Competition law in 2024: putting theory into practice
2023 marked the near finale of the European Commission’s overhaul of its competition policy, leaving only a few loose ends to tie up in 2024/2025.
Now that the Commission’s position is clear on vertical, horizontal and sustainability aspects of collaborations, it is time to watch theory be put into practice by the competition authorities and at the courts. The same applies to the Commission’s alternative methods to catch non-notifiable mergers and to conduct merger assessments. The Digital Markets Act’s rules will face practical challenges soon and the upcoming exclusionary abuse guidelines are bound to include recent case law and decisions.
There is never a dull moment in the dynamic competition law world and 2024 is unlikely to be an exception.
Never fear, guidance is here
The Commission ticked nearly all the boxes in its policy review wish list.
The new Horizontal Guidelines accompanying the R&D and Specialisation Block Exemption Regulations have led the Netherlands Authority for Consumers and Markets (ACM) to largely give in on how to assess sustainability collaborations. Upcoming informal views and opinions may clarify how much room is left for companies to manoeuvre under the remaining gap (see our December 2023 newsletter).
The revised Vertical Block Exemption Regulation (VBER) and Vertical Restraints Guidelines were already adopted in 2022 (see our June 2022 newsletter), but companies had until 31 May 2023 to adapt their existing distribution agreements to it.
In the meantime, the European Court of Justice (ECJ) clarified that resale price maintenance (RPM), even though qualifying as a hardcore restriction under the VBER and consequently falling outside the VBER’s safe harbour, does not automatically constitute a ‘by object’ restriction. Instead, a substantive analysis is required whether the RPM results in a sufficient degree of harm to competition taking into account the nature of its terms, the objectives that it seeks to attain and all of the factors that characterise the economic and legal context of which it forms part. Likewise, other ‘vertical restraints’ clarifications were given in the Rotterdam District Court’s upholding of the ACM’s vertical price coordination fines and the General Court’s ruling confirming the Commission’s decision that Valve (an online platform operator for video games) and five game developers had infringed the cartel prohibition by restricting cross-border sales through geo-blocking (see our October 2023 and December 2023 newsletters). The ECJ’s answers to a preliminary ruling request whether wide and narrow parity clauses may qualify as ancillary restrictions and how the relevant market for online hotel platform services should be defined, are still eagerly awaited. Those answers may also affect the upcoming revised market definition notice.
More is yet to come on this front. The ongoing investigation into food producer Mondelĕz and into fashion house Pierre Cardin and its licensee Ahlers underline the authorities’ continued determination to tackle cross-border sales restrictions (see our April 2023 and October 2023 newsletters).
Unfazed focus on ‘classic’ and novel cartels
The uncovering of ‘classic’ cartels remains on the authorities’ priority list. The ACM fined carrot companies for alleged market-sharing, egg-product companies for alleged price-fixing and traffic sign manufacturers for alleged bid-rigging, whereas the Commission imposed fines for an alleged market-sharing agreement regarding military hand grenades and for an alleged Euro-denominated bonds trading cartel. The Commission also imposed a fine for alleged price-fixing and quota allocation of an essential pharmaceutical ingredient. The investigation into an alleged automotive starter battery cartel is still ongoing, but the Commission’s interest into potential cartel facilitation by trade association Eurobat and its service provider Kellen underlines that ‘third party’ non-cartel participants do not necessarily go scot-free.
‘Novel’ cartels, such as purchasing cartels and labour cartels, are still on the authorities’ radars too. Lantmännen was the last to be fined for participating in the alleged ethanol benchmarks cartel, whereas Clariant failed to overturn the Commission’s ethylene purchasing cartel decision at the General Court. The Commission’s investigation into the online food delivery sector was extended to cover alleged no-poach agreements and exchanges of commercially sensitive information. It thereby joining the ACM in its fight against non-poaching and wage-fixing. Moreover, an upcoming appeal on the ACM’s novel approach to indirect information exchange will hopefully set clearer boundaries between prohibited horizontal collusion and legitimate flows of information between suppliers and distributors (see our August 2023 newsletter).
