While merger and cartel enforcement lead to similar outcomes on both sides of the pond, there are significant differences regarding “abuse of dominance” and “monopolisation”. The European Commission and some national competition authorities in Europe have taken on tech giants in high-profile cases. However, hard-wired differences between the European and American enforcement regimes make very difficult for the US antitrust enforcement agencies to emulate their European counterparts.
This piece, available here, seeks to identify these differences.
A first set of differences relates to how an administrative model prevails in Europe, while the US system is mostly accusatorial.
The European system was conceived of as regulation enforced by an administrative agency, not as law enforcement by the courts as in the US. One important distinction in this respect is that a contested court order in the United States typically contains a series of conduct mandates and prohibitions, while administrative decisions usually merely provide for cease-and-desist orders. Furthermore, the European system is driven by competitor complaints, which lead to administrative proceedings. US antitrust enforcement agencies, on the other hand, often leave it to the complainants to bring cases on their own – in an environment where courts have both made it more costly to bring cases and less likely for plaintiffs to succeed. A last difference is that the European system is run by politicians – i.e. a commissioner – while the US antitrust enforcement agencies most often are run by antitrust professionals.
Another difference concerns the stronger procedural guarantees available to companies in the US.
EU antitrust enforcement does not deny due process, but remedies and penalties that would be imposed by court order in the US are imposed administratively in the EU without an adversarial hearing, third-party discovery, or cross-examination. Furthermore, the European system lacks the burden of proof of an adversarial system. As a matter of form, the EU has a burden of proof, but that means little because the Commission need not satisfy a neutral fact-finder that it has met its burden. While courts can overrule the European Commission on the fact, European courts do not take a fresh look to see whether the evidence meets the requisite standard. Most significantly, the courts grant the Commission a margin of appreciation on the challenging judgement matters where sceptical US judges scuttle many plaintiffs. This is one of the reasons why the European system does not impeach unsound theories, while the US litigation system aims to screen out half-baked and dead wrong ideas in the first instance through application of the rules of evidence. Unlike in the US, nothing appears to screen out unreliable expert opinion at the EU, and nothing appears to prevent unreliable theories from being credited in EU enforcement proceedings.
A third set of differences concerns opposing views regarding how markets work and what competition law is supposed to do.
Monopoly, without more, is not offence. However, this proposition rings hollow in the EU because a monopoly had no right to charge monopoly prices in the case of exploitative abuses (e.g. excessive prices). In the United States, however, a lawful monopoly is free from any antitrust constraints on exploiting its power, e.g., by charging monopoly prices. This reflects the fact that the European system is grounded in a scepticism of markets. Antitrust law in Europe was adopted at a time when several EU members had state-owned monopolies, and most had a great deal of government control over their economies. This has led to a regulatory mind-set that can be contrasted with the US antitrust assumption that competitive markets operate well and that antitrust law should protect and preserve the competitive process.
Unlike what happens in the US, the European system maintains a low bar for anticompetitive effects. While Europeans loudly reject the charge that their system protects competitors rather than competition, they do not meaningfully distinguish between the two in the way they assess anticompetitive effects. Lost business or lost opportunities to get business by a competitor can provide sufficient proof of harm to competition in Europe. The contrast to the US system is stark; a plaintiff alleging harm only to itself is apt to have its complaint dismissed for failing to allege antitrust injury. A variant of this difference concerns the receptiveness to leveraging theories, i.e. claims that a monopoly is being unlawful extended from one market into an adjacent market. In the United States such theories are cognisable only when monopoly is actually threatened in the second market, while in Europe it is sufficient that competition is “distorted’.
Ultimately, the European system does not recognise competition on the merits. As a concept, competition on the merits has had a central place in EU jurisprudence because it has provided the theoretical benchmark for defining abusive conduct. Nonetheless, references to competition on the merits appear to have been a rhetorical device, with neither the EU courts nor the Commission having ever declared that any particular category of conduct to be competition on the merits.
To wrap up, the authors explain how all these differences have implications, particularly in enforcement against tech companies.
The EU approach has both upsides and downsides as regards enforcement against tech companies. First, EU-style due process means that investigations take a lot longer in the EU than in the US. The court litigation that follows an infringement decision takes even longer in the EU than US antitrust litigation. This leads to remedies making little sense because cases move so slowly, particularly since the facts must be fixed when the Statement of Objections is sent to the infringing parties. For example, key facts about media players in the EU case against Microsoft were hopelessly out of date when Microsoft complied with the EC’s decision by offering a version of Windows without Windows Media Player. That the key facts were no longer true was irrelevant in subsequent court proceedings.
In the US, the facts are not fixed as of the complaint; rather they are fixed as of the time of trial or the close of discovery. Most critically, the facts are fixed only for purposes of liability. Since the court assesses the situation anew before ruling on remedy, if circumstances have materially changed since the relevant moment for liability determination, the changed circumstance are taken into account, which can have a profound effect on remedy.
Overall, this is an interesting description of the differences between the EU and the US –with a noticeable Euro-sceptic slant. While I am sympathetic to a number of the authors’ criticisms of the European system, I think that, even if the differences identified between the systems are broadly correct, they do not have the implications the authors suggest.
For example, the authors seem to suggest that EU enforcement is directed by complainants with political influence, which is not what happens in the US – despite the US having a much more obvious system of political appointees, with approaches to competition being clearly set along party lines. Furthermore, the focus on the Commission’s College of Commissioners not only ignores how different national systems work, but also presumes (without any evidence) that the level of political control over DGCOMP is similar to the control that FTC commissioners and DOJ appointees exert over the agencies’ work. It is also mistaken, I think, to argue that the European courts do not look at the evidence when reviewing European Commission decisions, even though that is a common truism among US scholars.
Further, it is plainly incorrect from a normative perspective to say that monopoly pricing is prohibited in Europe merely because some there can be enforcement against exploitative abuses –as wrong as to say that there is no control of monopoly power in the US because there are virtually no instances of successful enforcement in recent years. It is similarly unclear how an administrative procedure followed by judicial review can be effectively compared to a purely judicial process. I suppose my UK friends would be surprised to hear that their system does not meet US due-process standards, or that competition law has a regulatory bent that is absent in the US.
Lastly, I found that the authors’ analysis of the (advantages) of the US system over the EU one as regards enforcement in the tech sector to go against the arguments made earlier in the paper. For example, the authors argue that the US has an advantage over the EU in this regard because its system pursues speedier investigations. This is a surprising argument to make, because while the EU has brought and completed multiple investigations in the tech sector, the US has brought none, which makes arguments about speed of process appear to be beside the point. Furthermore, this would seem to be an important matter in which due process is stronger in Europe than in the US, allowing defendants to become aware of the facts at an earlier stage in the process – which runs against the authors’ implication throughout the text that the US system provides better guarantees to defendants. It is true that a system that allows remedies to be adapted to market developments at the end of the process may be more effective in remedying competition harms, but it does not follow that such an approach better protects the due process rights’ of companies – just imagine the uproar if the European courts obtained the power to impose remedies in such a manner.