EU champions, tech titans, big banks and pharma: what to look out for in 2019

Google, big banks, aspiring industry champions and major drugmakers can expect run-ins with EU competition enforcers this year as Commissioner Margrethe Vestager enters the twilight of her mandate.

From trailblazing probes into the digital economy to suspected cartels in international finance, here are the top EU competition cases to look out for in 2019 before the EU sails into unknown waters with a new commission in November.

Siemens-Alstom

Unless the companies decide to abandon the deal, Vestager will have to come to a decision on the controversial Siemens-Alstom railway tie up by Feb. 18.

She’s under intense political pressure to clear the deal, allowing the creation of a European champion able to withstand the competition from China’s CRRC, the largest rail company in the world.

French economy minister Bruno Le Maire reiterated on Sunday that blocking the deal would be a "political mistake" because it would weaken the European rail industry vis-à-vis China.

So far, Vestager has been firm in her insistence that she’ll only clear the deal if it doesn’t compromise competition in Europe. She set the bar high with a weighty statement of objections that the commission put to the companies at the end of October.

Siemens and Alstom made a remedy offer in mid-December, and right now is crunch time for the commission to decide whether their proposal is enough to allay its serious doubts about their deal.

The parties will probably have to cough up more to satisfy Vestager, whose decision is likely to go right down to the wire.

Google

Google will also remain in the European Commission’s sights this year, as the regulator continues to pursue the tech giant for alleged abuses of its dominant position.

After wrapping up two antitrust cases against Google during her tenure — one on its shopping services and another on its Android operating system — Vestager could well take another swipe or two at the US tech giant yet.

In November 2018, she confirmed that an investigation into Google’s alleged restrictions on websites that want to display adverts by rivals is nearing an end. An initial charge sheet in the AdSense case was sent to the company in July 2016, which means a fine could be in the works.

There’s also the ongoing probe into Google’s local search business, which was confirmed by Vestager late last year. As with the Google Shopping case, the commission is working out whether the company has favored its own service over those of rivals such as Yelp, which lodged a complaint in May 2018.

Finally, the commission could return to its Google Shopping and Google Android decisions to see whether the remedies the company has offered have fixed the initial problems. In both cases, some of Google’s competitors think otherwise.

E-commerce

Two big competition cases in the e-commerce sector could be nearing a close in the coming months. Together, these cases could set some important precedents for what is considered anticompetitive behavior by online traders.

The first, involving suspected discrimination between hotel customers on the basis of their nationality or country of residence by Meliá Hotels and the tour operators it has contracts with, will enter its third year in February.

Tour operators are cooperating with the commission in order to win reductions in fines, MLex reported last month, suggesting that a final decision could be imminent.

And another EU probe into alleged restrictions on cross-border online video game sales will also enter its third year. The case involves Valve Corporation, the owner of the Steam gaming platform, and its bilateral agreements with five PC game publishers.

The commission is investigating whether the use of "activation keys" for games purchased online has led to a breach of EU competition rules by preventing cross-border competition, stopping consumers in one EU country from buying games which may be cheaper in another.

Finance

After dishing out fines for some of the biggest banks over a euro interest rate derivative cartel in 2016, the commission has been busy probing foreign-exchange markets for similar activities.

It’s likely Vestager will wrap up the probe before the end of her tenure.

Last year the commission served Credit Suisse with a charge sheet after it dropped out of settlement talks, and damages claims recently appeared in London’s High Court alleging manipulation of Forex markets by UBS, HSBC, Barclays and Citigroup.

Meanwhile, Mastercard has already said it’s expecting a $650 million EU antitrust fine in the first quarter of 2019 over rules it imposed on merchants which limited their ability to shop around for different banks to handle their payments.

The commission will also need to decide whether commitments made by Mastercard and Visa last month to reduce fees on international card payments have adequately addressed its competition concerns.

Pharma

Pay-for-delay cases in the pharmaceutical sector, which involve big drugmakers paying rivals not to market cheaper versions of specific medications, will make headlines this year. They come on the heels of a major EU court ruling last month which partially overturned a 2014 EU antitrust decision against Servier.

EU officials have already signaled that Israeli drugmaker Teva could face a final EU decision on whether it breached antitrust rules through such agreements with Cephalon this year.

And Lundbeck and generic drugmakers will appear in front of the EU’s top court later this month to defend themselves against an EU antitrust decision from 2013 which fined them for agreements relating to antidepressant drug citalopram.

The EU should also advance its probe into suspected excessive pricing of cancer treatments by South Africa’s Aspen in the first quarter of 2019, the company has said.

Beer and Brexit

An ongoing EU probe into drink and brewing company ABInBev could also be nearing an end, after the commission served the company with a charge sheet in November 2017.

The commission suspects the company of restricting the cross-border sale of its products by changing their packaging in France and the Netherlands to make them harder to sell in Belgium.

There are also a couple of big tax avoidance cases waiting in the wings.

After backing down in its probe into McDonald’s tax treatment in Luxembourg last year, the commission might want to end on a stronger note by advancing its investigation into alleged tax breaks for IKEA in the Netherlands. The initial probe was launched in December 2017.

With Brexit looming, there’s also the question of whether the commission will wrap up the pending state aid case into UK tax laws for “Controlled Foreign Companies,” or CFCs, before March.

The EU launched an in-depth probe into alleged tax exemptions for multinationals in October 2017. At the time, Vestager made it clear she hoped the case could be “expedited” to ensure it was finished before the UK leaves the bloc.

But given political sensitivities around the question of which EU rules the UK will remain bound by after exit day, and the febrile atmosphere in Westminster as Theresa May’s deal hangs in the balance, there’s probably never a good time for the EU to serve the UK with a hefty unpaid tax bill.