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Antitrust in focus - January 2024

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Related news and insights

Publications: 13 March 2024

Regional snapshots for antitrust enforcement fines in 2023

Publications: 13 March 2024

Surge in EU and UK private antitrust damages actions continues

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Sustainability and antitrust weave a regulatory patchwork

Publications: 13 March 2024

Digital markets remain a focal point for antitrust enforcement

This newsletter is a summary of the antitrust developments we think are most interesting to your business. Noah Brumfield, partner based in Washington, D.C. and Silicon Valley, is our editor this month. He has selected:

Final revised U.S. merger guidelines signal greater scrutiny and more aggressive enforcement

Following a two-year process of public engagement and the receipt of over 35,000 comments, the U.S. antitrust agencies have published the final version of their revised merger guidelines.

When released in summer 2023, the draft revised merger guidelines reversed agency standards applied over the past 40 years. In our commentary we noted that the amendments effectively rewrote how both the U.S. Department of Justice and the Federal Trade Commission (FTC) will review transactions under the U.S. merger control rules.

The final guidelines have been somewhat restructured. There are now only 11 principles rather than 13, more recent citations to case law and various stylistic changes. But the fundamental elements proposed in the draft – including many of the most significant changes in approach – remain. In particular:

  • Lower thresholds for presuming when a merger is unlawful, including if the combined firm has a market share of more than 30%.
  • Scrutiny of the cumulative effects of serial acquisitions – in line with recent enforcement activity. This puts private equity roll-up strategies firmly in the antitrust spotlight, especially when combined with planned changes to the HSR filing form that will require the submission of greater information on prior acquisitions.
  • A focus on labour markets – the agencies’ interest in this area has increased in the past year and they lay down how they will assess deals for their impact on workers, creators, suppliers or other service providers.
  • Scrutiny of acquisitions involving partial ownership or minority interests, in particular whether these can lessen competition by reducing incentives of the acquiring firm to compete, giving it access to competitively sensitive information or enabling it to influence the competitive conduct of the target.
  • Expanding the framework for assessment of vertical mergers – including new share-based presumptions of illegality and an analysis of industry factors and market structure.

Combined with the planned revisions to the HSR filing form, expected to take effect in the first half of 2024, the revised merger guidelines amount to the biggest shake-up in U.S. merger control policy and procedure since the introduction of pre-close merger control under the HSR Act in 1976.

As expected, they reflect the aggressive approach to merger control enforcement adopted by the U.S. antitrust agencies under the Biden Administration. In fact, a recent annual report setting out HSR data for fiscal year 2022 highlights that merger control enforcement activity hit a record high, with the agencies initiating 50 merger challenges and bringing 12 actions in court during that period (see our alert for the highlights).

Certain sectors have been a particular focus, including health care – you can read our commentary on recent U.S. antitrust intervention in health care M&A below – and aviation. In our May 2023 edition of Antitrust in focus, we reported on a U.S. federal judge prohibiting the “Northeast Alliance” between JetBlue and American Airlines. This month a U.S. federal judge blocked JetBlue Airways’ acquisition of “Ultra-Low-Cost Carrier” Spirit after concluding that it would “eliminate one of the airline industry’s few primary competitors that provides unique innovation and price discipline”, add to industry consolidation and lead to increased fares. U.S. President Joe Biden has referred to the court ruling as “a victory for consumers everywhere”. JetBlue and Spirit announced they plan to appeal the injunction.

Despite this enforcement record, the agencies have faced some setbacks, with the FTC experiencing a number of court losses in the past year. But this does not appear to have dampened their appetite to challenge deals. Noah Brumfield discussed these issues recently with Law360.

The upshot for merging parties: going forward expect greater scrutiny of significantly more deals. Watch out for our upcoming report, where we comment further on these U.S. developments, as well as analyse trends in merger control enforcement from across the globe.

