As antitrust goes through a resurgence in the United States with a revived appeal to Justice Louis Brandeis, it is worth looking across the ocean to see what can be learned from competition law and policy in the European Union. Professor Pablo Ibáñez Colomo’s The New EU Competition Law provides a deep dive with much refreshing insight into the directions competition law can and should take. Professor Ibáñez Colomo is with the London School of Economics and Ordinary Member of the UK Competition Appeal Tribunal. His book is a masterwork for scholars and students of competition law and theory. It is an understatement to say I like it lots, but I certainly do and much more.
What makes EU Competition Law new is the implementation of Regulation 1/2003 which gives the European Commission, the executive arm of the Union, authority to coordinate with national competition authorities to share documents and information, paper and digital, to pursue claims of anticompetitive activities within the European market. This new development has facilitated several competition law decisions from the European Court of Justice (ECJ), the judicial arm of the Union. One important authority granted under Reg 1/2003 is the power to impose fines on companies found to be in violation of competition law. The new prong supplements traditional competition law established under sections 101 and 102 of the Treaty on the Functioning of the European Union (TFEU). Section 101 outlaws agreements and anticompetitive practices (analogous to Section One of the Sherman Act). Section 102 outlaws abusive behavior by companies with a dominant position (analogous to Section Two of the Sherman Act).
Although Ibáñez Colomo does not discuss Brexit, one implication of the UK leaving the EU is that European Competition Law does not apply within the UK; sections 101 and 102 and Reg 1/2003 would no longer apply to anticompetitive effects from the conduct of UK companies on the EU market. What effects count for these transborder transactions is not discussed but will likely be relevant for the ECJ just as extraterritoriality of antitrust law has been relevant for the US Supreme Court. See, e.g., Abitron Austria GmbH v. Hetronic International, Inc., 600 U.S. 412 (2023)(analyzing extraterritoriality in antitrust law case to decide extraterritoriality of trademark law).
Against this institutional background, Ibáñez Colomo documents several shifts in competition law enforcement arising from Reg 1/2003. The first shift starts from a deferential approach by the European Commission towards industry practice based on economic principles. The Commission’s deferential approach developed against a Brussels Consensus emphasizing liberal markets and minimal government intervention. Deference was consistent with a free trade, open borders perspective antithetical to interventions by national competition authorities favoring domestic markets. Ibáñez Colomo notes a shift, coincident with the passage of Reg 1/2003, towards more aggressive enforcement on a case-by-case approach. What structures the Commission’s intervention is the industry at issue in a case and the degree of concentration. Pharmaceuticals and communications receive particular scrutiny as highly concentrated markets affect consumer interests. While economic analysis is still relevant to understanding these markets, the Commission moved from a rigid economic examination of anticompetitive conduct to a more empirical based consideration of consumer harms. This shift has lessons from contemporary developments in United States antitrust law, a point Ibáñez Colomo does not raise, but to which I return later.
Two important policies inform this shift to more assertive enforcement by the Commission. The first is the use of competition law as a tool for regulating industry. Ibáñez Colomo astutely points out that competition law and direct industry regulation complement each other: Competition law polices business practices of companies in regulated industries; direct industry regulation target practices such as implementation of technology, organization of firms, and pricing. The European Commission, independent from other legal institutions such as administrative agencies, works to promote the goals of industry regulation. Examples from the energy and telecommunications sectors illustrate how the Commission punishes anticompetitive conduct. In German Electricity Wholesale Company, the Commission obtained a commitment from the three dominant German wholesale electricity providers to sell electricity generation capacity to a third party, injecting competition in the concentrated market. The Commission examined market structure in Deutsche Telekom to determine the availability of market competition in the German telephony market. This attention to market structure and firm competition parallels current debates in the United States about “breaking up” large tech companies.
The treatment of intellectual property is the second policy space where the Commission has intervened to ensure competition. Countering the position that interfering with the commercialization of intellectual property undermines innovation, Ibáñez Colomo points out that intellectual property rights attach to nonrival commodities, such as music or technical know-how that can readily be shared. Market competition may underproduce nonrival commodities but monopolies limit dissemination of the commodities and cumulative innovation. Consequently, the Commission has a role in policing markets shaped by intellectual property rights. Ibáñez Colomo documents these interventions, such as controlling concentration in the pharmaceutical industry, promoting access to copyrighted materials on cable systems, allowing competitors to use data and databases for identifying customers and developing pricing schemes for drug distribution, and more recently targeting accessing patented technologies embedded in smartphones. As with regulated industries, the Commission has developed its role as complementing another legal regime, the domain of intellectual property, with its goal of promoting innovation. Competition law also promotes innovation, the Commission’s interventions prove, and does not undermine that goal.
What are the broader lessons from this expansion of the Commission’s decisions supported by these two shifts in policies? First is the change in institutional orientation through the enactment of Regulation 1/2003. Ibáñez Colomo argues that this enactment expands the tools available to the Commission under TFEU 101 and 102. Specifically, Reg 1/2003 allows the Commission to award fines and to act proactively. While TFEU 101 and 102 required evidence of actual anticompetitive conduct, the Commission now acts proactively, permitting actions against concentrated markets and design of technologies and contracts that block competition.
The latter is the most salient for Ibáñez Colomo as illustrated by the Commission’s successful claims against Google in 2017 and 2022. In the first case, the Commission successfully challenged Google’s practices in steering customers through their search results and advertising. A fine of several million euros was imposed on Google. In the second intervention, at issue was Google’s design of its Android operating system and the integration of applications that customers were forced to purchase as a condition for using the operating system. While this case is currently on appeal, the Commission’s intervention demonstrates its power to design tech products to combat practices that harm competition and customers.
Accompanying this change in institutional orientation is a shift in the use of economics in guiding the Commission’s investigations. Ibáñez Colomo characterizes this shift as one from focusing solely on economic efficiency to including questions of redistribution. The two Google cases illustrate this change in perspective. US courts have deferred to design choices by technology companies partly as a matter of expertise, partly as a concern for interfering with efficient choices of the company. The Commission, however, was concerned with the effects on consumer choices through steering and through limiting choices in the design of the Android operating system. Consequently, the new EU competition law has led to more scrutiny of the technology sector than under United States antitrust law.
Perhaps the orientation of the FTC has itself shifted, as cases against Facebook, Amazon, Apple and Google have been filed. With allegations of consumer harm, skepticism towards efficiency defenses, and the possibility of restructuring corporate organizations, the FTC has learned lessons from the new EU competition law. We have yet to see whether these developments will flourish. Professor Ibáñez Colomo’s excellent book helps us to understand the reasons for these shifts and to witness how one jurisdiction has managed these reforms.
