Archive for the ‘Hotch Potch’ Category
The question that I get the most often from readers of Chillin’Competition relates to how I manage to reconcile an already quite time consuming job –and a few adjacent academic and business activities – with blog writing
(other typical questions being: why don’t you change your pic on the blog? why don’t you use a fake pic of a better looking dude? do you really not make any money out of the blog? (that has a follow up: are you dumb?); why are you not at a fancy firm with a sequence of anglo-saxon names? how does your firm let you write a blog? are you and Nico lovers, friends, do you hate each other?; are you two the same person?)
I generally have a decently good -if long- response to that, and the fact is that I’ve -generally- managed to find the time to juggle everything.
However, I recently
whined justified myself wrote about not being able to find the time needed to write something worth your reading time, and commited to make a greater effort. However, in spite of my good intentions, I will not be able to honor my commitment (including the one about writing down my detailed views on Google’s commitments).
I will be taking a short leave of absence
until 30 May. In a way it’s a pity, because there’s most interesting stuff going on on which to comment, but work these daysis as interesting as it is absorbing. As it is becoming customary, Pablo Ibáñez (LSE) will be covering my absence.
P.S. On Google’s proposed commitments, and in a nutshell, I would argue that the Commission’s strong hand play has yielded very good results for the Institution. Whereas I retain my doubts about the underlying
and arguably unknown theories of harm, it’s hard to deny that the Commission has managed to extract very significant concessions from Google that should make its competitors’ lives easier.
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.
As explained in previous posts, there is a new and innovative Spanish competition law in the pipeline. I say innovative because the main change it will bring to the current system is the unification of sectoral regulators and the competition enforcer into a single “competition and markets authority”. We have voiced out some of our views about the draft law in a previous post. I’m still hesitating over the idea of writing a well thought out post explaining what’s going on in Spanish competition law (I do very little national work these days, but still follow it closely), but it might be wise to go through a cooling off period first.. Anyway, what I meant to say -mainly to our Spanish readers- is that the new draft law was approved by Congress and sent to the Senate earlier today. It’s available here.
Also, I’ll be flying to DC on Tuesday for the ABA’s section of antitrust law spring meeting. The program is interesting, but this event is mostly about
attending free cocktails networking (which may reinforce the perception some people have of lawyers as heavy drinkers). If any of the readers of Chillin’Competition is around, you can drop me a line (email@example.com); unfortunately we don’t always get to meet those of you outside Brussels. My firm will not be hosting a reception [hosting cocktails in the State can be risky from a legal point of view ;)], so I’m collecting cocktail invitations from others. I actually have a bet with an in-house counsel friend to see who gets more, and he’s clearly way ahead. Being an in-house at one of these events must feel like being the hot girl at a night club: everybody wants to buy you drinks…
Today the European Commission imposed a 561 million euros fine on Microsoft (roughly 37 euros per each of the 15 million copies of Windows that were sold in the EU in breach of the 2009 commitment).
As I said in a previous post, I don’t think anyone believes that Microsoft did this on purpose, so the amount of the fine might have come as a surprise to quite a few people (although not to those who participated in Nico’s poll yesterday).
In any case, this is the third time that Microsoft contributes to the EU Budget because of competition related matters. In total, it has paid approximately 2 billion euros.
[Btw, I couldn't help remembering Neelie Kroes statement after fining Intel 1 billion euros: “Intel´s latest advertising campaign proposes Intel as the sponsors of tomorrow; well, now they are the sponsors of the European tax payer” (two years ago we nominated the video of this speech to an Antitrust Oscar)].
When one hears about these figures it’s easy not to realize what numbers mean. So we’ve decided to help you become aware of what 2 billion represent:
According to the World Bank there are 41 countries in the world whose GDP is lower than 2.1 billion euros (approx 2.7 billion dollars).
With 2 billion euros the European Union could:
- Bail out banks in Cyprus (estimates say that it will cost up to 2 billion);
- Pay for a couple of ambitious science projects (like studying graphene and fighting brain disease);
- Buy the full squads of Real Madrid, FC Barcelona or Manchester United to represent DG Comp in the internal football championship;
- Buy half of an aircraft carrier (don’t know why they would want an aircraft carrier, or why they would only want half, but I’ve seen more absurd public spending…);
- Pay DG Comp’s budget (93,5 million euros) for 21 years;
- Develop the atomic bomb (not in today’s money, though; it cost 2 billion back in 1945).
