s right of access to the file had been denied).

41 See Case T-342/99, Airtours v. Commission, 2002 E.C.R. II-2585; Case T-310/01, Schneider Elec. v. Commission, 2002 E.C.R. II-4071; Case T-5/02, Tetra Laval v. Commission, 2002 ECR II-4381.

42 Case C-453/99, Courage Ltd. v. Bernard Crehan, 2001 E.C.R. 1-6297, at ¶¶ 26-27. 43 See 15 U.S.C. § 15(a). 44 European Council, “Presidency Conclusions of the Lisbon European Council of 23-24 March, 2000,”

at ¶ 5, available at http://www.europarl.europa.eu/summits/lis1_en.htm.


accession of ten new countries, the largest accession to date, led to a rethinking of the institutional framework for enforcing the provisions of the Treaty.45 It became clear that the old competition law model which was characterized by excessive centralization and limited flexibility could not function in a Union of 25 (and, soon thereafter, 27) members. Keeping the old structure after enlargement meant that the Commission would have to process even more notifications and that more agreements would be in need of exemption regulations, a situation that would have diminished the regime’s effectiveness even further. Hence it was not a coincidence that the entry into force of the two main components of the modernisation package, Regulation 1/2003 and the New Merger Regulation,46 matched the effective date of EU enlargement, May 1, 2004.

2. The Modernisation Package and Its U.S. Sources

The Commission hailed Regulation 1/2003 as “an ambitious and fundamental

overhaul of the antitrust rules implementing Articles 81 and 82 of the Treaty,”47 and the New Merger Regulation as “the most far-reaching reform of its merger control regime since […] 1990.”48 Commentators called the modernisation package “a legal and cultural revolution,”49 marking “the dawn of a new era” and introducing “radical” reforms.50 They also agreed that the process brought EU competition law ever closer to its U.S. counterpart.51 Table 1 presents an outline of these innovations, together with their U.S. origins. The differences between the pre-2004 EU regime and the post-2004 EU regime and the latter’s marked similarity with the U.S. regime supports the view that the European Union engaged in a process of modernisation through transplantation.

45 See, e.g., European Commission, “Adapting the Institutions to Make a Success of Enlargement:

Commission Opinion on the Reform of the Institutions of the European Union of 26 January, 2000,” COM (2000).

46 Council Regulation 139/2004 of 20 January 2004 on the Control of Concentrations Between Undertakings, 2004 O.J. (L24) 1 [hereinafter New Merger Regulation].

47 EUROPEAN COMMISSION, XXXII REPORT ON COMPETITION POLICY, at 19 (2002) [hereinafter 2002 COMPETITION POLICY REPORT].

48 European Commission, IP/02/1856: Commission Adopts Comprehensive Reform of EU Merger Control (Dec. 11, 2002).

49 Claus Ehlermann, The Modernization of EC Antitrust Policy: A Legal and Cultural Revolution, 37 COMM. MKT. L. REV. 546 (2000).

50 Laurent Garzaniti et. al, Dawn of a New Era? Powers of Investigation and Enforcement Under Regulation 1/2003, 72 ANTITRUST L. J. 159, 207 (2004).

51 See, e.g., Eleanor Fox, Monopolization, Abuse of Dominance, and the Indeterminacy of Economics: The U.S./E.U. Divide, 2006 UTAH L. REV. 799 (2006) (acknowledging that “the view that economics can and should decide antitrust cases, [which] Americans famously advocated, [was] exported [...] to Europe.”)


Table 1: The U.S. Sources of Reforms Introduced by the EU Antitrust Modernisation Program Competition Regime Features EU Before

Modernisation EU After Modernisation United States

Legality presumption for restrictive agreements:

Generally presumed illegal

Generally evaluated under rule of reason

Generally evaluated under rule of reason

Decentralized public enforcement: No. (Commission had monopoly on applying EU antitrust law)

Yes. (EU antitrust law applied by nat’l courts & antitrust authorities)

Yes. (Federal antitrust law is enforced by state attorneys general)

Availability of private enforcement: No. (Had some legal basis but was not used) Yes. (Encouraged) Yes. (Central part of

regime since 1914)

Multiplier for private damages: No Yes (Double) * Yes (Treble)

Powers of enforcement: Weaker Expanded Extensive

“Efficiency defense” for single-firm conduct under §2 of the Sherman Act (U.S.) or Article 82 (EU):

No Yes * Yes

Existence of Horizontal Merger Guidelines: No Yes Yes

Existence of Non-Horizontal Merger Guidelines: No Yes * Yes

Case consultations with an indepen-dent in-house team of economists: No Yes Yes

* Under discussion or in the process of being implemented. Source: Compiled by the author using sources referenced throughout this paper.


3. Tailored and Untailored Legal Transplants

As illustrated by Table 1, the modernisation of EU competition law is notable for its

large-scale borrowing from U.S. antitrust law. The practice of legal transplantation itself, however, is neither novel nor uncontroversial; Roscoe Pound famously noted that the “history of a system of law is largely a history of borrowings of legal materials from other legal systems.”52 For example, the influence of German law on the drafting of the U.S. Uniform Commercial Code in the 1930s is well documented.53 So is the much more recent transplantation of another uniquely American legal device, plea bargaining, into the laws of European and Latin American countries; it too was introduced with the intention to promote efficiency, this time within the criminal justice system.54

Outside the realm of the normative or the descriptive,55 modern scholarship suggests few specific determinants for the success and failure of legal transplants. A study by Jonathan Wiener highlights the fact that borrowing from national law in order to formulate an international climate control regime (i.e. vertical or trans-echelon borrowing) has resulted in inefficient legal rules.56 In another study, Francesca Bignami suggests that a federal system like the European Union should consider the U.S. experience with notice-and-comment rulemaking and not look to the administrative law of member states with parliamentary systems.57 Neither of these factors play a large role in the case of the EU’s modernisation program: the borrowing was horizontal and not trans-echelon, and its source was a federal system in which antitrust law plays a role similar to that it has in the EU.

The breadth and universality of the original transplantation metaphor is perhaps to blame for this difficulty in encapsulating it into a more coherent analytical framework. The problem has led some to suggest replacing “legal transplants” with “legal translations,”58 or

52 WATSON, LEGAL TRANSPLANTS, supra note 9 at 22. 53 See James Q. Whitman, Commercial Law and the American Volk: A Note on Llewellyn's German

Sources for the Uniform Commercial Code, 97 YALE L.J. 156 (1987) (describing Karl Llewellyn’s idiosyncratic borrowing of German legal constructs in drafting the U.S. Uniform Commercial Code).

54 See Máximo Langer, From Legal Transplants to Legal Translations: The Globalization of Plea Bargaining and the Americanization Thesis in Criminal Procedure, 45 HARV. INT. L.J. 1 (2004).

55 See, e.g., Otto Kahn-Freund, On Uses and Misuses of Comparative Law, 37 MOD. L. REV. 1 (1974); For a cogent restatement of Watson’s transplantation thesis and an evaluation of its critics, see William Ewald, Comparative Jurisprudence (II): The Logic of Legal Transplants, 43 AM. J. COMP. L. 489 (1995).

56 Jonathan B. Wiener, Something Borrowed for Something Blue: Legal Transplants and the Evolution of Global Environmental Law, 27 ECOLOGY L. Q. 1295 (2001).

57 Francesca E. Bignami, The Democratic Deficit in European Community Rulemaking: A Call for Notice and Comment in Comitology, 40 HARV. INT’L L.J. 451, 455 (1999).

58 Langer, supra note 54.


“legal irritants,”59 or “legal transfers.”60 In the interest of analytical rigor, I will distinguish between “tailored” and “untailored” legal transplants, whereby “tailoring” refers to the process of purposeful adjustment and modification of the borrowed legal rule with the goal of ensuring that the rule fits well within the receiving legal system.61 Close examination of the EU modernisation program suggests that one significant difference among the various borrowed rules was indeed the degree of tailoring they underwent, and that this difference is most likely to account for the rules’ relative success.

The most significant innovations within the modernisation package were subject to extensive discussion and comments from practitioners, academics, and national competition authorities. In the cases of both the New Merger Regulation and Regulation 1/2003, tailoring occurred in two stages, (1) before the final version of the regulations were submitted to the Council, and (2) before the Commission adopted its own procedural regulations and notices setting out in detail the application of the two Council regulations. There were also two levels to tailoring, a procedural one (solicitation of comments and opinions) and a substantive one (adjusting borrowed legal rules to fit the EU regime). The process strived to ensure that the new conceptual framework as a whole, and the majority of the innovations separately, benefited from the feedback of all interested parties.

On a procedural level, the Commission began preparing for Regulation 1/2003 by publishing the Modernisation White Paper and soliciting comments. In the course of only five months, the Paper attracted 118 submissions from various governmental and non-governmental entities; the Commission then prepared and published a summary of those comments.62 Shortly thereafter, the Economic and Social Committee adopted an opinion on the Paper, while the European Parliament held a public hearing and adopted a resolution, for the most part indicating its approval.63 The second phase of procedural tailoring occurred after the Council adopted the final text of Regulation 1/2003. The Commission submitted for public consultation a package containing drafts of a Commission Regulation implementing Regulation 1/2003 and six Notices containing important procedural and substantive guidance. These documents attracted thorough comments from 53 law firms, bar organizations and

59 See Gunter Teubner, Legal Irritants: Good Faith in British Law or How Unifying Law Ends Up in

New Divergences, 61 MOD. L. REV. 11 (1998). 60 See David Nelken, Comparatists and Transferability in COMPARATIVE LEGAL STUDIES: TRADITIONS

AND TRANSITIONS (Pierre Legrand & Roderick Munday eds, 2003). 61 The notion of tailoring has been used outside the context of legal transplantation. See, e.g., Ian Ayres,

Preliminary Thoughts on Optimal Tailoring of Contractual Rules, 3 S. CAL. INTERDISC. L.J. 1 (1993); 62 European Commission, Summary of the Observations on the White Paper on Reform of Regulation

17, Feb. 29, 2000. [hereinafter Summary of White Paper Observations.] 63 European Commission, Proposal for a Council Regulation implementing Articles 81 and 82 of the

Treaty, COM(2000) 582 final (Sept. 2000), 2000 O.J. (C 365E) 284, at 3.


industry associations.64 The most important legal transplants in the modernisation package also underwent

substantive tailoring in order to fit within the EU competition law framework. Consider first the example of the New Merger Regulation. It changed the substantive test for enjoining a merger from the “creation or strengthening of a dominant position” test to a standard that examines whether a transaction “would significantly impede effective competition, in the common market or in a substantial part of it, in particular as a result of the creation or strengthening of a dominant position” (the SIEC test).65 This new test comes very close to the “substantial lessening of competition” (SLC) standard first introduced in the United States and subsequently exported to the United Kingdom, Ireland, and other jurisdictions. Whereas the old test was based strictly upon the rigid concept of dominance, the new test also covers “anticompetitive effects in oligopolistic markets where the merged company would not be strictly dominant in the usual sense of the word (i.e. [by being] much bigger than the rest).”66 In the words of the Commission, “[t]he central question is whether sufficient competition remains after the merger to provide consumers with sufficient choice.”67 Even though this new consumer welfare rhetoric echoes another of the underlying tenets of U.S. antitrust law, the new EU test is similar but not identical to the U.S. SLC test. During the consultation process, many viewed the SLC test as more suitable for evaluating the effects of complex transactions. Despite its analytical superiority, the SLC test was not transplanted mechanically but was instead tailored and transformed into the SIEC test, because of concerns that, unless modified, the SLC test would conflict with CFI and ECJ jurisprudence created under the old “dominance test” and thus reduce legal certainty.68

In a similar vein, the Horizontal Merger Guidelines imported the approach and content of the U.S. Merger Guidelines in most respects,69 but the few differences suggest substantive tailoring that served as a bridge between the old and the new structure of EU competition law. Consistent with the Union’s traditional concern with access to markets, the EU Guidelines list a number of incumbent advantages that can serve as a barrier to new entrants, including “technical advantages, such as preferential access to essential facilities,” “innovation and

64 All contributions available at http://ec.europa.eu/comm/competition/antitrust/legislation/ procedural_

rules/comments. 65 Council Regulation (EC) No 139/2004, 2004 O.J. (L 24) 1 (emphasis added to highlight similarity to

the test used in the United States). 66 European Commission, MEMO/04/9: The New Merger Regulation – Frequently Asked Questions

(Jan. 20. 2004). 67 Id (emphasis added). 68 See Philip Lowe, Current Issues in EU Competition Law—The New Competition Enforcement

Regime, 24 NW. J. INT’L L. & BUS. 1, 8-9 (2004). 69 See Brian Facey & Henry Huser, A Comparison of Horizontal Merger Guidelines in Canada, the

European Union, and the United States, ANTITRUST, Fall 2004, at 43.


