Has EU Competition Law Lost its Bite? A Hard Look at How 'Soft' Enforcement Undermined the Basic Conventions and Goals of EU Competition Law

On October 2018, the vice president of the GC, Judge Marc van der Woude, heavily criticized the Dutch national competition authority (NCA) for ”losing its bite”.1 In a speech in front of the Dutch Association of Competition Law, he noted that in recent years the authority has hardily issued prohibition decisions or imposed fines for infringements of (EU and national) competition law. Instead, the authority has devoted much of its enforcement efforts to non-binding soft enforcement actions, such as informal opinions, warning letters, and negotiated remedies. This overly reliance on soft enforcement, the Judge maintained, goes against the very foundations of the EU enforcement system. As was recently pronounced by the ECN+ Directive Proposal, the EU competition rules “do not have teeth” where the Commission and NCAs do not impose effective sanctions for non-compliance. In such situations, firms have little incentives to act in compliance with the law. By avoiding formal infringement decisions, the Judge concluded, the Dutch NCA has marginalized its function and threated its credibility. Favoring soft over hard enforcement, nevertheless, is far from being a unique Dutch phenomenon. This paper provides empirical evidence demonstrating that various competition authorities, including the Commission itself, have directed much of their scarce enforcement efforts towards soft enforcement. More specifically, the paper surveys all of Article 101 TFEU enforcement actions taken by the Commission (1958-2017) and the NCAs of Germany, the Netherlands, and the UK (May 2004-2017). The empirical findings illustrate that soft enforcement amounted to over half of the enforcement actions of those authorities. Despite the central role of soft enforcement, thus far only limited attention was devoted to studying its existence, scope, and implications. This paper offers an important contribution by systematically recording the evident and particularities of EU soft enforcement actions as applied in practice. Based on these empirical findings, the paper asserts that the strong reliance on soft enforcement goes against the basic conventions and goals of EU competition law enforcement, threatening its deterrence and effectiveness. In addition to the overly reliance on soft enforcement, this paper criticized the form and characteristics of the soft enforcement instrument employed by the Commission and NCAs. It affirms that the authorities often have not published a detailed account of their analysis, thus hindering the rationales and potential benefits attributed to soft enforcement.