Articles 101 and 102 of the Treaty on the Functioning of the European Union (TFEU) are a matter of public policy and should be applied effectively throughout the Union to ensure that competition in the internal market is not distorted. Effective enforcement of Articles 101 and 102 TFEU is necessary to ensure fairer and more open competitive markets in the Union, in which undertakings compete more on their merits and without company-erected barriers to market entry, enabling them to generate wealth and create jobs. It protects consumers and undertakings active on the internal market from business practices that keep the prices of goods and services artificially high and enhances their choice of innovative goods and services.
(2)
The public enforcement of Articles 101 and 102 TFEU is carried out by the national competition authorities (NCAs) of the Member States in parallel to the Commission pursuant to Council Regulation (EC) No 1/2003 (3). Together, the NCAs and the Commission form a network of public authorities that apply the Union competition rules in close cooperation (the ‘European Competition Network’).
(3)
Article 3(1) of Regulation (EC) No 1/2003 obliges NCAs and national courts to apply Articles 101 and 102 TFEU to agreements, to decisions by associations of undertakings, to concerted practices or to the abuse of a dominant position which are capable of affecting trade between Member States. In practice, most NCAs apply national competition law in parallel to Articles 101 and 102 TFEU. Therefore, this Directive, the objective of which is to ensure that NCAs have the guarantees of independence, resources, and enforcement and fining powers necessary to apply Articles 101 and 102 TFEU effectively, inevitably has an impact on national competition law when it is applied in parallel by NCAs. Furthermore, the application by the NCAs of national competition law to agreements, to decisions by associations of undertakings or to concerted practices, which may affect trade between Member States, should not lead to a different outcome to the one reached by the NCAs under Union law pursuant to Article 3(2) of Regulation (EC) No 1/2003. Therefore, in such cases of parallel application of national competition law and Union law, it is essential that the NCAs have the same guarantees of independence, resources, and enforcement and fining powers necessary to ensure that a different outcome is not reached.
(4)
Moreover, providing NCAs with the power to obtain all information related to the undertaking subject to the investigation, including in digital form, irrespective of the medium on which it is stored, would also affect the scope of the NCAs' powers when, at the early stages of their proceedings, they take the relevant investigative measure on the basis of national competition law applied in parallel to Articles 101 and 102 TFEU. Providing NCAs with inspection powers of a different scope, depending on whether they will ultimately apply only national competition law or also apply Articles 101 and 102 TFEU in parallel, would hamper the effectiveness of competition law enforcement in the internal market. Accordingly, the scope of the Directive should cover both the application of Articles 101 and 102 TFEU on a stand-alone basis and the parallel application of national competition law to the same case. As regards the protection of leniency statements and settlement submissions, this Directive should also cover the application of national competition law on a stand-alone basis.
(5)
National law prevents many NCAs from having the necessary guarantees of independence, resources, and enforcement and fining powers to be able to enforce Union competition rules effectively. This undermines their ability to effectively apply Articles 101 and 102 TFEU and to apply national competition law in parallel to Articles 101 and 102 TFEU. For example, under national law many NCAs do not have effective tools to find evidence of infringements of Articles 101 and 102 TFEU or to fine undertakings which break the law, or do not have adequate human and financial resources and operational independence to apply Articles 101 and 102 TFEU effectively. This is capable of preventing NCAs from taking any action at all or limiting their enforcement actions. The lack of guarantees of independence, resources, and enforcement and fining powers for many NCAs to be able to apply Articles 101 and 102 TFEU effectively means that undertakings engaging in anti-competitive practices might face very different outcomes in proceedings, depending on the Member State in which they are active. They might be subject to no enforcement under Article 101 or 102 TFEU or they might only be subject to ineffective enforcement. For example, in some Member States, undertakings can escape liability for fines simply by restructuring.
(6)
Uneven enforcement of Articles 101 and 102 TFEU, whether applied on a stand-alone basis or in parallel with national competition law, results in missed opportunities to remove barriers to market entry and to create fairer competitive markets throughout the Union where undertakings compete on their merits. Undertakings and consumers particularly suffer in those Member States where NCAs are less equipped to be effective enforcers. Undertakings cannot compete on the merits if there are safe havens for anti-competitive practices, for example, because evidence of anti-competitive practices cannot be collected or because undertakings are able to escape liability for fines. Undertakings therefore have a disincentive to enter such markets, to exercise their rights of establishment, and to provide goods and services there. Consumers based in Member States where there is less enforcement miss out on the benefits of effective competition enforcement. Uneven enforcement of Articles 101 and 102 TFEU, whether applied on a stand-alone basis or in parallel with national competition law, throughout the Union thus distorts competition in the internal market and undermines its proper functioning.
(7)
Gaps and limitations in the tools and guarantees of NCAs undermine the system of parallel powers for the enforcement of Articles 101 and 102 TFEU, which is designed to work as a cohesive whole based on close cooperation within the European Competition Network. This system depends on authorities being able to rely on each other to carry out fact-finding measures on each other's behalf in order to foster cooperation and mutual assistance among the Member States. However, it does not work well when there are still NCAs that do not have adequate fact-finding tools. In other key respects, NCAs are not able to provide each other with mutual assistance. For example, in the majority of Member States, undertakings that operate across borders are able to evade paying fines simply by not having a legal presence in some of the territories of Member States in which they are active. This reduces incentives to comply with Articles 101 and 102 TFEU. The resulting ineffective enforcement distorts competition for law-abiding undertakings and undermines consumer confidence in the internal market, particularly in the digital environment.
(8)
In order to ensure a truly common competition enforcement area in the Union that provides a more even level playing field for undertakings operating in the internal market and reduces unequal conditions for consumers, there is a need to put in place fundamental guarantees of independence, adequate financial, human, technical and technological resources and minimum enforcement and fining powers for applying Articles 101 and 102 TFEU and for applying national competition law in parallel to those Articles so that national administrative competition authorities can be fully effective.
