08/08/22

A new framework for informal guidance… but pitfalls remain

On 24 May 2022, the European Commission issued a call for evidence on proposed changes to its Notice on informal guidance for novel or unresolved questions in antitrust cases.

With this initiative, the EC is hoping to breathe some life back into a communication tool that has remained under-utilised in its almost 20 years of existence. The EC proposes a welcome refresher, aimed at clarifying the use of informal guidance letters and (ideally) allowing guidance to be issued in more cases.

However, as ever the devil is in the detail and the revised (draft) Notice as it stands currently could benefit from further modifications to have the desired effect of encouraging businesses to seek guidance - and adequately protecting those businesses when they do.  The main proposed changes to the Notice - and potential pitfalls - are set out below.

In what cases will the EC issue a guidance letter?

The first important change to the Notice concerns the framework for assessing whether to issue a guidance letter. The Notice contains a two-pronged approach, aimed at enabling the EC to provide guidance in situations where: (i) there is a gap in existing precedent; and (ii) providing clarification would add “significant added value”.

A gap in existing precedent

The guidance criteria are expanded from situations where a question is novel or unresolved, to those situations where there is “not sufficient clarity in existing case law, decisions, or previous guidance letters”.

This is a helpful clarification of the Notice’s intent to fill a gap in existing precedent (e.g. sustainability initiatives where there has been little enforcement to date). As previously commented, while the EC’s new guidelines on sustainability will provide useful guidance, that general guidance remains inevitably high-level, and ad hoc guidance from the Commission for specific cooperation will be beneficial (as signalled in a recent statement by Commissioner Vestager).

However, as a practical matter, ideally the Notice would also address situations where precedents exist, but which no longer provide sufficient clarity  notably due to external factors, such as global pandemics or conflict.

From “useful” to “significant added value”

The threshold to decide whether the EC has an interest in answering a guidance request has been modified - from whether the guidance will be “useful”, to whether it will “add significant value”. To mitigate this seemingly higher hurdle, the EC will also be able to take into account its overall priorities and the Union’s interest. This addition comes as an alternative to the pre-existing consumer oriented criterion, and reflects the broadening priorities of the EC with respect to competition law enforcement.

Preliminary assessment: the burden is on applicants

Applicants will be required to submit their own preliminary assessment to the EC on the application of articles 101 and 102 TFEU to their request and its novel or unaddressed nature.

While this aspect can seem somewhat circuitous (conducting an assessment about the precise issue on which you are seeking clarification from the EC), the approach is similar to, for example, the procedure for seeking guidance on jurisdiction under the EUMR. The EC aims to highlight that parties should not use the guidance procedure as a way to avoid conducting an undoubtedly costly legal analysis themselves, or use the EC as their legal advisor. Across the Atlantic, however, antitrust enforcers appear to have a friendlier approach that the EC could aspire to emulate. Indeed, the US authorities do not require a detailed assessment from the applicant, as long as they provide all the relevant data and background information about the business conduct in question and its potential effects.

New Notice, new data gathering tool?

Ability to contact third parties and procedural rights

Upon receiving a request, the EC will be able to contact “other selected parties” in “exceptional cases”. This could include NCAs but also customers, competitors, and suppliers, turning this tool into the starting point of a fully-fledged market investigation. The deterrent effect this could have on guidance requests is undeniable. The updated Notice, in its current form, does not include detailed safeguards with respect to the applicant’s confidential or competitively sensitive information provided during the request process, or the exact procedure which the EC would follow to contact third parties. We should assume that confidentiality and business secrets will be protected, in accordance with general practice and rules, considering that parties will request guidance about intended cooperation agreements which might not be publicly known at the time of the request. Nonetheless, a clarification as to the particular circumstances and process would assuage the concerns of potential applicants.

Evidentiary uses of the (request for) guidance

Similar to its previous iteration, the Notice highlights the possibility for the EC to open proceedings with regards to the facts presented in the request. This is a clear reminder that the Notice, even in its updated form, cannot act as an immunity card against years of potentially questionable competitive behaviour. The leniency procedure (and derivative cooperation procedure now in place) remains most appropriate in such situations.

Given the EC can act on information it receives, the informal guidance process provides no protection against self-incrimination, and is likely to be appropriate for future projects where parties are seeking official oversight - (hopefully) carrying a modicum of evidentiary weight. The approach differs from the US where the EC’s transatlantic counterparts specifically do not offer guidance for current and past behaviours, which avoids the risk of parties ending up in hot water by virtue of having shared actionable documents with the authorities.

What comes next?

The EC closed its call for evidence on the new Notice on 21 June 2022. Linklaters submitted its views and concerns in response to the call. The complete feedback is available here.

Adoption of the new Notice is currently planned for the third quarter of 2022.

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