Archive for the ‘Antitrust Scholarship’ Category
[Guest post by Pablo Ibañez Colomo]
It would seem that the Spanish super-quango is more active than one would have assumed (in particular given what is currently going on within the tax authority of the country). The newly-created CNMC has fined four football teams (including Real Madrid and Barcelona) and the broadcaster Mediapro EUR 15 million for concluding exclusive licensing agreements for a period exceeding three years. Such terms contravened a previous decision adopted by the – then – CNC in 2010.
The case is interesting, first, because the Spanish government passed (in 2010, at pretty much the same time that the original decision was adopted) legislation that set a four-year term for exclusive licensing agreements between teams and broadcasters. One could claim that, insofar as the contentious agreements complied with the relevant sector-specific legislation, they were concluded in good faith. Accordingly, the fine would be unjustified. In light (pun intended) of Consorzio Industrie Fiammiferi (pun intended, I’m on fire!), it is clear, however, that this is not a valid defence. Legislation did not preclude undertakings from concluding agreements for a shorter period and thus from complying with Article 101 TFEU (which was clearly applicable in this case).
A second reason why the case is interesting is because it shows that the three-year limit for exclusive licensing agreements is now set in stone. There is no reason why this should be the case. A three-year term is not necessarily pro-competitive. It all depends on the context in which the licensing agreement is concluded. If the goal of this bright-line rule is (as I assume) to preserve the contestability of markets for the acquisition of television rights, then it may sometimes be too short. A new entrant (as BSkyB was back in the early 1990s) may need a longer period to reduce uncertainty and recoup its investments. By ruling out any flexibility, a rigid interpretation of Article 101(1) TFEU can very well have the perverse effect of protecting the incumbent. These are the problems of applying competition law as regulation, which I highlighted elsewhere, and of assuming that UEFA Champions League, Bundesliga and Premier League were rightly decided, in spite of the overwhelming evidence suggesting the opposite.
- Fresh off the Court. This morning the ECJ handed down a Judgment in which it has ruled that the Court itself is not supposed to reduce the fine imposed on a company whenever judicial review by the General Court exceeds a reasonable time. This Judgment effectively and explicitly overrules the Baustahlgewebe Judgment, in which the ECJ had followed the opposite (and in my view much more reasonable approach). Today’s Judgment is premised on the idea that an application for damages brought against the EU would in all circumstances constitute an effective remedy to compensate for any damages caused by the GC’s failure to adjudicate within a reasonable time.
For those of you with less background on general EU law, actions for damages against the EU shall be brought before the General Court. In other words, parties who believe that the duration of proceedings before the General Court was excessively lenghtly should, by means of a different application, ask the General Court itself to ascertain whether its own behavior was appropriate in the light of the circumstances specific to the case and whether the parties suffered any harm. Good luck with that…
- Save the date! On February 7th and 8th AIJA [Association Internationale de Jeunes Avocats) (a generous institution according to which lawyers below 45 qualify as young] will be holding a two-day conference in Bruges under the title “Competition Law 2.0- Competition Law and Technology“. A not-to-be-missed excuse to
spend part of the weekend in Bruges and pay a visit to the greatest beer bar ever discuss hot topics in current antitrust. Both Prof. Petit and myself will be speaking there.
- Speaking of current antitrust debates: the last number of the Journal of European Competition Law and Practice (a great journal that has rightly earned a prominent place in a saturated? market) features various very good articles, including one by our guest blogger Pablo Ibañez on State aid litigation. At another level, it also features a brief piece of mine [the hyperlink only leads to the abstract] about Google’s commitments (you already know my views). Ironically, my comment was written in relation to the first version of the commitments but features in the “current intelligence” section of the journal. Fortunately I did explicitly envisage “likely further tweaks over specific details” and all comments are applicable to the new (leaked) proposal.
These are the stats available in DG Comp’s webpage for cartel fines imposed in the period 2009-2013.
