Archive for the ‘Antitrust Scholarship’ Category
Our last post revolved around a well-known quote from Philip Areeda that explains the evolution of the law in terms of judicial inertia/judging by catchphrase. Areeda’s explanation has the virtue of verbalizing brilliantly in simple and intuitively correct terms a human factor that explains why some legal rules may at times evolve beyond the limits of their logic. [To be sure, as noted elsewhere his explanation certainly applies not only to theories that expand liability, but also to those that limit it; in fact, the example I used may arguably refer to the latter category].
In my view, the idea underlying Areeda’s theory explains many other behaviors and situations in areas beyond competition law. At the end of the day, it is about people adopting a simple pre-established view or prism that makes further reflection unnecessary which, in turn, makes the process of forming a view much easier. We do that all the time in many other fields, politics being one of them (if, for instance, one dogmatically assumes that State intervention is always bad (think of Tea Partisans…), then one has a
simplistic solid view on many complex specific instances without the need for further reflection; yep, this is one of my recurring themes). Uncertainty and doubt feel troublesome, but certainties -even when mistaken- are comfortable, save a lot of effort and provide seemingly confident opinions.
Judges may at times certainly favor simple pre-defined solutions uncritically (Areeda blamed the fact that there were “too few judges experienced enough with the subject to resist” the temptation of applying previous rulings uncritically), but they’re not the only ones. Think, for instance, of a group which, by definition, is not experienced enough with the subject to resist the temptation to assume stuff uncritically: students.
In the past few days I’ve had various interactions with students from various backgrounds, and I have again been reminded of how new generations of competition lawyers almost universally coincide in the view that the case law and the decisional practice (particularly, but not exclusively, in the domain of Art. 102 TFEU) is fundamentally flawed, absurd, “ordoliberal” and almost crafted by lunatics. But once you scratch below this initial thought, it seems that for some resason students often feel it must necessarily be THE right answer even if they can’t always explain why (which is ironic when what’s criticized is the alleged lack of analytical content in current rules and doctrines). To be sure, I’m not saying that the case-law is perfect (which it probably isn’t, but one needs to understand it and to reflect on it in order to have ideas on whether and how it is to be improved), nor that this is the case of all students, nor that professors don’t do their job right (although not all of them are Areeda either), but I like it better when I see young lawyers who have reasoned doubts than when I see them with unreasoned certainties (I, for one, have very few competition law-related certainties; in fact, I’m not even sure of whether the criticism I’m expressing here is entirely justified). And false certainties may be more common in relatively complex yet non-scientific disciplines, like ours.
Drop by drop, this process whereby some people learn formed opinions instead of the tools with which to form them might also have a crucial impact on the evolution of the law. As new generations get to higher roles (clerks, then Judges, etc), their preconceptions may follow. And, as Areeda noted, it wouldn’t be until their expansion became ridiculous that the process of cutting back would begin (perhaps engendering an analogous process holding contrarian views).
In 1989 late Philip Areeda (picture above) wrote one of the most influential and cited antitrust pieces in the history of the discipline: Essential Facilities: An Epithet in Need of Limiting Principles, 58 Antitrust L.J. 841. I recall my first reading of this article as student at the College of Europe and how I truly enjoyed it (at roughly the same time I remember having felt the same about Joseph Weiler’s The Transformation of Europe) (yes, those were two good indicators of geekishness). From time to time I’ve gone back to that piece from Areeda, and as a fan of pendulum-based evolutional/historical theories, I’ve quite often cited one particular excerpt therein; here it is:
“As with most instances of judging by catch-phrase, the law evolves in three stages: (1) An extreme case arises to which a court responds. (2) The language of the response is then applied -often mechanically, sometimes cleverly- to expand the application. With too few judges experienced enough with the subject to resist, the doctrine expands to the limits of its language, with little regard to policy. (3) Such expansions ultimately become ridiculous, and the process of cutting back begins“.
I think this captures the evolutionary process of the law in many other areas of law in general and of competition law in particular. To mention only one among many possible examples, I used it some days ago to explain the evolution of the notion of the “single and continuous infringement” under Art. 101 TFEU.
There’s an interesting additional thought in relation to this quote. A few years after this piece was published the ECJ ruled on Magill, and I think it’s not at all unreasonable to say that Areeda’s piece was pondered by the Judges in that case (see, and cast your vote, here). Now, if you think about it, Areeda in many ways anticipated how the evolution of the law on refusal to supply would discur in Europe:
(1) Magill was a extreme case to which the Court responsed with a reasoning that was very much tailored to the facts at issue (a point often forgotten); (2) The language of the response was then applied -possibly mechanically, as an illustration of judidicial inertia (not to be confused with stare decisis)- to other factual settings and, with too few judges experienced enough with the subject to dare to nuance it (?), the Magill criteria consolidated in cases like Bronner and IMS. (3) Their consolidation as the sole relevant criteria ultimately became perhaps unreasonable and inconvenient, which led to an attempt to nuance them [the Commission's -in my view very reasonable- claim in the first Microsoft Decision that “there is no persuasiveness to an approach that would advocate the existence of an exhaustive checklist of exceptional circumstances and would have the Commission disregard a limine other circumstances of exceptional character that may deserve to be taken into account when assessing a refusal to supply.” (para. 555)].
