Predictions for 2025 from our Competition, Regulation and Trade team (Part 2)

Lawyers in our Competition, Regulation and Trade practice have come together to predict what's on the horizon in the competition space in the UK and beyond in 2025 – identifying the key themes and trends that businesses will need to navigate in the coming year.

This is Part 2 of 2 in our predictions series – read part 1 here.

1. Competition litigation
2. Foreign subsidies regulation
3. New EU Competition Commissioner
4. ESG developments

Competition litigation

A pivotal year ahead in the UK and Germany amidst growing popularity of collective damages claims

Thorsten Matthies and Joe Williams

Damages claims based on infringements of competition law have grown in prominence across Europe in recent years and we anticipate this trend will continue in 2025 and beyond. The UK and Germany remain particularly attractive forums, both having legal frameworks which facilitate claims and mature litigation funding markets.

In the UK, 2025 is set to be a pivotal year for the litigation funding market. The Civil Justice Council (CJC) is due to publish its final report on its review of the litigation funding sector in July 2025 (see here for an update on the interim report). This is not limited to competition class actions, but the issues it is considering – including the benefits being delivered and the possible need for greater regulation - loom large in such cases.

2025 will also bring what is likely to be the biggest judicial intervention into litigation funding since the judgment of the Supreme Court in PACCAR, with the CAT being asked to scrutinise the reported £200m settlement in Merricks v Mastercard (a claim once said to be worth £14bn). In an extraordinary turn of events, the litigation funder has publicly criticised the settlement and indicated its intention to contest approval by the CAT. How the CAT handles this conflict, and the impact on the incentives of litigation funders, could have enormous ramifications for the development of the opt-out competition collective actions regime.

Other upcoming UK developments to watch closely include the level of damages awarded (if any) and the approach to distribution in the first substantive judgments in competition collective claims. We also expect the CAT to continue to accept claims being "shoe-horned" into the opt-out regime based on novel theories of harm rooted in abuse of dominance allegations – at least at the initial certification stage (see further our recent Class Actions Radar briefing).

Practical availability of collective redress is also a hot topic in Germany, and 2025 might shed more light on the admissibility of pooling cartel damages claims. In the absence of a "lucrative" regime for collective redress such as that in the UK, specialised law firms and service providers – supported by funders – prefer to bundle cartel damages claims in vehicles through assignments. This model promises its "customers" compensation on a "no-win no-fee" basis: the assignors only pay a commission if the claim is successful (usually a share of the damages being awarded). Whilst lower courts issued differing rulings in this regard, the Courts of Appeal of Munich and Stuttgart have recently confirmed the admissibility of the assignment model for cartel damages claims. It remains to be seen whether the Federal Court of Justice will deliver final rulings in 2025.

Meanwhile, a ruling by the European Court of Justice anticipated for Q2 2025 following a reference might further back the assignment model despite being limited to a standalone action. In the Advocate General's (non-binding) view, a prohibition of the model would violate European law if no other "effective legal remedy" exists. It is questionable whether the German representative action (Abhilfeklage) introduced at the end of 2023 qualifies as such "effective legal remedy". Whilst it applies to cartel damages claims, it is only available to consumers (and small/medium enterprises) and the strict limitation of success fees to 10% for funders (much less than the market-standard) reduces its attractiveness.

Foreign Subsidies Regulation

Foreign Subsidies Regulation regime starting to bed down

Lode Van Den Hende and Morris Schonberg

It has now been over a year since the EU's Foreign Subsidies Regulation (FSR) regime entered into force and notifications to the European Commission became mandatory for large transactions as well as tenders for large public contracts.  The FSR was designed to address the distortive effects of subsidies granted by non-EU countries and has become a key piece in the regulatory jigsaw to be considered by dealmakers in the context of cross-border M&A, alongside merger control and foreign direct investment regimes.