(9)
It is appropriate to base this Directive on the dual legal basis of Articles 103 and 114 TFEU. This is because this Directive covers not only the application of Articles 101 and 102 TFEU and the application of national competition law in parallel to those Articles, but also covers the gaps and limitations in the tools and guarantees of NCAs needed to apply Articles 101 and 102 TFEU, because such gaps and limitations negatively affect both competition and the proper functioning of the internal market.
(10)
Putting in place fundamental guarantees to ensure that NCAs apply Articles 101 and 102 TFEU uniformly and effectively should be without prejudice to the ability of Member States to maintain or introduce more extensive guarantees of independence and resources for national administrative competition authorities and more detailed rules on the enforcement and fining powers of NCAs. In particular, Member States should be able to endow NCAs with additional powers beyond the core set provided for in this Directive to further enhance their effectiveness, such as powers to impose fines on natural persons or, by way of exception, the power to carry out inspections with the consent of those subject to inspection.
(11)
Conversely, detailed rules are necessary in the area of conditions for granting leniency for secret cartels. Undertakings will only disclose secret cartels in which they have participated if they have sufficient legal certainty that they will benefit from immunity from fines. The marked differences between the leniency programmes in the Member States lead to legal uncertainty for potential leniency applicants. This may weaken their incentives to apply for leniency. If Member States were able to implement or apply clearer and harmonised rules for leniency in the area covered by this Directive, this would not only contribute to the objective of maintaining incentives for applicants to disclose secret cartels, in order to render competition enforcement in the Union as effective as possible, but would also guarantee a level playing field for undertakings operating in the internal market. This should not prevent Member States from applying leniency programmes that cover not only secret cartels, but also other infringements of Article 101 TFEU and equivalent provisions of national competition law, or from accepting leniency applications from natural persons acting in their own name. This Directive should also be without prejudice to leniency programmes that exclusively provide for immunity from sanctions in criminal judicial proceedings for the enforcement of Article 101 TFEU.
(12)
This Directive should not apply to national laws insofar as they provide for the imposition of criminal sanctions on natural persons, with the exception of the rules governing the interplay of leniency programmes with the imposition of sanctions on natural persons. It also should not apply to national laws that provide for the imposition of administrative sanctions on natural persons that do not operate as an independent economic actor on a market.
(13)
Pursuant to Article 35 of Regulation (EC) No 1/2003, Member States can entrust the enforcement of Articles 101 and 102 TFEU exclusively to an administrative authority, as is the case in most jurisdictions, or they can entrust this to both judicial and administrative authorities. In the latter case, the administrative authority is at least primarily responsible for conducting the investigation, while the judicial authority is typically entrusted with the power to take decisions imposing fines and can have the power to take other decisions, such as finding an infringement of Articles 101 and 102 TFEU.
(14)
The exercise of the powers, conferred by this Directive on NCAs, including the investigative powers, should be subject to appropriate safeguards which at least comply with the general principles of Union law and the Charter of Fundamental Rights of the European Union, in accordance with the case law of the Court of Justice of the European Union, in particular in the context of proceedings which could give rise to the imposition of penalties. These safeguards include the right to good administration and the respect of undertakings' rights of defence, an essential component of which is the right to be heard. In particular, NCAs should inform the parties under investigation of the preliminary objections raised against them under Article 101 or Article 102 TFEU in the form of a statement of objections or a similar measure prior to taking a decision finding an infringement, and those parties should have an opportunity to make their views on those objections known effectively before such a decision is taken. Parties to whom preliminary objections about an alleged infringement of Article 101 or Article 102 TFEU have been notified should have the right to access the relevant case file of NCAs, to be able to exercise their rights of defence effectively. The right to access the file should be subject to the legitimate interest of undertakings in the protection of their business secrets and should not extend to confidential information and internal documents of, and correspondence between, the NCAs and the Commission. Moreover, for decisions of NCAs, in particular those decisions finding an infringement of Article 101 or Article 102 TFEU, and imposing remedies or fines, the addressees should have the right to an effective remedy before a tribunal, in accordance with Article 47 of the Charter of Fundamental Rights of the European Union. Such decisions should be reasoned so as to allow addressees of such decisions to ascertain the reasons for the decision and to exercise their right to an effective remedy. Moreover, in accordance with the right to good administration, Member States should ensure that, when applying Articles 101 and 102 TFEU, NCAs conduct proceedings within a reasonable timeframe, taking into account the specificities of each case. The design of those safeguards should strike a balance between the respect of the fundamental rights of undertakings and the duty to ensure that Articles 101 and 102 TFEU are effectively enforced.
(15)
The exchange of information between NCAs, and the use of such information in evidence for the application of Article 101 or Article 102 TFEU, should be carried out pursuant to Article 12 of Regulation (EC) No 1/2003.
(16)
Empowering national administrative competition authorities to apply Articles 101 and 102 TFEU impartially and in the common interest of the effective enforcement of the Union competition rules is an essential component of the effective and uniform application of those rules.
(17)
The operational independence of national administrative competition authorities should be strengthened in order to ensure the effective and uniform application of Articles 101 and 102 TFEU. To this end, express provision should be made in national law to ensure that when applying Articles 101 and 102 TFEU, national administrative competition authorities are protected against external intervention or political pressure that is liable to jeopardise their independent assessment of the matters before them. For that purpose, the grounds regarding the dismissal from the national administrative competition authority of those persons who take decisions exercising the powers referred to in Articles 10, 11, 12, 13 and 16 of this Directive should be laid down in advance in national law in order to remove any reasonable doubt as to their impartiality and their imperviousness to external factors. Similarly, clear and transparent rules and procedures for the selection, recruitment or appointment of those persons should be laid down in advance in national law. Moreover, to ensure the impartiality of national administrative competition authorities, the fines that they impose for infringements of Articles 101 and 102 TFEU should not be used to finance these authorities directly.
