Chillin'Competition

Relaxing whilst doing Competition Law is not an Oxymoron

Do Fast Moving Markets require Fast (and Furious) Competition Authorities?

with 6 comments

In support of his aggressive move against Google on 25 May 2012, Commissioner Almunia declared:

I believe that these fast-moving markets would particularly benefit from a quick resolution of the competition issues identified. Restoring competition swiftly to the benefit of users at an early stage is always preferable to lengthy proceedings, although these sometimes become indispensable to competition enforcement“.

Later in June, he again said:

I strongly believe that users and competitors would greatly benefit from a quick resolution of the case; it is always better to restore competition swiftly in fast-moving markets, provided of course that the companies concerned are ready to seriously address and solve the problems at stake“.

Commissioner Almunia, and his advisers, must  have read Judge R. Posner who warned 10 years ago that:

Antitrust litigation moves very slowly relative to the new economy. Law time is not real time. The law is committed to principles of due process that limit the scope for summary proceedings, and the fact that litigation is conducted by lawyers before tribunals that are not technically trained or experienced inevitably slows the process.

The mismatch between law time and new-economy real time is troubling in two respects. First, an antitrust case involving a new-economy firm may drag on for so long relative to the changing conditions of the industry as to become irrelevant, ineffectual. That was a problem even in the old economy. One recalls for example that by the time the monopolization case against Alcoa completed its journey through the courts, Alcoa had lost its monopoly for reasons unrelated to the litigation; as a result, the decree finally entered against Alcoa offered little more than nominal relief (the divestiture of Alcoa’s Canadian subsidiary). This type of problem is likely to be more frequent in the new economy.

Second, even if the case is not obsoleted by passage of time, its pendency may cast a pall over parties to and affected by the litigation, making investment riskier and complicating business planning“.

Does this call for novel enforcement tactics, with increased recourse to settlements and interim measures?

Or, in evidentiary words, does this require doing away with “cogent evidence” in exchange for “serious doubts“? I have my own doubts.

And Posner too. As he, very humbly, recognizes: “This problem will be extremely difficult to solve; indeed, I cannot even glimpse the solution“.

If God Posner cannot find it, we are indeed all doomed.

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Written by Nicolas Petit

26 June 2012 at 11:58 am

6 Responses

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  1. In the end, this is a public policy decision; specially in an administrative law and also heavily political system of enforcement like the one in the EU.

    George Pedakakis

    26 June 2012 at 12:06 pm

  2. Like George says, it’s definitely a policy issue, but the authorities do have some tools that allow them to move a little bit faster… The question is: are they actually promoting those tools (as settlements) as much as they should in the new-technology markets (fast moving markets)? EU Microsoft 2004 was a disaster. EU Microsoft 2009 was slightly better (faster)… Find the differences…

    PVIC

    26 June 2012 at 1:10 pm

  3. Allow me to cast my vote for the Schumpeterian approach. The quicker the market moves/develops, the less the need for competition law enforcement. Almunia should stick to endives.

    Martin Holterman

    26 June 2012 at 2:41 pm

  4. If this is a policy issue, let’s just apply the Commission’s own policy: “Newly emerging markets should not be subject to inappropriate obligations, even if there is a first mover advantage […]. Newly emerging markets are considered to comprise products or services, where, due to their novelty, it is very difficult to predict demand conditions or market entry and supply conditions, and consequently difficult to apply the three criteria. The purpose of not subjecting newly emerging markets to inappropriate obligations is to promote innovation […]”. See Commission Recommendation of 17 December 2007 on relevant product and service markets within the electronic communications sector.

    Nicolas Petit

    26 June 2012 at 3:13 pm

  5. I would say that Schumpeter hardly applies to industries that are characterized by high network effects which goes with less contestability. And comparing the Commission’s Microsoft article 7 decision on the Media Player and its article 9 decision on the Internet Explorer shows that the fast track is not necessarily less effective than the slow one.

    BV

    3 July 2012 at 9:11 pm

  6. It is not right to compare MSFT I with II, and argue in favour of Article 9 as an effective tool.

    There could have been no quick resolution in MSFT II if the lengthy MSFT I had never taken place.

    MSFT II is a re-run of MSFT I, so the Commission could draw on the previous decision, and avoid the pitfalls of a drawn-out investigation.

    Nicolas Petit

    4 July 2012 at 11:49 am


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