Finally, in other U.S. merger control news, the FTC has announced increases to the HSR filing thresholds and premerger filing fees that will shortly take effect. We set them out for you here

European Commission proposes major reforms to EU foreign investment screening

The European Commission (EC) has published a landmark proposal to introduce more comprehensive rules for the review of foreign investments in the EU. The planned reforms come after the EC sought views on how the existing regime could be improved, focusing in particular on ways to ensure better cooperation between screening authorities and harmonisation across Member States. The proposal sits alongside other EC legislative initiatives to form a “European Economic Security Package”.

There are five key elements of the planned reforms:

  • Mandatory for all EU Member States to have a foreign investment screening regime in place
  • EU screening extended to investments by EU investors that are ultimately controlled by individuals or entities from a non-EU country
  • Minimum sectoral scope of national foreign investment screening (and other standards)
  • Requirement for national screening before investments are completed
  • Enhanced cooperation, information sharing and reporting between Member States and the EC

Our alert tells you what you need to know about each of these points and what they mean for investors.

UK court confirms extraterritorial reach of CMA’s investigatory powers

The UK Court of Appeal has confirmed that the Competition and Markets Authority (CMA) has the power to require overseas companies to produce documents and information when it is investigating suspected anti-competitive conduct.

The case relates to the CMA’s investigation into vehicle manufacturers and trade associations suspected of coordinating the use of recycled materials in cars, their recyclability, and the arrangements for recycling old or written-off vehicles.

Early last year, the Competition Appeal Tribunal (CAT) ruled that the CMA did not have the power to compel BMW and VW group companies with no UK territorial connection to respond to information requests (see our February 2023 edition of Antitrust in focus for more detail on the CMA’s probe and the CAT’s reasoning).

However, the appeal court has now found in favour of the CMA on all grounds of appeal. It concluded that the CMA’s statutory power to request information in antitrust investigations has extraterritorial effect. The CMA can send an information notice to any entity, whether located inside or outside the UK and the whole undertaking to which that entity belongs must comply with the notice. Otherwise, said the Court of Appeal, the CMA’s ability to conduct antitrust investigations would be “badly compromised” and there would be “a perverse incentive for conspirators to move offshore to organise cartels directed at harming the United Kingdom market”.

The CMA has praised the ruling as strengthening its ability to investigate, enforce against and deter anti-competitive conduct. The UK government is also of the view that the CMA should have wide powers in this regard. Draft legislation – expected to come into force in October this year – is set to amend the UK competition rules to explicitly enable the CMA to issue information notices to overseas companies if: (i) they are being investigated for breach of the UK antitrust prohibitions; or (ii) they have a UK connection, eg carry on business in the UK.

Belgium joins list of EU Member States enforcing abuse of economic dependence rules

The Belgian Competition Authority (BCA) has opened ex officio proceedings into a potential abuse of economic dependence in the agricultural sector.

It is the first time that the BCA has opened a formal probe under the abuse of economic dependence rules. These provisions have been in force in the country since August 2020. They prohibit undertakings from abusing their non-dominant position vis-à-vis undertakings that are economically dependent on them, whenever this could affect competition in the Belgian market or a substantial part of it.

The fact that the first case falls within the agricultural sector is not unexpected. Parliamentary records relating to the new prohibition mention that it could be of relevance in the relationship between farmers and their suppliers who are often large companies (eg supermarket chains), and the BCA’s most recent annual priority note lists the agri-food industry as a sectoral focus.

The BCA joins French, German and Italian antitrust authorities in employing similar tools to combat exploitative behaviour – with varying success. As we reported in our June 2023 edition of Antitrust in focus, in Italy a court recently criticised the Italian Antitrust Authority (IAA)’s analysis of abuse of economic dependence allegations against Poste Italiane. The court annulled a EUR11.3 million fine imposed on the postal service operator in 2021 for banning its Naples mail distributor and collector from providing services to its competitors. Interestingly, under the new Italian Annual Competition Law referenced in our commentary below, the IAA may now use information collected for the enforcement of the EU Digital Markets Act in abuse of economic dependence cases – our alert flags how this may result in parallel proceedings for cases in the tech sector.    

