Competition in troubled times" - Foreword l Concurrences N 3-2020 Jonathan Faull
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Concurrences REVUE DES DROITS DE LA CONCURRENCE | COMPETITION LAW REVIEW “Competition in troubled times” Foreword l Concurrences N° 3-2020 www.concurrences.com Jonathan Faull jfaull@brunswickgroup.com Chair European Public Affairs, Brunswick Group, Brussels Former Director General European Commission, Brussels
Foreword
“Competition in
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troubled times”
Jonathan Faull*
jfaull@brunswickgroup.com
Chair
European Public Affairs, Brunswick Group, Brussels
Former Director General
European Commission, Brussels
I
t has become a commonplace and an understate- What is “aid to promote the execution of an important
ment that competition policy today faces new chal- project of common European interest or to remedy a
lenges, opportunities and dangers. I will focus in what serious disturbance in the economy of a Member State”
follows on competition policy in the broad sense as it is (Article 107(3)(b))? Who decides on the common interest
understood in Europe, encompassing antitrust, mergers and what constitutes a serious disturbance?
and state aid. The digital economy, climate emergency,
Brexit, populism, trade tensions and now Covid-19 all In the EU Merger Regulation, the familiar but still
come together to shake the foundations of a consensus elusive words “technical and economic progress” (note
carefully established over the last fifty years. that the conjunction “or” has been replaced by “and”)
are included among the criteria of which the Commission
While there have always been schools of thought, para- must take account in its “appraisal of concentrations”:
doxes, ruptures and disagreements in this field, it does seem “the development of technical and economic progress
that intellectual ferment, political impatience and ques- provided that it is to consumers’ advantage and does not
tioning of the traditional roles of key protagonists (institu- form an obstacle to competition.” Why is the EU Merger
tions, courts, lawyers, economists) are reaching a crescendo Regulation (Article 24) so concerned about “relations
unprecedented in recent times (see, e.g., R. Pitofsky, with third countries” that it requires that “[t]he Member
The Political Content of Antitrust, 127 University of States shall inform the Commission of any general diffi-
Pennsylvania Law Review 1051–1075 (1979); T. Calvani culties encountered by their undertakings with concen-
and J. Stewart-Teitelbaum, Introduction, 65(2) The trations (…) in a third country” and sets up a reporting
Antitrust Bulletin 199–207 (2020)). mechanism on such difficulties?
In the European Union, and I expect in other jurisdictions Why is that concern still prevalent in 2020, thirty
with which I am less familiar too, there has never been a years after the Merger Regulation entered into force?
uniform view about the purposes and details of competi- The Commission’s 2020 Work Programme announced:
tion policy. Courts, authorities, practitioners and academics “We also need to ensure fair competition and the level
have always had to take account of political mood changes playing field in the global market. A White Paper on an
expressed, in democracies, through the mechanisms of Instrument on Foreign Subsidies will reflect on possible
accountability, institutional interactions and appointments. new tools to address the distortive effects of foreign subsi-
One does not need to be a legal archaeologist to identify dies in the single market. This will help prepare the ground
traces of yesterday’s battles in today’s treaty articles, regu- for a legislative proposal in 2021.”
lations and other provisions. To name but a few:
As European Commission Vice-President and
What does “technical or economic progress” (Article 101(3) Competition Commissioner Margrethe Vestager said in
TFEU) mean in 2020, whatever it meant in 1957? a recent speech, “right now, we’re working on new powers
to protect fair competition – powers that would allow us
In today’s and tomorrow’s world, what is an under- to deal, for example, with the harm that foreign subsi-
taking “entrusted with the operation of services of general dies and state ownership can do to competition in Europe.
economic interest” (Article 106(2) TFEU)? By the end of June, we plan to publish a White Paper, to
get input on our ideas for how these new powers could
* Writing in a personal capacity.
Concurrences N°3-2020 I Foreword I Jonathan Faull I Competition in troubled times 1work” (Keeping the EU competitive in a green to merge with a Belgian one. The initial focus is
constitutes a violation of the publisher's rights and may be punished by up to 3 years imprisonment and up to a € 300 000 fine (Art. L. 335-2 Code de la Propriété Intellectuelle). Personal use of this document is authorised within the limits of Art. L 122-5 Code de la Propriété Intellectuelle and DRM protection.
and digital world, College of Europe, Bruges, 2 rightly on Belgium. But what’s happening back
Ce document est protégé au titre du droit d'auteur par les conventions internationales en vigueur et le Code de la propriété intellectuelle du 1er juillet 1992. Toute utilisation non autorisée constitue une contrefaçon, délit pénalement sanctionné jusqu'à 3 ans d'emprisonnement et 300 000 € d'amende (art.
L. 335-2 CPI). L’utilisation personnelle est strictement autorisée dans les limites de l’article L. 122 5 CPI et des mesures techniques de protection pouvant accompagner ce document. This document is protected by copyright laws and international copyright treaties. Non-authorised use of this document
March 2020). on Mars? How relevant is that? If the roles were
reversed, could the Belgian company enter the
Competition here or there? Martian market? Does the Martian company
have support from its government bolstering its
domestic position and giving it the firepower to
One such “distortive” effect may occur when a
maraud on other planets? Should the competi-
subsidised, state-owned or state-backed foreign
tion authorities responsible for what happens in
company seeks to acquire a European company.
