On Friday 14 March the General Court issued seven Judgments in cases T-292/11, T-293/11, T-296/11, T-297/11, T-302/11M T-305/11 and T-306/11. We represented one of the seven applicants (needless to say, the opinions below are exclusively my own, and in no way can be attributed to my client or my colleagues).
I had already anticipated those Judgments noting that -irrespective of who the prevailing parties were- they would be of great interest and procedural relevance. [The Judgments came out while I was lecturing on competition procedure at the Brussels School of Competition, so I discussed them almost live].
The cases concerned seven appeals lodged by cement companies against massive -arguably unprecedented- requests for information, and they are important because the Court was asked to clarify whether there are any real limitations to the Commission’s investigative powers.
There have been two groups of Judgments:
-In six cases the applicants grounded their appeal on the lack of motivation of the information request. In those cases the GC has ruled (a) that although “it is true that “the presumed infringements [were] set out in very general terms which might well have been made more precise”, they have the minimum degree of clarity in order to be able to be considered to be consistent with the requirements of EU law; and (b) that even if “the size of the workload caused by the volume of information and the very high degree of precision in the response format imposed by the Commission cannot be reasonably disputed”, that workload was not disproportionate in the light of the necessities of the enquiry and the extent of the presumed infringements.
[Intermission: Too often, when the Court decides to dismiss an application it practically denies any reason to every argument made by the applicant). This wasn't the case here, and the Court was objective and transparent enough to acknowledge that there could be problems, but that they were overridden by effectiveness considerations. I like it better this way].
-The content of the Judgment in the seventh case (T-296/11 in which we acted for the applicant) is different, as explained in the Court’s press release http://curia.europa.eu/jcms/upload/docs/application/pdf/2014-03/cp140035en.pdf
Instead of focusing our arguments on lack of motivation (which we thought would at most have only given us a temporary victory), we had posited that the criterion of “necessity” in Art. 18 of Regulation 1/2003 should be interpreted not in light of what the Commission intends or hopes to find, but in the light of the elements that the Commission has and that raise the suspicion triggering the investigation. We claimed that otherwise the criterion of necessity would be devoid of any practical significance.
The GC has accepted the theory (as it did in Prysmian and Nexans -now pending before the ECJ- regarding inspections). According to the GC, the Commission is not obliged to disclose to the companies the preliminary evidence at its disposal, but it must have enough evidence to justify the information request (paras. 38-40).
In this particular case, and since the Court acknowledges we had “put forward factors capable of casting doubt on the sufficiently serious nature of the evidence concerned”, the Commission was very exceptionally asked to produce a summary of its file. Luis Ortiz Blanco and myself were asked to go to Luxembourg to access it and make observations without being allowed to disclose anything not even to our client [I'm not disclosing anything confidential because this is all explained in paras. 23-26 of the Judgment]. This is what explains that a great part of the Judgment is redacted as confidential.
Obviously I can’t say or even hint at anything that’s not been disclosed in the non-confidential version of the Judgment. Essentially, the Court explains that in the light of the Commission’s file the Institution could have validly addressed the exhaustive and exhausting information request to the applicant. The reasoning (mainly contained in para 59) is that even if we did offer an alternative interpretation of the elements in the file, the Commission cannot be asked at a preliminary stage to have evidence so consistent as to be sufficient to establish an infringement; it’s enough to have evidence that -at a preliminary stage and absent third party contextualization- would have arouse a reasonable suspicion.
The lines of what’s reasonable are of course blurry, and the Court’s approach is -rightly or wrongly- deferential to the Commission and to the need of safeguarding the effectiveness of its investigations, particularly at an early stage. Some may fear that if Courts started annulling requests for information (or Phase I clearance decisions, to pick a “random” example) then the floodgates would open. However, failing to annul those categories of decisions systematically and regardless of their merits or lack thereof those may also be akin to conferring carte blanche on the Commission, and that (regardless of the unquestionable good intentions of the Institution) might also have drawbacks.
I have thoroughly enjoyed teaching for the first time in the Executive LLM programme recently launched by the LSE. As is usually the case, one learns a lot from students. When discussing oligopolies and tacit collusion, Lars mentioned the creation of a Market Transparency Unit for Fuels (all capital letters, it’s after all a German authority) by the Bundeskartellamt. According to the authority, this initiative will make it easier to address ‘illegal predatory strategies and other forms of market power abuse’. Impeccable move. There is certainly nothing better than tacit collusion to fight predatory pricing!
