Published on Feb 20, 2024
Bing, iMessage sidestep DMA. The European Commission said last Tuesday that Apple’s (AAPL) messaging service and Microsoft’s (MSFT) Bing search engine aren’t subject to the Digital Markets Act (DMA), the bloc’s sweeping new law to rein in the power of tech giants.
In addition to letting Microsoft off the hook for Bing, the EC said Tuesday that the software behemoth wouldn’t have to adapt its advertising service and Edge browser to follow the DMA’s rules.
The DMA will require interoperability for messaging apps and bar self-preferencing on platforms such as search. Six designated “gatekeepers”—Apple, Microsoft, Google parent Alphabet (GOOG), TikTok parent ByteDance, Facebook parent Meta (META) and Amazon (AMZN)—are required to make many of their services compliant with the law by March 7.
When the EC unveiled the gatekeepers in September, it also announced investigations of whether iMessage and those three Microsoft offerings should be included in the services required to follow the DMA. Those services weren’t automatically subject to the law because they didn’t meet the thresholds for gatekeeper designation, which are based on active user and revenue figures. The EC also chose not to apply the DMA to Microsoft’s Outlook, Google’s Gmail and Samsung’s browser, and allowed the last firm to escape gatekeeper status entirely, even though some of its services did meet the thresholds.
Bing commands only about 3% of the search engine market—a distant second to Google’s share of over 91%, according to web traffic analysis site StatCounter.
But critics, including U.S. lawmakers, have said Apple’s iMessage possess considerable market power and taken issue with the company’s refusal to allow the app to operate with other texting services. Apple’s effort to wall off iMessage from other messaging services has also reportedly caught the attention of DOJ’s antitrust division as it prepares for its sprawling antitrust case against the company. The scrutiny followed a cat-and-mouse game between Apple and the interoperable messaging app Beeper Mini, which found alternative ways to connect non-Apple users with iMessage after Apple changed its system to exclude the newcomer.
EC approves Orange/MasMovil. The competition enforcer said today it has cleared the wireless joint venture on the condition that the companies divest MasMovil’s mobile spectrum to Romanian telecom firm Digi Communications and allow Digi to use the JV’s network. The Capitol Forum previously reported the EC’s approval conditioned on the sale of spectrum to Digi was forthcoming.
Major UK housebuilding merger to face CMA review, potential remedies. The UK’s largest homebuilder, Barratt Developments (LON: BDEV), will seek Competition and Markets Authority (CMA) clearance before completing its 2.52 billion pound ($3.18 billion) proposed acquisition of the sixth-largest player, Redrow (LON: RDW). The merger agreement notes the possibility of remedies at phase 1 “which are reasonably satisfactory to Barratt.” The companies don’t entirely preclude a phase 2 probe but expect to close the deal in the second half of 2024, which wouldn’t leave much time for an in-depth CMA investigation.
The transaction will undoubtedly pique the enforcer’s interest given it’s in the middle of studying the housebuilding sector following a government request. The agency’s most recent update in August acknowledged complaints from smaller companies about increasing concentration. In particular, it noted concerns “regarding the market power that large housebuilders have which allows them greater control over build out rates and prices.” A final report is due by next Tuesday.
Novo Holdings/Catalent deal expected to trigger CMA, EC interest. Novo Holdings (NVO) plans to submit a briefing paper to the CMA see if the UK agency wants to review its proposed $16.5 billion acquisition of Catalent (CTLT). Novo is buying the drug development and manufacturing company primarily to spin off three Catalent late-stage production facilities in Indiana, Italy and Belgium to its subsidiary Novo Nordisk, which wants the factories to expand production of Wegovy.
The UK government licensed Wegovy as the only weight loss drug to use the active ingredient semaglutide; the National Health Service started prescribing it last September. Catalent has four production sites in the UK that aren’t part of the proposed Novo Nordisk plant acquisitions.
The deal is also expected to meet EU merger control thresholds for a review, and the EC will likely want to examine how easily Catalent’s customers could switch to new suppliers once Novo Nordisk takes over the three factories.
CMA studies baby formula market. The CMA today launched a market study into the infant formula sector over concerns about prices being at “historically high levels.” Nestle (SWX: NESN) and Danone (EPA: BN) together control 85% of the market. Danone last month cut prices on its Aptamil brand by 7% but claimed it was unrelated to the London-based watchdog’s scrutiny. The study could end with a market investigation or recommendations to government, including price control mechanisms. The agency’s deadline is February 19, 2025.