See our alert for information on the scope and application of the Belgian provisions. We will update you as further details emerge in this case, including on the BCA’s analytical framework for the assessment of alleged abuses of economic dependence.

Italian amendments to antitrust and consumer laws take effect

The new Italian Annual Competition Law came into force at the end of 2023 that introduced a variety of provisions impacting the enforcement of merger, antitrust and consumer protection rules.

Significantly, the law gives the Italian antitrust authority the power to enforce the EU Digital Market Act, extends the deadline for phase II merger control proceedings from 45 to 90 calendar days, gives consumers additional protections against automatic renewal of fixed term service agreements and limits telco operators’ use of information for tailored consumer offers.

Our alert considers the implications of these amendments. 

Australia, Malaysia and Nigeria impose record antitrust fines

Several antitrust authorities ended 2023 with a bang by imposing record fines. Resale price maintenance (RPM) and cartel conduct were particularly in the spotlight.

In Australia, the Federal Court imposed a record AUD15m (approx. EUR9.1m) RPM penalty on power tool supplier Techtronic Industries Australia. The company admitted to entering into 97 agreements with retailers and dealers over a five-year period, which restricted the sale of Milwaukee brand power tools, hand tools and accessories below a specified minimum price. It also admitted to enforcing these contractual provisions on numerous occasions by warning dealers that offered to sell or sold the products below the specified price, or withholding supply from dealers that failed to adhere to the contract.

The Court also ordered Techtronic to post corrective notices on its website and to its dealers, implement a compliance programme and pay part of the Australian Competition & Consumer Commission (ACCC)’s costs.

The ACCC noted that the case “sends a strong signal to deter others from engaging in RPM”. On instituting court proceedings, the ACCC particularly called out RPM in industries where retailers would otherwise strongly compete on price, “such as by offering price match guarantees to consumers”.

Elsewhere in APAC, Malaysia’s Competition Commission (MyCC) also imposed a record penalty, fining five feed millers MYR415.5m (EUR81.1m) for agreeing to fix prices of poultry feed over three separate periods.

The decision followed simultaneous dawn raids at each of the companies in November 2021 – in itself a first for the authority – and the creation of a special task force in 2022 to investigate antitrust issues in the chicken and egg sector. MyCC plans to continue monitoring the industry following the Malaysian government’s decision to discontinue subsidies and price controls. As for other antitrust authorities in the region, a current priority is to target cartels in the food and agriculture sectors.

Finally, in Africa, Nigeria’s antitrust authority has settled an investigation which resulted in a USD110m fine, the authority’s highest-ever penalty since it was established in 2019.

For more commentary on fining trends, look out for our upcoming Global antitrust enforcement report.

Adobe/Figma abandoned following EU and UK antitrust objections and unresolved U.S. review

Adding to the tally of deals frustrated in 2023 as a result of antitrust concerns, at the end of the year Adobe terminated its USD20 billion acquisition of Figma. The parties concluded that there was “no clear path” to achieving merger control clearances from the European Commission (EC) and UK Competition and Markets Authority (CMA). And with no resolution of the U.S. review, the abandonment led to a rare U.S. Department of Justice statement on the deal that the “Antitrust Division remains committed to protecting competition in technology markets”.

In November, following an in-depth investigation, the EC set out its preliminary conclusion that the deal may significantly reduce competition. It alleged that the acquisition was likely to create a dominant player in the market for the supply of product design tools and would result in the discontinuation of Adobe’s own interactive product design tool as well as any potential successor product. The EC also provisionally found that Figma would be eliminated as a potential competitor in the supply of certain editing tools.

