Strengthening the Luxembourg competition authority
The law of 30 November 2022 on competition, as amended by the law of 17 March 2023 (the “Law”), transposes Directive 2019/1 of 11 December 2018 to empower the competition authorities of the Member States to be more effective enforcers and to ensure the proper functioning of the internal market (the “Directive”).
The Directive aims to ensure that national competition authorities enjoy independence and have the adequate tools to investigate anti-competitive behaviours, in terms of both powers and resources. The driver behind this reform is the wish to ensure the effective enforcement of the EU competition rules as well as Luxembourg domestic competition rules.
Consistently, the Law should therefore allow avoiding the risks of an uneven application of material and procedural competition rules across the EU and preserving the system of parallel powers designed under Council Regulation 1/2003, which first introduced the European Competition Network composed of the European Commission and national competition authorities (the “ECN”).
Against this backdrop, the object of the Law is twofold:
- in conformity with the Directive, it redesigns the nature, organisation, powers and procedures of the Luxembourg competition council (Conseil de la concurrence), which, following the entry into force of the Law, has been renamed into “Competition Authority of the Grand Duchy of Luxembourg” (Autorité de la concurrence du Grand-Duché de Luxembourg) (the “Competition Authority”) and
- it reforms the Luxembourg competition law, by repealing the amended law of 23 October 2011 on competition.
The scope of the Law is procedural and organisational, as this does not provide any substantial change to the material competition rules applicable by the Competition Authority.
The Law, which entered into force on 1 January 2023, has now been amended by the law of 17 March 2023, which transposes a handful of provisions of the Directive not taken into account in the enactment of the Law. The few envisaged changes affect particularly the calculation of fines to associations of undertakings (Article 50) and the use of information in the framework of leniency procedures (Article 74).
A new framework for the independence of the Luxembourg competition authority
Under the provisions of the Law, the Competition Authority has now become a public institution (établissement public) having legal personality and financial and administrative autonomy (Article 6). As such, it is now capable of autonomously standing in judicial proceedings. Specific provisions reinforce the independence of the institution (Article 7) and the transparency of the recruiting process (Article 12).
More intense investigating powers, responsibilities and guarantees
The provisions of the Law reinforce and clarify the investigation powers of the Competition Authority, in the framework of a revised and more articulated procedure:
- Under its renewed controlling powers (pouvoirs de contrôle), the Competition Authority can access companies’ business premises and, inter alia, ask questions to the staff, request to check documents stored therein and make copies thereof (Article 24).
- In case of unannounced on-site inspections (inspections inopinées), the Competition Authority enjoys increased powers to, inter alia, access the business premises, check books and documents stored therein, obtain copies or extracts thereof. The staff on the premises may be requested to cooperate with the authority’s agents (Article 25).
In view of balancing such enhanced investigatory powers, the Law also adds further responsibilities for the Competition Authority, as well as procedural assurances in favour of companies under investigation and complainants:
- The rejection of a complaint filed with the Competition Authority will now need to be duly motivated and the complainant can appeal the relevant decision (Article 5).
- In case of exercise of controlling powers, the access to private places (lieux à usage d’habitation) annexed to business premises requires a specific judicial authorisation (Article 24).
- A dawn raid can be organised only upon authorisation by the competent Luxembourg judiciary, insofar as it is consistent with and proportionate to the underlying purpose (Article 25). Companies can request to be assisted by a lawyer (Article 26(6)).
- Correspondence between the company and its lawyers is confidential and covered by privilege (secret des communications avocat-client) (Article 26(7)). In case of dispute on the nature of the correspondence during a dawn raid, the company can appeal before the judiciary, pending which the Competition Authority cannot access it (Article 26(12)).
- Appeals can be brought against not only judicial orders authorising an inspection, but against the conduction of the inspection itself (Articles 25(8) and 26(12)).
Incentives to put an end to the breach of competition rules
Under the Law companies intending to admit having violated the EU and/or Luxembourg rules on competition may protect themselves through new leniency and settlement provisions.
A harmonised leniency framework (programme de clémence) offers to companies applying for immunity a faculty to request a “marker” for a place in a queue for leniency before they formally submit the application for immunity, so as to gain the necessary time to gather evidence to meet the relevant evidential threshold (Article 55).
Companies may also admit they committed a breach of such competition rules and accept to enter into a settlement agreement with the Competition Authority allowing them to obtain a reduction of the applicable fines by up to 30% (Article 47).
The way forward
The enactment of the Law is expected to strengthen the role and effectiveness of the Competition Authority and enhance the cooperation among national competition authorities, in line with the policy underlying the Directive. The independency of the authority should be strengthened, which may result in a more active role both as an actor in the Luxembourg institutional framework and with respect to the interplay with the European Commission and other national authorities in the ECN. Due to the design of more thorough powers, the Competition Authority is likely to enlarge its size and recruit new staff members pursuant the enactment of the Law.
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