Belgium worry only about the prices offered to
This is not an entirely novel consideration and
Belgian consumers or add concerns about where
it applies even when both companies involved
what they consume is made, opportunities for
in a merger are foreign. Thus, in 1997, when
Belgian companies in foreign markets and the
the European Commission scrutinised Boeing’s
sovereignty of Belgium or the European Union
purchase of McDonnell Douglas, it paid close
to which it belongs? In other words, is it legiti-
attention to the advantages the merged entity
mate to oppose a merger or subject its approval
would have as a result of “much greater access
to conditions on the grounds that a foreign
to R&D which is funded by the US Department
party’s home market is impenetrable? Or that the
of Defense (DoD), the National Aeronautics and
domestic party’s activities are deemed “strategic”
Space Administration (NASA) or other public
and must remain located in the domestic terri-
bodies.” The Commission approved the merger
tory? If the competition authorities take a narrow
once it had secured commitments relating to
view of their responsibilities, to whom are they
licensing of government-funded patents and
accountable and what other authority can deal
transparency of research and development
with wider issues?
funding (OJ L 336, 8.12.1997, pp. 16–47, paras.
83, 114 et seq.).
In addition to the legal and economic analyses
which underpin competition policy, we also need
Given the interplay between law, politics,
an understanding of political science and the
economics and trade, it is not surprising that there
incentives and interests of agencies and profes-
is no science of competition policy ready to be
sions involved in enforcement and administration.
handed over to artificially intelligent algorithms
Why did the European Commission use competi-
fed with rules and case law, armed with theories
tion law to deal with telecom liberalisation, airline
of harm and the econometrics needed to apply
deregulation, taxation of the tech sector, transfer
them. Equally unsurprisingly, calls to change
pricing and bank resolution? Why did some other
competition law are met with dire warnings about
competition authorities not follow suit? Why are
the time it could take to prise open Pandora’s
courts prominent in some jurisdictions and less
box and the dangers lurking inside it, coupled
so in others? What is the role of parliaments in
with reassuring references to the flexibility of the
competition policy? Merely to make the laws and
language of the law.
then sit back and watch them being applied, or to
set parameters for enforcement of the rules? To
Some issues are specific to individual jurisdic-
whom are competition authorities accountable?
tions and their particular laws and politics, while
others are of universal concern. Among the
latter is the age-old question of market defini- Into the breach
tion. Peering into the microscope, we adjust the
focus until we see clearly who is competing with Should competition authorities step into breaches
whom (or is foreseeably likely to do so soon) left open by other policy inadequacies or the lack
and where they are doing it (or are foreseeably of requisite regulatory power at what they judge
likely to be doing it soon). Then we can begin to be the relevant level of authority? Does it
our analysis of the effect of whatever we are matter whether the competition authority is or is
investigating on the competitive space we have not independent of other government structures?
identified.
To take a recent example, if bank resolution
Is that market definition method flexible enough rules are missing, should state aid rules be used
to bear the strain of the policy it serves or to to approve state support with conditions resem-
respond to the concerns some wish to associate bling those for which legislation might have been
with the policy? A frequent argument here is the provided had it been enacted in time? In the
relevance or otherwise of competitive advantages, absence of tax rules at EU level, should a coun-
including subsidies and entry barriers, in the try’s favourable tax arrangements for a company
separate, usually foreign, market from which one in return for local investment be dealt with as
of the parties comes. This, as seen above with refer- a distortion of competition within the EU’s
ence to Article 24 of the EU Merger Regulation, “single” market?
is not a novel concern. A Martian company seeks
2 Concurrences N°3-2020 I Foreword I Jonathan Faull I Competition in troubled timesThese considerations go beyond arguments 2015. Competition policy will have an important
constitutes a violation of the publisher's rights and may be punished by up to 3 years imprisonment and up to a € 300 000 fine (Art. L. 335-2 Code de la Propriété Intellectuelle). Personal use of this document is authorised within the limits of Art. L 122-5 Code de la Propriété Intellectuelle and DRM protection.
about what parameters of competition should be role to play in the sustainable reconstruction of
Ce document est protégé au titre du droit d'auteur par les conventions internationales en vigueur et le Code de la propriété intellectuelle du 1er juillet 1992. Toute utilisation non autorisée constitue une contrefaçon, délit pénalement sanctionné jusqu'à 3 ans d'emprisonnement et 300 000 € d'amende (art.
L. 335-2 CPI). L’utilisation personnelle est strictement autorisée dans les limites de l’article L. 122 5 CPI et des mesures techniques de protection pouvant accompagner ce document. This document is protected by copyright laws and international copyright treaties. Non-authorised use of this document
included in the traditional analysis of competitive post-confinement economies.
effects. Output, price, research and development,
innovation, nipping future competitors in the It is not possible to bring protagonists from all
bud, predatory behaviour and foreclosure are all over the world together to debate these issues at
legitimate concerns. Can new theories of harm be the moment. Learned journals open to all relevant
developed to deal with concerns about competi- disciplines should encourage debate as a matter
tiveness as they emerge, or re-emerge, into polit- of urgency. A paradigm shift will be welcomed
ical consciousness? by some, feared by others: a greater danger is the
adoption of different paradigms in different juris-
We are in a time of flux in which answers to dictions, encouraging fragmentation and protec-
these questions are urgently needed and will not tionism. n
be the same in 2025 as they would have been in
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