- Buy a few Greek islands for its officials to go on holidays (the most expensive one I’ve seen here costs 150 million..). Odd thing, I saw an ad for Bahamas islands on sale, and there is a private islands magazine with a Fall/Winter catalog for islands (!)
- Produce all of the 10 most expensive films in history (Pirate’s of the Caribbean, Tangled, Spider-Man 3, John Carter, Harry Potter and the Half Blood Prince, Avatar, The Dark Knight Rises, The Chronicles of Narnia: Prince Caspian, Pirates of the Caribbean: Dead Man’s Chest and The Avengers).
- Build the tallest building in the world to host DG Comp (it would be more impressive than the Madou Tower to which it is moving…the Burj Khalifa costed 1.5 billion). For my suggestion on how it could look like, see here
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)
We have discussed about hotels in previous posts (notably when I
shamelessly unconsciously advertise my parents’ hotel (pictured above); you see? it just happened again!) (btw, top floor third window from the left is the room where I grew up). A couple of months ago I published a short piece on Competition law in the hotel sector in the industry’s magazine in Spain in which I highlighted (in, let’s admit it, a rather simple way), some of the interesting competition law issues that may arise in this sector; here are a couple:
OFT’s investigation on price-match guarantees
I’m following with interest the OFT’s investigation on price-match guarantees in the hotel sector (again, out of personal
geeky interest, nothing professional). As you may know, in July the OFT addressed a statement of objections to Expedia, Booking and InterContinental Hotels challenging agreements that are said to restrict online travel agency’s ability to discount the price of room-only accomodation. The OFT considers that “the alleged infringements (…) could limit price competition between online travel agents and increase barriers to entry and expansion for online travel agents that may seek to gain market share by offering discounts to consumers“. It notes that it ”limited the scope of its investigation to a small number of major companies, with a view to achieving a swift and effective outcome. However, the investigation is likely to have wider implications as the alleged practices are potentially widespread in the industry“.
Keep an eye open, because this is a case which may contribute to altering how we think about agency agreements and price matching guarantees. In the meanwhile, the OFT has published a most interesting report on “price match” or “lowest price” guarantees that makes a good read
(that is, if you really have nothing else to do..).
A candidate to the worst antitrust development prize
In April 2011 we wrote a post announcing that there was an ongoing investigation that could yield a strong candidate for the Worst Antitrust Development Prize. Last week our forecast materialized. The Spanish competition authority (CNC) imposed a 150,000 euro fine on the Confederation of Spanish Industries, and an individual fine of 50,000 euro fine on the President of its Tourism Committee, a well known Spanish and former President of F.C. Barcelona (for full disclosure, my firm has no interest in this case, but I do know the person who was sanctioned).
The sanctions have been imposed because this person told the press at an industry fair that he thought there was a margin for hotels in certain cities of Spain to increase rates. No more. Admittedly, the fact that this personal opinion was accompanied by an inconvenient joke -”if there’d be someone from the competition agency here I’d be sanctioned“- may not have helped much… Later on, he was asked by a newspaper whether hotel rates would increase in the course of 2011. He responsed that rates had gone down 20% since 2007 and that a 6-7% increase could be reasonable, but that different hotel owners had different views.
If you ask me, such a statement can very hardly have led to any sort of collusion. There are thousands of hotels in Spain and hundreds of relevant markets evolving under different conditions, so this had nothing to do with setting a focal point to facilitate tacit collusion. Nonetheless, just as I feared on my previous post, the CNC decided to resort to competition authority’s favorite shortcut: the “object label”:
According to the CNC’s decision, one only needs to verify the content, author and diffusion of the statement. It explains that “it is not necessary to examine additional factors, such as the context in which the conduct takes place, the intention, the degree of furtherance, or the relevant market”. This paragraph alone makes this decision a good candidate to the “worst antitrust development prize”.
And, but the way, this “collective recommendation” was until now unknown to most hotels in Spain. The CNC has just ensured that everyone hears about it thus multiplying any potential effects. Now, in light of its new practice of sanctioning public authorities contributing to private breaches of the competition rules: should the CNC sanction itself for having acted as the loudspeaker and propagator for this alleged invitation to collude?
