The Commission’s 2020 updated working programme provides for a legislative proposal for a new “ex ante competition tool” to be put forward before the end of 2020, in the context of its digital markets strategy.

At this stage no further details as to the nature of the new tool are available, but Commissioner Vestager has previously indicated that the Commission was exploring a new competition tool similar to that of the UK market study investigation regime, in order to allow the Commission “to intervene with regard to anti-competitive behaviour by powerful but not dominant players in tipping markets” and “prevent the creation of future market players with entrenched or gatekeeper positions”.

EU Sector inquiries

Under Article 17 of Regulation 1/2003 the Commission already has the power to investigate a sector of the economy or a type of agreement where there may be a restriction or distortion of competition, in order to gain a better understanding of the functioning of that market and uncover potential infringements of the competition rules.

The most recent sector was the e-commerce sector, which resulted in a number of investigations relating to vertical restrictions.  The e-commerce sector inquiry also prompted legislation, such as the Geo-blocking Regulation, in order to address some of the issues highlighted by the investigation. In 2008/9 the Commission also investigated the pharmaceutical sector, which resulted in a number of investigations under Article 101 and 102 TFEU, in particular in relation to patent settlement agreements. (Its other sector inquiries are listed here.)

But whereas sector inquiries can influence the Commission’s wider policy work and inform and guide proposals for legislation (in addition to investigations into anti-competitive conduct discovered during the investigation), unlike under the UK market investigations regime the Commission does not have any specific enforcement powers under this tool.

Inspired by the UK market investigations regime the Commission looks now set to propose a regime similar to that of the UK.

UK market investigations

Market investigations allow the UK competition authorities to take action in relation to markets which are not operating competitively, but where this is not the result of a breach of the Chapter I or Chapter II prohibitions of the UK Competition Act and/or Articles 101 or 102 TFEU.  The substantive test for market investigations is whether there is an adverse effect on competition (AEC).  If the CMA concludes there is an AEC it must remedy the position as fully and effectively as possible.

The CMA has wide powers to impose remedies and can typically impose structural or behavioural remedies or make recommendations to Government for a change in policy or regulation.  It has imposed structural remedies following the airports markets investigation, requiring BAA to divest certain airports, and required the divestment of a number of hospitals in the private healthcare market investigation.

Next steps

The Commission has not yet published a detailed proposal, and is expected to launch a consultation over the next month.  Ultimately it will need to go through the EU legislative process. Although the tool is framed in the context of the Commission’s digital markets strategy (and is also referred to as the “tipping tool”), once in force it will apply to all industries, not just the digital sector. The proposal will need to be reviewed carefully by all stakeholders and it will be important to provide views to the Commission to inform their next steps. Consultations have in the past resulted in significant changes to the Commission’s original proposals or even to proposals being shelved. For example, the Commission tried in recent years to introduce amendments to the EUMR thresholds to catch so-called killer acquisitions or non-controlling minority stakes but ultimately decided not to proceed following stakeholder feedback.

Contacts

Kyriakos Fountoukakos
Kyriakos Fountoukakos
Managing Partner, Brussels
+32 2 518 1840
Peter Rowland
Peter Rowland
Of Counsel, Brussels
+32 2 518 1847
Kristien Geeurickx
Kristien Geeurickx
Professional Support Lawyer, London
+44 20 7466 2544