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European Commission’s literature

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Having to spend a couple of quieter than usual days sick at home, I decided to catch up and so some summer reading on some recent European Commission’s publications.

As you know, DG Comp is quite prolific from a literary viewpoint (I’m not saying that this is because anyone there may have free time). Aside from an extraordinary number of soft law instruments it has also tried new genders, such as show-off comics, and regularly issues other seldomly read stuff.

A first point to be made –and oddly enough I’ve just realized about it- is that the Competition Policy Newsletter has disappeared for good. I don’t know what has led to its termination, but it’s a pity; the articles featured in it often offered interesting insights on how some cases were viewed from the inside. The publication has been replaced by the Competition Policy Brief, which mainly deals with policy issues; not really the same concept.

A great candidate for an article on the Competition Policy Newsletter would have been the case on spare pieces of luxury watches shelved yesterday by the Commission, which did not find an infringement. This marked the first and only time that the Commission has used the claw-back clause provided for in Article 11(6) of Regulation 1; it took the case from a national competition authority (the Spanish) that was on the verge of sanctioning it and now it has  concluded that there is no infringement. [For advertising disclosure purposes: we were active in both the national and EU phases of the case representing a number of the companies investigated].

I’ve also done some catching up on actual decisions. We keep on complaining that the Commission adopts fewer infringement (Art 7) decisions in non-cartel cases than it should and that we lack guidance, but then very few people read the scarce ones there are. How many people have, for instance, read Telefónica/Portugal Telecom, which raises very interesting and never discussed points on the self-assessment of restrictive agreements? The very recently published Motorola decision is also an interesting read for those geeky enough.

Then I skimmed trough the latest set of documents published by DG Comp in relation to the 10th anniversary of Regulation 1/2003, namely the Communication on Ten Years of Antitrust Enforcement under Regulation 1/2003: Achievements and Future Perspectives and the accompanying Staff Working Documents (here and here) Aside from interesting stats on enforcement, these documents contain a cautionary discussion on institutional issues related to national competition authorities (in relation, mainly, to their independence vis à vis political authorities, the necessary appointment of members of the authority on the basis of merit, “amalgamation of competences” risking “a weakening of competition enforcement”). I wonder if they had any specific NCA in mind…  Some of the understatements in these papers make evident a couple of problems; for instance, when the Commission says that the “mechanism by which the Commission is informed of national courts judgments (…) has not worked optimally”, what it means to say is that national courts have completely ignored this mechanism in practice.

But what those documents are mainly about –and they’re right on point- is in identifying procedural divergences across Member States as the next obstacle to tackle. This is a recurrent issue on which I’ve insisted every time I had the chance (both in lectures and papers like this one –the others are in Spanish-). At the present moment, and due to the principle of procedural autonomy, very significant differences remain regarding, for instance, inspection powers, discretion to take on cases, powers to impose structural remedies, regulation of commitment decisions, leniency rules, existence of cartel settlements, procedural rights and calculation of fines. This leads to the result that the application of the same –EU competition- rules is very likely to lead to very different outcomes depending on the authority dealing with the case (and rules on jurisdiction often make it difficult to predict who that would be). To me, this is legally the big, fat, painted elephant in the EU competition enforcement room (hence the pic –taken at a Banksy show- at the top of the post)

Lastly, I also read a few speeches by high officials at DG COMP. In preparation for a paper which will touch a bit on commitment decisions and on the technology sector, I read a speech by Vice President Almunia on commitment and settlement decisions in which –this grabbed my attention- he referred to the e-books case explaining that the Commission “accepted commitments in a nascent and extremely dynamic market which called for quick and decisive action”. Why is that so, you may ask. The response is contained in para. 90 of the Staff document on the 10 years of Regulation 1 referred to above: at the beginning of a special section on IT, Internet & Consumer Electronics, the Commission states that “these are industries characterized with strong network efforts [it seems quite likely that they meant to say effects, not efforts] which enable the lock-in of customers and further strengthening of dominant positions. Vigilance on the part of competition authorities is thus warranted”. So, we’re told that nascent and extremely dynamic markets call for quick and decisive action because of the risks generated by network effects. The thing is that I sort of recall having read something different somewhere

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Written by Alfonso Lamadrid

30 July 2014 at 2:59 pm

Recent output

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In the course of his time off blogging, Nicolas has remained pretty productive on the academic front. Here are the abstracts and links to some of his latest work:

1. A sequel to the World Cup, with a short paper on the UEFA Financial Fair Play Regulation. In brief, he expressess doubts that the FFPR recently introduced by UEFA will promote competition in the football industry. According to Nico’s view, the FFPR is likely to create an ‘oligopoleague’ of football clubs that will freeze the market structure, to the detriment of the smallest clubs. The conclusion is that the FFPR may well constitute an unlawful agreement under Article 101 TFEU. The paper can be downloaded here.

