The European Commission's approach to mergers involving software-based platforms: Towards a better understanding of platform power

What Are the Pro- and Anti-Competitive Claims Driving the European Commission’s Platform Policies? A Case Study Based Analysis of the European Commission’s Take on Platform Cases

Purpose: The study concerns abuse of a dominant position on digital markets on the example of practices used by Google. The main purpose of the article is to draw attention to the lack of appropriate tools for assessing abuse of a dominant position in such markets. Methodology: The article was prepared based on the method of analyzing documents (mainly the European Commission and FTC) and literature on competition low and policy. The article also uses legal acts and the guidelines of the European Commission. Findings: The study adopts the hypothesis that the European Commission is limited to instruments created for the needs of mature markets, whose attribute is static competition and not innovation. Such tools are not appropriate to assess the behavior of entrepreneurs on digital markets and should be used in a selective and flexible manner. The Commission's rigid approach to the application of existing mechanisms may harm innovation and expansion of companies operating under dynamic competition. Practical implications: The article critically assesses the approach of the European Commission and indicates the factors that should be considered in assessing the abuse of a dominant position by entrepreneurs on digital markets. Originality/Value: As a result, it was pointed out that abuse of a dominant position on digital markets is a relatively new practice and their antitrust assessment mechanisms have not yet been developed. This study provides a voice in the discussion on how antitrust authorities approach towards the assessment of abuse of dominance on digital markets and their sanctioning. At the same time, it draws attention to the need to develop appropriate tools for assessing a dominant position and then its abuse in markets with dynamic competition and whose main attribute is innovation.

The EU Merger Regulation: A One-Stop Shop or a Procedural Minefield?

The European Union's merger control mechanism is intended to prevent acquisitions and mergers from undermining competition in the European Single Market. The European Commission must be notified of all mergers and acquisitions that fulfill specified criteria under the EU Merger Regulation (EUMR), which went into effect in 1990. A minimum amount of revenue must be generated within the EU in order to meet the requirements, and at least two of the firms participating in the merger or acquisition must have activities in more than one EU member state. It is generally agreed upon that the Commission's implementation of the EU Merger Regulation was successful. The EC Merger Regulation is an increasingly sophisticated legal weapon, even if there will unavoidably be legal and practical advancements, such as improvements in forensic tools and economic modeling, that influence its future implementation. The analytical framework that will be used in any given case, the economic and other evidence that will probably be considered probative, the length of the Commission's review, and the likely result can all be predicted with a reasonable degree of certainty by counsel, which is at least as significant. The article discusses Commission's implementation of the EU Merger Regulation, Merger Control and the scope of application of the Merger Regulation in the European Union.