Just over a week later, the CMA set out its provisional findings along similar lines. It alleged that the transaction would eliminate competition between two main rivals in product design software, reduce innovation and the development of new competitive products, and remove Figma as a threat to Adobe’s Photoshop and Illustrator products. The CMA sought views on how to address these concerns. Options included prohibiting the deal and possible structural divestments which, as acknowledged by the authority, would be substantially similar to a prohibition.

The case is a further example of antitrust authorities’ growing appetite – in the EU, UK, U.S. and elsewhere – to closely scrutinise digital/tech M&A. It also demonstrates their interest in protecting future competition. According to EC Competition Commissioner Vestager, this is important not only in digital markets, but also in more “traditional industries”, and “applies in particular to transactions by which large, established companies acquire successful disruptive innovators”.

Find out more about intervention rates by antitrust authorities in digital and other sectors in our Global trends in merger control enforcement report, out soon.

Antitrust authorities launch inquiries into artificial intelligence

Artificial intelligence is currently one of the main areas of focus for antitrust authorities around the world. We discussed this trend last November, noting in particular the work of the UK Competition and Markets Authority (CMA) (a review of AI foundation models) and the U.S. Federal Trade Commission (FTC) (scrutiny of AI stacks and establishing a new Office of Technology).

The FTC has now taken this one step further, issuing orders to five companies requiring them to provide information on recent investments and partnerships involving generative AI companies and major cloud service providers. The agency is seeking information on a range of issues, including the practical implications of a partnership or investment (eg governance or oversight rights), an analysis of its competitive impact and competition for AI inputs and resources. FTC Chair Lina Khan noted that the “study will shed light on whether investments and partnerships pursued by dominant companies risk distorting innovation and undermining fair competition”.

One of the partnerships under scrutiny is Microsoft’s investment in OpenAI, which is also being closely watched by other antitrust authorities.

The German Federal Cartel Office considered the partnership as it stood last year (it seems before the further changes in November) and concluded that (at that stage) it was not subject to German merger control review (see here. The CMA has since opened a review to determine whether the partnership changes could be caught under UK merger control rules and, if so, what the impact could be on competition in the UK. And, at EU-level, the European Commission (EC) is checking whether the arrangements might be reviewable under the EU merger control rules.

To date, EU efforts in the AI sector have primarily focused on crafting the landmark EU AI Act, on which the European Parliament and Council reached political agreement in early December. A revised draft leaked this week (see our alert). The EC then announced a package of measures which included plans to establish an AI Office – a body responsible for the development and coordination of AI policy in the EU as well as implementation and enforcement of the forthcoming AI legislation. But from an antitrust perspective, the EC had been relatively quiet compared to its international peers, saying it was monitoring developments in the sector.

Now, the EC has taken a first step on the antitrust front. In addition to looking at Microsoft/OpenAI, it has issued two “calls for contributions” on generative AI and competition in virtual worlds (the “metaverse”).

The purpose of the surveys is to gather views on the level of competition in these rapidly developing areas and to explore how antitrust enforcement can help ensure that they remain competitive and innovative.

The EC’s questionnaires include cover various issues, ranging from the types of barriers to entry likely to emerge in the AI and virtual world markets, to how generative AI systems and models will likely be monetised or which data monetisation models are expected to be most relevant for the development of virtual world markets. Interested parties can submit their responses until 14 March. The EC may organise a workshop with relevant stakeholders to discuss these issues further.

As part of this, the EC has sent requests for information to several large digital players. It is also looking into agreements between large digital companies and generative AI developers and providers to determine their effect on market dynamics.

Elsewhere in Europe, the President of the French Competition Authority mentioned in his 2024 new year message that the authority is concerned that the AI sector is dominated by a small number of players and plans to investigate. The Hungarian Competition Authority has also expressed an interest in AI and has launched a market analysis on the effects of AI on competition. .

UK CMA sets out planned approach to new digital markets regime

The Competition and Markets Authority (CMA) has published its high-level provisional plan for implementing the proposed new UK digital markets competition regime. This comes in response to a request from UK government ministers, as the draft legislation establishing the regime makes its way through the UK Parliamentary process.

