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Archive for April 2012

The Friday Slot (9) – Damien Geradin

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This 9th edition of the Friday Slot features an interview with Damien Geradin (Covington & Burling, TILEC). I owe a lot to Damien. If Alfonso ever did me the honour to invite me on the Friday Slot, I would explain that Damien is the one who really got me into competition law. We met at the College of Europe, where I was his student. Came the end of the year, he offered me a research assistant position in Liege. I took it, and he then taught me how to write, introduced me to the more economic approach of EU competition law and taught me that all established truths – and in particular legal principles – deserve to be discussed. I will never be grateful enough for all the things he brought me. More generally, in the competition community, Damien is known for his many powerful papers on abuse of dominance law. He is also amongst the very few EU law scholars who managed to obtain a teaching position in a US university, and to reach position 40 in the ssrn ranking of top authors for law. We are immensely happy to publish his interview today.  

Oscar” of the best competition law book?  And of the best non-competition law book?

I have never really used any competition law book (as when I am looking for a piece of information, I am rather trying to find the relevant law review article), so it is a hard question to answer.  The Antitrust Paradox of Robert Bork was certainly very influential and a good read, but it was flatly wrong on some points.

Mémoires d’Hadrien by Marguerite Yourcenar is a fabulous historical novel, which I read when I was a teenager. Since then, I have read very many books, but none exceeded the level of perfection and erudition of that book. Albert Speer’s memoir Inside the Third Reich is also a book that needs to be read (as it explains how the unthinkable happened), although I regretted that Speer did not express stronger regrets for his actions.

Oscar” of the best case-law development in the past year? “Oscar” of the worst case-law development?

Although this is not a case-law development, I think that the Commission did a fine job with the guidelines on horizontal cooperation agreements. The Commission managed to find a good balance on some complex and sensitive issues.

As to the worst case-law development, the ECJ judgment in TeliaSonera is a terrible piece of work. It will be hard to explain to future generation of students why margin squeeze is conceptually different from refusal to supply, and why the condition of essentiality that must be met in refusal to supply cases doesn’t apply to margin squeeze cases. This leads to patently absurd results.

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

1. I would split investigative and decision-making functions in EU competition cases. No one would create enforcement agency combining such functions today. There is a large consensus among scholars and practitioners that such a reform is needed even if it is resisted by the Commission. How this should be done in practice is subject to discussion and various modalities could be envisaged. But the principle that no authority should combine investigative and decision-making functions is fundamental.

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Written by Nicolas Petit

27 April 2012 at 3:22 pm

Posted in The Friday Slot

Output

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With today’s announcement that Harvard University will soon endorse an “open-access” policy for academic publications, I thought time was ripe to post something on recent interesting publications (including my own  :).

There’s a new journal coming, The Journal of Antitrust Enforcement, Oxford University Press. A label of quality => the journal is edited by Ariel Ezrachi  (Oxford CCLP) and William Kovacic  (George Washington University). More here.

A new GCLC book  is out: “The Role of the Court of Justice of the EU in Competition Law Cases”, M. Merola & J. Derenne (eds), Bruylant. As the title suggests, the book contains papers on issues related to judicial review, in all areas of EU competition law. The list of authors is impressive, not least because my co-blogger is in. Topics covered include effectiveness, intensity and scope of judicial review, specialized courts, expert economic evidence, effects-based standards and legal certainty. A must read: Alfonso and Luis Ortiz Blanco’s  paper. In short, they advocate that “legal certainty is hardly compatible with effects-based enforcement“. This view, which still holds sway in most of the Brussels legal community, would certainly deserve to be further discussed and researched (through, for instance, a survey with in-house counsels).

Finally, on a market where the “Whish” remains by far the dominant player, a maverick has made entry : It is entitled “EU Competition Law and Economics“. It is edited by Oxford University Press. And it was written by Damien Geradin, Anne Layne-Farrar and myself. This is the first edition, yet the end of a long story. Our goal has been to integrate as much basic, non quantitative economics into the book.  Given that we will shortly start working again on the next iteration, we’d be glad to have your comments.