(18)
To ensure the operational independence of national administrative competition authorities, their heads, staff and those who take decisions should act with integrity and refrain from any action which is incompatible with the performance of their duties. To prevent the independent assessment by heads, staff and those who take decisions from being jeopardised, they should refrain from any incompatible actions, whether gainful or not, both during their employment or term of office and for a reasonable period thereafter.
(19)
This means that during their employment or their term of office, the staff and those who take decisions should not be able to deal with proceedings for the application of Article 101 or 102 TFEU in which they have been involved or which directly concern undertakings or associations of undertakings by which they have been employed or otherwise professionally engaged, if this has the potential to compromise their impartiality in a specific case. Similarly, the staff and those who take decisions, as well as their close relatives, should not have any interest in any businesses or organisations which are subject to proceedings for the application of Article 101 or 102 TFEU in which they take part, if this has the potential to compromise their impartiality in a specific case. The assessment of whether their impartiality might be impaired in a specific case should take into account the nature and the magnitude of the interest and the level of involvement or engagement of the individual concerned. Where it is necessary to ensure the impartiality of the investigation and the decision-making process, the individual concerned should be required to recuse herself or himself from the specific case.
(20)
This also means that, for a reasonable period after leaving the national administrative competition authority, whenever former staff or those who took decisions engage in an occupation which is related to the proceedings for the application of Article 101 or 102 TFEU with which they were dealing during their employment or term of office, they should not be involved in the same case in their new occupation.
The length of that period might be determined by taking into account the nature of the new occupation of the individuals concerned as well as the level of their involvement and responsibility in the same proceedings during their employment or term in office in the national administrative competition authority.
(21)
Every national administrative competition authority should publish a code of conduct that, without prejudice to the application of stricter national rules, covers rules on conflicts of interest.
(22)
The operational independence of national administrative competition authorities should not preclude either judicial review or parliamentary supervision in accordance with national law. Accountability requirements should also contribute to ensuring the credibility and the legitimacy of the actions of national administrative competition authorities. Proportionate accountability requirements include the publication by national administrative competition authorities of periodic reports on their activities to a governmental or parliamentary body. National administrative competition authorities might also be subject to control or monitoring of their financial expenditure, provided this does not affect their independence.
(23)
National administrative competition authorities should be able to prioritise their proceedings for the enforcement of Articles 101 and 102 TFEU to make effective use of their resources, and to allow them to focus on preventing and bringing anti-competitive behaviour that distorts competition in the internal market to an end. For this purpose, they should be able to reject complaints on the grounds that they are not a priority, with the exception of complaints lodged by public authorities which share competence with a national administrative competition authority for enforcing Articles 101 and 102 TFEU and national competition law, where applicable. This should be without prejudice to the power of national administrative competition authorities to reject complaints on other grounds, such as a lack of competence, or to decide that there are no grounds for action on their part. In cases of formally filed complaints, such rejections should be subject to effective remedies in accordance with national law. The power of national administrative competition authorities to prioritise their enforcement proceedings is without prejudice to the right of a government of a Member State to issue to national administrative competition authorities general policy rules or priority guidelines that are not related to sector inquiries or specific proceedings for the enforcement of Articles 101 and 102 TFEU.
(24)
NCAs should have sufficient resources, in terms of qualified staff able to conduct proficient legal and economic assessments, financial means, technical and technological expertise and equipment including adequate information technology tools, to ensure they are able to perform their tasks effectively when applying Articles 101 and 102 TFEU. In the event that the duties and powers of NCAs under national law are extended, Member States should ensure that NCAs have sufficient resources to perform those tasks effectively.
(25)
The independence of NCAs should be enhanced by enabling them to decide independently on the spending of the budget allocations for the purpose of carrying out their duties, without prejudice to national budgetary rules and procedures.
(26)
To ensure that national administrative competition authorities have the necessary resources to perform their tasks, different means of financing might be considered, such as financing from alternative sources other than the state budget.
(27)
In order to ensure effective monitoring of the implementation of this Directive, Member States should ensure that national administrative competition authorities submit periodic reports on their activities and resources to a governmental or parliamentary body. Those reports should include information about the appointments and dismissals of members of the decision-making body, the amount of resources that were allocated in the relevant year and any changes in that amount compared to previous years. Such reports should be made publicly available.
(28)
NCAs require a minimum set of common investigative and decision-making powers to be able to effectively enforce Articles 101 and 102 TFEU.
(29)
National administrative competition authorities should have effective powers of investigation to detect any agreement, decision or concerted practice prohibited by Article 101 TFEU or any abuse of a dominant position prohibited by Article 102 TFEU at any stage of the proceedings before them. The national administrative competition authorities should be able to apply those powers to undertakings and associations of undertakings which are the subject of proceedings for the application of Articles 101 and 102 TFEU, as well as to other market players which may be in possession of information which is of relevance to such proceedings. Granting such effective investigative powers to all national administrative competition authorities should ensure that they are in a position to assist each other effectively when requested to carry out an inspection or any other fact-finding measure on their own territory on behalf of and for the account of another NCA pursuant to Article 22 of Regulation (EC) No 1/2003.
(30)
The investigative powers of national administrative competition authorities should be adequate to meet the enforcement challenges of the digital environment, and should enable NCAs to obtain all information related to the undertaking or association of undertakings which is subject to the investigative measure in digital form, including data obtained forensically, irrespective of the medium on which the information is stored, such as on laptops, mobile phones, other mobile devices or cloud storage.
