Archive for the ‘Subversive Thoughts’ Category
As long anticipated, here are some comments on the proposed commitments in the Google case (I graciously granted myself an extension, like the one other third parties have received; it actually is convenient because I can comment on others’ comments as well).
Four caveats are in order:
- The views expressed below are written against the background of the Commission’s concerns as set out in the press release and the Q&A doc. accompanying the market testing of Google’s proposal. The relevant question to keep in mind is whether the proposed commitments –in their current form- are apt to address the concerns identified by the Commission in its preliminary assessment, not whether they are apt to lead to candy world for satisfy the wishes of all third parties.
- My views are necessarily incomplete and they’re also work in progress. I’ve only read the limited publicly available information and have not had access to any confidential info or documents that might be contained in the case-file. Moreover, I have allocated two flights time to draft this (and I should ideally also do some billable work, you see), so I’ll (i) update and improve this document on the basis of any new thoughts or possible feedback and (ii) refine my thoughts for a forthcoming piece on Oxford’s Journal of Competition Law and Practice
- My views are mine (sounds like a tautology, but don’t always take this for granted in our area of work…); some of my colleagues and clients may well have different opinions.
- I haven’t worked nor for Google nor for any of the 17 complainants.
In case I haven’t yet got you tired before even starting, here is a methodological explanation. This will be a five-pronged analysis; I will very succinctly summarize (i) DG Comp’s concerns; (ii) my take on the substantive concerns; (iii) the content of the proposed commitments; (iv) third-party criticism of the proposal (notably that read here, here, here or here) (I actually read some favorable comments as well); and (v) my take on the proposed commitments. And this for each of the four concerns flagged by the Commission (although only the two first ones raise interesting issues).
The structure will make this post longer. In order not to cram the page, click if interested.
Being a competition lawyer one cannot help but to be interested in the competitive dynamics of the very market in which we operate.
There are a few odd things to it, but I usually -although not on this blog- refer to one particular market failure in the market for EU competition law legal services: its lack of transparency (not price wise, but rather quality wise). My take on this (developed below) is that making certain legal submissions public would contribute to addressing this market failure. The report on accesibility of Court documents just issued by the European Parliament has given me
an excuse not to comment on the Google commitments that I’ve been unable to read in full the push I needed to write about it.
It’s funny to observe that the cult of personality/firms prevalent in the EU competition world is, to a great extent, grounded on practically no available information. Firms and individuals are revered and ranked in various ways and tiers; they (we) are reviewed, reveive prices, etc, but, if you stop for a sec to think about it: how do you know that any of them/us is any good?
The maximum information that one can get about the quality of a firm’s or lawyer’s work merely relates to the cases in which a given firm/lawyers has worked. Interestingly, the outcome of those cases tends to matter little; what appears to matter is to have been involved in them. Many lawyers advertise the fact that they have acted on particular cases regardless of the result, and there’s no way of knowing whether they did excellent, good enough or poorly (at the extreme, I know a few cases of lawyers who show off for having represented clients in proceedings initiated as a result of poor legal advice in the first place). To be sure, although outcomes are, at times, a very good proxy, they are not a definitive criterion, for we often know little about the objectives pursued, about the details of a case, or about its a priori odds. Actually, telling whether an outcome is positive or not, as well as determining what a lawyer’s/economists’ contribution to this result was, is almost always unfeasible.
I’d argue that the only ones who can really have an informed idea about how good a firm or a lawyer is are the people working at the Commission and at the Courts who have shared cases with them/us; they are the sole ones who are able to measure their/our work against the background of all factors in play (when it comes to pleading, the Mlex guys who listen in at the hearings could have something to say too; I’ve said before that Lewis Crofts could make some extra money by publishing a litigators’ ranking..) but no one asks them (and even if they were asked, it’s arguable whether they should disclose favoritism in this regard either).
You could argue that in-house lawyers can be good comparative judges as well, but this is not always the case: in-house lawyers are often exposed to a very reduced subset of lawyers (sometimes retained due to political reasons outside their control). Moreover, many in-house lawyers may not be experts in the area for which they hire external lawyers (this is frequent in the competition world except when you deal with particularly large firms with specialized competition counsel), and very often the less risky thing to do is to pick people who others perceive as triple A, even if the reasons justifying the perception are
ranking based unknown (the force of inertia and virtuous/vicious circles do the rest).
