Chillin'Competition

Relaxing whilst doing Competition Law is not an Oxymoron

Archive for December 2011

Christmas miscellanea

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We will be closing the shop for a few days, but there are a few things that we would like to tell you first:

- Our personal Christmas wishlists appear in a special issue from Competition Policy International.  They´ve done a great job with editing our pictures (“thanks” to all those of you who have written to say that I need to change the one I use for these things),  and we´re grateful for having been placed in such good company. I´m also grateful for the opportunity to do some free advertising of my family´s bakery: thanks to this they will now start seeing some usefulness to my job!  Nicolas also profited from this occassion to make it (more) evident that he´s a competition law freak geek.

- Nicolas and I had some pre-holiday drinks last night together with some good friends. Not only all of us were competition lawyers, but the place we went to was also packed with competition lawyers from a well-known firm. We´ll keep the name of the firm confidential, but we can give you a hint: what do you see in the second row of the image below?  ;)

- Many other lawyers in Brussels and elsewhere are also getting some last-minute Christmas gifts. Our thoughts will be with all those who, like our friend David Henry, will have to be stuck at the office with a merger filing…

- The Spanish CNC also received a Christmas gift the day before yesterday, when the names of the members of the new Spanish government were made public. The new minister for the economy is Luis de Guindos, who was the Secretary General for Competition between 1996 and 2002. The CNC is certainly poised to play an important role in the coming years as Spain makes an effor to boost competitiveness. (By the way, the CNC has joined the list of national competition authorities resorting to animated cartoons to explain their job and the benefits of competition. Check it out here).

- A reminder of some events coming up right after the holidays: Nicolas will be opening the new edition of the IEB´s Competition Law Course in Madrid on 13 January (we´ll profit from our visit to Madrid to plot a couple of interesting projects on which we´ll report right after the holidays). The BSC will also be holding a very interesting conference on “Costs in Competition Law” on 25 January.

- A light piece of Christmas reading: Freedom to Trade and the Competitive Process by A. Edlin and J. Farrell. This short article is perhaps the most insightful paper I´ve read in a long time. It´s cool to see two top-notch U.S. economists saying sensible stuff that in Europe would be received with the worst of all insults: Ordoliberal!

- Finally, we want to thank whoever had the idea of improving the search tool in the webpage of the European Court of Justice.  You made our lives easier.

- To be frank, there were more issues on which I was planning to comment, but I need to run to the airport…Merry Christmas to all and our best wishes for 2012!!

P.S. We leave you with the image of the European Union´s Christmas tree:

 

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Written by Alfonso Lamadrid

23 December 2011 at 2:11 pm

The B******t Test

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As demonstrated by H.G. Frankfurt, we are surrounded by b******t.

One of the methods for spotting b******t it is the “not test“. As explained here and there, this test checks whether “it is possible to negate the statement and create a sentence that any sane person would utter in public“.

The “not test” has been applied by development economists to G20 declarations.

In concrete terms, the idea is to take a speech and turn its sentences to their opposite, i.e. turn all positive sentence to negative and vice versa.  If the revised sentence makes sense and could equally be voiced by the speaker, then it enshrines worth content. If, on the other hand,  the changed sentence makes no sense and would never possibly be pronounced by the speaker, then it is a vacuous statement which conveys b******t.

Now let’s see whether b******t is also pervasive in the antitrust field.

To apply the “not test“, I have chosen a policy speech of former Competition Commissionner Neelie Kroes. I apply it to  bits and pieces of the speech which seem to convey opinions rather than descriptions. Instead of systematically using the “not” word, I occasionally apply antonyms.