R&D, or intellectual property rights,” “distribution and sales networks,” etc.70 The U.S. Horizontal Merger Guidelines do not include such considerations and – indeed – some of the factors listed in the EU Guidelines have been rendered irrelevant to U.S. antitrust analysis in recent years.71

In contrast to the major elements of the modernisation package, U.S.-style settlement procedures did not benefit from either procedural or substantive tailoring. The introduction of settlements was mentioned in publications describing the modernisation program, but did not provoke any substantive discussion. The Modernisation White Paper referred to settlements only briefly and used language suggesting that they would not play a major role in EU antitrust enforcement.72 Among the more than one hundred comments on the White Paper, the Commission found “[v]ery few” that addressed settlements, and none that were critical of the new procedures.

The settlement procedure was introduced in the final version of Regulation 1/2003.73 Despite issuing formal Notices on other aspects of the modernisation package, the Commission did not propose one clarifying the Regulation’s provisions on settlements. Moreover, it did not issue any indication on how it would apply the procedure until more than four months after the Regulation came into effect. Guidance eventually came in the form of a short informal memo posted on the Competition Directorate’s website, setting out “frequently asked questions and answers” about settlements.74 In the end, there is no evidence that prior to accepting the desirability of U.S.-style settlements, either the Commission, or the antitrust bar, or the academic community undertook a systematic examination of the potential problems with settlements based on their long performance record in the United States. This indicates that there was no procedural tailoring and, as a result, no substantive tailoring could take place either. Part V infra shows that the uncertainties and performance problems associated with the new EU settlement procedures result precisely from this lack of tailoring.

70 European Commission, Guidelines on the Assessment of Horizontal Mergers Under the Council Regulation on the Control of Concentrations between Undertakings, 2004 O.J. (C 31) 5, ¶¶ 71(b)-(c).

71 See, e.g., Verizon v. Law Offices of Curtis Trinko, 540 U.S. 398, 410-11 (2004) (confirming prior refusals by the Supreme Court to recognize the “essential facilities” theory).

72 Modernisation White Paper, supra note 33, at ¶ 90 (“In the course of procedures that might otherwise end with a prohibition, it can happen that the undertakings concerned propose to give the Commission undertakings that would overcome the objections raised against their agreement. It is useful that the Commission should be able to make such commitments binding, both in order to oblige the undertakings to comply with them and to enable the parties and others to rely on them before their national courts.”)

73 See Part III(C)(1) infra. There was a slight change in the language from the draft Regulation, supra note 63 (Recital 12) to the final version (Recital 13). This change, however, was not material and did not reflect any additional tailoring.

74 European Commission, MEMO/04/217: Commitment Decisions: Frequently Asked Questions and Answers (Sept. 17, 2004) [hereinafter European Commission, Commitment Decisions Memo].


The modernisation program achieved its goal of transforming the structure of antitrust adjudication within the EU. Efficiency, both in the process of antitrust enforcement and as a goal of EU economic policy was the lodestar principle guiding modernisation. Even though most innovations were borrowed from the United States, they underwent a process of careful tailoring with both procedural and substantive dimensions. The introduction of U.S.-style settlements was the exception. The advantages of settlements in terms of faster and more flexible resolution of cases were apparent, but there was no consideration of whether those advantages might be offset at least partially by non-efficiency drawbacks. The next Parts of the paper are devoted to answering this question.

III. ANTITRUST SETTLEMENTS IN EU LAW: HISTORY, SOURCES, AND CURRENT USE

The notion of formalized settlements resembling U.S. “consent decrees” between private parties and governmental agencies is foreign to the national legal traditions of EU member states. Similarly, until Regulation 1/2003, EU law did not provide for settlements between the EU’s administrative executive (the Commission) and private actors. This did not prevent the Commission from entering into informal agreements in order to obtain behavioral remedies in highly complex and drawn-out antitrust cases. Albeit effective in obtaining relief, such settlements had uncertain legal enforceability and were negotiated using ad hoc procedures lacking transparency. After Regulation 1/2003 came into effect, the Commission started using settlements with greater frequency. Indeed, excluding cartel cases, almost half of the decisions taken pursuant to Articles 81 and 82 of the Treaty after May 1, 2004, have been settlements rather than prohibition decisions that include an official finding of infringement.

A. Sources in National and EU Law

Even though the out-of-court settlement of commercial disputes between private

parties is part of the legal traditions of most EU member states,75 the settlement of disputes between the government (or parts thereof) and private parties is uncommon. Indeed, public-private consent decrees are an uniquely American invention with no pre-2004 parallels in either national or EU law. Since 2004, Regulation 1/2003 has entrenched settlements not only at the EU level, but – as I show in this sub-section – it has also led to their gradual diffusion into the legal systems of several EU member states.

Looking at two of the main advantages of consent decrees in the U.S. context helps explain why public-private settlements did not arise independently in Europe. First, consent

75 See, e.g., Matthias Lehmann, A Plea for a Transnational Approach to Arbitrability in Arbitral

Practice, 42 COLUM. J. TRANSNAT’L L. 753 (2004) (noting the receptiveness of British, French, and German courts to alternative methods of dispute resolution).


decrees in the United States allow governmental agencies to impose behavioral remedies upon firms faster, consuming fewer administrative resources, and without having to accumulate as much evidence as would be otherwise required. In full-fledged proceedings, the government and the company under investigation are adversaries, and the latter can use a number of tools to protract the process. Moreover, U.S. administrative decisions are subject to appeal in court, where the agency has to justify them based on the substantial evidence standard.76 In contrast, most continental European systems do not have such elaborate provisions for judicial review. Absent control by the courts, companies have fewer procedural options to delay the resolution of a dispute and hence less bargaining power. Agency adjudication is likely to be more effective and there has been no reason for the legislature to seek alternatives by introducing public-private settlements.

Second, consent decrees in the United States are often used by agencies as a regulatory tool, imposing complex conditions on industries or aspects of private life without going through the more formal (and burdensome) steps of rulemaking, agency adjudication, or court litigation. In contrast, European parliamentary systems allow for laws to be passed more easily, and government ministries themselves have the power of legislative initiative. This makes it possible to create and implement large-scale regulatory schemes through the legislative process, 77 and – hence – without any need for consent decrees.

Differences in constitutional design also explain the limited use of settlements in EU law prior to Regulation 1/2003. In the United States, consent decrees are used in areas where the government can litigate directly against private parties, e.g., in cases concerning the environment, employment discrimination, securities law violations, etc. The European Commission, on the other hand, is not empowered to act against private parties in any field other than antitrust. For example, even though it is in charge of monitoring over 200 pieces of EU environmental legislation, the Commission can bring legal actions for infringement only against member states.78 The member states themselves are responsible for implementing and enforcing legislation that gives effect to EU environmental law. This application of the principle of procedural autonomy has eliminated any need for a EU settlement tradition outside the field of antitrust.

The introduction of Regulation 1/2003 has not only changed the availability of settlements at the EU level, but has also led to the adoption of similar provisions under the

76 This standard applies to judicial review of formal agency adjudication and formal rulemaking

conducted under §§ 556 and 557 of the Administrative Procedures Act (5 U.S.C. 551 et seq.). 77 For an elaboration of this thesis, see Terry M. Moe & Michael Caldwell, The Institutional

Foundations of Democratic Government: A Comparison of Presidential and Parliamentary Systems, 150/1 J. OF INSTITUT’L & THEORETICAL ECON. 171 (1994).

78 See European Commission, Seventh Annual Survey on the Implementation and Enforcement of Community Environmental Law, SEC(2006) 1143 (Sept. 2006).


laws of more than half of the EU’s member states,79 including France, Belgium, Ireland, and the United Kingdom. Those national settlement provisions have taken a variety of forms. For example, in anticipation of the EU modernisation package, the French New Economic Regulation Act of 2001 created a provision in the Commercial Code (Article L.464-2) which offers a reduction of fines to companies that do not contest the allegations of the Conseil de la Concurrence and agree to change their behavior in the future.80 In November 2004, a cabinet ordinance further amended Article L.464-2 to allow for settlement decisions mirroring those under Regulation 1/2003.81 The Conseil has already employed the new settlement provisions in as many as fifteen cases.82 The Irish Competition Authority and the U.K. Office of Fair Trading (OFT) began using settlements at the same time as the Commission, but did so without making any direct reference to EU law. The Irish Competition Authority has negotiated nine settlements since 2003, and all have involved behavioral commitments from companies without any fines.83 By contrast, the first settlement in the U.K., negotiated in 2006, involved both financial penalties and an admission of guilt. Still, the OFT and the parties did not link the anti-competitive practice to any specific financial harm and strategically reduced the risk of follow-on private litigation.

Even though public-private settlements did not enter EU law from the national laws of individual member states, such settlements are now clearly moving from EU law into national law and are assuming a central role in several national antitrust regimes. The effects of this experimentation with U.S.-inspired practices at the national level are just as important as the effects of settlements on EU law and will be considered in Part V(B) infra.

B. Ad hoc Settlements under Regulation 17/62

During the forty-two years of EU antitrust enforcement prior to Regulation 1/2003,

the Commission occasionally used informal means to resolve cases, despite the lack of specific provisions for doing so under the then-governing Regulation 17/62. The Commission “settled” cases in a variety of ways. It accepted behavioral promises (or “undertakings”) from companies in return for issuing a negative clearance decision, or an exemption, or a comfort letter, or in exchange for terminating or suspending proceedings, or not opening proceedings,

79 John Temple Lang, Commitment Decisions and Settlements with Antitrust Authorities and Private

Parties Under European Antitrust Law, in 2005 ANNUAL PROCEEDINGS OF THE FORDHAM CORPORATE LAW INSTITUTE 265 (Barry Hawk ed., 2006), at 307.

80 Act of 5 May 2001 (No. 2001-420) Regarding the New Economic Regulation, LOIS ET DÉCRETS, May 16, 2001.

81 Ordinance of 4 November 2004 (2004-1173) Implementing Art. 9 or Regulation 1/2003, LOIS ET DÉCRETS, November 5, 2004.

82 “Engagements” available at http://www.conseil-concurrence.fr/user/standard.php?id_rub=152. 83 See [Irish] Competition Authority, News and Publications, available at http://www.tca.ie/.


or not imposing interim measures.84 The most significant cases that were settled by making use of behavioral conditions involved drawn-out proceedings and a complex subject matter, such as abuse of dominance.

The pre-modernisation settlement negotiation procedures were ad hoc and the terms of the “deal” between the Commission and the company differed in each case. For example, in IBM, the Commission adopted a formal decision stating that it had no grounds for action against the company for its use of restrictive distribution practices,85 but then entered in an undertaking whereby IBM agreed to disclose information to ensure interoperability with products by competitors. The agreement emphasized that IBM admitted no infringement, and that IBM’s undertakings cannot be enforced by others or even relied upon by the Commission in that or other proceedings.86 By contrast, the company under investigation in SWIFT first reached an agreement with the party that had field the complaint against it, and only then proposed extensive behavioral remedies which were accepted by the Commission.87 The Wood Pulp case illustrated yet another approach to informal settlements; the Commission issued an infringement decision, but accepted undertakings from the companies in exchange for reduced fines.88

The absence of formal settlement procedures allowed the Commission to enjoy flexibility in closing cases, but it also involved several drawbacks. First, it diminished the predictability of competition law enforcement in the EU and provoked occasional criticisms from commentators.89 Second, an enforcement mechanism existed only in those few cases where a settlement took the form of conditions attached to an exemption decision.90 Any other form of settlement could not be formally enforced under Regulation 17/62, even if a company failed to comply. Finally, there was a lack of transparency that prevented interested third parties from commenting on any proposed undertakings, even when they were directly affected. Moreover, unlike formal decisions, accepted settlements were not published in the Official Journal; the only source of information about them were the brief summaries in the Commission’s Annual Report on Competition Policy.91 This eliminated both the possibility

84 See Jacques Bourgeois, Undertakings in E.C. Competition Law, in PROCEDURE AND ENFORCEMENT IN

E.C. AND U.S. COMPETITION LAW 94 (Peit Jan Slot & Alison McDonnel, eds. 1993), at notes 12-18 (citing cases).

