Europe: economist perspective

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The European Union’s competition policy has been undergoing changes this year, some of which have been in line with anticipated modifications in legislation or court decisions, while others have been part of a dynamic response to unforeseen circumstances. These changes include the implementation of new guidelines and regulations, rulings by the European Union courts, legislative measures that were both anticipated and urgently adopted, and overall shifting approaches in various competition cases. While the role of economics and the economic approach has remained largely unchanged, we expect that with the new legislation, court precedents and the shift in the European Commission’s priorities, economists will have to adapt their thinking, skills and, in some cases, ways of working.

To gain a deeper understanding of the role of economics in competition cases this year and its projected evolution, we consulted leading professionals from some of the most experienced law firms in Brussels: Allen & Overy, Cleary Gottlieb, Freshfields Bruckhaus Deringer, Jones Day, Shearman & Sterling, and Skadden. We also interviewed the Directorate-General for Competition’s Chief Economist Team. The interviews took place between May and June 2022.

In the following sections, we:

  • describe the role of economists in recent competition cases;
  • note the possible implications of recent court decisions on the economic approach;
  • discuss the role of economists in the implementation of the Digital Markets Act (DMA), the evaluation of sustainability effects, and in future state aid cases; and
  • describe the likely economic input needed following the changes in legislation.

Overall, we find that the role of economists in 2021 has been significant and the tendency for stronger reliance on economic evidence has continued in merger investigations, Articles 101 and 102 cases, and state aid cases. Other more novel aspects have also played an increased role in competition cases and, thereby, contributed to an increased role of economists. One example of this is the economic assessment and quantification of sustainability effects, primarily concerning efficiencies and theories of harm. Moreover, we find that recent court rulings such as those in the Intel and CK Telecoms cases increase the burden of proof on the European Commission, yet the exact effects on the work of economists remain unclear. We also find that economic analysis may be necessary in an increasing number of cases related to the implementation of the DMA and state aid cases.

Economic analysis has been mostly focused on classical casework

As had been increasingly the case in the recent past, economic input played an important role in a plethora of competition cases in 2021. However, novel questions arose, such as the growing focus on the ways to assess sustainability-related aspects cutting across various cases and ways to assess the value of data in digital markets. In addition, economists are likely to need to collaborate more closely, not only with colleagues in other jurisdictions but also with lawyers.

Most interviewees noted merger investigations as a primary example where economists continued to provide valuable support. This area was marked not only by high-profile cases such as the European Commission’s Illumina/Grail merger but also by less prominent cases that required novel solutions and new ways of thinking. These trends were accompanied by the increased involvement of multiple jurisdictions in the same merger transaction (such as Cargotec/Konecranes), which is due to factors such as Brexit and the increased interest and capabilities of some national competition authorities. Such involvement requires increased collaboration among different stakeholders, such as competition authorities.

In merger cases, the role of economists remained focused on classical issues, albeit with a slight shift towards ways to address more novel issues. The classical issues included market definition exercises, market share calculations, diversion ratio estimations, and price pressure indices assessments. Additionally, the interviewees observed other types of economic analyses efficiently and inventively applied in merger cases, such as the competitive assessment of local areas (eg, concerning hospital mergers). Nevertheless, economic thinking has also been shaped to address other issues. In particular, the European Commission has been adapting to accommodate non-horizontal theories of harm and vertical mergers with rather classical foreclosure theories of harm, such as in Nvidia/Arm. Similarly, an increase in the use of innovation theories of harm and potential competition arguments also required new economic thinking.

Overall, while the interviewees emphasised the importance of hard evidence in competition cases, they also noted that economic analysis has remained a major tool in borderline merger cases. For example, economists successfully incorporated effects related to the covid-19 pandemic into the analysis, which, in several cases, made it easier for the European Commission to clear mergers. Similarly, in complex cases when the overall message from the evidence was not entirely clear, economics helped to tip the scale.

The lawyers interviewed have been inclined to involve economists in merger cases as early as possible. This is particularly the case if a merger is perceived early on as ‘risky’, ie, it is highly likely that the merger would be referred to Phase II investigation by the European Commission. In some of these cases, the economic analysis helped avoid such Phase II referrals. Additionally, some lawyers found that potential remedy analyses take place earlier in the overall proceedings, sometimes already during the pre-notification stage, which leaves room for economists to contribute.