I’ve worked in various cases where I’ve seen well-known lawyers and firms produce documents that were not…worthy. I’ve also seen well regarded firms (sometimes even the sames as in my previous example) produce excellent work. And I’ve also seen work by less-known firms that was pretty good. The interesting thing is that in these cases the quality of the work tends to impact the result ot the case, but not the firm’s/lawyer’s reputation, for good or for bad, because no one can see and assess what was done.
In sum, to a great extent, law firms and economic consultancies are credence goods.
If you ask me, the only way to get rid of many of the absurdities derived from this market failure, and to improve the quality of legal services at the same time, would be to increase the transparency of legal submisions. It has happened all too often that I read something (a document, a plea or an argument) and wonder whether it would have been
billed for written had its authors known that it would be publicly available.
Nico and Miguel Rato wrote a few years ago about sunshine regulation; I would argue that sunshine lawyering would also be a good thing; why not follow the example of the U.S., where Court filings are considered to be public records? There are very good reasons why this should not be the case in administrative proceedings, but I see no impediment in the case of Court proceedings, and nor does the European Parliament’s report recommending that changes be adopted in order to facilitate access to Court files at the EU level.
A few days ago Nico wrote a post about “Commission bashing” in which he acknowledged that, in reality, he’s not a Commission basher but rather appreciates the good things that Comp does [the fact that one of the three examples given -next to the Guidance Paper and the effects-based approach..- was Post Danmark -a Court Judgment- reveals that Nico struggled to find good deeds on the Commission's part :)]
Until now, the most vocal Commission basher I knew of was Michael O’Leary, Ryanair’s CEO (check out his CV and the accompanying Commission disclaimer here.) We’ve previously referred to his comparison of Comp officials with Kim Il-Jung (sic) and with North Korean economists, but you may not have watched his equally… outspoken intervention at the EU Innovation Convention in 2011 (worth checking it out here)
But Mr. O’Leary now faces fierce competition. A blog called Venitism appears to overpass Ryanair’s chief’s tone; it has just published a post mildly titled: The stupid European Commission harassess the chip industry. Actually, the title is much softer than its content and than its pics. It’s so overdone that it’s worth taking a cursory look if you’ve a minute.
Aside from insulting the Commission, the post states that its authors have conducted a survey that reveals that 80% of economists would favor the abolition of antitrust rules. I’m told by my economist friends that this cannot be true, for, they say ”the literature makes it clear that antitrust law promotes our welfare”
I’ll tell you a secret. I’ve lately been quite frustrated with regard to my latest contribution to this blog. In the past few weeks there have been very interesting substantive developments that we could’ve covered, but I’m having increasing trouble to find the time to write here. That’s a problem, for it makes little sense to write for a (now) large audience unless you’ve something meaningful to say. So I thought, either I quit, either I make an enhanced effort to post some -arguably decently- interesting stuff. Risking sleep deprivation I’ve chosen option 2.
But, as with all important commitments, I’ll start next week For the time being, I’ll leave you with some brief thoughts on some of the different issues that we’d like to cover more in depth in posts to come:
1) On Google’s proposed commitments: Some basic elements of Google’s proposed commitments were leaked to the press (see the Financial Times’ piece on this). Rumor has it that the text to be market tested next week will be a bit dense, which has given us an idea for our very own commitment: we commit to explaining its content as objectively as we can in order to make Chillin’Competition a forum of discussion on this topic.
Some preliminary comments: (i) DG Comp appears not to object to Universal search itself; the basic description of the commitments reveals that the Commission has sensibly engaged in a balancing exercise which aims at creating more room for competition without disrupting too severely Google’s successful and innovative business model; (ii) apparently the commitments in relation to search mainly concern changes in Google’s user interface (UI). I would be curious to know who within COMP took responsibility for assessing what changes needed to be effected on something as important to Google as their UI (some say that the Commissioner himself had a significant intervention on this point!). We’ll come back to this as soon as there’s more info available.
