After reading the post written by Nicolas on Friday, I realized that we need a disclaimer too. Here it is:

The views reflected in our posts do not necessarily represent the views of Chilling Competition or of its authors. They merely reflect the thoughts that crossed our minds at the exact date and time that appears under each post. Those thoughts may actually be radically opposite to the ones that crossed our minds on the followring second.

- If anyone feels offended or dislikes any of our posts, then we suggest that you assume that our opinion has evolved since the date of publication and that we have embraced more reasonable opinions.

- If, on the other hand, you like what we say, we recommend that you assume that since our opinions were sound, we will not have felt the need to change them.

Revenge: where and what was that?

Alfonso pays a lunch.

We have already talked of the Commission’s somewhat confusing disclaimers in official documents.

Think of §3 of the Guidance Communication on exclusionary abuses under Article 102 TFEU : “This document is not intended to constitute a statement of the law“

Or of the good old “The opinions expressed in this document are those of the author and do not represent the views of the European Commission nor of its services“.

Antitrust lawyers often make jokes about the Commission for those disclaimers. But should they?

During the consultation process on the settlement notice, a famous law firm inserted this courageous, delicious footnote in its position paper:

 “These comments do not represent the views of the Firm or of its clients.”

So whose views are these? Please help me, because I am lost.

I am even more puzzled given that a few lines above, the same document explicitly mentioned that:

“These comments are offered by the Brussels office of __ & __ LLP in response to the Commission’s invitation to comment.”

Given our track record on this blog, we cannot be suspected of trying to stigmatize this particular law firm. We have very good friends there and they are all stellar professionals.

This is just to show that no one’s perfect in this business, and that it is quite easy to make fun of those who make fun.

PS: Thanks to my assistant N. Neyrinck for the pointer.

PS2: In a paper written with my esteemed colleague Miguel Rato (Shearman & Sterling), we stressed that regardless of those disclaimers, oral statements may to some extent limit the enforcement discretion of the Commission and, as a result, be relied upon by affected parties to challenge a formal Commission decision. In Case T-25/99, Roberts and Roberts v. Commission, the GC for instance reviewed the substance of a public speech given by a Commission official on specific aspects of the application of competition law to pub contracts (§§128-129).

PS3: Picture taken from a very good LP, if you do like post grunge music.

Congrats to Tatiana Siakka, David Mamane, Andrey, and Lorenzo Climenti!  (Nico: you can afford 4 beers, right?)

Here is an explanation extracted from their answers:

Title 7 within Law 2 of the Fifth Partida, entitled “Of the shortages and bids that merchants create between themselves through oats and guilds” was the legal provision prohibiting traders from engaging in price-fixing and output restriction.

The Code was elaborated in Spain (Castile), but it was in force in Latin America until the modern codification movement (1822–1916). Until the beginning of the 19th century, they were even in effect in the parts of the United States, such as Louisiana, California or Nevada, that had previously belonged to the Spanish empire and used civil law. Furthermore, they served as the legal foundation for the formation of the governing juntas that were established in both Spain and Spanish America after the imprisonment of King Fernando VII during the Peninsular War.

Below you will find a scanned version of the relevant part by courtesy of José Luis Buendía.

[The text appears in Spanish and Latin. Since the short bios available at Brussels-based law firms suggest that all competition lawyers are fluent in practically every language, we trust that many of you will be able to understand it ]

P.S. Could someone please edit wikipedia´s entry for History of Competition Law?

If we asked you what was the first antitrust legislation ever in force in part of the territory of what is now the United States you would probably respond that it was the Sherman Act.

This answers is wrong.

What then was the first antitrust law ever in force in America??

We can give you two hints: (i) it was drafted in the 13th century; (ii) the person who promoted its drafting is one of the 23 lawmakers depicted in the marble bas-reliefs of the House of Representatives chamber of the United States Capitol.

Our quizz will be open for 24 hours. You can submit your answers either as comments to this post (they won´t be made public until tomorrow) or via email to alfonso.lamadrid@garrigues.com (I anticipate that I won´t be able to reply; actually, the reason why we´re posting a quizz is because these are busy -and fun- times at work).

Those who get the answer right are entitled to a free beer.

P.S. Since, as you know, “free” products are rarely ever free, the beer will be paid by Nicolas, who doesn´t yet know about it

The Year of the Rabbit is over, and the Year of the Dragon just started today in China.  This is thus a good moment to look at the rabbit in the rearview mirror, and reflect on what has been achieved in Chinese antitrust over the past year. Our colleague and friend Adrian Emch from Hogan Lovells Beijing has proposed us a series of posts on the Year of the antitrust Rabbit.  If time allows, Adrian has promised a “trilogy!” 

