This website requires Javascript for some parts to function propertly. Your experience may vary.

EU competition law and policy outlook for 2023 | Hengeler Mueller News
EU Competition Law

EU competition law and policy outlook for 2023

The year 2022 brought about many significant developments in EU competition law and policy, including the adoption of the Digital Markets Act (DMA) and the revision of the Block Exemption Regulation for vertical agreements. We expect that 2023 will also be an action-packed year. Below, we highlight some legislative initiatives and enforcement trends to watch out for.

Scrutiny of foreign subsidies on the rise

The EU's new Foreign Subsidies Regulation (FSR) is expected to take effect in mid-2023. It addresses the Commission's concern that subsidies by non-EU member states may distort the EU's internal market, including by providing recipients of foreign subsidies with an unfair advantage to acquire companies or obtain public procurement contracts in the EU.

The FSR will enable the Commission to review a variety of financial contributions following a mandatory notification of certain M&A transactions and public procurement bids, or an ex-officio investigation of transactions that fall below the notification thresholds. Financial contributions which are found to be distortive of the EU's internal market may result in structural or non-structural remedies, such as the divestment of certain assets or providing access to infrastructure; the Commission can also prohibit the subsidised M&A transaction or the award of a public procurement contract to the subsidised bidder.

For companies benefitting from non-EU member states' financial contributions, the FSR will no doubt – in addition to merger control and Foreign Direct Investment control – create another significant regulatory hurdle for deal-making. Companies are well-advised to track foreign subsidies they receive carefully and to have appropriate compliance mechanisms in place.

Stretching the jurisdictional thresholds for merger review

According to its new approach taken in the Illumina/Grail case and new Guidelines, the Commission can take merger control jurisdiction over a transaction following a referral request by an EU member state under Article 22 EU Merger Control Regulation (EUMR), even if this transaction fails to meet the notification thresholds under the EUMR or the EU member states' national merger control laws. After the General Court upheld the Commission's new approach in the Illumina/Grail case, it remains to be seen whether the Court of Justice will follow suit. Building on its previous Article 22 EUMR Guidelines, the Commission has in the meantime published additional FAQs in December 2022, which are intended to provide further guidance under what conditions the Commission considers a transaction to be a suitable Article 22 EUMR candidate and certain procedural issues.

The Commission's shift in applying Article 22 EUMR creates significant hurdles, which need to be taken into account early on in the deal-making process. Undoubtedly at greatest risk of being called in by the Commission under Article 22 EUMR upon an EU member state's referral request are acquisitions by large players of smaller competitors in the healthcare and digital sectors with low or no turnover, but high growth potential.

Companies potentially having a dominant position in the relevant markets should also watch out for the Towercast case: according to Advocate General Kokott's recently published opinion, already completed acquisitions may still be challenged ex-post under abuse of dominance rules if they have not been reviewed (and cleared) ex-ante under merger control laws because the transaction did not require a merger control notification. The European Court of Justice's decision is expected in the course of 2023.

Enforcement of the DMA

On 1 November 2022, the DMA was signed into law and will become applicable on 2 May 2023. DMA enforcement will be one of the top priorities for the Commission in 2023. As a first step, the Commission will, until around August/September 2023 designate so-called 'gatekeepers', i.e., large providers of so-called 'core platform services' (e.g., online search engines, app stores, or certain messaging services), which meet certain (rebuttable) quantitative thresholds in terms of turnover, market valuation, and monthly active users.

Six months after the designation decision (i.e., around February/March 2024), gatekeepers must fully comply with Dos and Don'ts laid down in the DMA (e.g., a ban on so-called 'self-preferencing' or obligations on interoperability with third-party services and portability of end user data). Gatekeepers must also inform the Commission about intended M&A transactions involving targets active in the digital space or enabling the collection of data, even if such a transaction is not notifiable under the EUMR. The information provided will enable the Commission to reach out and potentially encourage EU member states to request a referral under Article 22 EUMR.

On 5 December 2022, the Commission kicked off a series of workshops to gather insights from stakeholders on the difficulties in implementing the DMA. In addition, on 9 December 2022, the Commission published a Draft DMA Implementing Regulation for public consultation, which addresses procedural issues. It will be adopted later in 2023.

More guidance and comfort for coordination in times of crisis

Climate change, COVID-19, Russia's invasion of the Ukraine and the resulting energy crisis – policymakers and companies alike are facing tremendous challenges. Cooperation between (competing) companies – e.g., agreeing on more sustainable production methods or supply chains – makes a huge contribution to overcoming these challenges in a swifter and more efficient manner. However, legal uncertainties about competition law compliance can sometimes frighten off companies from entering into such crisis cooperation

Just as it did in 2022, we expect the Commission to take an active role in the EU-wide debate on how competition policy can increase legal certainty for companies to engage in collaboration. For example, the Commission's revised Draft Guidelines on Horizontal Agreements (which is expected to be adopted in 2023) will include a dedicated chapter on the legal framework for sustainability agreements.

While this certainly provides helpful guidance to companies' self-assessment, some national regulators and competition authorities (e.g., in the Netherland and Austria) took bolder steps in providing even greater comfort to companies.

In addition, the Commission will continue its 'open door' policy, i.e., providing informal guidance ('guidance letters') to interested companies on the legality of their plans. The Commission recently updated its Informal Guidance Notice, part of which also included some (some say: not enough) improvements to the informal guidance process and the (evidentiary) value of guidance letters.

Cracking down on anti-competitive collusion and abuse of dominance

The Commission will continue to be highly alert to and aggressively enforce anti-competitive collusion and abuse of dominance, and – as Executive Vice-President Margrethe Vestager put it in a policy speech in October last year – 'not shy away from novel theories of harm' where considered relevant. One example is the Commission's ongoing investigation into suspected antitrust breaches by Teva in the market for multiple sclerosis medicine. Here, the Commission is, inter alia, concerned that Teva 'gamed' the patent system by artificially prolonging its market exclusivity, resulting in the delayed market entry of other medicines.

Latest Articles

Government proposal for English-language chambers and commercial courts – will Germany be bolstered as a venue for international commercial disputes?

Is there no Corporate Criminal Liability in Germany? Not exactly.

EU competition law and policy outlook for 2023

Recent EU Competition Law Work