85 Case IV/30.849, IBM Personal Computers, 1984 O.J. (L118) 24. 86 EUROPEAN COMMISSION, XIV REPORT ON COMPETITION POLICY (1984), at ¶¶ 94-95. 87 EUROPEAN COMMISSION, XXVII REPORT ON COMPETITION POLICY (1997), at 120-22. 88 See Joined Cases C-89, 104, 114, 116, 117, and 125-129/85, A. Ahlstroöm Osakeyhtiö et al. v.

Commission (Wood Pulp), 1993 E.C.R. II 1307. 89 See, e.g., I. Van Bael, The Antitrust Settlement Practice of the EC Commission, 23 COMMON MKT. L.

REV. 61 (1986); Denis Waelbroeck, New Forms of Settlement of Antitrust Cases and Procedural Safeguards: Is Regulation 17 Falling Into Abeyance, 11 EUR. L. REV. 263 (1986).

90 Regulation 17/62, Articles 8(3)(b), 15(2)(b), and 16(1)(b).


for public oversight of the process and the usefulness of negotiated settlements as guidance for companies in future infringement proceedings.

C. The Commission’s Use of U.S.-Style Settlements Since 2004

In view of the shortcomings associated with the unstructured nature of settlements

under Regulation 17/62, the idea to introduce a more formalized procedure through the modernisation program was a welcome development. As Part II showed, however, the new legal framework was not tailored to fit within the EU competition law regime. The use of settlements has nevertheless accelerated because of their perceived efficiency and because the introduction of formal procedures has given them a stronger imprimatur of acceptability. One longtime observer has noted that “[t]he Commission initially believed that commitment decisions would be unusual and rare, and has been rather surprised that, for various reasons, there have been so many cases in which commitments have been suggested by companies or by Commission officials.”92

1. Legal Basis and U.S. Parallels

Regulation 1/2003 refers to settlements as “commitments” and authorizes them

through Article 9(1), as follows:

Where the Commission intends to adopt a decision requiring that an infringement be brought to an end and the undertakings concerned offer commitments to meet the concerns expressed to them by the Commission in its preliminary assessment, the Commission may by decision make those commitments binding on the undertakings. Such a decision may be adopted for a specified period and shall conclude that there are no longer grounds for action by the Commission.93

A few other provisions in Regulation 1/2003 complete the statutory framework for

settlements. Article 9(2) provides that the Commission can reopen cases in which commitments have been accepted, if a material change in the facts occurs, if the company acts contrary to the commitments, or if the decision was based on incomplete, incorrect or misleading information. The Commission can also use its full enforcement powers in cases with commitments; these including both the ability to impose penalties amounting to up to ten percent of a company’s annual turnover and periodic penalties for each day of non-

91 The undertakings in SWIFT were the only exception. The Commission decided to publish them in the

Official Journal [1997 O.J. (C335) 3] because of their precedential value and to encourage interested entities to seek access to SWIFT’s financial transfers network.

92 See Temple Lang, supra note 79, at 270. 93 Regulation 1/2003, supra note 2, Article 9(1).


compliance.94 In so enforcing a settlement decision, the Commission does not need to prove that the conduct giving rise to the commitments was anti-competitive, but only that the commitment decision itself was violated.

In terms of procedure, Article 27(4) requires the Commission to publish any draft commitments and to collect comments from third parties for at least one month; and Article 30 mandates that the Commission shall also publish any final commitment decisions it takes. Two of the recitals to Regulation clarify the status of settlements. Recital 13 notes that commitment decisions do not represent an adjudication on whether an infringement has occurred, that they are without prejudice to the powers of national competition authorities and courts to make a future finding of infringement, and that they are not appropriate in cases where the Commission intends to impose a fine. Recital 22 further emphasizes that commitment decisions do not affect the powers of the national courts and competition authorities of member states to enforce Articles 81 and 82 of the Treaty.95

The provisions of Regulation 1/2003 and the Commission’s informal memorandum on the use of commitment decisions96 have set up a settlement model that is structurally very similar to the models used by the U.S. Department of Justice and the Federal Trade Commission. The actual use of settlements by the European Commission is also similar to that of the U.S. agencies. Table 2 provides a comparison along several important dimensions and shows that structurally and procedurally, the regimes in the two jurisdictions are now almost identical. For example, all three regimes have public comment provisions, all three are careful to avoid any finding of an infringement by the enforcer or an admission of guilt by the settling company, and under all three, the settlement cannot serve as prima facie evidence of an infringement in follow-on litigation. These parallels and their implications for EU competition law are considered in greater detail in Part V.

The similarities between the three regimes, illustrated in Table 2, lend further support to the assertion that the EU settlement framework is a legal transplant. That the EU framework is an untailored transplant is demonstrated by its deviation from standard EU administrative law principles. For example, provisions calling for public comments on specific cases are uncommon under EU law; accordingly, interested third parties are not afforded the right to comment in other types of antitrust proceedings, including regular prohibition decisions and even merger settlements (such settlements are not governed by Regulation 1/2003). The new settlement framework borrows its public comment provisions from U.S. administrative law where they are very common. If the new EU settlement procedures had undergone tailoring, the process would have most likely ensured a consistent treatment of public comments in the various types of cases.

94 Id., Articles 23(2)(c), 24(1)(c). 95 Id., Recitals 13, 22. 96 European Commission, Commitment Decisions Memo, supra note 74.


Table 2: Comparison of the EU and U.S. Antitrust Settlement Regimes

Characteristics \ Regime EU 1962 - 2004 EU After 2004 Federal Trade Commission

Dept. of Justice - Antitrust Division

In use since: 1962 2004 1930s 1906 / 1974 i

Level of use: infrequent 43% of cases ii over 90% of cases over 90% of cases

Legal basis: none Art. 9, Reg. 1/2003 FTC Regulations Tunney Act

Types of cases: NA (no legal basis) only non-merger (EC Art. 81, 82) iii

both merger and non-merger cases

both merger and non-merger cases

Fines as part of settlement: no no no iv yes, but only with court approval

Settlements cannot be of unlimited duration NA (no legal basis) yes yes yes

Judicial review required by statute: no no no yes

Public comment provisions: no yes yes yes

Admission of infringement by the company: no no no no

Fines if co. does not comply with terms of settlement no yes yes yes

Evidentiary value of settlement in private enforcement

NA (no private enforcement)

unclear (at best, very limited)

cannot serve as evidence of infringement

cannot serve as evidence of infringement

Third-Party/Public Influence over Process none unclear

(most likely limited) limited limited

Full complaint issued before negotiating a settlement: yes only sometimes

(trend: no) no no

_______________________ i The first U.S. antitrust consent decree is from 1906, but the present antitrust settlement framework was not established until 1974. ii Out of the 14 non-cartel decisions taken pursuant to Regulation 1/2003 after May 1, 2004, 6 were Art. 9 settlement decisions, 2 were prohibition decisions without fines, and 6 were prohibition decisions with fines. See Table 3 for additional details. iii The New EU Merger Regulation provides a mechanism whereby the Commission can accept undertakings from merging entities; the same process in the U.S. is managed through the settlement mechanism. iv Monetary penalties have been used only in three cases of exceptional violations; court approval is required.

Source: Compiled by the author using sources referenced throughout this paper.


2. The Commission’s Application of the New Provisions

Slightly more than three years after the introduction of settlements by Regulation

1/2003, the Commission has already used what were intended to be infrequent proceedings in thirteen cases.97 It has issued six settlement decisions, which constitute 43 percent of all decisions under Regulation 1/2003 (excluding cases involving cartels).98

a. Overview

Table 3 compares the use of settlements during three periods of equal duration: two

before May 2004 (when Regulation 17/62 was in force) and one after May 2004, under Regulation 1/2003.99 The Table shows that the Commission has relied on U.S.-style settlements to a much greater extent than it relied on informal settlements under the previous regime. Between September 1997 and May 2004, the ratio of informal settlements to prohibition decisions was less than 1 to 4, whereas since May 2004, the ratio of settlement decisions to prohibition decisions has been almost 1 to 1. This is even more remarkable in view of the fact that the use of Article 9 settlements is limited to cases that do not require the imposition of fines.

97 This includes the eleven Article 9 actions started since May 2004, and the three Article 9 decisions

adopted in cases initiated under Regulation 17/62 and concluded under Regulation 1/2003. See Table 3 infra.

98 Cartel cases are not included in this statistic because they virtually always involve fines and are therefore not candidates for settlement. The point here is that of all the cases that could have ended with either a settlement or an infringement decision, 43 percent have been settled.

99 The length of the periods was determined by the number of months that have elapsed since the introduction of the modernisation program in May 2004 (40, as of August 31, 2007). Because of the low number of decisions issued by the Commission annually, aggregating the data across three periods of equal duration provides for more meaningful comparisons.

24

Table 3. Decisions by the European Commission in Selected Types of Cases

Pre-Modernisation Post-Modernisation Type of Decision 9/1997-12/2000

(40 months) 1/2001-4/2004

(40 months) 5/2004-8/2007

(40 months) Change After Modernisation

Prohibition with Fines (not including cartels) 9 13 6 45% decline over ave. for the prev. two periods

Prohibition without Fines 5 4 2 56% decline over ave. for the prev. two periods

Informal Settlements (i) / Art. 9 Settlements (ii) 3 5 9 marked increase over ave. for prev. two periods

Art. 9 Settlement Actions Pending (iii) / / 7

Total 17 22 17 comparable number of total decisions

i Includes only cases where the Commission closes its investigation in exchange for “undertakings,” without adopting a formal decision. Does not include comfort letters or exemption decisions with conditions attached. ii After modernisation (i.e. after 5/2004). iii Indicates publication of proposed commitments pursuant to Article 27(4) of Reg. 1/2003.

Use of Settlements Since May 2004: Actions initiated: 11; Decisions taken: 6; Informal settlements: 3; Pending Cases: 7.

Source: Author’s calculations based on public information from the European Commission’s Website (available at http://ec.europa.eu/comm/competition/antitrust/cases/index.html) and the Commission’s Annual Reports on Competition Policy (available at http://ec.europa.eu/comm/competition/annual_reports/).


Notwithstanding the evidence of the growing use of Article 9 settlements, several

factors should be borne in mind when considering the extent of the EU’s future reliance on these procedures. First, at the time of writing the regulation authorizing settlements has been in use for only three and a half years, a time period shorter than the length of the average EU antitrust case. Second, the application of the settlement mechanism has been at least partially set back by the July 2007 Alrosa judgment of the CFI, which added to the list of recent court cases finding defects in the Commission’s internal procedures.100 Finally, a few of the initial settlement decisions were in legacy cases commenced under Regulation 17/62, and the procedures used therein might not be fully indicative of future enforcement policies.

b. Representative Cases

Despite the short experience with Article 9, the current level of interest suggests that

settlements are very attractive. Two Commission decisions adopted in 2006 are of particular importance to the future of competition law enforcement in the EU: Alrosa, because it was the first settlement that was appealed to the CFI and that will be decided by the ECJ, and Universal International Music/MCPS, because it marks several emerging trends in the Commission’s working practices.

The Alrosa case concerns restrictive trade agreements for the sale of rough diamonds between De Beers, a vertically-integrated conglomerate which controls much of the diamond product pipeline worldwide, and Alrosa, a Russian state-owned entity which is the world’s second-largest diamond mining company.101 The Commission first learned about the agreements in the course of a 2001 merger case and, after a separate investigation, issued individual complaints against De Beers and Alrosa in 2003.102 Both companies then proposed commitments (i.e. remedies) to reduce 2.5-fold the value of rough diamonds supplied to De Beers by Alrosa over a five-year period. After receiving comments from twenty-one interested third parties most of which found the commitments inadequate, the Commission suggested that amendments to the proposed settlement were needed. De Beers then offered – and the Commission accepted – much stricter commitments that broadened the definition of rough diamonds and agreed to completely phase out the purchasing relationship between De Beers

100 See, e.g., supra note 40 and accompanying text. The same panel of CFI judges which issued Alrosa

also ruled against the Commission in Schneider Electric (Case T- 351/03) where it imposed Art. 288 EC non-contractual liability for the Commission’s decision to prohibit a merger.

101 European Commission, MEMO/06/90, De Beers’ Commitment to Phase Out Rough Diamond Purchases from Alrosa (February 22, 2006).