2) On the reactions of Google’s complainants to the commitments: A few weeks ago –while teaching a 6 hour course on procedure at the BSC in the middle of easter (my gf appreciated that we had to break our holidays for this…) I had to talk about, among others, commitment decisions and I used the Google case to illustrate some points. I realized then that many people don’t know that when the Commission adopts an Art. 9 decision in a case in which it has received complaints, it also has to adopt specific decisions rejecting each complaint. Now, if complainants were really sure that their theory of harm fits within current legal standards and that the commitments are insufficient, they would appeal the decisions rejecting the complaints, right? I’m not sure they will (even if it would be interesting to read for once how this case can be framed in legal terms).
Also, some complainants are there to address a specific business concern that they have concerning Google’s practices; others seem to be there just to put some sticks on Google’s wheels no matter what. I’m intrigued as to whether these two categories of interested parties will adopt the same approach from now onwards or not…
3) On Nico’s yesterday post on the Expedia Judgment: Readers of this blog will not be surprised at the fact that Nico and I disagree on something ;) I told him yesterday that I didn’t share his reading of the Expedia Judgment. In fact, when it came out I thought about writing a post on it, but when I read it I thought it was so common-sensical that there was little to be said.
However, and whereas I still like the overall Judgment, I now get Nico’s point, and I understand that para. 37 of the Judgment might sound equivocal. I also see the point in the comments made by Bagnole and Asimo to that post. My take on it: the criterion of “appreciability” of restrictions of competition has a qualitative and quantitative dimension; restrictions by object are qualitative appreciable by definition; the quantitative appreciability criterion should be assessed separately. In this case the Court appears to assume that, to the extent that trade between Member States is affected the quantitative requirement is fulfilled, which could be understandable, but it’s also very arguable. Effects on inter-State trade may be an acceptable proxy as Bagnole and Asimo say, but I’d rather regard this as a different jurisdictional element not necessarily related to the quantitative significance of the restriction. True that in practice the Völk Judgment mixes them, and true that Expedia does too, but strictly speaking they’re different things.
(I hope this is clear despite the abstraction; I’m writing while on a plane next to someone who’s snoring [(-_-)zzz] and trying that my
diet coke doesn’t spill on me, so I’ve trouble concentrating…)
Pay also attention to the fact that para 11 of the de minimis notice solely states that the threshold in the Notice are not applicable to hardcore restrictions, but it does not exclude the possibility that a hardcore restriction could be considered of minor importance when the combined market power of the parties is significantly below those thresholds.
4) On the CISAC Judgments: Last Friday the General Court issued its Judgments in the Cisac case. We haven’t commented on them because the case is quite complex, and having only skimmed through it I would risk
saying some stupidity missing something. We’ll come back to it. A couple of non-substantive interesting things in the meanwhile: (i) There have been various outcomes to the case for different parties: some did not appeal –apparently because they liked the new scenario-; others (the Spanish applicant) missed the deadline to lodge the appeal (I’ve nightmares about this ever happening to me), and others appealed everything but the point on concerted practices, which is the one that has been quashed. At the end of the day, however, the result may matter little in practical terms, for collecting societies could always unilaterally decide to do adopt any licensing policy, including the same one challenged by the decision (only on the grounds that it had been collectively agreed upon). In any case, I’m told that market circumstances may have changed, and that some collecting societies are now interested in the “liberalization” (in terms of multi-territorial licenses) that the decision sought to promote. (ii) It’s funny to read the Court saying that the Commission failed to explain some stuff; these cases required more than 100 hours of hearings (as our readers may know, the hearings had to be repeated for procedural reasons); Fernando Castillo, the lead Commission agent in the series, is well known for speaking extremely fast; surely he must have explained quite a few things in the course of so many hours !
