Insights

On July 2, 2024, the Belgian Competition Authority (BCA) found that three security companies, Seris, G4S and Securitas, had participated in serious cartel practices within the private security services sector from 2008 to 2020. The practices consisted of price-fixing, bid rigging, and no poach agreements. This decision is important for two reasons: because the fines imposed by the BCA amount to a substantial EUR 47 million and because this is the first time that the BCA has fined companies for a no poach arrangement.

On Tuesday, June 11, 2024, Crowell & Moring (Crowell) and King's College London co-hosted their 6thannual Competition Law Conference at TheMerode in Brussels. The event featured a keynote address by David Lawrence, Policy Director at the Antitrust Division of the US Department of Justice (DOJ), and four panels of experts discussing the latest developments in competition law in the EU, UK and US. Key topics included the impact of AI and digital innovation, no-poach and non-compete provisions in the employment context, state aid and the Foreign Subsidies Regulation, and developments in merger enforcement. Distinguished speakers from the EU, UK and US, representing diverse perspectives from regulatory authorities, academia, and industry, shared their insights on these pressing issues.

The European Commission recently revised its Guidelines on Horizontal Cooperation Agreements. This alert is the fourth and last in a series of alerts in which we provide practical guidance, in light of these revised Guidelines, on how to make antitrust-related assessments for various types of agreements between competitors.

At the beginning of the year, we brought to your attention that a number of important Belgian and EU legislative changes are likely to have an impact in 2024: there are new laws that have been adopted and proposals that are expected to firm up into law.

A number of important Belgian and EU legislative changes are likely to have an impact in 2024. On the one hand, there are new laws that have been adopted and will start to bite, and, on the other, there are proposals that are expected to firm up into law.

On July 1, 2023, the European Commission’s revised Guidelines on Horizontal Cooperation Agreements entered into force (see our previous alert for a comprehensive overview of the new rules, including the new horizontal block exemption regulations).

Businesses distributing goods and services in the EU often rely on the Vertical Block Exemption Regulation (VBER) for legal certainty. The VBER and the accompanying guidelines set out the conditions under which distribution agreements are presumed to comply with EU competition law. To be covered by the VBER, the parties’ market shares may not exceed 30% and the agreement may not include so-called hardcore restrictions. Above the market share threshold, the parties will need to self- assess their agreement based on the guidelines. Over the past few years, the Commission has been working with stakeholders to assess, update and amend the existing rules to take account of market developments, including the emergence of online platforms and e-commerce (see also our Client Alert of August 24, 2021). The most important changes can be summarized as follows:

On March 24, 2022, the European Union (EU) co-legislators (the European Parliament and the Council) reached political agreement on the final provisions of the Digital Markets Act (DMA). The DMA aims at ensuring fair and contestable markets in the digital sector by imposing specific regulatory obligations on so-called “gatekeepers,” i.e., major digital platforms with a powerful and entrenched position which act as important gateways for businesses to reach end users. The European Commission (EC) will act as the central enforcer of the DMA. It will have extensive investigative powers and be able to impose hefty fines as well as behavioral and structural remedies (including the breaking up of companies). As an instrument of ex ante regulation, the DMA is designed to complement (not replace) the ex post enforcement of competition law, which is often viewed as too slow to effectively rein in the market power of “Big Tech” players.

On March 1, 2022, the European Commission published its draft revised block exemption regulations on research and development agreements (“R&D BER”) and specialization agreements (“Specialization BER”), together referred to as the Horizontal Block Exemption Regulations (“HBERs”). At the same time, it published draft revised Guidelines for Horizontal Cooperation Agreements (“Horizontal Guidelines”). The stated aim of the revision is to make it easier for companies to cooperate in ways that are economically desirable and contribute to the digital and green transition. The current HBERs are set to expire on December 31, 2022; it is therefore to be expected that the final revised HBERs and Horizontal Guidelines will be adopted before the end of this year.

Businesses distributing goods and services in the EU rely on the Vertical Block Exemption Regulation (VBER) for legal certainty. The VBER and the accompanying guidelines set out the conditions under which distribution agreements are presumed to comply with EU competition law. The current VBER is set to expire on May 31, 2022. Over the past few years, the Commission has been working with stakeholders to assess, update and amend the existing rules to take account of market developments, including the emergence of online platforms and e-commerce (see also our Client Alert of October 26, 2020). The most important changes proposed by the Commission can be summarized as follows:

Caudalie operates a selective distribution network for the sale of cosmetic products. To protect its luxury image, Caudalie included certain restrictive clauses in its distribution agreements. For example, the distributors were prevented from applying labels to the front of the products and from using words such as “discount” or “reduced prices” on posters. In addition, distributors were only permitted to expand sales into other countries with the written consent of Caudalie. In principle, the agreements did allow Caudalie’s distributors to set the retail price of the products; Caudalie provided only a recommended resale price.