The CMA’s paper is a useful reminder of the objectives and features of the new regime, which will involve certain firms being designated as having “Strategic Market Status” (SMS) in relation to one or more digital activity. These SMS firms will be subject to tailored conduct requirements, with the CMA also having the ability to make “Pro-Competition Interventions” (PCIs) to address factors underpinning the firms’ market power. The paper lists the broad categories of potential harm that the CMA will seek to prevent or address, as well as the benefits it hopes to achieve under the regime.

Importantly, we now have an insight into likely timing. The CMA indicates that, subject to UK Parliamentary process, the relevant legislation is likely to be enacted in April 2024, with the regime taking effect six months later in October.

The CMA intends to launch the first SMS investigations (to determine if a firm should be designated) very soon after. It anticipates it will initiate three to four SMS investigations in the first 12 months but, crucially, expects the overall number of firms designated to be “very limited”. The first SMS designations, together with the corresponding initial sets of conduct requirements, are scheduled for July 2025.

It is not clear which firms or digital activities will be first in the CMA’s sights. The authority says it has not yet decided but anticipates that its early work will build on and leverage the experience it has already gained through recent studies. It mentions platforms funded by digital advertising and mobile ecosystems as examples. More clues may be found in the CMA’s recent “horizon scanning” report, where it sets out exploratory thinking on ten potential future trends in digital markets and their implications for competition and consumers. These include digital platforms increasingly integrating additional services, raising prices for API access and expanding into new markets, as well as issues around interoperability and technology convergence.

The paper also sets out 11 high-level principles that will guide how the CMA operates the digital markets regime. These include taking action that is proportionate and focused on where it will have the most impact, intervening in a technology-neutral way and ensuring that the digital markets regime complements other CMA enforcement tools.

Ongoing engagement – with digital firms, other stakeholders and UK and international regulators – is another a key theme. Speaking to tech firms in the U.S. on the day the paper was published, CMA CEO Sarah Cardell was keen to emphasise the importance of productive relationships with SMS firms as well as input from consumers, businesses, investors and other third parties.

All of this provides useful insight into how the CMA is likely to use its powers under the new regime. However, the devil will ultimately be in the detail. The CMA notes that it plans to consult on guidance once the legislation is enacted. This will cover how it will assess whether a firm has SMS, its approach to imposing and monitoring compliance with conduct requirements, how it will investigate and decide whether to impose PCIs and its approach to procedure and enforcement of the rules. We will keep you updated.

Bid-rigging remains an antitrust enforcement target across the globe

Bid-rigging is an enforcement priority for many antitrust authorities and can result in significant fines for the companies involved. In some jurisdictions, it can also lead to fines and criminal sentences on individuals. In the last couple of months, we have seen several bid-rigging investigations being progressed and concluded, particularly in the construction industry.

In Germany, the Federal Cartel Office (FCO) fined 14 construction companies and 12 individuals a total of around EUR4.8m for bid-rigging in industrial construction contract tenders awarded by three steel companies. The case marks the first time that the FCO has applied powers, introduced in 2017, to impose fines and liability amounts on parent companies to prevent avoidance of fines through restructuring.

In neighbouring Austria, the antitrust authority has for some time had the construction sector in its sights. Most recently, the cartel court fined Hitthaller & Trixl EUR1.36m for illegal price fixing, market sharing and information exchange with rivals, mainly in relation to public and private tenders for road building contracts. The authority has also asked the cartel court to fine Leyrer & Graf EUR5.8m for similar conduct. It has applied for a reduced fine given the company’s cooperation outside of the leniency programme and “extensive” compliance efforts.

In Portugal, the antitrust authority fined three more businesses for collusion during public tenders for the provision of teleradiology services to hospitals and hospital centres across the country. The firms face a year-long ban on taking part in public procurement procedures including such services. Following settlement with two other companies in 2022, the authority has imposed a total of approx. EUR6.8m in this case.