102 Case COMP/B-2/38.381, De Beers, Commission Decision of 22.02.2006, 2006 O.J. (L 205) 24 [hereinafter De Beers Commitment Decision].


and Alrosa over a three-year period.103 Soon thereafter, Alrosa lodged an action for annulment of the commitment decision at

the Court of First Instance.104 The company argued that the Commission had violated its right to be heard by not explaining which third-party observations and what aspects of the Commission’s analysis justified (1) the rejection of the original joint commitments and (2) the adoption of final commitments proposed only by De Beers. Furthermore, Alrosa claimed a violation of Regulation 1/2003 because the commitments were offered only by De Beers, but are in effect binding upon both companies, and because the duration of the restrictions imposed by the settlement was not specified.105 The case hearing at the CFI took place in April 2007, and the court issued a judgment annulling the Commission’s decision only three months thereafter, an unusually abridged timetable which illustrates the importance of the matter. The Commission has appealed the CFI’s annulment decision to the ECJ, which is unlikely to issue a decision before the end of 2008.

With regard to the legal status of antitrust settlements within and outside the framework of Article 9, the CFI clarified that only a formal decision of the Commission can give binding legal force to commitments proposed by undertakings.106 More importantly, even though the court recognized that the Commission has a margin of discretion in the investigation and prosecution of cases under Regulation 1/2003, it noted that the Commission nevertheless has to comply with the core EU law principle of proportionality.107 The review of the proportionality of a measure is an objective inquiry which examines the appropriateness of and the need for the contested decision, in light of the aim pursued by the institution.108 The court took the view that the extent of the Commission’s prohibition was “manifestly disproportionate” and that only exceptional circumstances, such as the existence of a possible collective dominant position could justify the suppression of the contractual freedom of the parties.109

When it decides the case, the ECJ is likely to clarify important questions about the proper application of the settlement provisions, including the legal status of third-party comments and the extent to which the Commission can rely on them. The future ECJ judgment should also shed light on the extent of the Commission’s discretion to demand the modification of proposed commitments and to unilaterally exclude companies from being party to a settlement. This will help address some of the substantial legal uncertainty

103 De Beers Commitment Decision, supra note 102, at ¶¶ 40-44. 104 Alrosa Action for Annulment, supra note 8. 105 Id., at 32. 106 Court of First Instance, Alrosa Judgment, supra note 8, ¶¶86-90. 107 Id., ¶ 92. 108 Id., ¶ 99. 109 Id., ¶ 140, 156.


surrounding Article 9 settlements. As discussed in Part V(A) infra, however, the settlement procedures raise a host of questions that go well beyond those touched upon by the CFI in Alrosa. It remains to be seen whether the ECJ would engage in more open-ended review and address the systemic effects of the settlement procedures on the EU competition law framework after modernisation. Even if the CFI’s annulment of Alrosa is sustained, in the absence of more detailed judicial guidance the Commission would be able to apply the settlement procedures mostly as it has done so far. Notably, the CFI refused to provide such additional guidance in the second settlements case it heard and instead dismissed it on strictly procedural grounds in October 2007.110

Some of the complications in Alrosa arise from the fact that it began as a pre-modernisation case, some from the fact that the settlement was challenged by a party that had previously been a party to it. In contrast, Universal International Music/MCPS presents no such complications; it was the first case conducted entirely under Regulation 1/2003.111 Therefore, the Commission’s handling of Universal International Music/MCPS might be indicative of the future shape of settlement proceedings in EU competition law. The case lasted less than eight months, which is well below the norm. The Commission published a notice on the initiation of proceedings in January 2006, invited third-party comments under Article 27(4) in May 2006, and adopted the final commitment decision in October 2006. Also notable was the procedural flexibility enjoyed by the Commission as well as the scarcity of information about the proceedings prior to the publication of the Article 27(4) notice. The Commission did not serve the parties with a detailed statement of objections (i.e., a complaint), and also did not issue a press release summarizing its anticompetitive concerns as it does in regular investigations. Instead, on January 23, 2006, the Commission published a one-sentence notice on the initiation of proceedings on the website of the Directorate General for Competition (and not in the Official Journal).112 The following day, it sent the parties a letter informing them of its “preliminary assessment.”113

Article 9(1) is usually read to require such a preliminary assessment in cases where commitments are expected, but it does not set any requirements for its content. Thus, it is

110 See Case T-274/06, Estaser El Mareny v. Commission, Order of Oct. 25, 2007, 2007 O.J. (C 294) 58

(rejecting a competitor’s appeal of a settlement decision, because the appeal was filed six days past the statutory deadline).

111 The case involved an agreement between five major music publishers and thirteen European collecting societies, establishing rules for the licensing of copyrighted material.

112 The notice is available at http://ec.europa.eu/comm/competition/antitrust/cases/decisions/38681/ initiation.pdf and reads as follows: “On 23 January 2006 the Commission decided to initiate proceedings in case COMP/C2/38.681 – ‘Universal International Music BV/MCPS and others’ with a view to adopting a decision pursuant Chapter III of Regulation (EC) N° 1/2003.”

113 See Case COMP/C.2/38.681 — Universal International Music BV/MCPS and others (The Cannes Extension Agreement), Notice Published Pursuant to Article 27(4) of Council Regulation (EC) 1/2003, 2006 O.J. (C 122) 2, at ¶3.


unclear how detailed the Commission’s assessment in this case was, and – in turn – how formal and procedurally sound was the first stage of the investigation. Assuming that Universal International Music/MCPS was not an uncharacteristically “easy” case, its handling suggests that the Commission is eager to capitalize on the promise of settlements to make investigations shorter and more efficient. It further suggests that the improvements in speed would be accompanied by more procedural flexibility and less rigorous initial investigations.

IV. ANTITRUST SETTLEMENTS IN U.S. LAW After identifying the settlement provisions introduced by the EU antitrust

modernisation program as untailored transplants from U.S. law in Part II, and after detailing the European Commission’s growing reliance on such settlements in Part III, it is helpful to consider the longstanding U.S. experience with antitrust consent decrees. It is instructive on two levels: (1) to reveal what a mature antitrust regime relying on settlements looks like, and (2) to illustrate one level at which to set the balance between the efficiency benefits of settlements and their potential costs to the legal system and economic welfare. Therefore, if the Commission and the EU antitrust bar had subjected the settlement procedures to tailoring before importing them into EU law, they would have had to consider whether (and what) U.S.-type problems could arise within the context of the EU antitrust framework, and whether the same balance between costs and benefits would be acceptable in the European Union.

A. The History and Structure of the U.S. Framework

In line with the dual antitrust enforcement structure in the United States, both the

Department of Justice and the Federal Trade Commission can enter into antitrust settlements. These are called consent decrees at the DOJ and consent orders at the FTC.114 Even though the DOJ negotiated its first antitrust settlement in 1906,115 it began to use consent degrees with much greater frequency only after the enactment of the Clayton Act in 1914. In Section 5(a), the original Act provided that in no case shall a government-negotiated consent decree, entered before testimony is taken, be available as prima facie evidence to assist private parties in recovering treble damages for injuries caused by the defendant’s activities.116 This created a powerful incentive for defendants to negotiate settlements rather than litigate. Not settling and then losing made the company vulnerable in follow-on suits by private litigants; settling limited the evidence available to such litigants and decreased the likelihood that they will prevail.

114 This paper, like most of the literature, refers to both instruments as “consent decrees.” 115 See supra note 11. 116 15 U.S.C. § 16(a) (1914).


The statistics bear out this shift in incentives: between 1906 and 1909, 30 percent of all civil antitrust cases at the DOJ were settled. The figure then quickly rose to 75 percent for 1910-1955,117 and to 93 percent for 1955-1974. The frequency of settlements temporarily decreased to 87 percent for 1975-1984, because of an amendment to the procedural framework for consent decrees, but it then recovered, stabilizing at 97 percent since 1985.118

Even though the statutory frameworks for settlements at the FTC and the DOJ vary slightly, the actual negotiation and use of consent decrees by the two agencies is very similar, as illustrated in Table 2. The key difference is that all DOJ settlements are reviewed by a district court which must consider whether the consent decree is in the “public interest” before entering it.119 No such formal public interest determination is made in the case of FTC consent orders, whose negotiation and entry is governed by an internal administrative process.120 A second, smaller difference is in the ability to impose financial penalties as part of the settlement: DOJ consent decrees routinely include fines, whereas the FTC has thus far sought and obtained civil monetary relief in the form of disgorgement in only three large cases, all of which were resolved through consent orders.121

One difference with the EU framework is that while the U.S. procedures apply to both merger and non-merger cases, Regulation 1/2003 applies only to non-merger cases. (The negotiation of commitments in merger cases in the EU is governed by the Merger Regulation.)122 The strong similarities between the DOJ and FTC enforcement frameworks and practices, on the other hand, makes it possible to draw a representative picture of U.S. antitrust settlements by focusing mostly on the DOJ, since it is the agency whose use of settlements has attracted the greatest amount of attention.

Unlike its EU counterpart, the statute regulating consent decrees at the DOJ includes a number of specific requirements. First, any proposed consent decree must be filed with a federal district court and published in the Federal Register at least 60 days prior to the effective date of the settlement. Along with the decree, the DOJ needs to file a competitive impact statement (CIS), which summarizes the proceedings and describes the general impact of the settlement.123 Next, the DOJ is required to disseminate summaries of the consent decree

117 Author’s calculations from data reported in Richard Posner, A Statistical Study of Antitrust

Enforcement, 13 J. LAW & ECON. 365, 375 (1970). 118 Author’s calculations from data reported in Joseph C. Gallo et al., Department of Justice Antitrust

Enforcement, 1955-1997: An Empirical Survey, 17 REV. INDUS. ORG. 75, 112 (2000). 119 15 U.S.C. §§ 16 (e)-(g) (2007). 120 Federal Trade Commission, Rules of Practice, 16 C.F.R. §§ 0.1 et seq. 121 These involved the FTC’s proceedings against Mylan (1999), Hearst Trust, et al. (2001), and Perrigo

Company and Alpharma (2004). 122 See New Merger Regulation, supra note 46, Article 6(2). (Similar provisions also existed in the

original 1989 Merger Regulation, supra note 30.) 123 The statute lists six highly specific requirements for the content of the CIS. 15 U.S.C. § 16(b) (2007).


and the CIS,124 to consider the public comments it receives, and to publish a response in the Federal Register.125 The statute then requires that the reviewing district court “determine that the entry of [the consent decree] is in the public interest,” based on a host of factors enumerated at a level of specificity that is unusual for a judicial review statute.126 The court is given broad discretion over the proceedings it may conduct in making the public interest determination,127 but the term “public interest” itself is not defined in the statute. Before commencing review, the court must also receive from the defendant a list of all its direct and indirect communications with the government concerning the settlement, except those in which it was represented by its counsel of record.128

This elaborate statutory framework for the negotiation and judicial review of consent decrees was promulgated by the Tunney Act in 1974. Before its passage, the only procedural requirement was that decrees be submitted to a district court for approval. Courts were willing to set aside DOJ consent decrees only when there was a clear showing of “bad faith or malfeasance” on the part of the government,129 and allotted DOJ the flexibility to enter into settlements regulating entire sectors of the economy. Those occasionally drew significant public criticism,130 which was further bolstered by a 1959 Congressional Report that identified flaws in the DOJ’s consent decree program.131 Nonetheless, there was no sufficient momentum for change until the early 1970s, when the press raised allegations that a company was offered a consent decree in exchange for helping to finance the convention of a major political party.132

Congressional deliberation leading up to the adoption of the Tunney Act indicates that lawmakers were concerned with several key elements of the antitrust settlement procedures operating at the time, including the unavailability of meaningful judicial review; the secrecy of consent decree negotiations and the attendant lack of public participation; and the scope for political influence. The sponsors of the bill argued that a number of recent DOJ settlements

124 Id., § 16(c). 125 Id., § 16(d). 126 Id., § 16(e)(1). 127 Id., § 16(f). 128 Id., § 16(g). 129 Sam Fox Publishing Co. v. United States, 366 U.S. 683, 689 (1961). See also, City of Burbank v.

General Elec. Co., 329 F.2d 825, 831 (9th Cir. 1964) (consent decree approval not necessary, but “from a practical standpoint is a forgone conclusion”).

130 See, e.g., United States v. Atlantic Refining Co., Civil Action No. 14060 (D.D.C. 1941) (oil pipeline consent decree); United States v. Western Elec. Co., 1956 Trade Cas. ¶ 68,246 (D.N.J. 1956) (early telephone industry consent decree).

