Summary of Key Developments — November/December 2024
The "European Antitrust Bimonthly Bulletin" breaks down the major antitrust developments in Europe during the past two months into concise and actionable takeaways. For any questions or suggestions please contact Jindrich Kloub, Deirdre Carroll, or any other attorney in the European Antitrust Team listed at the end of the Bulletin.
European Commission (EC) Unconditionally Approves Nvidia's Acquisition of Run:ai
On December 20, 2024, the EC unconditionally approved Nvidia's acquisition of Run:ai. Run:ai develops software that helps customers schedule multiple workloads on clusters of NVIDIA datacenter Graphic Processing Units (GPU). Pre-transaction, Run:ai only supported NVIDIA GPUs.
The transaction did not reach the merger notification thresholds under the EU Merger Regulation (EUMR). The transaction was notified in Italy upon request of the Italian Competition Authority, which used its below-threshold call-in powers. Italy then submitted a referral request to the EC under Article 22 of the EUMR, which permits transferring a merger case to the EC, which does not meet EUMR thresholds but affects trade within the Single Market and threatens to significantly affect competition within the territory of the Member State(s) making the request. The case was the first Article 22 referral post-Illumina, where the European Court of Justice held that national authorities can only refer a transaction where they have jurisdiction themselves and strongly criticized the use of below-threshold reviews by the EC, given the attendant legal uncertainty. No other national agency joined the Italian referral request. The EC concluded that the acquisition does not raise any competition concerns.
Companies should know that European competition authorities are extremely interested in investments and acquisitions within the AI value chain. The EC continues to push for additional EU Member States to adopt below-threshold call-in powers to enable referrals to the EC, but this approach has also come under heavy criticism and may ultimately be challenged. Wilson Sonsini represented Run:ai in the transaction. We have a unique experience and understanding of such cases and can assist in developing and executing successful merger strategies.
UK Competition and Markets Authority (CMA) Approves Vodafone/Three Telecoms Merger
On December 5, 2024, the UK’s CMA conditionally approved the merger of UK telecommunications providers Vodafone and CK Hutchison’s Three, subject to commitments. As part of the commitments, the merged group will invest £11 billion (approx. US$14 billion) into deploying a combined 5G network in the UK over the next eight years, cap selected mobile tariffs and data plans for retail customers for three years and offer pre-set prices and contract terms for wholesale services for three years. The CMA will be responsible for monitoring the commitments regarding consumer tariffs and wholesale terms, while the CMA and UK communications regulator Ofcom will jointly monitor compliance with the network investment commitment.
Companies should know that the CMA recently promised more openness towards behavioral remedies instead of a strict reliance on structural remedies in merger investigations. Here, this new flexibility (including accepting a novel investment remedy) enabled a 4-to-3 merger which the CMA and other European competition authorities have traditionally disapproved of in the telecommunications sector. This could signal a similarly more permissive approach in other sectors.
EU Court Confirms Fines for Banks in Government Bonds Cartel
On November 6, 2024, the EU's court of first instance, the General Court (GC), confirmed a 2021 decision of the EC fining several banks for entering into agreements on trading and pricing strategies and exchanging commercially sensitive information on the secondary market for suprasovereign, sovereign, and agency bonds denominated in dollars (SSA bonds). The exchanges of information took place between varying participants in the period between January 2010 and March 2015. Among several participants, the EC fined Crédit Agricole €3.9 million (approx. US$4.1 million) and Credit Suisse €11.9 million (approx. US$12.5 million).
Both Crédit Agricole and Credit Suisse challenged their fines, claiming that the EC had not proven an anticompetitive agreement and that it had erred in calculating the fines. The GC dismissed Credit Suisse’s challenge in its entirety. The GC annulled the EC’s decision relating to Crédit Agricole insofar as it held that Crédit Agricole’s participation in the SSA bond cartel had not been proven for the very first day of its alleged infringement. However, the GC did not lower Credit Agricole’s fine overall for participating in the SSA bond cartel.
Companies should be aware that sharing competitively sensitive information carries a high risk in the EU and may be pursued as a type of cartel conduct leading to high fines and likely follow-on damage claims.
