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European Commission’s literature

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

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

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 The publication has been replaced by the Competition Policy Brief, which mainly deals with policy issues; not really the same concept.

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

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

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

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

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

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Written by Alfonso Lamadrid

30 July 2014 at 2:59 pm

Recent output

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

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

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

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

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

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

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

Written by Alfonso Lamadrid

23 July 2014 at 12:32 pm

More on the antitrust-privacy interface

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

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

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

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

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

Written by Alfonso Lamadrid

16 July 2014 at 9:33 am

Hotch Potch

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As you might have noticed, we took an unnanounced temporary break from bloggin’. First it was due to a particularly intense period of work (I might give more details about it in the future) and then to (my only…) week of Summer holidays during which I wanted to hear nothing about competition law [btw, I read these two very recommendable books (here and here), only to find out that the latter -a dystopian novel about tech companies- does refer to European Commission's antitrust investigations as part of the plot...].

In between this break Chillin’Competition surpassed 750,000 visits  [I checked the stats and only in the past year we've had visits from 193 countries (exactly the same as the members of the UN)], which still today feels pretty surprising. We are however increasingly struggling to find the time to improve what we do here; at least in my case, this is proving a challenge (and it’ll be even more in the near future once the upcoming paternity reshuffles my priorities). This is to say that you should expect some significant changes in Chillin’Competition after the summer holidays, hopefully for good.We’ll explain this in more detail soon.

Nicolas -who will soon end his time at DG Comp- and myself discussed a bit about this yesterday when we met by surprise at a corridor of the College of Europe in Bruges; we were simultaneously lecturing in two contiguous rooms and hadn’t realized about it… By the way, I was lecturing to a group of very smart Chinese officials (pictured above) about EU Competition Procedure and Article 106 TFEU (the provision with the greatest unexploited potential in EU Competition Law) and very much enjoyed discussing with them (this in spite of -excellent- consecutive translation, which added a level of complexity to the conversation). In case anyone is interested, here are the two power points I used (although I’m afraid you might have trouble understanding much): EU Competition procedure (CoE-China) and Article 106 (CoE-China)  (many thanks, by the way, to Carlos Bobillo and Ana Balcells for taking care of these. One day they’ll realize that the main advantage of spending a few years at a law firm is that you can get someone to do your PowerPoints ;) )

 

 

 

Written by Alfonso Lamadrid

9 July 2014 at 2:58 pm

Materials on commitment decisions + upcoming conferences (on Intel, Samsung and Motorola)

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Voluntary2

I realized yesterday that the slides used by all speakers at the Brussels School of Competition’s and Liège Competition and Innovation Institute’s very interesting conference on Commitment Decisions in EU Competition Policy are available here  (the image above corresponds to one of mines;  as an animated GIF it looked better in slidehow).

As for my presentation, I don’t think I said anything that was particularly original. I essentially did a 20 minutes quick overview and categorization of  the commitment decisions adopted so far on the bases of  (a) the (real) underlying reasons to resort to them, which may not always have to do with procedural economy considerations; (b) the sectors they affect (you can observe clear clusters that provide useful insights regarding enforcement priorities complementing regulatory initiatives -or lack thereof-); (c) the theories of harm at issue in each case and (d) the remedies made binding. This exercise made (even more) evident that both the theories of harm and the remedies that we see in these cases are nowhere to be found in Art. 7 infringement decisions. My purpose was merely to provide an objective account of these cases, so I left the discussion on the pros and cons of this approach to my fellow panelists.

Btw, the Liège Competition and Innovation Institute will also be holding other two interesting conferences in the coming days:

Intel v Commission: More eco or more ordo fiendly? next Monday 16 of June

and

The Commission’s Decisions in the Samsung and Motorola Cases – IP v. Competition 2.0?on 11 July

Have a nice w-e!

 

 

Written by Alfonso Lamadrid

13 June 2014 at 11:12 am

On Privacy, Big Data and Competition Law (Post 1/2)

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As I self-advertised in my previous post, I participated yesterday at the European Data Protection Supervisor’s impressive workshop on Privacy, Consumers, Competition and Big Data, where, by the way, this blog received a few mentions.

My impression is that it provided a useful opportunity for various actors to reflect together on the nature, potential and limitations of each discipline in the wake of the EDPS preliminary opinion on these issues.

The workshop touched on competition issues several times. On the EU side, Kris Dekeyser gave the Commission’s view, and on the private side I was honored (and, frankly, a bit surprised) to be the sole EU competition lawyer speaking.

Julie Brill (FTC Commissioner; her speech is available here) and Pamela Jones Harbour (former FTC Commissioner now in private practice) also shared their views on the US approach to these issues.

I was asked to explain to a non-expert audience (by non-experts I mean those who retain the ability to realize sometimes that the king may sometimes be naked…) the notion of market power, why it is important for the application of our rules, how it is assessed in practice, and what are the particular challenges posed by digital markets and big data in this regard.

I’ll spare you the content on my intervention on the most basic issues; suffice it to say that I pointed out that the traditional means to define markets and market power are far from perfect in many ways, but that they’re not supposed to be used mechanically and in the abstract, that the Commission may depart from standard assessment tools to capture the dynamics of competition in any given sector, and that it enjoys wide discretion to act flexibly in this regard.

Moving on to the more interesting stuff. Following a conventional explanation of the main peculiar features of technology/digital markets and of their mixed competition law implications I gave my (non data protection expert) views on the big relevant issues addressed in the workshop, namely (A) What are the implications of data and big data for market definition and market power assessments and (B) Should privacy data protection standards be incorporated to substantive assessment under the competition rules

Today we’ll discuss A, and tomorrow [on Friday] we’ll deal with B, so:

What are the implications of data and big data for market definition and market power assessments?

