UK firms' Brussels offices under threat

A PROPOSED change in European Union legislation could spell hard times for the Brussels offices of law firms, it was claimed at the conference.

Emil Paulis, head of the European Commission's DG IVA unit, which deals with competition issues, says the forthcoming White Paper on competition law could divert many block exemption cases to the national authorities of member states.

Some Brussels offices could find their caseloads going back to London.

The White Paper was supposed to be released on 17 March but was delayed due to the mass resignation of the European Commission.

It would allow national authorities to decide on the withdrawal of block exemption protection from companies using franchises or exclusive distribution deals in the EU.

The EC is so flooded with notification from companies that it does not have time to deal with most agreements and merely sends out letters saying it intends to take no action.

“The centralisation of competition law was necessary in the early 1960s because there was not a culture of competition,” explains Paulis.

“Our objective is to make life easier for the majority of companies, while making the rules stricter for those with a large market share.”

The biggest law firms dealing with major corporations with market shares of more than the proposed upper limit of 30 per cent would not be covered by the block exemption rules and will therefore not be affected. However, smaller firms could find work is diverted away from Brussels.

One Brussels-based competition lawyer doubted the system would be workable. “It would be a question of which jurisdiction a case would fall under if the company is based in one country and the case affects another,” says Dibb Lupton Alsop partner Frank Fine.

“You would also need physical access to the national authorities, which would mean a company instructing foreign law firms rather than using firms it already knows.”