Chillin'Competition

Relaxing whilst doing Competition Law is not an Oxymoron

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To all readers,

After a long period of silence – part of it was Commission-imposed – the shareholders of chillincompetition have decided to transform this blog.

From today onwards, the blog moves from joint to sole control. In plain words, I quit, and leave the blog in Alfonso’s hands.

We discussed this together, but the reasons for exit are compelling.

Paraphrasinging BB King: “The Thrill is gone, it’s gone away for good“.

Alfonso’s challenge is now to find a new “bad cop“, to keep a sane degree of political incorrectness on this platform.

Thanks to all for the support in the past years.

And to my good pal Alfonso: “And now that it’s all over, All I can do is wish you well

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Written by Nicolas Petit

3 October 2014 at 10:50 am

Posted in Uncategorized

Microsoft’s Android Anathema

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by Geoffrey Manne

I want to thank Alfonso and Nicolas for letting me post here. I’ve been following the discussion of the most recent Google competition case in Europe here at Chillin’ Competition (click here for Alfonso’s comments and here for Pablo Ibañez Colomo’s) and elsewhere with great interest. And I’ve written about it back on my home blog in the US, Truth on the Market. But I have a keen interest in discussing the case with a more European audience, so when Alfonso asked for thoughts about the case, I gladly took him up on it . The following is a re-publication of my post, Microsoft’s Android Anathema. I’d welcome any feedback. Thanks!

 

Microsoft wants you to believe that Google’s business practices stifle competition and harm consumers. Again.

The latest volley in its tiresome and ironic campaign to bludgeon Google with the same regulatory club once used against Microsoft itself is the company’s effort to foment an Android-related antitrust case in Europe.

In a recent polemicMicrosoft consultant (and business school professor) Ben Edelman denounces Google for requiring that, if device manufacturers want to pre-install key Google apps on Android devices, they “must install all the apps Google specifies, with the prominence Google requires, including setting these apps as defaults where Google instructs.” Edelman trots out gasp-worthy “secret” licensing agreements that he claims support his allegation (more on this later).

Similarly, a recent Wall Street Journal article, “Android’s ‘Open’ System Has Limits,” cites Edelman’s claim that limits on the licensing of Google’s proprietary apps mean that the Android operating system isn’t truly open source and comes with “strings attached.”

In fact, along with the Microsoft-funded trade organization FairSearch, Edelman has gone so far as to charge that this “tying” constitutes an antitrust violation. It is this claim that Microsoft and a network of proxies brought to the Commission when their efforts to manufacture a search-neutrality-based competition case against Google failed.

But before getting too caught up in the latest round of anti-Google hysteria, it’s worth noting that the Federal Trade Commission has already reviewed these claims. After a thorough, two-year inquiry, the FTC found the antitrust arguments against Google to be without merit. The South Korea Fair Trade Commission conducted its own two year investigation into Google’s Android business practices and dismissed the claims before it asmeritless, as well.

Taking on Edelman and FairSearch with an exhaustive scholarly analysis, German law professor Torsten Koerber recently assessed the nature of competition among mobile operating systems and concluded that:

(T)he (EU) Fairsearch complaint ultimately does not aim to protect competition or consumers, as it pretends to. It rather strives to shelter Microsoft from competition by abusing competition law to attack Google’s business model and subvert competition.

It’s time to take a step back and consider the real issues at play.

(Click here to continue reading)

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Written by Alfonso Lamadrid

3 October 2014 at 10:10 am

In the press this week

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On the tax-related State aid investigations. Many newspapers opened this week with big headlines on the alleged news that the Commission had adopted a “preliminary decision” regarding the State aid probe into Apple (see e.g. here). I’m a bit intrigued by what’s behind this press campaign; the only news is that the Commission has published in the Official Journal decisions that had already been adopted before the summer. This sort of publication is never news, so why the fuss about it now is beyond me.

