Competition

In his speech in Austin, Texas in 2019[1] and subsequent interviews,[2] the Chairman of the French Electronic Communications and Postal Regulatory Authority (ARCEP) and former general rapporteur at the French Competition Authority, Sébastien Soriano, suggested that it is no longer appropriate to apply the “Schumpeterian paradigm” to technology companies that he characterised as having reached “… a critical size making it unlikely that external innovation will reverse the situation”.

Since then, Mr. Soriano has spoken about addressing the market power of “prevailing platforms”(“plateformes structurantes”). Last week, ARCEP defined “prevailing platforms” in a strategic note “Prevailing digital platforms – Elements of reflection relating to their characterization”.[3] This strategic note effects the shift in approach that Mr Soriano proposed.

Taking into account the current definitions of digital platforms, ARCEP has defined “prevailing digital platforms” as follows:

online platform operators or operating system providers which, in particular because of their intermediation activity in accessing internet services and content, and because of their importance, are able to significantly limit the ability of users to engage in economic activity or communicate online”.

To determine whether a given operator falls within this definition, ARCEP has set out a set of indices (partly based on the criteria used by the European Commission to characterise operators with significant market power in the electronic communications sector).
Continue Reading The French telecoms regulator has entered the fray “prevailing digital platform”

On 27 November, Johan Ysewyn and Annemarie ter Heegde (DG COMP) presented the highlights of recent EU cartel enforcement in their annual presentation at the Advanced EU Competition Law Conference in Brussels. They covered the developments in the traditional three pillars of enforcement, policy and court review.
Continue Reading Advanced Competition Law Conference Brussels – Joint Presentation on Recent EU Cartel Enforcement

On 7 October 2019, the German Ministry of Economics and Energy published the draft Act on Digitalisation of German Competition Law (the “Draft Act”).  The Draft Act proposes several key changes to the current competition rules in Germany, with an emphasis on what the proponents present as novel challenges that arise in digital markets and in connection with data.  Subject to further revisions by the Federal Government, the Draft Act would enter into force during the second half of 2020.
Continue Reading German Ministry of Economics and Energy publishes the draft Act on Digitalisation of German Competition Law

On 24 September 219, the General Court (“GC”) delivered its long awaited judgments on the European Commission’s (“Commission”) decisions finding that tax rulings granted to Starbucks and Fiat constituted State aid. The GC annulled the Commission’s decision on Starbucks but upheld the Commission’s decision on Fiat. The judgements confirm that State aid rules enable the Commission to review whether tax rulings endorsing transfer pricing arrangements are in line with the arm’s length principle. However, in order to find that such tax rulings constitute State aid, the Commission must clearly show that they reduced their beneficiaries tax burden and cannot limit itself to pointing out inaccuracies or mistakes in the methodology used to calculate transfer pricings.
Continue Reading The GC’s rulings in Fiat and Starbucks : a green light with a warning

Fines are integral to EU cartel enforcement and subject to careful methodology and review. The European Commission (“EC”) determines cartel fines in accordance with the Guidelines on the method of setting fines imposed pursuant to Article 23(2)(a) of Regulation No 1/2003 (the “Fining Guidelines”). The Fining Guidelines set the value of sales of goods or services to which the infringement relates as the proxy that forms the basis of the fine calculation. The value of sales, together with the duration of the infringement, is considered “an appropriate proxy to reflect the economic importance of the infringement as well as the relative weight of each undertaking in the infringement”.

The proportion of the sales value taken into account will depend on the degree of gravity of the infringement, multiplied by the number of years of the infringement, and will be set at a level of up to 30%. However, point 37 of the Fining Guidelines enables the EC to depart from the usual methodology where the peculiarities of the case, or the need to achieve a deterrent effect so require.

Implemented in 2006, the Fining Guidelines have since come of age and in recent cases – mostly in the financial services industry – the EC has started to apply point 37 to accommodate increasingly complex infringements and sectors, rather than as an instrument to wriggle it out of the occasional fining impasse. Does this mean the Fining Guidelines are ripe for an overhaul? Or can the use of point 37 cater for all situations in which the standard methodology falls short?
Continue Reading The EU Commission’s cartel fining challenges: a need to “re-fine” the method?

On July 11, 2019, Assistant Attorney General Makan Delrahim announced fundamental and sweeping changes to the Division’s approach to corporate compliance policies that will bring it into line with other Department of Justice branches.  In every case, the Division will now consider compliance programs in deciding whether to file criminal charges and in calculating fines.
Continue Reading Covington Alert: DOJ to Credit Compliance Programs and Consider Deferred Prosecution Agreements in Cartel Cases

On 16 January 2019, the European Court of Justice (“ECJ”) rejected the European Commission’s (“Commission”) appeal in Commission v. UPS. The judgment followed Advocate General Kokott’s Opinion of July 2018, and upholds the 2017 judgment of the General Court (“GC”) annulling on procedural grounds the Commission’s decision prohibiting the acquisition of TNT by UPS.
Continue Reading EU Court Confirms the Annulment of the European Commission’s Decision Prohibiting the UPS/TNT Transaction

On 21 January 2019, the UK government published its draft statutory instrument on State aid, outlining the changes to the UK State aid regime in the event of a no deal Brexit. Its publication comes at critical moment for the UK as it considers the potential options for leaving the European Union: (i) leave with a deal; (ii) leave without a deal; or (iii) postpone the date of leaving.

The State Aid (EU Exit) Regulations 2019 (“State Aid No Deal Regulation”), which still requires the approval of the UK Parliament, does not make material changes to the substance of the EU State aid framework, but rather transposes the regime into UK domestic law, establishing the UK Competition and Markets Authority (“CMA”) as the UK State aid enforcement authority, thereby replacing DG Comp.Continue Reading “No Deal” Brexit and the UK State Aid Regime (Part 2)

Potentially significant changes are just around the corner for the UK competition system, as the country prepares to take the final step of exiting the European Union. In this regard, the UK has three potential options: (i) leave with a deal; (ii) leave without a deal; or (iii) postpone the date of leaving. Should the UK leave the EU with a deal, then its departure shall be governed by the Withdrawal Act ( “WA”), which simply confirms much of the competition framework will remain until December 2020 (the “Transition Period”). At the time of writing, the WA still awaits Parliamentary approval. In the case that the UK leaves without a deal in place, then from 29 March 2019 competition law will be governed by the statutory instrument titled The Competition (Amendment etc.) (EU Exit) Regulations 2019 (“No Deal Regulation”).

A very brief summary of the key differences between the WA and the No Deal Regulation in terms of the effect on the UK competition framework is as follows:

Continue Reading Deal or No Deal Brexit? The Lowdown for Competition Law (Part 1)

With a musical ABBA twist, Johan Ysewyn presented the evolution of the cartel concept in the EU at the Chillin’ Competition Conference on 20 November 2018 in Brussels.

Click here to watch the full presentation by Johan.
Continue Reading The (Developing) History of Cartels – A Conceptual Waterloo