In January 2020, the FCA published its study on behavioral remedies in merger control and anticompetitive practices. The study takes stock of the FCA’s decisional practice on behavioral remedies and provides material for broader discussion amongst competition law practitioners and academics.
Behavioral remedies aim to address competition concerns by modifying a company’s commercial behavior, often for a limited period of time, for instance through commitments to license key technology, provide access to infrastructure or key assets, or put in place firewall provisions. In contrast, structural remedies (e.g., divestiture of a business activity, termination of contractual ties) are one-off remedies that aim to immediately restore the competitive structure of the market.
According to the study, competition authorities have traditionally been reluctant to accept behavioral remedies for three main reasons:
Duration. Structural remedies are instantly implemented where behavioral remedies are implemented over several years.
Temporary nature. Structural remedies are by nature irreversible and permanently restore competition on the market. In contrast, behavioral remedies are temporary. While their duration generally varies between 3 and 11 years, they are typically offered for 5-10 years in merger control and 5 years in anticompetitive proceedings.
Complex monitoring. Structural remedies require monitoring for a short time period, for instance, the few months required to divest a business. In contrast, behavioral remedies require rigorous and continuous monitoring throughout their entire duration.
The FCA has generally been more eager to accept behavioral commitments than other competition authorities. The study confirms that the FCA considers that behavioral remedies can sometimes be a more flexible and proportionate tool than structural remedies to address competitive concerns, especially in fast-moving markets.
Key features of behavioral remedies in FCA decisional practice
The study indicates that the FCA assesses proposed behavioral remedies in light of three main criteria:
Suitability and proportionality. Remedies must be sufficient to resolve the competition issues identified, i.e. to maintain competition on the market (in merger control cases) or put an end to a competition concern (in anticompetitive practices cases). They should not go beyond what is strictly necessary to resolve the competition issues. The duration of the remedies must also be proportionate to the competitive concern they address.
Verifiability. Remedies must be verifiable, i.e. the FCA must be able to easily check (i) prior to their approval, whether the party is capable of enforcing them, and (ii) after the proposed remedies have been approved, whether the party is actually implementing them. Third parties may inform the FCA of any risk in this respect, particularly in response to a remedy presentation notice sent by the FCA to concerned parties in anticompetitive proceedings or to a remedy market test launched by the FCA in merger control proceedings.
FCA’s ability to easily monitor and review the remedies. The FCA must be able to monitor the remedies easily and adapt them over time if market conditions change. The FCA is therefore unlikely to accept behavioral commitments that would require complex or burdensome monitoring over time.
The study concludes that in any commitment litigation the FCA aims at finding a balance (i) between restoring or maintaining overall competition on the market and (ii) protecting the individual party’s freedom to determine its own business policy. As a result, the FCA typically allows parties to shape tailored commitments addressing the particular anticompetitive concerns raised in the case at stake. The FCA also limits third-party challenges to those who have standing to bring proceedings.
Parties offering behavioral remedies generally need more time to convince the FCA that such remedies are more suitable and/or effective than clear-cut structural remedies. They should therefore submit their proposals sufficiently in advance of the relevant deadlines.
 Available both online since January 17, 2020 and in paperback format starting February 18, 2020.
 Remedies can also be “hybrid” when they are both behavioral and structural in nature, typically when they aim to address different competition concerns (e.g., horizontal and vertical effects in merger cases).
 No indefinite behavioral remedies have been accepted by the FCA to date.SC