In Shearman & Sterling’s 2016 Antitrust Annual Report, our attorneys combine their deep knowledge and experience to discuss some of the key antitrust issues affecting our clients.
“We have seen significant change in European antitrust enforcement, some of which has made headlines on both sides of the Atlantic,” said one partner. “In the US, the story is not one of reform or drastic change, but there have been several blockbuster cases that serve as cautionary tales.”
“The report discusses the significant issues and developments our clients encountered in 2015,” added the practice’s New York-based co-leader, Beau Buffier. “On the deal side, the revisions to the US 2010 Horizontal Merger Guidelines can now be said to quite accurately reflect the practice of the Agencies when it comes to merger enforcement, something that the Merger Guidelines had long failed to do” said Buffier, “And we have seen the Agencies’ reliance on ‘unilateral effects’ theories continue, almost to the exclusion of other theories of anticompetitive harm. When it comes to litigating merger cases, however, the Agencies are taking a very cautious approach, relying heavily on market definition, concentration and presumptions of anticompetitive harm that sound more in coordinated effects, so there is a growing dissonance between the agency approach and the judicial one.”
“Because of the European Commission’s increasing demands for enhanced safeguard measures when devising merger remedies, transactions can take significantly longer to complete,” explained one partner. The report also discusses the Federal Trade Commission’s rare merger litigation defeat in FTC v. Steris and the implications of this case for mergers between potential competitors.
In relation to global cartels involving various component parts, we examine the different approach that the US courts have taken to jurisdiction over “foreign” sales in follow-on civil damages actions and a recent decision of the EU Court of Justice concerning the jurisdictional reach of the European Commission in cartel cases. “It is interesting to compare the approaches,” says Buffier, “Here we have an example of the US courts taking a narrower view of the jurisdictional reach of the antitrust laws than the European courts, at least as it pertains to US civil damages actions. In imposing criminal fines, however, the DOJ does not feel so constrained in counting “foreign sales” in the volume of commerce, raising the prospect that the same sales can be double counted and, in effect, fined twice.”
With changes to dawn raid procedures in some countries and evidence that simultaneous raids are on the increase, the Report also undertakes a practical survey of five major countries, highlighting best practices for companies faced with coordinated raids or searches by the authorities. The Report also discusses some emerging changes in US cartel enforcement, namely two recent cases of companies being rewarded for the first time, through lighter penalties, for having robust forward-looking compliance programs. We also consider the impact of the “Yates Memo” on antitrust investigations and reflect on whether it will lead to more aggressive treatment of individual executives implicated in cartel violations.
The compliance section of the Report discusses the application of the EU antitrust rules to sports, an area that is likely to gain increasing attention; the UK’s Financial Conduct Authority antitrust enforcement powers and their significance for the financial services industry; and the EC’s expansive Digital Single Market Initiative and what it might mean for territorial distribution models in Europe.
With respect to unilateral conduct, we compare the EU and US essential facilities doctrine, highlighting some of the fundamental differences between the two jurisdictions, and examine the implications of a much-anticipated and controversial Huawei v. ZTE judgment. Given the important role of standard-setting organizations in the technology sector, the report also discusses the Department of Justice’s (DOJ) review of the Institute of Electrical and Electronics Engineers’ (IEEE) proposed patent policy revisions.
On litigation, the report examines the reform to private enforcement of EU competition law, which, although dependent on national legislatures to implement, is intended to increase private damages actions in the European Union. The report also assesses what California Supreme Court’s Cipro decision means in terms of antitrust scrutiny of reverse payment settlements.
“State aid is an increasingly important domain within EU competition law,” said one partner. “The complex interplay between the State aid rules and the Banking Recovery and Resolution Directive is at the core of how Europe will deal with failing banks. We analyze its first application in the 2015 recapitalization and restructuring of the four systemic Greek banks. These cases wrote the rule book on how to deal with failing banks in Europe.”
The report concludes with an examination of the “quiet revolution” underway in State aid, discussing stringent conditions being imposed by the EC on aid granted to manufacturing companies as well as the EC’s use of State aid rules to unwind Member States’ tax rulings with multinational companies.Shearman & Sterling’s antitrust practice has over 50 lawyers globally and has been recognized by the leading competition publication, Global Competition Review, as one of only 25 “Global Elite” practices.