On 1 May, 2004, Council Regulation 1/2003/European Commission (EC) will enter into force and will introduce a new procedural framework for the enforcement of EC competition rules, replacing the current regime dating back to 1962.

These reforms will abolish the current notification system and will empower national courts and national competition authorities to apply the exemption contained in Article 81(3) EC. By relinquishing its monopoly over this exemption power, the EC hopes to focus its attention more fully on price-fixing cartels and other serious abuses.

However, it seems inevitable that the lack of any procedure to obtain exemption decisions or informal 'comfort letters' will lead to a greater degree of uncertainty, at least where one of the 'block exemptions' does not clearly apply. Indeed, the inability to obtain a review of an agreement through a notification could have an inhibitory effect on investment.

The EC intends to provide advice in certain circumstances in cases that involve new or unresolved legal questions. However, this informal guidance will be limited to particular issues. The EC will not endorse an agreement in its entirety, as would be the case in the US under the procedure for a 'business review letter'.

Furthermore, the new network that is composed of numerous competition auth-orities creates a risk of inconsistent application of the substantive rules, particularly since not all of these authorities or national courts will have adequate experience with EC competition law.

Other problems that can be foreseen include the risk of duplicative proceedings in different jurisdictions and forum shopping due to the diversity of national procedural rules.

Although the EC is expected to provide further guidance as to how the network will function, it is unfortunate that the reforms have already been adopted when the essential details have not yet been worked out and cannot be evaluated.

Although it remains to be seen how serious the impact of the problems outlined will be, it is clear that companies doing business in Europe will soon be faced with significant challenges. The inherent uncertainties of the new reforms imply significant growing pains before the new system functions smoothly.

Jean-Francois Bellis is managing partner at Van Bael & Bellis. They can be contacted on (+32) 2 647 73 50 or at [email protected] The firm's website address is www.vanbaelbellis.com