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.
REFORM (SUMMARY AND STATUS)
2023
Q4
2024+
Q3
Q2
Reform of antitrust enforcement procedures (Regulation 1/2003)
Summary: EC is consulting on fundamental reform of Regulation 1/2003, governing EU antitrust enforcement rules and procedures. Matters within scope include the EC’s investigatory powers (including during dawn raids), parties’ right of defence, and cooperation between the EC, national competition authorities and courts.
Status: Initial public consultation conducted in 2022. Stakeholder workshops, surveys, and consultation with national competition authorities to be organized as part of a wide-reaching evaluation process in 2023.
See Cartel Intel (7th Edition)
Digital Markets Act
Digital Markets Act (“DMA”)
Summary: Landmark legislation imposing significant obligations on larger market players (so-called "gatekeepers") providing core platform services (e.g., online search engines, social networks, messaging services, advertising services, web browsers, cloud computing
services etc).
Status: DMA entered into force on 1 November 2022 (available here).
See Digital Markets Act Update: Implementing Act, Timelines, Workshops and Institutional Changes
The DMA is part of the EU’s Digital Agenda, which also includes the Digital Services Act (protecting user interests through regulation of online content provision – see here), and the AI Act (which proposes an EU regulatory framework for artificial intelligence – see here).
Merging parties holding pre-notification discussions in Q2 should urgently consider implications of imminent reforms.
A seminal moment in digital regulation, reshaping the relations between businesses, Big Tech and EU institutions. The world is watching as a new regulatory frontier opens.
EU Foreign Subsidies Regulation (“FSR”)
Summary: Bold reform conferring far-reaching powers on the EC to investigate companies benefiting from foreign (non-EU) subsidies. Foreign subsidies are broadly defined and include loans, guarantees, tax exemptions and a wide range of other financial benefits and contributions.
Status: FSR entered into force on 12 January 2023 (available here). A draft Implementing Regulation, specifying key procedural rules and containing proposed notification forms, was issued for consultation in February 2023 and provoked heated debate.
See EU Reaches Agreement on Foreign Subsidies Regulation and, more recently, EU FSR adopted – Draft Implementing Regulation to be published beginning of 2023
Adoption of Implementing Regulation, including procedural rules and confirmation of notification requirements, envisaged for end of Q2.
A game-changer for businesses receiving financial contributions from non-EU governments. The new regime will include obligations on businesses to notify for review potentially subsidized M&A mergers and public procurement bids. As presently envisaged, notification obligations would be burdensome: preparation before October will be key.
Adoption of new rules for EU Merger Regulation filings
Summary: An extensive reform package will come into effect in 2023, simplifying merger control procedures. Notable changes include expanding the category of transactions eligible for simplified treatment and the publication of new merger notification forms cutting back red tape (e.g., including tick box responses in place of freestanding narrative). Pre-notification engagement with the EC can be dispensed with for M&A deals benefiting from “supersimplified” treatment.
Status: New measures, including revised procedural rules and notification forms, published on 20 April, available here.
See European Commission adopts major reforms to EUMR merger review procedures
Initial consultation on reforms concluded on 24 April. Date for immediate follow-up steps yet to be announced.
The burden and expense of notification in many M&A deals may be mitigated, but to capitalize fully businesses need to consider before 1 September the information relevant for future filings - former notifications may no longer be suitable precedents; some additional new questions have been added to the standard notification form.
New Market Definition Notice
Summary: Wide-ranging revisions proposed to the 1997 Market Definition Notice, modernizing practice so fit for the Twenty-first Century. Proposed reforms are wide-ranging and take account of developments including digitization, globalization and the supply of goods/services at zero monetary cost.
Status: Consultation on a revised draft Market Definition Notice (available here) was concluded on 13 January 2023.
See EU Market Definition Notice – Commission proceeds from evaluation and fitness check to public consultation
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, as the EC seeks to modernize its approach.
New guidance on abuse of dominance (Article 102 TFEU)
Summary: The EC intends to issue new guidance on the application of Article 102 TFEU to exclusionary abuses by dominant firms. Guidance was lasted issued 15-years ago. In the intervening period enforcement priorities and practices have changed, partly due to a series of landmark EU Court judgments.
Status: In March 2023, the EC issued amendments to existing enforcement priorities, effective immediately, and issued a policy paper with latest thinking (both available here).
See European Commission announces plans for new Article 102 TFEU Guidelines and amends 2008 Guidance on enforcement priorities
Adoption of new Notice scheduled for Q3.
Reform agenda is wide-ranging and may well herald a “reset” of enforcement practices and procedures. Outreach programme in 2023 will give businesses and other stakeholders the opportunity to have their say.
This is the first major policy initiative in relation to abuse of dominance since 2008. It marks a renewed attempt to codify EU law relating to conduct including predatory pricing, refusals to supply, tying and bundling and margin squeezes. Businesses need to be aware of changes to enforcement priorities that have already been adopted; they will then have the opportunity in 2024 to influence the future direction of policy.
New rules for vertical agreements
Summary and status: Revised EU vertical agreements block exemption Regulation (“VBER”) and Guidelines, governing the likes of distribution and supply arrangements, came into force on 1 June 2022. A 12-month transitional period has been granted to businesses to ensure compliance.
See New EU competition rules for vertical agreements enter into force on 1 June 2022
… and horizonal agreements
Summary and status: New EU horizontal agreements block exemption and Guidelines took effect generally from 1 January 2023. These included, for the first time, specific EU guidance on sustainability agreements, as well as detailed guidance on issues including information exchanges, R&D agreements and joint purchasing arrangements.
See Commission publishes draft guidance on sustainability agreements
Companies must ensure compliance with revised VBER by no later than 31 May 2023.
For R&D and specialization agreements only, extension of prior rules until 30 June 2023.
Stakeholder workshops, surveys, and a consultation with national competition authorities are to be organized as part of a wide-reaching evaluation process to be conducted during 2023.
Specific reforms will be proposed late 2023/ 2024
Businesses must act now to verify the legality of existing vertical arrangements or adapt arrangements before expiry of the transitional period in May 2023. Similarly, R&D and specialization agreements must comply with new rules effective from the end of June 2023.
Majority of DMA provisions apply from 2 May.
The Implementing Regulation, setting out procedural rules and notification forms for the DMA, was adopted on 14 April (available here).
Affected companies must notify the Commission and provide requisite information on gatekeeper status by no later than 3 July.
Commission must decide on gatekeeper designation within 45 working days of notification – i.e., decisions by 6 September at the latest.
Designated gatekeepers will be obliged to comply with relevant DMA obligations and restrictions from March 2024.
Most FSR provisions will apply from 12 July.
From this date, the EC will be able to launch own-initiative investigations into foreign subsidies.
Notification obligations for qualifying M&A and public bids will apply from 12 October.
Clarification of certain key concepts may be provided by the EC in 2024; more detailed guidance is not likely before 2025.
New procedural rules, including revised notification forms, are applicable from 1 September.
Publication of draft guidance as part of 12- week public consultation is expected mid-2024.
Adoption of revised guidance is expected 2025.