Shearman & Sterling’s 2017 Antitrust Annual Report reflects our lawyers’ experience and insights on key antitrust risks affecting our clients’ businesses.
“Clients today face greater turbulence and uncertainty than at any point in recent times. The threat of political interference translates into a material risk for antitrust proceedings,” said one partner. “Businesses must therefore not only view agency investigations through the narrow lens of antitrust, but also have an acute appreciation of geopolitical developments, be ready to engage far more with antitrust agencies and the broader government where necessary, expect transactional clearances to take longer and be prepared for unpredictable outcomes.”
On both sides of the Atlantic, one of the key emerging issues in antitrust is how to handle big data, he continued. “Several countries, including Germany, are now set to capture low-value, data-rich transactions. The European Commission (EC) is consulting on similar changes to its merger control framework, and other countries are also considering changing their rules. Companies eyeing acquisitions should prepare for more intrusive scrutiny.”
Given that big data, antitrust and privacy concerns are often interwoven, the report briefly touches upon key data privacy aspects. We review the impeded Staples-Office Depot merger which will be remembered for its unorthodox defense, taking in the key lessons of the case — the importance of internal documents and national product market definitions. Numerous mega-mergers have been announced in the agribusiness. Our lawyers chart the issues that might arise, and we spotlight Merger Matrix, a proprietary tool we have developed to help clients determine quickly where to file merger transactions.
In relation to cartel enforcement, we explore lessons from recent EU/US cartel investigations on Japanese defendants. “Many Asian companies still have yet to fully integrate the reality of EU and US antitrust enforcement in conducting business. When they discover that evidentiary thresholds in investigations are low and no company is too small to be targeted, it’s too late,” explained one partner. He added, “Treating compliance seriously goes a long way to addressing potential problematic behaviors.” Our lawyers also review the European investigations into the financial services sector, before addressing the concept of awareness and liability in cartels and what that means for civil damages actions. The treatment of “captive sales” in cartel investigations remains a hot topic. Following recent decisions, we examine the issue of territoriality and jurisdiction and analyze the latest EC practice and decisions in relation to cartel settlements which suggest that rushing to settle may not be advisable. We conclude by looking at price signaling and the lessons of the EC’s commitments decision in the Container Shipping case.
On compliance, we first examine the consequences of Brexit for antitrust before assessing the EC’s Preliminary Report in the e-commerce sector inquiry. We briefly discuss the enlargement of the Court of Justice and review what we expect to be a defining case for the online distribution of luxury goods in Europe: the Coty Germany v. Parfümerie Akzente case.
On unilateral conduct, one of 2016’s defining developments was Advocate General Wahl’s Opinion on Intel’s appeal of the General Court’s 2014 ruling. We take a fresh look at exclusive arrangements. Influential though non-binding, Advocate General Wahl’s Opinion further refines the interpretation of “object’ vs. ‘effect.” With a ruling expected in Q2 2017, we examine its significance.
With respect to litigation, our lawyers analyze the US Court of Appeals’ ruling on American Express’ non-discriminatory provisions, taking in lessons for antitrust litigation in general and more specifically for two-sided markets. Limiting discovery and litigation to transactions that fall within the Foreign Trade Antitrust Improvement Act’s (FTAIA) jurisdiction is always difficult in civil cases, especially when global cartels are being alleged. The US Capacitors case is typical of such complex cases. However, our team explores in detail its case management model, which provided for a relatively efficient and early resolution of the FTAIA issues. Benchmark cases and investigations are in full swing in the United States, creating a renewed focus on three threshold requirements defining who may sue and for what conduct. We highlight some of the key issues and examine the first-ever intervention of the Chinese government in a US lawsuit.
State aid remains in the spotlight, mainly due to the EC’s continued assault — through its novel reading of State aid law—- on multinational companies’ tax arrangements. Our lawyers evaluate the arguments developed against the EC’s first decisions. “The EC is now rightfully being challenged in court for the legal uncertainty it has created through reinterpretation of the arm’s length principle, which diverges from the OECD’s generally accepted standards and shaky assessments of ‘selectivity’,” said one partner. “What I find disturbing is what amounts to retroactive enforcement of novel principles.” With high levels of non-performing loans in Southern Europe — and elsewhere — our teams contrast how the Greek and Italian authorities approached the issue, while under heavy scrutiny from the EC.
Shearman & Sterling’s antitrust practice has over 60 lawyers globally and has been recognized by the leading competition publication, Global Competition Review, as one of only 25 “Global Elite” practices in its 2017 GCR 100 ranking. To find out more about our Antitrust Practice, click here.
Read the 2017 Antitrust Annual Report.