131 ANTITRUST SUBCOMMITTEE, COMMITTEE ON THE JUDICIARY, 86TH CONG., REPORT ON THE CONSENT DECREE PROGRAM OF THE DEP’T OF JUSTICE (Comm. Print 1959).

132 See Note, The ITT Dividend: Reform of Department of Justice Consent Decree Procedures, 73 COLUM. L. REV. 595 (1973) (describing the controversy involving the ITT/Hartford merger).


were “blatantly inequitable and improper,”133 and expressed their desire to “insure [sic] that [the] antitrust laws are not for sale.”134 The new bill specifically sought to remedy the “judicial rubber stamping” of DOJ proposals by strengthening the judicial review process and by giving more detailed guidance to courts.135 Despite the concerns expressed during the congressional debates, the bill was careful not to undermine the viability of the consent decree program. Congress reaffirmed its position that settlements are a “legitimate and integral part of antitrust enforcement,” and that they bear “crucial importance as an enforcement tool, since [they permit] the allocation of resources elsewhere.”136 Thirty-three years after the introduction of the Tunney Act, the evidence suggests that it has had only a modest effect upon the working practices of the DOJ and the structure of judicial review of settlements. The situation has persisted despite occasional criticism.137 Courts have continued to be reluctant to examine DOJ settlements in great detail. Thus, even though the statutory judicial review provisions have been strengthened, the content of judicial review has not been altered materially. When first interpreting the Tunney Act, most courts adopted an approach that gave very strong deference to the views of the DOJ. One year after the Act was passed, a district judge maintained that the “[p]ower to reform the proceedings under which consent decrees are actually negotiated is vested in the executive and legislative branches, not the judicial” and refused to subject the settlement to close examination.138 In line with this view, most courts found that the highly deferential pre-1974 standard continued to apply.139 Few judges adopted a less deferential approach and conducted hearings,140 or requested the modification of a consent decree.141

The scope of judicial review was further constrained when in 1995 the D.C. Circuit overruled the lower court’s rejection of the consent decree in United States v. Microsoft.142

133 119 CONG. REC. 24598 (1973) (Remarks of Sen. Tunney). 134 120 CONG. REC. 36342 (1974) (Statement of Rep. Holtzman). 135 H.R. REP. NO. 1463, 93d Cong., 2d Sess. 6 (1973), reprinted in 1974 U.S. CONG. & AD. NEWS 6538. 136 S. REP. NO. 93-298, 93d Cong., 1st Sess. 6, at 3, 5 (1973). 137 See, e.g., John Flynn & Darren Bush, The Misuse and Abuse of the Tunney Act: The Adverse

Consequences of the Microsoft Fallacies, 34 LOY. U. CHI. L. J. 749 (2003); Lloyd Anderson, United States v. Microsoft, Antitrust Consent Decrees, and the Need for a Proper Scope of Judicial Review, 65 ANTITRUST L. J. 1 (1997).

138 United States v. Associated Milk Producers, 394 F. Supp. 29, 41 (W.D. Mo. 1975), aff'd, 534 F.2d 113 (8th Cir.), cert. denied, 429 U.S. 940 (1976) (internal quotation marks omitted).

139 See, e.g., U.S. v. National Broadcasting Co., 449 F. Supp. 1127, 1141 (D.C.Cal. 1978); United States v. Agri-Mark, Inc., 512 F. Supp. 737 (D. Vt. 1981); United States v. Morgan Drive Away, Inc., 1976-1 Trade Cas. (CCH) ¶ 60,949 (D.D.C. 1976).

140 United States v. Gillette Co., 406 F. Supp. 713 (D. Mass. 1975). 141 United States v. AT&T, 552 F. Supp. 131 (D.D.C. 1982), aff’d sub nom., Maryland v. United States,

460 U.S. 1001 (1983). 142 United States v. Microsoft, 56 F.3d 1448 (D.C.Cir. 1995).


The district judge had subjected the settlement to an open-ended evaluation, with participation from several third parties as amici, and with little deference to the DOJ’s determinations.143 Upon reviewing the legislative history of the Tunney Act, he asserted a broad role for the district court in examining the terms of the settlement and concluded that the proposed consent decree was inadequate.144 The D.C. Circuit disagreed and accused the district court of abuse of discretion that infringed upon the constitutional domain of the executive branch.145 A unanimous panel ruled that a DOJ settlement had to be approved by a district court unless it “appears to make a mockery of judicial power.”146

Since Microsoft, distinct courts have applied this injunction unfailingly and have not rejected or modified any of the government’s consent decrees. Even the 2004 amendment to the Tunney Act which purported to strengthen the scope of judicial review, has not had any effect.147 When the amendment was tested in connection with two large telecommunications mergers from 2005, the reviewing judge noted that “Congress has [still] not instructed how much scrutiny the Court should apply,” and approved the settlement using the highly deferential review standard that had been the norm theretofore.148 In the absence of specific instructions, courts fall back on the general presumption in favor of settlements in U.S. law, reflected even in the Federal Rules of Civil Procedure.149 The function of judicial review has been transformed; it has possibly served to deter bad settlements but not to detect them.150

Despite its shortcomings, the U.S. antitrust settlement regime produces a number of benefits that should not be downplayed. The consent decree programs at the FTC and the DOJ allow the agencies to use their limited resources more efficiently and end more antitrust violations then they otherwise could. Consent decrees also allow them to craft innovative remedies which might not have a legal basis, but which might nevertheless address past anticompetitive behavior and change the alignment of incentives so that future violations are less likely to occur. Settlements are much cheaper than court litigation for companies; thus, their availability may contribute to more innovation and greater economic growth. Viewed this way, the performance of the settlement process is not as a failure to implement the intent of

143 United States v. Microsoft, 159 F.R.D. 318 (D.D.C. 1995). 144 Id., 332-39. 145 Microsoft, supra note 142, at 1457. 146 Id., at 1461. 147 Pub.L. 108-237, Title II, § 221(a), June 22, 2004, 118 Stat. 668. The amendment mandated that the

district court “shall” (rather than “may”) consider the factors enumerated by the statute (supra note 126), and modified slightly the language of these factors.

148 United States v. SBC Communications & ATT Corp., United States v. Verizon Communications & MCI, 2007 U.S. Dist. LEXIS 22947, at 42 (slip opinion) [hereinafter SBC/ATT & Verizon/MCI].

149 Rule 16 lists “facilitating the settlement of the case” as an objective for the courts. FED. R. CIV. P. 16. 150 In no case has an appellate court ever sustained a district court’s rejection of a settlement as outside

the public interest. SBC/ATT & Verizon/MCI, at 33 (slip opinion).


Congress from 1974, but a reflection of the tradeoff between benefits and costs which the U.S. political system is willing to accept. After all, Congress could have introduced extensive changes in the framework when it considered the 2004 amendment to the Act, but it did not find it necessary to do so.

B. Theoretical Views on Settlements in U.S. Law

The longstanding use of settlements in the United States has generated much academic commentary about their effects and desirability. The literature, however, has focused mostly on settlements between private parties and in fields outside of antitrust, and is therefore of limited applicability to public-private settlements.151 Perhaps most famously, Owen Fiss has been critical of settlements for “intrinsic” reasons stemming from a particular vision about the role of law in society. Fiss views adjudication as a cherished elaboration of public values, “the values that define a society and give it its identity and inner coherence.”152 Since settlements work outside of the public realm, a society that relies on them “privileges peace over justice” out of fear of the disruption caused by justice (i.e. non-settlement). Fiss maintains, however, that in a civil society, justice is a higher value than peace and for this reason, adjudication should be favored and settlements avoided.153

David Luban has countered most criticisms of settlements though a set of justifications that are grounded in both economic efficiency and – quite notably – public law. He has argued that the critics of settlements unrealistically romanticize court adjudication without considering the negative public law effects of “bad” adjudication. After looking at the “squalid world of actual litigation,” Luban finds that a large population of cases “exist only to be settled.”154 Moreover, in an already overburdened judicial system, more adjudication would only result in bad and inconsistent law that would dissipate rather than elaborate public law values. Even when they decide cases, U.S. courts often use unpublished opinions which – like settlements – have no precedential value and are incongruent with the public-life conception of adjudication.155 Reducing the role of settlements would arguably increase the reliance on such opinions and burden the judicial system without producing any real benefits. Luban contends that a careful balance between settlements and adjudication would realize public law values such as openness, legal justice, and the creation of public goods more effectively than adjudication alone could.

151 See, e.g., Bruce Hay, Effort, Information, Settlement, Trial, 24 J. LEGAL STUD. 29 (1995). 152 Owen M. Fiss, Social and Political Foundations of Adjudication, 6 LAW AND HUM. BEHAV. 121

(1982). 153 Fiss, supra note 12. 154 Id., 2640. 155 Id., 2644-45.


The U.S. reliance on settlements, and antitrust settlements in particular, has been the

result of a dynamic compromise. It is not a “capitulation to the conditions of mass society,” but rather a sober recognition of these conditions. Thus, the structure of the antitrust settlement rules is a reflection of the balancing between the need for the promotion of public law values through litigation and the preference for speed and efficiency in the enforcement of the antitrust laws. As this Part showed, the factors that enter into the balancing process are specific to the United States, the structure of its government, its administrate law framework, its history, and its public values.

V. EFFECTS OF THE RELIANCE ON U.S.-STYLE ANTITRUST SETTLEMENTS IN EU LAW: THREE DIMENSIONS

The flexibility of the settlement procedure described in Part III makes it an efficient

alternative to some of the traditional antitrust enforcement approaches in the EU. As most shortcuts, however, the use of settlements can change the strategic behavior of various actors on a number of levels. This Part analyzes the nature of those changes by looking at three closely-related, yet distinct, antitrust enforcement frameworks: (1) the EU competition law regime, (2) the competition law regimes of individual EU member states, and (3) the transatlantic regime for antitrust cooperation. The nature of these effects, many of them unintended, will determine the advisability of maintaining or further extending the EU’s reliance on U.S.-style settlements.

A. Antitrust Enforcement at the EU Level

The effects of the European Commission’s growing reliance on settlements are not

evenly distributed and, as can be expected, most of them have occurred within the EU antitrust enforcement framework. The application of the new procedure has arguably reduced the transparency of antitrust enforcement, diminished legal certainty by leaving several practical questions unanswered, and created the conditions for unintended systemic changes in the competition law regime.

1. Diminished Transparency

Embedded in the enforcement of the Treaty’s antitrust provisions is a complex scheme

of procedural guarantees which covers the rights of companies to be heard and to have access to the Commission’s file (i.e. docket).156 Both of these rights are based on “the right to good

156 See European Commission, Notice on the Rules for Access to the Commission File, 2005 O.J. (C

325) 7.


administration” set out in the Charter of Fundamental Rights of the European Union,157 and are closely related to the notion of transparency in administration. Transparency is important not only with regard to a company’s individual case, but also on the aggregate level, where it serves as a safeguard against corruption and political interference.

Because settlements involve bargaining in “the shadow of the law,”158 the U.S. antitrust enforcement framework deliberately tries to introduce transparency at key points in the settlement process, e.g. by requiring the dissemination of the CIS, the solicitation of and response to public comments, and through the judicial review requirement. The EU legislator copied many of these provisions, but their interaction with other aspects of the competition law regime renders them more ineffectual than they are in the United States. Hence, their application reduces the information that is available both to the general public and to interested third parties.

Under the new procedures, the Commission provides much less information about a case that is being settled than about cases that are investigated with a view towards adopting an infringement decision. In the latter type of cases, the Commission sends a detailed statement of objections (i.e., a complaint) to the defendant and usually issues a press release summarizing its contents. The statement of objection is a thorough document which undergoes rigorous review in two Directorates General of the Commission: Competition and the Legal Service. It is not unusual for the Commission to spend several years collecting evidence and formulating the theory of harm that would form the basis of the statement of objection.159 Once the defendant receives it, it can estimate with some precision the strength of the Commission’s case. Furthermore, once the statement of objections has been issued, a non-confidential version can be obtained by any third party that had filed a complaint against the defendant giving rise to the investigation.160 Thus, along with the public transparency provided by the press release summarizing the statement of objection, this regime also provides two forms of “private” transparency: (1) it allows affected third parties to check the work of the Commission and, if they find the statement of objections inadequate, contemplate private actions or actions in national courts; and (2) it informs the defendant of all aspects of the Commission’s case against it. This private transparency can be thought of as a procedural safeguard and a part of a company’s “right to be heard.”

