No Safe Harbour: EU Court Confirms Antitrust Risks in Capital Markets Communications

Yesterday, the General Court handed down its decision in T-188/24 – Michelin v Commission (currently only available in French) which is noteworthy in various respects. 

• The decision offers insights into the Commission’s investigatory methods and evolving theories under which circumstances public statements that companies make, e.g. in earnings calls, amount to a costly infringement of EU antitrust law, as they in fact signal to competitors how they should act, or how a company might respond to competitors’ behavior (so-called “signaling”). 
• The decision confirms that combating illicit signaling is one of the Commission’s enforcement priorities and that the Commission goes to great lengths to uncover it, e.g., by having analysed hundreds of thousands of earnings calls. 
• With its decision, the General Court sends a clear message: While governed by their own transparency obligations, capital markets communications, like any other public statements, are not immune from antitrust scrutiny. Quite the opposite: Any public communication, especially by listed companies regarding their investor relations, must be handled with competition compliance in mind.

Background

The case concerns the Commission’s 2024 dawn raid at Michelin. The underlying suspicion: several tyre manufacturers may have used earnings calls to signal pricing strategies to competitors, in potential breach of Article 101 TFEU. Michelin challenged the inspection decision, arguing that the Commission’s reasoning lacked clarity, specificity, and sufficient factual support.

Outcome

The Court partially annulled the decision:

• It upheld the inspection for the more recent period, finding that the Commission had supported its suspicions with sufficiently serious indicia.
• But it struck down the part referring to earlier years, as the Commission had not presented contemporaneous evidence. References in later earnings calls to past behaviour were not enough.

Substantive relevance of earnings calls?

Formally, the Court did not rule on the substantive legality of the earnings calls under Article 101. However, it left no doubt that public statements – when used to reduce market uncertainty or “signal” future pricing – may fall squarely within the scope of antitrust enforcement.

Notably, the Court:

• Recognised as plausible the Commission’s view that certain public phrases (“we expect the industry to follow”, “we will maintain pricing discipline”) may serve a signalling function;
• Dismissed the argument that answering analyst questions or complying with capital markets law would shield companies from competition scrutiny;
• Affirmed the legitimacy of building dawn raid decisions on patterns found in earnings calls, even when derived from public sources.

The Court also clarified the function and limits of inspections

• An inspection is part of the preliminary investigative phase. The Commission does not need to present final legal qualifications or market definitions – but it must articulate clear suspicions and have sufficiently serious indicia.
• The Court allows a degree of flexible language (“and/or”, “notably”), so long as companies understand what is being investigated.
• However, the Commission may not extrapolate freely across time: allegations must be time-bound and evidence-based. That threshold was not met for earlier years in the Michelin case.

How the Commission identified the case

The judgment provides rare visibility into the Commission’s internal approach:

• The case originated from an algorithmic screening of hundreds of thousands of earnings calls, across industries and jurisdictions.
• The Commission used bigram frequency analysis to detect phrases associated with pricing intentions or competitor references (i.e., statistical screening of two-word combinations such as “price discipline” or “market leader”).
• Tyre manufacturers were flagged for comparatively high densities of such expressions.
• A manual review of the flagged calls followed. That qualitative screening eventually led to the dawn raid.

Implications

• The decision illustrates how far the Commission is prepared to go in operationalising “public signalling” theories.
• It reinforces the need for companies to train their public relations and investor relations teams as well as any other functions (including executives) who communicate publicly on the company’s behalf on the antitrust risks of forward-looking statements.
• The decision also highlights the need for proactive alignment between capital markets compliance and antitrust risk management.
• The Court’s strict insistence on contemporaneity and specificity of indicia supporting the suspicion of an antitrust infringement raises the bar for Commission dawn raids but does not shield capital market statements from scrutiny.

Companies should expect that the Commission will leverage the results of their previous screening exercise for enforcement actions not just in the tyres industry and continue to apply similar screening techniques across industries and jurisdictions also going forward.