The European Antitrust Agenda: CMA Signals Strong Enforcement Ahead of Apple, Google Digital Markets Rulings; Regulators to Eye Meta/Scale AI for Extra Scrutiny
Welcome to The European Antitrust Agenda, written by Europe Executive Editor Javier Espinoza and Senior Correspondents Charley Connor, Vesela Gladicheva and Lydia O’Neal. This week, the UK’s Competition and Markets Authority (CMA) readies for its next raft of Big Tech enforcement and a European Commission official raises a flag at Meta’s latest AI investment.
CMA Stresses Tough Tech Enforcement. Robust competition enforcement has major benefits for innovation, productivity and consumer welfare, a senior CMA official said last week, as the agency prepares to publish key decisions on whether to designate Apple (AAPL) and Google (GOOG) as having “strategic market status” under the country’s new digital markets regime.
The remark comes amid a broader push by the UK government to promote growth and a regulatory shift instructing agencies like the CMA to prioritize innovation and investment through proportionate enforcement.
“The work of competition authorities should be seen as a crucial element of governments’ toolkits to bolster productivity and dynamism within the economy and hence foster long-term prosperity,” said Jenny Haydock, Deputy Chief Economic Adviser at the CMA, during a conference in London organized by the Centre for Competition Policy. Haydock has been involved in developing the UK’s Digital Markets, Competition and Consumers Act (DMCCA) since its inception.
The DMCCA took effect in January, and the CMA is preparing to publish next month draft decisions in its probes into Apple and Google. The drafts will be subject to public consultation, with final decisions expected in October.
If either firm is designated as having “strategic market status” under the DMCCA, the CMA will also publish roadmaps outlining the areas it plans to prioritize for future conduct requirements for Apple and Google. The CMA plans to impose initial conduct requirements on both firms in October, while it continues work on more complex interventions.
The agency also plans to open an SMS probe into a third area of digital activity by the end of June. Amazon (AMZN), Meta (META) or Microsoft (MSFT) are considered likely targets.
Haydock’s speech resembled a pitch to the government to make the point that the CMA should be allowed to enforce antitrust rules robustly. Addressing an audience of academics and economists, Haydock stressed that, for the CMA, the question isn’t about being less or more interventionist, as it has been claimed. Rather, it’s about “trying to improve the accuracy of the CMA’s work and therefore the positive impact.”
Meta/Scale AI at risk of extra scrutiny. The European Commission “will look twice” at Meta’s (META) $14.8 billion investment in Scale AI to see whether it falls under EU merger rules, an official said.
The social media giant’s 49% stake in the artificial intelligence startup is “perfectly in line with what we have seen in other cases” where Big Tech firms form close relationships with smaller AI players in ways that dodge merger rules, said Marc Zedler, deputy head of the Directorate-General for Competition’s merger unit dealing with information technology, telecommunications and media, during a conference in Dublin last week.
Given strong interest in AI and specifically large language models at the commission and among member states, deals with an LLM element are generally more likely to receive scrutiny, he said. Even when these transactions fall outside typical EU merger thresholds, there’s a greater chance the commission would encourage member states to use their special “call-in” powers, he said.
“Even if we think the case might not be particularly problematic from a substantive point of view, I think there is an interest in learning about these industries and learning about these cases by reviewing cases that seem to fall into that area,” Zedler said. He added, “if there are cases involving large language models, there is an interest to learn about these markets, and therefore probably they are more likely to be reviewed, to be called in, to be examined.”
What Else Is Happening
EC seeks Mars/Kellanova fix. Mars and Kellanova (K) met last week with officials from the European Commission who aired their concerns about the proposed $36 billion transaction, The Capitol Forum was first to report.
Qualcomm/Alphawave to file in Germany. Qualcomm (QCOM) will seek approval from Germany’s Bundeskartellamt for its $2.4 billion proposed purchase of British semiconductor company Alphawave (LON: AWE), according to the companies’ merger announcement. They’ll also file for foreign direct investment clearance in the UK and for merger control approval in the U.S., South Korea and Canada, though there’s no mention of a UK merger control filing.
Germany blocks slaughterhouse deal. The Bundeskartellamt on Thursday blocked Tönnies from purchasing a group of slaughterhouses from rival Vion, citing dominance concerns in cattle and pork processing. A Tönnies spokesperson said the company is “deeply disappointed” in the prohibition and is reviewing its legal options. “It represents a significant setback for farmers in Southern Germany, who have been waiting for months for a clear and sustainable solution for the future,” the spokesperson said.
Competition expert urges EC to open in-depth probe into UMG/Downtown. Amelia Fletcher, a former CMA chief economist and a co-founder of an independent label, has sent a letter to competition chief Teresa Ribera outlining her concerns about Universal Music Group’s (UMG) proposed $775 million acquisition of Downtown Music Holdings.
French issues first no-poach fines. The Autorité de la concurrence on Thursday fined engineering and technology consultancies Alten, Expleo, and Bertrandt a combined €29.5 million for agreeing not to hire each other’s staff, while fourth participant Ausy escaped penalties as the leniency applicant. It’s the French agency’s first foray into labor market enforcement.
CMA seeks views on Google Privacy Sandbox. The UK regulator said on Friday the tech giant’s 2022 commitments are no longer necessary in light of its decision not to block third-party cookies in its Chrome browser, which would have favored its online advertising business.
Big Tech firms challenge DSA fees and designation. Lawyers for Meta and ByteDance argued in the EU’s General Court last week that the commission had overestimated the Digital Services Act (DSA) fees they owe. Amazon (AMZN) lawyers also asked to roll back its designation as a “very large online platform” subject to the law’s requirements.
New Competition Tool off the table, for now. European Commission Legal Service Director Fernando Castillo de la Torre said Thursday that there are no current plans to revive the shelved New Competition Tool, which would allow the enforcer to conduct sweeping market investigations where there’s no evidence of antitrust violations. The mechanism has grown popular on the national level, however. In Norway, competition officials last week defended a similar national tool after a legal op-ed raised independence concerns.
Events
June 19 at 10:30 a.m. CET: Global Competition Law Centre’s “Future Directions of EU Competition Enforcement” conference in Bruges.
June 20, June 23, June 30, July 1, July 2 and July 3 at 9:00 a.m. CET: Microsoft (MSFT), Amazon, Apple, Alphabet, ByteDance and Meta present their DMA compliance efforts at workshops hosted by the commission in Brussels.
Ribera’s Weekly Calendar
To view European Commissioner for Competition Teresa Ribera’s schedule for the week, click here.