157 See European Council, European Parliament, and European Commission, Charter of Fundamental

Rights of the European Union, 2000 O.J. (C 364) 1, Article 41. 158 The term was coined in Robert Mnookin & Lewis Kornhauser, Bargaining in the Shadow of the

Law: the Case of Divorce, 88 YALE L.J. 950 (1979) 159 Author’s interviews with officials from the Commission’s Directorate General for Competition, July

2005. 160 European Commission, Regulation (EC) 773/2004 of 7 April 2004 Relating to the Conduct of

Proceedings by the Commission Pursuant to Articles 81 and 82 of the EC Treaty, 2004 O.J. (L123) 18, Article 6.


By contrast, settlement cases entail neither the public nor the private transparency elements.161 The Commission initiates proceedings through a brief public announcement which does not provide details about the investigation or the allegations against the company. The Commission then sends the defendant a preliminary assessment, a document required by Regulation 1/2003, but the content, length, and level of specificity of which is defined nowhere.162 Unlike the statement of objections in regular cases, the preliminary assessment in settlement cases is not made available to third parties. Furthermore, because the preliminary assessment can be very brief and does not have to meet the requirements of a final Commission work product,163 it most likely does not provide the defendant with sufficient information about the Commission’s case or allow it to assess the strength of the case. The defendant also does not have the right to access the Commission’s docket, as it does in regular cases.164 This reduction in transparency for the defendant, however, is not nearly as worrisome as is the reduction in transparency for the public and third parties, because the defendant is not required to enter into settlement proceedings and has voluntarily surrendered some of the regular procedural guarantees.

The general lack of constraints built into the framework also allows the Commission and the defendant to negotiate a settlement completely outside of the procedures set out in Regulation 1/2003. There is evidence that this has already happened in the Coca-Cola case, where the Commission and the defendant negotiated the draft commitments before the preliminary assessment was issued, rather than vice versa, as Article 9(1) of the Regulation seems to require. The proposed commitments were even discussed with interested third parties. Thus, the preliminary assessment did not constitute an independent evaluation of the case by the Commission, but was rather drafted to match the commitments offered by the defendant.165 This mirrors the controversial U.S. practice of negotiating the complaint and the terms of the settlement simultaneously so that they fit one another and are more likely to be approved. Using such an approach in the EU circumvents the plain requirement in Regulation 1/2003. If such practices become commonplace, they would not only reduce transparency in settlements even further, but would also obviate the already-modest procedural safeguards contained in the legal framework.

161 It is possible that the Commission would begin a case with a view towards adopting an infringement

decision and issue a statement of objections, but later decide to accept commitments. Under this scenario, a settlement case would not suffer from the lack of transparency described herein.

162 See supra notes 112-113 and accompanying text for details on the procedures which the Commission employed in the Universal International Music/MCPS case.

163 The statement of objections has to be supported in such a way so as to withstand a subsequent challenge by the defendant in court.

164 See Notice on the Rules for Access to the Commission File, supra note 156. 165 See Cook, supra note 6, at 215-16. The author also notes that “[f]rom the companies’ perspective

(and in fact from the Commission’s as well), the preliminary assessment would have been largely a formality.” Id., at 216.


2. Reduction of Legal Certainty

The new procedures have also raised a host of questions about the appealability of

settlement decisions and the rights of third parties in settlement proceedings. The resulting legal uncertainty prevents companies from predicting with sufficient confidence the costs and benefits of the strategic choices they make and thereby distorts not only their behavior but also the overall performance of the regime. This is a very important consequence, since the distortions can implicate not only the choice between settlement and adjudication, but also areas such as the viability of private enforcement of EU competition law. The settlement procedure is new and it would be unreasonable to expect that all questions relating to it should have been resolved ex ante; a few of them may be even better resolved by the courts when appropriate cases arise. The nature of most of the problems, however, suggests yet again that in importing the settlement procedures, the Commission did not sufficiency consider their interaction with other key elements of the EU competition law framework and did not engage in substantive tailoring.

The first set of unanswered questions relate to the appealability and legal status of commitment decisions adopted by the Commission. Regulation 1/2003 gives the Commission the power to reopen its investigation under certain conditions, but does not set out a procedure for the modification of a settlement when both the Commission and the company agree, or at the unilateral request of the company. It is unclear whether a company would be able to appeal an original commitment decision that is outdated, and whether the EU courts would allow in-depth review of such a decision. This lack of certainty affects the incentives of parties under investigation. Unless they know whether (and how) commitment decisions can be modified, companies in fast-changing sectors might be reluctant to enter into settlements that could be easily superseded by unforeseeable changes in technology or industry circumstances. On the other hand, if settlements are easily modifiable, the procedure might become even more attractive, leading both the Commission and firms to be less careful at the negotiation stage. Another question related to appealability concerns the legal standing of third parties (e.g., competitors, customers, and suppliers) that are directly affected by the terms of the commitment decision. As demonstrated in Alrosa, a settlement between a company under investigation and the Commission can have serious and direct economic effects on another commercial party.166 A similar situation occurred in the Coca Cola case, where as part of the settlement the Commission required Coca Cola to “use its best efforts” to ensure that all EU bottlers of its beverages sign the settlement and agree to an amendment of their contracts with Coca Cola to state that they will abide by the terms of the commitment decision.167 Thus,

166 See text accompanying notes 101-105 supra. 167 Case COMP/A.39.116/B2, Coca-Cola, Commission Decision of 22 June 2005 Relating to a


bottlers would be induced to modify their behavior and suffer direct economic harm as a result of a settlement to which they were not a party. This is even more bothersome in cases of vertical (or supplier) relationships where one of the parties (here, Coca Cola) has considerable market power. In its CFI appeal, Alrosa argued that an approach that ignores the interests of third parties violated its right to be heard, and the CFI agreed. It remains to be seen whether the ECJ would accept this argument and grant third parties standing to appeal Commission commitment decisions when they affect them directly.

The greater procedural rights afforded to third parties under EU competition law give rise to another unresolved issue that can have significant and unintended effects. Under a line of court precedents that began with Metro in the late 1970s, a Commission decision finding no infringement is viewed as a “negative decision” and can be appealed in court by an interested third party.168 This is usually the company that lodged the initial complaint prompting the Commission’s investigation, though it need not be.169 Decisions in commitment cases satisfy the requirement of Metro; the Commission dismisses the complainant’s request to find an infringement and instead reaches a settlement which expressly states that there has been no finding of an infringement. If the courts find that Metro applies to Article 9 cases, dissatisfied parties would be able to appeal settlement decisions and would threaten the procedure’s advantages as an efficient way to close cases. An appeal is a lengthy process that imposes additional costs on the settling parties; the Commission would have to defend its decision not to find an infringement, whereas the company that accepted the settlement would have to wait for the final outcome and manage the attendant legal uncertainty. Not unexpectedly, this problem does not arise under the legal regime that was the source of the EU settlement provisions.170 In the United States, a complainant who is unsatisfied with the DOJ’s or FTC’s disposition of a case has access to the private enforcement mechanism and can file its own suit as long as it can prove that it has suffered an antitrust injury as a result of the actions of the alleged infringer.171

3. Systemic Implications

Along with reducing transparency and raising important questions about appealability

Proceeding Pursuant to Article 82 of the EC Treaty and Article 54 of the EEA Agreement, at 12-13, 26 [hereinafter Coca-Cola Commitments Decision]

168 See Case 26/76, Metro SB-Grossmärkte v. Commission, 1977 E.C.R. 1875 [hereinafter Metro]. See also Piau v. Commission, January 26, 2005, ¶ 38 (case not yet reported).

169 See Case 75/84, Metro SB-Grossmärkte v. Commission (Metro II), 1986 E.C.R. 3021, ¶¶ 21-33. 170 The functional equivalent of this situation would be for a company that filed an unsuccessful

complaint with the FTC to take the FTC to court in order obtain review of its finding that no violation of the antitrust laws took place.

171 See Brunswick Corp. v. Pueblo Bowl-O-Mat, 429 U.S. 477 (1977) (setting out antitrust injury requirement in private actions under Section 4 of the Clayton Act).


and the rights of third parties, the new settlement procedures are also likely to have systemic effects extending across the entire EU competition law framework. First, the greater procedural ease with which the European Commission can adopt settlement decisions, as compared to regular infringement decisions, might cause settlements to be used beyond the optimal level. Second, the growing reliance on antitrust settlements leads to a shift away from the “law enforcement” antitrust model, which focuses on ex post enforcement, and to a much more bureaucratic model under which the Commission serves as a market regulator and uses settlements to remedy potential future violations of EU competition law. These two clusters of systemic effects are discussed in turn below.

a. Shifts in Incentives and Enforcement Priorities

The procedural advantages of settlement decisions pursuant to Article 9 of Regulation

1/2003 are numerous: the Commission can substitute the detailed statement of objections it uses in regular cases with a cursory “preliminary assessment;” it does not have to conduct an oral hearing before representatives from national competition authorities; it does not have to give the defendant access to its case docket; and it does not have to draft a legally robust prohibition decision that can withstand challenge by the defendant in the EU courts.

The relative attractiveness of settlements is helped by the deficiencies of the mechanism for adopting regular infringement decisions. Because of the procedural rigidity of these procedures, it is not unusual for five or more years to elapse from the date the Commission receives a complaint alleging anticompetitive activity to the date when it adopts a prohibition decision or a decision dismissing the complaint. During that time, the competitive landscape within a given sector might change dramatically and the Commission might not be able to use evidence gathered early on in the proceedings for its final decision. In light of the scope for delay within the regular procedure, a settlement decision might often be the only way for the Commission to end an infringement, and – just as important – produce results that shield it from criticisms for being inefficient or incompetent.

Their attractiveness notwithstanding, settlements should not be used for purposes they were not intended to serve and should not become surrogates for regular infringement decisions. For the Commission to have adequate bargaining power in a settlement negotiation, it should also be able to end infringements effectively outside of the settlement process. If this is not an option, the choice for both the defendant and the Commission becomes one between (1) a settlement, (2) no enforcement, and (3) protracted proceedings most likely leading to no enforcement. In such a situation, the Commission does not have adequate bargaining power and defendants would be willing to give concessions valued at or below the expected cost they attach to protracted proceedings. For most violations of EU competition law, such concessions would be insufficient. Regular enforcement and enforcement through settlements are not


perfect substitutes and the Commission cannot remedy the inefficiency of the former by expanding its reliance on the latter, because for settlements to work, regular enforcement should be a viable option. Even in the United States, where the use of consent decrees is much more widespread, the DOJ and the FTC arguably have greater bargaining power to extract sufficient commitments from defendants, because they can also obtain effective and timely relief in court.

When combined with the procedural disparities between the regular and the settlement mechanisms, the statutory limitation that settlements be used only in cases where fines are not appropriate imposes a further distortionary effect on antitrust enforcement in the European Union. Several undesirable scenarios, not necessarily independent of one another, are possible. First, the Commission might be induced to use the settlement procedure for all cases that do not require fines, including cases that should not be settled because of the precedential value they could have or for some other reason. Second, the Commission might over-enforce provisions of EU competition law that deal with offenses where fines are not necessary and under-enforce provisions that deal with offenses where fines are necessary. The Commission has long enjoyed the prerogative to set its own enforcement priorities,172 and in view of the resource constraints under which it operates, it would only be rational for it to choose the mix between procedures and case types that has the greatest probability of success in the shortest period of time.173 One configuration of the optimal mix involves a high percentage of settlement actions used in cases that ordinarily do not require fines. Choosing this mix would lead to under-enforcement of provisions that govern cases where fines should be imposed. Another configuration of the optimal mix suggests that the Commission would improperly use settlements and adopt commitment decisions without fines in serious cases that would ordinarily require fines. It is rational to do this, because the expected value of the relief it could obtain by using settlement procedures (higher likelihood of success, more efficient) for a lesser remedy would still be higher than the expected value of using the regular procedure (lower likelihood of success, lengthier) for a more substantial remedy involving fines.

Despite the low number of decisions, Table 3 supra suggests that one or both of these distortions might have already occurred. The ratio between decisions with fines and decisions without fines is lower for the period after the introduction of settlement procedures than it was for the preceding periods. The benign explanation would involve random fluctuations in the Commission’s docket over time. But the ratio could also suggest the under-enforcement after 2004 of cases where fines should be required and the corresponding over-enforcement of cases which do not require fines, or the improper use of settlement decisions without fines in cases

172 See Case T-24/90, Automec v. Commission, 1992 E.C.R. II-2223, ¶¶ 73-77; Case C-344/98,

Masterfoods v. HB Ice Cream, 2000 E.C.R. I-11369, at ¶ 46. 173 Neither the courts, nor the political process, nor public opinion impose any additional constraints

that affect the calculus used by the Commission in choosing its enforcement priorities.


that would normally require fines. Each of these shifts in the Commission’s enforcement agenda, if occurring in practice,

would run counter to the intent behind the modernisation program and the introduction of U.S.-style settlements. They were meant to free up resources so the Commission can focus on prosecuting hardcore breaches of EU competition laws that can serve as precedents for national competition authorities, and not as a way to achieve higher levels of enforcement through commitment decisions which have no precedential value.

