Global antitrust outlook 2017

May 2017  |  FEATURE  |  COMPETITION & ANTITRUST

Financier Worldwide Magazine

One critical element of today’s business landscape is paying attention to antitrust and competition issues – an especially acute concern given the increasing prevalence of cross-border components in transactions and the greater vigilance of antitrust regulators.

Under the auspices of US antitrust law, European Commission (EC) competition law and China’s Anti-Monopoly Law, among others, global antitrust activity is at an all-time high, with governments, regulatory agencies and law enforcement officials dramatically increasing the number and scale of their investigations. Furthermore, private litigation, including antitrust class actions, is also on the rise.

However, according to Linklaters’ ‘Competition/Antitrust Global Market Outlook 2017’ report, uncertainty will go hand in hand with activity, as it remains to be seen whether president Trump makes good on election campaign promises, such as his pledge to undertake a close review of mergers such as AT&T’s proposed $85m acquisition of Time Warner.

The appointment of key antitrust officials, such as the nomination of Makan Delrahim as the head of the Department of Justice (DOJ) Antitrust Division, as well as those made to the Federal Trade Commission (FTC), the US Supreme Court and federal courts, also have the potential to have a long-term impact on key antitrust enforcement issues. Among the issues in the spotlight are reverse payment patent settlements, class certification in private litigation and the extraterritorial application of US antitrust laws. “Although the Trump administration will likely have a limited effect on pending investigations and enforcement, the new administration will likely shift some priorities,” notes Linklaters.

For James S. Venit, a partner at Dentons, no one, including probably Mr Trump himself, really knows what he is likely to do. “So far, president Trump’s economic nationalism has not extended to protecting US firms from foreign competition authorities. Rather, his focus has been on domestic investment and job creation. In terms of his stance on European antitrust cases involving large US-based companies such as Google, it is very difficult to determine how president Trump will adapt his firebrand campaign messages into policies that reflect harsh political and economic realities.

“President Trump has not set out a clear agenda in the field of antitrust policy,” says Dr Ulrich Soltész, a partner at Gleiss Lutz. “Personally, I would not exclude that he would take some form of retaliatory measures if the EC adopts measures against Google and others.”

European perspective

Antitrust activity in Europe is also vibrant. The Google case involves charges that the American multinational technology company unfairly promotes its shopping service and blocks rivals in online search advertising. This is one of several cases testing the robustness of the EC’s enforcement of strict antitrust rules, in particular the approach taken by Margrethe Vestager, the EC’s European commissioner for competition and a well-known enforcer of EC antitrust law.

“Commissioner Vestager does not see herself merely as an enforcer of antitrust rules,” opines Dr Soltész. “She is very ambitious and some people say she would be a good successor to president Jean-Claude Juncker. Vestager seems to believe that her activities contribute to broader political objectives, like the fight against aggressive tax planning or tax avoidance, the establishment of a single market for energy or the reshaping of European banks. It is no surprise that this creates some conflicts with stakeholders, such as member states and multinationals.”

EC antitrust policy has, in actual fact, gradually shifted over the past few decades. In the early 2000s, the focus was on merger control and the fight against cartels, i.e., classic antitrust policies. However, since the 2008 financial crisis, the EC has concentrated on measures pertaining to state aid control.

“The EC’s enforcement agenda has been focused on mergers, cartels and the occasional abuse of dominance case,” says Mr Venit. “In the area of vertical restraints, it has largely ceded the initiative to the member states. In 2016, the Directorate-General for Competition of the EC was also very active in the area of state aid, particularly concerning alleged tax breaks to encourage investment. Although state aid is not part of traditional competition law, the EC’s tax decisions and repayment orders represent one of its bolder initiatives, with far-reaching implications for international enforcement.”

China matters

According to the Linklaters report, China has firmly established its position as one of the key competition jurisdictions globally. Moreover, against the backdrop of increasing enforcement, companies doing business in and with China must “carefully consider the impact of this antitrust jurisdiction when contemplating mergers & acquisitions (M&A) transactions or designing commercial strategies and competition compliance programmes”.

A changing landscape

The global antirust landscape is changing, thanks in no small part to the political changes that have taken place over the past year, not to mention constantly shifting global economic dynamics. As a result, 2017 is shaping up to be the year in which the global antitrust issues affecting domestic and international businesses are significantly impacted by the new world order.

© Financier Worldwide

BY

Fraser Tennant