A shared memorandum was published on 2 October 2019 by the Dutch Authority for Consumers & Markets (ACM) (press release), the Belgian Competition Authority (BMA) (press release) and the Luxembourg competition authority (Conseil de la Concurrence) (press release), in which the three authorities set out their views on competition law in the digital world.
Merger control in the digital sector
The three authorities note that the existing merger control mechanisms and rules are inadequate as far as the digital sector is concerned. For example, it is often the case that the target company does not exceed the turnover thresholds, while the transaction could be harmful from a competition law point of view. Another example is that competition authorities could consider the use of a broader assessment framework. The competition authorities currently use the likelihood of harm to competition, while they could also include the scale of harm to competition in their assessment. As a result, the assessment of merger control in cases where technology giants have a dominant position would be stricter than in other cases.
Since, according to the three authorities, a lot is still unclear and there are many doubts as to the exact impact of the technology sector, they propose that the European Commission orders to conduct an economic study into this sector. Based on this study, the competition authorities can decide whether, for example, it is actually necessary to introduce an additional notification threshold and whether a different assessment test must be applied.
Ex-ante guidance and informal standpoints needed
A second point raised by the three authorities is the need for more ex-ante guidance regarding the digital sector. They believe that the European Commission should issue guidelines in the first place and, in case of specific problems at a national level, national competition authorities should also be allowed to issue guidelines. The European Commission should also be more open to issuing informal standpoints, as the possibility to do so exists but is not exploited. The European Commission should develop an approach, which allows for an easily accessible and fast procedure for this purpose. In this context, the European Commission should also explore, for example, how the rights of third parties can be guaranteed or the possibility of legal protection.
Non-punitive ex-ante instrument needed
The third and most far-reaching point in this joint memorandum is the proposal by the three competition authorities to introduce an ex-ante instrument that can impose ex-ante remedies on dominant tech companies. The current complaint is that ex-post enforcement is too slow for fast-moving markets and sectors such as the digital sector. Abuse of the dominant position can be prevented if a competition authority can impose remedies on dominant companies in advance. The interpretation of the prohibition of abuse of a dominant position, as laid down in Article 102 TFEU, must, of course, be followed in this respect. It is also important that the imposition of these remedies should not be regarded as a punitive sanction (resulting in possible actions to recover damages). This instrument will ultimately need to be available at both national and European level and will need to be enforceable if a dominant company fails to comply with the remedies. The three authorities stress that the introduction of such an instrument would fill a legislative gap, as the other possibilities available to the European Commission require the establishment of an infringement.
With this joint memorandum, the three competition authorities support the Dutch State Secretary for Economic Affairs and Climate Policy, Mona Keijzer, who wrote a policy memorandum to the Dutch House of Representatives last May, requesting the European Commission/European legislator to do the same. The State Secretary made the same points as those made by the three competition authorities in their joint memorandum. In short, the pressure on the European Commission to work proactively with the subject of the tech sector has only increased with this joint memorandum. It remains to be seen how the European Commission will respond, but it is likely that it will not fail to do so.
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