Click to increase image sizeClick to decrease image size ACKNOWLEDGEMENTS We thank the anonymous referees for their constructive feedback and helpful comments on the articles included in this special section. The contributions to this section have emerged from a workshop that took place on 19–20 September 2007 at the University of Glasgow on the 'Security of Energy Supply in the New Europe – A Challenge for the European Neighbourhood Policy?'. The workshop was co-organised by Valentina Feklyunina and Anke Schmidt-Felzmann and was generously funded by the University Association of Contemporary European Studies (UACES), the Department of Politics and the Faculty of Law, Business & Social Sciences of the University of Glasgow, the Scottish Jean Monnet Centre and the Centre for Russian, Central & East European Studies (CRCEES). Notes 1. Commission of the European Communities, 'Towards a European Strategy for the security of energy supply', Green Paper (Brussels: Commission of the European Communities 2001) p. 22. 2. Ibid., p. 3. 3. P. Roberts, 'The Undeclared Oil War', Washington Post, 28 June 2004. 4. The Union's (and thus the Commission's) competences over energy policy will increase following the entry into force of the Lisbon Treaty which turns energy policy into an area of 'shared competences', see Article 176 A of the Treaty on the Functioning of the Union (TFEU). 5. B. Ferrero-Waldner, quoted in 'Commission of the European Communities, Securing Your Energy Future: Commission Presents Energy Security, Solidarity and Efficiency Proposals', Press Release (Brussels 2008), IP/08/1696, p. 1. 6. Commission of the European Communities, 'On the Development of Energy Policy for the Enlarged European Union, its Neighbours and Partner Countries', Communication (26 May 2003) COM 2003 262 final, p. 18. 7. Commission of the European Communities, 'Towards a Secure, Sustainable and Competitive European Energy Network', Green Paper (13 Nov. 2008) COM 2008 782 final. 8. Commission of the European Communities, 'The Commission Proposes €5 Billion New Investment in Energy and Internet Broadband Infrastructure in 2009–2010, in Support of the EU Recovery Plan' (28 Jan. 2009) IP/09/142, p. 1. 9. Commission of the European Communities, 'Secure, Sustainable and Competitive' (note 7). 10. 'Commission to Outline New Energy Action Plan', EurActiv, 6 April 2010, p. 1. 11. With the notable exception of the Special Issue edited by D. Averre, 'The EU, Russia and the Shared Neighbourhood: Security, Governance and Energy', European Security 19/4 (2010) pp. 531–534, as well as the studies by S. Wood, 'Europe's Energy Politics', Journal of Contemporary European Studies, 18/3 (2010) pp. 307–322; S. C. Park and D. Eissel 'Alternative Energy Policies in Germany with Particular Reference to Solar Energy', Journal of Contemporary European Studies, 18/3 (2010) pp. 323–339; and M. Neuman, 'EU-Russian Energy Relations after the 2004/2007 EU Enlargement: An EU Perspective', Journal of Contemporary European Studies, 18/3 (2010) pp. 341–360. 12. See e.g. S. Padgett, 'The Single European Market: The Politics of Realization', Journal of Common Market Studies, 30/1 (1992) pp. 53–76; F. Aschea, P. Osmundsen, R. Tveterås, 'European Market Integration for Gas? Volume Flexibility and Political Risk', Energy Economics 24/3 (2002) pp. 249–265; J. P. Stern, 'Security of European Natural Gas Supplies: The Impact of Import Dependence and Liberalization', Royal Institute of Internal Affairs Sustainable Development Programme (London 2002). 13. A. F. Correlje and C. van der Linde, 'Energy Supply Security and Geopolitics: A European Perspective', Energy Policy, 34/5 (2005) p. 532. 14. With the exception of the recent work on EU-Russia energy relations. See for example: S. J. Lussac, 'Ensuring European Energy Security in Russian 'Near Abroad': The Case of the South Caucasus', European Security 19/4 (2010) pp. 607–625; D. Bozhilova and T. Hashimoto, 'EU-Russia Energy Negotiations: A Choice Between Rational Self-interest and Collective Action', European Security 19/4 (2010) pp. 627–642; O. Pardo Sierra, 'A Corridor through Thorns: EU Energy Security and the Southern Energy Corridor', European Security 19/4 (2010) pp. 643–660; N. Kaveshnikov 'The Issue of Energy Security in Relations between Russia and the European Union', European Security 19/4 (2010) pp. 585–605. 15. See e.g. G. Bahgat, 'Europe's Energy Security. Challenges and Opportunities', International Affairs 82/5 (2006) pp. 961–976; V. Constantini, F. Gracceva, A. Markandya and G. Vicini, 'Security of Energy Supply: Comparing Scenarios from a European Perspective', Energy Policy 35/1 (2007) pp. 210–226; D. Yergin, 'Ensuring Energy Security', Foreign Affairs 85/2 (March/April 2006) pp. 69–75. 16. For a study on this topic see M. Natorski and A. Herranz Surrallés, 'Securitisation Moves to Nowhere? The Framing of the European Union's Energy Policy', Journal of Contemporary European Research 4/2 (June 2008).