One last puzzling thing: in OUP ‘s catalogue competition law titles are classified under the category Public International Law…

PS: I forgot a piece of importance, i.e. a book on Vertical and Distribution Agreements in EU Competition Law edited with my colleague and friend Charles Gheur, from the Brussels School of Competition.

Written by Nicolas Petit

26 April 2012 at 7:06 pm

Change of tone

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Today’s edition of The New York Times features an interesting piece on the “change of tone” that migh have taken place at DG Comp with regard to antitrust intervention in high-tech industries. It argues that the Commission is now favouring effective and timely solutions instead of the time-consuming proceedings and the headline grabbing large fines that characterized “Steely Neelie’s” era (their expression, not ours!)  The article attributes this change to the lessons learned throught the Microsoft case as well as to the appointment of Joaquín Almunia as Competition Commissioner.

Very importantly, The New York Times once again quotes a certain Professor Petit, from the University of Liège ;)

The piece does not make any mention to the change of key people at DG COMP’s Unit in charge of  IT, Internet and Consumer Electronics. Per Hellström -who was until now its Head of Unit- is leaving for the merger unit dealing with energy and utilities. Its successor will be facing a huge workload and quite a few challenges, many of them in the form complaints, which these days are growing like mushrooms in the IT sector. If our information is correct, the Commission will be appointing an excellent new Head of Unit (sorry, but this time we can’t give you the Chillin´leak…yet).

One of the hottest potatoes on the desk of the new Head of Unit will be to deal with the many IP-related complaints and ongoing investigations. This will be precisely the topic of an interesting lunch talk held today by Concurrences, Arnold&Porter and CRA, that I will be attending in a few hours (will have already attended by the time this post is published).

This is not the sole social competition law event of the day. Nicolas and I have also been very kindly invited to attend the gala dinner for the EU Business Summit. The downside (apart from the fact that given the presence of the Royal Family we’ll have to shave) is that I´ll be missing the Real Madrid-Bayern match (any email informing on the evolution of the match will be greatly appreciated!).  And this leads us to the final piece of info of today’s post:

Bayern Munich appears to be fighting Spanish clubs not only in the pitch. DG Comp confirmed yesterday that, pursuant to a complaint lodged by German clubs, it is now investigating whether Spain is granting unlawful State aids to a number of clubs. Two years ago we already said that there was a risk that this could happen. We’ll keep you posted on this too.

Written by Alfonso Lamadrid

25 April 2012 at 5:30 pm

Posted in Uncategorized

Recent Article 102 TFEU Case-law

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Today, my ex-Howrey colleagues invited me to give a presentation on recent developments on EU competition law at Shearman & Sterling. I was very honoured.

It gave me the opportunity to read  the recent judgments in Telefónica v Commission, Post Danmark and Tomra v Commission.

On my own arbitrary scale, the ranking of those judgments is as follows:

  1. CJEU, Post Danmark, C-209/10
  2. CJEU, Tomra v Commission, C 549/10 P
  3. GC, Telefónica v Commission, T-336/07

A word of explanation is in order: amongst those three judgments, the Grand Chamber of the Court should  first be praised for its ruling in Post Danmark. The judgment dissipates the uncertainty generated by Compagnie Maritime Belge in clarifying that selective price cuts are presumably legal when prices > average incremental costs. But this is not all. The Court makes very explicit – and this is right in my opinion – that dominant firms can compete on the merits even if this forces rivals off the market (§22). In so doing, it recognises that not all foreclosure is unlawful, but only that “anticompetitive foreclosure” matters under Article 102 TFEU. Last, but not least, the judgment upholds the unnamed “Article 102(3) TFEU defense” that the Commission had plugged in §30 of its Guidance Paper (see §42).