The final manifestation of the change in incentives produced by the introduction of settlements relates to the decision matrixes of companies, rather than the Commission. The impossibility of including fines as part of the remedy might lead to situations where companies have to offer stricter behavioral and structural commitments in exchange for relief that could have been obtained through fines. Yet, substituting prospective commitments whose effects and, hence, expected costs are uncertain for fines the costs of which are always known might be inefficient. Furthermore, there is an information asymmetry in that the company offering the commitments can evaluate the tradeoff between prospective and monetary relief much better than the Commission can. Each of these distortionary effects is the direct result of the design of the settlement procedure and could have been prevented if the Commission had tailored it better to the realities of EU law.

b. Settlements As a Cause of Bureaucratization

The growing reliance on U.S.-style settlements by the European Commission is also

having another, much more profound systemic effect: the increased bureaucratization of antitrust enforcement at the EU level. If taken too far, this process will have negative implications for the development of EU antitrust law doctrine, the independence of competition law enforcement, and, in some cases, even economic efficiency.

Most regulatory schemes fit along a continuum delimited by two extremes, a legalistic regulatory model and a bureaucratic regulatory model.174 The traditional common law system of case-by-case adjudication sits closer to the legalistic end of the spectrum, while command and control systems that involve a high degree of centralized planning sit at the opposite end. The EU competition law model has always been more bureaucratic than legalistic. Cases are decided entirely within the Competition Directorate General, which until recently employed industry-wide block exemptions as part of antitrust enforcement and which now uses guidelines and notices applicable across the board. Even though the modernisation program has tried to move the regime towards legalistic regulation by creating a mini-judicial process within the Commission,175 these efforts are countered by the increased reliance on

174 Harry First, Is Antitrust “Law”?, ANTITRUST, Fall 1995, at 9. 175 The process entails stronger procedural rights, case hearings, and even the powerful institution of


commitment decisions. Settlements further the bureaucratic regulation model because they focus not on the

actual past violation of the law (indeed, they are purposefully silent on this question), but rather on the future remedies that would best address what the regulator perceives as a market failure. The reliance on settlements is the main, but not the only factor changing the nature of the system. Another example is the growing use of “sector inquiries” which analyze the competitive conditions within sectors of the common market but do not give rise to cases for violations of any competition rules.176 The shift away from the legalistic regulatory model is not unique to the EU: the United States has already experienced such a shift in the field of antitrust and it has been accompanied (and perhaps in part caused) by the growth in reliance on consent decrees.177 Since the European Union is starting with a system that already has a strong bureaucratic tradition,178 the effects of settlements are likely to be at least as pronounced as they have been in the United States.

The increased bureaucratization of the EU antitrust system would have several undesirable characteristics, some of which will negate the benefits from the modernisation reforms. First, by not adopting a sufficient number of formal decisions and by relying on settlements instead, the European Commission will not contribute to the clarification of the legal content of the prohibitions in Articles 81 and 82 of the EU Treaty. The evidentiary threshold for ending a practice through a settlement is much lower than the evidentiary threshold for adopting a prohibition decision. Hence, commitment decisions can only be of limited guidance to enterprises. The remedies included in a commitment decision also fail to serve a notice function, as no equivalence exists between them and the remedies in a formal prohibition decision: in the latter case, the remedies must be linked to specific, proven violations of the competition laws and should be able to withstand a court challenge, while in the former case, the defendant would be willing to accept broader or unorthodox remedies in exchange for the more efficient procedure and the avoidance of fines and negative publicity. Ultimately, the remedies included as part of a settlement do not have to be grounded in competition law; instead, they can supplant the law.

This shift towards bureaucratic regulation is also evident in the United States, where the advice lawyers give their clients is often entirely divorced from case law authority.179 The agencies have used consent decrees, rather than the courts, to develop important doctrines on,

hearing officers who have many of the powers of U.S. administrative law judges (themselves called hearing officers at an earlier point in time).

176 See George Stephanov Georgiev & Augustijn van Haasteren, Commission Launches Inquiries into the Energy and Financial Service Sectors, EU COMPETITION POL’Y NEWSL., Autumn 2005, at 51.

177 A. Douglas Melamed, Antitrust: The New Regulation, ANTITRUST, Fall 1995, at 13. 178 See Robert Kagan, Should Europe Worry about Adversarial Legalism, 17(2) OXFORD J. OF LEGAL

STUD. 165 (1997). 179 See, e.g., Richard M. Steuer, Counseling Without Case Law, 63 ANTITRUST L.J. 823 (1995).


for example, the application of the per se rule against vertical price fixing or the limits to the legality of joint ventures.180 The European Commission followed a similar approach by using the recent settlement in Coca-Cola to clarify its stance on fidelity rebates.181 This is an important and contested area of the law,182 but instead of using the formal infringement process, which contains the procedural guarantees to produce sounder precedents, the Commission used the settlement process as a shortcut. In this area of the law, EU competition lawyers would now counsel their clients based on a short, informal decision that does not indicate whether any infringement had actually taken place.

The shift to a more bureaucratic model of antitrust enforcement could have two additional systemic effects which are less tangible, but no less important. One is the economy-wide inefficiency created by subjecting companies to (imperfect) prospective regulation through commitments or consent decrees; by definition these tools require that companies seek the government’s approval when economic conditions change and an adjustment of behavior is needed. This leads to economic inefficiencies both in the case when approval is not forthcoming and even when it is merely slow. The other systemic effect is the increased scope for political influence. Drawing on the U.S. and Japanese experience, Harry First has written that under the bureaucratic model “[e]nforcement officials become too easily tempted to issue guidelines which achieve political objectives, but which also avoid hard factual problems and need not reflect the actual state of the law.”183 In a similar vein, Douglass Melamed has warned that, as a result of bureaucratization through the use of consent decrees in the United States, “antitrust law is coming to the point [where] what matters is not what the law requires, but rather what the present government wants.”184 There is no reason to believe that a modernized EU competition law regime that uses settlements extensively would be immune to these risks.

As this sub-part showed, the growing use of U.S.-style settlements in EU law has

already led to a number of changes in the EU competition law framework. Many of the effects, such as those leading to reduced transparency and a wholesale shift in enforcement incentives, have already manifested themselves; others, such as those related to uncertainties in the legal and procedural status of settlements are raising questions that should be answered in due course. On a more abstract level, the reliance on settlements has created the conditions for an undesirable and unintended shift in the nature of the EU competition law regime away

180 See Michael L. Weiner, Antitrust and the Rise of the Regulatory Consent Decree, ANTITRUST, Fall

1995, at 5. 181 Coca-Cola Commitments Decision, supra note 167. 182 See, e.g., Case T-219/99, British Airways v. Commission, supra note 32. 183 First, supra note 174, at 11. 184 Melamed, supra note 177, at 14.


from legalistic regulation and further towards a bureaucratic regulation model. The logical question, taken up in Part VI, is whether these changes are compatible with the tenets of EU law and whether the efficiency benefits of settlements outweigh their real and potential costs.

B. Antitrust Enforcement at the Member State Level One of the main achievements of the modernisation program was to transfer some of

the Commission’s powers onto the member state level and to empower national courts and competition authorities to enforce EU antitrust law directly. Also as a part of modernisation, many member states introduced legislation either mirroring the settlement procedures in Regulation 1/2003, or setting up similar ways by which to end antitrust cases informally.185 EU-level settlements therefore have both a direct and an indirect effect on the national competition law systems beneath them; these systems represent the second of the three dimensions under analysis here.

The effects of the new national settlement procedures upon national competition law system strongly resemble the effects of EU-level settlements on the EU competition law regime discussed in the preceding sub-part, and include reduced transparency, less legal guidance and certainty, and a move towards the bureaucratization of antitrust enforcement. The vertical interaction between EU-level settlements and national competition law systems, on the other hand, raises novel questions and provides additional evidence about the aggregate effects of U.S.-style settlements in the EU. Even though a number of questions remain unanswered, it appears that the use of settlements on the EU level will serve as a powerful counterforce to the decentralization of EU competition law envisioned by the modernisation program.

While the Commission enlists the help of national courts in the enforcement of commitment decisions,186 it initially tried to create the impression that such decisions do not interfere with antitrust enforcement at the member state level by emphasizing that national courts and competition authorities are not precluded from finding an infringement in a case that the Commission had decided to settle.187 This effort to contain the reach of settlement decisions, however, has been (and likely will continue to be) unsuccessful; it is difficult to imagine that a national competition authority would begin (or continue) to prosecute a company after the company has settled with the Commission. For one, national authorities are under a general duty “[not to] take decisions running counter to [a] decision adopted by the

185 See text accompanying notes 79-83 supra. 186 The Commission’s informal memorandum on commitment decisions notes that national courts “must

enforce the commitments by any means provided for by national law, including the adoption of interim measures.” See Commitment Decisions Memo, supra note 74.

187 See text accompanying note 95 supra (Recitals 13 and 22 to Regulation 1/2003).


Commission.”188 Moreover, the Commission’s memorandum on settlements limits national proceedings against companies that have settled by requiring that “the uniform application of the competition rules throughout the EU [is not] jeopardized.”189 In practice, these two provisions, together with the relative inexperience of most national authorities in enforcing EU competition law suggests that a settlement by the Commission will have a preclusive effect on further actions against the company across the entire European Union. This not only expands the reach of settlement decisions, but also makes them much more attractive for companies. In effect, settling with the Commission is equivalent to receiving an individual exemption of the kind that was available under Regulation 17/62, or a finding that EU antitrust law does not apply to a given agreement.190

This dynamic suggests that settlements could allow the Commission to reclaim parts of the enforcement portfolio which it purposefully delegated to national competition authorities. The mere initiation of a settlement action at the EU level leads to a suspension of enforcement by national competition authorities,191 and the adoption of a commitment decision ends investigations in the company’s practices across the EU and gives it de facto immunity from prosecution. This will have a pronounced impact upon competition law enforcement at the member-state level, because it stalls capacity-building and thwarts the drive towards decentralization. Insofar as private actions for damages can only be brought on the national level, the re-centralization of EU competition law enforcement would also limit the development of this institution, once again in contradiction with the goals of the modernisation program.

C. Transatlantic Antitrust Cooperation

The effects of the Commission’s use of settlements on the transatlantic antitrust

cooperation framework are not as visible as they are in the other two systems analyzed herein. Nevertheless, the globalization of business has led to ever more frequent coordination between the EU and U.S. antitrust authorities, which has, in turn, raised the importance of procedural compatibility and substantive convergence. As the failed 2001 GE/Honeywell merger illustrated, when a clash between the two regimes occurs, the costs can be substantial.192 As this sub-part shows, the introduction of settlements in the EU is already changing the balance in transatlantic antitrust enforcement.

The Commission’s use of settlements in transatlantic cases is not without precedent.

188 Regulation 1/2003, supra note 2, Articles 16(1). 189 Commitment Decisions Memo, supra note 74 (emphasis added). 190 Such findings are formally available under Article 10 of Regulation 1/2003. 191 Regulation 1/2003, supra note 2, Article 11(6). 192 See George Stephanov Georgiev, Bridging the Divide? The European Court of First Instance

Judgment in GE/Honeywell, 31 YALE J. INT’L L. 518 (2006).