Together with the Court of Justice, the Commission has been an independent driving force to promote antitrust compliance to bring better products, greater choice, and lower prices to the citizens of Europe” gives =>  “Together with the Court of Justice, the Commission has been a biased inefficient force to promote antitrust compliance to bring better products, greater choice, and lower prices to the citizens of Europe” => b******t

this is an impressive record, I still believe that more can be done” gives => “this is an unimpressive record, I believe that more cannot be done” => b******t

Let me be very clear. These discussions are not about bargaining or negotiating. The Commission will not bargain about evidence or objections” gives => “Let me be very clear. These discussions are just about bargaining or negotiating. The Commission will  bargain about evidence or objections” => no b******t

We have a lot to be proud of. But as you can see, we are not resting on our laurels: our commitment to designing ever better competition policy and enforcement is as strong as it was fifty years ago” gives => “We have a lot to be ashamed of. And as you can see, we are not resting on our laurels: our commitment to designing ever better competition policy and enforcement is as weak as ever” => definitely b******t

I leave it to our readers to draw their conclusions on this. But it seems we’d  save a lot of time and paper if speeches were better drafted…

A disclaimer: this post was inspired by Alfonso’s last post + drinks yesterday with my LL.M students…

PS: I suppose only die-hard fans of AC/DC-like sound will know the LP that illustrates this post. Jackyl was a great band, and their titles are worth re-listening.

Written by Nicolas Petit

22 December 2011 at 1:57 pm

Posted in Uncategorized

The laugh test

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A prominent practitioner once explained to me the usefulness of the “laugh test” (a.k.a. “red face test”) in our profession. He said that lawyers often have to defend arguments about which they are not very confident, but that there should be a limit to the “originality” of these arguments. According to him, this limit could only be drawn with the aid of the laugh test.

The practical instructions are easy: whenever you come up with what you fear to be a far-fetched argument, ask yourself the following question: will the addressee of the argument in question have a laugh when she/he reads it? If the answer is no, you may as well give it a try. If the answer is yes, then you´re better off keeping it to yourself.

Sounds easy, right? If you´d read some decisions and submissions that I´ve been reading this week you´d realize that not everyone applies the laugh test properly!

Since I can´t talk about the examples that are currently on my desk, I will refer to a case that´s being heard today in the U.S.  in which it appears legitimate to ask whether the laugh test has been applied or not.

Take a look at this piece (Price-fixing or good manners? Jury might decide) and reach your own conclusion ;)

Written by Alfonso Lamadrid

20 December 2011 at 10:16 pm

Best Conference in Early 2012 – Costs in Competition Law

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With the dissemination of the “more economic” approach in all areas of EU competition law, costs have become a key concept in antitrust proceedings.  But to most lawyers and in-house counsels, the very notion(s) of costs remains cryptic.

Against this background, the Brussels School of Competition (BSC) has decided to organize on 25 January in Brussels a half-day compliance seminar entitled “Costs in Competition Law”.

In line with the interdisciplinary spirit of the BSC, this event attempts to “blend” competition law and economics. Under each selected topic (see  link to the agenda below), it thus brings together a team of one lawyer and one economist, who will seek to provide an integrated perspective on the issue.

This event is a joint initiative of the BSC and of the Institute for European Legal Studies (IEJE) of the University of Liege (ULg). I owe a big, huge, enormous thank you to Elise Provost, for her great assistance in the organisation of this event.

Costs in competition law – Compliance Seminar – 25012012 – Programme

A registration form can be found here.

Written by Nicolas Petit

19 December 2011 at 11:09 pm

The Friday Slot (2) – Bill Kovacic

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For this second edition of the Friday Slot, Bill Kovacic (George Washington University, former FTC Commissioner and Chairman)  has  kindly accepted to answer to our questions. I suppose Bill needs no further introduction to most of our readers. Yet, for those of you who have never seen Bill “live”, I have to say he belongs to the top five speakers on the antitrust conference circuit. A biography is attached at the end of this post. Thanks again to him for taking the time to answer our questions (with, as you will see, a great sense of humour and humility).

Question 1: “Oscar” of the best antitrust law book?  And of the best non-antitrust law book?

Here are two books which, owing to their age, may not be well known to new generations of competition economists and lawyers.  For the best antitrust law book, read Ellis Hawley, The New Deal and the Problem of Monopoly (Princeton University Press 1966).  Hawley provides essential background on the US antitrust system, and his discussion of antitrust in the 1930s has powerful relevance today.  For the best non-antitrust law book, read Marver Bernstein, Regulating Business by Independent Commission (Princeton University Press 1955).  Bernstein studies US experience with regulatory commissions, but his assessment has universal application.  Most honorable mention for category two: Richard Harris & Sidney Milkis, The Politics of Regulatory Change – A Tale of Two Agencies (Oxford University Press, 2d Edition, 1996).  Every newly appointed competition agency leader should read this book before the job begins.