You know the drill: busy day= quick advertising.
- On June 12-13 2004 the University of East Anglia (Norwich) will be holding a conference on “Problem markets” (according to the organizers, this refers to markets that are “too hot for regulators to handle, with nobody quite sure why or what should be done about it“).
One of the speakers will be an also problematic (the definition above applies, except for he “too hot” bit) French Professor now turned temporary DG Comp staffer who founded this blog and who goes by the name of Nicolas Petit. In addition, there will also be a number of big names among the speakers ;) For further details, click here.
- I’ve been contacted by the developers of a new app called “Comp law” that provides access to updated versions of the main legal documents of daily use (in the antitrust, state aid and merger control domains) in a smartphone-user friendly format; it also includes other stuff, such as a merger control calendar which takes into account Commission holidays (which I guess should be particularly useful for the holiday planning of Commission officials dealing with mergers…). It’s available at the AppStore and costs € 1,79 (for the moment it’s only available for iOS).
- The 3rd edition of Faull & Nikpay’s The EU Law of Competition is now out. It is without a a doubt one of the must-have books in EU competition law, and most likely the most comprehensive one. Indeed a great book (with over 1.2 million words according to the publicity we’ve seen).
Btw, and since we’re on advertising mood, my other must-have books are this one, this one, this one, this one (undergoing updating works), and, of course, this one (for Frenchies) and this one Before you click on any of these, be aware that the selection may not be strictly neutral…
As I mentioned some posts ago, over the past few months I’ve been paying increased attention to competition law issues arising in Latin America. Until now I hadn’t shared here any views about what’s going on there, but this time the issue merits a comment, not the least because it calls into question the much talked about process of international substantive (or at least legislative) convergence in our field.
As you may know, Mexico is currently considering a reform to its competition law system. This is a move that many considered necessary; respected publications such as The Economist or even the influential book How Nations Fail had insisted in recommending Mexico to boost its competition law system and target market concentration as a way to increase growth and reduce inequality. But whereas few would challenge Mexico’s need for vigorous competition policy, many in the antitrust community are voicing out concerns in relation to some of the envisaged reforms.
For the most part, Mexico’s contemplated Competition Act is in line with other competition regimes around the world, including the EU’s. The proposed reform, however, includes some novel and unusual provisions, concepts and remedies that have given rise to concern, namely:
(i) several provisions (arts. 52, 55 and 57) that would turn the erection of “barriers to competition” (a term not defined in the draft Law) into a new self-standing violation of competition law (one that would seemingly be added to the prohibition on restrictive agreements and abuse of dominance); and
(ii) a provision (art. 94) that would grant the authority powers to “determine the existence of barriers for free competition” and order “corrective measures deemed necessary” for the purpose of eliminating them (“the measures may include the elimination of barriers to free competition, regulation of essential inputs or divesture of assets, rights, partnership interests or shares in Economic Agents in the proportion required (…) The measures concerning the existence of an essential input shall include modes of access to it, price or tariff controls, technical and quality conditions and time schedules”. This last provision reportedly attempts to mirror (although with some diferencies) the UK’s market investigation system.
Unsurprisingly, strong varied opinions have been published in various forums.
One of the best pieces written so far on the subject (and one that has the virtues –for us- of departing from the EU system and of being written in English) has been co-authored by our friend Assimakis Komninos (who has contributed to this blog in the past) and Anne Perrot (with whom I had the pleasure of sharing a panel last year). The Komninos-Perrot piece has been echoed not only in Spanish language press, but also in places like the Financial Times. It’s worth a read, and it’s available here: MexicoEurope(Komninos&Perrot)
For those of you who are interested in more and can read Spanish, I would recommend this document, featuring opinions from various experts.
P.S. Unrelated to the reform, but nevertheless interesting: a former member of the Mexican competition authority recently told me about a Mexican case that perfectly illustrates both the need for competition advocay in the country as well as how strictly the concept of “policing” a cartel has been interpreted. This 2010 COFECO decision refers to an official agreement subscribed by the municipal authorities of a given city with “tortilla producers”; the municipality divided the city into various areas, each one of which was exclusively assigned to a particular producer (delivery motorcycles all were painted in a color corresponding to the area in which they could operate). The task of ensuring compliance with this market sharing arrangement was entrusted to the municipality’s police. No kidding. And if you think this would not happen in Europe, read again our previous post on Monsieur Arnaud Montebourg.
