Antitrust, Regulation & Foreign Investment Q1 2024 newsletter

Welcome to our first quarterly newsletter of 2024, where the Ashurst Antitrust, Regulation and Foreign Investment Team recaps some of the key developments of Q1 2024. 

This edition highlights:

• Developments in the digital economy, including an overview of the EU's Digital Markets Act (DMA), an update on the UK Digital Markets, Competition and Consumers Bill (DMCC) as it progresses through the legislative process and a multidisciplinary overview of developments to watch out for in the EU and the UK this year.
• The increasing intersection between consumer and data protection laws with an important case in Italy establishing that the Italian competition authority must cooperate with its data protection counterpart where cases raise substantive data protection issues.
• The ongoing interest in ESG issues by competition regulators, with the Competition and Markets Authority (CMA) issuing its second informal opinion under the UK Green Agreements Guidance.
• The new EU Market Definition Notice which has been revised for the first time since 1997 to reflect the "significant societal and technological changes" which have taken place in the intervening years.

January 2024 recap

1. The EU Digital Markets Act – What do you need to know? 

The DMA entered into force in November 2022 and potential gatekeepers were required to notify the European Commission by mid July 2023. In September 2023, the European Commission designated the first six gatekeepers which then had six months to comply with the obligations set out in the DMA. 

The DMA places pro-competition obligations on core platform operators (such as social media platforms, marketplaces or search engine operators) which have market dominance. These obligations relate primarily to the designated core platform services – however, some obligations do go further and impact other digital products and services provided by a gatekeeper where such gatekeeper leverages its gateway position. See here for our overview of the DMA, including designation thresholds and obligations for designated core platform operators.

2. UK Digital Markets, Competition and Consumers Bill: One step closer to becoming law

On 21 November 2023, the DMCC passed its third reading in the House of Commons. The House of Lords held its second debate on the Bill on 5 December 2023 and the Lords' Committee Stage began in late January 2024. 

The DMCC will implement the Government's digital markets strategy, which includes tailored codes of conduct for certain digital companies and a bespoke merger control regime for designated firms. In addition, it contains significant reforms to the competition and consumer law regimes in the UK: in particular, it significantly strengthens the CMA's consumer law enforcement powers by enabling the CMA to directly enforce consumer law through the imposition of fines and the ability to award compensation to consumers.

In this update, we provide an overview of the key areas of debate and the most significant amendments made since the Bill was introduced in April 2023.

3. UK Court of Appeal confirms the CMA's information gathering powers apply extra-territorially

The question of whether the CMA's information gathering powers have extra-territorial effect arose in the context of the CMA's investigation into suspected anti-competitive conduct relating to end-of-life vehicles (ELV). After German companies Bayerische Motoren Werke AG (BMW AG) and Volkswagen Aktiengesellschaft (VW AG) refused to comply with a section 26 notice issued as part of the ELV investigation, the CMA imposed penalties. Both BMW AG and VW AG challenged the section 26 notice. Their appeals were upheld by the Competition Appeal Tribunal (CAT) in 2023.

On 17 January 2024, the UK Court of Appeal overturned the CAT's 2023 ruling and confirmed that section 26 of the Competition Act 1998 allows the CMA to compel the production of information and documents from companies located outside of the UK. See here for our analysis.

February 2024 recap

1. Intersection between consumer and data protection laws: Italian authorities told to cooperate 

On 21 December 2023, the Italian Supreme Administrative Court held that the Italian competition authority, Autorità Garante della Concorrenza e del Mercato (AGCM), must cooperate with the Italian Data Protection Authority when investigations give rise to substantive data protection issues. 

The judgment is a significant development that will impact future AGCM investigations (including, potentially, in relation to the enforcement of the Digital Markets Act). It also casts doubts on the legitimacy of previous AGCM decisions where the investigation involved antitrust / consumer protection issues as well as data protection issues. See here for our analysis.

2. New EU Market Definition Notice for the digital era 

On 8 February 2024, the European Commission adopted a revised Market Definition Notice to reflect the "significant societal and technological changes" since the previous version was adopted in 1997: in particular, there has been a significant shift towards a digital economy and increasingly global trade. The revised Notice provides additional guidance on market definition, particularly in relation to digital and innovation intensive markets, and puts an increased emphasis on non-price parameters of competition, in particular innovation. See here for our overview.

March 2024 recap

1. Foreign investment regime in Spain. How does it affect real estate transactions?

In Spain, new rules regarding foreign investment were adopted in 2020 as a result of the Covid-19 pandemic and the EU FDI Screening Regulation encouraging all Member States to implement national FDI screening regimes. The Spanish regime involves two elements: (i) a mandatory and suspensory notification in certain circumstances and (ii) reporting requirements for administrative and statistical purposes. There can be significant penalties for failing to notify a transaction and the deal will be void. In this update, we consider how the FDI regime in Spain applies to real estate transactions. 

2. CMA's growing interest in labour markets

Competition authorities worldwide have shown an increasing interest in potential competition issues in labour markets in recent years, with regulators in the USA, EU and UK issuing guidance for employers on how to comply with competition law. Three areas of particular risk have been highlighted: (i) no poach agreements, (ii) wage fixing and (iii) information sharing. Currently, the CMA has three live investigations relating to conduct on labour markets and enforcement action is expected to increase. See here for further details. 

3. What's Ahead: 2024 Digital Economy in Europe & UK

Digital platforms, online content providers and other businesses active in the digital economy face an increasingly complex and evolving legal and regulatory landscape in the EU and UK with privacy and data regulation, online safety, competition and consumer issues increasingly intertwined in the digital sphere, and new regulation such as the EU DMA and Digital Services Act (DSA). We are also likely to see more investigations, novel theories of harm, intrusive remedies, substantial penalties and more private actions. 

It is essential to adopt an integrated approach that is consistent across legal areas and is future-proofed so far as possible. To help you stay on top of the key developments, our multi-disciplinary team has created a snapshot of significant emerging themes, incoming reforms, and cases to watch this year.

4. CMA publishes informal guidance under Green Agreements Guidance

On 20 March 2024, the CMA published its second informal opinion under the "Open Door Policy" introduced by its Green Agreements Guidance on 12 October 2023. The opinion relates to a proposal by WWF-UK for supermarkets to make a joint commitment to reduce greenhouse gases in their supply chain by encouraging their suppliers to adopt net zero science based targets. This is the first time the CMA has applied the more permissive approach for agreements intended to combat or mitigate climate change, which allows it to take into account the benefits for all UK consumers and not just those affected by the initiative. Where the CMA has blessed an initiative under the informal guidance scheme, companies involved in the scheme will be protected from fines if the CMA subsequently chooses to take enforcement action. See here for more details.