Several European countries (Denmark, Germany, Italy and Norway) have recently adopted a so-called market investigation tool, also sometimes referred to as the “new competition tool”. Other countries, such as Sweden and the Netherlands, may soon follow suit.
Market investigation tools can differ between countries, but the defining feature is that they allow competition authorities, following an in-depth market assessment, to impose remedies to address competition problems in a market.
The rationale is that they fill an enforcement gap, allowing authorities to intervene in markets where competition does not function well, but where there has been no breach of competition law.
However, some industry bodies and commentators view market investigation tools as unnecessary over and above competition law and sectoral regulation, suggesting that they add uncertainty and can impose substantial burden on businesses over often multi-year investigations.
In this article, we seek to shed light on what to expect as market investigation tools gain popularity across Europe: (i) how do they work, (ii) what markets are investigated, (iii) what analysis is used, and (iv) what is our view on balancing benefits and potential drawbacks. Read on to get a summary of our findings, or download the full insight piece below.
Across Europe, market investigation tools allow authorities to intervene directly in markets even without evidence of wrongdoing, enabling them to impose behavioural or structural remedies following a detailed investigation – sometimes initiated after a preliminary inquiry such as a sector study. These tools are ex ante, forward‑looking, and typically address sector‑wide issues, aiming to prevent future market failures and ensure markets function effectively, unlike remedies in merger or abuse cases, which apply only to specific firms involved.
Market investigation tools are used to investigate markets that are characterised by structural competition concerns or market failures. Accordingly, while the legal requirement to open a market investigation differs by country, there is typically an a priori notion that some market factors limit the functioning of proper competition.
Consistent with the broad mandate to address competition problems across the economy, authorities have used market investigations to address many different types of markets. Many of the competition authorities listed have also conducted sector inquiries, or other forms of ‘pre-investigations’ during the same period as they have had the power to conduct market investigations.
Irrespective of the industry, authorities will prioritise markets with structural competition issues. Based on a high-level assessment of past market investigations, features which make a market particularly prone to an investigation include:
• High levels of concentration
• High barriers to entry
• High returns, persistently and substantially above a competitive benchmark
• Vertical integration and/or the potential for discriminatory conduct
• Pricing behaviour that is inconsistent with effective competition, e.g. weak pass-through of cost changes
• Customer inertia, e.g. due to high switching costs, low transparency, or behavioural biases
Apart from these market features, competition authorities may also choose to focus on “strategically important” and/or “highly sensitive” markets.
To illustrate how a holistic assessment is often undertaken, we review the use of the market investigation tool in the UK, where it has been in place the longest with the largest number of concluded investigations. As such, analyses in the context of market investigations can generally be grouped in the following categories:
We briefly outline some of the key elements of the CMA’s (and its predecessor the Competition Commission) approaches to each of these three types of analyses, as well as ex post assessments, in the full insight piece below.
In short, market investigation tools give authorities greater freedom to tackle all kinds of market out-comes that have a negative impact on consumer welfare. When used well, they can address persistent structural issues that traditional enforcement may struggle to capture and can thereby generate substantial benefits. Illustrating this, the CMA estimated that the impact of its “markets work” led to annual average consumer savings of £1717.8 million for the period 2022-2023 and 2024-2025 – around half of overall CMA impact.
However, its drawbacks also come into view: the practical operations raises questions regarding proportionality and efficient use of public resources. This may especially be the case in smaller economies where the costs of lengthy procedures can more easily outweigh the expected gains. How this balance between flexibility, legal certainty and resource-intensity will be struck in newer regimes remains to be seen and will depend on how actively authorities choose to deploy their new powers.
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