A reconnaissance look at the major EU Commission competition cases

The EU Commission pursues major antitrust cases, profiling Commissioners, investigation processes, enforcement goals to promote fair competition, recent high-profile fines against Google, Intel and more, critique of approaches and priorities in rapidly changing digital markets

Summary:
The EU Commission’s role in enforcing competition law
Key rules that the EU Commission enforces
How the EU Commission conducts investigations into potential competition law infringements?
The aim of EU competition policy and enforcement
Profiling the EU Commissioner for Competition and current enforcement priorities
Statistics on EU competition fines and open cases
Potential critiques of the EU Commission’s competition enforcement approach
Some recent high-profile EU competition cases

The EU Commission’s role in enforcing competition law

The European Commission’s Directorate-General for Competition is responsible for enforcing antitrust rules and regulations across the 27 European Union member states. As the executive body of the EU, the Commission has a mandate to ensure fair competition is maintained through the implementation of competition policy. This involves investigating and ruling on potential infringements of Articles 101 and 102 of the EU Treaty, which prohibit anti-competitive agreements between companies and the abuse of a dominant market position. Let’s talk in this article about EU Commission role in enforcing competition law with some recent high-profile EU competition cases.

When a competition case is opened, whether triggered by a complaint or initiated by the Commission itself, DG Competition officials will examine the relevant markets and business activities. They can use investigative powers to demand information be provided by companies under investigation. If serious concerns are identified, unannounced inspections of business and private premises, known as dawn raids, may be conducted to gather documents and electronic files. The Commission then assesses whether the behavior in question represents a restriction or distortion of competition under EU law.

If sufficient evidence confirms a competition rule breach, the Commission can issue a decision prohibiting the conduct, require remedial changes to practices, or impose financial penalties of up to 10% of a company’s worldwide annual turnover. These cases are decided through formal administrative proceedings, with businesses afforded opportunities to respond to allegations made against them. There is also the right of appeal to the General Court and the Court of Justice of the European Union for any party unhappy with the outcome.

Key rules that the EU Commission enforces

One of the major areas the Commission focuses on is prohibiting anti-competitive agreements between companies. Article 101 of the EU Treaty bans cartels, which can involve practices like price-fixing, market sharing, or limiting production quantities. Detecting cartels is a high priority as they distort markets and harm consumer welfare. Infamous cartel cases the Commission has cracked down on include those involving trucks, elevators and car parts. If caught, cartel participants face heavy fines as well as joint and several liability.

Another vital aspect of EU competition policy regulated by the Commission concerns dominant companies and the potential for them to abuse their market power. According to Article 102, engaging in practices like unfair pricing, limiting production or tying products together illegally leverages a dominant position against consumers and business partners. Landmark cases have centered on exclusionary conduct by Microsoft as well as allegations Google favors its own shopping comparison service. When a breach is found, remedies aim to restore effective competition.

Merger control represents a third major area of enforcement. Under the EU Merger Regulation, the Commission reviews notifications of proposed takeovers, mergers and acquisitions that meet certain turnover thresholds. If a transaction threatens to significantly impede effective competition, it will be blocked. Two high-profile prohibited mergers in recent years were the failed mergers of rail firms Siemens and Alstom as well as Deutsche Börse and the London Stock Exchange, on competition concerns in certain markets. Pre-merger notification gives the Commission oversight to minimize anti-competitive consolidation.

How the EU Commission conducts investigations into potential competition law infringements?

When the Commission opens formal proceedings into a suspected breach of competition rules, it begins gathering evidence to determine whether violations have occurred. Commission officials may send requests for information to the companies under investigation, seeking documents, emails and other records relating to the suspected anti-competitive practices. Companies are obliged to cooperate fully with the inquiry adapting to EU Commission power investigating competition cases.

If responses are incomplete or raise further questions, the Commission can authorize unannounced inspections of business premises. Known as dawn raids, these allow officials to obtain files and data directly. Dawn raids can uncover smoking gun evidence like notes from secret cartel meetings or documentation of abuse of dominance. Companies are entitled to legal counsel during dawn raids but must provide access to all requested electronic and hard copy files.

By analyzing the information collected, the Commission’s case teams seek to establish whether restrictive agreements or conduct contravened Articles 101 and 102. They examine aspects like the relevant market definition, whether companies held a dominant position, and if behaviors unfairly hindered competition. Commission investigators apply economic theories and use tools such as customer surveys or price monitoring to determine possible harm caused.

All parties involved have rights to respond to the Commission’s competition concerns during the formal proceedings. Oral hearings may be held where companies can set out counterarguments before a final decision is taken. Strict confidentiality protections apply to protect sensitive business information throughout the investigative process.

The aim of EU competition policy and enforcement

The overarching goal of the European Commission’s competition policy activities is to ensure fair and undistorted competition in the EU’s single market. By promoting competition, the Commission aims to boost consumer welfare and economic efficiency. When companies engage in anti-competitive practices like price-fixing cartels, it undermines these objectives. Effective enforcement of the rules is therefore necessary to safeguard competition for the benefit of businesses and citizens across Europe.

One of the key ways the Commission’s antitrust enforcement benefits consumers is by helping to maintain low prices. When companies illegally collude to fix prices higher than competitive levels, consumers inevitably pay more than they should for goods and services. Strict penalties for cartels and other restrictive agreements aim to deter this consumer-harming behavior. Enforcement also promotes innovation, as companies are encouraged to compete on merits like the development of new products and services. This spurs better quality and choice.

