With economic growth the priority for governments across Europe, 2016 is likely to see continued focus from competition authorities on key markets. These include energy, digital, technology and infrastructure markets. We can also expect to see further consolidation in the lifesciences, telecoms and retail / consumer goods markets, with new market structures and business models presenting challenges for competition authorities. Companies are also increasingly aware of antitrust rules and how to make strategic use of them; and the gloves are now firmly off when it comes to private litigation and damages actions.
So what do companies need to be prepared for in 2016? We set out below a few issues to look out for in the coming year:
Key focus on e-commerce and digital markets
The online sphere will remain a major focus for the European Commission, the CMA and other national competition authorities in 2016, building on work and decisions in 2015.
EU Digital Single Market Strategy: the European Commission’s Digital Single Market Strategy for Europe has competition objectives at its heart, with primary goals aimed at breaking down artificial “barriers” (contractual and unilateral conduct) to a pan-European digital market. The e-commerce market investigation is well underway, looking at cross border-online trade (both in digital content and where e-commerce is widespread e.g. electronics, clothing etc.). It is expected that the preliminary report will be issued for consultation in mid-2016 with the final report to follow in early 2017.
CMA’s interest in the digital economy is set to continue: the CMA’s proposed Annual Plan for 2016/17 shows that it is looking to identify specific digital behaviours and practices that it can usefully address. It also explicitly states that it will follow up on the Call for Information on the Commercial Use of Consumer Data. Ongoing investigations include online reviews and cloud storage (both consumer enforcement cases), online sales of consumer products and online travel agents (suspected cartels).
UK market studies and investigations are set to dominate 2016
Remedies for energy and retail banking markets: the CMA will conclude its two major market investigations into energy and retail banking. The energy investigation has identified deficiencies in the regulatory framework that will need to be addressed in a remedies package, but there are also issues around retail, pricing transparency and switching that will be addressed (with the final report now due by 25 June 2016). In the same vein as the energy investigation, the latest update from the retail banking investigation highlighted a need for improved information sharing from lenders (e.g. price comparison website tools, trigger points for review of service). These concerns will be addressed in the provisional decision on remedies due in February 2016, with the final report due by 5 May 2016.
Price comparison websites: in 2016/17 the CMA plans to undertake an analysis of price comparison websites, with the aim of understanding whether problems exist in the sector and, if so, what changes might be needed to make sure they operate competitively. This is likely to revisit previously trodden grounds of most favoured nation provisions and other issues around distribution and complex horizontal and vertical relationships in these market structures.
FCA programme of competition market studies: the FCA has several market studies underway, with the investment and corporate banking study due to publish provisional findings and conclude during the course of 2016. The FCA will be starting in earnest its asset management market study and also be making a decision on whether the UK mortgage market warrants further review. With the FCA now having competition enforcement powers this programme of market studies presents potentially significant risks for the companies involved.
European Commission to be tested in 2016
Having taken the helm last year, Margrethe Vestager will be tested in 2016 on progressing a number of key cases. These include the investigation into Amazon’s e-book distribution arrangements, together with an investigation into licence agreements between film studios and broadcasters for pay TV.
There are also two ongoing cases concerning Google; one relating to the Android mobile operating system, and the other on comparison shopping. The latter stemmed from a wider complaint about Google’s online searching practices which the Commission is continuing to examine.
Also of note is the Gazprom case which concerns an alleged abuse of dominance relating to market partitioning in Central and Eastern European gas markets.
There has been significant press speculation on these cases and 2016 will test the Commission’s ability to reach final decisions on these matters or accept commitments from the parties to bring these proceedings to an end. Google and Gazprom in particular have made it clear – at least in public – that they do not consider there is a case to answer.
CMA enforcement programme to build on a successful 2015
After several recent disappointments in relation to cartel offence proceedings, 2015 saw its first conviction. This should give the CMA confidence (and precedent) to push forward with more criminal enforcement cases in 2016 in addition to the ongoing criminal investigation into cartel activity in the supply of products to the construction industry.
2015 also saw the CMA conclude a number of enforcement proceedings and issue guidance and briefings on compliance in a variety of different sectors – from property sales to eye surgeons. 2016 will continue to see the CMA push forward several pharmaceutical competition cases, including dominance proceedings alleging abusive pricing. We should also see updates from ongoing investigations in the modelling sector and in sports equipment.
The CMA’s aim for 2016 is to do more and to do so as efficiently as possible. In addition, its strategic interests will be emerging markets, markets for public services and markets served by SMEs. The CMA is also looking to develop its consumer protection work with a commitment to launch as many consumer cases/projects as possible with three as a minimum.
Mobile mergers: a change of position in 2016?
The end of 2015 seemingly indicated that the Commission is contemplating a stricter approach to merger control in the mobile sector. 2016 will likely see further clarification in respect of the trend of mobile operator consolidation.
Previous mergers of major mobile network operators in Europe have found approval with limited conditions to ensure access to the market for competitors. For example, the mergers of Telefonica Deutschland/ E-Plus (2015) and Hutchison 3G Austria/Orange Austria (2013) were conditionally approved with various remedies related to network coverage share and divestment to remove resulting barriers to entry.
However, the remedies proposed by the Commission in September 2015 in respect of the proposed joint venture between TeliaSonera and Telenor revealed a harder line on supporting a new entrant to the relevant market, namely requiring the creation of a fourth competitive mobile network operator.
This approach may reflect the difference in views between the previous Competition Commissioner Joaquin Almunia and incumbent Margrethe Vestager. 2016 may ultimately lead to a new (and more intrusive) methodology for dealing with complex mobile mergers.
Competition litigation before the CAT
2015 brought with it a raft of changes to the UK competition litigation regime, including the introduction of revised rules on collective actions and in particular the introduction of an “opt-out” procedure (which allows claims to be brought on behalf of a defined set of claimants, excluding those who specifically request to opt out).
More cases for the CAT?: the CAT can now hear “standalone” claims in addition to “follow-on” claims (where an action is brought following an infringement decision by a competition authority), grant injunctive relief and has extended limitation periods in line with those applying to the High Court. It seems likely that the CAT will emerge as a credible alternative to the High Court for competition litigation in 2016. Perhaps as a sign of things to come, the first standalone action (and application for interim injunction) before the CAT, NCQR Ltd v Institution of Occupational Safety and Health, was lodged just before Christmas (although the parties have now settled). This was also the first case seeking to make use of a special fast track procedure for simpler cases.
Injunctive Relief: in another case from 2015, Packet Media Limited v Telefonica, the claimant (PML) was initially successful in seeking an interim injunction, requiring Telefonica to continue to supply PML. The injunction has since been lifted (on the basis that PML had not established an arguable case of dominance in the relevant market). However, the key points to take away from the case still stand - the bar to obtaining an injunction is not particularly difficult to overcome, even where a competition case may ultimately be weak. An injunction may well be a potentially useful tool for a claimant alleging refusal to supply, which could give it a lifeline to continue commercial operations in the interim period prior to any final judgment.