Both IBM (1984)193 and Microsoft (1994)194 involved settlements that were negotiated jointly with the U.S. Department of Justice, even though there was no procedural framework on the EU side. Since Regulation 1/2003 now supplies such a framework, the antitrust authorities would have to consider the interactions between the EU and the U.S. settlement procedures in future negotiations. This represents one more area where coordination would be necessary and which is not covered by the 1991 Treaty detailing the terms for cooperation between the EU and U.S. agencies.195

Because the EU framework imposes fewer procedural requirements and – most importantly – does not require judicial review, it should not significantly affect the negotiation of joint settlements from a procedural standpoint. However, the fact that the EU framework, unlike its U.S. counterpart, cannot be used for cases involving fines could affect the substantive outcomes in cases with transatlantic implications. It is unclear whether the antitrust agencies would consider different settlement terms for each jurisdiction (trading fines in the U.S. for stricter behavioral/structural remedies in the EU), or whether the EU would circumvent its new settlement framework and negotiate transatlantic settlements informally, as before. Both possibilities are undesirable. The second one would enable the use of settlements with fines, but could undermine public confidence in the EU settlement negotiation process. The first one stays within the framework of Regulation 1/2003, but has the potential to create inconsistencies and lead to economic inefficiencies. Negotiating two sets of settlements and limiting their impact to the jurisdictions for which they are meant would be very difficult, because U.S. consent decrees apply extraterritorially, to the foreign commerce of the United States, whereas EU settlements (like EU antitrust law) applies only to trade among EU member states.

These difficulties feed into one final effect, both more speculative and potentially more dangerous. As discussed, the increased reliance on settlements by the Commission leads to the bureaucratization of EU antitrust enforcement, suggesting that EU commitment decisions reflect regulatory policy, rather than antitrust law. When combined with the greater need to negotiate settlements jointly, again a consequence of the Commission’s new practices, this might lead to more frequent disagreement between the antitrust agencies of the two jurisdictions. Antitrust law is relatively stable while antitrust policy fluctuates with politics. Hence, transatlantic disagreements are more likely to occur if the negotiations are about a common policy than if the are about the narrow application of law. Policy disagreements are also be more intractable and this could well contribute to deeper and more frequent clashes of the GE/Honeywell type.

The mainstay of antitrust enforcement over the past fifteen years – Microsoft –

193 See XIV REPORT ON COMPETITION POLICY (1984), supra note 86. 194 EUROPEAN COMMISSION, XXIV REPORT ON COMPETITION POLICY (1994), at 364-65. 195 See EC-U.S. Agreement on the Application of Their Competition Laws, 30 I.L.M. 1487 (1991).


provides a pertinent example of the potential for conflict. Under the Republican-led administration in the United States since 2001, Microsoft has not been subject to new antitrust charges or investigations. In contrast, during the same period the European Commission has been very active against the company. In a March 2004 decision, it found a number of violations of EU competition law, instituted a trustee to monitor the company’s conduct, and subsequently imposed a fine in the record-setting amount of 497 million euro.196 In September 2007, the CFI upheld the Commission’s decision.197 U.S. officials were vocal about their dissatisfaction with the Commission’s and the CFI’s decisions in Microsoft.198 The nature of the case did not require that the two jurisdictions agree on a common approach has precluded any formal clashes. However, if the EU and the U.S. had to negotiate in 2007 a joint settlement similar to the one they negotiated in 1994, a real divergence of opinions would seem inevitable; such an agreement would have to do less with law and would instead need to represent an emanation of a common regulatory policy.

VI. A CAUTIONARY NOTE Even though the European Commission has used settlements only since May 2004,

their effects have already become apparent on a number of levels. These effects, along with the longstanding U.S. experience and the EU’s approach to designing its settlement provisions make it possible to propose several broad themes that EU policymakers should consider before entrenching settlements even deeper into the EU competition law regime.

A. Contagious Efficiency and Untailored Transplantation

This paper is not an objection to a focus on economic efficiency or the use of

settlements in the antitrust context. To the contrary, it started with the view that the European Union’s adoption of antitrust rules and concepts seeking to promote economic efficiency and consumer welfare has been an unequivocally positive development. The Union has rightly decided that it no longer needs to sacrifice economic growth and competitiveness for political

196 Obstacles to Rethinking the EU Line on Dominant Companies, FIN. TIMES, September 27, 2005, at

22. Most recently, the Commission issued a new statement of objections for non-compliance with the March 2004 decision. See European Commission, MEMO/07/90: Statement of Objections to Microsoft for Non-Compliance with March 2004 Decision (March 1, 2007).

197 Case T-271/06, Microsoft v. European Commission, Judgment of the Court of First Instance of September 17, 2007; available at www.curia.eu.int.

198 See Statement of Assistant Attorney General for Antitrust Thomas O. Barnett, on the [CFI’s] Microsoft Decision, Sept. 17, 2007, http://www.usdoj.gov/atr/public/press_releases/2007/226070.htm (expressing concern that “the standard applied […] by the CFI, rather than helping consumers, may have the unfortunate consequence of harming consumers by chilling innovation and discouraging competition”).


reasons. Similarly, the paper found that having a formal framework for antitrust settlements is much preferable to the situation that existed before 2004. Settlements have a role to play in the modern administrative state and a formal framework can add much-needed procedural safeguards. Finally, the paper did not argue that large-scale borrowing from the United States is necessarily a step in the wrong direction, because the U.S. antitrust system contains varied and valuable antitrust experience accumulated over a long period of time. The argument is, instead, that a certain type of borrowing and a certain approach to efficiency have begun to have negative effects on the EU antitrust system and beyond. Most of the major elements of the modernisation program benefited from a process of public deliberation and were adjusted to fit within the EU context. Thus, even though the modernised regime has virtually the same meta-structure and is organized around the same principles as its U.S. counterpart, it is still a distinctly European antitrust regime. The introduction of U.S.-style settlement procedures was the exception from the general approach, because the new rules were not subjected to either procedural or substantive tailoring. It is precisely for this reason that their efficiency and hence their use have become so contagious. The procedures function as a loophole in the EU antitrust system because they allow both the Commission and companies under investigation to achieve their goals in a way that is much less procedurally constrained and more informal than the next available alternative. The use of this loophole is problematic, because it clashes with other goals of EU competition law. Hence, there should be more careful deliberation in the EU about the advantages and disadvantages of antitrust settlements and about their optimal level of use. The sections that follow suggest two ways in which this could be done.

B. Revisiting the Goals of Modernisation

The use of settlements can be evaluated by revisiting the original goals of the

modernisation program and examining whether the new procedures have interfered with any of them. As illustrated in Part II(B), the modernisation program intended to streamline EU competition law in part by decentralizing its administration, giving a greater role to national competition authorities and courts, incorporating contemporary economic concepts, establishing stronger procedural guarantees, and encouraging private enforcement. The introduction of settlements has already had an impact on each of these goals.

Plans for the modernised regime envisioned that the Commission would have a coordinating function: it would focus on the most difficult cases and give formal guidance to national bodies which, after building more capacity, should become the primary enforcers of EU competition law. Several specific innovations were introduced to reduce the workload of the Commission and to allow it to decide mostly cases with a significant impact across the European Union. These innovations included ending the mandatory notification program and


introducing settlements as a way to dispose of less important cases. The Commission’s application of the settlement procedures, however, has threatened the very goal that led to their introduction.

The contagious efficiency of settlements has, first, resulted in a change in incentives, making it advantageous for the Commission to over-enforce certain areas of EU competition law while under-enforcing others, and to misuse settlements in cases that should involve fines or that should clarify the application of the law for the benefit of national competition authorities and individual companies. Second, the growing reliance on settlements also reduces the autonomy of enforcement at the national level. As shown in Part V(B), a national competition authority is in practice precluded from prosecuting violations of EU competition law which the Commission has already settled at the EU-level. This is despite the formal provisions of Regulation 1/2003 which emphasize that no such preclusive effect exists. The two results from the use of settlements – the diminished coordinating function of the Commission and the interference with enforcement on the national level – ultimately work to prevent the modernisation program from achieving its goal to decentralize EU competition law and encourage its enforcement on multiple levels.

Over-reliance on settlements also reduces the possibility that U.S.-style private actions for damages will emerge as an effective institution within the framework of EU competition law. Such actions can work only if the culture of antitrust enforcement is strengthened at the national level, and if national courts are comfortable with applying EU competition law. Settlements militate against both of these conditions: they not only preclude capacity-building within member states but also practically exempt companies that reach an agreement with the Commission from follow-on private litigation in national courts.

Finally, the reliance on settlements has worked against the goals of instituting stronger procedural protections and establishing quasi-judicial mechanisms within the Commission’s Directorate General for Competition. As illustrated in Part V(A)(3), by potentially leading to the further bureaucratization of the EU competition framework, settlements have precisely the opposite effect. Instead of helping to move closer to the legalistic regulatory model envisioned by modernisation, the reliance on settlements threatens to entrench a bureaucratic regulatory model that is characterized by informal procedures and a greater scope for political pressure and that results in less efficient outcomes and less guidance for companies.

On the whole, the reliance of U.S.-style settlements has segmented the EU antitrust regime into two tiers. The first tier is governed by the formal, procedurally and economically sound enforcement mechanisms introduced by the modernisation program. The Commission’s decisions in most cartel cases, most merger cases, and about half of the non-merger non-cartel cases occupy this tier. The second tier is governed by informal and flexible procedures containing fewer safeguards. The decisions taken under the settlement provisions, i.e. the other half of the non-merger non-cartel cases since 2004, occupy this second tier. The drafters


of the modernisation program viewed the second tier as necessary only to the extent that it furthered the primary goals of the reforms; they did not envision a separate, larger role for the second tier and they never defined its limits. However, the experience since 2004 shows that the second tier has expanded beyond what observers and the Commission expected and that instead of implementing the goals of modernisation, it now threatens to subvert them. If unchecked, the contagious efficiency of settlements has the potential to squeeze out the first tier even further and turn settlements into the primary mode of antitrust enforcement within the European Union.

C. Recalibrating Benefits and Costs

When it introduced U.S.-style settlements in 2004, the European Commission

imported not merely a set of procedures, but also the results of a unique compromise between the benefits and the costs of informal antitrust enforcement. This compromise is specific to the United States and embodies its experience with settlements over more than a hundred years. By not subjecting the new procedures to any tailoring or public deliberation, the Commission failed to determine whether EU law and society value the benefits and the costs of settlements in the same way and, correspondingly, whether they would tolerate a similar balance between the two. U.S.-style procedures would be acceptable and desirable only if the answer to these questions is in the affirmative.

In introducing settlements, the European Commission mirrored not only the specific provisions of the U.S. statutory framework, but also its administration by the U.S. agencies. The dynamic compromise inherent in both, however, does not appear to fit well with the history and basic tenets of EU law. Settlements implicate some of the political and social goals that were, until recently, a key part of EU competition law. Those goals still function as (weak) background norms and are reflected in the jurisprudence of the courts.199 For example, EU law allows for much greater rights of third parties in antitrust adjudication, but the new framework for settlements cannot incorporate these to a sufficient extent.200 As a positive matter, the EU seems to value the preservation of the residual political and social goals of competition law to an extent greater than the U.S. system. Even if the two systems view the efficiency gains from antitrust settlements similarly, it is doubtful that the balance between these benefits and the attendant costs would be struck at the same level.

As a normative matter, if there is any chance that the U.S. balance would sit uncomfortably with tenets of EU law, it should be subjected to public deliberation. The EU may or may not need to recalibrate the specific provisions and the level of use of its settlement framework; regardless of the outcome, however, the process of public deliberation would

199 See supra notes 65-71 and accompanying text. 200 See text accompanying notes 166-170 supra.


uncover both the efficiency benefits and the potential downsides to settlements. By doing so, it would help to remedy the fact that U.S.-style settlements were introduced in EU law without undergoing any procedural or substantive tailoring.

VII. CONCLUSION Antitrust enforcement has been one of the great success stories of the EU integration

project. Between 1962 and 2004, antitrust law did much to promote the common market, one of the preconditions for the creation of “an ever closer union between the people of Europe.”201 After 2004, antitrust law plays an important role in promoting economic liberalism and safeguarding against the introduction on the national level of protectionist policies that stymie growth and weaken EU integration. It is for this reason that the design and the performance of the antitrust regime is so important. Thus, the use of settlements after the “revolution” brought about by modernisation should be closely monitored. Settlements are justified on efficiency grounds and efficiency is generally considered a desirable characteristic of any regulatory system. However, this paper demonstrated that the type of efficiency on display here can have unique costs along several dimensions: not only horizontally across the EU antitrust system, but also downstream, on national antitrust systems, and upstream, on the system of transatlantic antitrust cooperation. In view of the importance of the EU antitrust regime on so many levels, it would be unfortunate if the blinding lure of efficiency through settlements ultimately undermines the regime’s very legitimacy.

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201 This goal, first stated in the Preamble to the EEC Treaty in 1958, has been retained in all subsequent

EU treaties and has become an oft-used metaphor for the process of European integration.

Documents

CONTAGIOUS EFFICIENCY: THE GROWING RELIANCE ON U.S