EU Competition Chief Hints at More Reforms on the Horizon
After the agreement on the Digital Markets Act last week and the soon-to-be approved Digital Service Act, the EU is poised to use the political tailwind to continue with the modernization of its competition laws.
The latest addition to laws and regulations that may be amended in the wake of the “Great Digital Regulation,” as European Commissioner Margrethe Vestager suggested in a speech on Thursday, is the Regulation 1/2003. This regulation is “the central plank of our antitrust enforcement framework,” said the Commissioner. The provisions in this regulation establish, among other things, how the EU regulator conducts dawn raids, pursues enforcement actions, imposes fines and other penalties or grants the right to be heard to companies under investigation.
Regulation 1/2003 hasn't been updated for almost 20 years, and despite the “remarkable success” of this regulation, the EU's Competition chief announced today that in the next months, it will launch an evaluation of these rules to ensure that they are “fit for the digital age.” The regulator also wants to hear from stakeholders about what has worked well and where there is scope for more efficient and effective procedures and enforcement tools.
Additionally, the Commission will work on how to improve the Notice of Informal Guidance to provide stakeholders with more opportunities to engage in information discussions.
The Commissioner didn't enumerate any of the possible changes in the Regulation 1/2003, but some procedural changes may be necessary to align to the DMA, which may prompt more expedited investigations and even higher fines than those established in the regulation.
The substance of the antitrust rules will remain the same, as these are established in the Treaty of Functioning of the European Union. However, amendments to the procedural rules could have a significant impact on companies, and not always for negative reasons. Technological advancements since the adoption of the Regulation 1/2003 could enable companies and the Commission to accept virtual access to documentation or to facilitate virtual hearings.
Another important remark from Commissioner Vestager is that the new regulation, including the DMA, will not substitute but complement enforcement actions. “The whole 'regulation versus enforcement' debate is a false dichotomy. Because we need both. And as our enforcement pipeline clearly shows, both will be working hand in hand,” said Commissioner Vestager.
During the 20 months that the regulator worked from home due to COVID-19, it opened four new investigations in digital markets and moved forward with two ongoing investigations. This includes the use of data and leveraging by Meta in the market for classified ads, Google's behavior in the ad tech sector, Amazon's Buy Box and, most recently, the agreement between Google and Meta on header bidding.
One enforcement tool that was not widely used during this time — but has resurged strongly since summer 2021 — is the unannounced inspection of a company's premises to obtain information about potentially anticompetitive agreements. The Commission has conducted dawn raids in several sectors such as manufacturing and distribution of garments, animal health, wood pulp, recovery of end-of-life cars and vans and the defense sector.
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