Out-Law News | 08 Oct 2019 | 2:33 pm | 4 min. read
The Financial Times reported recently that the European Commission is set to impose an interim order against chipsets manufacturer Broadcom to address alleged anti-competitive practices.
The Commission opened a formal antitrust investigation in June to "assess whether Broadcom may be restricting competition through exclusivity practices" in the TV and modem chipsets markets.
At the time, the Commission issued a statement of objections in which it outlined its plans to impose interim measures against Broadcom. The Commission said that it had preliminarily concluded at that stage that "an interim measures decision may be indispensable in this case, to ensure the effectiveness of any final decision taken by the Commission at a later date".
The Financial Times said the Commission is set to confirm that position later this month, with Broadcom likely to challenge that decision on appeal to the EU courts.
According to Angelique Bret of Pinsent Masons, the law firm behind Out-Law, this case will be the European Commission’s first attempted antitrust interim measures decision since the IMS Health case in 2001. In that case, the Commission withdrew the measures after its decision was challenged before the EU courts. Interim measures can be imposed "in cases of urgency due to the risk of serious and irreparable damage to competition" where a competition law infringement is apparent. Bret said this test is challenging to satisfy other than in clear-cut cases.
"Competition investigations are inevitably complex and complainants often have to wait months or years for a decision from the authorities," Bret said. "Interim measures may be particularly well-suited for addressing imminent competition concerns in fast-changing markets in the technology sector. We expect that this tool will be used more frequently, particularly if the interim measures on Broadcom are imposed and survive any subsequent appeals."
Bret said that the UK's main competition authority also has the ability to impose interim measures in antitrust cases but that, so far, these have been used rarely and unsuccessfully.
In 2006, the Office of Fair Trading, which has subsequently been replaced by the Competition and Markets Authority (CMA), withdrew interim measures it imposed on London Metal Exchange after its decision was appealed to the Competition Appeal Tribunal.
In 2014, the CMA issued detailed guidance on the use of its interim measures powers and can now use these powers to prevent imminent "damage" to a person or class of persons that is "significant" rather than "serious, irreparable".
Under the new threshold, the CMA refused one interim measures application in 2015 which was sought by Worldpay. It was reported that the CMA might impose interim measures against ATG Media following complaints by BidonThis. However, ATG Media offered binding commitments in 2017 which rendered a final interim measures decision unnecessary.
Greater use of interim measures was recommended in a government-commissioned review which published its report earlier this year.
The so-called Furman review, which explored how the UK's competition regime could be updated to account for developments in digital markets, said that existing antitrust enforcement "can often be slow, cumbersome, and unpredictable" and that this "can be especially problematic in the fast-moving digital sector". It pointed to the lowering of the threshold for their use in 2014 and said the CMA's powers are "already sufficient in themselves", but it recommended a streamlining of the regulator's "procedures and administrative rules" to make interim measures easier to apply in practice.
"Before it can impose an interim measure, the CMA is rightly required to disclose files relating to the proposed direction to the parties affected," the Furman review said. "This is so defendants can see relevant evidence justifying the decision and any potentially exculpatory material. An ‘access to file’ process is used, with an agreed set of relevant documents shared between the CMA and companies involved in the case."
"The CMA has identified the potential to make more use of interim measures through confining file access to documents clearly relevant to the interim measure. This process improvement has the potential to make interim measures more practicable, without compromising companies’ legitimate procedural expectations. However, if it proves legally contentious for the CMA to narrow access in this way, it is possible that the CMA’s rules will have to change. This would likely require secondary legislation. In addition, as considered in the following section, the standard of appeal against interim measures should be changed in parallel to any change to that for final decisions, to maintain consistency," it said.
In a separate letter setting out recommendations for reform published early in 2019, the CMA outlined a range of proposals on how it could "intervene earlier and more robustly to tackle consumer detriment" in digital markets that might otherwise develop to be "irreversible".
The CMA said businesses should be placed under a statutory duty to act in consumers' interests and that its existing powers to impose interim measures in "backward-looking" enforcement cases should be extended to the "forward-looking" 'markets regime', as well as in cases of breaches of consumer protection law.
"Interim measures are particularly important in fast-moving markets," the CMA said. "There is a risk that, by the time appeal routes are exhausted, the harm will have become entrenched or the market will have 'tipped', rendering the competition authority’s decision, even if upheld, ineffective."
"The CMA needs to be able to act swiftly, on an interim basis, to prevent consumer detriment in competition enforcement cases, pending final determination of its investigations. With a consumer interest duty in mind, the CMA would be likely to intervene more frequently and directly on an interim basis to protect the consumer interest. And if such interventions were challenged, the reviewing court would be subject to the same duty, implying a need to give particular weight to the protection of the consumer interest on an interim basis," it said.
"The power to order legally-binding requirements to remedy consumer detriment, and the power to do so by way of interim measures pending full investigation – at both a firm and a market-wide level – would provide a stronger incentive for these firms to listen, engage and take steps to address the CMA’s concerns in advance of formal work, than currently," the CMA said.
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