European Commission

Our webinar series on the European Commission’s draft guidelines on Article 102 is now available on demand here. The series, hosted by Kevin Coates, a former European Commission head of unit and an antitrust partner in Covington’s Brussels office, is in three parts. 

In the first webinar, Massimiliano Kadar of the European Commission’s…

Continue Reading European Commission’s draft guidelines on Article 102 – webinar series

On 3 September 2024, the European Court of Justice (“ECJ”) published its highly-anticipated judgment in Illumina/Grail v Commission (Joined Cases C‑611/22 P and C‑625/22 P) (“ECJ Judgment”), regarding the scope of application of Article 22 of the EU Merger Regulation (“EUMR”).

The ECJ set aside the EU General Court (“GC”) judgment (Case T‑227/21) and ruled that the European Commission (“Commission”) does not have jurisdiction over transactions referred to it by the national competition authorities of EU Member States (“NCAs”) if the transactions do not meet the national thresholds of the referring EU Member States.

Key takeaways

  • Based on a historical, contextual, and teleological interpretation of Article 22 EUMR and the EUMR itself, NCAs cannot ask the Commission to examine transactions which do not meet their national thresholds.
  • Article 22 EUMR provides for a corrective function regarding the allocation of competences between the Commission and NCAs, and is to limit the possibility of multiple parallel notifications, providing legal certainty and facilitating the one-stop shop principle.
  • An amendment of the EUMR thresholds and/or referral rules to capture below-threshold transactions would likely entail a burdensome legislative process and complex negotiations with EU Member States.
  • The Commission can still rely on (i) new thresholds which have by now been introduced in some EU Member States to catch transactions outside the scope of their traditional turnover-based thresholds, and (ii) the possibility for NCAs to review these transactions by means of Article 102 TFEU, which prohibits abuses of a dominant position.

Continue Reading ECJ decides that EU Member States cannot refer below-threshold transactions to the European Commission (Illumina/Grail v Commission)

The European Commission’s draft guidelines on exclusionary abusive conduct by dominant firms under Article 102 TFEU (the “Draft Guidelines”) were published on 1 August 2024. They show a marked change from the 2009 Article 82 [now Article 102] Enforcement Priorities Guidance (the “Priorities Guidance”): economic concepts have largely been replaced with the Commission’s interpretation of the European Courts’ caselaw.

The consultation on the Draft Guidelines is open until 31 October 2024. Practical suggestions rooted in and developing the caselaw appear more likely to influence the Commission’s final version of the Draft Guidelines than statements of economics.Continue Reading From Concept to Precedent: The 2024 Draft Guidelines on Article 102

On 3 June 2021, the European Court of Justice (“ECJ”) in case C-563/19 P Recylex v Commission dismissed Recylex’ appeal both to adjust its ranking in the leniency process and to receive partial immunity for parts of its participation in the Car Battery Recycling cartel.  The judgment, on appeal against the judgment of the General Court (“GC”) of 23 May 2019, provides guidance to companies considering a leniency application when there is already an ongoing European Commission (“Commission”) investigation.

Applying for leniency enables cartel participants to obtain reduced or annulled fines.  The 2006 Commission Notice on Immunity from fines and reduction of fines in cartel cases  (“Leniency Notice”) sets out the key principles:

  • the first company providing the Commission with sufficient evidence for an investigation will be granted full immunity;
  • subsequent applicants can receive fine reductions of 30-50%, 20-30% or 20% depending on the timing of their submission; and
  • companies can receive partial immunity for providing the Commission with details expanding the scope of the infringement.

Continue Reading ECJ provides guidance on key cartel questions: the partial immunity concept and rankings for leniency applications

On 6 May 2021, the European Commission (“Commission”) published the findings of its evaluation of the horizontal block exemption regulations for Research & Development (“R&D BER”) and specialisation agreements (“Specialisation BER”, together “HBERs”), as well as the accompanying Horizontal Guidelines (“Evaluation”).

The Commission launched the Evaluation in 2019 to assess the future relevance of the HBERs and the Horizontal Guidelines, since their adoption in 2011 and 2012.  It gathered a variety of evidence on the functioning of the HBERs, which included:

  • findings of an open public consultation running from November 2019 to February 2020;
  • responses to the call for contributions on Competition Policy and the Green Deal launched in 2020; and
  • an external evaluation support study, which cross checked the public consultation and the responses received with the Commission’s and national competition authorities’ own experiences.

