Antitrust Remedies: From Caution to Creativity

Journal of European Competition Law & Practice, vol. 14, pp. 540–552

Abstract

Adopting remedies to address violations is an essential part of antitrust enforcement. Establishing infringements without the ability to impose proper remedies would make antitrust enforcement a Sisyphean task—one that is ultimately futile. Article 7(1) of Regulation 1/2003 empowers the European Commission to impose ‘any behavioural or structural remedies which are proportionate to the infringement committed and necessary to bring the infringement effectively to an end.’1 Despite this power to impose any remedy, the Commission generally remedies infringements with ‘simple’ cease-and-desist orders. This cautious approach is coming under pressure, especially in digital markets where it is perceived as ineffective. Therefore, Commission officials are calling for new ideas, which may find their way into the ongoing review of Regulation 1/2003.2 In this article, we take up the baton and take an in-depth look at antitrust remedies.3 First, we ask whether the caution in remedy design goes back to limits imposed by the legal framework. In adopting remedies, the Commission is constrained by their aims (Section II.A) and the requirements of effectiveness, proportionality, and a remedial link (Section II.B). We find that the legal framework leaves substantial room for creativity. Next, we turn to practical difficulties when designing and monitoring remedies (Section III.A), especially in digital markets (Section III.B). We find that these practical difficulties pose a stricter limit to the Commission’s creativity in remedy design. One solution to tackle these difficulties is to take a more structural approach to remedies; another solution, which we prefer, is to make the process more iterative (Section III.C). To complete the picture, we discuss the Digital Markets Act, finding that it may tackle some but not all of the difficulties that haunt antitrust remedies (Section III.D). The Commission’s cautious approach to antitrust remedies, which tends to take the form of cease-and-desist orders, needs to be rethought in order for remedies to achieve their aims, especially in digital markets. The legal framework, which centres around the requirements of proportionality, effectiveness and a remedial link, leaves room for creativity in remedy design. It allows not only for injunctive remedies but also for preventative and restorative remedies. Practical difficulties, including information asymmetries, resource considerations, platform market intricacies, and the complexity of intervening in product designs and business models, pose a greater challenge to remedy design. A more iterative remedy process revolving around flexible remedies, adopted through a more open procedure, which can be tested and redesigned along the way, can help tackle current difficulties. Article 7(1) empowers the Commission to impose antitrust remedies but does not give a lot of guidance as to where the limits of this power lie. To ascertain these limits, it is necessary to establish to what ends the Commission is able to use its remedial power (Section A) and to which requirements it must adhere when making use of it (Section B). The Commission’s remedial power is limited by the ends for which it can be used. The Commission is able to impose remedies on infringing undertakings ‘to bring such infringement to an end’. This seemingly straightforward phrasing may give the false impression that the Commission may only use its remedial power to stop the illegal conduct. This idea is reinforced by the Commission’s remedial practice, which mostly features cease-and-desist orders geared primarily towards halting the illegal conduct. The Commission, however, is not bound by this single objective but may (and should) employ its remedial power to achieve a set of remedial aims, including a broader injunctive aim (Section 2), a preventative aim (Section 3), and a restorative aim (Section 4). Remedies must halt the illegal conduct and stop the anticompetitive effects that flow from it, even after the conduct has stopped. This is inherent to the concept of ‘infringement’, which comprises both the illegal conduct and its anticompetitive effects.4 According to the European Court of Justice (ECJ), the Treaty provisions continue to apply when the illegal conduct has ceased but its effects remain.5 It also follows from Ufex that the Commission may not only remedy anticompetitive conduct but also its consequences. In Ufex, the Commission rejected a complaint (inter alia) because the anticompetitive conduct had ceased. On appeal, the General Court (GC) confirmed it was unnecessary to follow up on a complaint where the illegal practices had ceased.6 The ECJ, however, found that the Commission must have regard for the illegal conduct’s effects and that it has the power to eliminate these effects.7 In both policy documents and decisional practice, the Commission has adopted the position that ‘Article 7 decisions aim at ensuring that infringements are found, and their effects are effectively brought to an end’.8 The GC is on the same page: in Microsoft, it found that the remedy may ‘put an end to the anti-competitive effects’.9 The remedy was ‘an appropriate means of putting an end to the abuse in question and of resolving the competition issues identified’.10 A remedy may thus address competitive issues that