The second judgment on my podium is Tomra. It comes second because the dicta that dominant firms should be able to compete on the merits for the entire market is wholly unfortunate (§42). It is first non-sensical from an economic standpoint. But as we wrote here, it is also inconsistent with the approach followed in other areas of competition law . A similar comment applies to the unconvincing assertion that a “suction effect” can be established without any need to run a price-cost analysis (§79). Not all in Tomra is bad though. In particular, the judgment encapsulates a subtle message of hope at §81 when it implies, a contrario, that the Guidance paper will have increased relevance in future Article 102 TFEU cases:

As the Advocate General observes in point 37 of his Opinion, the Guidance, published in 2009, has no relevance to the legal assessment of a decision, such as the contested decision, which was adopted in 2006

The worst of those three judgment is, by far and large, Telefónica v Commission. In this judgment, the General Court obediently implements the perplexing standards set by the Court in Konkurrensverket v TeliaSonera Sverige AB (C-52/09). To me, it is beyond common sense, conventional wisdom, reason, logic, honesty, intellectual sanity to consider that a dominant firm can abusively squeeze its rivals through high prices, meanwhile being under no duty to deal with them (see §180). In the language of driving metaphors (I love them), this is akin to forbidding someone from driving at 130 km/h, meanwhile explicitly entitling him to drive at 200 km/h.

I should, however, be very grateful to the Court. The release of those rulings comes at a perfect time, with our Brussels School of Competition conference on “Costs in EU competition law” scheduled on 9 May. The number of participants keeps increasing, and yesterday, the General Counsel of one of the 3 firms involved in those cases registered :).

Written by Nicolas Petit

24 April 2012 at 10:03 pm

Posted in Case-Law, Uncategorized

Man Proc, Confidentiality and Red Little Riding Hood

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In preparation for my lecture at the Brussels School of Competition last week I read a couple of Commission documents that I had not had a chance to look at: the Manual on Procedure and the recent Guidance on Confidentiality Claims. For very different reasons both of them are commendable.

- The Manual of Procedure is much more comprehensive than what I think most of us had expected (even if the non-confidential version -which has 277 pages- appears to be half as long as the original one, which according to the Ombudsman was “roughly 500 pages”). John Temple Lang deserves to be congratulated for having managed to have the European Commission make its Manual public, but the Commission also deserves to be thanked for having favored transparency when drafting the publicly available version.

The only thing I find missing in the public version is a summary description of the content that has not been included in the Manual because of confidentiality concerns. It would have been nice if the Commission had followed the instructions set out in its own guidance on confidentiality claims which state that “[f]rom the non-confidential version it has to be clear where information has been deleted“.

- The Guidance on Confidentiality Claims was not a promising document. There can be little of promise in a document whose subject-matter is the most boring thing a lawyer can do (I must confess that I started reading the doc very late at night on Thursday and was very tempted to skip it). But against all odds, the Guidance makes a fun skim read. Yep, I´m serious. Whoever wrote it has done a terrific job. The main characters of the Guidance are Red Little Riding Hood, her Grandma, Big Bad Wolf, Mr. Charming, Snow White, Ms. Magic Mirror, Wicked Step Mother, Mr. Humpty Dumpty, the Little Mermaid, the three little pigs and others.  ;)

 

P.S. By the way, on the procedural front the Commission has in recent times issued not only the Manual, but also a comprehensive set of Best Practices and a new Hearing Officer’s mandate. Query: are any of these moves aimed at preempting a possible challenge to the current procedural framework before the European Court of Human Rights once the EU joins the Convention?

Written by Alfonso Lamadrid

23 April 2012 at 4:36 pm

Sunday readings

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There’s generally a moment every Sunday in which I try to catch up reading newspapers and magazines that I haven’t had the time to check out during the week. I’m doing this right now (while, btw, I listen to great music that Nicolas recommended me yesterday) and I’ve come accross something which deserves a comment here.

Today’s edition of El Pais features an interesting piece by Paul Krugman called “Europe’s Economic Suicide” (originally published in The New York Times)  in which he argues that fiscal austerty imposed by Germany is pushing other Member States -and very particularly Spain- to the disaster. I cannot but agree with practically everything he says.

