Chillin'Competition

Relaxing whilst doing Competition Law is not an Oxymoron

The Bon Jovi Defense

with 2 comments

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I gave a presentation last week at the Intertic conference organised by F. Etro in Rome (see link hereafter:Recent Developments in Article 102 TFEU – Intertic Conference – Final).

This was a very good event, with many great speakers.

One of the main points in my presentation was to exort the Commission, as a best practice, to avoid working on the new “hi tech” cases under the “likely” effects framework, and prefer to investigate them under an “actual” effects framework.

A Commission official rightly remarked, however, that  agencies cannot wait to have dead bodies on the floor to intervene.

So I gave some thinking to the remark. On face value, this is a commendable suggestion.

Yet, when one thinks about it, this is a bit of a rethorical, oversimplistic defense: a company is either dead or alive, full stop (we may call it the “Bon Jovi defense“, after the band’s classic  “dead or alive” gem).

Bu this wholly fails to understand that there is – and this is fortunate – something between life and death, and that companies do not exit markets instantly.

On top of this, most players in the hi tech sector are big corporations with deep pockets – they all accuse each other of being dominant – that are unlikely to disappear overnight.

That said, I understand the Commission’s concerns. To help the agency, I would argue in favour of the use of interim measures. After all, those measures may give the Commission the time necessary to amass empirical proof of anticompetitive effects, meanwhile mitigating the harm on alleged victims of the dominant company.

Besides this, it would be probably more satisfactory to think about this issue in terms of threshold, and ascribe a well-defined probabilistic threshold to the concept of “likely” effects, drawing for instance inspiration from the discussion that took place in merger control in the Tetra Laval case (“in all likelihood” v.  “balance of probabilities“). Given the escalation of sanctions for infringements of Article 102 TFEU, I’d set the bar quite high.

A last thing: no one can predict the future… and I trust antitrust agencies are no exception to this. So again, the principle of enforcement humility (we mentioned it in a previous post) calls for a modest, empirical approach to fast moving markets, as advocated by J. Wright in a recent excellent speech.

PS: a question for our readers: I am looking for real life evidence of firm exit out of anticompetitive exclusionary conduct. Can anyone help? Examples shall not necessarily come from antitrust cases. I am thinking of running some case studies with my students.

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Written by Nicolas Petit

21 May 2013 at 9:25 am

2 Responses

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  1. As to your PS question, a good example of firm exit would be 2 Travel Plc in the OFT’s Cardiff Bus case.

    SH

    21 May 2013 at 5:50 pm

  2. Meridiana exited the Linate-Rome route. They held too few slots at Linate so that operating the route was not economically viable for them. Not just my words, but the Italian Competition Authority’s. (Counter question: Guess who was happily flying -alone- on that route?!)

    Gabriele

    22 May 2013 at 8:41 pm


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