As you know the the General Court did not follow the Commission on that particular point, not because it disagreed, it just didn’t need to rule on that point because it thought the Magill criteria were in any event fulfilled. That was done with the aim of minimizing the chances of getting quashed in an appeal and at the cost of some legal contortionism. In my view, it would have been desirable for the Court to assess whether all “extraordinary circumstances” to identify a refusal to suppy could or not be subsumed within the Magill criteria. Instead the Court gave a practical illustration of how its hammer can make square pegs fit round holes (an exercise that was repeated a few months later in BUPA re the Altmark criteria).
For a most interesting discussion on the legal contortions in Microsoft featuring some of the people who were actually associated to the case see the 16 comments to Nicolas’ post on The Magill-IMS Re-animator.
A few hours ago Facebook announced its purchase of WhatsApp, which has been -more or less- valued at over 13 billion euros, one of the most expensive tech aquisitions ever.
As any well-informed competition lawyer may have learnt from recent case-law, this may seem like a risky investment: WhatsApp operates in a dynamic market, in which barriers to entry are said to be almost inexistent, in which there are no technical or economic obstacles to switching to a competing provider (particularly for small groups of people), in which services are mostly provided for free, and in which, despite the lack interconnection, having the largest network with hundreds of millions of users does not give rise to network effects providing a competitive advantage….
If such reasoning were right, it’d be hard to see why anyone would invest over $40 per user of a 55 employees company.
Bitter ironies aside, this deal raises another interesting question: given WhatsApp’s limited turnover I guess it’s likely that the deal will fall outside EU merger notification thresholds. Now, should it? I don’t have a stance on this, but now that there are so many ongoing discussions about the reform of the scope of the Merger Control Regulation, it could perhaps be useful to reflect on whether turnover thresholds are well-suited to reach mergers in the era of free services, in which turnover may not always be good proxy to competitive significance. Think of the possibility that depending on market definition, these transactions could only have to be notified in jurisdictions contemplating market share thresholds (which I’ve always criticized but that remain in place in Spain and Portugal); does that make sense? To be sure, I’m not saying this merger raises any substantive competition concerns; my point is a more general one unrelated to the specificities of any particular case.
A few days ago I participated at a very interesting AIJA seminar in Bruges on Antitrust and Technology. All panel discussions were great, but I’m particularly grateful to Pablo Ibañez (LSE) and Kevin Coates (DG Comp) for their participation in the panel I moderated on interoperability issues, which was truly excellent (and not because of me).
The presentations projected at the conference have been made available at AIJA’s website (I include the hyperlinks below for your convenience):
- Technology Licensing and the New TTBER
- Keynote speech – With great power comes great responsibility
- Caught in the antitrust web -Regulating internet services
- Patent litigation and settlements -The limits of settlements and Pay-for-delay
- Patent strategies and abuse of dominance What are the antitrust boundaries
- Competition law and interoperability
(Image quite possibly subject to copyright)
As Alfonso hinted in a previous post, I will be an “atypical” trainee at DG COMP in the next 6 months.
The stage starts tomorrow, and whilst I keep my ULg, GCLC and BSC activities, I have decided to discontinue my posts on the blog during my stay at COMP.
Alfonso will of course remain active. And I’ll be back in full force in 6 months.
Meanwhile, you can still write to me at my usual university address.
This post also gives me a last opportunity to share with you several recent presentations and papers:
- A presentation on injunctions on SEPS given at the University of Wurzburg (Germany), in the context of a seminar series organized by Professor Florian Bien: Universität Wurtzburg – Presentation on Injunctions
- A presentation on Compliance Programmes in EU and National Competition Law, given in Paris at a joint EDHEC-Ernst&Young conference: Antitrust et compliance – 11 02 14 – Risque juridique et compliance – tendances actuelles NP
- A paper on the flawed patent=monopoly equation (co-authored with Prof. Bostyn): http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2373471
- A paper on market power in the credit rating industry (co-authored with Profs Candelon and Gautier): http://ssrn.com/abstract=2392989
With Alfonso, you guys are in good hands.
And my posts will presumably be better informed when I return in 6 months.
Some of you might remember one of ours posts titled State aid conferences: that’s where the fun is! (Michael O’Leary and Kim Jong Il make for a great marketing combination and attracted quite a few readers) [Btw, today’s picture features another “peculiar” character; see below for an explanation].
In reality, and jokes aside, State aid is a field where much is currently happening, and that most antitrust lawyers often fail to follow and even perceive as distant. Let me explain why that may not make much sense:
Off the top of my head, I would say that around 40% of DG Comp’s decisional output and resources are devoted to State aid. In economic terms, State aid issues generally have much greater repercussions than most antitrust cases (to put just one example, the guys at my office are advising Spain on how to use some tenths of billions granted by the European Council to restructure the financial sector). The substantive issues are no less interesting, complex, and challenging as the one’s posed by antitrust law.