[It is, by the way, interesting to observe how some developments are “sold” twice, whilst others –including the closure of infringement proceedings against luxury watch manufacturers- go under the radar (disclaimer/advertising: my firm represented one of the main companies subject to that investigation)].

Given that I’ve lately been working on loads of tax-related State aid cases before the General Court I’ve developed a particular interesting in these matters. We might comment more in-depth on them in the future; for the moment, I’ll simply point out that by questioning not national taxation systems or tax rulings in general but rather APAs (advance price agreements) the Commission might be opening Pandora’s box (how many multinationals –including many EU ones- have similar arrangements?; could all of those now be challenged under State aid rules? ) For my previous comments on these issues, see here.

On the Google search investigation. The Google case has been on the news again, which, paradoxically, is no news. It’s been a while since we last commented on this investigation (partly because there wasn’t anything substantial on which to comment, and partly because the susceptibility around these issues is quite acute). One of the main contributors to this blog –Pablo Ibañez Colomo- gave his views to Global Competition Review a few days ago; Pablo explained that “[i]t is very controversial to argue that, as a rule, article 102 [prohibiting abuse of dominant position] requires all dominant companies to give access to their facilities – including operating systems or search engines – on non-discriminatory terms and conditions (…) I do not believe there is case law supporting this understanding of the provision.” According to Pablo, “there is the expectation that remedies are justified even if it is not clear why Google’s conduct is illegal”.

Last time I wrote about the case I made some comments on the politicization of competition law enforcement (see here). Since then, Vice-President Almunia has explained that politics are being left aside of the case (here, ehem). So, politics aside, let me focus on a purely legal point without discussing who’s right or wrong:

The complainant’s interesting main legal argument now seems to be that Google’s proposed commitments do not address the concerns set out in the Commission’s preliminary assessment (see, e.g. here). This a most interesting claim, and one on which many –including myself- can’t really comment because we haven’t read the preliminary assessment. In fact, no one other than Google was supposed to have seen it (according to the Manual of Procedure, “the complainant has no right to a hearing or to receive a (non-confidential) copy of the Preliminary Assessment or to have access to information”). In this case, however, the Hearing Officer granted a request for access on the part of some of the complainants (see the previous hyperlink for a source).

Now, consider the future implications of this move: in the past the Commission could overdo a bit its concerns in its preliminary assessments because, after all, they are not subject to the same requirements as the SO, would not be subject to any rebuttal on the part of its addressee, unlike SOs do not need the approval of the Commission’s President and, at most, could give the Commission a stronger hand in commitment negotiations (which, regardless of what Alrosa says, obviously exist). Now that the Commission is aware of the fact that preliminary assessments will/could be accessed by complainants, will it have to show more self-restraint? Will this have an impact on future commitment negotiations? Would these problems be avoided if the Commission was required to adopt a proper SO prior to entering into commitment negotiations?

On Android. I also saw some headlines this week anticipating, once more, the initiation of a formal investigation into Android. As frequent readers will recall, I’ve already written quite extensively about this (see here). On October 15th (the same day in which, by the way, the Commission will be making public an avalanche of decisions…) I’ll be speaking about it at a conference in Brussels, so in case anyone has thoughts about the case feel free to send them my way.

On the Euribor probe and the role of the Ombudsman. Last week, the fact that Crédit Agricole had resorted to the Ombudsman to complain about a possible bias on the part of the Commission also hit the news. CA’s claim has to do with the Commission having adopted a settlement decision finding a cartel infringement in relation to the Euribor prior to concluding the infringement proceedings against those who chose not to settle (see Gaspard Sebag’s piece for Bloomberg here). This obviously raises most interesting procedural questions, which I’d nevertheless tend to think pertain more to the realm of judicial review than to the Ombudsman. The piece includes a quote of mine which is a candidate for the prize of ‘dullest comment of the year in the press’: “It’s always uncomfortable to have to deal with the Ombudsman”. A deep thought that is… ;)

 

A light post for a Friday

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Image not found

- The Berlaymonster has a great post on one of the most transcendental EU Court Judgments in recent years; see here (the pic above is taken from the actual Judgment). The post includes the following “transcript” of a recent conversation among General Court judges, allegedly overheard in the Court’s canteen:

J1: So, what do you have this morning?

