Steering Through Uncertainty: Antitrust Regimes on Both Sides of the Atlantic

Uncertainty Around Transatlantic Enforcement Trends

While EU and US agencies collaborated more closely over the past few years, their regulatory priorities and investigative approaches have always remained distinct. Much uncertainty remains about the relative paths of the two jurisdictions under the current US administration. Companies facing cross-border probes must navigate a mix of procedural differences and varied jurisdictional priorities.

Industrial Policy on Both Sides of the Atlantic

EU competition enforcement is increasingly coupled with industrial policy objectives aimed at fostering “European champions.” By contrast, the US approach had historically remained more market driven but seems to have recently embraced a selective approach to industrial policy that uses tariffs, subsidies, and incentives to strengthen selected domestic industries.

State Aid: The Doctrine and the Exceptions

The European Commission (EC) generally bans any form of aid to firms as a threat to competition. There are exceptions, however, for initiatives whose general economic advances outweigh the risks of market distortion. For example, EC Executive Vice President Teresa Ribera recently initiated a framework easing the approval of state aid programs that aims to speed the transition to a green economy. Firms seeking public subsidies in the EU should consider whether the objectives associated with the subsidies and the surrounding competitive circumstances are sufficient to qualify for an exception. In addition, firms that have been unduly disadvantaged due to their competitors receiving state aid in Europe have the option of challenging the aid mechanism.

Merger Review in Europe May Expand Beyond Thresholds

Over the last few years, the EC has attempted to increase its scrutiny of below-threshold mergers, especially when they suspect “killer acquisitions” or situations in which the current size of the target may not reflect its future importance. Since the European Court of Justice ruled against the use of the referral mechanism specified in Article 22 of the EU Merger Regulation to review the below-threshold Illumina-Grail merger, the EC and national competition authorities of the EU Member States have been looking for ways to expand their ability to review below-threshold transactions. Some authorities may revise their notification thresholds or attempt to introduce market capitalization thresholds in addition to the turnover thresholds they currently have, while others have pushed to acquire call-in powers that allow them to review transactions that are below the jurisdictional thresholds. US firms accustomed to focusing on Hart-Scott-Rodino thresholds should watch for more expansive EU reviews that may revise the capitalization thresholds of the acquirer or allow competition authorities to look below the threshold on request.

Excessive Pricing Cases Likely a Bigger Consideration than Price Gouging in the EU

Competition authorities frequently pursue cases in which either a firm has set a price that is higher by orders of magnitude than that of other firms or a firm suddenly raises its price well above the rate of return. Price gouging mainly concerns essential goods such as food or health care products, as well as episodic price spikes during crises or market disruptions. Excessive pricing can concern any goods and stable economic environments, though excessive pricing investigations can only target dominant firms. Firms in the US should be aware of price-gouging laws and claims, especially in times of crisis, and firms operating in Europe that could be considered dominant should be aware of potential scrutiny of sustained “high” prices.

Dynamic Theories of Harm Likely to Raise Costs of Defending Deals

The EU has shown an increased propensity to emphasize forward-looking market dynamics in merger review, such as in the Microsoft/Activision case or the Booking/eTraveli case. Because dynamic theories require evaluating the impact of present actions on complex future processes such as innovation, economies of scale, and ecosystem dynamics, mergers may involve a more intensive review of the evidence and assumptions about the dynamic world. Firms considering a merger should be aware of this shifting focus, as it may require addressing a broader set of concerns than those on which traditional merger review has focused.

EU and US Regulators Keeping a Close Eye on Labor Market Enforcement

EU regulators have followed the US’s lead in scrutinizing labor market practices, particularly wage-fixing arrangements, no-poach agreements, and non-compete clauses, as exemplified by the recent food delivery cartel decision, which featured the first EC fine for no-poach agreements. However, non-compete clauses can serve legitimate purposes, such as safeguarding trade secrets or facilitating knowledge transfer. Effective non-compete policies that are designed to ensure clear efficiency benefits may survive regulatory scrutiny. In the US, the Federal Trade Commission (FTC) in April 2024 adopted a comprehensive ban on new non-compete agreements, but the final rule was blocked prior to implementation, and its fate is unclear under the current administration.

EU Likely to Continue to Be the Leading Force Behind Digital Space Regulation

EU regulators are taking a stricter approach toward dominant digital platforms than US regulators. The Digital Markets Act (DMA) has introduced new obligations for large platforms, which may result in aggressive enforcement. In addition, the Digital Services Act (DSA) imposes restrictions on a broad set of online platforms and intermediaries, as well as certain rules specific to large platforms. And competitors are closely following the platforms’ practices and bringing frequent complaints to regulators. Digital firms operating in the EU will continue to closely monitor compliance obligations under the DMA and DSA to mitigate enforcement risk and remain competitive. Furthermore, competition authorities across the rest of the world may be inspired by the EU’s approach in their scrutiny of the digital space.

Patents Are Not a Free Pass in the Pharma Space

Both US and EU agencies have shown a willingness to prevent pharmaceutical firms from relying on the patent process to extend the market for branded drugs or to allegedly abuse their dominant positions. Firms should continue to align patent strategies with evolving competition norms and embed antitrust considerations into patent lifecycle planning to mitigate legal exposure and preserve long-term innovation incentives.

The EU’s cautious tolerance of “green cartels”

While US agencies have been reluctant to relax antitrust scrutiny of potentially anticompetitive agreements that advance sustainability objectives, the EU recently amended its guidance on horizontal agreements to provide a limited safe harbor for agreements between competitors, otherwise subject to antitrust scrutiny, if such agreements are necessary for pursuing a sustainability objective. Firms interested in cooperating with their competitors in sustainability projects within the EU may have the option to do so within the limits prescribed by the EC’s guidelines. ■