For this first post, let’s just review the main developments in Chinese antitrust law over the year of the rabbit (the description is not meant to be exhaustive)? The year started with a bang: on 1 February 2011, a total of five new regulations implementing the Anti-Monopoly Law came into effect.  Two of them were released by the National Development and Reform Commission (NDRC), and three of them issued by the State Administration for Industry and Commerce (SAIC).  (For in-depth analyses of these regulations, see here.)

Besides this, and focusing on case-work, here’s a flavor of what Chinese agencies and Courts have been busy working on.

NDRC.  As already reported, one of the highlights in NDRC’s activities was the Unilever decision in May.  In November, NDRC also adopted a decision against two domestic pharmaceutical companies, with the highest fines ever imposed for an infringement of competition law.  The case was about two of only a handful of distributors of a drug (promethazine hydrochloride) that entered exclusive supply arrangements with the two only domestic producers of the drug.  The result was rather obvious – significant price increases.  The legal reasoning in NDRC’s public announcement of the case, in turn, was less clear.  Press reports indicated that the two distributors were affiliated, so a possible theory that the two distributors had engaged in cartel conduct would not make much sense if one were to accept the “single economic entity” defense (which is not explicitly in the law inChina, though).  It seems that NDRC, instead, held that the distributors had abused their dominant position.  But there is no explanation on this in the announcement, so one can only speculate whether the dominance was found pre- or post-agreement, and whether it was single or collective dominance.

Finally, in December, NDRC officials told the domestic press that they were investigating a potential abuse of dominance by two ofChina’s three large telecoms companies, China Telecom and China Unicom.  In the absence of an official decision or announcement, the exact facts of the case are not fully clear.  For example, it is, again, not entirely clear whether the dominant position would be each company individually (China Telecom is strong in the South of China, and China Unicom in the North) or jointly (collective dominance can be presumed if the aggregate market share of two companies is two-thirds or more).  As for the alleged abuse, it seems it consisted of making difficult access to the broadband network.   The particular allegation may be that the two companies granted access on a discriminatory basis, with higher access charges for companies that compete with them downstream.

 Finally, in terms of human resources, NDRC has started restructuring its antitrust team in 2011.  In July, the main body was re-named Price Supervision and Anti-Monopoly Bureau (in English), and the antitrust team inBeijingis scheduled to grow from half a dozen to over 20 in the coming months.

SAIC.  The actual casework by SAIC was relatively limited.  The noteworthy cases were SAIC’s case against the construction equipment industry association in Lianyungang for market-partitioning in January, and the “administrative monopoly” investigation against a local government in Guangzhou in the GPS case in July.  The relative scarcity of SAIC decisions may, in part, be due to the fact that, after NDRC’s expansion, SAIC’s antitrust team is about to become the smallest team of antitrust officials among the three enforcement agencies, with less than 10 officials.  In part, this may also be because SAIC was busy preparing the BRICS international competition conference, held inBeijing in September.

MOFCOM.  Yet another year, MOFCOM was probably the busiest of the three agencies, at least in terms of the number of cases handled.  203 transactions were notified in 2011, four of which were cleared subject to conditions – Uralkali/Silvinit, Alpha V/Savio, General Electric/Shenhua and Seagate/Samsung Hard Disk Drive.  The remainder was cleared conditionally (or the case withdrawn).  I will discuss three of these cases in more detail, regarding a particular aspect in a later post.  The remaining case – General Electric/Shenhua – was also significant, from (at least) three angles: first, it was the first case where an “adverse” merger decision (ie, prohibition or conditional clearance) was addressed to a Chinese company.  More of this in the next post.  Second, the General Electric/Shenhua decision is the first public decision to apply to the establishment of a joint venture.  With this decision, MOFCOM confirms that joint ventures can and do fall under Chinese merger control rules.  Third, prior to this transaction, the relevant markets in all of MOFCOM’s published decisions concerned tangible products.  The General Electric/Shenhua decision is the first where MOFCOM found the licensing of technology to be the relevant market.

In terms of staff and internal organization, MOFCOM’s Anti-Monopoly Bureau has also been put in charge of hosting the secretariat of the Anti-Monopoly Commission, a loose policy body made up of officials at minister-rank from 14 ministries and other government bodies.  As for the merger control officials, the size of the team has remained stable.  Some newcomers have joined, while others are about to be posted in Chinese embassies abroad as part of their career/rotation scheme.