Thermo Fisher/Olink triggers in-depth German review. Germany’s competition authority, the Bundeskartellamt, yesterday opened an in-depth investigation into Thermo Fisher Scientific’s (TMO) proposed $3.1 billion proposed acquisition of Swedish proteomics company Olink (OLK). Its deadline for a decision is June 19.
An agency spokesperson said the phase 2 probe is based on “the matter’s complexity, intricate international investigations and the fact that this is an important field with promising future potential which affects not only, but particularly medical research.” The CMA is also investigating the deal, although it hasn’t yet formally started a phase 1 review.
UK court approves class action against Meta. The Competition Appeal Tribunal (CAT) Thursday greenlighted a 3 billion pound ($3.7 billion) lawsuit against Facebook parent Meta Platforms (META), after refusing the original claim last year.
The decision follows amendments to the case and a hearing in early January to determine whether the class action should proceed. The lawsuit alleges that Facebook abused its dominant position by imposing unfair terms and prices on users between 2016 and 2019. The claim is being made on behalf of some 45 million people in Britain and led by Liza Lovdahl Gormsen, director of the Competition Law Forum, a UK policy group.
The trial is scheduled to take place in the first half of 2026 at the latest, the court said.
A Meta spokesperson said that Gormsen’s arguments “remain entirely without merit and we will vigorously defend against them.”
Market fragmentation may be affecting telcos’ ability to invest, EU says. The EC has said that the bloc’s fragmentated telecom markets could affect operators’ investments in cross-border services that will be key to rolling out Internet of Things services, such as Internet-connected refrigerators, toasters and lightbulbs.
The regulator said that there are around 50 mobile operators and more than 100 fixed operators, but only four companies—Deutsche Telekom, Vodafone, Orange, Iliad and Telefonica—operate in several EU countries.
This fragmentation raises the question about whether consolidation across EU borders or “different forms of cooperation upstream could allow operators to acquire sufficient scale, without compromising downstream competition,” the EC has said in a leaked report seen by The Capitol Forum. The report is set to be published tomorrow.
The white paper, titled “Building Europe’s Digital Infrastructure of Tomorrow: Towards a Digital Networks Act,” outlines future scenarios for the bloc’s digital infrastructure. Interested parties will have a chance to comment on it.
EC opens first in-depth foreign subsidies probe. The EC announced Friday that it had opened an in-depth investigation to determine if Chinese state-owned railway company CRRC received subsidies from a non-EU country that helped it submit an unduly advantageous offer in response to a bid put out by the Bulgarian government.
It’s the first in-depth investigation under the EU’s Foreign Subsidies Regulation (FSR), which allows the EC to block and remedy deals and public bids involving companies that receive “distortive” subsidies from non-EU governments. The EC’s Directorate General for Competition (DG Comp) only conducts deal-related reviews so the probe is being handled by the Directorate-General for Internal Market, Industry, Entrepreneurship and SMEs (DG Grow).
The Capitol Forum has learned that DG Comp has completed 12 FSR reviews of mergers and investments, closing all of them without in-depth investigations. None of those deals involved Chinese companies. The agency has another eight reviews ongoing and about 30 cases in the prenotification stage.
Several lawyers and other advisers working on those reviews say DG Comp’s FSR team is understaffed and hasn’t yet developed any real protocols for its investigations. The regime has only been operational since October and is expected to ramp up soon with potential reviews including Novo Holdings/Catalent and Synopsys/Ansys.
EU court to hear Booking.com competition case. The EU’s highest court plan to hear arguments February 29 in a Dutch case about whether wide and narrow parity clauses applied by Booking.com violate the bloc’s competition law. Several hospitality businesses have accused the online platform of violations.
Vestager’s Weekly Calendar
To view EC Commissioner for Competition Margrethe Vestager’s schedule for the week, click here.
In Their Words
EU competition commissioner Margrethe Vestager spoke at an event hosted by European Parliament’s Renew group on Monday. She warned of the need for competition enforcers to act quickly on AI:
“Large language models, they depend on huge amounts of data. They depend on cloud space, they depend on chips. There are barriers to entry everywhere. Add this to the fact that the tech giants have the resources to acquire the best and the brightest talent. We are not going to see disruption driven by a handful of college dropouts, who somehow manage to outmaneuver or outperform Microsoft’s partner OpenAI or Google’s Deepmind. It is highly likely that disruption from AI will come from within the nest of existing tech ecosystems. Of course we have open source models, as well. We have companies who are there, who are innovating, but we have a lot of the power to foster artificial intelligence within the big incumbents that we know so well.
