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.
On January 5, 2023, the Federal Trade Commission (“FTC”) issued a groundbreaking proposed rule that would, if finalized:
- prohibit most employers from entering into non-compete clauses with workers, including employees and individual independent contractors;
- prohibit such employers from maintaining non-compete clauses with workers or representing to a worker that the worker is subject to a non-compete clause; and
- require employers to rescind any existing non-compete clause with workers by the compliance date of the rule and notify the affected workers that their non-compete clause is no longer in effect.
The FTC’s notice of proposed rulemaking explains that the FTC considered possible limitations on the rule—such as excluding senior executives or highly paid employees from the ban—but it ultimately proposed a categorical ban on non-competes. The only exception is for non-competes related to the sale of a business. However, even this exception is unusually narrow: it would only apply to selling business owners who own at least 25% percent of the business being sold. (The proposal also would not apply to most non-profits, certain financial institutions, common carriers, and others who are also outside the scope of FTC regulation.)
As discussed in Covington’s January 5 client alert, the FTC explained that it issued the proposed rule due to its belief that non-competes reduce wages, stifle innovation and business, and are exploitative and unnecessary. …
When its Anti-Monopoly Law (“AML”) went into effect in August 2008, China immediately became a significant antitrust enforcer on the world stage. On June 24, 2022, the National People’s Congress, China’s top legislature, passed the Amendment to the Anti-Monopoly Law of the PRC (the “Amendment”), the first significant changes to the AML in nearly fourteen years. The Amendment, which was signed into law by President Xi Jinping and published on June 24, will become effective on August 1. It marks a major milestone in antitrust enforcement in China.
The more significant aspects of the Amendment include:
- significantly enhanced penalties for AML violations, including the introduction of fines for individuals;
- the introduction of a discretionary “stop-the-clock” mechanism for merger reviews;
- the codification of a burden-shifting framework created by China’s courts that gives companies the opportunity to defend resale price maintenance agreements; and
- new safe harbor and burden of proof provisions for matters involving vertical agreements.
Consistent with trends in other jurisdictions around the world, the Amendment also features a special focus on key economic sectors such as the digital economy.
Following the publication of the Amendment, the State Administration for Market Regulation (“SAMR”), China’s lead antitrust enforcement authority, released six sets of draft implementing regulations for public comment. These cover subjects such as merger control and notification thresholds, anti-competitive agreements, abuse of a dominant market position, and the abuse of intellectual property rights to exclude or restrict competition. SAMR is accepting comments on these regulations until July 27, 2022.
How Covington Can Help
Covington’s global antitrust and competition practice guides clients through the often-complex web of antitrust and competition laws around the world to help them secure their most important business objectives. Our team, which includes many attorneys who have served in senior leadership roles at government enforcement agencies and in in-house positions, has decades of collective experience advising clients regarding their global antitrust and competition concerns. If you have any questions concerning the material discussed in this client alert, please contact any of the following members of our Antitrust/Competition practice: Jim O’Connell, James Marshall, and Alexander Wang.
This communication is intended to bring relevant developments to the attention of Covington & Burling LLP’s clients and other interested colleagues. It is not intended as legal advice. Readers should seek specific legal advice before acting with regard to the subjects mentioned herein. Please send an email to email@example.com if you do not wish to receive future emails or electronic alerts.…
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.
In Enel, a judgment of 12 May 2022 (C-377/20), the Court of Justice of the European Union (“CJEU”) complemented the framework for analysing exclusionary abuses developed in earlier case-law, notably where it applies to a context of market liberalisation:
- Abuse: The concept of “abuse” relates to conduct that departs from “competition on the merits”. Conduct that an equally efficient competitor can replicate is generally not abusive (“equally efficient competitor test”).
- Anti-competitive effects: While it is not necessary to demonstrate actual anti-competitive effects or the company’s intention to carry out an exclusionary strategy, such factors are relevant in assessing whether the conduct is abusive or not.
- Harm: Conduct that harms consumers indirectly as a result of its effect on the structure of the market is per se abusive; it is not required to demonstrate an actual or potential direct harm to consumers.
- Objective justification: The prohibition set out in Article 102 TFEU does not prohibit conduct that is objectively justified and proportionate, or where the behaviour is counterbalanced or outweighed by pro-consumer efficiency-benefits.
The judgment largely endorses the opinion of Advocate General Rantos (see our blog post), but adds some important nuance.…
Tuesday, January 18th, the Federal Trade Commission (“FTC”) and the U.S. Justice Department’s Antitrust Division (“DOJ”) launched a joint public inquiry regarding the agencies’ horizontal and vertical merger guidelines. As part of this inquiry, the agencies are soliciting public comment via a Request for Information (“RFI”) on a wide range of topics that could lead to significant changes in the merger guidelines and increased scrutiny of a broad array of transactions. The agencies’ inquiry will address numerous themes of the merger guidelines including those highlighted below.
Continue Reading FTC, DOJ Announce Process to Revamp Merger Guidelines
On 6 October 2021, a preliminary ruling of the Court of Justice of the European Union (“CJEU”) in Sumal confirmed that follow-on damages actions can be brought against subsidiaries of companies found to have infringed EU competition law. This note briefly analyzes the judgment and the implications thereof.
Continue Reading The CJEU’s Sumal Judgment: Parental Liability is “Going Down”
On 20 July 2021, the UK Government’s Department for Digital, Culture, Media & Sport (“DCMS”) and Department for Business, Energy & Industrial Strategy (“BEIS”) published proposals for a new regulatory regime for digital markets alongside accompanying consultation documents (the “Consultation”). The Consultation seeks views from interested parties and closes on 1 October 2021.
Continue Reading New UK Digital Competition Regulation Regime Consultation Closes on 1 October 2021
In May 2021, the Court of Justice of the European Union (“CJEU”) published the summary of an appeal filed by the International Skating Union (“ISU”) against a ruling from the General Court (“GC”) which found that ISU rules restricting athletes from taking part in rival events infringed Article 101 TFEU. At the same time, a Spanish judge referred questions to the CJEU for a preliminary ruling concerning the compatibility of UEFA and FIFA regulations with EU competition law, which forced UEFA, the governing body of European football, to suspend disciplinary proceedings against members of the recent European Super League (“ESL”) that have not yet abandoned the project (i.e., Juventus, Barcelona and Real Madrid). This note briefly analyzes how the CJEU’s ruling on the ISU case could frame the response to the reference from the Spanish court.
Continue Reading The potential implications of the CJEU’s ISU judgement on the European Super League: Football “on thin ice”
The European Commission (”Commission”) is preparing the ground for a new competition enforcement tool. This new tool could substantially extend the competition authority’s current enforcement powers and allow for far-reaching intervention where the Commission identifies structural competition concerns. In particular, following the proposal, the standard for intervention could be lowered significantly as the Commission may no longer be required to establish dominance in order to impose behavioural or structural remedies on a company.
Executive Vice-President Margrethe Vestager, in charge of competition policy, explained “that there are certain structural risks for competition, such as tipping markets, which are not addressed by the current rules.” She stated that the Commission “is seeking the views of stakeholders to explore the need for a possible new competition tool that would allow addressing such structural competition problems.…
Continue Reading The New Normal? EU Commission Prepares a New Competition Enforcement Tool Aiming at Structural Competition Concerns