A few weeks ago we posted a story about the “competition pills” that the Spanish Competition Authority (CNC) is distributing (see here). We remarked the “originality” of this promotional campaign. Yesterday, one of our readers (thanks, Luca!) posted a comment in which he questions such originality; the comment reads as follows:
“This is scandalous!! Plagiarism!!
They’ve copied the idea, the packaging, the leaflet, the design – literally, everything except the color, red instead of deep blue – from a record by Spiritualized of 1997 – “Ladies and Gentlemen, we’re floating in space”.
Am I the only one old enough to remember this masterpiece?
Still I’d be curious to know who’s the psychedelic case handler at the CNC who came up with the idea”.
Since our readers’ wishes are our commands, we are launching a quest to find the musically literate CNC official/s who came up with this idea, and we want to interview her/him/them here (about music
, copyright and the promotion of competition).
The customary beer tasting reward applies to whoever gives us any information that may help us in our quest.
Since these days we’re read mostly by those unfortunate people not enjoying August holidays, we’ve decided to publish a few light posts. This one is particularly light:
Some of you have conveyed to us your surprise about the fact that -despite our frequent attention to food cases (an attention which was prompted by the landmark endives case)- we missed the news about confectionery manufacturer Haribo being sanctioned by the Bundeskartellamt for exchanging competitively relevant information (see here).
The case actually appears to be a very interesting one (thanks to Gavin Bushell for pointing our attention to it). Not knowing more about it than what the press release says, the Bundeskartellamt’s application of two instruments developed for cartel cases (i.e. leniency and settlements) in a stand-alone exchange of information case appears to confirm the concerns I (I use the singular because Nico and I disagree on this) expressed in previous posts (see here) about the possibility of stand-alone information exchanges suddenly being treated as cartels. I stick to what I said back then: “enlarging the legal concept of cartel so as to encompass information exchanges, thereby applying to them all the instruments that were developed and justified in the framework of the fight against cartels is bad policy and a dangerous development”.
In our defense, we have to explain that there is actually a reason why we missed these news: it’s bikini time. We’re healthy guys, and therefore a few weeks ago we decided to get sweets and carbohydrates out of our enforcement menu saga. You may remember that the last of our post on competition and food related to shrimps; today we have a mushroom
side complement (all very proteic and Dukan diet compliant as you can see): last Wednesday a U.S. federal judge sanctioned a company in multidistrict litigation alleging a conspiracy to hike mushroom prices, holding the mushroom seller liable for an affiliated distributor’s destruction of documents sought by the plaintiffs (see here) (Thanks to José Carlos da Matta for the pointer!).0
By the way, one our readers particularly liked the shrimp post; Eva, if you like mushrooms too we suggest you try this (pictured above).
Getting serious now, the fact that we’re recurrently joking about food cases is not only a consequence of the limited scope of our sense of humor, but is made possible by food having become an enforcement priority for competition authorities. I, for one, am currently involved in a few food-related cases. In fact, European competition authorities seem to be competing as to which one is toughest on food. The evidence: check out the European Competition Network’s very interesting report on its members activities in the food sector.
Last Friday the European Commission confirmed that it has addressed a Statement of Objections to four traders of North Sea Shrimp over a suspected cartel. We learnt the news through one of the sites that we check several times a day: www.seafoodsource.com; see here).
Some of you have conveyed to us the suspicion that, in reality, DG Comp has sent this SOs in an attempt to force us to write about it. According to this theory, the guys at
Bubba Comp, DG Gump. DG Comp were worried about our silent week and decided to resort to the big guns: a food case. Judging by precedents (notably our well known endive saga), they knew that we wouldn’t let it pass by without a comment.
As credible as this theory may sound…. the sending of these SOs at this time of the year is in reality a classic piece of July desk clearing on the part of the Commission. Getting one of these right before the holidays is one of the occupational hazards of being a competition lawyer in private practice in Brussels (the other one coming the run up Christmas).
In any event, we should not be making jokes about this. It is a serious matter. Nicolas – a renowned shrimp consumer may moreover be a victim of this alleged shrimp conspiracy- One nonetheless wonders: have they caught the big fish? It certainly isn’t small fry!
PS. A Chillin’Leak: We have been told by very reliable sources that the Commission found the evidence for this case during a “fishing expedition”.