EC Fines Fashion House Pierre Cardin and Licensee Ahlers for Restricting Cross-Border Sales
On November 28, 2024, the EC fined fashion house Pierre Cardin and its largest licensee Ahlers a total of €5.7 million (approx. US$6 million) for restricting cross-border sales of Pierre Cardin-branded clothing, as well as sales of such products to specific customers (territorial and customer restrictions). The EC alleged that between 2008 and 2021, Pierre Cardin and Ahlers engaged in agreements and concerted practices that prevented other licensees and their customers from selling Pierre Cardin-branded clothing i) outside their licensed territories and/or ii) to low-price retailers.
Companies should review their distribution policies to ensure they are up to date and effective, especially if they involve elements of exclusivity or territorial/customer restrictions. The EC has renewed its focus on distribution agreements that may prevent cross-border trade within the EU.
French Competition Agency (FCA) Fines Appliance Firms €611 Million for Resale Price Maintenance
On December 19, 2024, the FCA fined 12 companies €611 million (approx. US$629 million) for allegedly engaging in resale price maintenance practices in the household appliance sector between 2007 and 2014. These practices aimed to maintain high retail prices and suppress competition, particularly from emerging online distributors, by enforcing pricing instructions and penalizing non-compliant distributors. The investigation was initiated through dawn raids and according to the FCA revealed serious infringements that eliminated intra-brand competition and harmed consumers.
Sanctioned companies include 10 major household appliance manufacturers, as well as two distributors. All but two companies had settled with the FCA. Fining distributors alongside manufacturers occurs only rarely in resale price maintenance cases.
Companies should review their distribution policies, especially if they involve elements of exclusivity, to ensure they are up to date and effective. Companies with selective distribution models should carefully assess whether the restrictions they impose on their authorized retailers are proportionate.
EC Opens Formal Investigation Against Corning over Exclusivity Agreements and Consults on Commitments Offered by Corning
On November 6, 2024, the EC announced that it had opened a formal investigation into U.S. glass producer Corning. Corning produces alkali-aluminosilicate glass (Alkali-AS Glass), which is particularly break-resistant and used as a cover for mobile phones and tablets. The EC is concerned that Corning may have struck exclusive supply agreements with mobile phone manufacturers (OEMs) and with companies that process raw glass (finishers).
The EC believes that agreements between Corning and OEMs may contain i) exclusive sourcing requirements covering all or nearly all Alkali-AS Glass demand of the OEMs, ii) exclusivity rebates for OEMs on the condition they adhere to the exclusive sourcing requirements, and iii) so-called English Clauses which require OEMs to report competitive offers to Corning and only allow the OEMs to accept them if Corning fails to match them. The EC believes that Corning’s agreements with finishers may contain i) exclusive purchasing requirements obligating finishers to purchase all or nearly all of their Alkali-AS Glass demand from Corning, and ii) so-called No Challenge Clauses preventing finishers from challenging Corning’s patents.
On November 25, 2024, the EC sought feedback on commitments offered by Corning to close the investigation. Among other commitments, Corning offered to waive all exclusive dealing clauses in contracts with OEMs for Alkali-AS Glass on a worldwide basis, and not to require OEMs or their supply chain to purchase Alkali-AS Glass from Corning for devices intended to be used in the European Economic Area and not to offer any price advantages for such requirements. In addition, any patent claim would only be based on patent infringement, and not on breach of contract.
Companies should review their distribution policies, especially if they involve elements of exclusivity, to ensure they are up to date and effective.
EC Fines Meta in Facebook Marketplace Investigation
On November 14, 2024, the EC announced that it had fined Meta €797.7 million (approx. US$836.8 million) over conduct related to its online classified ads service, Facebook Marketplace. The EC alleged that Meta had abused its dominant position in the European market for personal social networks as well as in national markets for online display advertising on social media through two different types of conduct.
On the one hand, Meta allegedly tied Facebook Marketplace to its personal social network Facebook, giving it an unfair advantage and foreclosing competitors of Facebook Marketplace. On the other hand, Meta allegedly imposed unfair trading conditions on other online classified ads service providers who advertise on Meta's platforms, allowing Meta to use the ads-related data for the sole benefit of Facebook Marketplace.
Companies should know that while all companies—including companies dominant on a specific market—may self-preference, they may not discriminate and depart from competition on the merits. Following the EC’s Apple App Store fining decision, this case points to an increased willingness by the EC to pursue exploitative abuse cases.