In Turkey, the antitrust authority is targeting undertakings operating in the market for construction chemicals. Its investigation is broad. In addition to bid-rigging, the probe covers alleged price fixing, information exchange, no-poach agreements, resale price maintenance and online sales bans involving a number of companies and industry bodies.

Recent South Korean enforcement is notable for being the first instance of the Korea Fair Trade Commission (KFTC) imposing penalties for bid-rigging within the country’s important bituminous coal sector. The KFTC fined three coal suppliers KRW1.6bn (approx. USD1.2m) and issued corrective orders for colluding on coal purchase bids for use in power plants. The KFTC intends to intensify its surveillance of bid-rigging activities within the coal procurement market and apply stringent sanctions if it uncovers violations. Earlier in December 2023, the KFTC fined four companies KRW30.5bn (approx. EUR21.6m) for conspiring to fix the price of iron manganese alloy by rigging tenders issued by ten steelmakers over a ten-year period. In January 2024, the authority fined two firms KRW54m (approx. USD41,000) for rigging wood pellet procurement bids – the KFTC’s first such sanction in this market.

Some bid-rigging investigations are criminal in nature. The New Zealand Commerce Commission has for the first time brought a criminal cartel prosecution after relevant laws were introduced in April 2021. Noting that it “will not hesitate to bring criminal proceedings in appropriate cases”, the authority alleges that two unnamed construction companies and their directors colluded to rig bids for infrastructure projects in Auckland. In New Zealand, cartel conduct is punishable with a prison term of up to seven years.

In Japan, the Tokyo District Court has found an ex-official of the Tokyo Olympics organising committee guilty of rigging bids for “test events” related to the 2021 Games. It has sentenced him to a two-year prison term, suspended for four years. Further criminal antitrust trials involving Japanese advertising firms alleged to have colluded to win event deals leading up to the Tokyo Games, and their representatives, are in the pipeline.

Finally, in the U.S., two executives of competing companies have been charged with bid-rigging, territorial allocation and defrauding the U.S. Forest Service. The investigation, which was conducted by the U.S. Department of Justice’s Procurement Collusion Strike Force, allegedly affected contracts for forest-firefighting services. In the U.S., if proved, these antitrust violations carry a maximum penalty of ten years in prison and a USD1m fine for individuals and a maximum penalty of USD100m for corporations. The maximum fine may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime if either amount is greater than the statutory maximum.

This active and widespread enforcement is a reminder for businesses and their employees to ensure independent participation in tenders. Even companies formally submitting joint bids should take a cautious approach: joint bidding is likely to only be permissible if each competitor would not be able to bid independently, and if any sensitive information exchanged between the jointly bidding parties does not go beyond what is necessary to submit the proposal and is restricted to relevant teams only. 

U.S. antitrust intervention in health care M&A continues to ramp up, including rare challenge to licence arrangement

In less than a month, the U.S. has seen four health care-related deals abandoned following U.S. Federal Trade Commission (FTC) enforcement.

  • Sanofi’s proposed acquisition of an exclusive licence to Maze Therapeutic’s therapy in development for treatment of Pompe disease: Sanofi announced that it would terminate the agreement within hours of the FTC’s suit to block the deal. The FTC described the development as “a big win for patients and an important victory for the FTC”.

This was an unusual intervention into a licensing arrangement, and for a product area involving uncertain future competition. Parties entering exclusive licences should be mindful that they can be subject to pre-close notification under the HSR rules applying to mergers & acquisitions.

The FTC’s complaint alleged that the deal would eliminate “a nascent competitor poised to challenge Sanofi’s monopoly in the Pompe disease therapy market”, in turn reducing innovation and enabling Sanofi to continue charging monopoly drug prices. FTC Chair Lina Khan noted that the complaint reflected several advancements in the FTC’s pharmaceutical merger enforcement programme. For example, it argued that early-stage drugs could pose a competitive threat to an existing monopoly drug, even where the ultimate success of the early-stage drugs is not guaranteed. In an industry where only one in ten early-stage drugs proceed to commercialisation, it also “broke new ground” by charging that an acquisition of a pipeline product with no sales can still amount to illegal monopolisation.

