Interim measures

 

Author Definition

 

Definition

Interim measures may be prohibitory or mandatory and may be granted by a court or a public authority to preserve or restore the status quo, or otherwise provide temporary relief pending resolution of the merits of a case. This powerful instrument ideally ensures that the effectiveness of any remedy finally adopted in the main action will not be jeopardized.

The grant of interim measures is typically conditioned on a demonstration that (i) the prima facie elements of an infringement appear to be satisfied or (in some jurisdictions) there is a serious question to be tried, and (ii) the measures are justified by the risk of serious, irreparable harm (absent the requested measures) that monetary damages would fail to rectify. In some countries, such measures will only be granted if supported by a balancing of the interests of the parties and third parties (or euphemistically, the ‘balance of convenience’). The public interest or public policy may also be relevant. An important practical point is that some of these conditions may be applied according to a sliding scale: e.g., if the demonstration of a prima facie case is particularly strong, the requirement of irreparable harm may liberally construed.

Some competition authorities and at least one legislature (the German Parliament in the 10th amendment of the GWB, January 2021) have respectively embraced, and lowered the threshold requirements for, interim measures as a rapid response tool for the digital sector, where empire-building commercial strategies by incumbents can outpace conventional instruments of enforcement. The need for such a tool may be mitigated, but not eliminated, by a shift toward more ex ante regulation of so-called ‘gatekeepers’ in this sector. In the gaps that such regulation leaves unaddressed, the extent to which Courts will embrace a greater use of interim measures to meet the digital challenge remains to be seen.

 

Commentary

Interim measures may be requested in the context of public as well as private enforcement. Taking the EU as an example of the former, the Commission may impose interim measures on an undertaking, or an undertaking may seek to suspend operation of a Commission decision by applying to the (President of) the General Court. In most jurisdictions, interim measures may also be requested in the context of private disputes, whether in B-2-B or consumer litigation. Due to space constraints the emphasis here will be on public enforcement.

Use or non-use of interim measures may create error costs. Such measures are potent and should generally be granted only on an exceptional basis. Where they are imposed by or requested by a competition authority, an inappropriately low standard could cause serious disruption of business operations based on a relatively cursory investigation. However, the arguments supporting an increased use of interim measures as a rapid response tool are strong.

European Union

The ECJ ruled in 1980 that the Commission had the implied power to adopt interim measures, and Regulation 1/2003 made that power explicit. Article 8 provides that in cases of ‘urgency’ due to the risk of ‘serious and irreparable damage to competition’, and on the basis of a prima facie finding of infringement, the Commission may order interim measures. The Commission’s assessment of ‘urgency’ must take into account the effects of the alleged conduct and of the interim measures on the undertakings concerned as well as third parties such as consumers. Interim measures can only be adopted where there is danger of harm to competition, not to particular competitors. The case law requires that such measures must comply with proportionality, the same standard that applies to remedies in Article 7 infringement cases. Before being subject to interim measures, the undertaking concerned must have an opportunity to contest the Commission’s objections in writing and in an oral hearing if it so requests.

Interim measures have become a ‘hot topic’ in the EU. Unlike some national authorities (notably the Autorité de la concurrence in France–where the legal standards are however more permissive), the Commission had let its interim measures power ‘fade into oblivion’ since 2001, mainly due to: (i) the restrictive wording of Article 8 of Regulation 1/2003, (ii) the exacting standards of the EU Courts, (iii) the frequent use of the Article 9 commitment procedure, and possibly (iv) the risk of type I errors. However, the Commission seems to have revived the instrument to address the growing need to react quickly before digital markets ‘tip’ and before large innovators settle into long-term, impregnable positions. In the Broadcom case (an exclusive dealing/rebates case), the Commission imposed interim measures in October 2019 following the adoption of a Statement of Objections. Broadcom subsequently proposed commitments that were accepted by the Commission in October 2020, paving the way for Broadcom to withdraw its appeal against the interim measures. It is too soon to say whether the EU Courts will countenance a new wave of interim measures cases. If they do, this may on the one hand lead to a more circumspect use of the sometimes lengthy ‘commitment’ procedure under Regulation 1/2003, yet on the other hand it may further incentivize undertakings to propose commitments in a timely manner (rather than after a strategic delay, or not at all). That said, a dilemma arises that could make it difficult for interim measures to emerge as an alternative to the use of commitments. While a key disadvantage of the latter procedure is (arguably) that new theories of harm in fast-evolving sectors may be resolved by commitments without a full litigation of the merits that could render valuable jurisprudence, it is precisely where the Commission pursues novel legal theories that the Courts may be particularly reluctant to grant interim measures.

Motivated by a desire for more discretion in adopting interim measures, the Commission—in a Declaration accompanying EU Directive 2019/1—states: ‘With a view to enabling competition authorities to deal more effectively with developments in fast-moving markets, the Commission commits that it will undertake an analysis of whether there are means to simplify the adoption of interim measures within the European Competition Network within two years from the date of transposition of this Directive [i.e. within two years of 4 February 2021]. The results of this will be presented to the European Parliament and the Council.’

