Top decision makers share how geopolitical challenges, digital regulation, and active and sometimes divergent enforcement against mergers are all contributing to a transformation in the antitrust landscape at Fordham’s 50th Annual International Antitrust Law and Policy Conference.
The current intense antitrust enforcement activity reveals the magnitude of the shift in antitrust and competition enforcement across the globe. With increased intervention in cross-border transactions and new digitally focused regulations, the new reality is that it is becoming more complex and taking longer for these transactions to close successfully .
Developments in the Microsoft/Activision merger, the Department of Justice’s trial against Google and the updating of the U.S. merger guidelines are just some examples. All of them showcase how the key themes of the speakers we heard recently at the 50th Annual Conference on International Antitrust Law and Policy at Fordham University’s Law School are coming to life.
In September, gridlocked Manhattan hosted not only the 78th session of the annual gathering of the 193 nation members of the United Nations General Assembly but was also home to an international gathering of top legal experts and economists in the antitrust field. The conference was attended by some 250 antitrust aficionados in person and more online and included agency leaders from the United States, Europe, Asia and Africa. To bring together multinationals living this new reality, APCO also hosted a dinner with Sarah Cardell, chief executive of the UK Competition and Markets Authority (CMA), as the guest speaker under Chatham House rules. The CMA has become a key agency on the global stage following Brexit.
Throughout the gatherings , we discussed reset priorities in the face of geopolitical realignment, resurgence of national industrial policies and accelerated adoption of new cutting-edge technologies.
These are my key takeaways:
1. Antitrust and competition agencies around the world are working against a geopolitical and macro-economic backdrop that is both complex and challenging.
UK Competition and Markets Authority (CMA) Chair Marcus Bokkerink set the scene:
“Economies around the world, with the UK no exception, are striving for growth against an increasingly turbulent backdrop: stagnating productivity; pervasive debt; fragmenting global supply chains; military conflict; a deteriorating climate. And the global consensus needed to tackle these challenges is increasingly fragmented. A ‘polycrisis’ is how it has been described.”
Bokkerink also spoke about the role antitrust and competition agencies can play:
“It’s understandable and right during such a time that public institutions are called on to play their part in supporting badly needed growth and productivity. But how can we, as competition authorities, do this most effectively? [By] using our powers to create, and safeguard, open and competitive market conditions, level playing fields and consumer trust in commerce.”
Several of the other agency leaders, including Japan Fair Trade Commissioner Reiko Aoki, made similar comments.
2. Antitrust agencies are weighing how conventional antitrust enforcement and regulation should be implemented alongside the work of data protection agencies in new areas like AI, fintech and cryptocurrency.
European Commission Director General for Competition Olivier Guersent explained that the European Union’s Digital Markets Act (DMA) is the first regulatory instrument to become law for the digital economy.. Following the designation of the first six gatekeepers (Alphabet, Amazon, Apple, ByteDance, Meta and Microsoft) under the DMA on September 6, 2023, the DMA has moved into the enforcement phase “where compliance is our ultimate goal”. Guersent noted the importance of “close coopetition” between competition and data protection agencies in this respect and the need to keep “a watchful eye” on the “complementarities” between conventional antitrust enforcement and regulation in relation to the DMA and “new areas like AI, fintech and cryptocurrency”. He also emphasized that the DMA is not “signaling a withdrawal from the [European Commission’s] decade of digital antitrust enforcement” adding “you may expect more digital antitrust enforcement activity in the coming months.”
In the UK, the Digital Markets, Competition and Consumers Bill (DMCC) is currently in front of the UK Parliament. The bill has a “very different approach to regulating markets” (Bokkerink) from the DMA’s—it has “a more bespoke approach.” Strategic market status (SMS) designations will be subject to review every five years, to reflect market and technology shifts which may bring material changes from a competition perspective. The foundation of the new regime will be an “ongoing, active and constructive dialogue with potential designated firms and broader stakeholders.” This will enable the CMA to “work to shape pro-competitive outcomes with a constant eye to the future.” A program of stakeholder and industry engagement is already underway. In addition, the UK’s Digital Regulation Cooperation Forum between the CMA and counterparts at the UK data protection, communications and financial services agencies will facilitate enforcement of the UK’s new digital regulatory regime.