Do you see anything remarkable?
After years of lawyers whining about sky rocketing fines, will we now see a reverse trend of lawyers whining about too few cartel decisions and too small fines?? We are funny whining beings…
In spite of temporary appearances, though, one should not expect these figures to remain as they are. The upcoming LIBOR decision will certainly inject some significant (record breaking?) “capital” into this years’s numbers. On top of that, there appear to be a number of cartel decisions
stuck somewhere in the pipeline (interestingly, only one cartel decision has so far been adopted in 2013).
P.S. For the one true masterpiece on cartel fines -Fine Arts in Brussels- click here (the fact that I co-wrote it doesn’t of course compromise my objectivity…).
In the past few days I haven’t been very diligent at keeping up with posting. My bad conscience has led me to write the hastily written random thoughts below. I might come back to develop some of them in posts to come:
1) On joint v individual assessment of (incriminatory v exculpatory) evidence in cartel cases. For some time now I have been (intermittently) attempting to finish a lengthy piece about evidence in cartel cases (surprisingly enough, there are only a handful of publications worth reading on this subject). One of the interesting things I’m observing is that EU Courts and the Commission [please note that I’m being critical with them; as some of you have reproached me, that doesn’t happen so often] is that whereas the principle of “joint assessment of evidence” is consolidated and very much followed when it comes to assessing the evidentiary value of incriminatory items, the same cannot be said about exculpatory ones.
In most cases, a bunch of elements are put together and assessed jointly in order to declare that an undertaking has committed an infringement. I’ve nothing to object to this logical approach (even more so in cartel cases otherwise these could hardly be brought). My concern on this particular point is limited to the fact that [in another illustration of the tendency of many legal principles to expand themselves until a point of absurdity that eventually must lead to their nuancing] the principle of joint assessment of evidence is often resorted to as an easy escape to avoid discussing individual evidential items that the parties consider worth discussing. In my view, the Commission and the Courts should always first engage in the individual assessment of each evidentiary item, and only then (once the value or lack thereof of every standalone item is established) move on to the joint assessment of all available evidence.
Interestingly, the contrary tendency can at times be observed regarding the assessment of exculpatory evidence. I’ve come across a few Judgments that address exculpatory items one by one concluding that “x is not in itself sufficient to rebut whatever”, that “y is not sufficient to prove whatever” or that “z cannot on its own lead to whatever conclusion”. The “joint assessment” of x, y and z as exculpatory items sometimes just doesn’t happen. For some examples, take a look at recent cases in which parties tried to rebut the AEG (parent liability) presumption (which, btw, turned 30 a few days ago). I hope to develop –and substantiate- my thoughts on this soon.
2) A suggestion to improve the Court’s rules of procedure. Nicolas has lately pushed for reform of EU Courts’ rules of procedure regarding conflicts of interest. We have not agreed much on that issue, but I too have a suggestion to improve the rules of procedure. Unless I’m wrong, the current rules do not envisage any sanctions nor any other sort of legal consequences for parties that provide the Courts with false information to (let’s leave misleading aside, for the concept is arguably too wide, for lawyers at least). Most legal systems do envisage such rules. Imagine the Court were to ask a question (written or oral) to a party, and that the information given in response were not only inaccurate, but untrue; should that not have any consequences?
3) A solicited response to Nico’s views about the effect on trade between MS criterion. In a recent post Nico referred to the effect on trade criterion, complaining that in the eBooks case the Commission had not undertaken any serious assessment, and had swiftly concluded that the conduct at issue did affect trade between Member States. He wisely noted that I’d probably have a divergent view, and I do (he knows me well…). If you ask me, in that case the effect on inter-State trade was crystal clear, as the Commission’s reasoning in paras. 91 and 92 (noting that the conduct at issue was implemented in the whole of the EEA and that agency agreements covered UK, France and Germany) sufficiently shows. Nico says that “[w]ith this kind of reasoning, everything may affect trade between Member States (though I understand Alfonso has a dissonant view on this”. Since I’m asked, my view is that with that reasoning, practices that are implemented throughout the EEA and that manifest themselves with a certain intensity in 3 Member States will be deemed to affect trade between Member States, which, to me, could not be more logical. In fact, as the Decision shows, no party ever challenged this specific point.
