Archive for the ‘International Antitrust’ Category
In 1989 late Philip Areeda (picture above) wrote one of the most influential and cited antitrust pieces in the history of the discipline: Essential Facilities: An Epithet in Need of Limiting Principles, 58 Antitrust L.J. 841. I recall my first reading of this article as student at the College of Europe and how I truly enjoyed it (at roughly the same time I remember having felt the same about Joseph Weiler’s The Transformation of Europe) (yes, those were two good indicators of geekishness). From time to time I’ve gone back to that piece from Areeda, and as a fan of pendulum-based evolutional/historical theories, I’ve quite often cited one particular excerpt therein; here it is:
“As with most instances of judging by catch-phrase, the law evolves in three stages: (1) An extreme case arises to which a court responds. (2) The language of the response is then applied -often mechanically, sometimes cleverly- to expand the application. With too few judges experienced enough with the subject to resist, the doctrine expands to the limits of its language, with little regard to policy. (3) Such expansions ultimately become ridiculous, and the process of cutting back begins“.
I think this captures the evolutionary process of the law in many other areas of law in general and of competition law in particular. To mention only one among many possible examples, I used it some days ago to explain the evolution of the notion of the “single and continuous infringement” under Art. 101 TFEU.
There’s an interesting additional thought in relation to this quote. A few years after this piece was published the ECJ ruled on Magill, and I think it’s not at all unreasonable to say that Areeda’s piece was pondered by the Judges in that case (see, and cast your vote, here). Now, if you think about it, Areeda in many ways anticipated how the evolution of the law on refusal to supply would discur in Europe:
(1) Magill was a extreme case to which the Court responsed with a reasoning that was very much tailored to the facts at issue (a point often forgotten); (2) The language of the response was then applied -possibly mechanically, as an illustration of judidicial inertia (not to be confused with stare decisis)- to other factual settings and, with too few judges experienced enough with the subject to dare to nuance it (?), the Magill criteria consolidated in cases like Bronner and IMS. (3) Their consolidation as the sole relevant criteria ultimately became perhaps unreasonable and inconvenient, which led to an attempt to nuance them [the Commission's -in my view very reasonable- claim in the first Microsoft Decision that “there is no persuasiveness to an approach that would advocate the existence of an exhaustive checklist of exceptional circumstances and would have the Commission disregard a limine other circumstances of exceptional character that may deserve to be taken into account when assessing a refusal to supply.” (para. 555)].
As you know the the General Court did not follow the Commission on that particular point, not because it disagreed, it just didn’t need to rule on that point because it thought the Magill criteria were in any event fulfilled. That was done with the aim of minimizing the chances of getting quashed in an appeal and at the cost of some legal contortionism. In my view, it would have been desirable for the Court to assess whether all “extraordinary circumstances” to identify a refusal to suppy could or not be subsumed within the Magill criteria. Instead the Court gave a practical illustration of how its hammer can make square pegs fit round holes (an exercise that was repeated a few months later in BUPA re the Altmark criteria).
For a most interesting discussion on the legal contortions in Microsoft featuring some of the people who were actually associated to the case see the 16 comments to Nicolas’ post on The Magill-IMS Re-animator.
I’ve somewhat of a bad conscience for not having been able to cover this topic before (not least because one of you has been pestering me with emails asking when I’d write about it…)(btw, the same person has also gently and repeatedly reminded me to post a link to his new –and actually very interesting (really)- paper, so here it is; titled The Law of Abuse of Dominance and the System of Judicial Remedies).
As you may have read, within a lapse of two days the US Supreme Court (SCOTUS) and the European Commission issued, respectively, an opinion (in FTC v Actavis) and a decision (against Lundbeck and others) addressing reverse payments.
Most of the superficial client alerts analyses I’ve seen merely note the time coincidence and suggest a certain convergence in the US and EU approaches to the issue. The headline goes that the Commission imposed its first fine for this practice, and that the SCOTUS reversed a Circuit clash, holding that reverse payments are subject to the rule of reason and dismissing the “scope of the patent test”. In my view, this reading, although right, is also incomplete and hides a few of the interesting issues that have surfaced in these cases.
