Chillin'Competition

In MyTravel vs. Commission, the CFI provides a good account of the past decisional process within DG COMP.

In the late days of the Commission’s administrative review of the Airtours/FirstChoice transaction, Airtours (now MyTravel) submitted a new commitments proposal to the Merger Task Force (“MTF”). The CFI’s  MyTravel vs. Commission ruling contains evidence that the MTF had prepared a briefing note for the competition Commissioner entitled “defensive points“. The purpose of this note was to debunk the late remedy proposal submitted by Airtours. Here is the relevant § of the CFI’s ruling:

“§114: a note setting out lines to take headed ‘Defensive Points – Offer of Undertakings’ prepared by the MTF for the attention of the Member of the Commission responsible for competition matters intended to enable him to put forward arguments relating in particular to the assessment of the substance of the commitments submitted on 15 September 1999“.

From a legal standpoint, the harsh title of this briefing note is quite surprising. Pursuant to the Merger Regulation, the Commission is supposed to objectively assess whether the proposed commitments will remove competition concerns, not to defend itself against a proposed remedy package.

In reality, this kind of vindicative language illustrates the unnamed adversarial nature of merger proceedings in the days of the MTF. In the Airtours case, which led subsequently to the harsh, notorious, annulment of the Commission’s decision by the CFI, it seems that the Commission had a preferred, pre-determined, bias position against the proposed merger, which it thus sought to “defend”. Since then, the MTF has been dissolved.

On a related issue: I was not aware that the Airtours saga had given rise to litigation before the CFI and ECJ in relation to the access of private parties to some of the Commission’s internal documents. Following the Airtours judgment, the Commission apparently established a working group comprising officials of the DG COMP and the legal service in order to consider whether it was appropriate to bring an appeal against that judgment and to assess the implications of that judgment on the procedures for the control of concentrations or in other areas. MyTravel sought to obtain access to the documents of this working group as well as other documents. The Commission decided to grant access to several of those documents, but refused to grant access to others (or to certain parts of the requested documents). The Commission’s decisions were challenged before the CFI, which annuled them in part only (T-403/05). This ruling is now being challenged before the ECJ (C-506/08 P).

(Image possibly subject to copyrights. Source here)

Not unlike excessive or discriminatory pricing claims, complainants purporting to lodge allegations of abuse of collective dominance face a tough job to convince the Commission to start proceedings.

In a 2005 case that went largely unnoticed (the EMC/European Cement Producers Decision), the Commission held that mere allegations that some firms belong to an association of undertaking and participate to meetings do not, in and of themselves, establish the existence of  “links” within the meaning of the traditional collective dominance case-law (CMB, TACA, and other cases).

“§120: EMC failed to provide substantiated evidence relating to the circumstances in which the Portland cement producers collectively hold a dominant position. Indeed, EMC has not given any indication of the existence of any link or factors which give raise to a connection between the European cement producers. The mere fact that Portland cement producers are members of Cembureau and that their representatives take part in meetings of the Technical Committee of CEN is not sufficient in order to prove the existence of a collective dominant position”

“§44: In the case of collective dominance the undertakings concerned must, from an economic point of view, present themselves or act together on a particular market as a collective entity.

§45: In order to establish the existence of such a collective entity on the market, it is necessary to examine the factors that give rise to a connection between the undertakings concerned. Such factors may flow from the nature and terms of an agreement between the undertakings in question or from the way in which it is implemented, provided that the agreement leads the undertakings in question to present themselves or act together as a collective entity. This may, for instance, be the case if undertakings have concluded cooperation agreements that lead them to coordinate their conduct on the market. It may also be the case if ownership interests and other links in law lead the undertakings concerned to co-ordinate.

The key explanatory factor for this is arguably that the Commission does not want to uphold Article 82 EC allegations as a surrogate for unproven cartel behaviour. In this case, the parties were primarily seeking to establish an Article 81 EC violation and, only ancillarily, had invoked Article 82 EC.

This decision should thus be interpreted as another illustration of the Commission’s reluctance to act upon abuse of collective dominance complaints (to be read also in conjunction with the Laurent Piau case and the Commission’s Guidance Communication on Article 82 EC which leaves collective dominance outside of its enforcement priorities).

(Wikipedia Image. Possibly subject to copyrights. Source here)