New Commissioner, New Mission, New Policy for Competition

What are the key take-aways of the mission letter to Teresa Ribera Rodríguez, EVP-designate responsible for EU competition policy?

On 17 September 2024, European Commission ("Commission") President Ursula von der Leyen ("President"), announced her proposed College of Commissioners ("College") for her second 5-year term. The Commissioners-designate still need to be confirmed by the European Parliament ("EP").

Of particularly interest from a competition policy perspective is the President's mission letter ("MissionLetter") to Teresa Ribera Rodríguez, the designated Executive Vice-President ("EVP-designate") for a "Clean, Just and Competitive Transition". The Mission Letter sets out the priorities and action plans of the European Commission for the next 5 years.

In this blogpost, we introduce EVP-designate Ribera and the tasks which the President has set for her, specifically on competition policy.

About EVP-designate Ribera

Like many of her colleague Commissioners, past and present, EVP-designate Riberahas held several national ministerial posts: she has been serving as Spain's Minister for Ecological Transition and Demographic Challenge since 2018 and has had two consecutive terms as Vice-President of the Spanish Government since 2020. She has also been serving as a member of the Spanish Parliament since 2019.

A lawyer by training, EVP-designate Riberahas also held high-level private and public posts focusing on sustainable development and climate change. She served as Spain's State Secretary for Climate Change (2008-2011) and as director of the Institute for Sustainable Development and International Relations (2014-2018) - likely suitable experience given indications in her Mission Letter that these topics will only gain in relevance, both for the Commission and its competition portfolio.

The new mission for EVP-designate Ribera

The Mission Letter observes that "Europe needs a new approach to competition policy" before setting out the main goals for the next mandate. The key pillars of EVP-designate Ribera's mandate - "clean, just and competitive transition" - related to this new approach include:

• Clean. The Mission Letter marks the European Green Deal and specifically decarbonisation as a policy priority. Unsurprisingly perhaps given her background, EVP-designate Ribera is expected to be a strong advocate for ambitious EU climate policy.
• Just. The concept of a just transition is embedded in various social objectives that the mandate pursues, including an increased focus on sustainability and energy poverty and the overall promotion of social fairness. In particular, the Mission Letter focuses on lowering energy prices and addressing the housing crisis.
• Competitive. The Mission Letter stresses that Europe should be "more supportive of companies scaling up in global markets". The President had already recognised the impact of global dynamics and global pressures on EU companies in her speech in July 2024 setting out her political programme (covered in an earlier blogpost). This follows calls by Member States for "new political impetus' to create "European champions" following the prohibition of the Siemens/Alstom merger in 2019. However, EVP-designate Ribera recently noted that "Europe's competitivenessis not solved by three or four national champions" and Commission initiatives to boost European companies but not bolster national champions appear more plausible. Similar recommendations are in the Draghi Report, which contains several references to European champions - it encourages, for example, "systematic cooperation between leading EU companies for generative AI and EU-wide industrial champions in key sectors" to boost Europe's competitiveness globally - but does not suggest departing from policy or precedent regarding national champions.

Contrary to what happened in the past when the Competition Commissioner was solely responsible for competition, EVP-designate Ribera will oversee a wider portfolio. This confirms a trend started in 2020, when Margrethe Vestager became Commissioner for "A Europe Fit for the Digital Age and Competition" combining competition policy with a digital portfolio. EVP-designate Ribera's portfolio seems even broader. This could mean less attention by the Commissioner to competition, with potentially a greater role for the administration, and tradeoffs between competition policy and other policies.

More specifically, on antitrust and merger control the Mission Letter includes:

• "Your work to modernise competition policy will include a review of the Horizontal Merger Control Guidelines".

The Horizontal Merger Control Guidelines have not been revised since their adoption in 2004 and numerous themes could come into play. The Draghi Report recommends that "these guidelines should explain how the authority assesses the impact of competition on the incentive to innovate", and advocates for a new innovation defence in the context of merger control which would enable certain sectors to achieve the scale needed to compete at the global level. Another point may include considering more actively potential efficiencies of a transaction, e.g., taking a longer-term view of efficiencies (Draghi proposed a 5-year term) or also considering efficiencies which benefit consumers outside the "relevant markets" where competition is harmed by the transaction under assessment (""out-of-market" efficiencies").

• "You will focus on the particular challenges facing SMEs and small midcaps, notably to address risks of killer acquisitions".

The Commission's ambition to better scrutinise so-called "killer acquisitions" (a catch-all term including acquisitions of nascent but promising companies), notably in the tech and pharmaceutical sectors, remains a policy priority. The President had already stressed this point in her speech in July 2024. That said, the Commission experienced somewhat of a setback in the meantime: just this month, the European Court of Justice ("ECJ") determined in Illumina/Grailthat under the EU Merger Regulation ("EUMR") the Commission does not have jurisdiction over transactions referred to it by national competition authorities that do not meet the national thresholds of the referring Member States. This is likely to affect many of the transactions which the Commission might consider "killer acquisitions". EVP-designate Ribera might need to rely on other mechanisms to address such transactions for now. As explained in our blogpost on the judgment, a legislative proposal to amend the EUMR could trigger complex negotiations with Member States and open the door for other changes to merger policy less palatable to the Commission (notably the above-mentioned treatment of national champions).