persist and that can cause future anticompetitive effects notwithstanding that the illegal conduct has ceased. Halting both illegal conduct and effects is aligned with the more effects-based approach which emphasises the effects of conduct over its form.11 For example, where a dominant undertaking operating two digital platforms illegally tied them together, untying may not be sufficient to stop anticompetitive effects as the tie may have created a consumer bias in favour of the second platform that persists after the tie. In such cases, in order to adequately remedy the infringement, a remedy must not only address the illegal tie but also the consumer bias it bred. Remedies seek to prevent the occurrence of future infringements. Remedies can take away an undertaking’s incentive and ability to engage in future anticompetitive conduct.12 It follows from recital 12 of Regulation 1/2003 that a remedy may alter an undertaking’s structure if is a substantial of a infringement that from its In and the remedies that to prevent a of the The Commission also the preventative this aim to the Commission’s in that a remedy is preventative remedies can make for where a undertaking illegally its market power from of the to In this the undertaking to its position on of the prevent it from in the same in the as it its ability and incentive to The preventative aim does not the of the same or conduct. of conduct what has found illegal its This is from and in which the remedies that a future of the illegal remedies aim not only to stop but also to the effects by the remedies to anticompetitive The is that anticompetitive conduct can a market to the this competition an that the to from the market power its illegal practices created or In such a a cease-and-desist order may stop the illegal conduct and its future It may even prevent the of that that is not sufficient to competition if it to the anticompetitive market that has For example, if a dominant undertaking its of business through to a may not competition and the undertaking to the of its illegal This is where market such as to prevent the market from on its Digital markets in are by with of and a platform to its created or dominant position even after the anticompetitive conduct has ceased. Regulation 1/2003 does not the restorative aim where antitrust remedies are the According to recital competition have means to competition in the market by structural and behavioural The same goes for the In the that the Commission was ‘to that the infringement was and that of the anticompetitive was from the of in Ufex, the that the Commission is to take to eliminate and anticompetitive The Commission this restorative In it the undertaking not to end the infringement but also to eliminate any anticompetitive what be have the competitive to the illegal conduct and the the illegal conduct The of the In the found that of be as it is to from its conduct and to to the that the In practice, however, it is to the or the The these also of competition as primarily with market structure or the In order to these difficulties and in with the more we that remedies on an competitive of ensuring that undertakings the market had or the infringement, remedies that both and are able to effectively in the market This to or that created or anticompetitive conduct. For example, where a dominant undertaking its market power from market to another and a through or the remedy not only address the but also the Article 7(1) empowers the Commission to impose any behavioural or structural remedies that are proportionate to the infringement and necessary to bring it to an We requirements that the Commission’s remedial power and the room for any remedy must be (Section proportionate (Section and have a link with the infringement (Section The Commission may impose remedies ‘to bring the infringement effectively to an end’. This is an of the of The Commission must be able to its power to stop infringements the its decisions must not The effectiveness a the Commission must at that the remedies it are Article 7(1) does not any guidance as to when a remedy is This is as effectiveness is a and that proper its effectiveness must be with to the objective of a legal In the of antitrust remedies, these to the remedial aims that a remedy is able to stop the infringement and its prevent its and the competitive of a remedy is not but is a Article 7(1) that remedies can only be imposed where is behavioural remedy or where any behavioural remedy would be more for the undertaking the structural The to remedies that is a of remedies from to and in the Treaty Article 7 of Regulation 1/2003 set infringements must be infringements can take that it is for to a of of infringements to an This of remedies allows for a of to Regulation the and stop or not to One may also and remedies. of the are cease-and-desist orders and remedies in Article 7(1) of Regulation 1/2003 a new not in legal behavioural and structural remedies. are of these in the Regulation or the these are in the and on a of whether or not or whether or not ongoing generally This and and as a the these of remedies is not A remedy an undertaking to its be as a structural remedy because it with the undertaking’s and may alter the market same remedy can also be as behavioural because it does not of and ongoing behavioural and structural remedies is especially in the digital Remedies for antitrust infringements in digital markets both