Abuse of a dominant position: upcoming guidelines and cases
The Commission intends to publish draft Guidelines on exclusionary abuses of dominance mid-2024 (see our April 2023 newsletter). Apart from these Guidelines, which will include the latest EU case law on exclusionary abuse, dominant companies will also gain more insights once the Commission’s ongoing investigations have concluded (see, for instance, the investigation into Teva’s alleged disparagement campaign and Renfe’s refusal to supply full content and real-time data to rival ticketing platforms). Meanwhile, they should keep in mind that, as a dominant company, they can be held liable for their distributors’ anti-competitive conduct (see our February 2023 newsletter).
In the digital sector, the interplay between ‘traditional’ antitrust review and the Digital Markets Act (DMA) will be interesting to watch, particularly since a number of ‘designated gatekeepers’ has challenged the DMA’s scope (see our October 2023 newsletter). Let’s see what the Commission’s ‘traditional’ investigations into Microsoft Teams, Apple, Google and Meta will bring to the table. The ECJ’s upcoming rulings on ‘self-preferencing’ and anti-competitive contracts will be helpful too (see our December 2021 and October 2022 newsletters). Any ‘tension’ between the European Commission and national competition authorities in similar investigations has already been resolved. According to the ECJ, carving out jurisdictions to avoid parallel proceedings is perfectly fine. The protection against parallel proceedings does not imply any right for companies to have their cases dealt with in their entirety by the Commission (see our May 2023 newsletter).
New and improved dawn raids
More antitrust cases are in the pipeline with the Commission having conducted dawn raids in the fragrance sector, fashion sector, synthetic turf sector, medical devices sector, construction chemicals sector, energy drinks sector and food delivery sector. The ACM launched an investigation into illegal arrangements involving IT devices.
After Regulation 1/2003’s evaluation is finalised, competition authorities may have additional tools to uncover anti-competitive conduct even more effectively. Options that are currently on the table include enabling fully remote inspections, making it illegal to destroy documents and imposing freezing orders during dawn raids. Other considered options are facilitating the imposition of interim measures and reducing the burden of "access to file”.
Even so, the authorities will have to abide by the safeguards set by the EU courts. The Commission, for instance, has to properly record interviews if they are used to gather information on the investigation’s subject matter, regardless of the stage of the proceedings (see our April 2023 newsletter). Moreover, the Commission can only require the disclosure of information that might enable it to investigate presumed antitrust infringements, under the condition of adequate protection of privacy rights but without the requirement of having to explain the relevance of each search term used (see our May 2023 newsletter).
‘Sticky’ merger control
After the Commission cut red tape with its merger simplification package (see our May 2023 newsletter), companies involved in M&A transactions may still face ‘sticky tape’. Non-notifiable concentrations may still be scrutinised by competition authorities, either by way of an ‘article 22’-referral (see our August 2022 newsletter; appeal pending before the ECJ) or an ex post abuse-of-dominance investigation by national competition authorities (see our April 2023 newsletter).
Moreover, companies should beware that the Commission can deviate from its non-horizontal merger guidelines: all eyes are on the Commission’s ‘novel’ ecosystem theory of harm in its Booking/eTraveli non-horizontal merger prohibition decision. A theory to be put to the test at the EU courts shortly. The ECJ already clarified the Commission’s horizontal merger guidelines and eased the way for the Commission to intervene in ‘gap’ cases (mergers that do not create or strengthen a dominant position but may still give rise to a significant impediment to effective competition; see our August 2023 newsletter).
Conclusion
The Commission’s policy overhaul is near to complete. 2024 will be used to dot the i’s and cross the t’s, leaving it up to companies, competition authorities and courts to put theory into practice. 2024’s competition law developments promise to be just as dynamic and innovative as always.
This article was published in the Competition Newsletter of January 2024. Other articles in this newsletter:
- European Court of Justice plays hardball in Sports rulings
- FDI screening guidance: shedding some light in the darkness
- From Farm to Fairness: Unpacking the Dutch Unfair Trading Practices Act for the Agri-Food Supply Chain