4) A great read. Finally, I confess my (very) geekish action of the month: I’m currently reading R.Odonoghue and J. Padilla’s book on The Law and Economics of Article 102 from beginning to end, as if it were a novel (in my defense: I hadn’t done that in a very long time). The book is a monument; it’s smart, balanced, exhaustive, very well thought and written and deserves (although doesn’t need) all possible publicity. Hats off to the authors. In fact, as soon as I’m done publishing this post I’ll send both authors an invite to participate in our currently lethargic Friday slot section.
EUROPEAN COMPETITION JOURNAL
Volume 9 . Number 2 . August 2013
To access this issue online and purchase individual papers please click here
To subscribe please click here
Vertical Antitrust Enforcement: Transatlantic Perspectives on Restrictions of Online Distribution under EU and US Competition Laws
Abstract: This article looks at how EU and US competition laws deal with restrictions of online sales in distribution agreements, respectively. The growing importance of online commerce highlights how vertical competition law enforcement is still an important building block of competition law policies, both in the US and in Europe. Businesses who are either engaged in online activities or deal with online intermediaries in the US and EU should be aware of the rules of the game, since vertical antitrust issues are generally subject to different principles on the two sides of the Atlantic. The European Commission recently adopted new competition rules that specifically target restrictions of online sales in distribution agreements, acknowledging the importance of e-commerce for consumers and its instrumental role in achieving the paramount goal of a single internal market in Europe. Conversely, unlike in the EU, several factors, such as the existence of a developed online market, the absence of single market considerations, the paramount importance of freedom to contract and the role of inter-brand competition under US antitrust law, arguably explain why US antitrust doctrine is less concerned about the need to adopt specific rules applicable to restrictions of online sales.
Alternative Approaches to Sentencing in Cartel Cases: The European Union, Ireland and the United States
Paul K Gorecki and Sarah Maxwell
Abstract: The paper examines the approach used in sentencing in hard core cartel cases in the European Union, Ireland and the United States. These approaches are not considered in a vacuum, but rather use the facts of the successful prosecution of the Citroen cartel in Ireland. While the EU and the US both use sentencing guidelines, the US guidelines are more evidence based and transparent. In contrast, the judiciary in Ireland has yet to develop a systematic clear policy for determining sentences in cartel cases. Applying the EU and the US sentencing guidelines to the facts of the Citroen cartel suggests that, in any event, the sentences imposed in cartel cases Ireland are too low. Some suggestions for rectifying the situation are discussed.
I love commitments decisions because they are a quick read.
But I also
hate dislike them because they leave the reader angry hungry for more.
Some evidence: in the E-Books case, the effect on trade condition was deemed fulfilled under the simplest possible sort of analysis:
(91) The Commission’s preliminary view was that the effect on trade of the concerted practice was appreciable given that the conversion to the agency model by the Four Publishers and Apple formed part of a global strategy that was intended to be,andwas,implemented in the EEA.(92) In particular,given the nature of the product in question, the position and importance of the undertakings concerned and the scope of the agency agreements entered into between each of the Four Publishers and Apple in the United Kingdom, France and Germany, the pattern of trade was potentially affected by the concerted practice which covered a substantial part of the EEA.
With this kind of reasoning, everything may affect trade between Member States (though I understand Alfonso has a dissonant view on this).
The reference to the “nature of the product” is in particular inconsistent with previous findings that geographic markets for books are national or subnational (see Case No COMP/M.2978 LAGARDERE/NATEXIS/VUP, §296).