“Still, we can make an impact. For me the first lesson from our experiences so far, is that our impact will always be greatest if we work together, communicate early and act on it […] this is also why our call for contributions on competition in a digital world is very important to us. The deadline is in a few weeks, so there is still time to make your voices heard […] And beyond this, obviously, I will continue to engage with my counterparts in the United States and elsewhere to align our approach as much as possible.
“A second lesson that we learned is that digital markets are indeed wide-reaching. Sometimes they influence our economy in ways that we did not expect. So we have to look very carefully at vertical integration and ecosystems. So we have to take account of the impacts of AI in how we assess mergers. We even have to think about how AI might lead to kinds of algorithmic collusion.
“A third lesson is that competition policy has to work together with digital regulation in this fast-paced digital economy. The Digital Markets Act is a new approach to preserving a level playing field online. Born out of years of experience with antitrust enforcement and designed to go indeed hand in hand with the candid continued use of our competition tools. The same has to be true for artificial intelligence.
“How this works will depend on a number of different regulatory parameters. For instance, there are still big questions about intellectual property rights, how they are respected. About how ethical AI is being deployed, about areas where AI actually should never be deployed. In each of these decisions, there is a competition policy dimension that needs to be considered. Conversely, how AI regulation is enforced will affect the openness and the accessibility of all these different markets that it will impact.”
Upcoming Events
February 22 at 3 a.m. ET (9 a.m. CET): “Competitiveness & Competition,” an all-day event hosted by Women@Competition in Brussels. Speakers include EU competition commissioner Vestager; CMA Chief Executive Sarah Cardell; and Martijn Snoep, chair of the Netherlands Authority for Consumers and Markets.
February 22 at 4 a.m. EST (10 a.m. CET): “Generative AI & Antitrust,” an event hosted by Concurrences in Brussels. DG Comp Deputy Director-General for Antitrust Linsey McCallum is among scheduled speakers.
February 27 at 4 a.m. EST (10 a.m. CET): “CompLaw: UK,” an in-person conference in London by Informa Connect. Scheduled speakers include Martin Coleman, panel chair and panel inquiry chair at the CMA; Simon Burden, head of competition at NatWest Group; Naomi Burgoyne, senior director of mergers at the CMA.
March 6 at 2 a.m. EST (8 a.m. CET): “OECD Competition Day,” an event organized by the Organization for Co-Operation and Development in Paris and online. Scheduled speakers include Olivier Guersent, head of DG Comp; Hans Zenger, head of unit for the Chief Economist Team of DG Comp; Ryan Tansey, section chief at DOJ.
March 8 at 2 a.m. EST (8 a.m. CET): “II Annual Conference of the European Commission Legal Service,” in Brussels and online. Scheduled speakers include Daniel Calleja Crespo, director-general of the EC Legal Service; Dragos Tudorache, a member of the European Parliament and co-lead adviser on the AI Act; Clemens Ladenburder, deputy director-general of the EC Legal Service.
March 19 at 2:30 a.m. EST (8:30 a.m. CET): “Competition Investigations,” an event hosted by Concurrences in Paris. Philippe Chauve, head of unit at DG Comp; Autorité de la concurrence General Rapporteur Stanislas Martin; Sean McNabb, director of the CMA’s cartel enforcement arm; Michelin Chief Compliance Officer Charlotte Grass; EC Legal Service member Pascal Berghe; Amgen Associate General Counsel Nicolas Pourbaix and Laila Medina, advocate general of the European Court of Justice, are among scheduled speakers.
March 20 at 4 a.m. EST (10 a.m. CET): “GCR Live: Telecoms, Media & Technology,” a conference in London hosted by Global Competition Review. Speakers include Guillaume Loriot, a deputy director-general at the EC’s DG Comp; Alberto Bacchiega, DG Comp’s head of digital platforms; Simeon Thornton, economics director at UK communications regulator Ofcom; and Haidee Schwartz, in-house competition counsel at Open AI.
March 21 at 8 a.m. EST (2 p.m. CET): “Article 102 Guidelines: Where Are We Heading?” a Concurrences conference in Brussels. Scheduled speakers include European Court of Justice Judge Nils Wahl; Legal Service Principal Legal Adviser Fernando Castillo de la Torre; DG Comp Deputy Head of Unit Massimiliano Kadar; Alessandra Tonazzi, senior competition policy expert at the Organization for Economic Cooperation and Development; Linsey McCallum and leaders of the competition authorities of Portugal, Spain, Belgium, Italy and France.
