Chillin'Competition

There has been some interesting stuff going on in the past few days that we haven´t been able to cover. Here’s a brief (and subjective) account of some recent antitrust related news:

- Bill Gates has been (and at the time of writing he may well still be) testifying in a Utah Court in the framework of a case initiated by Novell. Novell is arguing that Microsoft encouraged them to develop WordPerfect software for Windows, only to later withdraw its support because WordPerfect competed with other Microsoft products. Judge Motz, who is presiding over the case, has reportedly expressed skepticism that Novell’s claims have merit.

- Chinese authorities confirmed that there is currently an ongoing investigation concerning a possible abuse of dominance on the part of two State-owned companies (China Telecom Corp. and China Unicom). The antitrust branch within the NDRC is investigating whether these two companies -allegedly dominant in the market for broadband internet services- may have been charging their competitors higher fees for broadband access while offering favorable prices to non-competitors. This is to our knowledge the first high profile abuse of dominance investigation since the Antimonopoly Law was enacted in 2008. The fact that it is targeting two State owned companies makes it particularly interesting. We’ll be asking our “Chinese correspondent” to keep an eye open for any possible developments.

- Here´s one that I´m following with particular interest: NBA players hired the very well known antitrust lawyer David Boies to represent them in their battle against franchise owners that has led to the NBA lockout. The players have now filed two class action lawsuits (one in Minessota and one in California, which are considered to be favorable venues) asking for treble damages (that is, triple the amount of the more than $ 2 billion they would´ve made this season). The lawsuits argue that the lockout “constitutes an illegal group boycott, price-fixing agreement, and/or restraint of trade in violation of the Sherman Act” an hat the owners´ final offer for a new collective bargaining agreement would have “wiped out the competitive market for most NBA players”.  (For our comments on the very similar NFL precedent see here).

- Giorgio Monti (Professor at the European University Institute in Florence and author of one of our favorite competition law textbooks) read our posts on Pierre Fabre and on the future of Article 101 and invited us to participate at a workshop in Fiesole on January 5^th. Should be very interesting; we’ll give you more details in the coming days.

- Antitrust students at Berkeley have started their own Berkeley Global Antitrust Blog. Best of lucks to them!

-Finally, last week we received a couple of emails from readers that reveal that my co-blogger Nicolas is apparently becoming a celebrity. One reader told us about the fact that there is a Nicolas Petit street in Luxembourg, and another reader sent us a picture that shows that a young competition lawyer has a picture of Brad Pitt Nicolas above her desk (!)

See pic below for evidence. We´ll keep the identity of Nico´s fan secret in order to avoid any incidents with Ms. Petit ; )

Yesterday´s post was about Services of General Economic Interest and Sausages. Today´s deals with cartels and beers.

Some days ago we anticipated that we would comment on the latest cartel Judgment issued by the General Court in Case T-235/07, Koninklijke Grolsch v Commission in relation to the Dutch Beer Cartel, which was sanctioned by the Commission back in 2007. When we announced that we would comment on it we hadn´t yet read the Judgment but rather the Court´s press release about it, but the notice about the annulment of a Commission´s decision is something that always turns us on attracts our interest).

Those interested in an objective summary of the relevant facts and of the GC´s reasoning can read the Court´s Press Release. Those interested on some not objective opinions can keep on reading:

In our opinion, the annulment of the decision as regards Grolsch is, in a sense, quite logical: that is what happens when you conflate distinct legal entities into one (a temptation too often seen in EU competiton law) and distinct infringements into one single and continuous infringement (also quite usual) and then mix it all together.  But there are two interesting aspects of the case that are worth commenting.

One is the manner in which the GC dismisses the validity of the evidence concerning the parent´s company possible participation in the infringement: After noting that the majority of the evidence put forward by the Commission related in reality to the participation of Grolsch´s subsidiary, the Court was left with a couple of evidentiary items that could be used to support the accusation against the parent company (see recital 61 of the Judgment). The GC however dismisses those elements in an interesting manner (in recitals 62-71 of the Judgment). In essence, the GC decomposes the elements of the single and continuous infringement into three, and, departing from the Commission´s summary description of each of those components, it attempts to check whether the evidence can fit into any of them (this is an interesting, and welcome, deconstruction exercise that I´d never seen before regarding “single and continuous infringements). The GC then underlines that some of the evidence (documents found at Heineken relating to telephone conversations with one of the parent company´s employees) did not fit into the description provided by the Commission and therefore dismissed it.  The Court was then left with one piece of evidence (notes taken at a meeting by that same employee of the parent company), but this evidence was also considered insufficient on the basis of another interesting  reasoning (see recitals 65-66). In essence, the GC´s stance is that a complex concertation necessarily involves regular contacts throughout a long period of time, and that a single element cannot prove the participation of one company over the whole of this period. Does this imply a raise in the evidentiary standard for complex and long infringements?

