As home to the European Commission (EC), Brussels has been the centre of European competition law. But its role is changing. Last November, with the aim of relieving the EC of part of its enormous workload, reform proposals to decentralise some of its competition functions were formally discussed with the European Parliament at Freiburg.
In addition to the potential EC reforms, the Competition Act 1998 took effect on 1 March, 2000 and replaced UK competition legislation with European law principles. The result is that European Union (EU) competition law can now be practised in the UK.
The past decade has seen the Brussels office become a crucial outpost of any heavyweight law firm. But, in the light of these developments, has the Brussels office had its day?
Not yet, according to Craig Pouncey, a partner with Herbert Smith's European competition group. Since the implementation of the Competition Act in the UK, there has been no noticeable change in his workload. He says that foreign firms in Brussels are growing and a huge amount of competition work is still in the EC's hands.
"Even if changes were to result in a greater emphasis on competition laws being practised by member states, the sort of expansion that
we are seeing in European law and regulatory law will still make Brussels a logical place to be," he says.
The Herbert Smith competition practice straddles London and Brussels, but Pouncey believes that with an increasing amount of trade work coming from the World Trade Organisation, and a growing demand for regulatory advice due to the privatisation of public utilities, the expansion rather than the contraction of his Brussels practice seems likely.
With the UK Competition Act mimicking
EU competition law, there is an increased awareness in the UK of competition law issues. "As sanctions for antitrust infringements become more vicious at a national level, companies are looking to take compliance much more seriously than they were a few years ago," Pouncey says. "The amount of competition work is growing in the UK as the Office of Fair Trading gets the teeth that it never had before."
The reforms to UK competition law are part of a pan-European movement, where member states are dovetailing their national laws to EU laws in an effort to avoid incompatibility between systems. But the effect of the forthcoming reforms discussed at Freiburg will be more to rebalance the workload between the Commission and member states than to shift responsibility for competition law away from Brussels. Consequently, Simon Baxter, a partner with Clifford Chance in Brussels, says it is unlikely that competition work for foreign firms in Brussels will dry up.
"It is not as if the European Commission is going to be doing less work, it is just going to be different. It will undertake more investigatory work. Joint venture work will remain in Brussels, but matters that fall short of being cartel situations will be reviewed by member states."
Ross Denton, head of Baker & McKenzie's international law centre in Brussels, agrees that there is going to be a movement of some types of work away from Brussels and back to national capitals as part of an effort to rebalance the workload and make all systems work together more efficiently.
"There is going to be a rebalancing of competition work. There is going to be a flow of work relating to anti-competitive agreements back to national capitals and there is going to be an increase in cartel work in Brussels," he says.
Christopher Thomas, a partner in the Lovells office in Brussels, says the devolution of certain work will mean that the EC can concentrate on the more important competition cases in the knowledge that lesser cases can be dealt with at the national level. He says: "The EC will choose its cases with a focus on investigating mergers and cartels and bigger European issues. It is no longer particularly interested in vertical agreements of limited economic value."
The integration of UK with EU competition law is likely to lead to a closer relationship between competition lawyers in their respective London and Brussels practices. Denton says what Bakers is doing in its 13 offices inside the EU, and what he thinks any well-prepared law firm should also be doing, is to increase the capability of each office to deal with competition work that would normally be done in Brussels.
"Links between groups must be increased," he says. "A predominant part of EU work is now going to flow back to the member states so there can be no more running off to Brussels. They are going to be in court and before national competition authorities on a regular basis."
If the forthcoming reforms to the EC influence network building between competition practices in multiple European locations, then smaller firms without those networks will be disadvantaged. Baxter says: "There will be more enforcement of European rules at member state level. If you are a law firm in the competition game, you had better make sure that you are properly resourced at the local level."
While bread-and-butter competition work in Brussels would not appear to be under immediate threat, if such a risk ever existed then diversifying into the expanding lobbying arena in Brussels would be the direction to take.
Whether the concept of an emerging European superstate is a tool to sell newspapers and to influence voters or an indication of Europe's development, UK legislation is becoming integrated with EU legislation. Brussels is not only the epicentre of competition law, it is also the hub of public service work where, according to Mike Pullen of DLA Upstream, the public affairs arm of DLA, more than 80% of UK legislation starts. Brussels is fast beginning to parallel Washington with its host of law firms lobbying to influence lawmaking.
"To have any influence in the Brussels law-making process, law firms need to be involved in lobbying and public policy, as Washington firms are," Pullen argues. "Brussels is political as Westminster is political and because it is based on the Treaty of Rome, its regime is based on legal principles."
Because of these legal foundations, Pullen says Brussels provides the perfect climate
for legal lobbying, where lawyers can use their legal knowledge and advocacy skills to present legal arguments and to put forward legal
submissions on their client's behalf. Pullen describes this process as "proactive lawyering aimed at making law businesses friendly and workable from day one". Lawyers as lobbyists possess some advantages over general lobbyists. Not only do they understand the legislative process, but they also possess the legal skills to get involved in drafting amendments.
As the emerging political climate in Europe encourages the growth of demand for lobbying and public affairs services, law firms that
augment their traditional role of implementing the law with becoming involved in lawmaking will be well placed in Brussels.