ALL CHANGE: REFORMS TO ALMOST ALL AREAS OF EU ANTITRUST ARE IMMINENT
Ambitious, wide-ranging reforms pursued by Margrethe Vestager through her second term as EU Competition Commissioner are on the verge of being realised. In the next 12 – 16 months businesses will need to contend with a "once-in-a-generation" reset of many aspects of antitrust policy and enforcement, with innovative new systems of regulation to be launched in relation to the digital sector and foreign subsidies. Key reforms will also take effect in areas including the treatment of supply and distribution agreements and sustainability arrangements, the assessment of market definition and merger control procedures.
SUMMARY AND CURRENT STATUS
Reform of antitrust enforcement procedures (Regulation 1/2003)
In June 2022 the European Commission launched a public consultation seeking feedback on Regulation 1/2003, which governs EU antitrust enforcement procedures.
See Cartel Intel (7th Edition)
Most provisions will apply from 2 May onwards.
Digital Markets Act
Landmark legislation imposing significant obligations on larger market players ("gatekeepers") providing core platform services (eg, online search engines, social networks, messaging services, advertising services, web browsers, cloud computing services etc).
See EU legislators reach agreement on Digital Markets Act
Notification obligations for qualifying M&A and public bids anticipated to enter into force in October.
Adoption of new Notice scheduled for Q3.
A defining moment in digital regulation, reshaping the relations between businesses and Big Tech, while also providing the European Commission with extensive new powers to safeguard fair competition. To be complemented by the Digital Services Act, which will safeguard user interests by regulating online content provision, set to enter into force in 2024.
Reforms will further simplify procedures relating to clearance of mergers and acquisitions unlikely to raise competition issues (eg, joint ventures located and doing business outside the EU; acquisitions of target businesses with minor market shares etc.)
See Merger control in the EU – further simplification of procedures
Adoption anticipated in Q1.
Vital to consider for transaction planning purposes, envisaged reforms will reduce the regulatory burden on business when undertaking M&A. Simpler notification procedures and a streamlined filing form will become available for mergers meeting specified thresholds, providing cost benefits and time savings to parties.
Revised Market Definition Notice
Wide-ranging revisions to 1997 Market Definition Notice, taking account of developments including digitisation, globalisation, platform services and the supply of goods/services at zero monetary cost.
See EU Market Definition Notice – Commission proceeds from evaluation and fitness check to public consultation
Final text officially published on 12 October. Enters into force on 2 November.
For R&D and specialisation agreements only, Commission proposes extension of current rules until 30 June 2023
Companies must ensure agreements comply with new rules by no later than 31 May 2023.
Market definition is a key conceptual tool used in antitrust and merger control proceedings across all industries; reform may have a transformative impact particularly, but not exclusively, on cases involving the digital and technology sectors.
EU Foreign Subsidies Regulation
Confers far-reaching powers on the European Commission to investigate companies benefiting from foreign (non-EU) subsidies distorting the EU internal market. Foreign subsidies are broadly defined and include loans, guarantees, tax exemptions and a wide range of other financial benefits and contributions. Foreign "contributions" (a wider concept than subsidies) will count towards relevant thresholds that trigger mandatory notifications.
See EU proposal to address foreign subsidies and, more recently EU Reaches Agreement on Foreign Subsidies Regulation
Anticipated key provisions will be effective by mid-2023.
A game-changer for businesses that receive financial contributions from non-EU governments and are looking to either invest or operate in the EU. The new regime will include mandatory obligations on businesses to notify for review mergers and acquisitions and public procurement bids that are potentially subsidised.
New rules for vertical
A revised EU vertical agreements block exemption Regulation and Guidelines were published and came into force on 1 June 2022, with a 12-month transitional period granted to businesses to ensure compliance. Many changes seek to modernise rules originating from 2010 to take full account of the growth of e-commerce and online sales, including stricter rules on so-called dual-distribution systems.
See New EU competition rules for vertical agreements enter into force on 1 June 2022
Envisaged that draft Regulation will be published in December and formally adopted.
Stakeholder workshops, surveys, and consultation programme with national competition authorities to be organised during 2023 as part of a widereaching evaluation process by the Commission, with specific changes to be proposed late 2023 or early 2024.
New rules will generally take effect from 1 January 2023
Reforms will likely focus on the Commission's investigative powers and its enforcement tools, the procedural rights and obligations of parties subject to investigation, and the relationships between the Commission, national agencies and courts. Consultation exercises in 2023 will give businesses and other interested stakeholders the opportunity to have their say and engage with the Commission on its eventual reform package. Businesses will need to monitor proposed reforms and potentially reconsider internal compliances rules and procedures.
Changes taking full effect in 2023 mean businesses must act now to verify the legality of existing vertical arrangements or adapt arrangements before expiry of the transitional period; negotiation of new supply or distribution arrangements must take account of altered legal rules.
New rules for horizontal cooperation agreements
A new EU draft horizontal agreements block exemption and Guidelines were published in March 2022, including, for the first time, specific EU guidance on sustainability agreements, as well as detailed guidance on issues including information exchanges, consortia agreements in procurement and M&A contexts, R&D agreements and joint purchasing arrangements.
See Commission publishes draft guidance on sustainability agreements and Consortia Law and Competition
Current rules for horizontal cooperation agreements expire on 31 December 2022.
Initial public consultation concludes October 2022.
Establishes a new legal framework to assess agreements between competitors; innovative new guidance on sustainability arrangements is a key topic for debate that has dominated the headlines but is by no means the only significant area of reform that businesses must consider and act on.