Archive for June 2011
Let’s put headhunters out of jobs .
I heard on the grapevine that Covington and Burling Brussels is facing a huge stream of new business.
The downside is that current partners and associates are working ’round the clock. Since I have good friends, co-authors and university colleagues there, I am a little concerned.
Now, Covington and Burling is hiring junior and senior associates. I suppose you can send your application to one of the partners working on competition cases.
I attach below the slides presented by H. Gilliams (Eubelius) and N. Pesaresi+G. Mamdani (DG COMP) at yesterday’s lunch talk.
The open question to me: the remedial approach enclosed in those slides sought primarily to address the “too big to fail” issue. Now, should this approach be applied to the different setting where banks face bankrupcy issues because they have purchased dirty paper from failing States?
On the alleged non-structural views of Chicago scholars => “An industry which does not have a competitive structure will not have competitive behavior” (George J. Stigler, “The Case Against Big Business,” Fortune, May 1952)
On the 2004 Microsoft case => “The Commission’s case was like a jellyfish – shapeless and very painful” (I. Forrester). Thanks to I. Debois for the pointer.
Many recent news appear somewhat different when looked at from the perspective of an antitrust
geek professional. Some quick examples:
Novel anticompetitive practices? Pizza maker charged with using mice against competition
(An interesting case study of oligopolistic behavior: monitoring is easy, and the EU certainly has credible retaliatory mechanisms at its disposal…)
“The successful competitor, having been urged to compete, must not be turned upon when he wins” Man dies after winning vodka-drinking competition
A successful maverick? Roland Bunce wins next top model competition
There were a couple of “real” antitrust news too:
Google´s subpoenas Feds to launch probe of Google
One of our posts quoted by Bloomberg Edison, Air Liquide EU Rulings May Aid Fine Cuts, Lawyers Say
Finally (and I promise this is not a joke either), the last of our Press Clips is a further illustration of the Spanish Competition Commission´s proactiveness:
Yesterday, the Brussels School of Competition held its first conference. This inaugural event was devoted to information exchange agreements.
Unlike other events, we tried to avoid having another Horizontal Guidelines’ bashing conference.
Rather, and in line with the BSC’s second mission (compliance), the conference sought to improve awareness of the key principles applicable to information exchanges.
To this end, we designed a very comprehensive programme, which covered horizontal as well as vertical exchange of information. We also included a presentation on information exchanges promoted by public institutions.
I am certainly biased, but the conference was really good. Loads of questions, great presentations, good timing, nice turnout (approximately 80 participants).
So you can judge by yourself, I attach below the speakers’ slides.
Some posts ago we referred here to the Spanish Competition Authority’s decision sanctioning the main Spanish electricity companies with fines totaling some 61 million euros as a good illustration of how quantity and quality may not necessarily go hand in hand with regard to competition law enforcement in Spain.
(Btw, the comments to our previous post express interesting views on the CNC´s attitude and offers possible explanations to its causes. In the days after that post was published several other pieces on the CNC´s performance also appeared elsewhere).
As anticipated then, I believe that the ”innovative” theories put forward by the CNC on its decision (which include “sham litigation” and a version of what Nicolas has labeled as “Karate competition law“) merit a comment on this blog, so here go some brief remarks on the decision:
(Before getting started, a disclaimer is in order: my firm is representing one of the entities sanctioned by the CNC. Accordingly, and although I am expressing my very personal views, you are at liberty to take them with a pinch of salt). Those interested in a summary overview of the facts and of the CNC’s official position, check out the CNC´s Press Release here.
Even though the decision declares that companies are responsible for two infringements I will merely focus on the one that can be of greater interest to our readers:
According to the CNC, this infringement consisted of a strategy (note: not a conduct, but a strategy revealed by circumstantial evidence) aimed at hindering customers from changing of electricity supplier at a moment in which deregulation was taking place. One –the main- component of this strategy was an agreement adopted by electricity companies within the framework of their association to appeal a Ministerial Order on the grounds that it contravened data protection rules by not envisaging the right of companies to refuse to provide certain personal data. The other alleged elements consisted of a temporal “cutt-off” of operations relating to applications to move to the free market (which both the Ministry and the Energy Regulator consider justified) as well as of a refusal to meet the requests of one supplier (that had previously been sanctioned by the CNC on a different decision).