5) Remember the debate on exhaustion of copyrights in the case of computer programs and the most interesting Usedsoft/Oracle Judgment? The Spanish Competition Commission just issued a decision concerning Microsoft’s policies in this regard. It’s not yet published, but we’ll give you our views on it as soon as it is. [If you prefer not to wait for the free comments that we'll publish here, I can always offer a premium version at hourly rates ]
6) More on Microsoft. Some of you may have read that Microsoft is the target of a complaint lodged by Spanish users of Linux. I have no knowledge of this case other than what has appeared on the press (which sounds a bit odd, since it was reported that the complaint was lodged at the Commission’s delegation in Madrid and that it refers to Arts 81 and 82…). Reports say that the complaint alleges that the secure boot system in Windows 8 forces developers to conform to Microsoft’s requirements, thus extending the latter’s dominance in the OS market. Apparently, the new firmware supports authentication with digital certificates of the installed OS and their loader; in order for OEMs to get a “Designed for Windows 8″ label they must comply with Microsoft’s requirements, among which is the one (applicable to ARM equipment) of only booting Microsoft-certified software. Whereas I can’t comment on whether there’s any actual legal basis for this complaint, I’ve come across an interesting technical piece that explains what’s the factual background thereto: see Arstechnica’s piece here.
I landed in Brussels this morning at 7 am after an intense week of
cocktails antitrust events at the ABA’s antitrust spring meeting in DC. I’m knackered (I also have to recover from the sight of 2,700 antitrust lawyers under the same roof) and have lots of catching up to do, so let’s keep it simple today:
Nicolas’ Friday post criticized several pricing practices in the conference market, namely excessive pricing and lack of pricing discrimination in favor of academics and students.
This is not a new topic; some of you might remember that many posts ago I proposed an algorithm for competition conferences, positing that “the likelihood of getting to listen to new and interesting stuff is inversely proportional to the combination of three cumulative variables: the price of the event, the number of attendees, and the number and lenght of slide decks. It’s generally not a good sign if an event is pricy and crowded. The ones with a greater chance of not being interesting at all are those for which you have to pay in order to be a sp
ayeaker (yes, there are plenty of those!)”.
I discussed Nico’s post with a few sensible people over the w-e, and the discussion quickly came down to one sole issue: the ‘funny’ (not as in haha, but as in questionable) but prevalent practice of paying for speaking slots, which I had only touched upon in passing in my previous post.
I would argue that paying to speak is essentially a marketing trick based on misleading the audience. Let me prove my point: how many spaykers do you think would want to appear at a conference if the audience had transparent information about who’s paying for the slot and who’s not?
If you’ve something interesting to say, you should get paid for it (not so difficult, even Sarah Palin gets paid to speak) or at least be invited to speak for free. Note also that people who pay to speak would not normally (there are of course exceptions) give objective overviews of the topic at issue; their presentation would tend to be a more or less obvious sales pitch. I’ve nothing against lawyers advertising themselves, but, as in other contexts (some might think of search engines), it’s generally good to be able to tell what’s advertising and what’s not.
The most obvious way to address this “market failure” and push for a merit-based allocation of speaking slots would be to have lawyers stop paying (smart, uh?), but since self-regulation is unlikely to work, I would suggest, for a start, that public officials refuse to appear in conferences where people pay just to sit with them.
What’s your take?
As some of you may remember, a few months ago I wrote a post here on “Antitrust and Political Stupidity“. Competition Policy International asked me to develop the post for a special issue of the Antitrust Chronicle, which I did one-handedly during my extended Christmas break (the paper is available here). I was then asked to do a follow-up interview with CPI; the interview was published today (click here for the version in CPI’s web).
Asked about whether I was being too optmistic in the paper, I started my response saying that “my paper was written during the Christmas break, and it is not much more than a Christmas tale, a superficial exercise of wishful thinking” (see below for the complete answer). Little did I know that the mailing that was sent today to some thousands of people would summarize the interview saying that: “Lamadrid says his paper is ‘a superficial exercise of wishful thinking,’ and he tells CPI why“. So, here I am, promoting my work by saying that it’s really not any good (between us: it’s not a masterpice, but it’s somehow original and maybe not as crappy as my own quote suggests…). Man do I really need to work on my self-selling skills….
If anyone’s interested, you can click here to read the full interview:
Regretably I couldn’t attend Concurrence’s New Frontiers of Antitrust conference held last Friday in Paris in spite of Nicolas Charbit’s kind invitation. I hear that the conference was once again most interesting, so congrats again to Nicolas and the rest of the team at Concurrences.
