Concerns about China and the Russian war against Ukraine have increased transatlantic partnerships and dialogues between the EU and the United States over the past two years but may also have brought a false sense of convergence in other areas. In the trade and investment areas, for example, we are seeing moves towards protectionism and the politicization of some aspects of antitrust and competition policy. These developments are resulting in some divergence between the EU and the United States. The absence of the UK (traditionally, one of the most pro-market champions in the EU) from the EU since Brexit is also contributing to transatlantic divergence.
As debates about the extent of transatlantic convergence and divergence continue, businesses should take note of the following.
Increased Interventions and Regulatory Complexity
Whether it is Chinese state subsidies or the U.S. Inflation Reduction Act, the EU is concerned about the negative impact of foreign state aid and industrial policies on European economic competitiveness. Certain politicians in Brussels believe in the need to do whatever it takes to offset these negative influences and defend the EU level playing field—for example, through the Foreign Subsidies Regulation. This belief is shared by many EU member states that are intervening with their own foreign direct investment rules and tools to protect their markets, making obtaining mergers and acquisitions regulatory approvals more complex than previously.
In the United States, President Biden’s Executive Order on Promoting Competition in American Economy issued on July 9, 2021 calls for a “Whole-of-Government Approach” to promote competition and stronger antitrust enforcement. The Biden-Harris Administration has vowed to “combat the excessive concentration of industry,” particularly in labor markets, agricultural markets, internet platform industries, health care markets, repair markets and “other markets directly affected by foreign cartel activity.” This, combined with the return of industrial policy—such as the Inflation Reduction Act and The America COMPETES Act1, also points to a more complex regulatory environment with a broader range of interest groups looking to influence outcomes.
Diverging Outcomes Across Jurisdictions
In the transatlantic antitrust arena, occasional divergent outcomes are not a new feature. They range from the so-called “train wrecks” of GE/Honeywell and Boeing/McDonnell Douglas in the late 1990s/early 2000s to the Microsoft/Activision situation2 this year and the Cargotech/Konecrane3 aborted merger last year. But there are some important differences this time, including:
- Reflecting the Biden-Harris Administration’s stance, the U.S. Department of Justice (DoJ) and the Federal Trade Commission (FTC) are exhibiting an aggressive stance against mergers, an unwillingness to take commitments to settle cases and a preference to litigate to stop mergers even if without success in the courts.
- The emergence of the UK’s Competition and Markets Authority (CMA) post-Brexit as a new player on the global mergers enforcement field is also having an impact. The CMA is taking a tough stance against mergers with very strong preference for divestment rather than behavioral remedies. This new dynamic has resulted in decisions that have caught the headlines (such as the Microsoft/Activision and Cargotech/Konecrane transactions) where the CMA has aligned with the U.S. agencies’ decisions but not the European Commission’s. There are also decisions that have worked out the other way (e.g., Meta/Kustomer4) and others where there was alignment among the investigating agencies. But many cases have involved more complexity and longer review timelines than previously.
In addition, antitrust and competition law are being seen as tools to address issues beyond traditional consumer welfare. This is expanding the dimensions of antitrust and competition law enforcement. From digitalization to many other issues including supply chain resilience, labor mobility, cost of living and sustainability, antitrust and competition policy is playing a role in the broader policy and political agendas of governments on both sides of the Atlantic. The expansion of the role of antitrust and competition policy may further increase the risk of divergent outcomes in the future especially if the approaches to the expanded role of antitrust are not identical. This expansion is putting a spotlight on the interoperability of antitrust and competition law with broader policy issues in a way that has not previously occurred in modern times.
A Rise of Populism?
In addition to the developments outlined above, and starting already now with the inconclusive election in Spain on July 23, 2023 and continuing until the end of 2024, we will see a series of elections on both sides of the Atlantic.
In the EU, the European Parliamentary elections will take place in June 2024. The pursuit of strategic autonomy and reindustrialization of the European economy will continue to guide the overall approach of the new Commission. However, the mixture of approaches when it comes to economic and industrial policy, including competition policy, among EU member states could change with the outcome of elections due in several member states—including Slovakia, Luxembourg, Poland and the Netherlands before the end of 2024—and could result in a shift generally towards conservative forces. Any such changes will also set the tone for next year’s election for the new European Parliament and may change the priorities of those appointed to the next term of EU Commissioners and other EU top jobs.
In the United States, there will be a presidential election on November 5, 2024, together with elections at U.S. Congressional and state levels. These elections, depending on the outcomes, will likely have implications for U.S. antitrust law and enforcement. In particular, the future of the Updated Merger Guidelines that were issued on July 19, 2023 may depend at least partially on the outcome of the elections. Various federal and state level legislative proposals may also be affected.
In the UK, the next general election is due by January 28, 2025, but will likely happen in 2024. The current Digital Markets, Competition and Consumers bill which includes provisions to formalize the Digital Markets Unit within the CMA is likely to complete the parliamentary process and become law during the current Parliament. Other changes could be on the horizon depending on the outcome of the election.
Heightened vigilance is necessary for business looking to engage in transatlantic activities in light of the changing antitrust and competition landscapes on both sides of the Atlantic. Business needs to be prepared for increased interventions, elongated timelines, and the combined use of competition rules and targeted regulatory initiatives in many jurisdictions, which could potentially result in potentially divergent transatlantic approaches and outcomes. Readiness to navigate issues beyond traditional approaches, and proactive and coordinated engagement across jurisdictions to build a strong global strategy and alliances tailored to the transatlantic contexts well in advance of the launch of a transaction or other project, are even more critical than previously to ensure success.
 Creating Helpful Incentives to Produce Semiconductors.
 The EC approved the acquisition with remedies; the CMA rejected the remedies and prohibited it; the FTC sued to injunct the acquisition but lost in court. Microsoft’s appeal of the CMA’s prohibition is currently stayed while Microsoft seeks to reach an agreed outcome with the CMA.
 The EC approved the acquisition with remedies; the CMA rejected the remedies and prohibited it; the DoJ announced it would injunct the merger. The parties abandoned the acquisition.
 The EC approved the acquisition with remedies after a Phase 2 investigation; the CMA approved the acquisition unconditionally after a Phase 1 investigation; the FTC took no action.