The Development: For the first time in nearly two decades, the European Commission ("Commission") plans to impose "interim measures" to remedy perceived competition issues even though its antitrust investigation has not concluded.
The Background: Interim measures are a Commission order that prohibits certain conduct (or requires other conduct) before the Commission reaches a final decision on the merits of a competition case.
Looking ahead: If successful, the Commission is likely to use interim measures more frequently in future competition cases, including in investigations in the technology sector, which has received much Commission scrutiny in recent years.
A 1980 European Court of Justice ruling first added interim measures to the EU law toolbox. Under certain conditions during an investigation, the Commission can issue an order that temporarily alters alleged anticompetitive behavior before the Commission reaches a final decision. The measure can either require the company to act (e.g., a compulsory license) or refrain from acting (e.g., a prohibition on tying or bundling). The 1980 ruling triggered the adoption of interim measures in a number of cases in the subsequent years. In 2001, however, parties in the IMS Health case successfully obtained the suspension of the Commission's interim measures, which it had to withdraw, and the General Court set a high legal threshold for their use. Since then, interim measures have remained a dormant tool.
The EU codified the conditions for use of interim measures set forth in the IMS Health case in Regulation 1/2003. The Commission must show that (i) there is evidence, "at first sight," of a competition law violation, and (ii) the measures are necessary to prevent serious and irreparable harm to competition while investigation is pending. Mere financial loss, however, cannot be considered as irreparable harm unless, for example, the survival of a competitor is at stake. In addition, the Commission's interim measures must be temporary and proportionate.
Except for the proportionality requirement, there is no legal boundary as to the type of interim measures that the Commission can impose. Given that Commission antitrust investigations can last for years, such cease and desist orders, and interim measures more generally, can have far-reaching consequences for the companies involved.
Calls for Increased Use of Interim Measures
The Commission's decision to seek interim measures...