J2: A couple of Ukrainian oligarchs’ frozen assets and the legality of bankers’ bonus caps. You?

J1: Me? I have a billion-euro cartel fine on a handful of Fortune 500 blue-chip companies and a spot of precedent-setting in immigrant-workers’ rights. What about you?

J3: OH, not much…

J2: No, go on, what you got?

J3: …….not saying

J1: Tell us.

J3: N…

J1: You know we can find out, yeah?

J3: ……….. biscuits.

J1: What?

J3: …. [*mutters*] I have to decide whether a chocolate-chip biscuit with a chocolate layer on the inside is a unique design.

J2: Well that’s… that’s…

J1: Good for you.

J2: Yeah ….. good for you.

J1&J2: [*exit left, sniggering*]

[scene]

-  A few days ago NewsCorp published an open letter to the European Commission asking it to intervene against Google.  Google has now responded to the arguments in the letter on a post published in its blog. Click here to read Dear Rupert.  It  does make for quite a good read.

- Following the nomination of Commissioner-to-be Vestager  many people have started to develop an interest in the Nordic approach to competition law. Should that be your case, you should check out the Nordic Competition Blog.  This is a new and very welcome addition to the competition la blogosphere. Good luck to Simen Klevstrand (Wikborg Rein, Norway), Grant McKelvey (Vinge, Sweden), Matti Huhtamäki (Peltonen LMR Attorneys, Finland) and Michael Klöcker (Gorrissen Federspiel, Denmark).

- The call for papers for San Pablo CEU University’s International Conference on Cartels has been extended until next Tuesday, 30 September (for more info, click here: Call for PapersThe Fight Against Hard Core Cartelsv2). My colleague Ana Balcells will present there our recent paper on evidential issues.

- The new issue of Competition Law Review is out; all its articles can be downloaded for free here.

Enjoy the weekend!

Written by Alfonso Lamadrid

26 September 2014 at 12:17 pm

Posted in Jokes

ERA’s workshop- Exclusionary Pricing under Art. 102 TFEU: Impact of Recent Case Law

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ERA (the Academy of European Law), with which we’ve collaborated a few times in the past, will be holding a competition workshop titled “Exclusionary Pricing under Art. 102 TFEU: Impact of Recent Case Law”.

It will feature our friend Damien Gerard (who, by the way, has succeeded Nicolas as Director of the Global Competition Law Centre), our first Friday Slotee Ian Forrester (he’s actually the one who proposed the Friday Slot name), and Manuel Kellerbauer, from the Commission’s Legal Service.

Judging by the absurdly high number of click-troughs to Wouter Wils’ now famous piece on Intel and the effects based approach that we’ve seen on this blog in the past couple of days, we guess that this event might be of interest to many of you…

For more info, click here.

 

P.S. The fact that this posts gets me a free pass for one of our most recent hires (Sam Villiers, you’re welcome)  is merely incidental ;)

Written by Alfonso Lamadrid

24 September 2014 at 5:51 pm

Intel and the fight for the soul of EU competition law

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Wouter Wils (one the finest legal minds at the Commission, currently Hearing Officer and one of our Friday Slot interviewees -see here-) has today released an article that will certainly have a significant impact in the discussions on the convenience of following a “more economic approach” to abuse of dominance (and that is likely to be highly controversial, particularly among competition law economists).

We’ve recommended many other articles before, but this really is a must-read.

By the way, Wouter was inspired to write the article by Pablo Ibañez Colomo’s comment on the Intel Judgment in this blog and by the ensuing discussion (see here).

The piece (soon to be published in World Competition) is now available here:

The judgment of the EU General Court in Intel and the so-called ‘more economic approach’ to abuse of dominance

We very much look forward to the debate that this piece will spur.