In the competition law world there would appear to be too many prizes, awards and things of that sort. If you or your firm haven’t received an award, or at least a nomination, in the past few days, then either you’re a loser or your firm should increase its sponsoring budget :) (before anyone reacts, I’m kidding).
Someone should one day do an awards ranking and give a prize to the worst one. In the meanwhile, we at Chillin’Competition recently created the Stupidity of the Day Award, which is a purely merit-based award given to the person who contributes to the development of competition law and policy with the… most original thought.
Our first proud recipient was the then French Minister for Industry (appointed today Minister for the Economy and New Technologies (!); this is not an April Fools’ Day joke), Arnaud Montebourg, who said that the European Commission lives in a “legal delirium” and “makes up rules that don’t exist in the Treaties in order to perpetuate its powers” and that Vice-President Almunia is an “obsolete liberal integrist”.
And our second winner is….. Arnaud Montebourg again! He’s a goldmine. Look at this excerpt from a recent interview (Le Figaro, 3 février 2014)
“Quand je reçois l’Autorité de la concurrence, je lui dis : vous êtes contre les ententes. Moi, je les organise ! Qui a raison? Vous êtes nommé, je suis élu, donc c’est forcément moi !”
Translation: “When I receive the competition authority I tell them; you’re against agreements between companies. I arrange them! Who’s right? You were appointed, I was elected, so I’m certainly the one who’s right!”
(Thanks a lot to Benoît Durand (RBB) for this little gem!)
When one reads these things a thought comes to mind. Some say the problem with competition policy is that it doesn’t have constituents pushing for it; well, I don’t know; this might be politically incorrect (as if the rest of this post weren’t), but sometimes I’m glad that (for the most part) politicians keep their hands off it. This last thought gives me a new chance to once again promote my priZeless piece Antitrust and the Political Center and the follow-up interview).
It’s been two months since Nicolas temporarily left this blog for a half a year stint at DG Comp’s Private Enforcement Unit.
In the course of this short period he’s managed to single handedly unblock negotiations on the Commission’s proposal for a Directive on Antitrust Damages, and he’s adapted very well to the fonctionnaire lifestyle (meaning that he’s now taking some days of holidays) ;) (jokes aside, congrats to Eddy de Smijter and to the rest of the people involved in the negotiations about the Directive).
As he anticipated in his farewell post, Nico is maintaining all academic activities. Within that context, he’ll soon be participating at a conference on one of is favorite topics organized by his University. So, on 24 April the Liège Competition and Innovation Institute will be hosting a conferece in Brussels on Conflicts of Interest, Ethical Rules and Impartiality in EU Competition Policy .
Although Nicolas knows that I don’t share the same passion for the topic (or maybe precisely because he does?), he’s asked me to advertise the conference here. So voilà. It will feature representatives from the General Court, the European Commission, the OECD, the Belgian Competition Authority, as well as lawyers in private practice, The New York Times’ Brussels correspondent and ULG Professors and Researches, including Nico himself. Even Emilly O’Reilly (the current Ombudsman, whom you may remember from this) is on the tentative list of speakers.
Why do I say I don’t share the passion for the issue? Because whereas some improvements could possibly be made in the rules -mainly regarding their transparency-, I think we should be careful in not overshooting the mark. Otherwise we’d risk creating the impression that there’s a major endemic problem where I’m not at all sure there’s one (I, for one, I’m much more concerned about the Commission’s recruitment processes and about internal rules that oblige experienced people to rotate jobs too often or too soon). Anyone working in Brussels for some time will have worked with, against and before friends or professional acquaintances (sometimes the line is drawn too thinly). In my experience who you have on the other side doesn’t matter (at least for good: I do know of situations where lawyers’ friends deciding on cases have been unnecessarily harsh on them just to make a point and dispel any concerns, and that’s as unfair as the contrary) and there are enough checks and balances to avoid problems. The only positive consequence of working before people who know you is that they will perhaps trust you, provided that you have never proved not worthy of that trust (and competition law practice is also a game of repeated interactions), but I don’t see what’d be wrong about that.
As I told Nico back when he wrote his controversial piece on this subject, what’s different in our field is that our “relevant market” is very narrow; we’re not so many lawyers/economists repeatingly interacting among us and with the same academics, officials and judges. The only solution to the perceived problem, as framed, would be to have virginal public officials and lawyers who have not moved around jobs, who know no one, who haven’t studied at the same places, who haven’t worked with different people and who haven’t established a personal rapport with those in their field. In my view, at least, in that case the cure (assuming it were feasible, quod non) would be worse than the disease.