Question 2: “Oscar” of the best case-law development in the past 5 years? “Oscar” of the worst case-law development?

My nominees for best and worst are FTC cases I worked on.  The envelope with my answers can be opened five years hence.

Question 3: Let’s do it like economists => assume that you could change 3 rules, principles, judgments, institutions in the current US antitrust system. What would you do?

Three institutional changes to the US system:

First, reform the criteria that academics, government officials, journalists, and practitioners frequently use to grade competition agencies.  Abandon performance measures that equate activity (cases filed, fines imposed, days in prison) with accomplishment.  Define agency effectiveness by the economic outcomes achieved by litigation and non-litigation policy tools.  When a competition agency official says “We’ve been very busy!,” respond “Have you been very effective?”

Second, bolster efforts by competition agencies and external researchers to measure the economic effects of antitrust policy.   Evaluating outcomes is a difficult, necessary task.   Distrust assertions that competition law is valuable economic policy, but there is no way to tell if it works.

Third, increase policy integration between the two federal antitrust agencies and among the federal authorities and the states.  Create a US equivalent of the European Competition Network.   Greater policy coherence at home is ever more important to influence norms abroad.

Read the rest of this entry »

Written by Nicolas Petit

16 December 2011 at 9:37 pm

Posted in The Friday Slot

Ebooks and Resale Price Maintenance

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Last week the European Commission announced the opening of formal proceedings to investigate whether international publishers may have engaged in anti-competitive agency agreements regarding the sale of ebooks (see Press Release). Dawn-raids in connection with this case were carried out last March.

Today´s edition of the Financial Times (edited by Pearson -a publisher affected by the investigation-) features a most interesting piece on a very related topic under the title Don´t make Amazon a monopoly.

Its author -John Gapper- argues that competition authorities in the US and the EU should not challenge the arrangements under which publishers set minimum prices for ebooks and preclude companies such as Amazon, Apple or Barnes&Noble from offering discounted prices. It explains that this is a textbook example of the situation that the US Supreme Court had in mind when it overturned Dr. Miles in its Opinion in Leegin, and submits that it would be paradoxical for competition rules to enable free riding-based discounting on the part of Amazon, thus enhancing its alleged “monopoly”.

This situation and the legal controvery surrounding it raises very interesting questions that go beyond the situation at issue and which have the potential to affect online distribution in general.

Does anyone have any strong views on this?

Written by Alfonso Lamadrid

15 December 2011 at 6:27 pm

Economic advice for Christmas shopping

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This morning, as I was doing  a some last-minute airport shopping for a “Secret Santa” gift for my firm´s Christmas dinner in Brussels tonight, I received an email announcing that Frontier Economics has released a paper on the economics of Christmas. It wasn´t so useful for me because I had severe budget constraints, but it has the sort of fun approach that we like, and we thought you might find it useful or at least entertaining.  As they explain on their web page:

It’s easier to think of economists as the prophets of trading doom than as Santa’s little helpers – too busy telling everybody what’s happening to productivity, energy demand and like-for-like sales to provide any insights into the annual exchange of goodwill and good-or-ill gifts to family and friends. So Frontier Economics has been scouring the academic literature of behavioural economics for tips to make that last struggle with your present list a little easier…

If interested in economic advice for Christmas shopping, click here: Present values- The economics of Christmas.

And if you´re one of those who likes to “shop around” for the best deals, you can also check out Waldfogel´s seminal paper on this matter (which Nicolas already recommended last year) and The New York Times´ collection of stories about the economics of Christmas.

By the way, this week is a nervous time for competition lawyers all over Brussels waiting to see if their Christmas break will be wiped out by unexpected Christmas gifts from the Commission!

P.S. This morning we crossed the 200.000 visits threshold. Once again, thank you for taking the time to read us!

Written by Alfonso Lamadrid

14 December 2011 at 6:17 pm

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