Competition Outlook for 2021: Four themes towards a fairer and greener future

2021 will give competition authorities the opportunity to take further stock of what the dramatic refocusing of 2020 means for antitrust and merger control enforcement. New commercial realities need new guidance. The acceleration in the digital transition means that action appears more urgent than before. And the global threat posed to our welfare by the pandemic has created a policy awareness rebooting long held beliefs.

It seems fitting that we do things a little differently for our annual predictions piece. This is the first time that we are presenting our Competition Outlook as a bitesize video series. We have also prepared an accompanying keepsake report.

Partners from our global team discuss four themes which will significantly affect businesses in 2021. These are: the impact of increased scrutiny as part of merger control and foreign investment reviews, the value of effective antitrust compliance amid heightened global enforcement and the role of competition law in the green recovery in 2021.

Tune in to our three calls to action, to enable you to make the most of the opportunities and overcome the challenges ahead.

1. Expect: continued growth of foreign investment controls globally

Accelerated by the pandemic, authorities continue to develop more stringent regimes, affecting deal timetables and transaction costs for businesses around the world. Tech and healthcare are the more obvious targets but other, maybe less obvious industries like transport, communications and media, are now in the agencies’ crosshairs.

In deal situations, it is crucial to assess whether the business of a potential target is considered sensitive, and in which jurisdictions. And to develop an understanding of the basic rules in the key jurisdictions in which your business is active to flag complications as early in the deal process as possible. Start the foreign investment risk assessment as early as possible in the transaction to avoid unpleasant delays.

2. Expect: tougher global merger control enforcement

Competition agencies are ready to scrutinise the expected uptick in M&A activity following months of uncertainty. Agencies are eager to push the boundaries of the merger rules to expand their jurisdiction, especially in the tech space. Following the end of the Brexit transition period, we will also see the full effects of the CMA having parallel jurisdiction alongside the EC over some of the world’s largest deals and stepping up to the plate as a significant authority on the global stage. With the CMA’s notoriety in interventionism, it won’t be long before global dealmakers and the CMA get acquainted.

Remedy requirements can be expected to be more stringent while the pool of viable buyers may be smaller. So preparing a detailed remedy strategy upfront will be crucial in steering clear of trouble.

3. Expect: increased global antitrust enforcement

Many agencies eased the rules on business cooperation at the height of the pandemic, especially to ensure the functioning of supply chains and availability of medicines and other essential goods. In Europe, we have seen carmakers, banks and pharmaceutical companies benefit from formal or informal guidance on complex coordination questions.

Still, what was allowed in 2020 might no longer be acceptable in 2021. It’s important to review business practices adopted last year and to consider spot audits to reveal latent antitrust exposure. Compliance programmes and training should be refreshed, particularly in a remote working environment.

While reforms to regulate digital markets gather pace around the world, we expect the intense scrutiny of Big Tech via traditional competition tools to continue in 2021.

4. Expect: the rise of the sustainability agenda

The pandemic and related lockdowns have reminded many of the importance of nature and the challenges posed to society by climate change. Despite the difficulties that businesses have faced in 2020, competition agencies have not lost steam in debating how competition law should adapt to enable companies to play their part in building a sustainable economy. All eyes are on the EC and whether it will publish concrete guidelines on acceptable competitor cooperation in 2021. We are hopeful its sustainability conference in February (where our own Nicole Kar will join EC Vice-President Vestager to discuss the issues) will shed some light.

What else can competition law do? While less of a focus, merger control has a role to play in fostering green investment. The onus will be on merging parties to bring their deals driven by green considerations to agencies, bolstered by clear rationales, consistent internal documents, and compelling efficiency arguments. Businesses should also keep abreast of important ongoing changes to the EU State aid rules which govern the growing opportunities for public funding to support sustainability objectives.