INTRODUCTION The European Commission has identified the completion of the Digital Single Market (DSM) as one of its main political priorities. The Commission's Website states that the ‘internet and digital technologies are transforming our world … It's time to make the EU's single market fit for the digital age – tearing down regulatory walls and moving from 28 national markets to a single one. This could contribute € 415 billion per year to our economy and create hundreds of thousands of new jobs.’ That sounds quite good. And again one is deeply impressed by the Commission's quantification skills: it is not €400 or €480 billion but rather €415 billion per year that moving to a single market could contribute to the European economy. However, according to the Commission's so-called Digital Single Market Factsheet, ‘ obstacles remain to unlock these potentials’. In reality, cross-border online services seem to represent only a small percentage of overall EU online services. The Commission's website with reference to its priorities points out: ‘But at present, markets are largely domestic in terms of online services. Only 7% of EU small- and medium-sized businesses sell cross-border. This needs to change – putting the single market online.’ My focus in this article is on such cross-border contracts and specifically on what might be perceived as a barrier, a regulatory wall, or an obstacle, namely formal requirements in contracts concluded online. There is little doubt that the way we conclude contracts today has dramatically changed as compared to 25 years ago. In the digital world, the formal requirements of a contract may seem to be a throwback to the old world, the non-digital world. By formal requirements I do not mean those specific ‘formal requirements’ for consumer contracts concluded by electronic means which are meant to enable consumers to be informed about all the costs before entering into a binding contract. In that regard, Article 8(2) of the Consumer Rights Directive introduced a so-called ‘button solution’ in order to provide sanctions for ‘internet cost traps’. Nor do I mean domestic contracts entered into by parties based in one jurisdiction. I mean cross-border contracts, the kind of contracts which the Commission has in mind when it complains about the largely domestic nature of markets in the context of the digital single market. But what is special about cross-border contracts in terms of formal requirements?

On 18 July 2022, the Council gave its final approval of the Digital Market Act’s final text. Notwithstanding the amendments following the initial proposal published by the European Commission on 15 December 2020, the main objectives of the DMA have remained untouched and separate from the objectives pursued by competition rules. In the interim, the Court of Justice of the European Union (CJEU) issued its preliminary rulings on the bpost and Nordzucker cases, with particularly relevant consequences concerning the application of the double jeopardy principle. The potential remedies and obligations imposed on the main digital platforms both under Articles 5 to 7 of the DMA and under competition law rules will overlap and create a risk of incoherent enforcement, especially on the side of the European Commission. Against this background, the paper strives to draw out the narrow enforcement gap left for competition authorities. In addition, the paper highlights a number of alternatives open to competition authorities when enforcing competition law rules on digital markets, namely the segmentation of its enforcement efforts depending on the type of service concerned in each case.

Merger control is necessary to maintain competitive market structures which in turn are a prerequisite for good market performance. In European competition policy, both, Article 85 and 86 have been used to deal with merger cases.1 In 1973, Article 86 was applied in the Continental Can Case2 where an already existing dominating position was strengthened by a merger. In the Morris-Rothmans Case3 of 1987 the European Commission (EC) tried to apply Art. 85 to the agreements of firms which had an effect on the business conduct of the bought-up firm but that remained separate and independent from a legal point of view. A lack of certainty due to the absence of clear rules and of a timetable dealing specifically with merger control in the European Union (EU) caused the EC to create a new legislation to control mergers4 in 1989. To create a European merger control system meant that national authorities had to transfer further national competences to the EC in Brussels. On the one hand, some politicians regard European integration as an ultimate goal, on the other hand, there are politicians who try to weigh the pros and cons of such a new instrument. Past discussions on EU merger control must be seen against this background. Moreover, the discussion in 1989 on the introduction of the European merger control system was strongly influenced by the different economic philosophies in the twelve EU member countries. Until 1987 only France, Great Britain, Ireland, and the Federal Republic of Germany had a merger control system, whereas the other eight smaller member countries had no instrument of this kind.5

In Greek mythology, Icarus is given wings made of feathers and wax by his father as a means to escape exile. Experiencing flight for the first time ashe makes his escape, Icarus dares to fly too near the sun despite his father's warnings not to do so. His wax wings melt in the heat and Icarus consequently plunges to his death in the sea. The Commission is faced with a challenging task when dealing with firms in financial distress, some of them with falls befitting Icarus. This article focuses on three such concrete situations that the Commission has to manage: the “Failing Firm Defence” in merger control cases, restructuring agreements in declining sectors (also called “crisis cartels”) assessed under Article 101 TFEU, and undertakings’ inability to pay fines under point 35 of the Fining Guidelines. In all three situations, the Commission carries out a similar assessment of the financial health of the “failing” firm or sector, and in each case, the Commission's approach is rather formalistic. While the Commission advocates the same public policy concern across the board, namely to protect competition in a market, the criteria aimed at doing this are set out slightly differently in each of the three situations. The aim of this article, however, is not to argue for a more relaxed approach to competition policy as the standard, but rather for a more refined pragmatism that would also be more aligned to the effects-based competition enforcement adopted by the Commission in recent years.

