An “unprecedented scope and ambition” of the European Commission’s Competition Policy review – What’s next for businesses?
This article was prepared for and first appeared in Which Lawyer in Romania 2021
Authors: Georgeta Dinu and Anca Diaconu
Businesses and people are constantly proving their adaptability to both thriving and crisis conditions. Can competition policy keep pace?
The European Commission has recently[1] announced a review of competition policy tools “with unprecedented scope and ambition”, to make sure competition policy tools remain “fit for purpose”. The purpose? Preventing and remedying market distortions, ultimately resulting in availability of choice and innovative products at affordable prices.
Now that the European Commission announced what the competition policy review will entail, what can businesses expect?
First, in a world focusing on climate change and environmental sustainability:
- Declared openness from the European Commission to provide legal certainty by answering to requests for guidance for agreements pursuing sustainability objectives. Encouraging companies to cooperate to pursue genuinely green initiatives jointly.
- New derogation from antitrust rules in relation to agricultural sustainability agreements.
- Extensive review of state aid rules continuing to support climate objectives, public funding being also important to leverage private investment.
- Consumer demand for cleaner products further stimulated by competition policy.
Second, in an economy where digital transformation has become the norm:
- Revision of state aid guidelines further facilitating acceleration of digital transition and increase in connectivity.
- Strong enforcement of antitrust rules in the digital sector, with a focus on dominant digital platforms discriminating third party access to data or abusing gatekeeper roles to distribute content via the app store.
- Regulatory actions and competition enforcement in promoting data sharing, data remaining essential for the innovative potential of companies.
- Increased consideration to use interim measures in order to adapt to the fast-moving nature of digital markets.
- Enforcement related to exclusivity, tying arrangements, interoperability issues and data accumulation in the Consumer Internet of Things.
- Scrutiny of acquisitions of innovative digital companies.
- Revision of guidance on data sharing.
- Further guidance on new supply and distribution models, including in the context of the growth of online commerce and online platforms.
- Cooperation to bring to market innovative solutions contributing to digital transformation.
Third, in the constant pursuit for strengthening the Single Market:
- Proposed Single Market Emergency Instrument for possible future crisis, designed to safeguard the well-functioning, level playing field and resilience.
- European merger control focusing on preventing dependencies and increasing resilience of EU economy, by making sure supply chains remain diversified – balancing the aim of allowing companies to gain sufficient scale to compete and making sure a sufficient degree of competition remains in the market, including in terms of access to inputs for downstream competitors/ access to customers downstream.
- Allowing businesses to join forces to advance R&D efforts, joint design, production or commercialization or acquisition of products, in order to reduce dependencies and to increase economic resilience.
- Set up of industrial alliances in key strategic areas such as batteries, semiconductors, cloud, edge computing. Due to the competition compliance program developed by the Commission, parties will be encouraged to choose such solutions resulting in pro-competitive effects.
- Encouraging a combination of public and private efforts for financing large-scale research and infrastructure projects.
- Filling a regulatory gap by the Foreign Subsidies Regulation, aimed at complementing existing trade policy tools. The proposed regulation would be meant to address the distortive effects of foreign subsidies, ensuring fair competition at a global level.
Will competition policy, developing along these trends, (continue to) be(come) fit for the aim of businesses benefiting of a level playing field and consumers ultimately benefiting of lower prices, wide choices and higher quality?
In this post-pandemic world, it emerged that, now more than ever, a new policy is required to shape a resilient Europe, that would enable us to face major crises such as disruptions in the supply chains or climate change. Competition regulations and policies could be of great use to solve the structural problems EU is currently facing.
The setting up of alliances in key strategic areas such as batteries, semiconductors, cloud is already an important signal. Two new Industrial Alliances – the Alliance for Processors and Semiconductor technologies and the European Alliance for Industrial Data, Edge and Cloud are backed up by the European Commission.
Throughout its lifespan, the work of the Data/Cloud Alliance will observe the following key principles:
- Highest standards in terms of interoperability and portability/reversibility, openness and transparency;
- Highest standards in terms of data protection, cybersecurity, and data sovereignty;
- State of the art in terms of energy efficiency and sustainability;
- Compliance with European cloud best practices, including through adherence to relevant standards, codes of conduct and certification schemes.
Margrethe Vestager, the EU commissioner for competition, announced on 18 November that the European Commission was considering approving support “to fill possible funding gaps” in the semiconductor ecosystem especially for European “first-of-a-kind facilities”. This comes after the EU Commission President Ursula von der Leyen proposed a European Chips Act to encourage the design and manufacture of semiconductors in the EU.
It is clear that, as Margrethe Vestager commented “Self-sufficiency is an illusion,” “When you think about the scale of what is needed, it is clear that no country or company can do it alone”. “That’s why the aim should be diversification among like-minded partners, to build resilient supply chains and avoid single points of failure.” Will cooperation (a concept so much debated in competition) be in fact the key?
[1] Communication from the Commission – A competition policy fit for new challenges – November 18, 2021