2. A paper arguing that the TeliaSonera judgment on price squeezes has been in part repealled by subsequent case-law. The paper resorts to a short numerical example to show the flaw of finding a price squeeze in the presence of positive margins. The final version of this paper was published in the “Revue du Droit des Industries de Réseaux“, a new journal on the regulation network industries. See here: Price Squeezes with Positive Margins – Economic and Legal Anatomy of a Zombie (Final)

3. A presentation on the General Court’s Judgment in Intel, where he argueS that the Guidance Paper is not yet dead. In his view, the impact of Intel is confined to leveraging rebates – ie retroactive rebates – which are subject to a quasi per se illegality standard. As for the other rebates – eg incremental rebates – they remain subject to a rule of reason standard, though the assessment method need not be quantitative. The General Court also has generalized the Article 102(3) defense in abuse of dominance cases, though it is complex to see if this will be practical. The paper concludes with an optimistic note on the future of the Guidance Paper, and discusses the more philosophical point of whether Article 102 should seek to protect competitive OUTCOMEs or rather the PROCESS of competition. Nicolas submits that if 102 protects the PROCESS of competition, this should not dispense agencies and complainants to bring a certain degree of economic evidence in support of their allegations. See here: Intel v Commission – ABC Seminar – 10 07 14

4. A presentation on “Problem Practices”, ie practices that do not fall neatly within the conventional antitrust prohibitions: planned obsolescence strategies, most unfavored customer clauses, IP tracking- pricing, etc. He gave a speech on this at the CCP (University of East Anglia) Annual conference on Problem Markets arguing that existing EU rules can be flexibly stretched to capture such practices, and that we do not need a Section 5-type provision in our legal framework. In other words, he submits that there is no gap within the EU competition toolbox. See here: Problem Practices – CCP

5. A presentation on the principles of effectiveness and procedural autonomy in EU competition law given before an audience of judges at EUI as part of a seminar hosted by Giorgio Monti. See here: The Principles of Equivalence and Effectiveness -Petit

Nicolas is currently writing papers developing the content of presentations 3 and 4, so he’ll be grateful to anyone interested in sharing thoughts on those.

Written by Alfonso Lamadrid

23 July 2014 at 12:32 pm

More on the antitrust-privacy interface

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In some previous posts we’ve commented on the interface between the competition rules and data protection/privacy regulation, which is one of the trendiest topics in international antitrust these days.

As you may recall, the European Data Protection Supervisor recently held a high level workshop (high level but for my intervention on it, that is) on Privacy, Competition, Consumers and Big Data. On Monday, the EDPS made available on its website a report summarizing what was discussed in the workshop (conducted under Chatham House rules). The EDPS’ summary is available here:  EDPS Report_Privacy, competition, consumers and big data.

A summary of my intervention at the workshop was published in two recent posts (here and here).

For more, you can re-read Orla Lynskey’s A Brave New World: The Potential Intersection of Competition Law and Data Protection Regulation as well as the interesting comment by Angela Daly on my latest post on the issue.

The German Monopolkommission has also addedd its voice to the debate by issuing a recent report (“A competitive order for the financial markets“) which contains a section on data-related questions regarding the internet economy. The Press Release (in English here) expressess some concerns but notes that, according to the report, “an extension of the competition policy toolkit does not (yet) seem advisable on the basis of current knowledge and understanding“.

Written by Alfonso Lamadrid

16 July 2014 at 9:33 am

‘Stealth Licensing’ – Are Antitrust Law and Trade Regulation Squeezing Patent Rights ?