(i)                 Data is without doubt an increasing important asset/input, and it should no doubts be acknowledged as such. As some of you may remember, some time ago I commented on an article that essentially posited this idea, which I consider to be fairly uncontroversial. In this sense, I’ve no objection to the idea that, depending on the circumstances, data-related issues may give rise to competition concerns.

At the same time, however, data is an important asset or even crucial asset, but no more; and I don’t see why competition law would be required to adapt its rules to when applying them to data-heavy markets.

(ii)               I see one exception to the above. As I explained in a recent post, our current turnover thresholds are not well-suited to capture mergers in the subsidized side of two-sided markets (which may often be markets where non-traded data is important). Only jurisdictions envisaging market share thresholds (often criticized, also by me) may be competent to assess these transactions. Facebook’s very recent decision to try to have the EU review the acquisition of Whatsapp is to be read within this context. I don’t know what the solution is, but it’s worth a thought.

(iii)             Some (including Pamela Jones Harbour in her dissent to the FTC’s Google/Double Click decision) have advocated for a definition of relevant markets for “data used for x [in that case targetted advertising] purposes”. I’m not persuaded by this proposal (except perhaps when the data is subject to trade) because I’m not sure the intermediate data market is a meaningful market in the sense of competition law. If the alleged problem is that the use of data might have consequences in some markets, then my take is that it makes more sense to assess those markets directly.

(iv)             Regarding the big substantive issue, which is related to scale, aggregation, network effects playing to the benefit of allegedly dominant firms, I essentially said that:

  • far from being an obvious competitive problem this also has mixed implications, for data can also be a source of very significant efficiencies (and big data a source of big efficiencies) in many and important fronts;
  • it is true that access to data may in some circumstances be a barrier to entry and even a very important one depending on the facts (I also noted that barriers to entry are not in themselves a problem requiring intervention because competition law is about conducts and not structure);
  • many people throw out “essential facility” as a buzzword in this context to support the contention that some firms should be mandated to share data. In my view the term is used too loosely. As I explained, the identification of an essential facility is subject to an extremely high legal burden (indispensability, elimination of competition in a downstream market…) which makes it difficult to think of instances where it could be satisfied;
  • some people had formulated the idea that network effects and scale determine that users may be locked-in to a given provider and therefore have no meaningful choice as to the privacy policy applied to them. On this point I recalled, among others, that the recent Microsoft/Skype Judgment (yeah, I’m already starting to quote it) seems to close the doors to any argument based on laziness/stickiness when switching is technically and economically feasible.

(v)              I also observed that the main issue where competition law and data protection policies may converge relates to data portability. In cases where it is shown that scale is of the essence, then practices that could deny rivals a minimum viable scale could fall within the scope of the competition rule (in fact, Google’s proposed commitments -see here and here- already incorporate a section on the portability of data for AdWords campaigns). On the regulatory front, the proposed new EU regulation on data protection (currently stuck at the Council) also incorporates a right to data portability. Btw, some of the major companies cited in these discussions already have tools to facilitate portability (see here or here)

(vi)          My last comment on this point was that privacy policies can also be a parameter of competition (even if admittedly many users currently appear to confer more importance to other parameters).

Apologies for making it so schematic, but having quite some work to do I’ve chosen to basically to a transcript of my notes, plus this is already lengthy enough for a post.

On the next post I’ll state my views on whether non-economic privacy considerations should be included as part of the consumer welfare standard.

Written by Alfonso Lamadrid

3 June 2014 at 3:00 pm

Speaking engagements

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Minutes after I published the post on endives’ right to be forgotten I received a call from the European Data Protection Supervisor’s office. At first I admit I thought it was someone (my first suspect was that guy from 21stcenturycompetition because he’d read a draft of the endive thing; don’t worry, Kevin, I won’t disclose you thought it was serious) returning the joke, but it wasn’t, and I got invited to speak next Monday  the most interesting (but closed door) Workshop on privacy consumers, competition and big data (to be held at the European Parliament and arranged in the wake of the EDPS report that we –actually Orla- discussed here).

I’d solemnly committed myself to have a life and not take on any more non-work (non-billable, that is) stuff in the coming weeks/months, but it was an offer I couldn’t refuse. My topic is Market Power in the Digital Economy.

Three days later, on Wednesday 5 June I’ll be providing an overview of the commitment decisions adopted by the Commission since the enactment of Regulation 1/2003 at the Brussels School of Competition’s annual conference. This event you really should attend (click here for info: Programme_Commitments in EU Competition Policy – 5 June 2014).

[ I apologize in advance to all attendants at these two conferences: I’ve an important General Court deadline on Friday and then a bachelor party weekend, so preparing might be a challenge. Yes, this is the ol old expectation-lowering trick ! ]

Then on 8 July I’ll be lecturing on EU competition procedure and on Special and Exclusive Rights (Art. 106) at the College of Europe’s Competition Summer School for Chinese officials. Talking with Chinese officials about how competition law applies to public measures should be quite an interesting experience.  And then on the 11th same procedural class in the context of the College’s summer course on competiiton law.

And then, following my first paternity leave in September, I really plan to take on less of these commitments.

Well, on 28 November I’ll be participating at the Swedish Competition Authority’s annual and always excellent Pros and Cons conference, which on this edition will be devoted to Two Sided Markets, but I couldn’t say no to that either…

Written by Alfonso Lamadrid

28 May 2014 at 5:52 pm

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