UK CMA Provisionally Accepts Commitments to End Vifor Drug Disparagement Investigation
On December 10, 2024, the UK’s CMA provisionally accepted commitments offered by pharma company Vifor to end the investigation into Vifor’s alleged disparagement of Pharmacosmos’s iron medicine Monofer, the closest competitor to Vifor’s intravenous iron medicine Ferinject. Vifor has offered to pay the UK National Health Service £23 million (approx. US$29.1 million) and to publish factual clarifications about Monofer’s safety to healthcare professionals in the UK, including in medical journals and on its website, to allow Monofer’s supplier Pharmacosmos to use these materials when contacting healthcare professionals, and to limit its communications about Monofer’s safety. Vifor will implement safeguards to ensure compliance, including reviews of all external promotional and medical communications, as well as annual internal training of staff and a system of certification of compliance.
The CMA is inviting comments on Vifor’s proposed commitments until January 17, 2025, and may accept Vifor’s commitments subject to the comments received. The EC accepted an equivalent suite of behavioral remedies in July 2024 to close its own investigation into Vifor’s conduct, as described in our prior European Antitrust Bimonthly Bulletin.
Companies should know that competition authorities in Europe are actively focusing on competition in the healthcare sector and may pursue innovative theories of harm such as disparagement of rivals.
Norway Ends Antitrust Commitments for Foodora
On December 10, 2024, the Norwegian Competition Agency (NCA) announced that binding remedies imposed on digital food ordering platform Foodora would not be extended past 2025. The NCA believed that Foodora may have abused a dominant position by striking exclusivity agreements with restaurants, and prohibited Foodora from using exclusivity agreements in 2022. According to the NCA, there are now two large players and several smaller players active in the digital food ordering platform market, which justifies ending the binding remedies. The remedies will end on January 17, 2024. The NCA cautioned that it will continue to monitor the market.
Companies should review their distribution policies, especially if they involve elements of exclusivity, to ensure they are up to date and effective.
EC Examines Booking's Compliance with DMA Provisions
On November 14, 2024, the EC announced that following Booking’s designation in May 2024 as a gatekeeper under the DMA for its online travel intermediation service, Booking is now subject to the conduct requirements of the DMA, including prohibitions on self-preferencing and parity clauses, and is obligated to share certain data with business users such as hotels.
Our European team has extensive experience with the DMA and direct insights into the EC’s enforcement practice. We can support companies with DMA compliance or to capitalize on the opportunities created by the DMA for business users and other stakeholders.
EC Provides Preliminary Findings, Initiates Public Consultation in Apple Interoperability Probes
On December 18, 2024, the EC announced preliminary findings and initiated public consultations in its two proceedings to specify Apple's interoperability obligations under the DMA. Under the DMA, Apple is obligated to create free and effective interoperability between its DMA-designated operating systems iOS and iPadOS and third-party developers and businesses, while the EC may act to further specify certain related obligations and standards.
The first consultation concerns iOS connectivity features and functionalities that are most relevant for connected devices, including smartwatches, headphones, and virtual reality headsets. The EC’s proposed measures would obligate Apple to provide third-party developers with effective interoperability for all functions used by Apple’s connected devices, including iOS notifications, AirDrop, and AirPlay. The second consultation concerns the process that Apple uses to address interoperability requests from third-party developers for iOS and iPadOS. Under the EC’s proposed measures, Apple would have to provide developers with better information, justifications for any technical decisions on how to create interoperability, a clear timeline, and a dispute resolution mechanism.
Both consultations are open for responses until January 9, 2025. The EC is expected to conclude these specification proceedings within six months from their opening in September 2024. The proceedings do not prevent the EC from adopting a decision that Apple is non-compliant with the DMA, including the possibility of fines or periodic penalty payments.
Our European team has extensive experience with the DMA and direct insights into the EC’s enforcement practice. We can support companies with DMA compliance or to capitalize on the opportunities created by the DMA for business users and other stakeholders.
Treatment of AI Partnerships in Europe
On November 19, 2024, the UK’s CMA announced that Alphabet’s partnership with Anthropic did not qualify for a merger investigation since it did not amount to a merger. The CMA found that Alphabet would not be able to exercise material influence over Anthropic following the transaction, even when taking into account the entire commercial relationship between the two. In addition, the UK turnover test was not met with Anthropic’s UK turnover not exceeding £70 million. The CMA left open whether the share of supply test may have been met, given it did not need to take a decision as the arrangement did not qualify for review.
On November 27, 2024, Andreas Mundt, President of Germany’s Federal Cartel Office (FCO), stated in an interview that the FCO will ask German lawmakers to change German merger control thresholds to include a company’s “possible or future” activities in Germany and to also lower the transaction value criteria from €400 million (US$421 million) to €300 million (US$315 million), with an eye towards catching AI partnerships. Germany intends to update its competition rules in 2025.