(31)
National administrative competition authorities should be able to carry out all necessary inspections of premises of undertakings and associations of undertakings where, in line with the case law of the Court of Justice of the European Union, they can show that there are reasonable grounds for suspecting an infringement of Article 101 or 102 TFEU. This Directive should not prevent Member States from requiring prior authorisation by a national judicial authority for such inspections.
(32)
To be effective, the power of national administrative competition authorities to carry out inspections should enable them to access information that is accessible to the undertaking or association of undertakings or person subject to the inspection and which is related to the undertaking or the association of undertakings under investigation. This should necessarily include the power to search for documents, files or data on devices which are not precisely identified in advance. Without such power, it would be impossible to obtain the information necessary for the investigation where undertakings or associations of undertakings adopt an obstructive attitude or refuse to cooperate. The power to examine books or records should cover all forms of correspondence, including electronic messages, irrespective of whether they appear to be unread or have been deleted.
(33)
To minimise the unnecessary prolongation of inspections, national administrative competition authorities should have the power to continue making searches and to select copies or extracts of books and records related to the business of the undertaking or association of undertakings being inspected at the authority's premises or at other designated premises. Such searches should ensure the continued due respect of undertakings' rights of defence.
(34)
Experience shows that business records may be kept in the homes of directors, managers and other members of staff of undertakings or of associations of undertakings, in particular because of the increased use of more flexible working arrangements. In order to ensure that inspections are effective, national administrative competition authorities should have the power to enter any premises, including private homes, if they can show that there is a reasonable suspicion that business records which may be relevant to prove an infringement of Article 101 or 102 TFEU are being kept in those premises. The exercise of that power should be subject to the national administrative competition authority having obtained prior authorisation from a national judicial authority, which may include a public prosecutor in certain national legal systems. This should not prevent Member States in cases of extreme urgency from entrusting the tasks of a national judicial authority to a national administrative competition authority acting as a judicial authority or, by way of exception, allowing for such inspections to be carried out with the consent of those subject to inspection. The conduct of such inspections might be entrusted by a national administrative competition authority to the police or an equivalent enforcement authority, provided that the inspection is carried out in the presence of the national administrative competition authority. This should be without prejudice to the right of the national administrative competition authority to conduct the inspection itself and to obtain the necessary assistance of the police or an equivalent enforcement authority, including assistance, as a precautionary measure, to overcome possible opposition on the part of those subject to the inspection.
(35)
NCAs should have effective powers to require undertakings or associations of undertakings to provide information necessary to detect infringements of Articles 101 and 102 TFEU. To that end, NCAs should be able to require the disclosure of information that may enable them to investigate putative infringements. This should include the right to require information in any digital form, including emails and instant messaging system messages, irrespective of where it is stored, including in clouds and on servers, provided it is accessible to the undertaking or association of undertakings which is the addressee of the request for information. That right should not result in an obligation on the part of the undertaking or association of undertakings which is disproportionate to the requirements of the investigation. For example, it should not result in excessive costs or efforts being incurred by the undertaking or association of undertakings. While the right to require information is crucial for the detection of infringements, such requests should be appropriate in scope. Such requests should not compel an undertaking or association of undertakings to admit that it has committed an infringement, which is incumbent upon the NCAs to prove. This should be without prejudice to the obligations of undertakings or associations of undertakings to answer factual questions and to provide documents. Similarly, NCAs should have effective tools to require any other natural or legal person to provide information that may be relevant for the application of Articles 101 and 102 TFEU. Member States should be free to provide for procedural rules on such requests for information, such as the legal form they take, provided that those rules allow for the effective use of this tool. Experience also shows that information provided on a voluntary basis in response to non-compulsory requests for information can be a valuable source of information for informed and robust enforcement. Similarly, the provision of information by third parties, such as competitors, customers and consumers in the market, on their own initiative can contribute to effective enforcement and NCAs should encourage this.
(36)
Experience shows that the power to conduct interviews is a useful tool to collect evidence and to help competition authorities assess the value of already-collected evidence. NCAs should have effective means to summon for an interview any representative of an undertaking or association of undertakings, any representative of other legal persons and any natural person who may possess information relevant for the application of Articles 101 and 102 TFEU. Member States should be free to provide for rules governing the conduct of such interviews, provided that such rules allow for the effective use of this tool.
(37)
It is indispensable for NCAs to be able to require undertakings and associations of undertakings to bring infringements of Article 101 or 102 TFEU to an end, including where the infringement continues after the NCAs have formally initiated proceedings. Moreover, NCAs should have effective means to restore competition in the market by imposing structural and behavioural remedies which are proportionate to the infringement committed and which are necessary to bring the infringement to an end. The principle of proportionality requires that, when choosing between two equally effective remedies, NCAs should choose the remedy that is least burdensome for the undertaking. Structural remedies, such as obligations to dispose of a shareholding in a competitor or to divest a business unit, affect the assets of an undertaking and can be presumed to be more burdensome for the undertaking than behavioural remedies. However, this should not preclude NCAs from finding that the circumstances of a particular infringement justify the imposition of a structural remedy because it would be more effective in bringing the infringement to an end than a behavioural remedy.
(38)
Interim measures can be an important tool to ensure that, while an investigation is ongoing, the infringement being investigated does not seriously and irreparably harm competition. This tool is important to avoid market developments that could be very difficult to reverse by a decision taken by an NCA at the end of the proceedings. NCAs should therefore have the power to impose interim measures by decision. As a minimum, this power should apply in cases where an NCA has made a prima facie finding of infringement of Article 101 or 102 TFEU and where there is a risk of serious and irreparable harm to competition. Member States are free to provide NCAs with more extensive powers to impose interim measures. A decision imposing interim measures should only be valid for a specified period, either until the conclusion of the proceedings by an NCA, or for a fixed time period which can be renewed insofar as it is necessary and appropriate. Member States should ensure that the legality, including the proportionality, of such measures can be reviewed in expedited appeal procedures or other procedures which also provide for expedited judicial control. Furthermore, Member States should create the conditions necessary to ensure that NCAs can make use of interim measures in practice. There is a particular need to enable all competition authorities to deal with developments in fast-moving markets and therefore to reflect within the European Competition Network on the use of interim measures and to take this experience into account in any relevant soft measure or future review of this Directive.