behavioural and structural This is because infringements are in of a product design or business Remedies product into the For example, of that on to or some of or remedy, which are to as behavioural or Article 7(1) of Regulation 1/2003 the Commission to impose only remedies that are This is an of the of proportionality, which is a for the of Commission for an which the Commission when remedies. is only second to it a by an the means to and their on the thus the and The by remedies to the remedial aims A must be in to these the is more It is not which must be into which the of the infringing also be such as of by the remedies or has a and on the of Commission or of Regulation antitrust remedies, that the not the limits of what is appropriate and necessary in order to the by when is a appropriate must be had to the and the must not be to the aims is a a remedy must be to achieve the remedial that the remedy does not what is appropriate to achieve the remedial be an but remedy which remedies are that these remedies the remedial aims Remedies that not be A remedy also has to be the imposed by the remedy must be have this to antitrust remedies because their and are by two of a remedy a for the undertaking it the this does not to be with the of proportionality, the idea of which is that with by is an from This especially at on a as the remedial aims by a The remedial aims and the means to achieve these aims may not the of especially when remedies on In of the of proportionality, it has that Regulation 1/2003 a for behavioural over structural remedies. Article 7(1) that remedies can only be imposed where is behavioural remedy or where any behavioural remedy would be more for the undertaking the structural this General a of behavioural Article 7(1) does not to such a The the of the requirements of effectiveness and First, the that structural remedies can only be imposed where is behavioural remedy is a of effectiveness, which the remedy that is the that structural remedies can only be imposed where any behavioural remedy would be more the structural remedy follows from proportionality, which that the remedy must be The not to to the in Article 7 of the requirements of effectiveness and proportionality, a for behavioural remedies. a for behavioural remedies can be if a behavioural and structural remedy are and the is such a if In any a for behavioural remedies be a with the of behavioural and structural remedies. a when it is when is with a behavioural remedy the is only of is to use this to or a in the the GC that the of remedies as behavioural or structural was a for behavioural remedies at with the which is a on the of the Remedies be on a One even for these is to in Article 7(1) the of structural and behavioural remedies and the be the of behavioural and structural is unnecessary for the of Article it does not to the of the Commission’s power to impose Article 7 that the Commission is able to impose remedy, which behavioural and structural this also does not to the limits of the remedial which are by the requirements of and It is for the Commission to design and the appropriate Commission does not have when the Commission would the the remedy and the antitrust It would the Commission to its remedial it to markets or in would the Commission’s as antitrust Article 7(1) the Commission to impose not or remedy but remedy, that it only impose but also design and the This was in as necessary order to that its as in in is in to a to make an order to without in the order what must in order to with The power to remedies has by in which the GC that is not for the Commission to impose the its from all the of which are in with the be that if are in which an undertaking can end an infringement, it is for the undertaking and not the Commission to it the Commission the This of however, the as as Article A of is that the undertaking has some in ensuring that it ends the infringement but that this can be limited where the Commission a remedy, which may some to the undertaking as to it with the its power to design and a remedy, the Commission must that a link the remedy and the infringement This follows from Article only in the of an infringement may the Commission impose remedies and it can only in order to bring the infringement to an In in and the that the Commission’s remedial power must be in to the infringement The remedial link does not to be The GC in that can be link the for the legal of the abuse and the it to be the legal for it does not also the the aims to a the the as and the of a the of generally antitrust not the is thus a the finding of an infringement and the remedy The and the on For this and remedies can be found in legal the are in the the are set in Article to which the Commission can impose any remedy, which a of that would not if the in the Treaty the a remedy does not have to the the remedial link is The infringement the remedy through the of the effectiveness and requirements make that the remedy is at and the and a remedy to the remedial In the remedial aims are to the infringement as are to or the illegal conduct and or the effects this conduct. A remedy must be towards the illegal conduct and its that the remedy does not the illegal conduct and its It that the remedy is the way of the remedial It thus remedies what is necessary to achieve the remedial aims and a remedial A of Article 7 of Regulation 1/2003 that the Commission has room for creativity when designing