Perhaps the most prominent topic in this year’s program related to the interface between data protection and antitrust law. I’m sorry to have missed the discussions over this issue, for perhaps they would have enabled me to see where’s the substantive beef that justifies all the recent noise. Whereas I understand the practical reasons why this issue has conveniently become a hot one in certain academic circles, I confess my inability to see the specific features that make this debate so deserving of special attention.
The way I see it, personal data are increasingly a necessary input to provide certain online services, notably in two-sided markets. So far so good. But this means that personal data are an input, like any other one in any other industry, with the only additional element that the recompilationa and use of such input is subject to an ad hoc legal regime -data protection rules-.
In my view, competition rules apply to the acquisition and use of personal data exactly in the same way that they apply to any other input, and then there’s a specific layer of protection. I therefore understand that data protection experts have an interest in finding out about the basics of antitrust law to realize about how it may affect their discipline, but I fail to see the reasons why competition law experts and academics should devote their time to an issue which, in my personal view, raises no particularly significant challenges. [The only specificity may be that data protection practices may constitute a relevant non-priceparameter of competition, for companies may compete on how they protect consumer data]. I would argue that this is a serious matter, but one for consumer protection laws to deal with, and in which competition policy may at most play a marginal role (I understand this was also the view expressed by Commissioner Almunia in a recent speech).
To compensate for my absence at Concurrence’s conference, on Saturday morning I read some interesting “preliminary thoughts” published last week by Damien Geradin and Monika Kuschewsky: Competition Law and Personal Data: Preliminary Thoughts on a Complex Issue. The piece provides a contrarian view to the one I just expressed. Since I might very well be wrong (that’s at least what my girlfriend’s default assumption in practically all situations…) I would suggest that you take the time to read it in order to make up your own mind. It won’t take you long, but since behavioral economics (and the clickthrough rates to the links we show) tells us that many of you are of the lazy type, in the interest of a balanced debate here’s a brief account of its content; my comments appear in brackets:
(Click here if you’re interested in reading more)
As I was exiting a plane on Friday night I received a bunch of email notifications about the comments that were being written to one of our posts (probably the most interesting public discussion over allegations of “scraping” so far; not the post, but the comments to it) in which “Bagnol” made a couple of attempts to clarify what it was that I really meant on my post and in a later comment thereto. At the same time, I read a post written by Nico that started with an idea that I must have thrown out at a conference on why the Commission resorts to commitment decisions, but with which I don’t feel identified (most likely it’s my fault for not having expressed it well). Funnily enough, I couldn’t write any comments on what I really thought because I had committed to take a break from my blackberry (like certain companies I also break my commitments: I had to check my email hidden in an airport’s restroom; yeah, it was very glamorous..).
I have mixed feelings about the use of Article 9 decisions. On the one hand, I understand the Commission’s tendency to resort to them. Commitments enable authorities with limited resources to swiftly and effectively address certain practices (particularly in rapidly evolving markets, where a level-playing feel is needed, or when a fine does not appear to be adequate). On the other hand, given my whining-lawyer nature (and because of the little academic wannabe that some of us have inside) I sometimes also regret the lack of discussion and precedent inherent to such decisions. Now, is this new commitment-based enforcement paradigm positive or negative? There’s no clear answer. I guess that it all comes down to the role one atributes to the Commission: is it to put and end to anticompetitive conduct and to restore competition immediately through direct intervention, indirectly through precedent setting, or through a careful balance of both?
Nico and I have come up with a way of duplicating posts out of one piece of news; one of us writes something and then the other disagrees
Last Tuesday Nico wrote a post titled “Revolving doors” in which he expresses the concern that “the cumulative effect of appointing previous Commission officials as judges, plus the very many référendaires who have spent some time in the EU administration may give rise to a pro-Commission bias at the Court“.
[I was actually in Luxembourg for a Court hearing -my first one in the front lawyer's row- when Nico wrote it, but I'll tell you about that some other time].
Without entering into the debate on whether there is or there isn’t too much of a pro-Commission bias at the Court (in my view, there is the same deference towards the public authority that we find in any European administrative system – in the US, on the contrary, that deference is less visible-), I don’t at all share Nico’s concern.