(39)
Where, in the course of proceedings which might lead to an agreement or a practice being prohibited, undertakings or associations of undertakings offer NCAs commitments which meet their concerns, these NCAs should be able to adopt decisions which make these commitments binding on, and enforceable against, the undertakings or associations of undertakings concerned. In principle, such commitment decisions are not appropriate in the case of secret cartels, in respect of which NCAs should impose fines. Commitment decisions should find that there are no longer grounds for action by the NCAs, without reaching a conclusion as to whether there has been an infringement of Article 101 or 102 TFEU. It should be at the discretion of NCAs whether to accept commitments. Commitment decisions are without prejudice to the powers of competition authorities and national courts to make such a finding of an infringement and decide upon a case. Moreover, effective means of monitoring compliance by undertakings or associations of undertakings with commitments and effective means of imposing sanctions in cases of non-compliance have proven to be effective tools for competition authorities. NCAs should have effective means for the reopening of proceedings in cases where there have been material changes to any of the facts on which a commitment decision was based, where the undertaking or association of undertakings acted contrary to their commitments, or where a commitment decision was based on incomplete, incorrect or misleading information provided by the parties.
(40)
To ensure the effective and uniform enforcement of Articles 101 and 102 TFEU, national administrative competition authorities should have the power to impose effective, proportionate and dissuasive fines on undertakings and associations of undertakings for infringements of Article 101 or 102 TFEU, either directly themselves in their own proceedings, in particular in administrative proceedings, provided that such proceedings enable the direct imposition of effective, proportionate and dissuasive fines, or by seeking the imposition of fines in non-criminal judicial proceedings. This is without prejudice to national laws which provide for the imposition of sanctions on undertakings and associations of undertakings by courts in criminal proceedings for the infringement of Articles 101 and 102 TFEU where the infringement is a criminal offence under national law and provided that it does not affect the effective and uniform enforcement of Articles 101 and 102 TFEU.
(41)
To ensure that undertakings and associations of undertakings have incentives to comply with the investigative measures and decisions of the NCAs, national administrative competition authorities should be able either to impose effective fines for non-compliance with the measures and decisions referred to in Articles 6, 8, 9, 10, 11 and 12 directly themselves in their own proceedings or to seek the imposition of fines in non-criminal judicial proceedings. This is without prejudice to national law which provide for the imposition of such fines on undertakings and associations of undertakings by courts in criminal judicial proceedings.
(42)
In accordance with the Charter of Fundamental Rights of the European Union, in proceedings before national administrative competition authorities or, as the case may be, in non-criminal judicial proceedings, fines should be imposed where the infringement has been committed intentionally or negligently. The notions of intent and negligence should be interpreted in line with the case law of the Court of Justice of the European Union on the application of Articles 101 and 102 TFEU and not in line with the notions of intent and negligence in proceedings conducted by criminal authorities relating to criminal matters. This is without prejudice to national laws under which the finding of an infringement is based on the criterion of objective liability, provided that it is compatible with the case law of the Court of Justice of the European Union. This Directive does not affect national rules on the standard of proof or the obligations of NCAs to ascertain the facts of the relevant case, provided that such rules and obligations are compatible with general principles of Union law.
(43)
Fines should be determined in proportion to the total worldwide turnover of the undertakings and associations of undertakings concerned.
(44)
Periodic penalty payments are a key tool to ensure that NCAs have effective means to tackle continuing and future non-compliance by undertakings and associations of undertakings with their measures and decisions as referred to in Articles 6, 8, 9, 10, 11 and 12. They should not apply to findings of infringements that have been committed in the past. The power to impose periodic penalty payments is without prejudice to the power of NCAs to punish non-compliance with the measures referred to in Article 13(2). Such periodic penalty payments should be determined in proportion to the average daily total worldwide turnover of the undertakings and associations of undertakings concerned.
(45)
For the purpose of imposing fines and periodic penalty payments, the term ‘decision’ should include any measure which produces binding legal effects capable of affecting the interests of the addressee by bringing about a distinct change in his or her legal position.
(46)
To ensure the effective and uniform application of Articles 101 and 102 TFEU, the notion of ‘undertaking’, as contained in Articles 101 and 102 TFEU, which should be applied in accordance with the case law of the Court of Justice of the European Union, designates an economic unit, even if it consists of several legal or natural persons. Accordingly, NCAs should be able to apply the notion of undertaking to find a parent company liable, and impose fines on it, for the conduct of one of its subsidiaries, where the parent company and its subsidiary form a single economic unit. To prevent undertakings escaping liability for fines for infringements of Articles 101 and 102 TFEU through legal or organisational changes, NCAs should be able to find legal or economic successors of the undertaking liable, and to impose fines on them, for infringements of Articles 101 and 102 TFEU, in accordance with the case law of the Court of Justice of the European Union.
