by José Rivas and Lluís Girbau, Bird & Bird Brussels
The plenary of the European Parliament adopted on 5 May 2022 the resolution Competition policy – annual report 2021. Andreas Schwab (EPP, Germany), one of the most experienced Members of the European Parliament in the competition policy field, drafted the report in cooperation with other MEPs. Additionally, the Committee on the Internal Market and Consumer Protection (IMCO) provided an opinion while the Committee on Economic and Monetary Affairs provided a report with several amendment proposals (ECON).
1. General considerations and policy response to the COVID-19 pandemic
The Commission should closely monitor any distorting effects derived from the six-month renewal of the temporary framework for State aid measures and provide an assessment of the temporary State aid framework to the Parliament. In this regard, during the debate about the adoption of the report, Mr Schwab expressed the necessity to start phasing out pandemic support measures step by step: “as the pandemic ends, we must return to market discipline”.
In the report, there is a connection between exceptional State-aid policy arrangements and the potential appearance of the so-called zombie companies: “under no circumstances should exceptional arrangements become windows of opportunity for channelling public funding – whether national or EU – into capitalising companies that are economically unviable or of no real strategic interest to the public”.
While noting the necessity of the support measures granted during the COVID-19 crisis, the adopted text stresses that “the extraordinary level of public support must not become the new normal”. The Parliament also recalls that measures of the National Recovery and Resilience Plans must respect all requirements set out under the Recovery and Resilience Facility Regulation.
2. Digital transformation and enforcement
Regarding the enforcement of competition policy, the resolution highlights the need to increase the effectiveness of investigations “through the use of new instruments stemming from computational means (e.g., big data, artificial intelligence and machine/deep learning)”. Indeed, effective enforcement is one of the cornerstones of the European Parliament. In the presentation of the report before the plenary, Mr. Schwab stated: “We expect the Commission to provide adequate resources, and we expect the Member States to give the Commission the money to allow for adequate resources in that respect”.
In the same debate, Margrethe Vestager, Executive Vice-President and Commissioner for Competition expressed the following remarks about this issue:
“You will know the ongoing cases that we have: a Google case, a Facebook case, three Apple cases, two Amazon cases – all high priority. (…) As Parliament has pointed out several times, investigations take time. But now the enforcement has also shaped the content of the Digital Markets Act, both on process and on substance. The Digital Markets Act could not have been delivered so fast without the experience that we have accumulated over so many antitrust cases. I think the Digital Markets Act (DMA) is proof that democracy works because, with the excellent work of Parliament, here we are with a strong political agreement on this landmark proposal.”
Indeed, the Parliament stresses that it is “prepared to work towards the accelerated completion of negotiations of the DMA and the entry into force of the new rules”. To recall, Andreas Schwab was the rapporteur of the DMA in the IMCO Committee and participated in the recent trialogue negotiations with the Council and the Commission that led to a political agreement on 25 March.
Moreover, the report calls for rapid implementation of the new measures while ensuring synergies and avoiding overlaps or duplications. At the same time, the Parliament asks the Commission to eliminate inefficiencies and administrative burdens and “to allocate sufficient and adequate human and financial resources to organising the enforcement of the Digital Markets Act” and insists on the cooperation of national competition authorities within the European Competition Network (ECN).
When it comes to the consolidation of the airline industry in the EU -one of the sectors with the worst economic effects derived from the pandemic- the resolution calls for ensuring that airlines do not eliminate or take over smaller competitors given the important amounts of State aid authorised for certain EU airlines.
Besides welcoming the Commission’s Regulation proposal on foreign subsidies, the Parliament “recalls the Council’s call for the Commission to consider how to tackle distortive effects resulting from the participation of bidders using tax havens for tax avoidance purposes”. Moreover, the Parliament calls the Commission “to carry out merger reviews, foreign direct investment screening and foreign subsidies control in a coherent manner”.
3. Data and EU Competition Law
Undoubtedly, data is becoming more and more relevant in the competition law domain. As stated in the report, “price is not always an all-encompassing parameter for market definition in the digital economy”. As a matter of fact, the Parliament reaffirms that “data is key when it comes to the digital market” and calls on the Commission “to make best use of the Digital Markets Act and to come up with further legislative proposals, in the same vein as the Data Act”.
Another request to the Commission is to review its merger control rules when it comes to assessing personal data and to increase collaboration between antitrust and data privacy regulators. Regarding the Internet of Things (IoT) sector, the report acknowledges the lack of interoperability as one of the shortcomings of the sector that could hamper consumer choice and competition.
The Parliament also supports the review of sectorial legislation, such as State aid rules, the current regime on vertical agreements, the fine-tuning of the safe harbour rules, and the adoption of rules to match the needs of e-commerce and platform businesses.
4. Way forward
Regarding the Vertical Block Exemption Regulation (VBER) and related Vertical Guidelines, MEPS note that they “have been inadequately adapted to recent market developments, notably the growth of online sales and online platforms”. In fact, on 10 May, the Commission adopted the new Vertical Block Exemption Regulation (‘VBER’) accompanied by the new Vertical Guidelines, following a thorough evaluation and review of the 2010 rules.
At the judicial level, the Parliament requests the Commission to remain vigilant and draw the lessons from the recent State aid rules decisions in the taxation domain that have been annulled by the General Court, while at the policy level, MEPs welcome the EU-US Trade and Technology Council (TTC) as well as the Joint Technology Competition Policy Dialogue (TCPD).
The Parliament does not ignore the war in Ukraine. In this regard, it asks the Commission to “use the necessary flexibility of the EU’s State aid framework to enable Member States to provide support to the companies and sectors most severely affected by the ongoing Russian military aggression against Ukraine and which will be hurt by the sanctions imposed on Russia”.
Throughout the report, there are several references to the interplay between the green transition and competition policy. It is worth highlighting that MEPs acknowledge the “Commission’s new guidelines on State aid rules in the field of climate,
environmental protection and energy (CEEAG) and its efforts to strengthen 2014.
guidelines and to align them with the European Green Deal”.
The full report will be forwarded to the Council, the Commission, the national parliaments of the Member States, the national competition authorities and the regional ones, where applicable.
The previous annual reports on competition policy are available here. More information about the parliamentary debate is available here.