The European Commission (the Commission) published its inception impact assessment on the possible adoption of regulation that would introduce a new market investigation tool. The new tool would enable the Commission to investigate and impose behavioural and/or structural remedies on businesses with significant market power, whether dominant or not – and without any prior finding of a competition law infringement.
Тhis new tool could present a significant risk and potential burden for companies with market power. On the other hand, it offers potential benefits to market participants, such as new entrants, who might otherwise see their access to markets foreclosed.
Given that Article 102 TFEU only applies to certain practices by dominant companies, it fails to capture certain conduct that may allow powerful, yet non-dominant companies, to monopolize markets. Likewise, dominant companies may leverage their dominant position to gain control over adjacent markets, without acting in infringement of Article 102 TFEU. Therefore, the current model of ex-post competition law enforcement may not be the most effective way to resolve the resulting lack of competition. In addition, once a market has tipped in favour of a dominant player, there may be circumstances where it is simply no longer possible for others to compete.
Article 17 of Regulation 1/2003 already allows the Commission to investigate a sector of the economy or a type of agreement where there may be a restriction on or distortion of, competition. However, the Commission has no instruments available to remedy any structural competition issues that it may have detected during such market investigation beyond individual infringement proceedings that it may decide to open in response.
Proposed New Competition Tool
The exact form of the new tool has yet to be set. In the inception impact assessment, the Commission proposes four different options for a new competition tool against the baseline scenario in which the current EU competition law framework would remain unchanged. As indicated in the table below, the four options differ according to the target companies, target sectors, target issues, and remedies. In all scenarios, however the Commission will be able to act even before a target issue has materialized.
| Target Companies | Target Sectors | Target Issues | Remedies | |
| Option 1 | Dominant companies only | All sectors (horizontal) |
Unilateral conduct that may lead to: Foreclosure of competitors; or |
Behavioural and/or structural remedies |
| Option 2 | Dominant companies only |
Limited to certain sectors, notably; Digital or digitally-enabled markets |
Unilateral conduct that may lead to: Foreclosure of competitors; or |
Behavioural and/or structural remedies |
| Option 3 | Any companies | All sectors (horizontal) | A structural risk for competition or a structural lack of competition that prevents the internal market from functioning properly |
Behavioural and/or structural remedies Legislative Action |
| Option 4 | Any companies |
Limited to certain sectors, notably; Digital or digitally-enabled markets |
A structural risk for competition or a structural lack of competition that prevents the internal market from functioning properly |
Behavioural and/or structural remedies Legislative Action |
Options 1 and 2 can potentially improve the market conditions and enable smaller players to compete on the merits. However, as the Commission acknowledges, both require a finding of dominance, which usually demands a lengthy investigation. At the conclusion of such an investigation, it is not inconceivable that smaller players may already have exited the market, making remedies ineffective, if not impossible.
With that in mind, Options 3 and 4 may be more effective as it allows the Commission to intervene without a finding of dominance. Swift intervention could thus enable the Commission to prevent the foreclosure of smaller players or the tipping of markets in a timely manner. Similarly, Options 3 and 4 will allow the Commission to remedy structural issues not necessarily resulting from objectionable unilateral conduct. However, these options have the potential of subjecting a broader range of companies to lengthy and burdensome investigations, and costly and economically damaging remedies.
Moreover, Options 3 and 4 could potentially impose on non-dominant companies a special responsibility not to allow their conduct to impair competition, similar to the responsibility currently attributed only to dominant companies. Thus, without stringent safeguards and rigorous judicial review, Options 3 and 4 might not be proportionate to the objectives they seek to achieve.
In any event, remedies should never go beyond what is strictly necessary to correct the identified structural competition issues.
Unless the target sectors under Options 2 and 4 are strictly defined, the dividing line between these options and Options 1 and 3 will become blurred. Targeting only a few sectors might be seen as arbitrary and discriminatory and reduce flexibility for the Commission and prevent it from capturing novel competition issues arising in constantly evolving markets. At the same time, leaving the sectoral scope undefined may not be proportionate. Thus, the definition of a certain threshold or certain criteria may be required.
A public consultation on the new instrument began on 3 June. All interested parties can comment until September 8, 2020.