Krugman’s article has spurred a thought (not a brainy one; after all it’s Sunday):

It is funny (and funny may not be the adequate term)  to realize that the people in charge of getting the EU economy out of trouble are competition economists. I bet that a most of you reading this will immediately think of Mario Monti (former Competition Commissioner who is now Italy’s Prime Minister), of  Spain’s Minister for the Economy -Luis de Guindos-, who used to head of the competition authority, and maybe even of Spain’s Secretary of State for the Economy -Fernando Jimenez Latorre- who was also in charge of competition policy in Spain and who prior to his recent appointment directed NERA’s business in Spain.

What you may not know is that there is another well-known competition economist who is not in the first political line but who probably has even more influence on the European economy than any of the above-mentioned. This would be the person who inaugurated the Chief Economist post at DG COMP, Lars-Hendrik Röller, and whose current position is Economic Advisor to Chancellor Angela Merkel. A few months ago The Economist had a piece which read as follows: “Mrs Merkel may be lacking high-quality advice. Her newish economic adviser is Lars-Hendrik Röller, known for his writings on competition rather than high finance“.

I respect Röller as a competition economists and I believe he did well during his period at DG Comp but, to be frank, I think that him and the German government are not getting it right nowadays. This makes me share The Economist’s concerns that there might be different relevant markets for competition economics and for macro economics.

P.S. More on politics: the French presidential election is being held today. We are worried, because we have realized that apparently one of the candidates -Marine Le Pen- shares our concerns with regard to endives and cat food cartels and is campaigning on them (see here). Thanks to Caroline Si Bouazza for mentioning Chillin’Competition in her comments about this curious video!

Written by Alfonso Lamadrid

22 April 2012 at 7:03 pm

The reason…

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…. why Alfonso has not posted anything today, and did not post anything yesterday (he was preparing).

He does a great job, running an hilarious case-study with the Brussels School of Competition (BSC) students.

Written by Nicolas Petit

20 April 2012 at 4:19 pm

Posted in Our Organizations

Judicial appointments (including a Chillin’ leak)

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A few days ago it was reported that the Danish presidency had proposed that 12 extra Judges to the General Court be appointed pursuant to a “lottery system”. At first we thought it was an April’s fools joke, but no, it’s actually a true story.

We have already expressed here some of our opinions with respect to the debate concerning the reform of the General Court. In our view, people matter more than institutional arrangements; or, in other words, if Member States appoint the right Judges then the backlog and most other problems could be effectively solved. Many Member States have already done so and, needless to say, there are currently a number incredibly good and productive Judges at the General Court.

And speaking of judicial nominations, EU Governments are meeting this week to vote on the appointments or re-appointments of a number of Judges and Advocates General at the upper ECJ.

It has been reported elsewhere that EU Governments will reappoint Judges Arabadjiev, Arestis, Berger, Bonichot, Fernlund, Jarasiunas, Levits, Malenovsky, Prechal and Von Danwitz as well as AG Bot, and that the new faces will be Judge Da Cruz Villaça (Portuguese; former President of the GC and very familiar with competition law issues) and Advocates General Nils Wahl (Swedish; former Judge at the GC and another very good competition expert) and Melchior Wathelet (Belgian; lawyer and economist from the University of Liège with a Harvard LL.M; also former Judge at the ECJ).

What we believe no one else has yet reported is that the UK has formally nominated a renowned competition lawyer, Christopher Vajda QC, as the new British Judge at the ECJ. The letter sent to the Council by the UK´s permanent representation officially informing them of the proposal (and including Mr. Vajda’s CV and list of publications) is publicly available here.

Written by Alfonso Lamadrid

18 April 2012 at 1:40 pm

Posted in ChillinLeaks

Competition Press Clips (II)

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Some months ago we wrote a post explaining that some news stories are read differently from the perspective of an antitrust geek. Let’s continue with that series:

- In the above-mentioned post we reported on the use of novel anti-competitive practices in the US pizza market (remember the guy who planted live mice on competing pizza parlors?). That story was an illustration of how dirty  tough competition law can be when it comes to food (as I’m writing I keep on telling to myself: “don’t make an endive joke; don´t”, so: no endive joke here). But the economic downturn seems to have further complicated things. The New York Times recently published a brilliantly written and quite humorous piece on the origins and effects of the price war that is currently taking place in the streets of Manhattan. The article forecasts that we may even end up having free pizza.

