UK: Commission Seeks Interim Measures For The First Time In 18 Years

Last Updated: 25 July 2019
Article by Mark Jones and Iris C. Z. Karaman

On 26 June 2019, the European Commission announced that it has  opened a formal investigation to determine whether US chipmaker, Broadcom, is abusing its allegedly dominant position in the markets for modem and TV chipsets through its imposition of exclusivity requirements on customers (amongst other alleged breaches of competition law). In parallel, the Commission issued a Statement of Objections notifying Broadcom of its intention to impose an interim measures order restraining its allegedly exclusionary practices pending conclusion of the investigation.

This is the first time in nearly two decades that such interim measures have been pursued by the Commission. It also comes at a time when the Commission is coming under pressure to ensure competition law enforcement is timely and effective, particularly in respect of fast-moving digital markets.

Part of the challenge has been to determine whether existing enforcement tools are adequate for dealing with the issues arising with digitisation. The fact that the Commission turned here to an existing but much under-used power therefore marks this out as an interesting test case.

European Commission interim measures regime in antitrust cases

Under Article 8(1) of Regulation 1/2003, which codified precedent first set out in the 1980 European Court of Justice Camera Care v European Commission case, the Commission has the power to order interim measures on the basis of a prima facie finding of infringement where there is an urgent need to respond to a risk of serious and irreparable damage to competition. Broadcom marks the first time since the IMS Health case in 2001 (and the first time since the passing of Regulation 1/2003) that the Commission has sought to rely on these powers.

The Commission in IMS Health ordered IMS, which at the time was the leading supplier of pharmaceutical sales data, to license the use of its copyrighted data collection system to its competitors in Germany. IMS appealed to the Court of First Instance (now the General Court), which issued a temporary order suspending the interim measures pending the Commission's final decision. Two competitors of IMS unsuccessfully appealed the Court of First Instance's order to suspend interim measures to the Court of Justice. The Commission eventually withdrew the order in 2003, following from a substantive ruling in favour of IMS Health by a German court.

In its Statement of Objections issued to Broadcom last month, the Commission set out that Broadcom was likely to hold a dominant position in various modem and TV chipset markets and that certain agreements between Broadcom and some of its customers contain exclusivity clauses that may marginalise or eliminate competitors (and, in turn, stifle innovation in those markets). The Commission arrived at the preliminarily conclusion that an interim measures order is indispensable due to the risk of serious and irreparable harm to competition occurring before the end of its investigation. It reasoned that such measures are necessary to ensure the enforceability and efficiency of future decisions by the Commission following the end of the investigation.

Broadcom now has the opportunity to reply to the Statement of Objections and attend an oral hearing in Brussels before the Commission can proceed to impose the interim measures.

Interim measures: a tool for dealing with challenges posed by the "new" economy?

The Commission has recently come under pressure, from both national competition authorities and academics, to make use of its powers to impose interim remedies, particularly in relation to the fast-moving digital economy. Similarly, in the UK the Furman Report commissioned by the Competition and Markets Authority also recommended increased use of interim measures as a means to ensure more effective competition law enforcement in digital markets.

The main concern raised by commentators is the length of investigations. On average, antitrust investigations take several years to conclude. By the time the Commission makes a final decision, it is argued that it may be too late as a means to address the antitrust issue in question because by then the affected market may have tipped in the infringing party's favour. In digital platform markets in particular, there is a risk that an incumbent may irreversibly change the market in its favour in a relatively short period of time.

As it stands, the extent to which the Broadcom matter reflects a broader change in the Commission's attitude regarding the use of Article 8 powers in antitrust cases is unclear. However, the Commission is following an approach championed by the French Competition Authority for some time. As far back as 2015, the President of the French Competition Authority, Mr Bruno Lasserre, argued that interim measures are especially appropriate in the digital economy. To this end, the French Competition Authority ordered interim measures against Google in January 2019 during its investigation of alleged anti-competitive practices directed at Amadeus, a directory enquiry services provider.

Giving weight to this view, Guillaume Loriot, the director responsible for digital telecoms and media at DG Competition in the Commission, said earlier this week that "antitrust enforcement must and does adapt to the challenges of the new economy, new practice and new conduct". In this context, he believed that "it is extremely important to be flexible and use the tools we have". In respect of Broadcom, he noted that the interim measures would prevent the market "tipping" in Broadcom's favour during the course of the investigation.

Moving forward: a lower threshold for invoking Article 8 powers?

Under the current framework, there is significant evidential and procedural burden that must be met by the Commission in order to justify imposing interim measures. In particular, it is a hard standard to prove that conduct is causing, or will cause, serious and irrevocable damage to competition. According to a Commission official, this has dissuaded the use of interim measures in the past and attempting to do so can actually slow down investigations.

Compounding this is the high risk of judicial challenge. Most Commission interim order decisions have been appealed, with defending appeals in IMS Health having proved costly to the Commission. It is expected that Broadcom will challenge the Commission's decision were the Commission to proceed with the order. Such considerations have led various commentators to advocate reducing the threshold for invoking Article 8 powers. For example under UK competition law, the equivalent threshold was amended by the Enterprise and Regulatory Reform Act 2013 from "serious and irreparable damage" to "significant damage". It remains to be seen whether EU competition law will follow suit in lowering the bar to the use of this regulatory enforcement tool.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Related Topics
 
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions