In the midst of a global pandemic, with so many changes in all aspects of our lives, 2021 promises to become another important year in in the development of competition law.
Regulators have spent much of the last year evaluating and consulting on options to strengthen competition regimes going forward. We see an accelerating focus in 2021 on digital markets with significant policy developments globally, as well as increased enforcement against the large online platforms and tech ecosystems. The European Commission also announced its Green Deal earlier this year and competition policy is set to play a pivotal role in supporting sustainability goals, or at least preventing that competition rules present an obstacle. In 2021, both the competition and the State aid rules look set to be adapted to specifically cater to the aims pursued by the Green Deal. Finally, new rules on Vertical Agreements will come and the outcome of the Commission’s evaluation of its approach to horizontal co-operation agreements is fast approaching.
In this forward-looking edition of our competition newsletter we therefore consider how the enforcement tools are likely to be changing in 2021 and the potential impact this could have on the digital economy and beyond.
A big thank you to our editorial committee and to our London-based legal director, Anthony Rosen, for curating this edition. To our readers: we hope you enjoy this newsletter and we wish you all a safe and successful 2021!
Pauline Kuipers and Morten Nissen
Co-heads of Bird & Bird's Competition & EU group
In October 2020, the General Court of the European Union (GC) issued an important decision in the joined Casino cases which promises to ensure that competition investigations will be more robust and afford greater protection to companies‘ rights. Both the European Commission (EC) and companies can take much from the judgment in terms of strenthening their procedures and dawn raid processes.
The currently most discussed themes in competition law – digitalisation, sustainability and the COVID-19 pandemic – can be expected to have an impact on the restrictions and possibilities under competition law for companies to exchange information and cooperate on innovation. In this article, we provide an overview over which developments we expect for these areas in 2021.
The threat of strengthened competition intervention and enforcement to address potential concerns in the Digital Economy is looming large as we look ahead to 2021. Regulators have called for strengthened powers to be able to ensure that markets characterised by large platforms with significant networks effects acting as “gatekeepers” remain fair and contestable for innovators, businesses and new entrants. Governments are responding and we can expect new powers to complement ex ante competition law and tougher merger control enforcement. Regulators will be emboldened to test them. The rules of the game are being set – game on!
Sustainability and the revision of EU competition rules are among the hottest topics for 2021. The importance of sustainability projects and developments is eminent. How competition law relates to sustainability initiatives may, however, be less obvious. It becomes clearer with the realisation that sustainability goals can only be achieved when companies – competitors – in the various sectors of the economy cooperate to establish industry-wide sustainability goals and put them into practice. Competition law is (sometimes) perceived to be a barrier for cooperation and progress towards a more sustainable economy.
This outlook for 2021 explores the current available leeway under competition law for sustainability initiatives and we make suggestions of how competition policy could and must adapt to the sustainability challenge.
Online platforms and e-commerce have transformed the way in which manufacturers, suppliers and distributors sell their products both online and offline.
These changes were analysed by national competition authorities across the EU. This has led to a divergent approach towards the enforcement of vertical rules set out in the Vertical Block Exemption Regulation (VBER).
All this means that a review of the functioning of the current VBER is much needed ahead of the new VBER that will replace the current VBER that expires in 2022. Among the crucial changes expected by businesses are clear guidelines on dual distribution and dual pricing, retail price maintenance, agency contracts, and online marketplaces restrictions.
Merger control has always been one of the most effective mechanisms to protect ex ante market competition. However, the rapid evolution of many sectors in recent years and the emergence of new market players, especially companies with a high technological value, require merger control mechanisms to be adapted to the new realities.
The European Commission has not remained indifferent to this issue and, as it has done lately with other antitrust rules, it is determined to analyse and, where necessary, update the merger control rules so that they remain effective in novel and specific situations.
Follow-on damages claims are now an almost inevitable consequence of infringement decisions by the European Commission and national competition authorities, and preparing for possible claims is an ever more important element of the competition defence strategy, meriting consideration at an early stage of the process. This trend is set to continue into 2021, with most European Commission decisions expected to result in damages claims in at least one and often several Member States. Stand-alone claims have also now emerged into the mainstream as a viable and often preferred and swifter alternative to complaining to a competition authority.
For more information contact Peter Willis
The European Commission's decision to block the Siemens-Alstom mega-merger in February 2019 was heavily criticised by the French and German governments which claimed that it prevented the emergence of a European champion capable of competing with other global operators, in particular state-subsidized rivals, in the market for high speed trains and signalling.
This decision sparked a wider debate on whether European competition law should be revised in order to take into account economic sovereignty considerations. While the Commission has given assurances that it has heard the call for change, it seems that it is only prepared to consider adjustments to the current competition law framework rather than a radical change, pointing to other legal instruments than competition law to ensure a level playing field in the global economy.
For more information contact Thomas Oster
State aid rules are currently undergoing major changes since the European Commission is in a process of revising these rules in order to both enable state aid to assist companies with achieving the goals set out in the European Green Deal, and in order to accommodate the changes brought about by the implementation of the European Electronic Communications Code.
Great openness to foreign investment has come with opportunities for the EU economy but also with increased challenges, such as foreign subsidization. (Anti-)subsidy legislation helps preserve a level playing field in the internal market. However, recently, subsidies granted by non-EU authorities to undertakings established in the Union have been a growing concern in the European political debate – the argument being that foreign subsidies can distort the internal market and undermine the level playing field.
Against this background, the European Commission published a white paper in June 2020 in which it considers how the EU can respond to foreign subsidies. A first round of public consultations was held and the Commission is now expected to submit a legislative proposal in 2021, which will be accompanied by another round of consultations.
As 31 December 2020 approaches the UK and EU competition authorities have both published guidance on the application of the competition rules at the end of the Brexit transition period. This also covers the treatment of on-going cases and transfer of cases as between the UK and Brussels.
For more information please contact Anthony Rosen