The other aspect worth mentioning is the Commission´s lapsus (probably due to a certain overconfidence) , that has cost the EU budget 31.66 million euros. As it is clear from the Judgment, the participation of Grolsch´s subsidiary in the infringement was clear and there was enough evidence to prove it. If the Commission had addressed the decision to both the parent company and the subsidiary (as it normally does, and as it did in this case with regard to all other groups of companies involved)  the sanction would´ve been upheld. Ooops.

According to one of our favorite sources: beveragedaily.com, the Commission is pondering whether to appeal the Judgment before the ECJ.

More on cartels and beers:

On 10-13 October the International Competition Network will be holding a Cartel Workshop in Bruges (Nicolas is attending, and I wouldn´t mind accompanying him if someone at DG COMP considers me -when I wear my blogger hat- as a stakeholder and kindly sends an invitation…).  If any of our readers is attending the conference, I will now disclose one of Bruge´s most precious secrets: the most amazing beer that I´ve ever had can only be found in Bruges at a place called DeGarre. 

This is a traditional place for students of the College of Europe (because, you know, there are so many other things to do in Bruges…). Luis Ortiz Blanco also traditionally invites the students attending his seminar at the College  for some beers at the end of the academic year. You really shouldn´t miss it.

PS. And speaking about the ICN´s Workshop, we very much recommend you to check out their blog at www.icnblog.org . It really is a great source of information on  international antitrust.

Remember our Antitrust Oscars?

We have a new and excellent candidate for the category of “Best Film by a Competition Authority”.

Check out the Compliance Film that the OFT has just released and which includes a dramatised dawn raid and special guest appearances from the likes of Prof. Richard Whish. A cool initiative within the OFT´s wider compliance project.

(Thanks to Christopher Brown and Luis Ortiz Blanco for drawing our attention to it!).

And coming soon to a blog near you…we have a truly excellent film in the pipeline with very special actors and a very special director. We´ll post it here as soon as we can overcome some technical issues.

PS. For those of you who haven´t already heard, Damien Neven (former Chief Economist at DG Comp) is joining Charles River Associates.  Stay tuned, there might just be some more related news coming up soon.

Public outreach programmes were a key topic on the agenda of the ICN annual conference in the Hague.

Those programmes seek to raise awareness of the general public (including firms) to the scope, content, institutions and penalties of competition rules. They are particularly important in countries with young antitrust regimes. They induce firms to comply spontaneously with the new rules.

But they are also relevant to any agency seeking to improve its detection efficiency. To take one example only, too many individuals still believe that price-fixing is not unlawful. Through education, awareness programmes may prompt stakeholders to report infringements (by lodging complaints and leniency applications, for instance).

Now CAs accross the world have been very inventive in crafting such programmes, often with the active support of the ICN. The leniency movie is now a standard in many competition law jurisdictions. DG COMP has recently posted on its website a funny flash module which illustrates the scope of competition policy. The Norwegian and Brazilian CAs have produced t-shirts with competition-friendly slogans (would love to get one of them. My size S or M).

Without the shadow of a doubt, however, the prize of the best public outreach device must be awarded to the Competition Commission of Singapore (CCS).  On its website, the CCS makes available (for free) a MANGA on abuse of dominance (in English). Bravo!

I am just back from the Hague with 6 paperback copies. They will be awarded to my best students this semester.

PS: A great experience. I am truly indebted to the DG COMP for its kind invitation.

Wanna look eloquent at your next antitrust conference? Here’s a good, catchy antitrust quote:

“While the law [of competition] may be sometimes hard for the individual, it is best for the race, because it insures the survival of the fittest in every department”.

A. Carnegie, Wealth, from the North American Review (June 1889 vol. 148, issue 391).

Last week I mentioned here the White Paper issued by the American Antitrust Institute on Google´s proposed acquisition of ITA Software. As you will recall, the AAI concluded that the deal would give rise to competitive concerns that made antitrust intervention necessary. As practically all Google-related debates, this one is fast getting huge, and extremely interesting.