Assuming that there was such bias, I would argue that it has nothing to do with former Commission officials becoming members of the Court:
Only two current Judges at the GC have previously worked at the Commission: Marc van der Woude (who was also a private practitioner, which should offset any bias; ask anyone in the business their opinion on him and you won’t hear a single negative one), and Guido Berardis (of whom I’ve also heard very positive things). 2 out of 27 (3 if the Committee gives the green light to Kreuschitz, which it undoubtedly should) does not appear to be an unreasonable proportion. Furthermore, all three of them were part of the Legal Service, which means that an important aspect of their work -aside from pleading- consisted in identifying flaws in the Commission’s work.
If you ask me (and part of my job is to beat the Commission in Court), the problem lies not in Judge’s previous professional experience, but rather in Judges being appointed for political reasons other than their knowledge of the law (see here). And people who know about EU law are generally -there are a few exceptions- either academics (most of whom also have defined pro or anti Commission biases), practitioners (we may have the opposite bias, plus we’re too competition law oriented), and Commission officials.
In sum, I would argue that we need Judges that know their stuff inside out, no matter their nationality or whether they are national judges, academics, ex-Commission officials or former practitioners.
Heard at today’s GCLC lunch talk, seemingly in defense of Google’s search manipulation tactics: Bing is also linking preferentially to its own related services (maps, etc.). So the complainants, and Microsoft in the first place, should take a pass.
On further thoughts, this is a pretty weak argument.
First, the idea underpinning this argument seems to be that Google’s strategy is standard industry practice. And the upshot would be that Google’s conduct has a rational business justification. But the fact that a course of conduct is frequent within an industry, and that it has been replicated by rivals, does not make it presumably lawful. Many drivers breach the law by speeding everyday, yet this is no reason to hold their conduct lawful. Similarly, the fact that conduct is rational is not a cause of antitrust immunity. Collusion is often rational, yet it is strictly forbidden.
Second, this argument actually works in favour of Microsoft’s allegations. It is precisely because preferential placement of links on search engines has the ability to steal competitors’ market share – and in turn to foreclose – that Microsoft uses this strategy. But Microsoft does this to penetrate the market and/or avoid market marginalisation. And there’s no cause for concern here: given Bing’s very low market share, the preferential placement of links at best yields minor foreclosure effects. You may call this procompetitive foreclosure. In contrast, Google has a paramount market position. Hence its conduct is likely to exert anticompetitive foreclosure effects.
On the link between the magnitude of dominance and the intensity of anticompetitive effects, see §20 of the Guidance paper:
“in general, the higher the percentage of total sales in the relevant market affected by the conduct, the longer its duration, and the more regularly it has been applied, the greater is the likely foreclosure effect”
And on the fact that not all foreclure is unlawful, see §22 of the CJEU ruling in Post Danmark:
“not every exclusionary effect is necessarily detrimental to competition“
Finally, the argument surmises that competition law should treat market players equally. But in this industry, Google
is seems dominant, Bing not. Those two firms are thus in distinct situations, and the argument again does not fly. It is indeed well settled that pursuant to Article 102 TFEU, dominant firms are subject to a “special responsibility” (whatever this means) possibly for the reason set out in my second point. Like it or not, competition law imposes higher constraints on dominant firms than on non-dominant firms.
The sole possible way to make sense of this argument boils down to a moral issue, best expressed in the maxim: “nemo auditur propriam turpitudinem allegans”. But it is well known that this argument has no traction in competition law, which has no moral content, a point forcefully made by Bork – a late pro-Google advocate – in his early Antitrust Paradox. And this, in any case, would not bar the Commission from taking over the investigation on its own motion.
Overall, by trying to counter argue that Bing also manipulates search results, Google is falling into the well-known Tu Quoque fallacy.
PS: the Lunch Talk was great. We heard two economists, Anne Perrot and Cedric Argenton, speaking very clearly to lawyers. We also watched a lawyer, Alfonso, morphing into a complete hi-tech geek. The introduction of his presentation was simply hilarious. I rarely laughed so much at a conference. The slides will appear on the blog very soon.
PS2: link to the above pic here.