Written by Alfonso Lamadrid

19 September 2014 at 2:45 pm

10 Comments on the ECJ’s Judgment in Case C-67/13 P, Groupement des Cartes Bancaires

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September 11 2014 was a big day for antitrust at the European Court of Justice. The Court delivered two important Judgments in the Mastercard and Cartes Bancaires cases, and heard oral arguments in Huawei/ZTE. We’ll comment on the latter in due course, and will be devoting our next posts to discussing the content and implications of the two Judgments. Let’s start with Cartes Bancaires, which is the one with greater potential future implications (as already noted by Pablo in the post below).

This can be an analytically complex subject and there’s much to discuss, so allow me to skip the basics and the summary of the Judgment that you can find here (a copy-pasted version will also appear in some newsletters…) Here are my 10 initial reactions to the Judgment. These are not at all definitive positions but rather preliminary thoughts that I’m hastily posting now with the hope that I’ll be able to polish them in the course of follow-up discussions. For the lazy ones, and given that the full text may be lengthy and dense (for a change), all the main messages appear in bold.

1) The Judgment is to be welcomed mainly as a statement, or cautionary message, from the Court in reaction to an often discussed trend on the excessive use and abuse of the “object shortcut” (how many recent EU and national 101 “effects” cases do you know of?)

In the ECJ’s words (para 58) “[t]he concept of restriction of competition `by object’ can be applied only to certain types of coordination between undertakings which reveal a sufficient degree of harm to competition that it may be found that there is no need to examine their effects otherwise the Commission would be exempted from the obligation to prove the actual effects on the market of agreements which are in no way established to be, by their very nature, harmful to the proper functioning of normal competition”.

It seems almost as if the GC had asked to be quashed when writing in its Judgment in this case (para. 124) that “the concept of infringement by object should not be given a strict interpretation”. The ECJ sensibly lambasts this statement in para. 58 (admittedly, though, this may have been a problem of bad drafting on the part of the GC; read in context, the statement seems to have intended to refer to the fact that “object restrictions” are not limited to a closed list of “suspect” hardcore restrictions, which –had it been stated that way- would’ve made perfect sense; AG Wahl also seems to have observed this as evident from para. 67 of his Opinion).

This is not without importance, for the “object” category has arguably been expanded beyond the limits of its logic (remember Areeda’s quote?) not only by the European Commission, but arguably also by the ECJ itself in T-Mobile (see below) and, less visibly, but more excessively and perhaps more importantly, by national competition authorities (as AG Wahl also observed in para. 59 of his Opinion: “caution is all the more necessary because the analytical framework that the Court is led to identify will be imposed both on the Commission and on the national competition authorities, whose awareness and level of expertise vary”). For my previous comments in this regard –in relation to info exchanges- click here.

2) Until now, the ECJ had endorsed an arguably wide interpretation of the notion of restriction by object, placing however the emphasis on the need to conduct a proper 101(3) analysis in any event. This is what the Court has done since Matra, did recently in Pierre Fabre and, most obviously, in Glaxo Spain, although to no avail because –as you may not yet know- the Commission recently decided to drop this case because it allegedly lacks EU interest; this is after 14 years of proceedings, two Court Judgments, a declaration from the ECJ that dual pricing constitutes a restriction by object and also despite the ECJ’s mandate for the Institution to conduct a 101(3) assessment. No wonder they have tried to keep it under the radar… We’ll comment on this case in the future (Disclaimer: my firm represents the European Association of Euro-Pharmaceutical Companies, which has recently appealed the Commission’s decision to drop the case under a quite innovative legal reasoning]. Given the little practical impact of its previous stance and the slow death of Article 101(3), it seems reasonable for the Court to have decided to move beyond it.

3) AG Wahl had rightly observed in his Opinion, “the present case gives the Court another opportunity to refine its much debated case-law on the concept of restriction by object. Query: has the Judgment finally shed light on how to resolve the object/effect conundrum? As developed below, I’m afraid not much.

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Written by Alfonso Lamadrid

17 September 2014 at 6:02 pm

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