Concerning article 102 cases, the interviewees noted that the European Commission seemed to have been focused on tying and bundling cases and cases related to rebate schemes. The digital industry has been particularly prone to scrutiny by the European Commission, article 102 cases in particular (eg, the European Commission’s investigation into Google’s activities in the ‘ad-tech’ supply chain). Digital cases are also expected to remain at the forefront of the European Commission’s focus as the DMA comes into play. Due to the specificity of the industry, economists’ help is particularly useful, and the role of economics is expected to increase. For instance, economists are already used to solving rather novel industry-specific problems, such as determining the true value of data, providing a better understanding of how different metrics such as prices and costs are set by the digital companies, and requesting and/or gathering the right data at the company level that would be used in the investigation.

In article 101 cases, economists have maintained their role in follow-on damage actions, yet they have remained less involved in the cases themselves. Concerning damage estimations, economists have provided significant and consistent input in several instances, such as those related to the AirCargo cartel. Specifically, economists have helped to better understand the drivers behind relevant market developments and crystalise those factors that are indeed relevant for competition, such as those to be taken into account in ‘before versus after’ comparisons or regression analyses to determine the potential price effect of the infringement. In addition, some of the lawyers interviewed noted an increased preference to involve economists in most cartel investigations, such as the European Commission’s Czech network sharing case. In such cases, economists can provide a better understanding not only of the competition issues but also of the functioning of more complex markets, as was the case with the European Commission’s cartel investigation into foreign exchange spot trading.

The interviewees noted an increasing collaboration among economists from competition authorities in the assessment of competition cases. Such collaboration is mostly common in more complex cases and is facilitated by regular calls between the authorities. The post-Brexit collaboration between the European Commission and the Competitions and Market Authority also successfully continues in more complicated cases.

Recent court decisions promote deeper economic analysis

The recent decisions by the European Union courts provided long-awaited guidance on how the European Commission is expected to approach various cases. While some of these rulings are in the process of appeal, in general, currently they imply that the European Commission will be expected to meet a higher legal standard and a burden of proof. The two most prominent examples of court rulings that may have a significant effect are (i) the judgment with regards to the blocked merger between Three and O2 (CK Telecoms judgment) and (ii) the judgment in the antitrust case against Intel (Intel judgment). However, regardless of the outcomes of the appeals, it remains unclear how these court rulings will affect the strategy and the depth of economic analysis undertaken by the European Commission in practice.

The CK Telecoms judgment by the General Court[1] remained at the forefront of economic and legal thinking in 2021. In 2020, the General Court issued its ruling, which annulled the European Commission’s decision to block the proposed acquisition of Telefonica UK (O2) by Hutchison 3G UK (Three). The General Court established two cumulative conditions required to establish that the concentration may result in a significant impediment to effective competition (SIEC): (i) the elimination of important competitive constraints that the merging parties exert on each other and (ii) a reduction of competitive constraint on the other competitors. The General Court specified that the European Commission in its CK Telecoms investigation did not provide sufficient evidence that the merger would lead to a SIEC. The ruling opened the floor for a wide discussion among lawyers and economists on the standard of proof that the European Commission would have to meet in its merger cases in the future. The lawyers interviewed indicated that in practical terms the General Court’s ruling means that the European Commission will have to provide stronger evidence concerning the closeness of competition in oligopolistic markets and, specifically, concerning 4-to-3 mergers. The lawyers interviewed also stressed that the General Court’s ruling implies that due attention must be given to the proper assessment and interpretation of economic evidence, such as price pressure indices and ‘standard efficiencies’. However, since the ruling was appealed to the European Court of Justice by the European Commission, the exact consequences currently remain uncertain. Up until the new ruling, the European Commission may be in an uncertain position as regards the standard of proof to be applied to the merger cases currently entering Phase II. Therefore, two parallel workstreams and ways of thinking may currently be needed in the same case. The judgment of the Court of Justice of the European Union is expected in 2023.

