Webinar

Global Antitrust Hot Topics #3 In-house Counsel Round-Table: New Opportunities and Challenges & Closing discussion

3rd Webinar of the « 8th Global Antitrust Hot Topics Conference » organised by Concurrences, in partnership with Baker Botts, with Camilla Holtse (Associate General Counsel - Head of Competition Law & Policy, Maersk), Charles Malaise (Chief Counsel, Antitrust & Regulatory Counsel, Koch Industries), Miriam van Heyningen (Senior Legal Counsel, Shell), Matthew Levitt (Partner, Baker Botts), and closing discussion by Eddy De Smijter (Head of A5 Unit in charge of international relations, DG COMP) and John Taladay (Partner, Baker Botts).

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Synthesis

In-house Counsel Round-Table: New Opportunities and Challenges

Matthew Levitt introduced the panel with an observation: competition law is at an unprecedented inflexion point as regulators across the globe face a number of new and unusually compelling challenges such as the emergence of a small number of very large tech companies, the pervasive importance of data, the political pressure to address the environmental crisis, and the emergence of China as a global economic powerhouse.

In view of these challenges, one may wonder to what extent competition law can remain simply focused on its traditional economic axioms or whether the objectives of competition law should be reviewed to address these new issues.

These broad concerns may be addressed by three essential questions. First, what is competition law for and is it time to re-set the consumer welfare fundamentals (in favour of industrial policy goals, environmental targets, etc.)? Second, what can, and should Western competition agencies do about changing market dynamics, including foreign subsidies? Third, what are the challenges of global enforcement and of the proliferation of competition law?

In relation to the first question, Miriam Van Heyningen recalled recent developments in competition law. First, the European Commission’s decision in the Siemens/Alstom case (Case COMP/M.8677, February 2019) should be highlighted. The European Commission disregarded arguments on potential competition from Chinese CRRC (the largest player worldwide) and prohibited the merger because of its impact on the internal market of the European Union. Yet, the German and French governments vigorously called for a broader assessment of the competitive dynamics and the promotion of the European industrial policy.

Second, the Bundeskartellamt adopted its abuse of dominance decision against Facebook around the same time. The German competition authority was concerned that Facebook’s Terms & Conditions which allowed Facebook to collect its users’ personal data, without offering them the possibility to later withdraw their consent to such data collection, constituted an abuse of a dominant position. In that case, the German privacy regulator could not intervene. Many commentators think that the Bundeskartellamt deviated from the purpose of antitrust law by considering privacy issues.

Third, the Dutch Authority for Consumers and Markets (“ACM”) published its draft guidelines regarding sustainability agreements. The regulator explicitly states that it will take sustainability into account in the antitrust context. These guidelines provide a framework for the assessment of sustainability agreements between companies. In particular, the ACM decided that it would not impose any fine on companies which unintentionally failed to meet the guidelines’ criteria. Likewise, the Greek Competition Commission just published a Staff Discussion Paper, where it analyses convergence areas and conflicts between sustainable development and competition law. The European Commission also received comments and inputs on sustainability, as part of the review of the two horizontal block exemption regulations and the guidelines on horizontal cooperation agreements. It remains unclear how such comments would specifically translate into law. Presumably, sustainability agreements will be included in the revised guidelines on horizontal agreements. Companies may view these trends as an opportunity or as a risk that other public interests may be considered by regulators. In any case, it is crucial for companies that legislation and regulations remain predictable. This entails the need for further guidance. Likewise, businesses are expecting legal certainty to make informed decisions.

Clear boundaries and criteria from regulators encourage innovative behaviours from companies. Yet, one needs to distinguish between different public interests. In that respect, environmental welfare is very singular as it is part of a developed area of law, with binding legal standards, included for example in the Paris Climate Act and the Dutch Climate Act. The situation is very different when it comes to other interests such as geopolitics, animal welfare, etc., where the regulators’ objectives remain unclear. This shows well that the expansion of competition law enforcement beyond consumer welfare interests may be limited.

Camilla Holtse then discussed what competition law enforcers could do about changing markets. Environmental challenges put pressure on businesses to achieve sustainability goals. The increasing technological revolution is affecting the global competitive landscape, requiring closer cooperation between industry players to develop standards, while more industries are subject to digitalisation. Although competition law is becoming more harmonised globally, the development of alternative objectives to protect domestic interests creates growing discrepancies. In that respect, it is dangerous to mix antitrust with industrial policy since it would ultimately lead to a lack of transparency and predictability for companies. Last, there are now fully-fledged competition law regimes in many jurisdictions, which entails a greater risk of having inconsistent policy choices.

These challenges create a stringent need for clarity from regulators. The business costs associated with uncertainty should not be underestimated and companies may be reluctant to invest or enter in collaboration agreements with other market participants, as such activities become riskier from a competition law standpoint.

The New Competition Tool (“NCT”) introduced by the European Commission in June 2020 may create more uncertainty. Under this proposed framework, the standard for the European Commission’s intervention would be significantly lowered. Indeed, the European Commission would not be required to establish any infringement of competition law to impose behavioural and structural remedies.

The proposed NCT’s lack of transparency could lead to at least a couple of damaging effects. In the short run, companies would have to weigh uncertainty costs associated with unclear rules. In the long run, the NCT may inspire regulators in other jurisdictions to develop tools that increase unpredictability and protectionism. Companies expect clear and precise rules. In that respect, safe harbours and block exemption regulations or guidelines are very useful.

Another important development in competition law is the European Commission’s White Paper on levelling the playing field as regards foreign subsidies. This document aims to address the inequality between European companies, which are prevented from receiving State aids, and foreign competitors receiving subsidies from third countries’ governments, for example, Chinese state-own companies (“SOEs”). Companies will certainly welcome the European Commission’s initiative. That being said, it remains unclear how the regulator will be able to identify subsidies in practice. For instance, SOEs with complex corporate structures may hide significant equity transfers that would barely be detectable. In that respect, one may advocate for a presumption of subsidisation in cases involving SOEs.

Charles Malaise then addressed the issue of global enforcement and the proliferation of competition law. This involves greater challenges when companies intend to acquire competitors or assets overseas. Merger control now requires deeper analysis to identify merger filing requirements. Large companies are more at risk as some agencies monitor them carefully.

Global companies also face issues when it comes to antitrust enforcement in multiple jurisdictions. While collusive conducts are usually assessed in a similar fashion around the globe, issues may arise in relation to due process and when dealing with leniency programs in several jurisdictions at the same time. As regards single-firm conduct, multiple procedures may be difficult to handle and having different legal standards in different jurisdictions makes it difficult to adopt a coherent strategy.

The expansion of competition law enforcement to other public interests may also create a risk for companies. For instance, a sustainability agreement could be cleared in a given jurisdiction based on environmental grounds while being prohibited in another one in order to protect the national industry. In the United States, policymakers should bear in mind that other agencies and authorities are entrusted with the task of protecting these other interests.

Similarly, the issue of foreign subsidies may not be appropriately addressed by competition agencies. The U.S. government already has multiple instruments to tackle e.g., dumping measures and foreign investments but recent examples demonstrate that the government sometimes failed to properly address these issues. For example, the tariffs on steel imported from China and Canada actually led to a price increase in the downstream market. Recent debates regarding the sale of TikTok’s U.S. business also show that the CFIUS legislation on foreign investments may be misused.

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