The level of activity under the new regime so far has been significant and in excess of the Commission's original expectations.  In the first year of the notification obligation the Commission received over 100 notifications for concentrations, the large majority of which were also notifiable under the EU Merger Regulation, which confirms the significant impact of the regime for dealmakers.  Even more notifications have been made in relation to public contract tenders.  The Commission also launched two ex-officio investigations (one in relation to Chinese wind turbine manufacturers and the other involving a Chinese security equipment supplier), highlighting its intention to make active use of its investigation powers to police potential distortive foreign subsidies.

The notification process is burdensome and requires information to be provided for all "foreign financial contributions" exceeding €1 million that may have distortive potential.  This is not typically the kind of information that companies identify and collect as part of their ordinary accounting and financial procedures, which has meant that additional dedicated procedures and bespoke information gathering exercises have often been required in order to collect the required information.

Early pre-notification discussions with the Commission have, however, contributed to streamlining the notification process as early engagement has helped to clarify the information required for the reportable foreign financial contributions.

On the whole, the Commission's early practice indicates a preparedness to take a pragmatic approach, which is clear from the number of concentrations that have been accepted without opening a phase II investigation, which so far, is all but one.  In particular, in September 2024 the Commission adopted its first conditional clearance decision for a merger under the regime, approving the acquisition of parts of PPF Telecom by the State-owned Emirates Telecoms Group PJSC (e&).  Its initial concerns were addressed by a number of commitments, including removing the effects of an alleged unlimited State guarantee, significant restrictions on financing from the UAE and e& for PPF's activities in the internal market, and a requirement for e& to inform the Commission of future acquisitions that are not notifiable under the FSR.

The Commission's conditional clearance decision in this case is encouraging and demonstrates its willingness to accept behavioural remedies that ringfence the EU internal market from the impact of foreign subsidies.  The full decision should be published in early 2025 and it will provide a useful insight into the Commission's approach in relation to substantive issues and the potential for these commitments to serve as a model for future cases.

More generally, we can also expect to see greater transparency in relation to the operation of the regime in the next year as the Commission has now started to publish all concentration notifications.  The high level of notifications is also expected to continue, which will result in more phase II decisions, providing further practice and precedents in relation to the Commission's approach to the substantive issues.  More guidance from the Commission will also be forthcoming in form of additional Q&A and potentially the formal guidelines that the Commission must adopt before mid-January 2026.

In 2025 we will also see whether the Commission's ongoing ex officio investigations will proceed to phase II and the extent to which the Commission will make greater use of these powers to investigate potential distortive foreign subsidies.  Current indications, however, are that more rather than less enforcement may be expected.  The new Commissioner for Competition, Teresa Ribera has committed to “vigorous” enforcement of the FSR "in order to achieve a global level playing field for European companies" and more complaints may be expected from those European companies that feel unfairly disadvantaged by foreign subsidies, calling upon the Commission to take further action.

New EU Competition Commissioner

Priorities for new competition Commissioner Ribera - A packed agenda for her five-year term

Kyriakos Fountoukakos and Peter Rowland

The new European Commission started its five-year mandate on 1 December 2024, with Teresa Ribera as Executive Vice-President (EVP) for Clean, Just and Competitive Transition. She has an extensive brief, overseeing the EU's clean energy transition and antitrust enforcement alongside modernisation of competition policy.

The energy transition will be a key focus for Ribera. In this she will be able to draw on her career as Spain's environmental minister and her extensive experience on climate change policy. She is likely to drive the EU's decarbonisation efforts, with focus on matters such as reducing energy prices, eliminating reliance on fossil fuels, and investing in clean energy infrastructure while addressing energy poverty. She will aim to foster growth and competition within clean technologies and industries, ensuring Europe remains globally competitive in these critical areas. (See also link to HSF energy transition campaign here).

As the new leader of DG Competition, Ribera will take over at an important time for antitrust enforcement and modernisation of EU competition policy. The recent Draghi Report will likely form a pervasive backdrop: this calls for a more innovation-orientated approach, and improvement in the speed and predictability of decision-making as well as new regulation in digital markets.

