European Commission set to impose interim measures: the dawn of a new era?

Introduction

In the first move of its kind in 18 years, the European Commission has announced its intention to impose interim measures in an antitrust investigation. This is a seminal development that could mark a change in the way that the EC handles antitrust investigations.

The investigation concerns an alleged abuse of a dominant position by Broadcom in relation to set-top-boxes and modem chipsets. The proposed interim measures are essentially a cease-and-desist order aimed at preventing Broadcom from causing serious and irreparable harm to competition during the period of the EC’s investigation.

It is an extraordinary procedural step. One taken against the backdrop of increased calls for the EC to move quickly and make greater use of its interim measures powers in abuse of dominance investigations, particularly those concerning fast-moving technology markets.

Background

In its 1980 Camera Care judgement, the European Court of Justice established that the EC has “the power to take interim measures which are indispensable for the effective exercise of its functions and, in particular, for ensuring the effectiveness of any decision requiring undertakings to bring to an end infringements.” Following Camera Care, the EC did adopt interim measures in a number of cases, including in Port of Roscoff and ECS/Akzo. The last time that interim measures were attempted by the EC was in IMS Health in 2001. The EC had to withdraw the interim measures after a successful challenge by IMS Health before the EU Courts.

With the entry into force of Council Regulation No 1/2003 in 2004, the EC’s powers to impose interim measures were codified under Article 8 of that Regulation. According to Article 8, complainants do not formally have the right to request interim measures, although they can of course encourage the EC. Despite the codification of these powers in Regulation No 1/2003, the EC has not adopted any interim measures since 2001.

Requirements for interim measures

Article 8 states that the EC can impose interim measures if two conditions are met: (i) there is urgency due to the risk of serious and irreparable harm to competition before the EC has had the opportunity to adopt its final decision; and (ii) there is a prima facie case of infringement of the competition rules.

Financial loss is not regarded as irreparable unless the survival of the undertaking concerned, or at least its presence in the market, is threatened by the alleged conduct. But damage will be regarded as irreparable if it leads to market developments that will be difficult to reverse.

Even where the conditions for interim measures are met, the actual measures must be temporary and proportionate. The EC must also respect the right of the addressee to be heard by issuing a Statement of Objections, granting access to file and the right to an Oral Hearing upon request. 

The present case

The EC stated in its press release that Broadcom is likely to hold a dominant position in various markets for the supply of systems-on-a-chip for TV set-top boxes and modems. The infringement would result from agreements between Broadcom and seven of its main customers manufacturing TV set-top-boxes and modem chipsets, which contain exclusivity provisions. The press release mentions that Broadcom's conduct may result in the elimination or marginalisation of competitors before the end of the investigation, justifying the urgency.

The envisaged interim measures would generally apply until the EC concludes its assessment on the substance of the case.

Next steps

Broadcom has now received a Statement of Objections setting out the evidence and the legal basis for interim measures. Once Broadcom has had the opportunity to present its views by responding to the Statement of Objections, the EC will decide whether to proceed with the adoption of the interim measures.

Any such decision can be appealed to the General Court of the EU. However, pending an appeal, Broadcom will be required to comply with it. Failure to comply may lead to the imposition of periodic penalty payments.