On the one hand, the anti-Google “Fair Search” coalition has created a web page stating all the reasons why the deal would harm consumers in every conceivable way. You may or may not agree with it, but one must admit that they´re doing a pretty good job in speading their message around (this is a consequence of what I meant when I said here that Google has tough and very powerful competitors, who have the incentives and the means to present a fierce battle in as many fronts as possible). 

We´ve given you the link to the AAI´s White Paper and to the Fair Search web page, both of which favor close scrutiny of this transaction. The picture would not be complete if we didn´t direct you to some of the arguments explaining why the acquisition of ITA by Google would actually be procompetitive. Daniel Crane, a Professor at Michigan Law School, has just written a guest post on the blog Techcrunch.com in which he does that exactly; he also sends a very clear message: “Let´s calm down on the Google-ITA deal” (thanks go to George Pedakakis for pointing us to it).    

Crane´s main point is that “Google’s competitors naturally fear Google’s emergence as a formidable rival in travel search, but that is hardly a reason to block the transaction. Indeed, it’s a reason to approve the deal. The most likely scenario is that Google’s acquisition of ITA would allow Google a quick and efficient entry point into travel search that would expand consumer options and increase rather than decrease competition“. His post also responds to the main allegations put forward by those opposing the deal.

Now that you´ve a complete picture of the main positions in this debate we´d be happy to know about any thoughts our readers may have on this matter. Anyone? 

Unrelated: We are also reporting more and important moves in the Brussels legal market: a bunch of great associates have also left Howrey to join Shearman&Sterling. Amongst them are some of the brightest young lawyers around (some of whom are also very good friends of ours), such as Mark English, Elvira Aliende, Louise Rabeux, or Marixenia Davilla.      

And a chillin´leak: Julian Joshua is apparently headed to Steptoe & Johnson

It´s shocking to see how what until very recently was a top-notch practice at Howrey´s has disintegrated so quickly. Looking at the positive side: there will be more empty tables at L´arte di, which is were we constantly ran into each other at lunchtime..

In the past few days there have been several publications on which we hadn´t had the chance to comment:

Some days ago the European Commission published  a document stating its position regarding the nowadays common claims on inability to pay made by undertakings on which a fine has been imposed. Interestingly, the document was published on a Commission´s site on transparency, but not on DG Comp´s website.

Last week, DG COMP also launched the public consultation on collective redress  (thanks to P. Sabbadini for immediately pointing us to this). 

On the European Courts side (and aside from an arguably insufficient but nevertheless welcome fine reduction that some colleages of mine got in the Spanish raw tobacco case), Advocate General Kokott issued a very important Opinion in the Greek decoders case (the one concerning Karen Murphy, the owner of the Red White & Blue pub in Portsmouth,  who cancelled her licence with BSkyB -who holds the right to broadcast live Premier League games in the UK-, and instead signed up with a Greek provider and imported its decoders). The matter eventually arrived at the ECJ by way of a reference for a preliminary ruling. In her Opinion, AG Kokott considers that “territorial exclusivity agreements relating to the transmission of football matches are contrary to EU law“. Were the Court to follow its Advocate General, its Judgment would constitute a  revolution  that would shock the world of sports in a way only comparable to the Bosman Judgment, not to mention its potential implications for the cinema and TV industries in general.  We´ll post a comment on the Opinion here as part of our “Competition Law & Sport” series as soon as we get the time to read it and think it through.

And speaking of publications, there´s a new journal which might be of interest to many of us: the Journal of Universal Rejection They will reject absolutely everything submitted to them  

Our readers are proposing some additional nominations as well as the creation of a new categores for comic books and online games. We are obedient guys and we do what we´re asked, so we´re now beyond movies and looking for nominations on competition entertainment…

Best animated feature

A brief history of the creation of the FTC

Best online game

A visit to the mall, by the FTC

Best competition law comics

Two mangas by the Competition Commission of Singapore: Foiled (Abuse of dominance) and Fixed (price fixing)

O Cartel da Limonada, by the Brazilian Ministry for Justice

Io Non Abbocco, by the Italian Competition Authority

La Breve Storia di Borgo Allegro, by the Italian Competition Authority

Una Brutta Sorpresa, also by  the Italian Competition Authority (I´m sure they work on other stuff too over there)

The info on the comics is available at the ICN Blog (thanks a lot to Kartellblog for the pointer!).  I´ve actually found quite interesting info in there.  An example: anyone interested in doing competition law research in Fiji?