Antitrust enforcement is unlikely to change significantly. Open investigations continue under a new Commission, and most DG Comp staff will remain in place (they are not political appointees). We will likely see rapid and effective enforcement action under the Digital Markets Act (DMA), with that regulation used in preference to antitrust where the conduct falls within scope of both. There may be procedural changes to traditional antitrust enforcement, including to speed up investigations, as part of the broader push to modernise EU competition policy.

Modernisation started under EVP Vestager. It will continue, and expand, under Ribera. One of her biggest challenges will involve addressing calls to modernise EU merger control policy to encourage investment and increase European competitiveness on the global stage, including challenges around so-called "European champions" and "killer acquisitions". We are likely to see rigorous implementation and further developments in relation to the relatively recently introduced Foreign Subsidies Regulation.

In relation to antitrust, we should also see a revised block exemption regulation and guidelines on technology transfers, as well as guidelines on exclusionary abuses of dominance. Ribera is also tasked with considering how to ease application of the competition rules to facilitate co-operation in sectors such as technology and AI. In relation to State aid, she aims to develop a new framework for state aid focused on renewable energy and decarbonisation. Calls for a "new competition tool" to investigate market structures and impose remedies add to her agenda. Expect much debate on all these points.

ESG developments

Green claims under the microscope – a growing focus for 2025

Marcel Nuys and Sam Tappenden

2024 has been a busy year for UK and EU regulators in the consumer greenwashing space, with a stream of investigations, and this trend shows no signs of slowing. To the contrary, we anticipate a steady rise in probes in this area in 2025.

This year, the UK's Competition and Markets Authority (CMA) has concluded investigations into misleading environmental claims in the fashion and green heating sectors (resulting in binding commitments from several companies). In addition, the CMA closed a probe into Unilever on administrative priority grounds. In the EU, a coordinated action against Zalando similarly ended with the online retailer committing to change how it uses claims and imagery on its website. Looking ahead to 2025, we anticipate that scrutiny will be extended to new sectors, alongside a continued focus on aviation (with the EU coordinated action in the aviation sector relating to CO2 emissions offsets ongoing) and fast-moving consumer goods.

Next year, the CMA will finally unlock its long-awaited new consumer enforcement powers. These will include the ability to fine companies up to 10% of their global annual turnover for consumer law breaches, such as making misleading environmental claims. These changes, introduced by the Digital Markets, Competition and Consumers Act 2024, are expected to come into force in April 2025 and will significantly expand the CMA's existing powers in this space. Until now, the CMA's powers have been limited to accepting commitments from companies to make behavioural changes. We expect the CMA will be eager to start making use of its new 'teeth' in 2025, alongside the suite of softer measures available to it (such as e.g. sectoral guidance, open letters, and targeted warning letters, which it has employed to date).

From an EU perspective, next year will also see all industries grappling with significant new and upcoming legal changes related to greenwashing and ESG more widely. The Green Claims Directive, which EU Member States must implement into national law by March 2026 at the latest, will expressly prohibit companies from making greenwashing statements and will introduce an upfront verification system for green claims. We are already seeing legal actions brought on grounds of greenwashing on a national level. This trend is only likely to increase with NGOs and the Consumer Protection Cooperation Network taking advantage of the legislative momentum.

The Packaging and Packaging Waste Regulation (PPWR), while not due to become effective until post-2026, will bring far-reaching changes to the EU regulatory landscape of packaging and labelling. Already next year, we expect to see businesses focus on planning for their new obligations, which include implementing reuse systems into packaging, products and logistical processes, and requirements around how recycled content claims must be presented on product labels (which the PPWR will harmonise across the EU).

In addition to action taken by regulators, an increase in uptake of mandatory ESG disclosure requirements (such as the EU's Corporate Sustainability Reporting Directive) may also create litigation risks as information disclosed could form the basis of further greenwashing claims. This could lead to even more cases being brought in 2025.