Sparks flew when Olivier Guersent, Director General at the European Commission’s DG Competition, quizzed EU competition journalists Javier Espinoza (Financial Times), Foo Yun Chee (Reuters), Natalie McNelis (MLex), Valentina Pop (Wall Street Journal), Aoife White (Bloomberg) in a lively #BrusselsCalling media panel. The focus was on the impact of COVID-19 on competition policy and its reporting. Here are our five takeaways:
1. State aid, an effective first aid in the trenches
Setting the scene, Olivier Guersent outlined how competition policy proved to be part of the solution against the economic fallout from COVID-19. As such, the European Union’s state aid control has received for the first time in more than twenty years unanimous praise from Member States for its role during the pandemic. To provide the EU’s economy an additional fighting chance as COVID-19 hit Europe in March, the Commission relaxed its state aid rules with a Temporary Framework to ensure the flexibility that would be required. It helped Member States effectively respond to the initial emergency, the liquidity response, so firms could restart their activity following the peak of the pandemic. As a result, it positively led in June and July to a stronger growth re-bounce than expected. Adaptation to the Temporary Framework was then made in a second phase aiming to restore solvency. Another phase could be envisaged to accompany the recovery in line with the Commission’s longer political objectives such as digitalising the economy and its Green Deal.
2. Further guidance expected for antitrust
Until 2004, companies notified agreements to the Commission for approval under the antitrust rules. It was common for undertakings to ask from the Commission comfort letters confirming that a proposed agreement did fall within antitrust rules. This practice ended after Regulation 1/2003 came into force. However, in light of the severity of the pandemic, DG COMP is considering becoming more generous with its guidance on company cooperation. On 8 April 2020, the Commission published a Temporary Framework for assessing antitrust issues related to business cooperation in response to the COVID-19 outbreak. DG COMP then issued its first comfort letter in 17 years to an association of generic pharmaceutical manufacturers, authorising cooperation among them in order to respond to the shortage in essential medicines required for COVID-19 patients. Moving forward, similar guidance is expected for new technology in the area of decarbonisation that will involve new antitrust issues regarding long-term commitments for new investment. Note that a return to the old days of the notification regime is not envisaged.
3. Mergers should be business as usual
The merger activity has not dropped during the pandemic. In the next few weeks, one can guess a drop in the numbers and increase in number of the difficult cases. Nonetheless, the merger control regime should remain untouched. As facts are different, there may be more occurrences of new applications of the rules. One could see, for instance, an increase in the use of the failing firms defense.
4. Any impact of the crisis on the journalists’ beat?
Like everyone else, journalists have adapted to the crisis. The move to working online means reporting from Brussels on events happening across the world has become easier and EU stories have taken a more global turn. However, the job has lost the “randomness” of chance encounters and overheard conversations. Journalists have to be more deliberate to get a story. Getting a scoop or a short briefing on difficult cases on the margins of a conference is no longer possible. With online press conferences, spontaneous interaction with officials and the immediacy of responses is also lost. The accountability of decision-makers such as Commissioner Vestager is thus made more difficult.
5. Tension between reporters and competition purists
Competition cases are decided on the basis of competition rules. However, when reporting on competition cases, journalists often mix competition policy with other policy considerations. As such, competition cases are often judged in the media on merits that are outside the competition policy remit. Journalists explained that it often makes sense to link antitrust and tech policy as Margrethe Vestager is both Competition Commissioner and Executive Vice-President for the Digital Age and that the Commission itself often blurs the lines in its messaging. When explaining policy in an accessible fashion to a non-specialist audience, a journalist may also make wider links that may seem like a shortcut for policy purists.