Expert Papers responding to EC consultations on Competition Policy
After the launch of ERT’s flagship paper Competing at Scale: EU Competition Policy fit for the Global Stage in 2019, the ERT Competition Policy Working Group has elaborated 3 Expert Papers as a contribution to the consultations which were launched by the European Commission.
ERT strongly believes in competition policy and enforcement to secure fairer markets as well as strong competition and welcomes the EU’s efforts to explore how competition policy could evolve to reflect changing global market conditions. It is opportune to ensure that the current competition rules are fit for the challenges posed by the modern economy, the particular characteristics of digital platforms and companies that benefit from State support outside the EU.
For European companies to compete successfully at scale in today’s fast-moving economy, they need competition policies that seek to create a global level playing field and that are sufficiently responsive to changing global market conditions, without undue complexity and legal uncertainty.
New Competition Tool (NCT)
ERT queries whether there is an adequate legal basis for an instrument as far-reaching as the NCT and whether there is actually any significant enforcement gap that needs to be filled.
ERT recognises that the Commission could usefully increase the use of existing tools such as sector inquiries, interim measures, speedier and more targeted investigations to establish precedent in shorter timeframes.
However, quick but targeted enforcement against abusive practices of hyper- or super- scalers / super-dominant gatekeepers via an NCT (where it has been clearly identified that the current competition rules are not adequate in terms of powers or timing) should only be implemented to the extent an enforcement gap is clearly established subject to any proposed DSA ex ante regulation, and subject to two critical caveats: (i) that appropriate procedural safeguards are built in, and (ii) that the new rules do not introduce legal uncertainty in the broader economy.
White Paper on levelling the playing field as regards foreign subsidies
European companies are increasingly faced with competition from companies outside the EU that benefit from State support but that are not subject to the same rigorous State aid scrutiny. This puts EU companies at a significant competitive disadvantage. The WTO subsidies regime is insufficient, as the Commission has correctly identified. Its dispute settlement procedures have been critically undermined leading to the inability to deal with unfair State and market practices to the extent that they are covered by WTO rules.
The EU needs a broad, effective and workable regime to appropriately address distortive foreign subsidies, but without making inward investments less attractive or prompting third countries to adopt tit-for-tat rules that would be harmful for European investments abroad. ERT considers that this will require:
- Legal certainty, starting with clear definitions of key concepts such as foreign subsidy, State-owned enterprise (“SoE”) and distortion.
- Enforcement procedures that are not overly burdensome and that can be completed within short timeframes leading to effective redress.
Ensuring that the New Instrument is proportionate, does not discriminate, and is based on transparent and fair processes, will not only minimise the risk of third-country retaliation, but might even help to establish a multilateral or global solution for the control of unfairly distortive subsidies
Market Definition Notice review
The review of the 1997 Market Definition Notice is a timely initiative, especially because the pace of change in many markets has accelerated rapidly in recent years.
ERT encourages the Commission to develop a framework that: (i) provides legal certainty to businesses, (ii) clarifies the precedent value of market definitions in EU Merger Regulation (‘EUMR’) cases for the antitrust self-assessment under Articles 101 (vertical or horizontal agreements) and 102 (in dominance scenarios) and (iii) includes practical examples.
If the view is that, in relation to certain conduct or business scenarios in the digital context in particular, the use of market definition is less important than a broader competitive assessment, such approach should be clearly explained, well-grounded in economic theory, and limited to specific cases, if at all.
Competitive pressure of EU or global markets or players should be taken into account also for the definition of local regions as a market. In addition, the market-definition framework should be consistent with other EU policies, in particular considering the current debate on ensuring a global level playing field.