and remedies. The use of the Commission’s remedial power is not to illegal conduct. It can be to achieve broader remedial In remedies must be in all these aims, which means the Commission must a cease-and-desist order if such an order is of In these the Commission may be to more for example, an competitive Remedies must be The of remedies must to the remedial aims by the remedies. The on the undertakings must be in of these aims in a The Commission is and not be bound by a for behavioural remedies. remedies can be The the Commission to impose remedies. what may the is the of the must be a remedial link, this link does not a infringement and the remedial link is as it is by the of effectiveness and This can that remedies not the infringement but In it is not the legal framework that the Commission’s remedial to cease-and-desist orders. The has that is room for even remedies the of effectiveness and these continue to this on the practical limits when designing and monitoring remedies, especially a cease-and-desist (Section The difficulties in designing and monitoring are in digital markets (Section B). however, (Section and the Digital Markets is also to have an (Section The Commission is a and a when designing remedies. cease-and-desist orders or more remedies are Commission has to impose cease-and-desist orders or remedies. the remedy in that the abuse in its the of does not a cease-and-desist The design of the remedy is to the dominant which is for the Commission monitoring is is a to remedy effectiveness when such to an undertaking that has an incentive to it by the on its including the illegally created or dominant In the remedy, of the on on the to the Commission, it illegally its It an that for to that has not with the remedy at all at it its it in its or has with it not find their way to the of the may it that the remedy that it it the to an and is by the it is or and their for the the Commission take a more in designing we the Commission can be more when remedies even it would be not to a of at when the Commission’s power to remedies to be as in The anticompetitive the of to prevent from Despite its as the Commission two remedial the competitive that the of the by it, or by on to the of the of the It that the remedial of the because the in the and that the second would of and The GC and found the Commission’s remedy but the the Commission has to to even on remedies. It is that the Commission has for more remedies. In its for cease-and-desist orders in a for In of a and effectiveness, and to to the of the Commission tends to infringing undertakings to a remedy which it for This allows undertakings to It also the information Commission and which means the is with and business to bring the infringement effectively to an it is for the Commission, which only has to review the can be a business and remedy which the Commission must the undertaking is restorative remedies are to be its The Commission the on the remedies and its power is by the of remedies the Commission can continue to their its of if with the help of and that the for use of in infringement decisions is not In the Commission these which in over in the Commission over in the Commission remedy A the Commission this on the of the remedy, as the and the Digital Markets must have also a In digital the practical difficulties with remedies are to the complexity of platform business models, the information is have at two a remedy needs to for the on the effects the form of which means the remedy must also for the markets. is even more that market illegally or is more to as and effects can to is the seemingly remedy process in is all the more it has to a Remedies also to for the of competition in the and that competition is for the restorative seek to that but that is more competition in the In remedy the of a is to make especially the that is especially in markets where the of is and even the to This more a remedy, in the current market is to its effectiveness more are more to in the design of the product or the of the business of which them to was such a of product design. if the Commission would have an to in the of or it is not for this a digital design is more a the effectiveness of a remedy that a design. of this the for a remedy in For an of a in which anticompetitive conduct and business of The remedy, would have broader the of and the of it was to a for the in product design or business thus with a of which make the Commission also from a of remedies must be which is an and especially in digital markets. a platform in of its it can to achieve the same anticompetitive all of which must be In the Commission and complexity of the that may take to bring the infringement effectively to an It to the complexity by putting some of the on which was and the Commission also two with in the incentive to engage in anticompetitive conduct which is the for with behavioural remedies, monitoring can a for The Commission can to the of digital remedy design and monitoring in One way, which is is to have to structural way, which we prefer, is to take a more approach to remedies. remedies have in conduct a on a of to essential the A structural remedy was to the of The Commission the remedy proportionate but it that by the remedy and its The of the digital has in structural remedies. of has behavioural remedies as to information asymmetries, and to have of a towards remedies such as an undertaking to the of its business