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Monsieur le Professeur Nicolas Petit has just published a piece titled “Stealth Licensing”- Or Antitrust Law and Trade Regulation Squeezing Patent Rights. In this paper he illustrates his points by resorting to metaphors on black swans and butterflys (read the last sentence in the 3rd paragraph below), which is a good indication that he may well have definetely lost it   ;)   

In Nico’s view (and from now I’m pasting the paper’s abstract): a “stealth licensing” paradigm is emerging across the globe. It can be seen through subtle interventions from policy makers, judicial organs and administrative agencies. Those interventions seek to facilitate compulsory licenses outside the TRIPS agreement exceptions and/or to water down those exceptions. Altogether, they ramp up pressure on patent owners to give away their freedom – it is actually a “right” – to exploit their innovations as they see fit. The paper submits that stealth licensing is a significant phenomenon that adversely impacts the social welfare functions of the patent system. It risks undermining investment in technology, technology creation and the dissemination functions of the patent system at a critical juncture in time, as new critical technologies like green technology, the internet of things, machine to machine technology, smart medical devices or biotechnologies are being called for, and rolled out, across the globe. Moreover, stealth licensing is occurring despite the fact that both private and public investment in R&D is critical to help developed economies back on the path to growth, competitiveness, employment and prosperity.

This paper the concept and policy of “stealth licensing”. To that end, it first surveys the literature on the social functions of the patent system, and in particular, on the role of patents to incentivise (risky) R&D efforts and to disseminate successful technological innovations (I). In this context, it recalls that whilst divided on the exact function of patent law, scholars broadly concur that patents have social utility. The paper then shows the emergence a “stealth licensing” paradigm adversary to the social functions of the patent system. To aid understanding, it starts with a definition of the concept of “stealth licensing” (II). It then describes its emergence in international trade regulation where a “flexible” interpretation of the TRIPS compulsory licensing exceptions is making way (III); and in antitrust law, where a distinct though equally problematic “undercover” licensing paradigm is gaining prominence (IV). Finally, it explains the perils of squeezing patent rights through stealth licensing with two metaphors: that of a black swan (V) and that of a butterfly (VI).

For a link to all of Nicolas’ previous articles available on SSRN, click here.
On a related note, I’m told that, in addition to other interesting articles, the April issue of European Competition Journal  features a couple of pieces that partly discuss Nicolas’ prior writins on Standard Essential Patents. I was also told that if I wrote this here he’d get a free copy of the issue…
And if you want to register to attend the conference on Conflicts of Interest, Ethical Rules and Impartiality in EU Competition Policy that Nico has put together and that will take place on Thursday  (you already know my views on this subject), you can do so here.

Written by Alfonso Lamadrid

22 April 2014 at 6:32 pm

Supermarket power

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Some of the tastiest issues in current competition law arise in the food sector. In fact, as you’ll see in a second, some of those issues are the same ones that we often face in other dynamic two-sided markets that generally attract more public attention.

At Chillin’Competition we’ve always paid our fair share of attention to food distribution and groceries (in fact our first posts on endives still ranks among out most read ever  (actually, when you search for Chilling Competition on Google the word endives appears immediately in the autocomplete box, which may seem a bit odd). Today, we’re happy to include a “sponsored link” to the work done on this subject by a good friend of ours.

Javier Berasategi (former lawyer at Stanbrook in Brussels, former President of the Basque Competition Authority –yes, there is one-, surfer, runner, alpinist and overall a quite unique guy now running a solo legal practice) has authored an also quite unique work on supermarket power. As always, it’s original, thought provoking and perhaps a bit controversial.

But regardless of whether one agrees or not with the analysis and the suggestions in it, its approach is certainly interesting; here’s the abstract:

“This paper analyses the sources of supermarket power vis-à-vis shoppers and independent brands. This power transforms leading supermarkets into vertically-integrated competitive bottlenecks that are able to restrict competition between brands (including their own ones) and reduce consumer welfare. However, competition enforcement has failed to address their bottleneck role and the negative consequences of their practices on dynamic competition (i.e., a market where the competitive process fosters innovation, quality and variety), the ultimate goal of competition policy. This paper proposes complementary regulatory and competition remedies to ensure that access to supermarket platforms and competition within them promotes fair dealing, consumer welfare and economic growth. It draws inspiration from the remedies enforced in other competitive bottlenecks such as CRSs, mobile communication networks, internet service providers, internet search engines and credit card networks”.

[It's interesting that the paper brings together groceries and tech stuff, particularly following Nicolas Sarkozy's cautionary words about the perils of comparing endives to Apple (see here). Although, to be fair, Kevin Coates had done a similar link before with his "exploding banana hypothesis" (I'm saying this to force him to explain it on 21st Century Competition ...)].

