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10 key themes

The age of international tensions

How will antitrust policies change to meet new political and economic objectives?

The impact of political change on antitrust policy

2020 will witness a series of political changes that will impact global power structures and relationships, and may contribute to an emerging phenomenon of international fragmentation after a decade of globalisation:

  • the US presidential elections;
  • China’s expanding influence and geographic reach;
  • the start of the new European Commission’s agenda;
  • continuing stasis within the World Trade Organization (WTO); and
  • the UK’s exit from the EU.

The past year has already signalled a shift away from the long-standing narrative of globalisation in international politics. Trade wars (including US–China, US–EU, Japan–South Korea) and the paralysis of the WTO have undermined world trade, while a renewed focus on the impact of international conglomerates on local markets has challenged the orthodoxy of the global perspective of recent years.

Combined with the overt political push for national champions in key sectors, it appears that the long decline in global trade barriers may be reversing. This trend will have implications for business in the year ahead in a number of key areas.

2020 will witness a series of key developments, impacting international and national trade and antitrust policies for years to come. Businesses must be prepared to influence and adapt to them to ensure their continued success.

Martin McElwee
Antitrust Partner,
Brussels and London

A greater focus on domestic political concerns in antitrust cases 

The new European Commission takes office against a background of explicit national political pressure for an increased role for political and industrial priorities – mainly driven by national politics and a belief in national (or sometimes European) champions. 

While the focus of this has principally been in merger cases to date (eg in Siemens/Alstom – where the Commission’s decision to block the transaction was heavily criticised by national politicians in Germany and France for an alleged failure to support European companies, leading to calls for changes to EU merger review), the impact may also be felt in other types of antitrust cases. 

UK Prime Minister Boris Johnson has, for example, said that he plans to replace the EU’s state aid regime with a system giving the UK Government ‘greater discretion’ to allow ‘extremely rapid’ interventions in the case of economic turbulence and a new public procurement regime favouring British suppliers.

Understanding the domestic political impact of a particular case will become increasingly important.

It is important to fit the narrative of future deals to the new imperative of an EU Industrial Policy – this includes the impact of any transaction on local European industry and possible consequences for the EU’s ability to innovate and compete globally.

Christiaan Smits
Head of EU Regulatory and Public Affairs, Brussels

More deals attracting national security and other public policy scrutiny 

The past few years have seen a significant increase in the importance of national security and related public policy issues in the review of transactions. Navigating these domestic concerns – often while also navigating separate merger control reviews – takes significant planning and co-ordination (see theme 4).

The growing role of industrial policy and fairness for consumers 

Changes to political dynamics have also contributed to an uptick in competition authorities taking account of consumer fairness and industrial policy concerns in their investigations and decision-making (see theme 9):

  • European Commission President Ursula von der Leyen and Executive Vice-President Vestager have both stressed the need for markets to work better for consumers, business and society during the twin climate and digital transitions in the next Commission term;
  • in the US, Assistant Attorney General at the Department of Justice (DOJ) Makan Delrahim has stood behind the consumer welfare standard as the lodestar of antitrust enforcement, while Federal Trade Commissioner Rohit Chopra has tied the US’s future economy and democracy to its ability to restore free and unfettered competition; and
  • in China, public interest and consumer welfare have been built in as fundamental goals of antitrust and are likely to continue to play an important role in enforcement in the current geopolitical atmosphere.

How will the supra-national actors respond?

To ensure fair and effective competition, antitrust authorities and other regulatory bodies – particularly those at supra-national level – are likely to continue to try to create a ‘level playing field’ by broadening the remits of their antitrust, state aid, merger control, trade and foreign investment tools.

The past year has already seen a flurry of state aid cases in Europe, particularly those focusing on tax, including relating to the UK’s Controlled Foreign Company (CFC) regime. Whilst the traffic has not all been one-way in the Commission’s direction (it has either pulled back or been knocked back in a couple of high-profile cases involving US multinationals), the EU courts have shown some willingness to use state aid rules to impose an EU-level ‘arm’s length dealings’ requirement for tax purposes. This could substantially expand the Commission’s reach in an area traditionally thought of as a member state competence.

We have not yet seen the end of the Commission’s actions in the fiscal state aid cases. But the process is maturing. So perhaps we have seen the end of the beginning.

Eelco van der Stok
Tax Partner,

Paul Davison
Tax Partner,

EU political leaders have also insisted on level playing field guarantees (commitments would involve upholding EU standards on tax, state aid and the environment) as part of any agreement with the UK as the UK leaves the EU.

More broadly, Executive Vice-President Vestager has indicated that the European Commission will review its rules on antitrust, mergers and state aid with a strengthening of competition enforcement powers to make them fit for purpose in the modern age. This will include a review of the Commission’s approach to defining product and geographic markets in merger and antitrust cases, to ensure it properly reflects today’s global and digital markets.

At the same time, as the US presidential campaign enters into high gear, we can expect candidates from both sides of the political spectrum to continue their focus on consumer welfare. 

In this American election year, expect continued scrutiny of high-tech industries and an intense focus on pharmaceutical pricing and other healthcare costs.

Mary Lehner
Antitrust Partner,
Washington DC

In contrast to the general raising of trade and market access barriers internationally, China has countered with an overhaul of its foreign investment rules by opening up more sectors to foreign investment. It has adopted the new Foreign Investment Law, introducing measures to place foreign-invested enterprises on a level playing field with domestic investors.

China has been continuing to open up its market to foreign investment. Yet we are also seeing early signs that national security review may become more prominent and capture a wider scope of industries and transactions.

Hazel Yin
Antitrust Partner,

Looking ahead in 2020:

Global companies should prepare themselves for increased scrutiny both in a merger control context and via wide-ranging sector inquiries feeding into policy updates or enforcement action. Increasing divergence in the rate and pace of change across the major economic blocs cannot be ruled out in 2020 and may impact the desirability of investment in some jurisdictions as well as increase the resources needed to address an increased regulatory burden.

Knowing the local political and regulatory environment will be key to successful commercial strategies.

Test your rationale – particularly for cross-border deals – from all angles in each key jurisdiction (eg the EU, the UK, the US and China).

Monitor key regulatory and/or political developments that directly or indirectly affect your sector and adjust your strategy accordingly.

As national approaches diverge, international co-ordination will become even more critical to maximise your chances of success.

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