(Click here if you’re interested in a comment on the issues that perplex me the most) Read the rest of this entry »
I just read a short and interesting piece by W. Kolasky on the life of one of the most anonymous antitrust celebrities: John Sherman. A few things worth keeping in mind:
1. John Sherman’s name has been used by the British army to name Medium Tanks M4. In the British army, it is conventional to name American-built tanks after famous Civil War generals. Whilst John Sherman was a politician, his brother, William Tecumseh Sherman was one of the most famous Union Generals during the civil war.
2. The Sherman Act originates in a bid to protect tariff regulations that promoted domestic US industrial interests (!). In the late XIXth century, the democrats alleged that protective tariffs had caused the spread of domestic trusts. Sherman, a Republican and a fierce defender of tariff legislation, sought to rebuff the link between the rise of trusts and tariffs. Eventually, to reduce pressure to abolish tariff legislation, the republicans were left with no other choice but to promote anti-trust legislation (p.86).
3. Following years of fierce parliamentary debate (p.87), the final version of the Act was expunged of most of the wording initially proposed by Sherman, and replaced by the text that we know (p.87). The disappointed J. Sherman later commented that this change in wording would deprive the bill of all effectiveness. He is quoted to have said that the bill would be “totally ineffective in dealing with combinations and Trusts. All corporations can ride through it or over it without fear of punishment or detection.” (p.88)
PS: Some law firms, like WilmerHale, follow an open-access publication policy. Most papers written by their lawyers are publicly available on their website. Nice.
In its recent Tele2 Polska ruling, the Court deprived the National Competition Authorities “NCAs” of the ability to take “negative decisions” (C-375/09, Prezes Urzędu Ochrony Konkurencji i Konsumentów contre Tele2 Polska sp. z o.o., 3 May 2011).
Negative decisions – until now, I used to call them positive decisions… – acknowledge in their operative part that there is no infringement of the competition rules, and provide reasons for this. Under Article 10 of Regulation 1/2003, for instance, the Commission can take “inapplicability” decisions (to date, the Commission never adopted any). To take a hypothetical example, in a
positive negative decision, a NCA would conclude that firm X conduct does not constitute an abuse of dominance, absent an abusive course of action.
Now, in Tele2 Polska, the Court was asked to determine whether NCAs can take such decisions. For wholly disputable reasons I believe - flawed understanding of the concept of effectiveness of EU competition law, dubious literal reading of Article 5, inconsistency with VEBIC, long-term legal uncertainty effects, etc. – the Court held that NCAs were deprived of this decisional prerogative. As observed by my assistant, Charlotte Lousberg, this suggests that a number of NCAs have lived in a state of illegality for the past 7 years.
But this is not the primary point of this post. Rather, I would like to stress here a number of perverse effects which the ruling may have on the way NCAs conduct their decisional business.
As explained by Wouter Wils in a great paper (Wils, W. P. J. (2004), The Combination of the Investigative and Prosecutorial Function and the Adjudicative Function in EC Antitrust Enforcement: A Legal and Economic Analysis, World Competition, 27 (2), pp. 201 – 224), officials can be subject to a variety of biases, including hindsight bias, i.e., the need to justify past efforts. More generally, officials are rational individuals who seek to maximize the returns of their professional activities (for legitimate career advancement purposes, etc.).
Now, in the real life, it cannot be excluded that following a lengthy, costly investigation, officials will eventually come to the view that a case has no merit (after all, bright competition lawyers might, for once, convince the NCA that the case is worthless). However, with Tele2 Polska, the officials’ investigative efforts can no longer translate into some sort of observable decisional output.
I believe that this may alter officials’ incentives structures, now unable to craft negative decisions, and justify past activities, in meritless cases.
This is first true at the very outset of competition procedures (e.g., when the NCA receives a complaint). Officials might now be increasingly reluctant to “take” complex, difficult cases, including cases which raise novel questions of law, whose outcome is uncertain. NCAs might in turn prioritize their enforcement resources on “easy” cases, regardless of the public interest.
But this is also true during the procedure, if officials realize that the case is going nowhere. In such a setting, officials (who can no longer push for a negative decision) might nonetheless seek to “get something out” of the case, and resort, to this end to other enforcement instrument, which generate some decisional output, but require little proof and reasoning => think of Article 9, commitments’ decisions.
Just random Friday ruminations. There will be more to come on this in July.