Sustainability governs all policies and sectors of social and economic life. The goal of sustainable development is to meet the needs of today’s generations without compromising the self-sufficiency of future generations. Companies are called upon to innovate as economic conditions indicate a change in the direction of sustainability. Sustainability considerations and green developments have increasingly caught the attention of competition law’s enforcers. Competition authorities such as the European Commission (“Commission”), the Hellenic Competition Commission (“HCC”), the Dutch Competition Authority (“ACM”) and the German Competition Authority (“Bka”) have taken a positive stance towards accepting sustainability initiatives proposed by the private sector. How can companies balance both sustainability and competition law? In this blog post, we analyze recent developments that further explain the sustainability framework that companies have to navigate.
Competition Law in Europe
EU General Court Upholds Tata Steel/thyssenkrupp JV Prohibition
By Johan Ysewyn, Sophie Albrighton & Jiayen Ong on
On 22 June 2022, the EU’s General Court (“GC”) fully dismissed thyssenkrupp’s appeal against the European Commission’s (“Commission”) decision to block its proposed joint venture (“JV”) with Tata Steel in 2019.
This is the first time that the GC has considered the prohibition of a “gap” case under the EU Merger Regulation (“EUMR”) since it annulled the Commission’s prohibition of CK Hutchison’s proposed acquisition of Telefónica UK (O2) in 2020 (“CK Hutchison”) (see our previous blog post here). A “gap” case is a merger in an oligopolistic market that does not result in the creation or strengthening of an individual or collective dominant position. Rather, it risks causing a “significant impediment to effective competition”.
This result may indicate a return to a more traditional approach by the GC as regards “gap” cases than that demonstrated in the CK Hutchison judgment. The judgment also provides helpful guidance on the interpretation of the EUMR and other legal instruments (such as the Market Definition Notice and the Notice on Remedies). The key findings are:
- Standard of proof: In order to block a “gap” merger, the Commission must show with a sufficient degree of probability that the transaction significantly impedes effective competition in the internal market or in a substantial part of it.
- SSNIP test: The Commission is not required to apply the SSNIP (small but significant and non-transitory increase in price) test when assessing substitutability between products — it is only one of the methods available to the Commission when defining the market.
- Remedies: When assessing remedies, it is not necessary to demonstrate that the remedies remove the entire overlap between the merging parties or re-create fully the pre-merger structure in affected markets.
- Requests for Information (“RFI”): There is no procedural error where the Commission fails to take additional steps (beyond sending systematic reminders) to ensure that recipients respond to an RFI.
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The European Union adopted new rules for the Trans-European Networks for Energy
On 30 May 2022, the European Union (“EU”) adopted the revised Regulation on guidelines for trans-European energy infrastructure (No. 2022/869) (the “TEN-E Regulation 2022”), which replaces the previous rules laid down in Regulation No. 347/2013 (the “TEN-E Regulation 2013”) that aimed to improve security of supply, market integration, competition and sustainability in the energy sector. The TEN-E Regulation 2022 seeks to better support the modernisation of Europe’s cross-border energy infrastructures and the EU Green Deal objectives.
The three most important things you need to know about the TEN-E Regulation 2022:
- Projects may qualify as Projects of Common Interest (“PCI”) and be selected on an EU list if (i) they fall within the identified priority corridors and (ii) help achieve EU’s overall energy and climate policy objectives in terms of security of supply and decarbonisation. The TEN-E Regulation 2022 updates its priority corridors to address the EU Green Deal objectives, while extending their scope to include projects connecting the EU with third countries, namely Projects of Mutual Interest (“PMI”).
- PCIs and PMIs on the EU list must be given priority status to ensure rapid administrative and judicial treatment.
- PCIs and PMIs will be eligible for EU financial assistance. Member States will also be able to grant financial support subject to State aid rules.
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European Court of Justice clarifies scope of protection against double jeopardy in successive antitrust investigations
By Johan Ysewyn, Rolf Ali & Antoine Espinasse on
On 22 March 2022, the European Court of Justice (“ECJ”) issued two separate preliminary rulings – Bpost and Nordzucker – which clarify how the protection against double jeopardy (“non bis in idem principle”) should be applied in instances where an identical competition law infringement is sanctioned in parallel investigations, either by different regulatory authorities of the same EU Member State or by multiple national competition authorities (“NCAs”) from different EU Member States.