The economic crisis that erupted in 2008 has significantly influenced the European Union (EU) economy and questions about the future of the European integration process have arisen. The crisis' effects forced the European Union institutions and its Member States to take significant decisions and to draft recovery plans. Apart from initiatives aimed at economic policy coordination and financial market supervision, the EU proposed and introduced important initiatives for the strengthening of the internal market's competitiveness. In November 2008 the European Commission in its communication on the EU recovery plan proposed ways for supporting the real economy and competitiveness, for boosting demand and for restoring confidence in the European economy. Then, over the years 2008-2011, a broad range of legislative and non-legislative decisions were taken by the European Commission and the European Parliament in order to minimize the crisis' consequences for the internal market, which included the Single Market Act and the new European strategy Europe 2020. Moreover, part of the EU budget was taken out for investments in energy security, the development of broad-band internet in the rural areas or enterprise help within the framework of the EU Cohesion Policy, while the European Investment Bank took out15 billion euros for credits and loans to SMEs. Taking into account the variety and the scope of these actions this article will focus on the initiatives aimed at strengthening the competitiveness of the EU internal market. The overall objective is to answer the three main questions: 1. What are the priorities of the internal market and how can market competitiveness be improved in crisis circumstances? 2. What are the main activities of the EU institutions (the European Commission and the European Parliament) to strengthen the functioning of the internal market and EU competitiveness during and after the crisis? 3. What are the funding sources of actions relating to the internal market after the crisis? (original abstract)

In Germany, as a Member State of the European Union, European competition law acts in parallel with the German provisions. Although this contribution is confined solely to describing the German system, it would be helpful to start by briefly describing the relationship between the two merger control systems. The Act against Restraints of Competition (ARC) reaches its jurisdictional limit in cases where the Commission of the European Union (‘the European Commission’) has exclusive jurisdiction. According to recital 8 of the preamble to the European Community (EU) Merger Control Regulation (EUMR or ‘the Regulation’), EU law shall apply to mergers which cause significant structural changes, the impact of which goes beyond the national borders of any one Member State. A merger is within the scope of the Regulation if it is a concentration as defined in Article 3 EUMR and has a so-called Community dimension. Pursuant to Article 1 EUMR a concentration has a Community dimension where the combined aggregate worldwide turnover of all the undertakings concerned is more than €5,000 million and the aggregate Community-wide turnover of each of at least two of the undertakings concerned is more than €250 million unless each of the undertakings concerned achieves more than two-thirds of its aggregate Community-wide turnover within one and the same Member State. A concentration that does not meet these thresholds has a Community dimension where the combined aggregate worldwide turnover of all of the undertakings concerned is more than €2,500 million, in each of at least three Member States the combined aggregate turnover of all the undertakings concerned is more than €100 million, in each of at least three Member States included for the aforementioned purpose the aggregate turnover of each of at least two of the undertakings concerned is more than €25 million, and the aggregate Community-wide turnover of each of at least two of the undertakings concerned is more than €100 million, unless each of the undertakings concerned achieves more than two-thirds of its aggregate Community-wide turnover within one and the same Member State (for more details, please see the chapter on merger control in the EU). Furthermore, a concentration which does not have a Community dimension may in certain cases be referred to the European Commission. This can be done either by the relevant undertakings, the prerequisite being that the concentration is capable of being reviewed under the national competition laws of at least three Member States, or by one or more of the Member States, the prerequisite being that it affects trade between Member States and threatens to significantly affect competition within the territory of the Member States or State making the request. It is also possible for the reverse scenario to arise, where the European Commission refers a notified concentration to the competent authorities of the Member States pursuant to Article 9 EUMR. Where the European Commission has jurisdiction to deal with a concentration, it will be exclusively reviewed at EU level, thus excluding any competence on the part of the national authorities. The remainder of this chapter discusses the residual competence of the German merger control authorities.

Recently in certain sectors of the economy, in particular in the digital, pharmaceutical and biotech sectors, an increase in the number of concentrations has been detected involving emerging and innovative undertakings with competitive potential but which generate little or no turnover at the time of the transaction. Many such transactions do not fall under the EU merger control system or the domestic merger control systems of the Member States but may, nevertheless, have a detrimental impact on competition in the internal market. The European Commission reacted to this situation by adopting, on 26 March 2021, Guidance on the application of Article 22 (Article 22 Guidance). In this Article 22 Guidance, the Commission announced that it will abandon its previous practice of not accepting Article 22 referral requests from National Competition Authorities (NCAs) which are not competent to review the concentration at stake under their domestic rules. Instead, the Commission will now encourage and accept Article 22 referral requests, particularly from NCAs which do not have jurisdiction over the transaction at stake under their national merger regimes. The Article 22 Guidance gives rise to a number of questions and problems which we discuss in this article.