• "I want you to strengthen and speed up enforcement of competition rules[and] work toaccelerate authorization of compatible […] transactions in strategic fields".

The Commission is continuously subject to pressure to strike a balance between reducing the administrative burden for parties while still maintaining effective enforcement. It released the latest Merger Simplification Package in September 2023, and received generally positive feedback - but the Mission Letter seems to expect that continuing improvements will be required through the next term to reduce the current administrative burden for companies.

• "You will ensure the Commission takes rapid and effective enforcement actions under the Digital Markets Act".

Considering outgoing Competition Commissioner Vestager's emphatic focus on the enforcement of the Digital Markets Act ("DMA"), this statement in the Mission Letter is almost more notable for its briefness. That said, and notwithstanding various statements that highlight various broader social and sustainability objectives, there should be little doubt that the Commission will continue to consider enforcement in digital markets a key priority.

Finally, the Mission Letter gives EVP-designate Ribera several objectives concerning state aid and the Foreign Subsidies Regulation, including the following:

• "As part of the Clean Industrial Deal, you should develop a new State aid framework to accelerate the roll-out of renewable energy, to deploy industrial decarbonisation and to ensure sufficient manufacturing capacity of clean tech […] drawing the lessons from the temporary crisis and transition frameworks […] and support the implementation of the future European Competitiveness Fund to ensure coherence between it and State Aid policy […]".

The President had already noted the objective of creating a new "European Competitiveness Fund" dedicated to the EU industrial policy in her July 2024 speech (see also the mission letter to the EVP-designate for Prosperity and Industrial Strategy, Stéphane Séjourné). Since EU funds managed by Member States must in any case comply with EU State aid rules, the creation of a European Competitiveness Fund requires a fine-tuning of EU State aid compatibility rules. The Commission seems to focus on two workstreams:

• First, establishing a new State aid framework transposing the rules to grant State aid for (i) accelerating the roll-out of renewable energy, (ii) deploying industrial decarbonisation, and (iii) ensuring sufficient manufacturing capacity of equipment relevant for the transition towards a net-zero economy (e.g., batteries and solar panels) (see, in that regard, our recent blogpost), which are currently contained in the "Temporary Crisis and Transition Framework" but which expire at the end of 2025.
• Second, strengthening the recourse to "Important Projects of Common European Interest" ("IPCEIs"), i.e., large cross-border projects financed by (at least four) Member States to overcome market failures or social challenges and to create positive spill-over effects for the EU economy, which are assessed based on ad-hoc guidelines (see, in that regard, our recent blogpost). In this respect, the Commission is evaluating new streamlined IPCEIs rules beyond breakthrough technologies to more generally include industrial projects of common interest, e.g., in the automotive, air transport and interconnector sectors.
• "You should preserve the level playing field while pursuing further simplification of State Aid, prioritising work on the most distortive aids […]".

Since the 2012 EU State Aid Modernisation, the Commission has sought to focus on aid with a significant impact on the EU Internal Market. This approach led the Commission to investigate measures covering large and potentially distortive aid and, notably, tax rulings, i.e., arrangements between tax authorities and multinationals.

The Commission conducted several investigations and in most of the cases concluded that EU Member States' tax rulings were in breach of EU State aid rules because they conferred selective tax advantages to some multinationals, and ordered Member States to recover the amount unlawfully foregone.

The Mission Letter seems to suggest that, even if some Commission decisions were overturned by the EU Court of Justice, the Commission will continue its enforcement based on EU State aid rules against harmful tax competition and aggressive tax planning (see, in that regard, our blogpost). This is in line with the statement of the current Competition Commissioner, Margrethe Vestager, after the ECJ's judgment in the Apple case, by which the Commission's order to Ireland to recover from Apple EUR 13 billion of State aid in the form of foregone corporate tax was confirmed.

• "You will work with other Members of College to vigorously enforce the Foreign Subsidies Regulation, including by proactively mapping the most problematic practices that could lead to competition distortions".

The Mission Letter seeks to focus on tougher enforcement of the Foreign Subsidies Regulation ("FSR"), adopted at the end of 2022, which has been pitched by the EU as a key tool to remedy perceived distortions of competition in the EU caused by foreign subsidies (for a complete overview, see our blogpost). The Commission seeks to create tougher FSR enforcement, which has so far led to (i) two public procurement investigations involving Chinese State-owned manufacturers of clean tech (Longi and Shanghai Electric) and rolling stocks (CRRC), (ii) an investigation into the acquisition by e&, majority owned by the UAE government through an Emirates Sovereign Wealth Fund ("SWF"), of a telecom business in Central Europe, and (iii) two ex officio investigations into Chinese manufacturers of wind turbines and of security equipment.

In addition to the enforcement activity, the Commission has signalled that it intends to collect data on the most distortive foreign subsidies in place in third countries, to constantly monitor them, and to evaluate the tools to intervene. Indeed, in addition to the FSR, the Commission may rely also on trade defence investigations, such as the ongoing anti-subsidy investigation concerning electric vehicles from China (in this respect, see also the mission letter to Commissioner-designate for Trade and Economic Security, Maroš Šefčovič).

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