The report, titled Supermarket Power: Serving Consumers or Harming Competition, is available here  Take a look, it’s only slightly above 350 pages.

Further work on this subject will also be made available through a new website: http://www.supermarketpower.eu/en/

P.S. The picture may be subject to copyright, but I deserve full credit for having found an image of a supermarket actually called power.

Written by Alfonso Lamadrid

4 March 2014 at 5:47 pm

Antitrust and Tech Seminar Materials

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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

Dominic Muyldermans – Exclusion of termination for challenge of IP

Olivier Sasserath – Exclusion of the exclusive grant-back obligations

Anna Vernet – update after public consultation

Stefan Vollering – Big Change on a Minor Issue

  • Keynote speech – With great power comes great responsibility

Dr Philip Marsden – With great power comes great responsibility

  • Caught in the antitrust web -Regulating internet services

Gerardo Faundez – Travel as evolving market

Thomas Graf – The EU Google Investigation

Silke Hossenfelder – German Antitrust Cases in the Internet Economy

Sebastian Jungermann – Regulating internet services

  • Patent litigation and settlements -The limits of settlements and Pay-for-delay

Tamar Dolev-Green – Pay-for-delay

Kyriakos Fountoukakos – Patent litigation settlements

Simone Gambuto – latanoprost-pfizer saga in Italy

  • Patent strategies and abuse of dominance What are the antitrust boundaries

Miguel Rato and Nicolas Petit – Abuse in Technology Enabled Markets

Maria Troberg – Patent Strategies and abuse of Dominance

Jan Peter Van der Veer – An economic perspective on patent strategies

  • Competition law and interoperability

Pablo Ibanez Colomo – Interoperability issues under EU Competition Law

Alfonso Lamadrid – Interoperability

 

(Image quite possibly subject to copyright)

Written by Alfonso Lamadrid

20 February 2014 at 11:22 am

Light summer reading

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It’s July; the weather is good even in Brussels; you should be either on holidays, enjoying outdoors, or finishing off work in order to be able to go out and to do some photosynthesis; but nevertheless you’re reading a competition law blog… (yes, writing it is even worse, but we aren’t talking about us now…).

So, there is cogent, consistent and sufficient evidence to indicate that you’re a bit of a geek. If that’s the case, these are 3 recommendations of short reads, all of which deal with issues on which we’ve touched in the past:

- Wouter Wils, Ten Years of Regulation 1/2003, A retrospective- A very good and concise overview of the history and results of the procedural modernization of EU competition law (my only negative comment is that, for some unknown reason, it doesn’t cite my masterpiece, excellent, quite good, good, decent? more or less tolerable paper on the issue…)

- Thomas Graf – who together with Maurits Dolmans (click here for his Friday Slot interview) is the main lawyer for Google in the framework of the Commission’s investigation-  has written a blog post about Google’s proposed commitments., available here. It’s always interesting to know the impressions of those with first hand knowledge of cases. My own post on this subject is referred to as a one among three “thoughtful comments”; not sure if that is because my post was any good or because we actually have similar views on the main issues…

- Also on Google, last week I received a piece published in the Financial Times positing that “true progressivists” would seek Google’s break up.

Actually, this was of quite some interest to me, since (as frequent skimmers may remember)  I’ve devoted a few posts to what “true progressivism’ or “radical centrism”should mean to the antitrust world: see here (for the original post), here (for the short article developing the post), and here (for an interview in which I’m quoted saying that both the post and the article are superficial exercises of wishful thinking -I’ve original marketing techniques, you see..-).

Not being a fan of labels, I would have more or less defined myself as a radical centrist, and nevertheless I fail to see the reasons for Google’s breakup; query: does that make me a bad centrist?! The author of this interesting piece is Prof. Richard Sennet, a LSE professor. Since I didn’t recognize the name I “Googled” it and saw that he’s professor and expert in urban sociology.

Now, this is a worrying development for most competition lawyers. First it was economists who (quite successfully) started to eat “our cake” become antitrust experts, and now it’s urban sociologists!!  I guess it’s time to retaliate and send the FT my expert piece on the effects or rural migration in postmodern Spain..  ;)

Written by Alfonso Lamadrid

8 July 2013 at 9:23 pm

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