(47)
To ensure that the fines imposed for infringements of Articles 101 and 102 TFEU reflect the economic significance of the infringement, NCAs should take into account the gravity of the infringement. NCAs should also be able to set fines that are proportionate to the duration of the infringement. These factors should be assessed in accordance with the relevant case law of the Court of Justice of the European Union and in a way that ensures deterrence. The assessment of gravity should be made on a case-by-case basis for all types of infringements, taking into account all circumstances of the case. Factors that might be taken into consideration include the nature of the infringement, the combined market share of all undertakings concerned, the geographic scope of the infringement, whether the infringement has been implemented, the value of the undertaking's sales of goods and services to which the infringement directly or indirectly relates and the size and market power of the undertaking concerned. The existence of repeated infringements by the same perpetrator shows its propensity to commit such infringements and is therefore a very significant indication that the level of the penalty needs to be increased to achieve effective deterrence. Accordingly, NCAs should have the possibility to increase the fine to be imposed on an undertaking or association of undertakings where the Commission or an NCA has previously taken a decision finding that that undertaking or association of undertakings has infringed Article 101 or 102 TFEU and that undertaking or association of undertakings continues to commit the same infringement or commits a similar infringement. In accordance with Directive 2014/104/EU of the European Parliament and of the Council (4), NCAs should be able to take into account any compensation paid as a result of a consensual settlement. In addition, in exceptional circumstances, NCAs should be able to take into account the economic viability of the undertaking concerned.
(48)
Experience has shown that associations of undertakings regularly play a role in competition infringements and NCAs should therefore be able to fine such associations effectively. When assessing the gravity of the infringement, in order to determine the amount of the fine in proceedings brought against associations of undertakings, where the infringement relates to the activities of its members, it should be possible to consider the sum of the sales of goods and services to which the infringement directly or indirectly relates by the undertakings that are members of the association. When a fine is imposed not only on the association but also on its members, the turnover of the members on which a fine is imposed should not be taken into account when calculating the fine of the association. In order to ensure effective recovery of fines imposed on associations of undertakings for infringements that they have committed, it is necessary to lay down the conditions in which it is at NCAs' discretion to require payment of the fine from the members of the association where the association is not solvent. In doing so, NCAs should have regard to the relative size of the undertakings that belong to the association and, in particular, to the situation of small and medium-sized enterprises. Payment of the fine by one or several members of an association is without prejudice to rules of national law that provide for recovery of the amount paid from other members of the association.
(49)
The deterrent effect of fines differs widely across the Union, and in some Member States the maximum amount of the fine that can be imposed is very low. To ensure NCAs can impose dissuasive fines, the maximum amount of the fine that is possible to be imposed for each infringement of Article 101 or 102 TFEU should be set at a level of not less than 10 % of the total worldwide turnover of the undertaking concerned. This should not prevent Member States from maintaining or introducing a higher maximum fine that can be imposed.
(50)
Leniency programmes are a key tool for the detection of secret cartels, and thus contribute to the efficient prosecution of, and the imposition of penalties for, the most serious infringements of competition law. However, there are currently marked differences between the leniency programmes applicable in the Member States. Those differences lead to legal uncertainty on the part of infringing undertakings concerning the conditions under which they are able to apply for leniency, as well as uncertainty about their immunity status under the respective leniency programmes. Such uncertainty might weaken incentives for potential leniency applicants to apply for leniency. This in turn can lead to less effective competition enforcement in the Union, as fewer secret cartels are uncovered.
(51)
The differences between leniency programmes at Member State level also jeopardise the level playing field for undertakings operating in the internal market. It is therefore appropriate to increase legal certainty for undertakings in the internal market and to boost the attractiveness of leniency programmes across the Union by reducing these differences by enabling all NCAs to grant immunity and reduction from fines and accept summary applications under the same conditions. Further efforts by the European Competition Network to align leniency programmes could be needed in the future.
(52)
NCAs should be able to grant undertakings immunity from fines and reductions of fines, if certain conditions are met. Associations of undertakings which perform an economic activity on their own behalf should be eligible for immunity from fines or reductions of fines in cases where they participate in an alleged cartel on their own behalf and not on behalf of their members.
(53)
For a cartel to be considered a secret cartel, not all aspects of the conduct need to be secret. In particular, a cartel can be considered a secret cartel when elements of the cartel which make the full extent of the conduct more difficult to detect are not known to the public or the customers or suppliers.
(54)
In order to qualify for leniency, the applicant should end its involvement in the alleged secret cartel, except in cases where an NCA considers that its continued involvement is reasonably necessary to preserve the integrity of the investigation, for example, in order to ensure that other alleged participants in the cartel do not discover that the NCA was made aware of the alleged cartel before it carries out investigative measures such as unannounced inspections.
(55)
In order to qualify for leniency, the applicant should cooperate genuinely, fully, on a continuous basis and expeditiously with the NCA. This means, inter alia, that when contemplating the making of an application to the NCA the applicant should not destroy, falsify or conceal evidence of the alleged secret cartel. When an undertaking is contemplating the making of an application, there is a risk that its directors, managers and other staff might destroy evidence in order to conceal their involvement in a cartel, but the destruction of evidence could also occur for other reasons. Therefore, NCAs should take into account the specific circumstances under which evidence was destroyed and the significance of such destruction when considering whether the destruction of evidence calls into question the genuine cooperation of the applicant.
(56)
In order to fulfil the condition of genuine, full, continuous and expeditious cooperation, when contemplating the making of an application to the NCA, the applicant should not have disclosed the fact or any of the content of its contemplated application, except to other NCAs, the Commission or competition authorities of third countries. This does not preclude an applicant from reporting its behaviour to other public authorities as required by relevant laws, but only prevents it from disclosing the fact that it is contemplating an application for leniency and from handing over leniency statements to those authorities. However, when fulfilling its obligations under those relevant laws, the applicant should also consider the importance of not adversely impacting the potential investigation by the NCA.
(57)
Applicants should have the possibility of submitting leniency statements, in relation to full or summary applications, in writing, and NCAs should also have a system in place that enables them to accept such statements either in oral form or by other means that permit applicants not to take possession, custody, or control of such submitted statements. NCAs should be able to choose the means by which they accept leniency statements.
(58)
Undertakings that wish to make an application for immunity should be able to initially request NCAs for a marker for a place in the queue for leniency before they formally submit the application for immunity, in order to give the applicant time to gather the necessary information and evidence to meet the relevant evidential threshold. This is without prejudice to the ability of Member States to allow undertakings to apply for a marker in the case of applications for a reduction of fines.