Beyond actual cases, the three agencies have been pretty active on the international cooperation front.  As mentioned, SAIC hosted the BRICS conference in September.  SAIC and NDRC each signed cooperation agreements with the OFT.  And the three agencies jointly entered a MoU on antitrust cooperation with the FTC and the DOJ in July.  During a visit to the US by MOFCOM’s vice-minister in charge of the merger control work in November, MOFCOM, the FTC and the DOJ issued a document with follow-up “guidance” on their cooperation in the merger field.

Courts.  The lack of systematic publication/collection of judgments in China makes it difficult to assess the situation regarding antitrust litigation in China in 2011.  Sure, a few important judgments were reported.  For example, in December, the Changsha Intermediate People’s Court reportedly dismissed an action filed by a car owner against Nissan’s JV entity in China due to the insufficiency of evidence proving Nissan’s dominance and abusive conduct.  Overall, however, the year 2011 seems to have been relatively more quiet than 2010 in the litigation area.  (According to a judge of the Supreme People’s Court, while in 2010 a total of 33 antitrust actions were accepted by the courts throughout China, the first half of 2011 saw only seven cases accepted.  Article to be published here shortly.)

Still, one important development was the circulation for public comment by the Supreme People’s Court of a draft guidance document on procedural issues for antitrust litigation in April.  The court is understood to be in the process of enacting the guidance, and is expected to publish it soon.

For this third edition of the Friday Slot, Antoine Winckler (Cleary Gottlieb, Brussels) has taken a shot at our questions. I met Antoine five years ago at a conference on “Non-competition concerns under the EUMR”. He made a great impression and since then, with my competition friends, we refer to him as the “Tribun”. A full biography of Antoine can be found here.  I also know for a fact that Antoine reads our blog regularly.  It is a great honor that he took the time to answer to our questions.

“Oscar” of the best competition law book?  And of the best non-competition law book?

Judge Bork’s  Antitrust Paradox

Boccacio’s Decamerone

“Oscar” of the best case-law development in the past year? “Oscar” of the worst case-law development?

Worst : CJEU, C 439/09, Pierre Fabre Dermo-Cosmétique SAS v Président de l’Autorité de la concurrence and Ministre de l’Économie, de l’Industrie et de l’Emploi (another move away from the effects theory)

Best:  Advocate General Sharpston’s Opinion in CJEU, C-389/10 P, KME v. Commission

Let’s do it like economists => assume that you could change 3 rules, principles, judgments, institutions in the current EU competition system. What would you do?

I would transform DG COMP into an EU Prosecutor and give the General Court the power to make all antitrust decisions (but only after making sure judges have all followed economics 1.01).

Average working time/week?

When does work really stop?

Why do you work in competition law? How did you first get into it?

You get to work with non-lawyers a lot.

I really wanted to work in Brussels – just kidding.

Most interesting, intense or funny moment of your career?

Watching Judge Vesterdorf being shown a streamed James Bond movie (James Bond in his Aston Martin) during the Microsoft v Commission hearing.

Hearing my learned colleague/partner/dear friend Mario Siragusa and his opponent Antonino Abate from the Legal Service – both pure Sicilians – plead a State-aid case in re-invented French.

Your role model (if any) in the competition community? And outside of it?

Don Holley and Mario Siragusa (my mentors at Cleary)

Winston Churchill

What do you like the least about your job?

Difficult clients

What do you like the most about your job?

Difficult clients

What you like the most about economics in competition law?

Finding an economist coming up with the right answer

What you like the least about economics in competition law?

Economists who repeat what lawyers say

What career/personal achievement are you most proud of?

Having had fun (most of time) working

A piece of “counterfactual” analysis: what would you do if you weren’t in your current position?

Teaching philosophy/literature/history or riding horses

Besides being a “competition geek” (sorry for this one, but we all are), what are your hobbies?

Philosophy and horses

Favorite movies?

Gilda, The Night of the Iguana, Hitchcock and Marx Brothers generally

Favorite music style in general?

Opera

Your favorite motto?

Work is the curse of the drinking classes (Oscar Wilde)

Websites that you visit the most (besides Chillin’Competition)?

Google of course

A piece of advice for junior competition professionals?

Have fun

It was reported yesterday that construction toy manufacturer Mega Brands has lodged a federal antitrust complaint against its competitor Lego in order to “stop Lego’s illegal efforts to monopolize the construction toy market through illegal anti-competitive practices including, but not limited to, use of fraudulently obtained IP [intellectual property] rights to interfere with Mega Brands’ right to continue to import certain competitive products [cylindrical studs] into the United States.“

More information is available here. The original complaint is available here.

PS. The picture above is supposed to be one of a Lego Courtroom, although I´m a bit confused by the cook handing a pizza to one of the strangely-dressed members or the Jury…

In the last weeks, France lost its triple A, but gained a fourth operator in the mobile telephony sector.