On the other hand, to be sure, political interference is much more frequent, intense, and often less camouflaged (politicians, very particularly French and British ones, seem to be the ones realizing about the impact of these rules) than in antitrust. You might have read this morning about the French Industry Minister, Arnaud Montebourg, openly attacking both State aid rules in general and Vice-President Almunia in particular. In the Minister’s words, the Commission lives in a “legal delirium” and “makes up rules that don’t exist in the Treaties in order to perpetuate its powers”. He also referred to the Commissioner an “obsolete liberal integrist” and asserted that he has the backing of 11 Member States to “revise and liberalize State aid”. For once I will be the controversial one here instead of Nico, and I’ll refer to Monsieur Montebourg as the first recipient of the “Thicko of the day” award (pictured above proudly receiving his trophy)
Despite all the above (the fun, the legal complexity and the political and economic importance), State aid is not paid the attention it deserves by practicing lawyers. Why? Easy: because those most directly affected often seem to be public authorities (many companies haven’t yet understood the opportunities and the risks associated to these rules), and those don’t pay as high bills as private companies do. (I guess efficiency and profit-maximizing related incentives also give rise to market failures/externalities).
Whereas I agree with the idea that State aid DNA shares more chromosomes with internal market rules than with antitrust law, there are some common feature between the two disciplines. Aside from the fact that they were placed in the same chapter of the Treaty –which led to their enforcement being entrusted to the same body: DG Comp-, State aid law is also always constantly in the making and questioning itself, which is what initially seduced me from antitrust.
An example: on January 17th the European Commission launched a consultation paper on the very the notion of aid. Think about it; no one would dare of doing the same in antitrust, even if very few people (perhaps with the exception of the influential Giuliano Marenco) have a comprehensive theory to explain what a restriction of competition actually is (an idea I also stated here and here).
There’s loads of “low-hanging fruit” in this domain. If you’re interested in an overview of the legal issues involved in determining what an State aid really is, I very strongly encourage you to read Andrea Biondi’s recent piece: State aid is falling down, falling down: An analysis of the case law on the notion of aid (very recently published in Common Market Law Review).
In the past few weeks I’ve taken a few initiatives to compensate for our State aid deficit. On a personal level, I got heavily involved together with José Luis Buendía in drafting and lodging no less than 12 State aid appeals concerning a particularly controverted and interesting decision (little did I know that I’d have to do that in the course of the Christmas holidays; btw, the experience left me wondering how we could manage in the pre e-Curia days). On a blog-related level, we’ve just asked a couple of the best minds in the field to become regular contributors to Chillin’Competition. We hope to be able to announce their coming on board soon.
EUROPEAN COMPETITION JOURNAL
Volume 9 . Number 3 . December 2013
The 3rd issue of the 2013 volume of European Competition Journal is now available online.
To access this issue online and purchase individual papers please click here.
For further information about European Competition Journal, please click here.
Antitrust Marathon V: When in Rome Public and Private Enforcement of Competition Law
A discussion led by Philip Marsden, Spencer Weber Waller and Philipp Fabbio
Topic 1: Public–Private Partnerships for Effective Enforcement
Public–Private Partnerships for Effective Enforcement: Some “Hybrid” Insights?
Topic 2: Effective Injunctive Relief
Effective Injunctive Relief
Spencer Weber Waller
Topic 3: Private Actions for Damages
Private Actions for Damages
Topic 4: Criminal Enforcement
Real Crime: Criminal Competition Law
Susan Beth Farmer
Abstract: The Antitrust Marathon is a long-running series of roundtable discussions sponsored by the Institute for Consumer Antitrust Studies of Loyola University Chicago School of Law and the Competition Law Forum of the British Institute of International and Comparative Law, focusing on enduring issues of comparative competition law. These discussions always take place the day before or after the great marathon races of the world which some of the participants also endure. However, no running is required for the roundtable discussion itself. Past Antitrust Marathons have focused on Abuse of Dominance, Antitrust and the Rule of Law; Competition and Consumer Protection, and other topics, and have been held in Chicago, London, Boston and Dublin. We are grateful to the Italian Competition Authority and the University of Rome I (Sapienza) for hosting and being co- sponsors of the 2013 Antitrust Marathon.
I attach hereafter a link to the presentation on Article 102 TFEU that I gave yesterday at the Mardis du droit de la concurrence.
I end up concluding that time is ripe for Communication on Article 9 (or a notice, or guidelines, or a guidance, or whatever a little formal).
But more importantly, I make substantive suggestions to modify the Article 9 tool (eg. to introduce a bifurcation within Article 9 for protracted infringements, etc.).
Commissioner Almunia has been described in the press as “Mr. Commitments”.
I believe that he would really leave office on a high note with the adoption of a Communication rationalising and codifying the practice of COMP in this controversial, and often misunderstood, area.