(59)
Moreover, in order to reduce the administrative and other considerable burdens in terms of time, it should be possible for applicants to submit leniency statements in relation to full or summary applications, as well as in relation to requests for markers, either in an official language of the Member State of the NCA concerned, or, where bilaterally agreed between the NCA and the applicant, in another official language of the Union. Such agreement would be deemed to exist where the NCAs generally accept such submissions in that language.
(60)
In view of the shared competences between the Commission and the NCAs for the enforcement of Articles 101 and 102 TFEU, it is key to have a smoothly functioning system of summary applications in place. Applicants which have applied for leniency to the Commission in relation to an alleged secret cartel should be able to submit summary applications to NCAs in relation to the same cartel, provided that the application to the Commission covers more than three Member States as affected territories. This is without prejudice to the possibility for the Commission to deal with cases if they are closely linked to other Union provisions which may be exclusively or more effectively applied by the Commission, where the Union interest requires the adoption of a Commission decision to develop Union competition policy when a new competition issue arises, or to ensure effective enforcement.
(61)
The summary application system should allow undertakings to submit a leniency application to NCAs containing a limited set of information where a full application has been submitted to the Commission in relation to such an alleged cartel. NCAs should therefore accept summary applications that contain a minimum set of information in relation to the alleged cartel for each of the items set out in Article 22(2). This is without prejudice to the possibility for the applicant to provide more detailed information at a later time. At the request of the leniency applicant, NCAs should provide it with an acknowledgement of receipt stating the date and time of receipt. If an NCA has not yet received such a prior leniency application from another leniency applicant about the same alleged secret cartel, and considers that the summary application fulfils the requirements of Article 22(2), the NCA should inform the applicant accordingly.
(62)
The aim of the system of summary applications is to reduce the administrative burden on applicants which submit a leniency application to the Commission in relation to an alleged secret cartel that covers more than three Member States as affected territories. Given that in such cases the Commission receives a full application, it should be the main interlocutor of the leniency applicant in the period before clarity has been gained as to whether the Commission will pursue the case in full or in part, in particular with respect to providing instructions on the conduct of any further internal investigation by the applicant. The Commission is to endeavour to decide on this matter within a reasonable period of time and inform the NCAs accordingly, without prejudice to Article 11(6) of Regulation (EC) No 1/2003. In exceptional circumstances, when strictly necessary for case delineation or case allocation, an NCA should be able to request the applicant to submit a full application before such clarity has been gained. This possibility should be used very rarely. In other cases, the applicant should only be asked to submit a full application to an NCA which has received a summary application once it is clear that the Commission does not intend to pursue the case in whole or in part.
(63)
Applicants should be given the opportunity to submit full leniency applications to the NCAs to which they have submitted summary applications. If the applicants submit such full applications within the period specified by the NCA, the information contained in those applications should be deemed to have been submitted at the time at which the summary application was submitted, provided that the summary application covers the same affected products and territories and the same duration of the alleged cartel as the leniency application filed with the Commission, which might have been updated. The onus should be on applicants to inform the NCAs to which they have submitted summary applications if the scope of their leniency application with the Commission has changed and to update their summary applications accordingly. NCAs should be able to check whether the scope of the summary application corresponds to the scope of the leniency application filed with the Commission, through cooperation within the European Competition Network.
(64)
Legal uncertainty as to whether current and former directors, managers and other members of staff of applicants for immunity are shielded from individual sanctions such as fines, disqualification or imprisonment, could prevent potential applicants from applying for leniency. In light of their contribution to the detection and investigation of secret cartels, those individuals should thus, in principle, be protected from sanctions in relation to their involvement in the secret cartel covered by the application imposed by public authorities in criminal, administrative and non-criminal judicial proceedings pursuant to national laws that predominantly pursue the same objectives to those pursued by Article 101 TFEU, such as national laws on bid-rigging, where the conditions set out in this Directive are fulfilled. One of these conditions is that the application for immunity should predate the time when those individuals were made aware by the competent national authorities of the proceedings that could lead to the imposition of sanctions. Such proceedings include the moment those individuals become suspected of violating such national laws.
Member States are free to provide under national law for modalities as to how those individuals should cooperate with the relevant authorities to ensure the effective functioning of this protection. Protection from criminal sanctions includes cases in which the competent national authorities refrain from prosecution under certain conditions or subject to instructions as to the future behaviour of the individual.
(65)
By way of derogation, in order to ensure that the protection from sanctions to be imposed on individuals in criminal proceedings is in conformity with the existing basic principles of their legal system, Member States might provide that the competent authorities are able to choose between protecting the individual from sanctions or only mitigating those sanctions, depending on the outcome of weighing the interest in prosecuting and/or sanctioning the individual against the individual's contribution to the detection and investigation of the cartel. When assessing the interest in prosecuting and/or sanctioning those individuals, their personal responsibility or contribution to the infringement, among other factors, may be taken into account.
(66)
Member States are not precluded from also protecting the current or former directors, managers and other members of staff of the applicants for reduction of fines from sanctions, or from mitigating such sanctions.
(67)
In order to allow the protection to function in situations where more than one jurisdiction is involved, Member States should provide that in cases where the competent sanctioning or prosecuting authority is not in the same jurisdiction as the competition authority that is pursuing the case, the necessary contacts between those authorities should be ensured by the NCA of the jurisdiction of the competent sanctioning or prosecuting authority.
(68)
In a system in which the Commission and NCAs have parallel powers to apply Articles 101 and 102 TFEU, close cooperation is required among NCAs and between NCAs and the Commission. In particular when an NCA carries out an inspection or an interview under its national law on behalf of another NCA pursuant to Article 22(1) of Regulation (EC) No 1/2003, the presence and assistance of the officials from the applicant authority should be enabled to enhance the effectiveness of such inspections and interviews by providing additional resources, knowledge and technical expertise. NCAs should also be empowered to ask other NCAs to assist in establishing whether undertakings or associations of undertakings have failed to comply with investigative measures and decisions taken by the applicant NCAs.