On November 29, 2024, Germany’s FCO announced that while Microsoft's acquisition of Inflection AI’s workforce and intellectual property constituted a de facto merger, it was not subject to German merger control due to Inflection AI's limited operations in Germany. Despite exceeding the €400 million (US$422 million) transaction value threshold, the insufficient presence of Pi chatbot users in Germany led to the FCO closing its merger investigation.
Companies should know that competition authorities are extremely interested in investments in and partnerships with companies developing AI models. Companies should carefully consider how they communicate about partnerships and their impacts on competition. From a merger control perspective, European and UK agencies will carefully assess whether there is a change of control or material influence at play, with the CMA and the FCO able to take jurisdiction over minority stakes in certain circumstances.
Teresa Ribeira Confirmed as New EC Competition Commissioner
On November 27, 2024, the European Parliament approved the EU’s new College of Commissioners, including the new Competition Commissioner Teresa Ribera. EC President Ursula von der Leyen’s mission letter tasked Commissioner Ribera with vigorously enforcing existing rulebooks such as the Digital Markets Act (DMA) and the Foreign Subsidies Regulation (FSR), addressing risks from killer acquisitions of smaller, innovative companies, and conducting a review of the existing Horizontal Merger Control Guidelines.
On December 10, 2024, Commissioner Ribera announced plans to update the Horizontal Merger Guidelines to reflect a fresh approach to mergers between direct competitors, giving adequate weight to innovation, efficiency, and investment intensity in strategic sectors. She emphasized the importance of gathering input from the competition community and assessing whether stricter measures or updated guidelines are necessary. She also highlighted the challenge of addressing killer acquisitions that escape regulatory scrutiny due to notification thresholds, with the EC exploring new methods in collaboration with national authorities.
Companies should know that despite the change in the Commission, the EC is expected to continue vigorous enforcement of the competition rulebook, including the DMA and the FSR. It remains to be seen what changes, if any, will result from the review of Horizontal Merger Control Guidelines.
EC Withdraws Article 22 Merger Referral Guidance
On November 29, 2024, the EC announced that it had withdrawn its 2021 Guidance on applying the referral mechanism set out in Article 22 of the EU Merger Regulation (EUMR) to transactions that did not meet merger thresholds (the Guidance). The recent judgment of the EU’s Court of Justice (ECJ) in the Illumina/Grail case had invalidated the Guidance. The EC stated it would continue to accept referrals as clarified in the ECJ’s Illumina/Grail judgment and that this decision did not prejudice future EC initiatives relating to transactions involving smaller companies that fall below jurisdictional thresholds.
Companies should know that the EC is highly motivated to find ways to review so-called killer acquisitions of smaller innovative companies even when such transactions do not reach the merger review thresholds. Some EU Member States already have below-threshold merger review call-in powers, while the EC is actively encouraging other Member States to introduce such call-in powers.
Sarah Cardell Speech on UK Merger Review Process Concerns
On November 21, 2024, the UK CMA’s chief executive Sarah Cardell gave a speech promising proportionality, improved predictability, process, and pace in merger reviews, and more flexibility around when behavioral remedies might be appropriate in merger investigations, and to try to move remedy discussions as quickly as possible in Phase II investigations. The agency will launch a review in 2025, focused on remedies. On October 14, 2024, the UK’s Prime Minister had highlighted the need for the CMA to take growth more seriously.
Companies should know that the CMA has promised to improve the pace of merger reviews and to show greater openness to behavioral remedies in merger investigations. The novel investment remedy and acceptance of a behavioral commitment in Vodafone/Three already illustrate this shift in approach.
UK Digital Markets, Competition, and Consumers (DMCC) Act to Apply from 2025
On November 25, 2024, the UK Government published regulations to bring the DMCC into force on January 1, 2025. The DMCC creates a new competition regime for digital markets, and makes significant changes to the UK’s existing mergers, antitrust investigations, and consumer law regimes (including revising the merger control thresholds).
On December 19, 2024, the CMA published its final guidance on the new digital markets competition regime. The guidance outlines how the CMA will regulate large tech platforms with Strategic Market Status using new tools, emphasizing a balance between detail and flexibility. It also outlines how the CMA will collaborate with sector regulators like the Financial Conduct Authority and communications regulator Ofcom to ensure a coordinated approach under the new regime.