3. The world is just starting to grapple with the exponential expansion of digital regulation and consideration of AI—so how those regulations fit, or their “complementarity”, with antitrust and competition law, is rapidly evolving.
The CMA is adopting a similar “collective” approach to its research to date into AI (see CMA’s initial review of AI foundation models published on September 18, 2023) and is planning a broad program of engagement to start to build a consensus around how best to achieve positive outcomes.
Germany has taken yet another approach. A new competition law provision (section 19a of the German Competition Act) that relates specifically to large digital platforms (those of paramount significance for competition across markets) came into force in January 2021. The Bundeskartellamt has already determined that Alphabet/Google, Meta/Facebook and Amazon have paramount significance and has initiated proceedings to make similar determinations against Apple and Microsoft. Implying that more intervention can be expected, Bundeskartellamt President Andreas Mundt said he “doubted the cases have yet had the impact on the market that we want.”
In relation to AI, Mundt said he was not as optimistic as CMA Chair Bokkerink about the positive impact of AI. Mundt warned that competition agencies should be “extremely alert” to Big Tech partnerships with startup AI developers. He named Microsoft’s investment in OpenAI, Google’s investment in Anthropic and the partnership between Amazon Web Services and Stability AI and said, “we have all good reasons to look at these cooperations: if they are really cooperations or if there is not in reality a merger between these.” He also repeated a concern he has expressed before about Big Tech companies making “killer acquisitions” in the digital sector to remove future competitive threats.
4. We will continue to see active merger enforcement globally, stay tuned for more about “updated” U.S. draft merger guidelines, and the latest on an “evolutionary” approach to theories of harm under EU merger control.
In relation to the United States, Assistant Attorney General for Antitrust (AAG) Jonathan Kanter and Federal Trade Chair Lina Khan defended the United States’ updated draft merger guidelines which have drawn wide-ranging and divergent reactions from the political, business, consumer, academic and practitioner communities. Khan also defended the proposed revisions to the filing form which have been criticized as over-burdensome. Kanter said:
“The draft explains that competition plays out in many ways across our economy. We should use tools fit for purpose to identify mergers that might lessen it. But one thread carries through all the diverse competitive environments in our economy: when mergers lessen competition, they enable the exercise of market power that harms consumers, workers and other market participants.”
Of the over 3,000 comments received during the consultation period, Kanter said:
“The feedback received in the comment period has been thoughtful and constructive. We welcome it, and are working on revisions to ensure that the final merger guidelines are the best and most effective document they can be.”
Both Kanter and Khan emphasized the draft guidelines’ focus on labor markets—an aspect that has attracted a lot of attention.
“The draft guidelines… explain that the agencies will evaluate the impact of a merger on labor as a stand-alone basis to challenge a transaction. This focus doesn’t break new ground. Competitive labor markets are foundational to the purposes of the antitrust laws. … And yet, too often, we in the antitrust community haven’t focused on it. We’ve allowed consolidation in the economy that has made it harder for workers to bargain for higher wages or more opportunity. We’re changing that now.” (Kanter)
“The… comments have underscored the high stakes of getting this right. Across sectors and professions, people have shared with us how unchecked consolidation has hurt their paycheck, their job opportunities, their health and their communities.” (Khan)
Director General Guersent and CMA Chief Executive Sarah Cardell each expressed support for the U.S. draft guidelines and said there were similarities with the EU and UK merger guidelines although Guersent highlighted the different roles for guidelines in prosecutorial (United States) versus administrative (EU) systems.
No hints were dropped about how extensively the draft guidelines will be amended or when they will be adopted although Khan said she hoped the revised filing form would be finalized in the next 12 months.
In relation to the EU, Director General Guersent put down a strong marker about active merger enforcement in traditional as well as digital sectors:
“…it is important not to forget in the midst of all the excitement raised by tech deals—we cannot and will not let our attention slip from what happens in traditional sectors. At the same time, we do of course need to have our finger on the pulse when it comes to fast-paced sectors like digital or med tech, and the outlook for merger control for such areas remains dynamic, challenging and novel.”
