December Antitrust Bulletin: Top-of-Mind Global Antitrust Issues

December Antitrust Bulletin: Top-of-Mind Global Antitrust Issues

Welcome to the Sidley Antitrust Bulletin — thoughts on topics that are top of mind for Sidley’s Antitrust team and why they matter to you. European Commission (EC) Executive Vice President (EVP) and Commissioner for Competition Margrethe Vestager recently called for a renewed focus on a principles-based approach to European Union (EU) competition policy. Such an approach allows the EC to pursue multiple goals and pursue novel theories of harm in competition cases. The UK Competition and Markets Authority (CMA) sets out similar ambitions in its proposed annual plan for 2023–24. Preparations for compliance with the EU’s new Digital Markets Act (DMA) are continuing at pace. The first of several technical workshops organized by the EC with stakeholders took place in early December. The EC also launched a consultation on its proposed procedural rules for the DMA. And we’re providing you with an overview of the U.S. enforcement for 2022. Interested? Keep reading….

Our Take on Top-of-Mind Global Antitrust Issues

EC Competition Commissioner advocates principles-based approach to EU competition policy: In a recent speech, EVP and Commissioner for Competition Vestager advocated a renewed focus on a principles-based approach to EU competition policy. Whether in the context of introducing new rules or reviewing or enforcing existing ones, EVP Vestager argued that going back to the principles enshrined in the EU treaties allows the EC to pursue multiple goals, such as fairness, maintaining competitive processes, consumer welfare, efficiency, and innovation. This approach has guided the EC’s recent policy and enforcement action in the digital space. It has also, for example, led to the adoption of the revised Informal Guidance Notice, the new guidelines for climate, environmental protection, and energy, and the (ongoing) review of EU Regulation 1/2003.

Why it matters: This focus on the key principles underpinning EU competition law not only gives the EC extensive flexibility to adopt new rules or review existing laws and guidelines; it also allows it to pursue novel theories of harm when enforcing those rules — much in the same way the U.S. authorities are trying to go back to first principles and revive older laws as discussed in our October issue. That the EC will not shy away from such novel theories of harm is clear from its recent enforcement action, in particular, in the digital and pharmaceutical sectors. With Commissioner Vestager having explicitly encouraged national competition authorities to follow the EC’s lead, the pursuit of novel theories of harm may be expected to have a spillover effect at the national level.

Consultation on CMA Annual Plan: On December 15, the CMA launched a consultation into its proposed annual plan for 2023–24. The plan outlines the CMA’s ambition that through its work (i) people can be confident they are getting great choices and fair deals; (ii) competitive, fair dealing businesses can innovate and thrive; and (iii) the whole UK economy can grow productively and sustainably. Both the CMA’s medium-term priorities and intended areas of focus for the next 12 months are linked to these ambitions. 

Why it matters: The plan follows shortly after the UK government’s commitment to introduce, within the current parliamentary session, a statutory pro-competition regime for digital markets through the CMA’s Digital Markets Unit (DMU). The plan notes that the DMU has already begun work “to operationalise the new regime” and highlights some of the CMA’s ongoing work in the digital space. Other notable intentions include the CMA’s proposal in the coming year to bring a greater focus to emergent markets where the CMA may be able to provide advice or recommendations to help shape effective competition. In addition, the CMA plans to provide guidance on how businesses can ensure competition compliance during their collaborations for environmental sustainability objectives. 

First technical workshop on the DMA: Following the DMA’s entering into force on November 1, the EC is in the process of designating certain companies as “gatekeepers,” meaning they will be subject to the obligations in the DMA. After designation, gatekeepers will have until around the first quarter of 2024 to comply with those obligations. In preparation, the EC is organizing workshops with potential gatekeepers and other stakeholders to discuss the practicalities of DMA compliance. On December 5, the EC hosted its first workshop, in relation to the prohibition against self-preferencing practices under DMA Article 6(5).

Why it matters: Gatekeepers will face a considerable challenge over the next year to adapt their business operations to comply with the DMA. This will require a clear understanding of how the text of the legislation translates into practice. The first DMA workshop already highlighted a number of interpretative issues with the self-preferencing prohibition (e.g., in its application to indirect self-preferencing measures and equivalent effects). While the EC purposefully took a passive role during this workshop, the panelists argued that ongoing dialogue with the EC will prove crucial to enable effective compliance.

EC launches public consultation on DMA implementing regulation: Hot on the heels of its first DMA workshop, on December 9 the EC launched a public consultation on the proposed text for an implementing regulation that sets out the procedural aspects of DMA enforcement by the EC. The proposed implementing regulation sets out rules related to matters such as the form, format, and details required for notifications under the DMA, the time limits surrounding the EC’s investigations, the parties’ right to be heard, and access to the EC’s file.

Why it matters: The consultation, which is open until January 9, 2023, allows stakeholders the opportunity to review and comment on the EC’s proposed procedure relating to the DMA, which will apply from May 2, 2023. 

U.S. Antitrust Enforcement — A Year in Review: In 2022, the Federal Trade Commission (FTC) and the U.S. Department of Justice Antitrust Division (DOJ) continued an aggressive approach toward merger review that has thus far defined the Biden administration’s antitrust enforcement strategy. In January 2022, Assistant Attorney General Jonathan Kanter delivered a speech in which he expressed strong opposition to merger remedies to address competition concerns. Instead, he noted, when the DOJ concludes that a merger is likely to lessen competition, it should sue to block the deal outright. This message permeated the DOJ’s merger review approach this year as it did not settle a single merger investigation by consent decree. The FTC did not take the same rigid stance and settled several matters, but it continued its practice of requiring acquirers to obtain “prior approval” from the agency before closing any future transaction affecting each relevant market for which a violation was alleged. The agencies collectively filed 10 complaints to block alleged anticompetitive transactions, using both traditional theories of harm and more seldomly litigated theories of harm, from vertical foreclosure to buy-side power. Parties that litigated agency challenges saw mixed results, with an uptick in success in comparison to historical trends. Part of the deviation is attributable to the agencies’ willingness to bring cases that do not neatly align with tried and tested theories of harm, as discussed in our November issue

Aside from the merger context, both agencies have demonstrated a continued focus on using and reinvigorating the tools provided by Congress to thwart business practices that the agencies deem illegal. The agencies brought enforcement actions against wage-fixing, bid-rigging, and market allocation, with the DOJ securing guilty pleas in connection with a number of criminal cases. In September, FTC Commissioner Alvaro Bedoya called on the FTC to renew enforcement of the Robinson-Patman Act to target price discrimination and return the focus of the antitrust laws to “fairness” rather than efficiency. In October, the DOJ issued a press release announcing the resignation of several corporate board directors following the agency’s extensive review of potential interlocking directorates — that is, individuals serving on the boards of two competitors. In November, the FTC issued a policy statement broadly interpreting its Section 5 authority under the FTC Act to challenge practices that violate the spirit but not letter of other antitrust laws, a sharp contrast to the much more limited standalone authority outlined in the agency’s 2015 Section 5 policy statement.

Why it matters: The antitrust agencies’ statements and enforcement decisions this year demonstrate a continued willingness to commit agency resources to enforcement actions and theories of harm that have not been at the forefront historically. Companies should be mindful of the implications that recent agency efforts may have on their business conduct and structures. Merging parties need to consider the broader theories of competitive harm that the agencies are pursuing. And given the agencies’ reluctance to accept structural and behavioral remedies, merging parties must carefully consider risk allocation and related commitments in purchase agreements.

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