But there’s other fish in the sea: the E-Books decision is fascinating in that it exemplifies how, with parties’ consent, agencies manage to bypass the most basic evidentiary hurdles required for antitrust intervention.
Beyond the effect on trade condition, the decision adduces only light proof of the alleged horizontal “concerted practice” amongst publishers. I doubt this is Woodpulp or CISAC’s proof. As the Court recalled in those cases, heavy evidentiary thresholds apply in concerted practice cases.
More importantly, the Commission’s theory of harm is incomplete. In particular, the Commission does not explain if, and how, the publishers could have boycotted Amazon – their biggest client – under a collective refusal to supply (in Bronner sense) and reserved E-Books to Apple. And this is important, because absent this, the MFN scheme could not possibly have the anticompetitive effect foreseen in the decision.
Last but not least, the decision is a good example of antitrust sorcellery, in that it it turns the adoption of agency agreements, i.e. practices that are per se lawful practices by 101 TFEU standards, into a theory of anticompetitive harm.
To the Commission, article 9 decisions sound like Hetfield’s epic lyrics:
“I’m your truth, telling lies
I’m your reason alibis“
I attach a presentation I gave yesterday at the University CEU San Pablo in Madrid.
The presentation adresses wether competition policy contributes to investment in innovation.
I slightly reframed it though, to envision it under the competition v IP angle.
The picture above says it all of my views on this issue.
The past few days have left us some interesting statements on the competition front. Here’s a personal selection. Happy to add any others any of you might have.
A) The French Industry Minister said last week that EU’s competition rules are “stupid and counter-productive“. I can understand part of the point, but the view that ”Europe organized the balkanization of its companies by chasing down state aid” is peculiar, given that the State aid control regime seeks precisely to eliminate barriers to inter-State trade. As put by José Luis Buendía in another often quoted statement, “State aid ‘DNA’ shares more chromosomes with internal market rules than with antitrust rules“.
disrespect towards misunderstanding of competition law seems to be a non-partisan feature of French politics. Many of you might remember Sarkozy’s comments about endive producers not being Apple or Microsoft (see here) (the statement was not without consequences: it led our friend Mark English to stop wrapping his iPhone in ham).
B) Slow, ignorant’ lawyers charge by the hour to inflate bills, says President of British Supreme Court. A statement that adds up to a controversy we’ve often echoed regarding billable hours (see our previous post “Is associate lawyer the unhappiest job?“)
C) Have law blogs surpassed law reviews? That’s not really a statement, but rather an interesting (and interested) read.
D) The tone of the comments regarding Google’s proposed commitments has increased and reached new heights. A few days ago, an “anonymous” (no wonder!) lawyer representing one of the complainants said: “All we have to go on at the moment is what Almunia has said and it is absolutely not encouraging. Putting lipstick on a pig does not mean it is not a pig (…). “It’s starting to look like he just wants to get a deal before his term as Commissioner is up next year.”
I recently had the opportunity to sift through the recent case-law of the Court.
The CJEU ruling in Allianz Hungary, C-32/11 stands out.
Our Lords again blurred the object/effect distinction.
The Court held that “object” restrictions can be established by proof of anticompetitive effects:
“§34. Accordingly, where the anti-competitive object of the agreement is established it is not necessary to examine its effects on competition. Where, however, the analysis of the content of the agreement does not reveal a sufficient degree of harm to competition, the effects of the agreement should then be considered and, for it to be caught by the prohibition, it is necessary to find that factors are present which show that competition has in fact been prevented, restricted or distorted to an appreciable extent [...]
§36. In order to determine whether an agreement involves a restriction of competition ‘by object’, regard must be had to the content of its provisions, its objectives and the economic and legal context of which it forms a part […]. When determining that context, it is also appropriate to take into consideration the nature of the goods or services affected, as well as the real conditions of the functioning and structure of the market or markets in question […]“
Of course, my positivist friends will not fail to remind me that the Court had already said this in previous cases.