(69)
Arrangements should be put in place to allow NCAs to request mutual assistance for the notification of documents related to the application of Article 101 or 102 TFEU on a cross-border basis to parties to the proceedings or other undertakings, associations of undertakings or natural persons which may be the addressees of such notifications. Similarly, NCAs should be able to request the enforcement of decisions imposing fines or periodic penalty payments by authorities in other Member States where the applicant authority has made reasonable efforts to ascertain that the undertaking against which the fine or periodic penalty payment is to be enforced does not have sufficient assets in the Member State of the applicant authority. Member States should also provide, in particular, that where the undertaking against which the fine or periodic penalty payment is enforceable is not established in the Member State of the applicant authority, the requested authority may enforce decisions adopted by the applicant authority, at the request of the applicant authority. This would ensure the effective enforcement of Articles 101 and 102 TFEU and would contribute to the proper functioning of the internal market. In order to ensure that NCAs devote sufficient resources to the requests for mutual assistance, and in order to incentivise such assistance, the requested authorities should be able to recover the costs they incur in providing that assistance. Such mutual assistance is without prejudice to the application of Council Framework Decision 2005/214/JHA (5).
(70)
To ensure the effective enforcement of Articles 101 and 102 TFEU by NCAs there is a need to provide for workable rules on limitation periods. In particular, in a system of parallel powers, national limitation periods should be suspended or interrupted for the duration of proceedings before NCAs of another Member State or the Commission. Such suspension or interruption should not prevent Member States from maintaining or introducing absolute limitation periods, provided that the duration of such absolute limitation periods does not render the effective enforcement of Articles 101 and 102 TFEU practically impossible or excessively difficult.
(71)
To ensure that cases are dealt with efficiently and effectively within the European Competition Network, in those Member States where both a national administrative competition authority and a national judicial competition authority are designated as NCAs for the purpose of enforcing Articles 101 and 102 TFEU as referred to in Articles 6, 7, 8, 9, 10, 11, 12, 13 and 16 of this Directive, national administrative competition authorities should be able to bring the action directly before the national judicial competition authority. In addition, to the extent that national courts act in proceedings brought against decisions taken by NCAs applying Article 101 or 102 TFEU, national administrative competition authorities should be fully entitled to participate in their own right as a prosecutor, defendant or respondent in those proceedings, and should enjoy the same rights of such a public party to those proceedings.
(72)
The risk of self-incriminating material being disclosed outside the context of the investigation for the purposes of which it was provided could weaken the incentives for potential leniency applicants to cooperate with competition authorities. As a consequence, regardless of the form in which leniency statements are submitted, information in leniency statements that has been obtained through access to the file should be used only where necessary for the exercise of rights of defence in proceedings before national courts in certain very limited cases which are directly related to the case for which access has been granted. This should not prevent competition authorities from publishing their decisions in accordance with applicable Union or national law.
(73)
Evidence is an important element in the enforcement of Articles 101 and 102 TFEU. NCAs should be able to consider relevant evidence, irrespective of whether it is written, oral, or in an electronic or recorded form. This should include the ability to consider covert recordings made by natural or legal persons which are not public authorities, provided those recordings are not the sole source of evidence. This should be without prejudice to the right to be heard and without prejudice to the admissibility of any recordings made or obtained by public authorities. Similarly, NCAs should be able to consider electronic messages as relevant evidence, irrespective of whether those messages appear to be unread or have been deleted.
(74)
Ensuring that NCAs have the powers they need in order to be more effective enforcers reinforces the need for close cooperation and effective multilateral and bilateral communication in the European Competition Network. This should include the development of soft measures to facilitate and support the implementation of this Directive.
(75)
To support close cooperation in the European Competition Network, the Commission should maintain, develop, host, operate and support a central information system (European Competition Network System) in compliance with the relevant confidentiality, data protection and data security standards. The European Competition Network relies on interoperability in order to function effectively and efficiently. The general budget of the Union should bear the costs of maintenance, development, hosting, user support and operation of the European Competition Network System, as well as other administrative costs incurred in connection with the functioning of the European Competition Network, in particular the costs related to the organisation of meetings. Until 2020, provision has been made for the costs for the European Competition Network System to be covered by the Programme on interoperability solutions and common frameworks for European public administrations, businesses and citizens (ISA2 programme) established by Decision (EU) 2015/2240 of the European Parliament and of the Council (6), subject to the programme's available resources, eligibility and prioritisation criteria.
(76)
Since the objectives of this Directive, namely ensuring that NCAs have the necessary guarantees of independence, resources, and enforcement and fining powers to be able to effectively apply Articles 101 and 102 TFEU and national competition law in parallel to Articles 101 and 102 TFEU, and ensuring the effective functioning of the internal market and the European Competition Network, cannot be sufficiently achieved by the Member States, but can rather by reason of the requisite effectiveness and uniformity in the application of Articles 101 and 102 TFEU be better achieved at Union level in particular in view of the territorial scope of the Directive, the Union may adopt measures in accordance with the principle of subsidiarity as set out on Article 5 of the Treaty on European Union. In accordance with the principle of proportionality, as set out in that Article, this Directive does not go beyond what is necessary to achieve those objectives.
(77)
In accordance with the Joint Political Declaration of 28 September 2011 of Member States and the Commission on explanatory documents (7),Member States have undertaken to accompany, in justified cases, the notification of their transposition measures with one or more documents explaining the relationship between the components of a directive and the corresponding parts of national transposition instruments. With regard to this Directive, the transmission of such documents is considered to be justified,
