Heads or tails? Behavioral or Structural? Crafting the right remedy for a company in an antitrust investigation is a highly complex, demanding, and difficult task—not only to design but also to monitor its effective implementation. From the outside, one might assume that the same amount of resources and time is devoted to the remedy phase as to the investigation itself. After all, if the remedy is not implemented properly, what was the point of the investigation? However, according to a recent report evaluating the implementation and effectiveness of EU antitrust remedies over the past 20 years, more needs to be done in this area.
The report doesn’t state it so bluntly, but it suggests that once regulators and the parties agree that remedies or commitments are the best way to close an investigation, many of those involved in the case—both regulators and lawyers—move on to the next matter. It’s as if, after identifying and proving an infringement, all that remains is to “fix it,” right? This may be an oversimplification, but it reflects the idea that, at this crucial stage of the proceedings—one that determines the actual impact on the market—the regulator, at least in the past, did not commit as much as in other phases of the investigation.
The good news is that the situation is improving: regulators are crafting better remedies, and their implementation is becoming more effective. However, the report highlights that for this tool to truly achieve its purpose, regulators need to step up their game.
But let’s go back to “heads or tails.” Are behavioral or structural remedies better? The 227-page document on the ex-post evaluation of antitrust remedies provides a clear answer: “it depends on the case.” Surprised? Probably not. The document presents evidence supporting both types of remedies.
The benefits of structural remedies? They provide a clear-cut solution, are quick to implement, and don’t require ongoing monitoring by the Commission. On the other hand, behavioral remedies are less intrusive (making them more palatable for companies) and can help wrap up investigations more quickly. Overall, the data suggests that purely behavioral remedies tend to be less effective than structural remedies—or even a combination of the two. But as investors often say, past performance does not guarantee future results. As I’ll show you later, the latest commitment case involving purely behavioral remedies may turn out to be a win-win for everyone.
The report offers a detailed analysis of past cases where remedies were applied, examining whether they were fully or partially implemented and how effective they were. But if you are a regulator, what you’re probably wondering is: how can I design a good remedy? The authors propose a set of recommendations—so obvious that I wouldn’t be surprised if the Commission follows their advice:
1- Don’t prioritize behavioral over structural remedies per se (although legally the Commission needs to do so in prohibition decisions). The latter may work better or even a hybrid approach.
2. What about imposing additional remedies for non-compliance? or face the risk of divestiture? Similar to the provisions included in the Digital Markets Act (DMA).
3- Bring business and technical experts to the table, and the sooner the better, even before completing the investigation.
4- Monitoring trustees can make a difference to ensure an effective implementation
5- Interim measures? These are legally difficult to impose, but they alter companies’ incentives, pushing them to quickly propose effective remedies to have the measures lifted—similar to how companies in merger control must commit to certain conditions to close the deal.
6- Create a remedy unit. This makes sense, the European Commission has a legal department, a chief economist, a DMA unit, and other specialized units. Creating a new unit with the necessary tools and expertise to come to the negotiating table at the right time, design the right remedies and devote enough time to monitor its effective implementation sounds like a policy where everybody wins.
If you are a regulator, these recommendations will not make your job to design remedies much easier, but they will help you to get it right more often and faster. At the end of the day, the purpose of the remedies or commitments is to end the infringement, restore competition in the market, and hopefully make markets more efficient. And if correctly done, everyone may be better off.
Let’s take the example of Corning. In November 2024, the European Commission opened an investigation to assess whether Corning may have abused its dominant position on the market for a special type of glass (Alkali-AS Glass) that is mainly used to protect the screens of handheld electronic devices, such as mobile phones.
The Commission was concerned that Corning may have engaged in anti-competitive practices by signing exclusive supply agreements with mobile phone manufacturers (OEMs) and glass finishers. Just one week after the investigation was launched, Corning offered a nine-year commitment to stop using exclusive contracts with OEMs and glass processors in order to close the case without a fine. We are still waiting for the Commission’s decision on whether to accept these commitments, but all signs point to a positive resolution.
The outcome of this case can be summarized as follows:
- An antitrust investigation completed in just five months instead of dragging on for years, potentially avoiding a lengthy court appeal
- Corning agreeing to behavioral remedies while maintaining its business relationships with clients.
- Complainants securing a quick resolution to their concerns.
- Investors remaining optimistic about Corning’s ability to generate revenue, as reflected in the stock price’s positive reaction to the commitment news.
While not all cases will be as easy and straightforward as Corning, it definitely sets a good standard for other cases. And as the story goes, if you look after an ugly duck, it may become a beautiful swan.
