Week Ahead (20 July)

W/C Monday, 20 July – EU to make renewed push for agreement on 21^st Russian sanctions package as negotiations with Greece enter decisive phase

EU ambassadors are expected to make another attempt on Wednesday to approve the bloc's 21st package of sanctions against Russia, after negotiations stalled last week over Greek objections to a proposed ban on the transport of Russian liquefied natural gas (LNG) to third countries. With unanimity required, the latest round of talks will be decisive for determining whether the package can be adopted before the summer break.

Last week, Athens argued that the proposed LNG transport restrictions could disproportionately affect the Greek shipping sector while allowing non-EU competitors to capture market share without significantly increasing pressure on Moscow. Greek officials have therefore called on the European Commission to demonstrate that the measure would inflict materially greater economic costs on Russia than on European shipping companies and could not easily be circumvented through the reflagging of vessels or the diversion of business to operators outside the EU. 

In an effort to bridge the remaining differences, the Commission is expected to present member states on Tuesday with an updated assessment of the measure's economic impact, examining both its effectiveness in reducing Russian revenues and its implications for European shipping interests. Brussels has also explored possible fallback options, including a limited derogation for Greece, although several member states remain reluctant to support such an approach, arguing that it would undermine the unity underpinning the EU's sanctions regime.

The opposition nevertheless appears to be narrowing. Austria, which had also raised concerns over the package, is no longer expected to oppose its adoption following discussions with the Commission regarding Raiffeisen Bank. Meanwhile, member states have already agreed to maintain the current oil price cap (at $44.10 per barrel) temporarily while broader negotiations continue.

Overall, the package is ultimately likely to secure unanimous backing this week, although the final compromise will depend on whether the Commission can provide sufficient assurances over the economic impact of the LNG transport ban.

W/C Monday, 20 July – Commission poised to adopt landmark DMA decisions against Google over Search and Play Store practices

The European Commission is expected to adopt two landmark non-compliance decisions against Google this week under the Digital Markets Act (DMA), marking its most significant enforcement action against the company since the Regulation entered into force in 2023. The decisions are expected to conclude parallel investigations launched in 2024 into Google's Search and Play Store services and could be accompanied by substantial financial penalties, binding compliance orders and the threat of periodic penalty payments should Google fail to implement the required changes.

The first decision concerns Google's Search service, where the Commission is expected to conclude that the company continues to favour its own specialised services, including shopping, travel and hotel results, over rival providers in breach of the DMA's prohibition on self-preferencing. Despite several rounds of product modifications and extensive discussions with the Commission and market participants over the past 18 months, Brussels appears unconvinced that Google's proposed changes ensure the transparent, fair and non-discriminatory treatment of competing vertical search providers required under the new rules.

The second decision relates to the Google Play Store and whether app developers are able to steer users towards alternative purchasing channels outside Google's ecosystem. The Commission's preliminary findings concluded that Google continued to impose technical restrictions limiting developers' ability to direct users to external offers, while charging fees that exceeded what could reasonably be justified for customer acquisition through the Play Store. The expected decision is therefore likely to require Google to provide developers with significantly greater commercial freedom when distributing digital content and services.

The rulings follow the Commission's preliminary findings issued in March and represent the culmination of months of technical discussions between Google and Brussels. Even though the company has consistently argued that further changes would undermine user experience and compromise privacy, regulators increasingly appear to have concluded that the adjustments proposed fall short of the DMA's requirements.

Overall, the decisions are expected to represent the Commission's most consequential application of the DMA to date. Following last year's relatively modest fines imposed on Apple and Meta, the Google cases will provide the clearest indication yet of how aggressively Brussels intends to enforce the Regulation against repeat non-compliance. They will also serve as an important signal that, despite recent efforts to ease transatlantic tensions, the Commission remains prepared to pursue robust enforcement against large US technology companies where it considers the DMA has been breached.

Monday, 20 July – Burnham becomes UK Prime Minister; attention shifts to cabinet appointments and early political direction

Andy Burnham is expected to be formally appointed UK Prime Minister on Monday following his victory in the Labour leadership contest, bringing to an end the political upheaval triggered by Keir Starmer's resignation last month. Having secured the backing of an overwhelming majority of Labour MPs earlier in July, Burnham will enter Downing Street with a strong parliamentary mandate but facing immediate pressure to demonstrate how his government will differ from its predecessor.

One of the first tests will be the composition of his cabinet. Last Friday, Burnham indicated that his frontbench will "reflect voices from across the party", signalling a broad-based reshuffle rather than a wholesale break with the outgoing administration. Markets will be watching particularly closely for appointments to the Treasury, Business and Energy portfolios, which are expected to provide the clearest indication of the government's economic priorities and approach to industrial policy.

Burnham has sought to reassure investors that there will be no immediate departure from Labour's fiscal framework. Throughout the leadership contest, he repeatedly pledged to maintain the party's fiscal rules while ruling out increases in income tax, VAT and National Insurance. At the same time, he has suggested there remains scope for broader tax reform, having previously argued that the UK places too much of the tax burden on labour relative to wealth. Although he has not committed to specific measures, remarks on capital gains taxation, wealth taxation and wider property tax reform suggest the new government could gradually revisit the composition of the tax system while seeking to preserve overall fiscal credibility. 