Another important ruling that is likely to have an effect is an Intel judgment by the General Court[2] following previous judgments by the European Court of Justice[3] and the General Court[4]. The General Court annulled the European Commission’s decision stating that Intel had abused its dominant position by implementing a strategy to exclude its competitors from the ix86 central processing unit computer chips market. The General Court also annulled the European Commission’s €1.06 billion fine. The ruling of the General Court followed the ruling of the European Court of Justice, which established that the application of exclusivity rebates that were part of the alleged infringement is not an abuse of article 102 per se. It also established that if an undertaking in question submits evidence that its behaviour did not result in foreclosure effects, the European Commission must analyse these effects, for which the European Court of Justice set out the minimum criteria. In this case, both courts stressed that the ‘as efficient competitor’ test should have been properly applied. The interviewees noted that the ruling by the General Court establishes a high standard of proof for an antitrust case. If the standard of proof is kept in a way that has been established by the General Court, the consequences are likely to be significant and the methodology of cases active today may look different in the future. Additionally, cases such as Intel may leave the lawyers and economists in a slight limbo, whereby they may start to strategically choose the ‘classification box’ for their case depending on the standard of proof required, for instance, refusal to supply vs margin squeeze. The European Commission appealed this decision. As is the case with the CK Telecoms ruling, the exact consequences of the Intel case remain unclear, in particular regarding the extent to which deeper economic analysis will be undertaken in practice in similar cases.

Overall, the interviewees noted that the European Union courts are paying increasing attention to economic analysis. Also, as opposed to the UK and the United States, the European Union courts are more inclined to use complex economics or less inclined to apply simpler rules, such as an almost inevitable block of a 4-to-3 merger. Nevertheless, the lawyers noted that economic analyses must remain convincing, which is best done when they are clear and simple. A similar rule can be applied to the economic input in competition litigation cases.

New impulses from the Commission create more room for economists to contribute

Two important topics discussed among the practitioners in 2021 were the implementation of the DMA and the assessment of sustainability effects. The Council recently approved the DMA, and it is expected to come into force at the end of this year. Similarly, the increased focus on sustainability effects has been strongly driven by the European Green Deal, which aims to build a climate-neutral Europe by 2050. Due to the specifics of the markets, in particular those prone to the DMA regulation, and the possible novel approaches to the investigations, increased involvement of economists and other more specialised professionals is expected. However, there is still significant uncertainty as to how the DMA will be implemented and how sustainability effects should be assessed in practice.

The interviewees noted that concerning the DMA, the current conversation revolves around the shaping of the law, which will be particularly important for future cases, yet there remains a grey area in how the law will be implemented in practice. For example, the interviewees noted that it is unclear whether competition cases such as article 102 cases will be covered solely by the DMA or run in parallel to DMA cases. While it seems that DMA-related work will be laid on the shoulders of the Digital Taskforce (who are non-economists) and a case handler, how the functions between different Directorates-General will be shared and whether specific units or directorates will be established remain unclear. The need for the presence of specialised economists and other professionals with more specialised skills, such as behavioural economists and data scientists, will also likely be strong. These professionals should help to better understand how platforms and consumers behave, and close collaboration between economists, behavioural economists, and data scientists will be unavoidable. However, this need is now being slightly overlooked by the European Commission, in contrast to its counterpart in the UK, the Competitions and Markets Authority, where such teams have already been established.

When it comes to the role of economists in the DMA cases, the level of input at this stage is unclear. Practitioners consider that economist input will be particularly valuable when trying to understand how the markets function, forming theories of harm and executing more data-heavy analyses. Overall, it is not expected that the economic assessment in the DMA cases will be significantly different from the assessments applied in regular competition cases. However, the evolving industry may provide challenges to economists (eg, related to forming novel theories of harm). Additionally, economists will be expected to answer more complicated questions in digital mergers with which the European Commission is increasingly being faced and part of which may catch the European Commission’s eye due to the DMA. These questions may relate to the calculation of the value of data or the level of remuneration to other market participants.