United States

The preliminary injunction requirements are established in 15 USC § 26 (private injunctions) and 15 USC § 25 (public injunctions). The former, § 26, is somewhat more restrictive in that it refers to ‘threatened loss or damage’ and imposes a causation requirement. The detailed application of the rules on injunctions varies from Circuit to Circuit. However, U.S. Courts generally consider: (i) the applicant’s likelihood of success on the merits; (ii) the likelihood that the applicant will suffer irreparable harm if an injunction is denied; (iii) the balancing of hardships or ‘equities’ resulting from the grant/denial of a request; and, where appropriate, (iv) the effect of the grant/denial on the public interest. Where the applicant is a private party, a Court may choose—based on principles of equity such as ‘unclean hands’—to reject the request for preliminary relief. Where the plaintiff is the Government, and where a reasonable likelihood of success on the merits is established, Courts assume that the risk of irreparable harm is likewise established. If granted, a preliminary injunction may be of indefinite duration and it is immediately appealable. While U.S. Courts do not typically speak of ‘proportionality’, there are functionally equivalent principles, and if a proposed remedy has no reasonable relationship with an alleged antitrust infringement it will be denied.

The party opposing the motion for a preliminary injunction must be given a fair opportunity to be heard. However, exigent and specific facts can justify a temporary restraining order (TRO), a short-term and generally unappealable measure that a court may adopt in ex parte proceedings (Rule 65(b) FRCP). Such exigency may arise in particular where the DOJ or FTC seeks to stop a merger.

Challenging a merger under Section 7 of the Clayton Act is indeed the main (albeit not the only) scenario where the federal agencies may request a preliminary injunction or TRO. Where the DOJ handles the case, it will simultaneously seek from the Court both a permanent injunction and a preliminary injunction/TRO. When the Court balances the equities (criterion iii above), it will attach more weight to the Government’s interest than it will to the private interests of the parties to the proposed merger. Compared to the procedure governing DOJ actions, the procedure that applies to the FTC has special features. Section 13(b) of the FTC Act authorizes the FTC to file suit seeking a preliminary injunction/TRO when it has cause to believe that an entity ‘is violating, or is about to violate’ any provision of law enforced by the FTC. Unlike the DOJ, the FTC does not seek a permanent injunction from the District Court. Instead, if the Court grants the temporary relief, the FTC then files an administrative complaint and the merits are adjudicated in-house in an administrative procedure under Part 3 of the FTC’s Rules of Practice. The FTC thus becomes the first-instance decision maker. With regard to the FTC’s request for temporary relief, the Courts interpret the legislative intent of the FTC Act as supporting broad access to injunctive relief—a deviation from the more demanding traditional principles of equity. This idiosyncratic feature was criticized by the Antitrust Modernization Commission in 2007, as the DOJ does not benefit from quite the same generous treatment, leading to at least the perception of uneven enforcement.

 

Bibliography

Juliette Caminade, Antoine Chapsal & Jacob Penglase, ‘Interim Measures in Antitrust Investigations: An Economic Discussion’ (2021) 17 Journal of Competition Law and Economics 437-457

Morton Denlow, ‘The Motion for a Preliminary Injunction: Time for a Uniform Federal Standard’ (2003) 22 Review of Litigation 495-539

European Competition Network, Recommendation on the power to adopt interim measures,

European Union, Directive (EU) 2019/1 of the European Parliament and of the Council of 11 December 2018 to empower the competition authorities of the Member States to be more effective enforcers and to ensure the proper functioning of the internal market, [2019] OJ L 11/3, recital 38 and Article 11

Gábor Gál & Konstantina Strouvali, ‘Interim Measures’, in Ekaterina Rousseva (ed.), EU Antitrust Procedure (Oxford: Oxford University Press, 2020) 289-304

Laurence Idot, ‘Urgence et concurrences : Mesures provisoires, référés-suspension … Toujours trop tard ?’, Concurrences No 3-2018, 17-19

Despoina Mantzari, ‘Interim Measures in EU Competition Cases: Origins, Evolution, and Implications for Digital Markets’ (2020) 11 Journal of European Competition Law & Practice 487-498

Andrew Muscato, ‘The Preliminary Injunction in Business Litigation’ (2007) 3 New York University Journal of Law & Business 649-674

Alexandre Ruiz Feases, ‘Sharpening the European Commission’s tools: interim measures’ (2020) 16 European Competition Journal 404-430

This article is being reviewed by the Editors of the Dictionary.

Author

  • Monash Law School (Melbourne)

Quotation

Mel Marquis, Interim measures, Global Dictionary of Competition Law, Concurrences, Art. N° 12304

Visites 8534

Publisher Concurrences

Date 1 January 1900

Number of pages 500

 

Institution Definition

Conservatory measures imposed on firms by the Commission in relation to a competition case, in which a final decision on the substance has not been reached yet, in order to avoid that anti-competitive behaviour leads to irreversible damage before being sanctioned. Interim measures may be taken on the Commission’s own initiative, but are often requested together with a formal complaint. They can only be granted if the two following conditions are both met: - a firm’s behaviour prima facie constitutes an infringement of competition rules and - there is urgency, i.e. a risk of serious and irreparable harm to the applicant. For instance, a company whose existence is threatened by a potentially anti-competitive conduct of another company may request the Commission to investigate the matter under competition law, and in addition ask the Commission to prohibit the conduct in question until the investigation is terminated by a formal decision. The Commission can also take interim measures in merger cases in order to prevent the implementation of concentrations before the Commission has cleared them. The Merger Regulation prohibits the implementation prior to the Commission’s authorisation to avoid irreversible changes to the market structure before it is certain that a concentration is actually clearable. Interim measures can also be granted by the President of the Court of First Instance, to prevent a company from suffering serious and irreparable harm by the enforcement of a Commission decision the legality of which is challenged by that same company in a main action. European Commission

On this topic see the e-Competitions special issue "Interim Measures: An overview of EU and national case law"

 
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