If I were to start explaining what reverse payments are, the background to these cases and the content and implications of the opinion and the decision you’d probably be tempted to stop reading after a few lines. In order to avoid that, instead of following the normal structure of a post, this will be a reverse post on reverse payments:
Today we will provide you with some comments on these developments and of why they can be relevant beyond their specific context. Tomorrow (if I’ve time) or on Friday (more likely) we’ll offer you our vision on the background to these cases and an overview of the opinion and the decision. I trust this will enable (i) connaisseurs to skip the background stuff; and (ii) those not initiated in these issues to grasp their relevance and to become interested in reading more about them.
Some reactions to the SCOTUS opinion and to the Commission’s decision
- Leaving the pharma sector aside, and looking at things from a broader perspective, the underlying philosophy of the Opinion in relation to the IP regulation/antitrust interface (condensed in this statement: “it would be incongruous to determine antitrust legality by measuring the settlements anticompetitive effects solely against patent law policy, rather than by measuring them against procompetitive antitrust policies as well”) appears to be at odds with the principles governing the interface between sector-specific regulation and antitrust established in Trinko . It’s therefore not surprising that Justice Scalia, that wrote the majority opinion in Trinko, has joined Roberst and Thomas in a dissenting opinion here. So, does this signal a change of trend in the way the SCOTUS interprets antitrust law? The 3 dissenting Justices at least do seem to see it that way, and argue in strong terms that the opinion overturns understood antitrust.
- On a very related but more specific note, although I haven’t read any comments on this point I see common link between these two recent cases on reverse payments and other landmark cases like Linkline US) and Telia Sonera (one of the most controversial EU cases in recent years). In all these cases some party relied on the idea that “he who can do the most can do the least”. In Actavis and Lundbeck the argument was that a patent holder was entitled to exclude competition provided that it remained within the limits of the “scope of the patent”; and in TeliaSonera and Linkline it was that if refusing to supply would not be deemed abusive, there could be no room to find an abusive margin squeeze.
This argument, however, had only been accepted by the SCOTUS in Linkline, with European Courts taking a different line in the most criticized TeliaSonera Judgment, so it’s not surprising (at least to me) that the Commission has rejected it in Lundbeck, but it’s remarkable that the SCOTUS has taken a different line in Actavis.
By the way, I leave one provoking thought I heard from someone the other day discussing TeliaSonera: “I don’t have an obligation to let anyone into my home, but once they’re inside it would be illegal for me to kick them out violently…”. (I expect some virulent reactions to this; happy to discuss).
- Are the EU and US approaches converging with regard to reverse payments, or even with regard to the assessment of horizontal agreements more widely? Not really (leave aside the synchronized summer desk cleaning timing coincidence). Sure, both the SCOTUS and the Commission see a margin for potential restrictions of competition in reverse payments, but they have chosen very different approaches. And whereas the theoretical difference does not appear to be large, the practical consequences hugely differ. In the US reverse payments will need to be assessed under the rule of reason –which imposes a very considerable burden on plaintiffs- (as we will explain in our forthcoming post, the Supreme Court has dismissed the “quick look approach” proposed by the FTC). In Europe, on the contrary, the Commission has decided to take the usual “object” shortcut. This is key, for an “amorphous rule of reason” (an expression actually used in the dissenting opinion in Actavis) analysis normally means difficulties for the plaintiff, whereas a “bifurcated” 101(1) / 101(3) analysis generally results in condemnation because of the (anticipated and worrysome) death of Art. 101 (3).
(Interestingly, the FTC wasn’t able to give a satisfactory answer to a very pertinent question asked by Justice Sotomayor at the hearing: “Why is the rule of reason so bad?”)
