At the beginning of the year, we took the liberty to pause our blog for a couple of weeks. Reflecting on January in hindsight, there have been three developments which each might not justify a post on its own, but are just too interesting (and a continuation of previous posts) not to be mentioned at all. Here is quick run-through.
Finding the right topic for the weekly post is not always an easy task. Sometimes, you are almost flooded by the news running over the ticker, in other weeks it feels more like looking for a needle in the haystack. This week (and leaving the broadly covered Unilever judgement aside), it has been somewhat in-between which is why I decided to quickly touch upon three topics which, at least with a little imagination, are still interrelated.
Private equity and healthcare deals – more to worry?
Private equity being in the spotlight of regulators across the globe was the topic of one of our posts not too long ago (and also mentioned in Rocan’s Antitrust & FDI Outlook for the new year). It seems apparent that the healthcare sector has drawn the attention, especially from the US enforcers and the German Bundeskartellamt. Now the Spanish competition authority cleared the acquisition of the leading fertility treatment company in Spain by a large private equity firm only under the condition that certain clinics will be divested by the acquirer.
Admittedly, the antitrust concerns of the regulator mainly related to horizontal overlaps between the target and one of the acquirer’s portfolio companies and not so much to roll-up-strategies as such or new theories of harm. Still, the case seems to underline the general trend that private equity investors will face more scrutiny in the years to come.
Blowing the whistle for jumping the gun
Going hand-in-hand with a tougher stance in the substantive analysis, being compliant with the standstill obligation under European (and national) antitrust law has become maybe more important than ever. Such conclusion can at least be drawn from the European Commission’s announcement to expand the scope of the whistle-blower tool.
As a reminder, the tool was introduced in 2017 to establish a platform on which anyone could bring antitrust violations, such as price fixing, allocation of markets and other clear-cut hardcore infringements, to the attention of the European regulator on an anonymous basis. According to the Commission, the tool has been a success story with a “steady stream of around 100 messages per year”.
Now, the Commission has extended the tool to include merger (and State Aid) issues. Everyone has the chance to blow the whistle to help the Commission to find merger-related infringements such as gun jumping. Whilst the practical implications remain to be seen, the extension sends the clear signal that the Commission will continue to pay particular attention to that area .
Already an evergreen: Sustainability
Speaking of signals, the Commission has further launched a public consultation on its draft proposal for guidelines on how to design sustainability agreements in the field of agriculture. The draft guidelines are tailored to clarify a new exclusion from competition rules in the context of the recent reform of the common agricultural policy. An EU regulation on the organisation of markets for agricultural products excludes certain agreements in the agricultural sector from the cartel prohibition when those agreements are indispensable to achieve sustainability standards.
The draft guidelines first clarify that three sustainability objects can be pursued by an agreement for the exemption to apply, namely (i) environmental protection; (ii) reduction of pesticide use and antimicrobial resistance; and (iii) animal health and welfare. To benefit from the exemption, the parties further need to demonstrate that their agreement leads to a sustainability standard that is higher than what is mandatory under EU law. Lastly, the agreement has to be indispensable to achieving this standard which is only the case if the parties could not reach the standard individually and the agreement is structured in a way that is the least restrictive to competition.
Although sustainability was potentially a bit overshadowed by other topics in the past months, the guidelines and the way they are communicated can well be perceived as the Commission still having the green deal on its agenda and wanting to be understood that way. It remains to be seen whether the draft Horizontal Guidelines (more on that here), which many criticized for not being concrete enough regarding sustainability, will also include additional guidance in the final version.
Picture from Utsav Srestha on Unsplash