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If you thought the European Commission was the unrivaled overlord of competition in Europe, it’s time to think again.
While EU antitrust boss Margrethe Vestager has stolen the limelight for her high-profile cases involving Google and Apple, it is national authorities such as Germany’s Bundeskartellamt and France’s Autorité de la Concurrence that have increasingly blazed a trail — both in terms of new ideas, and cases.
“There has been a real change,” observed Antoine Winckler, a partner at law firm Cleary Gottlieb. “There was an accumulation of factors that caused national competition authorities to take off.”
Over the past 15 years, Brussels has changed the way European competition policy operates to share out the investigations. As a result, national authorities have built up muscle, and now often lead the way in tackling antitrust problems in sectors such as Big Tech and pharmaceuticals.
In part, the rise of the national authorities has also been due to the emergence of big-hitting personalities. Germany’s Andreas Mundt has surfed the surging media interest in competition battles, busting beer and sausage cartels, while his French counterpart Bruno Lasserre made headlines for sanctioning mobile telephone giants (implicating a former minister), and forcing Visa and Mastercard to slash their commission fees.
The national trust-busters took on the sort of antitrust cases Brussels seemed to disregard — and were the first to confront the likes of Google, Apple, Facebook and Amazon, allowing them to build up technical expertise that the Commission did not have. They vied with each other in developing new doctrines for the new frontiers of antitrust such as online advertising (in 2010), e-commerce (in 2012), or the antitrust of data.
For instance, as early as 2008, the French competition watchdog pressed Apple and Orange to break an exclusivity agreement, deemed anti-competitive, that they had signed for the distribution of the iPhone in France.
Two years later, the Autorité forced Google to change its worldwide terms in a case involving data for navigation systems. In Brussels, by contrast, the first decision against the search giant did not come until 2015, and there is still plenty of disagreement as to whether Brussels fixed the issues.
It has been a similar picture in pharmaceuticals. In 2016, the Italian Autorità Garante della Concorrenza e del Mercato fined Aspen €5 million for illegally boosting the prices of drugs. In 2017, the Spanish competition watchdog opened an investigation into Aspen’s pricing practices, three months before the European Commission started its own investigation.
Brussels has largely been happy with the new division of labor since 2003, although according to two experts there have been tensions at times — such as a U.K. investigation into arrangements between hotels and online travel agents, which Brussels wanted to take over, and the Facebook case in Germany.
Technology to tame
It was the emergence of the frenzied debate around digital platforms like Facebook and Amazon that allowed national regulators to show their mettle. While the Commission became bogged down in a seemingly endless to-and-fro over how to handle a case over Google’s Search, national regulators proved more nimble.
“They had a real competitive advantage,” Lasserre said.
National watchdogs could open and close an investigation much more quickly than the Commission, and, in the case of France, force big companies to change their practices in a few months by imposing interim measures, as with Apple and Orange in 2008.
Nobody doubts the volume of cases handled at country level. A dive into available data shows that since the 2003 introduction of the new Europe-wide regime, the European Commission has been responsible for 105 antitrust decisions, while the Italian watchdog has notched up 149, the French 144, and Germany and Spain both 119.
“The most important cases came to Brussels, although in the digital sphere, the national competition authorities have also done a lot,” said Alec Burnside, a partner at law firm Dechert.
Mundt at the Bundeskartellamt said recent years have been shaped by a “renaissance of vertical restraints cases.” These were cases that focused on complaints about the way that big companies could control key parts of the digital supply chain.
The Commission was initially less concerned about these cases as most agreements between suppliers and their retailers happen at a national level. Since then, the Commission has tried to catch up, and eventually opened cases against Sanrio, Guess, Nike, Asus, Denon & Marantz, Pioneer and Universal Studios, following the conclusions of the e-commerce sector investigation of 2015.
How it all began
The rise of the national authorities was partly inspired by necessity.
At the beginning of the 2000s, the Commission could not keep up with its backlog of cases and introduced a new law (snappily called Regulation 1/2003) to offload cases onto national competition authorities by sharing powers. This came as a “relief” for European antitrust bodies, according to several antitrust experts.
Philip Lowe, who was the EU official overseeing the implementation of the new rules, explained that Regulation 1/2003 was central to the emancipation of competition watchdogs in Europe, as it allowed them to tackle cases without asking the Commission: “So they took off!” said the EU antitrust division’s former head.
Part of the explanation has to deal with how cases were allocated under the new system, according to Lasserre, the French competition chief from 2004 to 2016: “No allocation rule was set out in Regulation 1/2003 … it was up to the authority that was the best placed to handle the case,” he said.
This created a strong sense of positive rivalry between national authorities, Lasserre felt, which according to Lowe “encouraged a degree of innovation in their laws.”
The most prominent example of such innovation is the German antitrust case against Facebook, where the Bundeskartellamt considered that a breach of data privacy law was an antitrust offense. The German competition watchdog eventually ordered the social network to change its data collection procedures in February.
All in all, the regulation acted as a confidence booster to national authorities: “It gave us wings,” Lasserre concluded.
It also led to a “very strong” decentralization of antitrust in Europe, according to Lasserre, allowing competition authorities to gain experience by managing “a very large number of cases.”
Antitrust becomes hip
According to Mundt, who was appointed head of the Bundeskartellamt in 2009, national authorities did not become more powerful, but their work became more visible: “The broader public audience became more and more interested,” he said.
And Mundt himself had no problem with the promotional parts of the business. “I was always keen to make our work visible and to explain to the public what we are doing and why we are doing it,” he said.
Some of the real-world cases also struck a chord with consumers.
For instance in 2014, the Bundeskartellamt fined a beer cartel €338 million and a sausage cartel €338.5 million. In Spain, the Comisión Nacional de los Mercados y la Competencia issued €171 million in fines in a car parts cartel in 2015, and €128 million in the adult diapers cartel in 2016.
This surge in cartel cases would not have been possible without the introduction of new fining guidelines and leniency programs in 2006. These regulatory changes allowed national authorities to uncover more cartels and to set higher fines.
Visibility also grew, as the antitrust world simply became more populous. Jonathan Faull, a former EU senior official, noted that there was “the never ending ballet of congresses, colloquia, the lawyers who revolve around them, the relatively recent newsletters, and social media.”
“It’s trendy, yes, trendy!”
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