The key takeaways from the two judgments are as follows:
- the non bis in idem principle applies to competition law due to the criminal aspect embedded in the relevant administrative penalties;
- the non bis in idem principle only applies if the facts are identical – a mere reference to a fact in a decision is not sufficient to demonstrate that an authority has ruled on that element;
- different national authorities can impose fines for an identical infringement if the legislation on which they rely pursues complementary objectives;
- the non bis in idem principle also applies to situations where an NCA has granted leniency to a company such that only a declaratory finding infringement (without fine) can be made.
Sustainability in the European Commission’s revised horizontal block exemption regulations and guidelines
By Johan Ysewyn & Jiayen Ong on
On 1 March 2022, the European Commission (“Commission”) published drafts of the revised Research & Development Block Exemption Regulation (“R&D BER”) and Specialization Block Exemption Regulation (“Specialisation BER”, together the “Horizontal Block Exemption Regulations” or “HBERs”) as well as the accompanying Horizontal Guidelines for stakeholder comments. The current HBERs are due to expire on 31 December 2022.
The HBERs set out how competitors can work together on projects and enter into horizontal agreements without breaching collusion-related prohibitions. During the Commission’s evaluation of the current HBER rules and horizontal guidelines, the Commission identified a number of areas for improvement, including the need to update the rules in line with the Commission’s policies on digitalization and sustainability (see our previous blog post here).
Three things for you to know about the recent amendments to the HBERs:
- There is a strong focus on sustainability, and how sustainability agreements may comply with EU competition law, which provides greater scope for companies to enter into sustainability agreements (which is detailed in this blog post).
- Data sharing and information exchange is at the forefront of the HBER update, with additional guidance on identifying and sharing commercially sensitive information and the use of algorithms.
- The competition rules for research and development agreements and specialisation agreements have been explained and clarified, including new definitions of key competition terms (e.g., active and passive sales, unilateral specialisation agreements).
The European Parliament endorses the EU Commission’s proposal on the Foreign Subsidies Regulation
Posted in Competition Law in Europe, Foreign Subsidies
On 4 May 2022, the European Parliament (the “Parliament”) adopted its position on the proposal of the European Commission (the “Commission”) for a Regulation on foreign subsidies distorting the internal market (the “Foreign Subsidies Regulation”) (see our alert on the proposal). It confirms the Commission’s powers to investigate and remedy the potential negative effects of foreign subsidies. It further approves a number of amendments adopted by the committee on international trade “to make the tool more effective and improve legal certainty”, according to the Committee’s press release.
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European Parliament and Council strike the deal on the Digital Markets Act
By Johan Ysewyn, Kevin Coates & Katarzyna Sadrak on
Posted in Competition Law in Europe, Digital Markets
On 24 March 2022, the European Parliament and the Council reached an agreement on the Digital Markets Act (“DMA”), a pioneering initiative to regulate digital markets and endorse the European digital strategy. The DMA would include a set of obligations for “designated gatekeepers”, namely companies whose digital services would be determined as an important gateway for businesses to reach consumers.
The DMA has been negotiated for more than a year, with discussions centering around: (i) the criteria for determining “designed gatekeepers”, (ii) content of specific obligations, and (iii) enforcement mechanisms. The final agreed text has not yet been released, but we share our understanding of the developments in these three areas.…
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Advocate General Rantos Provides Sound Guidance for Non-Pricing Abuse of Dominance Analysis (Case C-377/20)
By Laura van Kruijsdijk on
On 9 December 2021, Advocate General (“AG”) Rantos delivered his Opinion in Servizio Elettrico Nazionale (Case C‑377/20), a request for a preliminary ruling from the Italian Consiglio di Stato. The case concerns the conduct of the ENEL Group (“ENEL”) in the context of the liberalisation of the electricity market in Italy. ENEL, the incumbent, allegedly used customer data obtained before liberalisation to make offers to customers in order to “transfer” them to its operator active on the liberalised market, seeking to prevent the large-scale departure of customers.
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Dawn raids in the EU are back in full swing
By Johan Ysewyn & Vicky Ling on
Now that the COVID 19 pandemic seems to be – at least temporarily – under control, competition authorities in Europe have gone back to performing dawn raids on companies in the second half of 2021.
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Amended GBER simplifies State aid rules for projects supporting the recovery from the COVID-19 pandemic
By Johan Ysewyn & Laura van Kruijsdijk on
Introduction
On 23 July 2021, the European Commission (“Commission”) adopted an extension of the scope of the General Block Exemption Regulation (“GBER”). The revised rules concern:
- Aid for projects funded via certain EU centrally managed programmes under the new Multiannual Financial Framework; and
- Certain State aid measures that support the green and digital transition and are also relevant for the recovery from the economic effects of the coronavirus pandemic.