The Parliament has spoken: the new Commission can start its work in December 2024. This post looks at what this may mean for competition policy under Teresa Ribera, the new Commissioner for competition and Executive Vice President for Clean, Just and Competitive Transition.

European Commission President Ursula von der Leyen has made it clear that the EC should be pursuing changes to competition policy. Her Mission Letter to Ribera notes  that “Europe needs a new approach to competition policy” and that she plans to “ensure competition policy keeps pace with evolving global markets” (see our earlier blog). Ribera presented herself to Parliament fully aligned with her mission.

Changes to merger control rules

Ribera has signalled agreement with the Draghi Report’s suggestions for changing aspects of merger control enforcement. Specifically:

• Introduction of an innovation defence. Ribera expressed her commitment to reviewing the Horizontal Merger Guidelines, noting that “EU merger control must continue to evolve to capture contemporary needs and dynamics like globalisation, digitalisation, sustainability, innovation and resilience.” Whether the overhaul will include Draghi’s proposed innovation defence (and if so how) remains to be seen.
• Below-threshold mergers. Ribera did not commit to reforming the rulebook, but she acknowledged that more is needed to deal with killer acquisitions and below-threshold mergers (to address the enforcement gap left by the Illumina / Grail judgment). Whether this means using available tools (call in powers of national authorities) or creating new ones through a revision of the EUMR or its thresholds remains to be seen. Few expect the EUMR to be re-opened any time soon.

Policy forecast: Horizontal Merger Guidelines revision expected to start early in Ribera’s mandate. Even if not a substantial overhaul, it will be a lengthy process, and could see the introduction of an innovation defence and more focus on other efficiency related benefits.

State Aid – a swifter approval of ‘green’ aid

Energy is seen as a key driver of the EU’s competitiveness gap vis-à-vis other regions. The Draghi Report explicitly pointed to the EU’s dependency on gas imports and exposure to spot markets as causing a “cascading effect” of high prices across all sectors in the EU.

Ribera echoed these concerns, noting that “decarbonisation and competitiveness are inseparable objectives” and expressing plans to develop a new State aid framework that is faster and simpler. These rules will support the EU’s ambitions to accelerate the roll-out of renewable energy and decarbonisation. She also committed to supporting more State aid to foster (cross-border) innovation.

But disagreement between Member States in this area is likely, especially over how public funds should be spent, what sectors to target, whether this is the ‘right’ way to spend taxpayers’ money, and who gets what. It also remains to be seen how Ribera will address the risk of subsidy races between Member States. This constant headache for State aid policy is something Ribera is certainly aware of, noting that “Member States have varying fiscal capacities, making State aid control crucial for fair competition.”

Policy forecast: Significant developments in State aid are likely during Ribera’s mandate. This opens the door to financing opportunities for companies with respect to decarbonisation, clean energy transition, and innovative products required for a successful tech sector.

Competition and industrial policy - A level playing field for (green) EU champions within a protectionist mandate?

One of the key themes that will be driving the EC’s policy and priorities is promoting the competitiveness of EU businesses, against global counterparts, as a way of protecting Europe’s security and prosperity.

Ribera has emphasised the need to adapt merger control enforcement so that EU companies remain competitive “in global markets”, when “global players start to penetrate European markets.” She also pledged that DG COMP will do its best to ensure that EU companies benefit from a level playing field in the Single Market – and will not be disadvantaged by exposure to heavily subsidised third-country companies competing in the block.

‘European champions’ was also a hot topic during the Hearing, and Ribera was asked how she would balance the conflicting interests of creating European champions that can compete on the global stage whilst safeguarding EU consumers against harmful European monopolies. She noted that her aim is to reduce dependence on third countries while increasing jobs, wealth, security and competitiveness in Europe and stressed that “we do not want Trojan horses that challenge the existing European businesses that compete on a level playing field”.

Policy Forecast: Expect the EC to make full use of the legislative tools it already has (FSR and FDI) and potentially merger control reforms (discussed above) to ensure a level playing field. We may also see a more protectionist mandate – this will be a space to watch.

Stronger and faster competition enforcement

Ribera’s views give more insight into what shape ‘stronger and faster’ competition enforcement may take, specifically:

• Continued vigorous DMA and FSR enforcement. The EC has not been shy so far when it comes to applying the new powers granted by the FSR and DMA. We can expect Ribera to continue vigorous enforcement in both these areas to help the EC achieve its goals, with Ribera emphasising that she would “make full use” of the FSR. The new EC is also likely to be focused on making sure these new instruments are fully implemented – though Ribera noted at the Parliament’s Hearing that there may need to be a restructuring to ensure sufficient resources to do so.
• Updated Article 102 Guidance, with a potential focus on the internal market. At the Hearing, Ribera commented that the EC is currently reviewing the Article 102 guidance on exclusionary abuses. Given the focus of this EC on strengthening the internal EU market, we may also see parallel trade and export restrictions remaining in the spotlight - potentially with more Mondelēz-level fines.
• A potential new competition tool. A new competition tool to allow DG Comp to carry out market studies and market investigations is looking more likely than ever. Ribera commented that the proposal “merits an in-depth reflection” and again stressed that it will be necessary to assess whether a new competition tool, that could introduce structural remedies, is needed - and pointed to the DMA as an example of a tool that already has structural remedies at its disposal. While many in the Commission are in favor, this would require legislation that may be controversial for Member States.

Policy forecast: Expect to see continued vigorous enforcement not just of the DMA and FSR, but also under Articles 101 and 102. There may also be a new competition tool coming our way, although if that were too happen, it would likely take more time.

What’s next

The new Commission will be officially appointed by the European Council and is expected to start on 1 December 2024 for a five-year term.