The jurisdictional scope of EU merger control has faced criticism in recent years for being insufficiently broad to capture all anti-competitive transactions. In March 2021, the European Commission (EC) published guidance encouraging Member State competition authorities to ask the EC to examine potentially anti-competitive concentrations that otherwise fall below national merger control thresholds. In July 2022, the EC’s application of that guidance to the Illumina/GRAIL transaction was validated by the EU’s General Court. In allowing Member State agencies to empower the EC to investigate transactions that do not meet national thresholds, the Guidance Paper blurred the EU Merger Regulation’s brightline jurisdictional rules, introduced a degree of uncertainty into the determination of whether a given transaction may be subject to merger control, and allowed the EC to investigate non-reportable transactions that had been completed. This article describes the EC’s new policy and explores its principal legal and practical implications.

DIGITAL TECHNOLOGY AND CONTRACT LAW Digital technology has significantly changed the balance in society and economic relationships, offering new opportunities for innovative business models. This raises challenging questions affecting several aspects of the law. Scholars, practitioners, policy-makers and legislators are therefore involved in an ongoing debate and need to find appropriate answers in order to react adequately to the challenges of the digital revolution. This book aims to chart, analyse and clarify some of the main questions and issues. For a functioning market economy, private law has to provide a general framework and efficient tools. The realisation of a connected Digital Single Market is one of the ten priorities of the European Commission, which aims to react appropriately to the challenges of the digital revolution in order to use this opportunity for economic growth. In the framework of its Digital Single Market Strategy, the European Commission announced a set of measures aiming to create better access to digital goods and services across Europe for both consumers and businesses, underlining that the absence of consistent EU-wide criteria creates barriers to entrance, hinders competition and reduces predictability for investors throughout Europe. The harmonisation of European private law is a challenge of increasing significance and has inspired important developments, as shown for example by the European Commission's release, on 9 December 2015, of three legislative proposals as a part of its ‘Digital Single Market Strategy’: the Proposal for a Directive on certain aspects concerning contracts for the supply of digital content, the Proposal for a Directive on certain aspects concerning contracts for the online and other distance sales of goods, and the Proposal for a Regulation on ensuring the cross-border portability of online content services in the internal market. Since then, on 27 April 2016, EU Regulation 2016/679 on the protection of natural persons with regard to the processing of personal data and on the free movement of such data has been adopted.

This chapter investigates the regulation of SWFs' investments in the EU and its Member States. The chapter starts with an overview of the latest multilateral initiatives concerning SWFs and national security-related concerns, namely the Santiago Principles and the OECD Guidelines for Recipient Countries Investment Policies relating to National Security of 2009. The aforementioned multilateral initiatives, also supported by the EU Commission, aim at avoiding national (over)reactions, and a downward spiral into protectionist. Furthermore the chapter emphasizes that the admission and establishment of foreign investments (direct investments of third countries' SWFs included) in the EU is primarily (but not exclusively) governed by the freedom of circulation of capital. This internal market freedom encompasses the fundamental principle of non-discrimination, which is also mentioned in the OECD Guidelines as a sound basis for national investment policies. Nevertheless, the aforementioned freedom is not absolute. Under the Treaty's rules it is subject to reservations and (possibly) Member States' derogations, when genuine public order and security reasons exist. In this respect, the chapter highlights that free circulation of capital and the case-law of the CJEU thereon gives Member States quite limited possibilities to lawfully resort to investment restrictions. That notwithstanding, some Member States (such as Germany and France) have tightened their foreign investment control procedures for public order and security reasons in recent times. The chapter argues that such national schemes are not in line with the principles developed by the CJEU in its case-law on the matter. Moreover, after the entry into force of the Lisbon Treaty the EU has acquired exclusive competence to legislate on the admission of FDI. The conclusion is drawn that a European harmonization is needed in order to address Member States' genuine public security concerns related to direct investments of third-countries' SWFs.