The chronology of events that led to the entry of Free Mobile brings a good illustration of what may constitute retaliation tactics amongst semi-collusive oligopolists. A reminder of what happened:

1. Since last year, rumour has it that a new operator contemplates entering the French mobile telephony triopoly;
2. In the summer 2011, the 3 incumbent oligopolists introduce  low cost subscriptions in a bid to possibly dissuade the new entrant;
3. As the threat of entry grows in the first days of 2012, the incumbents make statements in the press that they are ready to throw heavy artillery at Free mobile;
4. On 10 January, Free Mobile launches its mobile telephony service, cutting the incumbent’s mobile offers by several €s, and outcompeting them on voice, sms and the Internet;
5. In the following days, all three incumbent players align their offers on Free, with Bouygues Telecom even applying similar prices as Free ;
6. Yesterday, one incumbent send bailiffs to witness that Free’s network is dysfunctional, in violation of a number of contractual obligations.

Looks to me as if 2, 3, 5 and 6 are clear examples of ex ante and ex post retaliation tactics.  Thanks to Free Mobile for offering an opportunity to put pictures on theory. Will likely use this as a case-study with my students.

Now, the theoretical question is: can Free Mobile rely on the competition rules to block incumbents’ retaliation tactics?  As a matter of theory, retaliation practices of collectively dominant oligopolists could fall within the scope of Article 102 TFEU’s under-used abuse of collective dominance doctrine (O’Donoghue and Padilla, 2009, p.158).

That said, traditionnally, the economics of oligopolistic retaliation are still seen as too equivocal to be imported into a legal standard.  Economists for instance disagree on the magnitude of retaliation measures.  Whilst some believe that only measures akin to predatory pricing constitute an effective retaliatory mechanism, others view a mere temporary breakdown of collusion as a sufficient deterrent mechanism.  Moreover, economists still disagree on whether retaliation must be specifically targeted at the cheating firm or whether general retaliation through market-wide price reductions is a sufficient disciplining factor.

Now, what is interesting in the Free Mobile case, is that retaliation is not just confined to prices. Incumbents seems to be engaged in a broadening pattern of retaliation tactics, the purpose of which is to force Free Mobile off the market.  Those include the sending of anticompetitive signals through the press, agressive price competition, and possibly judicial/contractual harassment.

If things go on this way, and new retaliation measures are taken by incumbent oligopolists, Free Mobile may well solicit the protection of competition authorities under Article 102 TFEU. The fact that there are additional retaliation measures in addition to aggressive price competition  could indeed make a strong case of  abuse, under a  Karate-competition law approach. Moreover, the incumbents might have coordinated their response to Free Mobile’s entry, as they did back in the day when they organized a Yalta on mobile telephony.

A last reason to believe: at the press conference announcing the launching of  Free Mobile’s offer, X. Niel, the CEO of Free Mobile  praised Bruno Lasserre, the head of the French CA, for his support in the last few years. And in reading Bruno Lasserre’s own words about free, it seems the French CA is quite enthusiastic with the entry of a fourth player in the market.

During a recent conversation with a Judge, he mentioned that he felt envious of competition agencies (we were talking about the European Commission) because they could easily behave in a “schizophrenic” way, taking one stance in one case and a completely different one in another. He argued that courts are much more concerned about respecting their own precedents (as I pointed out, there are also some nuances to this view) than competition authorities are. In my view, there is a lot of truth to this statement; competition enforcers do not feel bound by their decisional practice because the Court has endorsed the view that each case must be dealt with in light of its specific circumstances. Moreover, progressive interpretations of the law (notably with regard to unilateral behavior) show that some national competition authorities as well as the European Commission do not necessarily feel obliged to follow the case-law neither. To a certain extent, much of this could be understood, but only provided that adequate reasoning is offered to justify that the circumstances merit a change of approach. Sadly, this is not always the case (although, to be fair, the Courts are not a paradigm of transparency when they overrule their previous case-law neither). I´m sure you can think of quite a few examples of radical unexplained shifts.

This conversation made an idea spring to mind: we should ask you who or what (within the antitrust world; yeah, we know, that´s pretty limited, but..) do you wish you were?

Here are a couple of ideas to get the ball rolling:

- I wish I was one of those economists who can say “this is an economic model that we developed for this particular case“. I´m waiting for the day when I can say “this is a legal principle that we developed for this particular case“!.

- I wish I was NOT the lawyer (or rather the former lawyer, I suppose) of the Austrian company that has requested a preliminary ruling from the ECJ on whether having obtained wrong legal advice can exempt a company from responsibility…

Anyone else?