Vestager revives long dormant antitrust weapon against tech groups
Few things could sound more innocuous than “interim measures”. But behind the anodyne phrase used by Margrethe Vestager is a new determination by the EU’s competition enforcer to crack down on technology groups by dusting off a powerful weapon.
The investigation unveiled on Wednesday by Ms Vestager into US chip manufacturer Broadcom seeks to overcome what she has come to see as one of the major challenges to competition policy in fast-moving technological markets — the years that can pass before an antitrust measure can be implemented.
In the intervening period, the dominance of a deep-pocketed company over its rivals can be cemented, regardless of the outcome of a case.
“The technology cases the European Commission has recently pursued have all been for naught, as the decisions have come too late to have any real effect in the market,” said Thomas Vinje of Clifford Chance, who represented complainants in a case against Google for illegally favouring its shopping service, and also worked with Spotify in its recent complaint against Apple for allegedly abusing its power over the app store to give Apple Music an advantage.
Instead, in the Broadcom case Ms Vestager is seeking to force the company to stop alleged anti-competitive behaviour at the start of an EU investigation — hence the “interim” element.
The case against Broadcom alleges the company is abusing its dominance by imposing illegal terms on seven customers that make TV set-top boxes and modems, preventing them from buying chips elsewhere.
Ms Vestager is seeking to use interim measures “to order Broadcom to halt its behaviour while our investigation proceeds, to avoid any risk of serious and irreparable harm to competition”.
Interim measures were first established in EU competition law in 1980. But they have remained dormant since 2001, when a European court set a high legal threshold for their use.
Now, however, Ms Vestager is building on similar efforts made by French competition authorities in some domestic antitrust cases.
“If this [EU] test case works, then we can expect a number of future unilateral conduct investigations in digital and high-tech sectors to incorporate interim measures,” said Ioannis Kokkoris, antitrust expert and professor of law and economics at Queen Mary University of London.
Ms Vestager is taking up the cudgel even though her own term as competition commissioner is set to end in November — hoping to establish a revived precedent for her successor.
Europe’s crackdown on powerful digital companies such as Google, Microsoft and Qualcomm has attracted charges of anti-American bias from Donald Trump and his predecessors including Barack Obama. Ms Vestager “hates the United States perhaps worse than any person I’ve ever met”, Mr Trump told Fox News on Wednesday.
The Danish commissioner has repeatedly denied those claims by highlighting cases she initiated against European companies. But she has “been looking” for a test case to revive the interim measures, a commission spokesperson admitted.
Complainants against Google and Qualcomm had asked the commission to apply interim measures in those cases, but officials decided not to. In the seven years it took for the EU to decide that Google illegally favoured its own shopping service, many rivals left the market.
UK company Icera, which first filed a complaint in 2010 alleging that Qualcomm was using incentives to prevent customers from doing business with rivals, exited the market nearly four years later. A decision in that case is expected before the summer.
“The commission needs to move faster to be effective, and today’s action demonstrates a new-found willingness to do so by pursuing interim measures,” Mr Vinje said.
Ms Vestager wants Broadcom to stop enforcing contract terms that provide the seven big customers with rebates and other incentives for exclusively using its products in their modems and TV boxes, giving an unfair disadvantage to rivals.
Broadcom has two weeks to argue against the use of interim measures. EU officials are then expected to make a decision within a few months. The company said the enforcer’s concerns were “without merit” and that it believed the interim measures “will not have a material impact on its set-top box or broadband modem businesses”.
Alfonso Lamadrid, an antitrust expert at lawyers Garrigues, who has acted for technology companies, welcomed the case as “a positive and long anticipated change of attitude” but cautioned that the tool “is an exceptional power that should not be forced upon a particular set of cases”.