Sixth Annual Report Finds Controls on Foreign Direct Investment and Focus on Fairness Are Top of Mind Among Antitrust Enforcement Trends

Global law firm Shearman & Sterling publishes its sixth annual Antitrust Annual Report today. The 2018 Report discerns two key trends – a global resurgence of controls on foreign direct investment and the focus on ‘fairness’ developing in the European Union (EU).

The report also discusses various other important developments in international competition law enforcement.

A global resurgence of foreign direct investment controls

“A new U.S. Administration more assertive than previously anticipated, along with a wave of coming foreign investment control reform in Europe, means that corporations considering cross-border transactions in sensitive industries will need to prepare well and tread carefully,” says David Higbee, Global Antitrust Practice Group Leader.

Fairness in EU competition policy and enforcement

“Fairness has been the common theme in Commissioner Vestager’s tenure as Competition Commissioner,” says Matthew Readings, Global Antitrust Practice Group Leader. He adds, “arguably the focus on fairness has in some cases taken precedence over more ‘traditional’ competition principles and objectives of promoting consumer welfare and an efficient allocation of resources. I expect this trend to continue and companies with strong market positions in Europe ignore this enforcement perspective at their peril.”

Mergers

We look at gun-jumping and procedural compliance in the EU, the U.S. and China. We explore the implications of the DOJ’s challenging Parker-Hannifin Corp.’s consummated acquisition of Clarcor. In its Dow/DuPont decision, the EC introduced a novel innovation theory of harm and the report assesses how this could impact companies whose business strategies are focused on innovation and R&D. In September 2017, the Court of Justice of the European Union issued an important judgment clarifying the application of the EU Merger Regulation to joint ventures (JVs). We look at what the ruling means in practice and compare it with the treatment of JVs in China and the United States. We also report on the DOJ reviewing its use of behavioral remedies and consider what it might mean for future mergers.

Cartels

The EC has been very vocal about its concerns regarding the use of algorithms and artificial intelligence to engage in anti-competitive practices. The report explores possible scenarios and how an investigation would be approached.

Compliance

We conduct an early review of antitrust enforcement under the Trump Administration and discuss Brexit and the implications on trade. With the EC’s increasing focus on the implementation and achievement of the Digital Single Market, distribution agreements in the online sale of goods are very much on competition authorities’ radars and the report explores the do’s and don’ts in the EU.

Unilateral conduct

With European competition authorities increasingly investigating online platforms, we reflect on the novel questions this raises, especially when applying general principles. The EC and other EU national competition authorities are investigating multiple allegations of excessive pricing in the pharmaceutical industry. We take stock of the various investigations and assess the long-awaited Intel ruling for practical takeaways.

Litigation

Given developments in U.S. reverse payment settlements in the pharmaceutical industry, we look at what to expect in the coming months. The FTC v. Qualcomm ruling upends the modern trend for U.S. courts to decline to order production in civil discovery of confidential submissions to foreign competition enforcement authorities on grounds of comity. We consider the impact on future cases and analyze the dispute between the U.S. Department of Justice and Broadcast Music Inc. over the licensing of fractional interests. We also report on the U.S. Supreme Court hearing of United States v. American Express, a key case for the application of the rule of reason and the analysis of markets in antitrust cases.

EU State aid

We assess the EC’s new approach to infrastructure aid and review the EC investigation of a U.K. tax exemption (the Group Financing Exemption) and explore possible consequences for affected parties.

The Antitrust team

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Read the 2018 Antitrust Annual Report.