- Few consumers would object to free pizza. We have a weird love for free stuff (Brussels is, btw, a great city for gratuity lovers: you could perfectly survive without spending a cent of food just by attending receptions and cocktails; there are people who qualify as professionals at doing this). But a recent Judgment from the 15th Chamber of the Paris Commercial Courts has confirmed once again that, although we like “free”, we don´t understand the competitive implications of free products/services. The Judgment in Bottin v Google -a great candidate to the 2012 worst antitrust law development prize- has completely ignored that providing a free service in one side of a two-sided market cannot be akin to predatory pricing, without at least considering pricing on the other side of the market. An unofficial English version of the Judgment has been generously issued for free by the association of complainants against Google iComp. Considering that other people provide transalations for a price, we hope iComp is not also fined for predatory practices because of this free translation! (In iComp’s defense, one could claim that there is also an obvious business motive underlying the provision of this free service.  But then a cynic could respond asking whether horizontal cooperation specifically aimed at hurting a specific undertaking -even through the use of legal actions- could not qualify as an illegal anticompetitive practice itself?). ;)

- Not only pizza makers and search engines face tough competition. BBC reports that a London-based minicab firm Addison-Lee has asked its drivers to drive in the “bus lanes” as a sign of protest against the rules that reserve the use of these lanes to licensed black taxis and buses. The company argues that  “the current bus lane legislation is anti-competitive and unfairly discriminates against the millions of passengers that use Addison Lee“. Drivers in Brussels must have objections to the legality of the whole traffic code; otherwise it’s impossible to understand why they drive the way they do.

- Nicolas’ piece on Credit Rating Agencies seems to have inspired some: As reported by mlex, asset managers have filed an antitrust complaint against Standard & Poors in Switzerland.

-And speaking of mlex (which, as we have said here before, does a terrific job and has almost turned into an essential facility for anyone in the business), we have just found out that one of their excellent writers, Lewis Crofts, does not only cover competition law issues for MLex but is also an accomplished novelist (click here for his personal website). His novel “The Pornographer of Vienna” tells the story of a painter who was famous for his sexually explicit depictions of the Viennese underworld. Those who read it will find some familiarity with the competition law world.

P.S. I really tried, but I just can’t help it: putting mice in competing pizza places is pretty bad, but putting endives on your rival’s pizzas would really be too much!

Written by Alfonso Lamadrid

17 April 2012 at 1:23 pm

Professional moves

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Lately, several good friends of Chillin’Competition have made interesting career moves. A brief recap:

  • Scott McInnes (Jones Day and She Goes Electro) is moving to Mastercard.  BTW, Alfonso, here’s a present suggestion for Ms. Lamadrid who recently got her driving licence: Scott sells a very nice car at a very competitive price;
  • Ief Daems (ex Howrey/Shearman & Sterling) has moved to Samsung;
  • Laura Zadunayski (former student of the ULg LL.M in Competition and IP law) leaves Johnson & Johnson for boose Diageo (this one is very bad);
  • Tarik Hennen (Squire Sanders Brussels and GCLC) leaves the bar and is poised to reappear in a wholly unrelated market;
  • Guillaume Taillandier has left Squire Sanders Brussels for a in-house position at Bemis – a flexible packaging company with its European HQ in Belgium;
  • The new Richard Whish, Christopher Townley (King’s College London) has been awarded the title of Senior Lecturer with effect from 1 September 2012
  • Alfonso ………….. stays at Garrigues.
  • I stay full time in my good old Belgian university…

Congrats’ to all of them!

Written by Nicolas Petit

16 April 2012 at 7:05 am

Posted in Uncategorized

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