Alongside fiscal policy, Burnham is expected to place greater emphasis on regional economic development and public investment. His agenda centres on devolving powers away from Whitehall, expanding council house construction and increasing public involvement in strategic infrastructure sectors, particularly water and energy. At the same time, he has argued that net migration should continue to decline while pursuing reforms aimed at reducing welfare dependency and increasing labour market participation.

On foreign policy, Burnham has pledged to pursue a closer relationship with the EU while preserving constructive ties with the US. His arrival comes as the UK is engaged in several important negotiations with Brussels, including discussions on youth mobility, sanitary and phytosanitary (SPS) arrangements and linking the UK and EU emissions trading systems. Combined with difficult decisions over defence spending inherited from the previous government, these issues are likely to dominate the new administration's opening weeks.

Overall, this week's cabinet appointments will provide the first concrete indication of how Burnham intends to translate his campaign message into government. Although the broad direction of travel appears to point towards greater state activism, regional investment and closer engagement with Europe, the balance struck between those ambitions and Labour's commitment to fiscal discipline will be a key point to watch.

Tuesday, 21 July – Saipem-Subsea7 appears headed for Phase II as Commission weighs competition concerns against strategic autonomy objectives

This week, the European Commission is expected to open an in-depth Phase II investigation into Saipem's proposed €4.6 billion merger with Subsea7, following a State of Play meeting held earlier this month. Although the parties could still avoid escalation by offering remedies before the current Phase I deadline, this is increasingly viewed as unlikely, with both companies reportedly preferring to defend the transaction during a more extensive review.

The case is emerging as one of the first major tests of how DG COMP intends to reconcile traditional competition enforcement with its growing emphasis on competitiveness and strategic autonomy. The parties are expected to argue that the transaction would create a stronger European champion in a strategically important sector by combining complementary capabilities across offshore engineering, subsea infrastructure and offshore wind, while strengthening Europe's capacity to develop and protect critical energy infrastructure. Those arguments closely reflect the Commission's increasingly explicit focus on resilience, investment incentives and economic security, themes that also underpin its proposed revision of the EU Merger Guidelines.

At the same time, the transaction illustrates the limits of that evolving approach. As we have argued previously, the revised Guidelines are intended to complement rather than replace conventional competition analysis. UPM–Sappi remains an important recent example. Despite strong arguments centred on industrial resilience, competitiveness and investment, the Commission nevertheless opened a Phase II investigation in May due to significant horizontal overlaps. Even though Saipem–Subsea7 presents an arguably stronger strategic autonomy narrative given the sector's direct relevance to European energy security, the underlying competition concerns also appear more substantive, focusing on the reduction in the number of global contractors capable of delivering the largest and most technically complex subsea engineering projects.

Overall, our assessment remains that the Commission is becoming increasingly receptive to broader industrial policy considerations than it was only a few years ago. However, those arguments are more likely to influence the overall competitive assessment and, ultimately, the design of any remedies than eliminate the need for an in-depth investigation altogether. Assuming a Phase II review is opened this week, the central question will become how DG COMP can preserve the transaction's strategic rationale while adequately addressing the identified competition concerns, rather than whether strategic autonomy considerations alone can justify unconditional clearance.

Wednesday, 22 July – Paramount-WBD merger set for EU Phase I decision following remedies package and FSR clearance

The European Commission is expected to decide on Wednesday whether to approve Paramount Skydance's proposed $110 billion acquisition of Warner Bros. Discovery (WBD) under the EU Merger Regulation (EUMR), with the transaction appearing increasingly likely to secure a conditional Phase I clearance following the submission of targeted remedies.

As a reminder, Paramount submitted commitments at the end of June following a State of Play meeting with DG COMP, prompting the Commission to extend its Phase I review deadline from 7 July to 22 July in order to market-test the proposed package. According to market reports, the principal commitment involves the termination of Paramount's long-standing film distribution joint venture with Universal Pictures in a number of EU member states, addressing relatively narrow concerns surrounding theatrical film distribution rather than the parties' broader streaming, television or content businesses.

The latest developments broadly reinforce our assessment throughout the review. Paramount and WBD have only limited horizontal overlaps across European audiovisual markets, particularly in streaming, where their combined market position remains relatively modest. Consequently, the Commission's investigation has increasingly focused on specific vertical relationships and distribution arrangements rather than broader concerns over market concentration, making a targeted remedy package sufficient to resolve the remaining issues.

Importantly, the merger also secured clearance under the Foreign Subsidies Regulation (FSR) earlier in July removing what initially appeared to be one of the transaction's more politically sensitive regulatory hurdles. The Commission concluded its review of the consortium's sovereign-backed financing without opening an in-depth investigation, despite the involvement of investors from Saudi Arabia, Qatar and Abu Dhabi. That outcome contrasts with the Commission's increasingly assertive use of the FSR in transactions involving state-backed capital, most notably the ongoing Phase II investigation into JD.com's proposed acquisition of Ceconomy. 

Should DG COMP approve the transaction this week, attention will increasingly shift away from Brussels towards the UK, where the government's public interest intervention process remains ongoing. Unlike the EU review, the UK assessment is centred primarily on media plurality and public service broadcasting considerations rather than traditional competition concerns.

Overall, our base case remains unchanged. The combination of the recent FSR clearance, the limited nature of the remaining competition concerns and the submission of targeted commitments all point towards a conditional Phase I approval under the EUMR, avoiding a lengthier Phase II investigation.