That said, considering the speaker line-up I’ve no doubt the conference will be most interesting.
Note by Alfonso: Advocate General Wahl’s Opinion in Groupement de Cartes Bancaires out on Friday, and its take at clarifying the object-effect conundrum is remarkable. Pablo Ibañez Colomo offers his views on the Opinion below:
Advocate General Wahl’s opinion in Groupement des Cartes Bancaires v Commission (published last Friday, and available in French and in Greek only for the time being) is a model of lucidity and flexible thinking. It is also very much in line with an article of mine on the subject, but that is plain irrelevant. What matters, and what makes this opinion remarkable, is that it manages to capture the logic underlying the existing case law addressing the boundaries between restrictions by object and by effect. Many commentators and some advocates general have tried in the past few years to identify the elusive factors that should be considered when establishing whether an agreement restricts competition ‘by its very nature’. Paragraph 56 of the opinion sets out a formula that is, in my view, more accurate and elegant than any previous attempt (the fact that I am forced to read it in French for the moment probably adds to the latter):
‘Ne devraient donc être considérés comme restrictifs de concurrence par objet que les comportements dont le caractère nocif est, au vu de l’expérience acquise et de la science économique, avéré et facilement décelable, et non les accords qui, au vu du contexte dans lequel ils s’insèrent, présentent des effets ambivalents sur le marché ou qui sont porteurs d’effets restrictifs accessoires nécessaires à la poursuite d’un objectif principal non restrictif de concurrence’.
In other words, what really matters is whether, given the context in which it is concluded, an agreement is a plausible source of efficiency gains. Thus only those agreements that have no credible redeeming virtues are understood to restrict competition by object. A careful reading of the relevant case law shows, in my view, that this is the ‘default methodology’ (which is the expression I use in my article) – or, if one prefers, ‘l’appréciation plus standardisée’ (as Advocate General Wahl writes in his opinion) – followed by the ECJ when it examines the nature of agreements under Article 101(1) TFE. The methodology changes, and rightly so, when market integration as an objective is directly at stake in a case (as is true of agreements restricting parallel trade).
From Societe Technique Miniere to Pronuptia and Delimitis, and from Remia to Wouters and Asnef-Equifax (to mention just a few landmark rulings), the ECJ has followed the same approach, which revolves around an analysis of the rationale behind the agreement. The Court typically seeks to identify the reasons why two or more firms would introduce some restraints in an agreement. If it appears that such restraints are a plausible means to achieve legitimate business objectives, it concludes that the agreement does not restrict competition by its very nature. In Groupement des Cartes Bancaires, the parties to the agreement claimed that it was intended to address free-riding issues and therefore that it did not have a restrictive object. In light of the relevant case law, the question in these proceedings is whether this story is a credible one given the nature of the agreement and the context in which it was concluded.
The opinion is notable for other reasons, of which I mention a couple:
- It is sometimes claimed that the category of ‘object restrictions’ captures those agreements that can be presumed to have anticompetitive effects (the famous speed-limit analogy and variations thereof). This interpretation of the notion is problematic insofar as it sits at odds with the principle, well established in the case law, whereby an agreement may restrict competition by its very nature irrespective of the effects it produces. Advocate General Wahl emphasises, in this same vein, the importance of distinguishing between the analysis of the nature of the agreement and the analysis of its effects. If the question of whether an agreement restricts competition by object depends on its presumed effects, the two would be confused. The rulings mentioned above indeed confirm that the two are separate steps and that the Court has been careful not to mix them (and has rightly reacted when the General Court has done so, as in Glaxo Spain – also discussed in the opinion).
- The opinion shows that, when confined to its role, the use of economic analysis can be very useful and, more importantly, wholly uncontroversial. Advocate General Wahl does not rely on economic analysis for normative purposes (that is, to state how the law should be, or to claim that the case law is misguided), but as a tool (among others) to make sense of a legal issue. Economics is used in the opinion, in other words, as a guide – a code – to decipher a complex reality. I hope this opinion contributes to a more fluid dialogue between disciplines. I was pleased and surprised to even find a reference to Rochet and Tirole’s ground-breaking work on two-sided markets – which, as you all know by now from Alfonso’s last post, is ‘the single most important and fascinating subject in contemporary antitrust (and beyond)’.
Lastly, I will also mention that writing this post brings very good memories of a great seminar (and even better post-seminar!) to which Luis Ortiz Blanco and Alfonso invited me last year and in which I had the chance to discuss these questions with some luminaries from the Commission.