March 26 at 6:30 a.m. EST (12:30 p.m. CET): “Private Enforcement in the EU: Antitrust Damages Actions,” in Paris. Among the scheduled speakers are First President of the Paris Appeal Court Jacques Boulard; Italian Constitutional Court Judge Giovanni Pitruzzella; DG Comp Policy Officer Niklas Brüggemann; UK Competition Appeal Tribunal Judge Simon Holmes; and European Court of Justice Judge Jean-Claude Bonichot.
April 24-25 at 4 a.m. EST (10 a.m. CET): “CompLaw: Advanced EU,” an in-person conference in London by Informa Connect. Scheduled speakers include Julia Brockhoff, head of unit, mergers case support and policy at the EC; Juliette Enser, senior director in cartels at the CMA; Angeline Woods, legal director for antitrust and EU affairs, Uber.
June 24, time to be confirmed: “ECN Digital Markets Act Conference,” an event hosted by the European Competition Network at the Sheraton Hotel in Amsterdam. Speakers have yet to be announced.
Recent Developments
Korean Air/Asiana approved with remedies. The EC approved Korean Air’s proposed purchase of Asiana on the condition that Korean Air divests Asiana’s air cargo business and opens four routes to a South Korean rival, confirming earlier reports by The Capitol Forum.
CMA indicates possible clearance for online pharmacy merger. The CMA has withdrawn the Initial Enforcement Order (IEO) it issued to online pharmacies Pharmacy2U and Lloyds Direct over their completed merger—often an indication that it doesn’t have concerns with the deal.
Pharmacy2U acquired Lloyds Direct in October and the CMA issued an IEO one month later that required them to halt all steps towards integration during its review. The agency revoked that order on February 12, but its phase 1 investigation remains ongoing with a deadline of March 19. The companies declined to comment.
The CMA’s guidance states the enforcer is usually willing to fully revoke an IEO if it has no competition concerns after an internal “state of play” meeting during phase 1 and barring any subsequent evidence to the contrary.
France sanctions chocolatier for restricting sales. The day after Valentine’s Day, the Autorité de la concurrence said it fined De Neuville over 4 million euros ($4.4 million) for barring its franchisees from selling its chocolates online while reserving the sales channel for the company alone from 2006 to 2019. De Neuville also imposed on its franchise operators a highly restrictive system of sales to business customers from 2006 to 2022, the competition authority said.
De Neuville didn’t respond immediately to a request for comment.
EC begins taking comments on Cisco/Splunk. Third parties have until Sunday to comment on the pending $28 billion tech deal, the EC said Thursday. Cisco CEO Chuck Robbins said during an earnings call Wednesday that the companies had made “positive progress to date on the required regulatory approvals” and expect to close the deal in the first quarter or early in the second quarter of this calendar year. When the companies announced the transaction, they said they expected it to close by the end of the third quarter.
TikTok fails to suspend EU gatekeeper status. The EU’s lower-tier General Court has refused an application by TikTok parent Bytedance to suspend the EC’s decision in September to designate the popular platform as a gatekeeper under the DMA.
In an order on February 9, the court said that “Bytedance has not demonstrated that it is necessary to suspend the decision until the proceedings on the substance of the case are closed in order to avoid serious and irreparable harm to Bytedance.”
PayPal explores “offline” digital wallet solution as DMA perk. While many tech companies have criticized various aspects of Apple’s proposed compliance with the DMA, PayPal has stayed relatively quiet due to its various partnerships with the iOS developer. Asked directly about the DMA during an earnings call on February 7, PayPal CEO Alex Chriss said his company is “working closely” on the opportunity that the DMA will create to offer an “omnichannel and offline” payment service.
Offline digital wallets use near-field communication (NFC) technology, but Apple Pay is the only mobile wallet solution that can access the necessary NFC input on iOS devices. The DMA’s interoperability requirements are expected to address this, although the EC has also sent Apple a Statement of Objections alleging the conduct amounts to an abuse of dominance under traditional antitrust rules.
The agency is expected to issue a decision against Apple over its compliance with the DMA on March 6, the day before the compliance deadline. But it’s unclear if that decision will include issues over Apple Pay.
Dutch online platform probed over unfair practices. Bol, the Netherlands’ largest online retailer, is under investigation by the country’s Authority for Consumers and Markets (ACM) over allegations of unfair business practices.
The enforcer said in a statement Wednesday that it had received reports that the firm “gives preferential treatment to itself and to certain business users” and “uses data from businesses for strengthening its own position on the platform.”
Bol confirmed it has received questions from the ACM about how it has “structured our platform for our sales partners.” The company said it will provide the regulator with “all necessary information to ensure a smooth process.”