But let’s call a spade a spade: the Court’s insistence on reaffirming bad precedent reveals that the virus of legal non-sense is deep ingrained.
The upshot of Allianz Hungary is to unduly expand the “object” box, meanwhile creating much legal uncertainty.
In a recent speech, A. Italianer implicitly confirmed this, by saying that restrictions by object are serious, but “not necessarily obvious“.
In practice, parties lose the ability to articulate “effects-based” (and other) defenses, and face a considerably tougher task under 101(3) TFEU.
But the most bizarre statement is elsewhere. At §44, the Court held:
“With regard to determining the object of the agreements at issue in the main proceedings with respect to the car insurance market, it should be noted that, by such agreements, insurance companies such as Allianz and Generali aim to maintain or increase their market shares“
You read well: for the Court it is unlawful to cast agreements with purchasers with a view to maintain or increase market shares.
My practitioner friends often complain that it becomes impossible to advise on Article 102 TFEU. I guess that with such judgments, it is becoming equally complex to provide antitrust counseling under Article 101 TFEU.
Or is it the contrary? With such basic, formalistic reasoning, providing competition law advice under 101 and 102 TFEU is increasingly simple, since most inter-firms agreements and dominant firm conduct are unlawful as such.
Or the Court’s contribution to undermining the market for specialist competition law advice.
For more, see the excellent analysis of http://europeanlawblog.eu/?p=1664
The most important (antitrust-related) news last week was the European Commission’s announcement that it will market test a commitment proposal submitted by Samsung regarding the enforcement of its SEPs (Standard Essential Patents) related to mobile communications.
As you know, the Commission considered in its December 2012 Statement of Objections that the seeking of court injunctions by Samsung in relation to SEPs which it had committed to license on FRAND terms, or that third parties (i.e. Apple) were apparently willing to agree to license on FRAND terms, could amount to an abuse of dominance, because “access to patents which are standard-essential is a precondition for any company to sell interoperable products in the market” (press release dixit; we’ll come back to this phrase at the very end of the post). The theory goes that the challenged enforcement of SEPs could allow Samsung to obtain licensing terms that the licensee wouldn’t have agreed to absent the threat, and that this “undue distortion of licensing negotiations” would harm consumers in a number of different ways.
[Query 1: is this an exclusionary abuse? an exploitative one? both?; Query 2: Would an alleged abuse of this sort lend itself to the application of the Guidance paper?; Query 3: If the answer to query 2 is "no", then what are the criteria to undertake a legality assessment of a situation like this? Query 4: How does one assess the likelihood of anticompetitive effects in a situation like this?; Query 5: can you distinguish a willing licensee from a non-willing one without taking a view on what's FRAND? (I guess the proposed solution arguably gives an answer to this 5th question; if someone's willing to accept the proposed framework... ); Query 6: Was Apple -the de facto complainant- a willing licensee in this case?].
Samsung (which just before receiving the SO had unilaterally withdrawn all its European SEP-based injunction claims) has now offered to refrain from seeking injunctions for past, present and future mobile (smatphone and tablet) SEPs for a period of five years againts any company adhering to a given licensing framework. As explained by the Commission itself (and here I’m “scraping” its Press release) ”the licensing framework consists of: (i) a negotiation period of up to 12 months and (ii) if no agreement is reached, a third party determination of FRAND terms by either a court or an arbitrator, as agreed by the parties. If the parties cannot agree on either submitting to court or arbitration, the parties will have to submit to arbitration“.
Some well known commentators in the patent blogosphere swiftly commented on the proposal in a critical manner (see “EU Commission market-tests totally insufficient FRAND commitments offered by Samsung“). My preliminary take is that, even if some issues may (inevitably?) be left open, this proposal would shed some welcome light on a much contentious subject.
We’d be happy to host a discussion in Chillin’Competition, and welcome the views that any of you might have with regard to both the case and the commitments proposal.
Let me get the ball rolling: