Yesterday the Belgian Chamber of Representatives approved a package of new competition legislation. This introduces several major changes, including sanctions for natural persons and a new price monitoring regime.
The new legislation inserts a Book IV ("Protection of competition") and Book V ("Competition and price evolutions") into the new Economic Law Code. The new legislation is still subject to scrutiny by the Senate.
Please find below an overview of the most important changes, as well as a number of important points for businesses that remain unchanged.
1. Restrictive practices
The new legislation maintains the prohibitions on anticompetitive agreements and abuse of dominant position, both of which closely follow the EU example. However the competition rules will no longer apply only to undertakings: a specific prohibition is introduced for natural persons, although this is limited to hard core restrictions. It will be illegal for natural persons to negotiate or conclude agreements with competitors, on behalf of an undertaking or association of undertakings, in respect of:
• the fixing of prices when selling products or services to third parties;
• the limitation of production or sale of products or services;
• the allocation (sharing) of markets.
Infringements of this prohibition are punishable with an administrative fine of 100 to 10 000 euros. Natural persons can, under certain circumstances, be granted immunity if they contribute to proving the existence of an anti-competitive arrangement. That immunity scheme will coexist with the leniency programme in place for undertakings.
2. Merger control
The new legislation maintains the system of mandatory prior notification and approval of concentrations (acquisitions, mergers and certain joint ventures) which meet the "notification thresholds".
The notification thresholds remain unchanged. A concentration must therefore still be notified for approval where all undertakings concerned have an aggregate (consolidated group) turnover in Belgium of more than 100 million euros, and at least two of the undertakings concerned have a (consolidated group) turnover in Belgium of at least 40 million euros.
In practice most concentrations are dealt with in a "simplified procedure". The lead time in this procedure will be reduced: the competition authority will have to issue a decision within fifteen instead of the current twenty working days. If no decision is issued within that time-limit, the concentration is deemed to have been approved.
The lead time in the regular (non-simplified) procedure remains unchanged. The competition authority will in principle still have to issue a "phase I"-decision within forty working days. If there are serious doubts about the admissibility of the concentration, a "phase II"-investigation follows, which in principle lasts no more than sixty working days. If no decision is taken within those time-limits, the concentration is deemed to have been approved.
3. Pricing policy
Book V of the Economic Law Code provides that the prices of goods and services are determined by the process of free competition, but it allows the Belgian Competition Authority and Minister of Economic Affairs to intervene in the price-setting process under certain circumstances. This does not require a prior finding of an infringement of the competition rules.
Where the Price Observatory identifies a problem in respect of prices or margins, an abnormal price evolution or a structural market problem, it can submit a report to the Minister of Economic Affairs and the Belgian Competition Authority. The latter can then, in certain urgent cases, take interim measures. If it does, the Minister must submit a plan "for structural change of the market functioning in the sector concerned" to the government within six months.
Such price intervention is not possible for products or services which are subject to a system of regulated prices.
If measures are taken under the new regime, undertakings cannot refuse to supply: they must, within the limits of what is possible and in line with commercial usage, meet demand for products and services insofar as this does not appear abnormal.
In addition to this general price intervention regime, a specific scheme is introduced for medicines and related products, involving more systematic price controls.
4. A single competition authority ... with various organs
The new legislation replaces the existing enforcement institutions (Competition Council including College of Auditors; Directorate General for Competition) with a single "Belgian Competition Authority". The fragmentation of powers over multiple institutions was one of the reasons for the lack of vigorous enforcement in Belgium, particularly in respect of cartels.
However, the new Belgian Competition Authority is still made up of various organs:
• The President and his service;
• The Competition Board, which issues decisions on the merits and which is established on a case-by-case basis;
• The Management Committee, which manages the Belgian Competition Authority and sets enforcement priorities.
• The Auditor-General and the College of Auditors, who lead and conduct investigations and have certain decision-making powers (e.g. as regards simplified notifications).
This allocation of powers is intended to safeguard the rights of the defence. Only time will tell whether the new structure is conducive to a more vigorous enforcement of competition law.