At the same time, ensuring fair competition supports business growth. SMEs especially must be protected from predatory actions by larger competitors seeking to eliminate rivalry through abusive conduct. A level playing field permits any undertakings, regardless of size, an equal chance to thrive. The Commission’s merger control reviews likewise help guarantee anti-competitive tie-ups do not deny market access or opportunities. Overall, competition enforcement creates an ecosystem where both businesses and consumers prosper.

Profiling the EU Commissioner for Competition and current enforcement priorities

The Commissioner currently overseeing competition policy at the European Commission is Margrethe Vestager of Denmark. Appointed in 2014 and re-appointed in 2019, Vestager has gained an reputation as a tough enforcer during her tenure. Under her leadership, the Commission has issued multi-billion euro fines in headline cases against technology giants like Google and Qualcomm.

Vestager has identified rapidly evolving digital markets as a key priority area for competition scrutiny. As platforms like Amazon and Meta’s Facebook become increasingly influential in the economy, non-competitive behaviors can distort innovation and consumer choice online. Ensuring data-driven dominance is not abusive is a core aim. Another focus is assessing how mega-mergers in the pharmaceutical industry may impact future drug development and access.

A new legislative proposal introduced under Vestager’s watch is the Digital Markets Act. This draft ex-ante regulation aims to prevent large online gatekeeper platforms from engaging in unfair practices like self-preferencing or denying interoperability. It reflects the challenge of applying traditional rules actively enough in fast-paced digital spheres. Enforcing new tech-focused legislation will likely remain a heavy focus for Vestager in the years ahead.

Alongside Vestager, around 700 staff work in DG Competition. Their objective is to ensure vigorous antitrust enforcement capable of responding effectively to modern anti-competitive issues across all sectors of the EU single market.

Statistics on EU competition fines and open cases

The European Commission has issued tens of billions of euros in fines over the years for violations of antitrust rules. Just in the last decade, over €30 billion in penalties have been handed out. Some of the highest profile fines have been the €4.34 billion penalty against Google in 2018 for abusive practices relating to Android mobile operating system and €2.42 billion fine on Qualcomm in 2018 for predatory pricing.

Cartel cases consistently lead to massive fines given the serious nature of price-fixing and market-sharing agreements. In 2017, three truck producers were fined a record €2.93 billion total for operating a cartel. Other multi-billion cartel busts have targeted the car glass and cable industries. On average, the Commission concludes around 15-20 cartel investigations annually, maintaining pressure on hardened anti-competitive conduct.

As well as concluded cases, the Commission currently has hundreds of open competition inquiries at any given time. Over 500 staff work solely on cartel detection and leniency applications. Some ongoing major investigations include looking into Amazon’s dual role as marketplace and retailer, Apple’s App Store policies, as well as Facebook’s transatlantic data transfers post-Schrems II. The high volume of active cases demonstrates the vast scope of the Commission’s enforcement activities.

Potential critiques of the EU Commission’s competition enforcement approach

While the Commission is tasked with maintaining competition through impartial enforcement, some argue it has too much discretion in its decision making processes. Companies under investigation claim political and economic factors unduly influence objective analysis at times. There are also debates around proportionality of fines, with penalties increasingly record-breaking but possibly debasing deterrence effect over time.

Another critique centers on the Commission’s dual role as investigator and judge in cases. Unlike common law systems with separate authorities, the Commission conducts raids, reviews evidence and then rules on its own findings. This raises conflicts of interest concerns. However, the right of appeal to EU courts provides checks and balances.

Critics also point to length of case durations as a weak spot. Investigations can drag on for years, creating regulatory uncertainty for businesses. Commission defenders say thorough probes are needed given stakes involved. There are calls for continuous process improvements to expedite resolution.

A further contention is around the Commission’s ability to keep up with fast-moving digital markets. While it imposes fines and considers new legislation, some argue a more comprehensive pro-competition strategy is needed given scale of industry power imbalances emerging. Ensuring agility remains crucial as business models evolve rapidly online.

Some recent high-profile EU competition cases

One of the Commission’s biggest cases was against Google regarding its Android mobile operating system. In 2018, Google was fined a record €4.34 billion for imposing restrictive rules on Android device makers which entrenched Google’s dominance in general internet search. It was forced to allow more choice of search engines and browsers.

In 2017, the Commission blocked a proposed €15 billion merger between Siemens and Alstom, arguing it would reduce competition in the rail industry. The decision was controversial as it aimed to create a “European champion” to compete globally.

A €2.42 billion fine was handed to Qualcomm in 2018 for predatory pricing of baseband chips to force out rival Intel. Qualcomm was accused of paying Apple to exclusively use its chips, damaging competition.

Intel was itself fined €1.06 billion in 2009 for providing rebates to PC makers to only use Intel chips, excluding rival AMD. It had to stop its illegal practices and could not link rebates to exclusive or quasi-exclusive purchases.

In 2020, the Commission blocked a tie-up of stock exchange operators LSE and Deutsche Börse over concerns it would harm competition, especially in the markets for trading derivatives. Previous attempted mergers had also been blocked.

These headlining cases targeted some of the world’s biggest tech and industrial companies, demonstrating the Commission’s expansion into major digital and next-gen markets. Billions in fines aimed to curb dominant firms’ anti-competitive abuses and open areas to greater rivalry.

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Photo credit, Karolina Grabowska