Purpose and impact of the Modernisation Regulation (Regulation 1/2003)

Introduction

Regulation 1/2003 (the Regulation) took effect on 1 May 2004 and is intended to modernise the
enforcement of competition law by devolving responsibility from the European Commission (the
Commission) to the national competition authorities (“NCAs”) and courts of the EC Member
States. (this is the purpose)

For some 40 years enforcement of EU competition rules was centralised

–Articles 101 and 102 could be enforced by NCAs and applied by national courts (direct
applicability)
–However, the Commission was in practice the principal and almost sole enforcement agency
•Modernisation of application of Articles 101 and 102 was effected by Regulation No 1/2003

Responsibility for applying competition rules is now shared between the Commission and NCAs
and national courts .
Main features of new regime

•Introduction of self-assessment following the end of the notification of agreements to obtain

exemption under Article 101(3)

•Decentralisation of enforcement with greater involvement of national courts and competition

authorities in enforcing EU competition rules

•Strengthening of the Commission’s enforcement powers

(Impact)
The Regulation abolishes the system of prior notification to the Commission. Article 81(3) of the EC Treaty
- which exempts certain agreements and practices that would otherwise infringe Article 81(1) – can now, in
appropriate cases, apply automatically to those agreements and practices satisfying its requirements,
without the need for a Commission decision confirming compliance. This means that businesses must
assess for themselves whether or not the Article 81(3) requirements are satisfied in any particular case; the
relevant NCA(s) and/or the Commission will only take a decision if a dispute arises. However the burden of
proving that an agreement should benefit from an Article 81(3) exemption is now borne by the parties
claiming such a benefit.

. Articles 4 to 6 deal with the powers of the Commission, the NCAs and national courts
respectively.
Among the others, the Article 4 states that the Commission shall have the powers provided for by
Regulation 1/2003: of particular importance are the decision-making powers; the powers of
investigation; and the powers to impose penalties. Article 5 provides that NCAs shall have the
power to apply Articles 101 and 102 in individual cases. Article 6 provides that national courts shall
have the power to apply Article 101, in its entirety, and Article 102.
Regarding the purpose of the Regulation 1/2003 the Regulation states that the Commission and
the NCAs should form a ‘network of public authorities’. The network is known as the European
Competition Network.
Article 11(1) of the Regulation provides that the Commission and the NCAs have to apply the
competition rules in close cooperation. Article 11 requires to Commission to transmit to NCAs the
most important documents it has collected with a view to the adoption of decisions under Articles
7 to 10 or Article 29. Therefore Article 11 requires NCAs to inform the Commission in writing
before or without delay after commencing proceedings under Article 101 or Article 102.