He also reinforced:
- The European Commission’s intention to continue to make use of “the recalibrated approach to art. 22 referrals” first used in relation to Illumina/GRAIL and more recently Qualcomm/Autotalks and Nasdaq Power/EEX.
- The European Commission’s “evolutionary” approach to theories of harm: “fortunately, so far our EU merger control framework has shown itself to be flexible enough to allow us to capture these new market realities, and there are several cases where we have been looking into ecosystem effects.” (This was evidenced by the European Commission’s prohibition decision of the Booking/eTraveli merger the following week.) Separately, Bundeskartellamt President Andreas Mundt queried whether the current standard of significant impediment to effective competition (SIEC) in EU merger control is still the right test and referred to his “unease” over the German approval of the Meta/Kustomer
Addressing perceptions about the CMA’s anti-merger stance since Brexit, the CMA emphasized there is no presumption that mergers should be prohibited and that the CMA approves most of the mergers it reviews. However:
“… where already dominant companies argue for further market consolidation, they are effectively arguing for weaker competition. For an outcome which will impede markets operating freely. Even in some cases, it might be suggested, for monopolies or oligopolies free from interference. And to do so in the name of innovation or growth is to present an entirely false, and disingenuous, choice between this and the proven benefits of competition”.
5. The Microsoft/Activision merger was the elephant in the room. Everyone is talking about the importance of international cooperation —and how it could be a game changer for enforcement outcomes.
AAG Kanter said:
“Over the last two years, I’ve learned the immense value in reaching across the international aisle. Conduct often doesn’t stop at borders. Especially in the digital age, our interconnected world requires a global response to many competitive concerns…
Cooperation really comes alive on the policy side— – and it’s going to become even more important. Consider artificial intelligence. While this technology holds boundless potential, it’s sure to have huge competitive impacts. These risks transcend borders. So we’re engaging with our international colleagues to exchange knowledge about this rapidly developing area and its effect on competition law and policy” (emphasis added).
Director General Guersent said:
“There can be no doubt that in today’s global economy, the competition policy community needs cooperation. To ensure effective and well-targeted enforcement solutions. But more than that perhaps: the business community needs it in order to ensure a smooth and transparent path to better compliance, and workable outcomes that make sense on the ground.
Of course, we have different legal systems, different enforcement traditions and also different priorities, so 100% alignment is neither realistic nor even desirable—especially not when it comes to the design of instruments themselves. But I believe there is scope for adequate convergence when it comes to outcomes” (emphasis added).
CMA Chair Bokkerink said:
“…in our globalised world, with all its global challenges, we need global collaboration. We operate in different jurisdictions, often with different consumer and competitor market contexts, and naturally we have different approaches to some specific issues. But the increasingly concentrated industries we deal with are global, and the harms we are committed to preventing, particularly in this digital age, are borderless. Anti-competitive behaviour, or the erosion of competition in one country, resounds around the world in a way it did not half a century, or even a few decades ago. The value of dialogue and collaboration between us has never been more important” (emphasis added).
Bundeskartellamt President Andreas Mundt said he was “awaiting eagerly a cooperation agreement between the UK and the European Union” drawing attention to the impact that the UK’s exit from the European Union has had on cooperation between the CMA and the European Commission.
The Fordham conference and surrounding conversations served as a reminder that a seachange in antitrust and competition enforcement is not only underway, but will likely continue well into the future.
Facing geopolitical and macro-economic challenges and unprecedented technological developments simultaneously, antitrust and competition policy and enforcement are grappling with increasingly unprecedented and complex issues. Business leaders piloting their high-stakes projects through this new and changing world need to keep up with the latest developments in order to make savvy and successful decisions. APCO is advising clients to be prepared for antitrust and competition agencies to be increasingly interventionist, to use longer timelines and new approaches in their investigations, and for there to be more divergent outcomes than before. With the right strategic guidance and global considerations, today’s challenging and changing environment can still be understood and navigated successfully.