Recent months have witnessed a flurry of activity from the European Commission in the field of telecommunications regulation. On December 18, 2020, the Commission adopted a new Delegated Regulation setting single maximum Union-wide voice termination rates, as well as an updated Recommendation on those relevant markets within the electronic communications sector that it still deems to warrant regulation. On February 4, 2021, the Commission opened infringement procedures against 24 Member States for failing to implement the European Electronic Communications Code (EECC) into national legislation by the transposition deadline of December 21, 2020. And on February 24, it tabled a proposal for a new Roaming Regulation to replace the previous one of 2012 (Regulation No 531/2012). With these and other smaller initiatives, the Commission aims to complete a comprehensive overhaul of the European Union regulatory framework for the electronic communications sector, which it kickstarted in September 2016 with an ambitious legislative package intended to transform the EU into a “Gigabit Society” by 2025.

On December 15, 2020, the European Commission (EC) presented its long-awaited proposal for a Digital Services Act (DSA), together with a proposal for a Digital Markets Act (DMA), which we discussed in a previous alert. Whereas the DMA aims to promote competition by ensuring fair and contestable markets in the digital sector, the DSA proposal intends to harmonize the liability and accountability rules for digital service providers in order to make the online world a safer and more reliable place for all users in the EU.

On December 15, 2020, the European Commission (EC) published its proposal for a Digital Markets Act (DMA). The proposal aims to promote fair and contestable markets in the digital sector. If adopted, it could require substantial changes to the business models of large digital platform service providers by imposing new obligations and prohibiting existing market practices. These changes not only would create significant new obligations on “gatekeeper” platforms, but also opportunities for competitor digital service providers and adjacent firms. Further, the proposed requirements of the DMA have the potential to transform the way that businesses engage with “gatekeeper” providers – including, for example, companies that sell goods and services, distribute apps, and/or purchase advertising on large platforms.

In the coming weeks or months, the European Commission is expected to table an ambitious set of draft legislation that, if adopted, will have a major impact on the business practices of digital service providers in the EU, including non-EU companies serving European users: the Digital Services Act (DSA) and the Digital Markets Act (DMA). The Commission’s legislative proposals aim to strengthen the responsibilities of online platforms and to support fair competition in digital markets.

On October 23, 2020, the European Commission published its impact assessment providing its plans for the reform of the Vertical Block Exemption Regulation (VBER) and Vertical Guidelines. A number of impactful changes to the current rules are envisaged in relation to dual distribution, active sales restrictions, online sales restrictions, and Most Favored Nation clauses (MFNs). Moreover, the Commission will provide additional guidance on the circumstances in which Resale Price Maintenance (RPM) and non-compete obligations are permitted.

On May 11, 2016, the European Commission prohibited the proposed acquisition of Telefónica UK (O2) by Hutchison 3G UK (Three). The transaction would have been a 4:3 merger involving the number 2 and number 4 U.K. mobile network operators. The merged entity would have had a non-dominant share of around 40% and network sharing arrangements with both its remaining competitors (BT/EE and Vodafone). The Commission’s decision was based, in particular, on the elimination of Three as “an important competitive force” that offered the most competitive prices in certain market segments and 4G at no extra cost. The Commission made no finding of coordinated effects.

Given the major impact of COVID-19 on the European economy, a reaction from the European Commission on the state aid front was expected. On March 19, the European Commission adopted a Temporary Framework to enable Member States to support the economy in the COVID-19 outbreak. These measures complement many other possibilities under the existing state aid rules as outlined by the Commission in its Communication on a coordinated economic response to the COVID-19 outbreak. To date the Commission already approved over fifty state aid measures in almost every Member State in record time.

On March 19, the European Commission adopted a Temporary Framework to enable Member States to use the full flexibility of the State aid rules to support the economy in the COVID-19 outbreak. Since then the Commission has approved over €890 billion in aid schemes most of which were processed within 24 to 48 hours. On April 3, the Commission extended the Temporary Framework to enable Member States to accelerate the research, testing and production of COVID-19 products, to protect jobs and to further support the economy in the outbreak.

We previously reported on the joint statement the European Competition Network (ECN) issued on March 23 regarding the application of the competition rules during the COVID-19 crisis, as well as several initiatives taken by national competition authorities. Since then, the European Commission and other European competition authorities have not been resting on their laurels.