If you ask me, I would have no objection to the EU solution if Art. 101(3) were an effective possible way out (this was basically the ECJ’s stand in GlaxoSmithkline) and I would have no objection to the US approach if the burden of proof incumbent upon plaintiffs was a bit less burdensome. As things stand, it was probably not feasible to strike the right solution in theory (where I think the SCOTUS’ one is preferable) as well as in practice (where the Commission’s will likely yield better results) for these cases.
To be continued…
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 (firstname.lastname@example.org); 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…
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:
As reported earlier on this blog, Hong Kong recently joined the league of jurisdictions with a domestic competition regime.
On this occasion, CCH Wolter Kluwers organized a one day conference to discuss forthcoming challenges for the new law.
I was one of the happy many to be invited to the conference, together with a bunch of lawyers from Brussels, Beijing, Australia and the United States.
Now, our Hong Kong friends might be pondering how to apply their new law, they know how to throw a good event. Everything was perfect. Congrats’ in particular to Shirley Hon and Simon Bellamy for the superb organisation.
The level of the discussions was by all standards very high. You could tell the speakers had put time and energy in their presentations. Not the usual quick and dirty, taxi-drive preparation. I personally gave a talk entitled “New Challenges for XXIst Century Competition Authorities” where I identify 5 new enforcement challenges, and 4 new substantive ones. My ppt is available at the end of this post.
The after-conference evening was also a success. There was a cocktail reception, which was followed by rounds of free cocktails, courtersy of Kluwer (no kidding here). With a bunch of enthusiastic conference participants (including several speakers), we then moved to Lan Kwai Fung where we had a lot of fun. I then took a few days off, enjoyed the sun and did some trekking with an old friend who relocated there.
The bottom-line: it was a fantastic trip. And I must confess that since I came back, I have been looking once or twice if academic positions were available in the region…
In his post earlier today Nicolas
was whining wrote about the price of beer in Belgian supermarkets (the fact that he complains about the price of beer when he had never complained about actually cartelized products -such as endives- reveals a typical single-man’s pattern of consumption).
Anyway, he fails to see that things could be worse. Below you can see a pic of a beer taken in India a few days ago. The label features (i) an “MRP” or ”minimum resale price” ; and (ii) a prohibition to sell the beer in any place other than the Goa area. That’s a possible infringement combo right there!
[P.S: Following the publication of this post our Indian readers have clarified that the M in MRP in reality stands for "maximum" not "minimum", and that there is an explanation for the market partitioning clause].
Want more? Take a close look at this news: The All Goa Association of Bakers decides to increase the price of bread.
[P.S. Our Indian readers have confirmed that in this case there is no explanation other than price-fixing].
Good luck to our readers from India, who are making a great effort in fostering a culture of compliance in their country (way to go!). The CCI has earned a reputation for investigating Tacit Cartels, but apparently it won’t run out of explicit ones any time soon.
(Thanks to Christian Bulzomi -also the person half-responsible for this- for the great pics!)
A hotch potch of AT-related news, including some self propaganda:
- The next GCLC lunch talk will be devoted to the Microsoft compliance case, following the General Court’s judgment in Case T-167/08. Speakers are Eric Barbier de la Serre (Jones Day) and Thomas Kramler (COMP). See link hereafter for registration form: 61st GCLC Lunch Talk – Registration form
- The next GCLC annual conference will take place on 8 and 9 November, and will be devoted to “Competition law in times of economic crisis”. The final agenda is in the making.
- I will be speaking at a conference in Hong Kong on 19 October 2012. Just cannot wait to be there. See here for the conference website and hereafter for the programme: Leaflet_2012_9_4. My speech will be about challenges for 21st century competition authorities. If you have any suggestions of topics, items, or remarks to convey at the conference, please do not hesitate to drop a line;
- Our good friend Ewoud Sakkers from COMP is taking a one year sabbatical. He will be thinking and writing at Yale law school. May he also take some good rest while there;
- Marek Martyniszyn, a Senior Research Fellow at the Institute for Consumer Antitrust Studies (Loyola University Chicago) has posted online an interesting book review of the liber amicorum in honour of Professor Jacques Bourgeois.