  • John Muir Health’s proposed takeover of San Ramon Regional Medical Center from current majority owner Tenet Healthcare: John Muir announced that it would walk away from the deal just under a month after the FTC sued to block, alleging the transaction would eliminate head-to-head competition between hospitals in California’s 1-680 corridor, drive up health care costs and reduce incentives to improve patient services.
  • Illumina’s acquisition of GRAIL: Illumina announced that it would divest GRAIL following a U.S. Fifth Circuit Court of Appeals decision supporting the FTC’s determination that the acquisition could harm competition in the market for cancer detection tests. The FTC was quick to note that the case “recognizes how vertical deals can threaten competition and provides a clear roadmap for future cases”. Indeed, its 2021 challenge of the acquisition was the FTC’s first attempt to block a vertical merger in 40 years. The deal was also blocked by the European Commission.
  • In a fourth case, the U.S. District Court granted an FTC request for preliminary injunction, resulting in the parties terminating the transaction.

Notably, December also saw the FTC finalise a consent order resolving its first litigated pharmaceutical merger challenge in over a decade: Amgen’s acquisition of Horizon Therapeutics. We reported on the significance of the FTC’s suit to block the transaction on the basis of a portfolio theory of competitive harm in our May 2023 edition of Antitrust in focus, and of Amgen’s subsequent nationwide settlement, involving an extensive suite of behavioural remedies, in September.

The FTC has ended its 2023 merger enforcement on a high, variously describing the developments as “a major win”, “a victory for patients” and “another significant victory”. Going forward, we expect the FTC to continue to closely scrutinise deals in the health care sector, including those involving pipeline drugs, and to be emboldened in its efforts to prioritise enforcement of vertical mergers (see our earlier commentary on the newly finalised U.S. merger guidelines).

Overall, the FTC’s work dovetails into a wider set of initiatives to promote competition in the health care sector announced by the Biden administration in early December. These include a cross-government public inquiry into the effect of “private equity and other corporations’ increasing power and control of” U.S. health care, identifying anti-competitive “roll up” strategies, increasing ownership transparency, enforcing against Big Pharma companies delaying entry of generic competitors with improper patent listings in the Food and Drug Administration’s “Orange Book” and banning worker non-compete agreements. In addition, the FDA and FTC have indicated they are working together to promote competition under Biden’s “whole of government” policy, with the FDA creating a new competition czar position within the agency.

European Court of Justice clarifies relationship between sports and antitrust

The European Court of Justice (ECJ) has issued three highly anticipated judgments on the applicability of EU antitrust law to the sports sector.

All three judgments (International Skating Union (ISU)European Super League (ESL), and Royal Antwerp FC) confirmed that the practice of sports, insofar as it constitutes an economic activity, is subject to the provisions of EU law and clarify that sport associations (eg UEFA and FIFA), to the extent that they engage in economic activities such as organising competitions or exploiting related media rights, fall under the EU antitrust rules. In particular, an EU Treaty provision on the promotion of sport in the bloc, while noting that the specific nature of sport may be taken into account, does not exempt sport from the EU antitrust rules. The ECJ also provides important guidance on how sport associations and their governing bodies should ensure compliance with antitrust rules.

ESL ruling

The ESL case concerns a project to form a new independent football competition (the European Super League). FIFA and UEFA’s regulations allowed these bodies to refuse to recognise the ESL project and threaten any club or player participating in the ESL with expulsion from FIFA and UEFA tournaments. The ESL brought a claim against UEFA and FIFA before the Commercial Court of Madrid alleging that their regulations were in breach of antitrust rules.  The national court immediately granted an injunction preventing UEFA and FIFA from adopting any retaliatory measure that could hinder the launching of the new league, but asked the ECJ for advice on certain aspects of the law.