The significant rise in visits experienced by the blog in the past week (we had close to 3000 visits) has opened our eyes to a reality: there´s a lot of people with free time out there! That´s why, considering that nominations for the oscars were awarded last week, determined to fill your spare time with entertainment, and in the spirit of that weird phrase that appears on our header¨”Relaxing whilst doing Competition Law is not an oxymoron“, we´ve put together for you a list of nominees for the best antitrust-related videos on youtube. All of them are really worth watching.

Suggestions for additional nominations and/or categories are accepted. Vote for your favorite.

Best film by a competition authority

Leniency in cartel cases, by the Dutch Competition Authority.

Be the first to tell; a film on leniency, by the Swedish Competition Authority.

Best antitrust lawyer starred videos

ABA Antitrust Section kicks off year 2010/2011 

Best competition law book review

Great video-reviews of the EC Competition Law Handbook 08/09 and of EC Merger Control. Really worth watching; I keep telling Nicolas that this is how he should do his reviews..) They are full of highlights.

Best non-fiction films

The lysine cartel : The real story on which the movie The Informant was based (my favourite scenes are on minutes 1.44  and 2.46). For an interview with the real Mark Whitacre see here

Bill Gates´deposition before the DOJ in the Microsoft trial. In youtube you can find the whole series (for season 1 see here), and also a compilation of greatest hits (the videos give, I think, an unfair portrayal of him so, to balance things here is his great commencement speech at Harvard). Btw, Microsoft´s Steve Ballmer has also starred a short film which escapes any definition

Best politician starred video

Chuck Norris´ Neelie Kroes´ statement (some of the best lines in the history of competition movies) 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” and  ”My vision of tomorrow for Intel, here and now; obey the law“.

The Lisbon Treaty and Competition Policy: A Story of Two Views, by Nicolas Sarkozy and Tony Blair (from 0.40 onwards).

Best non-English speaking video

Apparently (¿?) this video deals with leniency

Best educational video “for dummies”

What is a cartel? (Unfortunately we could not nominate it for the category on best special effects)

¿Por qué la competencia importa?

Best critical video on antitrust

Don´t trust antitrust: the incredible bread machine (watch from minute 2 onwards).

An extra

A video not on competition law, but on competition in law (on 0.37 law school is compared to a situation where “you take a group of alcoholics and then open the bar for three years”, and law students are defined as “insecure, grade obsessed, status obsessed people). It also features Elizabeth Warren, one of the best professors I´ve ever seen in a classroom.

For the first time ever, DG COMP  has posed this question to stakeholders and citizens by carrying out a comprehensive survey about the perception of its activities.

In the framework of this exercise, two independent companies have undertaken  both a qualitative survey targetted to professional stakeholders and a quantitative survey of EU citizens from all Member States.

The aggregate stakeholder report is available here, and the individual reports for the various collectives interviewed are available in the following links (companies, lawyers, economic consultancies, consumer associations, national ministries, and national competition authorities). All of these reports cover issues such as legal and economic  soundness of decisions, integrity, economic effectiveness, and external communication. There are tons of interesting comments on DG COMP´s activities, too many to be summed up here. I very much recommend taking a look at these  if you find time.

The survey on citizen´s perceptions about competition policy can be consulted in its full version, as well as in an abbreviated one.  The results, once again, are also extremely interesting (and sometimes shocking; e.g: did you know that 29% of the Spaniards interviewed doubted that price agreements should be prohibited?).  

Some curious data: in practically all Member States the percentage of citizens who believe they are sufficiently informed about competition policy is below 5%;   more than 25% of Bulgarian, Slovak, Polish and Estonian citizens have no whish whatsoever in becoming more informed about this stuff;  the proportion of citizens who gave a “don´t know answer or who did not consider  themselves qualified to reply was highest in…Belgium!). When asked in what sector the lack of competition was causing problems for consumers, citizens pointed out at energy (44%), pharmaceutical products (25%), telecommunications and internet (21%), transport (19%), financial services (18%), and food distribution (16%).

PS. We´re not ignoring the elephant in the room (the opening of a formal investigation about Google´s allegedly abusive practices); there´ll be plenty to come on this case.