A report that the European Commission is considering reversing the burden of proof on large technology companies has been met with mixed reactions, as some observers question how such a change could be implemented.
EU competition commissioner Margrethe Vestager is considering shifting the standard of proof onto large technology companies to prove the effects of their conduct are not anticompetitive.
She is assessing a report released in April by an expert panel, which advised the European Commission to shift the burden of proof on the incumbent to show the “pro-competitiveness of its conduct”.
The expert panel of three released the report – titled ‘Competition policy for the digital era’ – in April, after the commissioner asked it to examine the challenges that digitalisation will bring to competition enforcement.
The Financial Times reported yesterday that Vestager wants to change the burden of proof, so that companies would “need to show its behaviour is causing no harm to competition rather than the commission having to prove it”.
Vestager told the newspaper that it is an “important discussion in figuring out what kind of regulation would be useful” but she had not decided if the standard of proof should be tightened.
The newspaper quoted a source saying that changes to the burden of proof would be limited in scope. They “would apply to companies preventing users from accessing multiple apps and companies blocking access to their data for third-party applications looking to offer supplementary services — such as apps that read emails”.
Jacques Crémer, a co-author of the EU’s special advisers' report, tweeted yesterday that the report “makes clear that the burden of proof should be reversed in well-specified cases”.
Miguel Perez Guerra, Google’s senior competition counsel, earlier this month said that reversing the burden of proof in behavioural probes or penalising companies for “self-preferencing” risked reducing established procedural safeguards and disincentivising digital investment.
Competition “often dead”
Tommaso Valletti, an economics professor at Imperial College London, was the chief competition economist at the European Commission's Directorate General for Competition between September 2016 and August 2019.
He said reconsidering the burden of proof is “a great idea”, as it addresses the “well-known problem of antitrust intervention” being too slow. He added that when an authority issues a decision, competition “is often already dead” and difficult to revitalise.
He said he is in favour of shifting the burden of proof for mergers that involve “very large and dominant companies”, as they would need to prove customer benefits or the deal would be blocked.
Valletti said two principles support changing the burden of proof. Economically, if an industry is quasi-monopolised, “over and under enforcement are not symmetric and the balance is tilted in favour of overenforcement,” he said.
Enforcers’ limited resources compared to global giant corporations is another reason to shift the burden.
“It makes a lot of sense to save those resources with a rebuttable structural presumption of this kind, so that such resources could then be devoted to genuinely uncertain mergers,” he said.
But Damien Geradin, a partner at Euclid Law in Brussels who represents complainants against big tech companies, said it is “a core legal principle” that enforcers or plaintiffs have the burden of proof.
“Moreover, I think there are more important issues to be considered, such as the need to make the investigative process faster and the need to adopt remedies that restore competition,” he said.
Geradin noted “significant” implications to changing the burden of proof, as it would change the dynamics of an investigation and put investigated firms “in an awkward position”.
“I am not sure the EU courts would follow the commission on this point,” he added.
However, Geradin said it is “definitely healthy” for a commissioner to “explore new ideas at the beginning of a new mandate”, and large internet companies like Google “need to be subject to scrutiny”.
Ulrich Soltész, a partner at Gleiss Lutz in Brussels, said holding large internet companies to a higher standard of proof “may turn out to be more difficult than it sounds”.
Soltész said the Charter of Fundamental Rights and the European Convention of Human Rights outlines “basic procedural guarantees” that the commission has to provide sufficient proof for an infringement of EU abuse of dominance or anticompetitive laws.
“It would be tricky for any legislator to deviate from this principle,” he said.
Jonas Koponen, a partner at Linklaters said it is “of great concern” that the commission is considering reversing the burden of proof.
“It will increase regulatory burden enormously and have a stifling effect on bona fide business conduct – especially in dynamic and fast-moving markets,” he said.
Tim Cowen, a partner at Preiskel & Co, said any regulation that “imposes different burdens on different players with no good reason would be controversial”.
Talking about the burden of proof is “beside the point”, he said; the key point is how to strengthen rules and the frequency of enforcement action.
The Microsoft, Intel and Google abuse of dominance cases had in common that “each case took the commission 10 years,” Cowen said. He added that “justice delayed is justice denied,” and the duration of the cases show that Vestager “is a referee not keeping up with the game”.
Matthew Levitt, a partner at Baker Botts in Brussels, said it is questionable “if it would be compatible with [EU law] to reverse the commission’s burden of proof and place a category of undertakings under a stricter obligation than Article 102 imposes on every other dominant company”.
He wondered how the commission would define this category of companies, the kind of conduct companies have to justify and the consumer benefits that must be shown.
“Though superficially attractive to some, I think the commission will find itself bogged down in the detail of how to implement and then apply such a proposal,” Levitt said.
Stephen Kinsella, a partner at Sidley Austin in Brussels, said that “more rigorous enforcement” can be expected.
The proposals are very interesting politically as a statement of intent, “signaling that tech companies will no longer get the benefit of the doubt,” he said.
On a legal basis, Kinsella cannot see “a huge shift, given the jurisprudence”. The initial burden “will always remain on the commission to establish a prime facie threat to actual or potential competition”, he said.
Francesco Liberatore, a partner at Squire Patton Boggs in London, said the special advisers’ report found that a “presumption in favour of interoperability may be justified” when a company’s dominant position is based on control over data that competitors cannot reproduce. A presumption of interoperability would reverse the burden of proof, he added.