According to the Commission, the results show that, while still relevant and useful to businesses, there is a need for the HBERs and Horizontal Guidelines to better reflect recent socio-economic developments like digitalisation and sustainability.  The Evaluation also identified that businesses perceive some rules as unnecessarily strict and unclear.Continue Reading The European Commission publishes the results of its evaluation of the horizontal block exemption regulations and guidelines

Companies that benefit from non-EU state support or subsidies will soon face heightened scrutiny in the European Union (EU) as the European Commission unveiled on May 5 its proposed Regulation on foreign subsidies distorting the internal market.  As its name suggests, the proposed Regulation will create a new tool to address what the European Commission sees as a “regulatory gap” in avoiding potential distortions caused by companies receiving non-EU subsidies and ensuring a “level playing field” in the EU.  Perhaps emblematic of its perceived importance at a time where calls from Member States to tackle potential distortive foreign investment have multiplied, it took the European Commission less than a year from the publication of the White Paper on levelling the playing field with respect to foreign subsidies to analyze the results of its public consultation and to put this proposal to the EU legislator.

The proposed Foreign Subsidies Regulation is wide-ranging and will apply in addition to the existing merger control and Foreign Direct Investment screening mechanisms.  Given the strong support it has received from most Member States and European industry bodies, it is widely anticipated that this new tool will be written into law without material change.

Here is what foreign companies that receive any form of non-EU public support and are active or considering deals involving the EU need to know, and prepare for.
Continue Reading More scrutiny to come in the EU for companies that receive non-EU subsidies

On 25 March 2021, the Court of Justice of the European Union (“CJEU”) dismissed the appeals by Lundbeck, Merck KGaA (and Generics UK), Arrow, Alpharma (and Xellia) and Ranbaxy, against the General Court’s (“GC”) judgment upholding the European Commission’s (“Commission”) 2013 pay-for-delay infringement decision.

Background

The case concerns the antidepressant containing the active pharmaceutical ingredient (“API”) citalopram.  Lundbeck’s patents for the API and two processes to produce it were protected in a number of European countries until 2003 (“Lundbeck’s original patents”).  Over time, Lundbeck developed other processes for the production of citalopram, in respect of which it obtained various patents (“Lundbeck’s new process patents”).

In 2002, Lundbeck entered into settlement agreements concerning potential launches of generic versions of citalopram with Generics UK (at the time an indirect wholly-owned subsidiary of Merck KGaA), Alpharma, Arrow and Ranbaxy.  Under the agreements, Lundbeck made payments to these producers of generic citalopram (“Other Providers”) in various forms (e.g., direct payments, purchase of generic citalopram stock for destruction, and guaranteed profits in a distribution agreement).  In exchange, the Other Providers agreed to cease or refrain from selling generic citalopram in the EEA as a whole or in specific Member States.

In 2013, the Commission adopted an infringement Decision against Lundbeck and each of the Other Providers, concluding that the agreements were “by object” restrictions of competition.
Continue Reading The CJEU’s Lundbeck judgment

Covington represented Riga International Airport and the Latvian State in obtaining State aid approval for the recapitalization of Riga International Airport. On March 8, 2021, the European Commission (EC) approved the state recapitalization of up to €39.7 million, comprising a capital injection and a waived dividend payment for the 2019 financial year.
Continue Reading Covington Helps Riga Airport Secure EC Recapitalization Approval

On 17 February 2021, the General Court of the European Union (“General Court”) in Cases T-259/20 and T-238/20 dismissed Ryanair’s challenges to pandemic aid packages introduced in France and Sweden in order to support the domestic airline sector. The judgments are the first ones where the General Court has decided on the legality of the State aid schemes adopted in response to the COVID-19 pandemic.
Continue Reading EU General Court dismisses first two challenges to State aid awarded to national airlines in response to the COVID-19 pandemic

Yesterday, the European Commission published its proposals for the Digital Markets Act (“DMA Proposal”) and Digital Services Act (“DSA Proposal”), proposing new regulation of “intermediary services” and “designated gatekeepers”. The proposals would impose new obligations on providers of digital services and augment enforcement powers.
Continue Reading Digital Markets Act Proposal