The ECJ held that, where a sport association is in a dominant position, any rules requiring prior authorisation of competitions must include a framework of substantive criteria and detailed procedural rules that are transparent, objective, non-discriminatory and proportionate (otherwise such rules and conduct may constitute abuse of dominant position). In addition, the court said that the adoption and implementation of such rules without this type of framework constitutes a restriction of competition “by object” under Art. 101 TFEU, as well as an unjustified restriction on the freedom to provide services.

It remains to be seen how the ECJ’s judgment will affect the ESL as the court did not rule on whether it should be approved. UEFA argues that it has addressed any shortfall in its pre-authorisation framework, while the ESL has since presented a new format for its proposed football competition. In March, the Commercial Court of Madrid will hear arguments from the ESL, FIFA and UEFA on how it should apply the ECJ judgment.

ISU ruling

The International Skating Union (ISU) is the only association recognised by the International Olympic Committee to administer figure skating and speed skating. The ISU’s regulations do not allow skaters to participate in competitions that it has not authorised. If they do, they face a lifetime ban from any ISU competition. Following a complaint by two speed skaters, the European Commission (EC) and then the General Court (GC) concluded that the ISU rules breached EU antitrust law.

On appeal, the ECJ broadly confirmed the GC’s ruling, finding that the ISU’s rules did not meet transparent, objective, non-discriminatory and proportionate standards and were able to exclude competitors from the market. Therefore, they represented a “by object” breach of EU antitrust law.

Interestingly, the judgment also sheds some light on the relationship between arbitration rules and antitrust law. The ECJ agreed with the EC (setting aside the GC’s judgment) that arbitration rules adopted by sport associations cannot limit the exercise of rights and freedoms conferred on individuals by EU law, including the rights underlying EU antitrust law. Therefore, while using arbitration is not prohibited, the parties must be able to seek effective judicial review before authorised EU courts.

Royal Antwerp FC ruling

The case stems from a professional football player’s and Royal Antwerp Football Club’s claim against the Belgian football association and UEFA. They argued that a rule established by the football federations requiring football teams to include a minimum number of “home-grown” players (ie those trained by the club or by the national football association to which the club belongs) restricts competition and freedom to recruit players. The Belgian court referred questions to the ECJ.

The ECJ said that home-grown rules could have as their object or effect the restriction of the possibility for clubs to compete with each other by recruiting talented players, regardless of where they were trained. However, it will now be for the Belgian court to determine whether those rules restrict competition.

A&O Antitrust team in publication

Our global antitrust team has had two articles shortlisted for the Concurrences 2024 Antitrust Writing Awards. Read and vote for them at the following links:

Other recent publications by members of the team include:

About your editor

Noah is a partner in the Antitrust practice and splits his time between Washington, D.C. and Silicon Valley. He partners with clients to craft and execute global antitrust strategies, and represents them before U.S. courts, the U.S. Department of Justice, Federal Trade Commission, and the various states’ Attorney General offices.

Antitrust plaintiffs and enforcers are invoking the antitrust laws in increasingly novel ways in private litigation and government investigations. Noah provides creative and nimble strategies tailored to his client’s business objectives, whether they are in high-stakes litigation or planning a transformative deal. He is singularly focused on understanding each client to provide practical, business-oriented solutions.

Noah draws on his 25 years of experience with complex cross-border antitrust issues, with a focus on how the antitrust laws intersect with intellectual property. He has successfully defended and asserted antitrust claims in merger and non-merger investigations before the enforcement agencies, and in federal district court.

Noah enjoys teaching on Antitrust and Innovation as an adjunct professor for antitrust at UC Berkeley School of Law. He is a prolific author and speaker on a range of competition topics, and contributes to American Bar Association (ABA) publications and commentary.