Tough Challenge Ahead for New Commissioner
As Margrethe Vestager's term as European Union ("EU") Commissioner for Competition ends, European Commission ("Commission") President Ursula von der Leyen has hinted at important developments for European competition policy. In her mission letter to Teresa Ribera Rodriguez, who will succeed Vestager as competition commissioner next month, von der Leyen emphasized modernizing competition policy; enabling European companies to compete globally; and, in particular, reform of Horizontal Merger Guidelines ("Guidelines") and address risks of killer acquisitions from foreign companies. She also stressed the need to attract investment through green transformation goals.
A key issue in killer acquisitions is the control of sub-threshold transactions (issues with which were starkly highlighted in the recent Illumina/ Grail case). Von der Leyen stated that 20 years' experience implementing the Guidelines highlights the need for improvements in flexibility and efficiency. She also singled out changes in Europe's defense and security status.
While revising the Guidelines will be a lengthy process, targeted reforms are expected to concretize during parliamentary confirmation hearings for Ribera's appointment.
The mission letter can be viewed here.
The Future of Football's Transfer System
The European Court of Justice ("ECJ") has ruled that FIFA transfer regulations, which require players (or the clubs which sign them) to pay compensation if agreements were terminated without "just cause" are anti-competitive.
The October 4 ruling can be summarized as follows: (i) Can clubs be held liable for compensation owed to a player's former club where the new club wrongfully terminates the contract? (ii) If so, how will compensation be calculated? (iii) Can a club challenge issuance of an International Transfer Certificate following a breach of contract (which would prevent the player participating in competitions)?
The ECJ compared current FIFA regulations to no-poach agreements which artificially divide markets and limit competition among clubs. The case arose from a dispute between FIFA and former Lokomotiv Moscow midfielder Lassana Diarra who, on having his contract terminated by the club, was ordered to pay significant compensation. Diarra argued that FIFA's rules meant potential new clubs were hesitant to sign him due to the risk of liability for compensation.
The ECJ's ruling is a significant blow to FIFA challenging both its authority in player transfers and ability to enforce restrictive rules. It could have far-reaching implications for future transfers, potentially leading to greater player mobility and increased competition between clubs.
New Australian Competition Regime
The Australian government has introduced its Treasury Laws Amendment Bill (Merger and Acquisition Reform) which, if passed, will significantly alter the country's competition framework. The Australian Competition and Consumer Commission ("ACCC"), which expects parliament to pass the bill, has issued a statement which emphasizes the relatively small number of annual mergers currently notified to them - and that around 93% of these are analyzed confidentially.
Adoption of the new bill should see M&A transactions and final decisions published in the ACCC register. The market share system will be abandoned while notification thresholds and monetary thresholds will apply.
If passed, the new regime, which also includes significant revision to transparency regulations and duration of investigation phases, will enter into force on January 1, 2026 (with implementation by applicable companies allowed from July 1, 2025).
ACCC's announcement can be viewed here.
Merger of Convenience Under Scrutiny
Couche-Tard, the Canadian owner of US convenience store giant Circle K, has made an offer to acquire Seven & i Holdings Co. which would see it take over 13,000 7-Eleven and Speedway stores in the US. If Couche-Tard's revised offer of USD 47.2 billion is accepted, massive US antitrust investigations are expected.
Nearly 50% of existing Circle K stores are located within two miles of 7-Eleven, or similar stores. The parties are therefore not only in direct competition but also display substantial overlap in many markets (particularly California, Texas and Florida) which could lead to increased prices and reduced competition for consumers. To address potential antitrust concerns, Couche Tard may be required to divest a significant number of stores.
Cooperation Between Competition Pioneers
The European Commission and the UK have announced completion of the technical aspects of their Competition Cooperation Agreement. The agreement, which complements the EU UK Trade and Cooperation Agreement, marks the first time the competition authorities of member states have cooperated directly with a third-party country.
It will ensure coordination of investigations and aims to prevent potential jurisdictional conflicts. Exchange of confidential information will continue to be subject to the consent of the undertakings concerned.
Landmark ECJ Intel Decision
In a case which has run for more than two decades, the ECJ has upheld partial annulment of a 2009 Commission decision which imposed a EUR 1.06 billion fine on Intel for abuse of dominance in the worldwide Central Process Unit (CPU) market. The 2009 decision held that: (i) conditional rebates Intel made to OEMs between 2002 and 2007 prevented AMD, a direct competitor, from competing and; (ii) the rebates meant OEMs delayed launch of products with x86 chip processing units.
In its October 24 ruling, the ECJ found the Commission failed to prove that Intel's exclusivity rebates were capable of excluding competitors.
This decision marks another significant setback to enforcement of exclusionary conduct cases. The ECJ highlighted the importance of the AEC (as-efficient competitor) test and the need to demonstrate anticompetitive effects of conduct. The Commission's new proposed exclusionary abuse of dominance guidelines, which include rebuttable presumptions, have been criticized for their potential to undermine the effects-based approach. The ECJ's decision both reinforces the importance of the effect based approach and casts doubt on the viability of the proposed presumptions.
This ruling further underscores the Commission's significant challenges successfully applying enforcement in complex cases.
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