EU antitrust ushered in a new commander, should United States tech giants continue to be wary?

Last month, when European Commission President Ursula von der Leyen introduced the 26 members she had nominated, the new competition commissioner, Spain's deputy prime minister, Teresa Ribera, was first on the list.

As the Commission's first executive vice-president in charge of a "clean, just and competitive transition", Rivera's upcoming role has been described by many European media outlets as perhaps the Commission's "most powerful position ever". In addition to antitrust enforcement, she will also oversee Europe's green transition, ensuring that the EU is both decarbonized and industrialised.

According to von der Leyen's mission letter, Rivera needs to reinvent the EU's competition policy, ensure that it supports the innovation and competitiveness of European companies, and that European companies have the ability to lead the world.

Over the past decade, European antitrust enforcement, led by outgoing competition commissioner Margrethe Vestager, has been tough and heavy. And in a recent interview, Rivera has revealed her different law enforcement directions. "[The rules] can be relaxed in a number of ways, but always to strengthen Europe's capabilities," Rivera said, "and we're going to reform those rules to be more flexible and give the industry a strategic European dimension." ”

Ninette Dodoo, head of the China antitrust practice department of Freshfields Bruckhaus T ”

The position of the European Commission

Rivera has previously spent much of his career focused on climate change policy, overseeing the closure of Spain's coal industry and negotiating a phase-out of nuclear power by 2035 as Spain's Minister for Ecological Transition. After Chile withdrew at the last minute from the 2019 UN climate talks, she offered Madrid to host the conference and won Spain and Portugal exemptions from EU electricity market rules during the gas crisis.

Rivera is still a novice in the field of competition policy, but she already has a very clear perspective.

"Europe's competitiveness cannot be solved by the 'champions' of three or four countries. We need enough scale to compete in the international market, but we also need a well-functioning internal market and a relatively balanced business ecosystem," she said, slamming the EU's M&A rules, saying it would shorten the time it takes to review deals.

Rivera's position echoes von der Leyen's recommendations for her work in her mission letter, some of which are at odds with the antitrust agenda of the past decade under Vestager.

Specifically, von der Leyen asked Rivera to review the horizontal merger rules; further simplification of state subsidy policies while maintaining a level playing field; focus on the challenges faced by SMEs and medium-sized enterprises, in particular the risks posed by "killer acquisitions"; strengthening and accelerating the enforcement of competition rules, with a focus on the most distorting subsidies and practices, while promoting the acceleration of subsidies and the empowerment of transactions in strategic areas such as artificial intelligence; work with other committee members to "vigorously" enforce the Foreign Subsidies Regulations (FSR); actively promote cooperation among global competition bodies; Respond to the challenges and dynamics of the digital market and conduct "swift and effective enforcement actions" under the Digital Markets Act.

In addition, von der Leyen drew special attention to Rivera's reference to the report "The Future of European Competitiveness", which she commissioned from former Italy Prime Minister Mario Draghi. The central theme of the report is simplifying and reforming competition policy in order to enhance Europe's ability to compete with global competitors.

In Draghi's report, he advocated for a realignment of competition and M&A review policies to promote growth and innovation within the EU, taking into account geopolitical and supply chain threats. Emphasizing the importance of alignment in a single market, the report recommends easing M&A restrictions in strategic sectors such as telecommunications and defence in order to achieve industrial policy objectives and create European "champions" that can compete in the global market.

In addition, Draghi's report said that existing procedures for merger review and antitrust investigations are too slow and complex, especially in fast-innovating industries such as technology and energy. Draghi suggested speeding up the review process in these areas to ensure that Europe can respond quickly to market changes. He also recommended the reinstatement of the "New Competition Instrument" (NCT), which would allow regulators to proactively respond to anti-competitive behaviour in key industries to address structural competition issues, such as tacit monopolies and market entry barriers, especially in markets with strong network effects.

Most unlike the last decade, Draghi suggested the introduction of an "innovation defense" mechanism for M&A deals, i.e., if the deal would promote innovation, the deal should be approved on this premise. He believes that innovation can be seen as an efficiency that is sufficient to offset the possible negative impact on competition. The current competition commissioner, Vestager, is often skeptical of the innovation argument, so he scrutinized and blocked a number of high-profile mergers and acquisitions, such as the Siemens and Alstom mergers.

Du Ning told the CBN reporter that the current discussion on competition policy in Europe mainly focuses on two aspects. On the one hand, supporters want to help European companies grow into industry champions. On the other hand, it is also important to ensure that competition policy fulfils its primary role of protecting competition rather than competitors, thereby creating a level playing field for firm innovation.

Confrontation with tech giants

Before receiving a formal appointment, Rivera will also be subject to scrutiny by the European Parliament, including answering written questions and appearing at hearings this month. If passed, she would take on the conundrum of going head-to-head with Big Tech.

During his tenure, Vestager took a series of aggressive antitrust enforcement actions against big tech companies. For example, Google was fined three times with a total amount of more than 8 billion euros; Accusing Apple of gaining an unfair competitive advantage through illegal tax incentives, the European Supreme Court recently ruled in favor of the European Commission's order to impose 13 billion euros in taxes on Apple; allegations that Amazon misuses seller data on its platform to compete for its own products, resulting in an unfair market environment; Apple, Google and Meta have also been heavily criticized by Vestager for failing to comply with the Digital Markets Act.

In Rivera's tenure, the task will not be easy. According to a report by Herbert Smith Freehills in United Kingdom, digital markets have been the focus of EU competition law enforcement in recent years and are newly regulated under the Digital Markets Act, and Rivera is tasked with addressing the challenges and dynamics of these markets, including the platform economy and data-driven business models, and ensuring that the Commission takes swift and effective enforcement action under the Act.

"With the recent leadership of the European Union, we can see that the overall legislative trend is becoming tougher," Dunin said. Whether it involves mergers and acquisitions in the aviation industry or in the digital sector, laws such as the Foreign Subsidies Regulation and the Digital Markets Act are pushing EU legislation in a stricter direction. ”

Wu Han, a partner at King & Wood Mallesons, told CBN that the EU is currently trying to supervise large technology platform enterprises from multiple dimensions such as anti-monopoly, anti-unfair competition, protection of the interests of small and medium-sized enterprises, protection of consumer rights and interests, and product compliance. "The Digital Markets Act, the Digital Services Act and the European Union's Artificial Intelligence Act can also confirm this perspective." He said.

Wu Han said: "To put it simply, the EU is worried about the way technology platform companies use platforms and artificial intelligence, because based on network effects, their behavior has a greater impact on society. From the perspective of the structure of the intelligent society, there will be more and more levels of social supervision, such as physical society and virtual society, physical currency and virtual currency, etc., and the dimensions will be more and more abundant (such as science and technology ethics). Large-scale social platforms (such as Google and Amazon) are not only considered to be regulated, but regulators may also use the technology and data of these platforms as a tool for regulation. ”

(This article is from Yicai)