On 2 June 2020, the European Commission (the Commission) published its inception impact assessment (or roadmap) on the possible adoption of regulation that would introduce a new market investigation tool. This assessment was immediately followed by the launch of a public consultation to seek views and feedback from the public regarding such a tool. The new tool would enable the Commission to investigate and impose behavioural and/or structural remedies on businesses with significant market power, whether dominant or not – and without any prior finding of a competition law infringement. As such, this new tool could present a significant risk and potential burden for companies with market power. On the other hand, it offers potential benefits to market participants, such as new entrants, who might otherwise see their access to markets foreclosed.
In the United States, The Federal Trade Commission (FTC) and Department of Justice (DOJ) faced new issues this quarter with the unprecedented challenges brought about by the COVID-19 global pandemic. In March, the agencies made certain changes to the merger review process to accommodate businesses and counsel working remotely. However, merger reviews, challenges, trials and consents have continued as usual at both agencies despite the additional obstacles.
In Europe, the European Commission (EC) also put in place special measures to ensure business continuity in the enforcement of merger control during the COVID-19 crisis. The first quarter of 2020 also saw the United Kingdom’s official departure from the European Union, which has consequences on the enforcement of EU competition law in the United Kingdom.
On March 24, 2020, the US Federal Trade Commission (FTC) and US Department of Justice (DOJ) issued a Joint Antitrust Statement Regarding COVID-19. In this statement, the FTC and DOJ recognize that public health efforts in response to the Coronavirus (COVID-19) require government and private cooperation. To address the speed at which companies and individuals must engage in COVID-19 response activities, the FTC and DOJ will respond to COVID-19-related requests for advisory opinions and business review letters within an expedited seven days of receipt of all information.
Amid the economic shocks caused by the Coronavirus (COVID-19) crisis, many industries are facing reduced demand for their products and services. Other industries—notably healthcare and food—are adjusting rapidly to expanding demand requirements and changing consumption patterns due to large-scale population confinement in several countries. Significant over- or under-capacity can create incentives, or even the necessity, to collaborate in ways that may push the limits of antitrust and competition rules.
On 23 March 2020, the European Competition Network (ECN) took unprecedented action. ECN, the network of competition enforcement authorities in the European Union, issued a joint statement announcing that its members will not actively intervene against “necessary and temporary” measures, including cooperation among competitors, in order to avoid a “shortage of supply.” At the same time, the ECN cautioned that its members would actively intervene against any measures taken by companies to limit the supply or charge excessive prices for critical products, such as masks or hand sanitising gel. This joint statement followed steps taken by several competition authorities in Europe to signal relaxed antitrust treatment of certain types of collaboration.
This article provides an overview of how companies can navigate these rapidly evolving developments in line with EU competition law. In brief, competition rules still apply, but are sufficiently flexible to allow critical industry adjustments during economic shocks that cannot be addressed in the short term by market forces, which are currently in turmoil.
In the midst of the ongoing global effort to mitigate the effects of COVID-19, the Directorate-General for Competition (DG Competition) of the European Commission (EC) and the EU courts are taking measures to prevent the spread of the virus among individuals whilst at the same time seeking to ensure that the EU economy remains as stable as possible. The situation remains highly fluid for the foreseeable future. Companies are therefore urged to stay abreast of the continually changing measures being taken.
EC Staff working on “non-essential” projects are working remotely from home. However, officials who hold “critical” functions, such as the Commissioner, the Director-General and Heads of Unit, will generally be present at DG Competition, although working on a shift basis. In-person meetings will be replaced by video conferences going forward. DG Competition staff who are dealing with the provision of State aid exemptions during the crisis are being considered “critical”.
The Department of Justice Antitrust Division (DOJ) was active in 2019. At the beginning of 2019, the DOJ was preparing for trial in six matters and had 91 pending grand jury investigations. Throughout 2019, the DOJ made public several new investigations, including in the commercial flooring industry, online auctions for surplus government equipment, the insulation installation industry and suspension assemblies used in hard disk drives. The DOJ also announced developments in other ongoing investigations.
Meanwhile, the European Commission (Commission) entered into settlements with parties in three cartel cases: Occupant Safety Equipment, FOREX and Canned Vegetables. The Commission imposed total fines of €1,469 million in 2019. In March 2019, the Commission launched an online tool to submit documents and information in the context of leniency and settlement proceedings.
The European Commission has reiterated its position that if a business allows for the non-exclusive licensing of its products in the EEA, such licensor can no longer control where, to whom, and in what manner (online/off-line) the products can be sold within the EEA.
On 30 January 2020, the Commission fined NBCUniversal Media, LLC, and other Comcast Group companies (collectively, NBCUniversal) EUR 14.327 million for restricting licensees from selling licensed products across customer groups and across countries within the European Economic Area (EEA). This is the third time in one year that the Commission has fined a brand owner for such restrictions, following Nike and Sanrio.
Although agreements restricting out-of-territory sales (i.e., market partitioning by territory) have long been prohibited under Article 101(1) of the Treaty on the Functioning of the European Union (TFEU), the Commission’s increased enforcement activity on vertical restraints is remarkable.
Antitrust M&A Snapshot | FTC and DOJ Continue M&A Transaction Investigation While UK CMA Continues Role as Key Jurisdiction in Merger Clearance Process
Antitrust regulators in the United States and Europe were very active in the final quarter of 2019. The FTC and DOJ continue to investigate and challenge M&A transactions in a variety of industries. Events of this quarter highlight the importance of states in merger enforcement. As well, recent FTC activity highlights the regulators’ focus on preventing monopolists from buying nascent competitors.
In Europe, the UK CMA continues to expand its role as a key jurisdiction in the merger clearance process, which will only accelerate with Brexit. The EC agreed to clear, subject to conditions, acquisitions in the aluminum production and battery industries as well as in the wholesale supply and retail distribution of TV channels after conducting Phase II reviews. Moreover, the EC opened new in-depth investigations into transactions in the copper refining and engineering sectors.
McDermott’s Annual European Competition Review summarizes key developments in European competition rules. During the previous year, several new regulations, notices and guidelines were issued by the European Commission. There were also many interesting cases decided by the General Court and the Court of Justice of the European Union. All these new rules and judicial decisions may be relevant for your company and your day-to-day practice.
In our super-connected age, we can be inundated by information from numerous sources and it is difficult to select what is really relevant to one’s business. The purpose of this review is to help general counsel and their teams to be aware of the essential updates.
This review was prepared by the Firm’s European Competition Team in Brussels and Paris. Throughout 2019 they have monitored legal developments and drafted the summary reports.
Antitrust M&A Snapshot | DOJ Arbitrates Market Definition Dispute While EC Clears Acquisition of Broadband and Energy Networks
There was significant antitrust activity in the third quarter of 2019. In the United States, the Federal Trade Commission (FTC) and Department of Justice (DOJ) continued an active docket challenging M&A transactions. DOJ is resolving antitrust reviews significantly faster than the FTC, following DOJ’s 2018 policy establishing a six-month target. The DOJ also made use, for the first time, of its authority to arbitrate a market definition dispute, potentially opening the door for a new tool the DOJ could employ to resolve challenges more rapidly.
In the European Union, the European Commission (EC) agreed to clear, subject to conditions, the acquisition of broadband and energy networks following lengthy Phase 2 investigations. Meanwhile, the national European regulators opened new in-depth investigations into commercial radio advertising, software as a service for airlines, autonomous sea surface vehicles and the promotion of live music events (all in the UK) and prohibited the merger of two recyclers (Germany).