Sustainability seems also to have become an overarching theme cutting across various cases. Specifically, the introduction of the Green Deal by the European Union created a need to assess sustainability arguments in article 101 cases, state aid cases and mergers. In cases such as these, sustainability-related effects may need to be assessed as part of the theory of harm or, in contrast, as sustainability-related efficiencies. While the topic is broad and yet to be widely applied in practice, the interviewees think that the European Commission is already paying particularly close attention to sustainability issues, especially in cases in more relevant industries, such as the automobile industry. For example, in July 2021, the European Commission imposed a fine of 875 million on several car manufacturers for restricting competition in the development of emissions technology for diesel cars. When it comes to environmentally driven projects, the need for input from economists is on the rise. Not only are economists expected to quantify sustainability-related effects, but they will also be increasingly asked to answer trickier questions, such as what the fair price should be for sustainable behaviour, what the optimal consumer survey design should be to answer questions like these and better understand consumer preferences. The lawyers interviewed, however, were worried that the sustainability argument may currently be used more often as an offence in some cases and that the positive sustainability effects may not yet be given due weight.

The growth in state aid cases and upcoming legislation will lead to more involvement from economists

The interviewees noted developments in the state aid area, which this year has been driven by shifts in the geopolitical situation and long-anticipated adjustments in the legislation. State aid cases have been gradually moving from covid-19-related issues to energy markets and energy prices, effects of the Russian invasion of Ukraine, and other aspects related to new legislation, such as addressing the competitiveness of the EU. In many of these cases, economic analysis will undoubtedly be required.

One of the main topics that the state aid cases in the EU also have to deal with is the urgent need to address tensions in the energy markets. The energy crisis coincided with the publication of the revised Guidelines on State aid for climate, environmental protection and energy, to be implemented in 2022. However, these guidelines alone do not seem to be able to fully address the most recent challenges, such as gas price rises, the situation in Ukraine and the REPowerEU plan. Thus, additional tools may be needed.

Another challenge for the businesses reflected in the European Commission’s legislation for state aid is the effects of the Russian invasion of Ukraine. In its response to the crisis, the European Commission adopted the Temporary Crisis Framework.

A more anticipated change in the state aid sector in the EU is the Important Projects of Common European Interest (IPCEI) legislation. The goal of this legislation is to address and increase the competitiveness of the EU. The legislation would enable competition by pulling together various offers from different member states for a particular project. Then each project would be presented to the European Commission, which would assess the projects together. Such a scheme is particularly useful when enhancing European resilience in the semiconductor supply chain. When it comes to IPCEI, economists would be expected to submit most of their input in a few areas, such as financial assessment of the projects by comparing net present values of different business plans, and assessment of the effects on competition and market failure. As IPCEIs are becoming more common, more economist involvement is expected.

Another important piece of future legislation where economic analysis will be needed is the European Commission’s proposed regulation to address distortions caused by foreign subsidies in the Single Market. This legislation aims to address the distortions in the EU internal market that have been caused by subsidies from non-EU countries to companies operating within the EU. The lawyers stressed that once it comes into force, how foreign subsidies affect competition in the EU market and the suitability of potential remedies will need to be assessed. Additionally, economists may need to be involved in a continuous process of data collection.

The new legislation is unlikely to add to the work of economists

Several new regulations shaping the field of competition at the European Union level have come or are likely to come into force. These include the introduction of Article 22 of the European Merger Regulation, the Horizontal Block Exemption Regulation, and the introduction of the new EU Market Definition Notice.

Concerning article 22 of the European Merger Regulation, the interviewees noted that undoubtedly the European Commission will examine more merger deals. One example of a case referred under article 22 is the prohibited acquisition of GRAIL by Illumina. Industry sectors such as those related to technology or pharmaceuticals are likely to be more prone to such scrutiny. It is almost certain that in such cases, input from economists will be needed and, since the notification threshold is indirectly related to the potential harm caused by the merger, economist input will be expected early in the case.

The Horizontal Block Exemption Regulation and the Market Definition Notice were noted as two other important developments, albeit their effect on the work of economists is limited. For example, the Market Definition Notice is not expected to bring major changes from the economist’s point of view and instead acknowledges the tools that are already present, such as the previous practice by the European Commission.


[1] Judgment by the General Court in CK Telecoms UK Investments v Commission, T-399/16, 28 May 2020.

[2] Judgment by the General Court in Intel Corporation v Commission, T-286/09 RENV, 26 January 2022.

[3] Judgment by the Court of Justice of the European Union in Intel Corporation Inc v Commission, C-413/14 P, 6 September 2017.

[4] Judgment by the General Court in Intel Corporation v Commission, T-286/09, 12 June 2014.

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