The remedy in has of the of the a more structural solution and is to make the remedy The of in a towards According to the Commission, on both of the market in of which means the competition can only be by by of part of its are and to structural remedies in conduct The idea is that structural remedies are more to design but to even unnecessary to with the anticompetitive the by the incentive to engage in anticompetitive thus This must be remedies must be that the to competitive the anticompetitive The Commission has in designing such from where structural are over behavioural design not be a the of was up in more structural remedies not be but on their over the the process and to the are to or in a especially to a are to the anticompetitive can be a power the be to the up In that it is that the Commission only a structural remedy in after the of Justice for structural in the A second way to with the difficulties of behavioural remedies in digital markets is to make the process more According to the process is from the that is in to the remedies adopted in the of and antitrust remedies not take to a We an iterative process with flexible remedies that are tested to on if the imposed remedy to be it can be on the iterative process empowers the Commission to take when it has sufficient information to design the remedy, the of unnecessary or remedies. The of remedies or are of with product designs or business is when the remedies can iterative process allows the Commission to a effectiveness and if an more remedy is room to it without A remedy can be imposed and be to for new In the GC has that give to the of as under the or of the if it is that the are necessary or decisions an example, not only when it to the of but also because have more and creativity. the of a of are a when away thus a of that is The also a the Commission to review the remedy after two have on the The was of after on them for and with of the of to the Commission have for by only to be in of is when such but a more iterative process can help from the the from not the anticompetitive the more the Commission can be in remedies a of them This is not to decisions can also review and can be with the iterative process when the undertaking is but such be with a The of an iterative approach must be legal for the undertaking and are monitoring is also a that the more process iterative process may also competition into we these and when are not greater the The Digital Markets can help the remedy at in digital markets with a it is to that the does not competition enforcement of competition framework, the to achieve Despite this a with conduct remedies. We at which a First, remedies are in the cease-and-desist for the more for the remedies form part of the in of decisions the Commission a market ‘any behavioural or structural remedies which are proportionate and necessary to a legal is to remedies be more under the even the on from the of Regulation some to the remedial structure be more competition First, the are more the more competition the necessary to be as the Commission can the to an infringement is the process to be more on a with the in to the more under competition The Commission for example, when remedies are not The in more in with all of this is to to a under competition which may for a market has remedy difficulties, such as intervening in product design and business models, also enforcement of the the of antitrust remedies, and their in digital the Commission may to more when designing and monitoring remedies. Regulation 1/2003 leaves sufficient to The Commission is not bound to a remedy that is the of the infringement or by a for behavioural remedies. the Commission can a remedy to the of the that it the infringement and its and the competitive In the Commission is constrained by the requirements that the remedy is and that a link infringement and the legal framework can be for which the ongoing of Regulation 1/2003 an it stop to the Commission’s creativity. however, practical difficulties that limit the Commission’s creativity and it on its of mostly cease-and-desist orders or remedies. difficulties, which are in digital information asymmetries, resource platform market intricacies, and the complexity of intervening in product design and business the difficulties can be One way to of which we is to have greater to structural remedies. way to remedial difficulties, which we prefer, is to make their design a more iterative This process around flexible remedies, adopted through a more open procedure, which can be tested and in with the of effectiveness and The remedial structure is a in this it is not a

Authors 2

1. Friso Bostoen Aachen Europa Institute

   Leiden University · KU Leuven · Tilburg University

   Affiliation as printed

   Assistant Professor of Competition Law & Digital Regulation , Tilburg Institute for Law,

   Europa Institute , Leiden University and Consumer Competition Market , KU Leuven

   Assistant Professor of Competition Law & Digital Regulation, Tilburg Institute for Law, Technology and Society (TILT) and Tilburg Law and Economics Center (TILEC), Tilburg University

2. David van Wamel Aachen Europa Institute

   Leiden University · KU Leuven · Tilburg University

   Affiliation as printed

   Technology and Society (TILT) and Tilburg Law and Economics Center (TILEC) , Tilburg University

   Europa Institute, Leiden University and Consumer Competition Market, KU Leuven