Chillin'Competition

Relaxing whilst doing Competition Law is not an Oxymoron

Archive for February 2010

Basic but Tricky Econ. Question

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Question: A survey shows that on average 100 people go to the movies when the price is $6 and 300 people go when the price is $9.  Does this violate the laws of supply and demand?

Any idea?

Written by Nicolas Petit

25 February 2010 at 7:00 am

Posted in Uncategorized

No surprises

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Three complaints have been logdged before the EU Commission against Google. The complaints have been introduced by British price comparison website Foundem, French legal search engine ejustice.fr, and –  guess who ciao.de, a Microsoft subsidiary. Frankly speaking, this is everything but surprising.

First, given the mounting degree of antitrust exposure faced by Google in Europe, and elsewhere in the world (think of the GBS in the US), it was just a matter of time for DG COMP to at least scrutinize Google’s conduct. Now, the many press announcements made in this respect shall be toned down a little. If I understand correctly, the Commission has not, as reported by several journalists, “opened a probe”, but simply announced that it will review the complaints. A Commission official is quoted to have said: “The Commission can confirm that it has received three complaints against Google which it is examining. The Commission has not opened a formal investigation for the time being,

Second, on legal grounds, the fact that Google’s conduct is challenged for a violation of abuse of dominance rules is also unsurprising. It is reported that Google would “unfairly” rank competing websites on its search engine. Whilst I have no particular information on this, I suspect the complaints to describe Google as an operator holding an essential search facility (a disputable argument actually). In turn, the systematic down-ranking of competitors could arguably involve, such as in the case of a physical infrastructure, something akin to a constructive refusal to supply, which squeezes rivals from the market. I would really love to see how the complaints are structured.  There might also be issues of unlawful discrimination against competing websites (Article 102 c)).

The good news from Google: it can draw upon, and recycle, a lot of the Microsoft-related antitrust literature on dynamic efficiencies, software integration, refusals to deal, etc. Quite paradoxically, Google and Microsoft may well be foes on the commercial front, but as far as legal argumentation is concerned, they have a lot to share.

(Image possibly subject to copyrights: source here)

Written by Nicolas Petit

24 February 2010 at 12:55 pm

Implications of the TFEU on EU Competition Law

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Just published in the February Antitrust Chronicle with my Assistant Norman Neyrinck.

Writing this paper involved a lenghty reading of the new Treaties. A lot has changed, and I now believe that all EU lawyers, including competition lawyers, should devote some time to reading them too.  The provisions on judicial remedies and the Court of Justice are particularly interesting.

Written by Nicolas Petit

23 February 2010 at 3:53 am

Posted in Our Publications

Making the buzz

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Still to be confirmed from official channels, but rumour has it that Marc Van der Woude will be appointed as the next Dutch judge to the General Court. Marc is a lawyer at Stibbe (a big Dutch-Belgian law firm) and Professor at the University of Rotterdam. He is well-known for his competition law handbook, as well as for his work on the energy sector. A nice pick from the Dutch government.

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Written by Nicolas Petit

22 February 2010 at 8:17 am

News from the Front

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Monday’s Concurrences conference at the national Parliament in Paris was great, just great. With this event and the ongoing OECD gathering, Paris this week was clearly the world’s antitrust law capital. I was particularly impressed by the speeches of J. Padilla (on behavioral economics) and B. Kovacic (on the assessment of agencies’ performance).

I wish to congratulate here Nicolas Charbit, Prof. Laurence Idot and Frederic Jenny who have made a great job organizing this event. I never went to Fordham’s Annual antitrust gathering, but from what I hear, the Concurrences event – which will take place on a yearly basis – is likely to be a strong contender in the coming years.

On a related issue: straight after J. Almunia’s first speech as the new Commissioner for competition, James Kanter from the International Herald Tribune asked me what my impressions were. See here for more.

I have been away for a few days. Regular posting activity on this blog will resume early next week.

(Image possibly subject to copyrights: source here)

Written by Nicolas Petit

19 February 2010 at 11:31 am

Slides – Conference on the Google Book Settlement

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I post below the slides of our conference on the Google Book Settlement. It was a very good, stimulating, event.  I wish to thank again all the speakers, in particular J. Grimmelmann who flew from NY to attend, and P. Samuelson, who accepted to speak at 6.00 am, California time.

Like I said at the conference, the GBS is a textbook example of an issue that, under competition standards, may warrant regulatory intervention: (i) intricate pricing issues; (ii) enormous fixed costs and unmatchable incumbency advantages; (iii) universal service – and other policy-related – issues (availability to users inside and outside the US, privacy, risks of disruption of service, censorship, etc.). Too early to tell, but in the future, Google’s digital library may exhibit the features of a good old essential facility.

Slides A Strowel – The GBS – A True Digital Library

Slides H Muller – The view of IFLA on the GBS

Slides I Forrester – GBS – A Good Thing or a Bad Thing

Slides J Grimmelmann – Perspectives on the Settlement

Slides P Samuelson – How Fair is the GBS

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Written by Nicolas Petit

16 February 2010 at 12:48 pm

Posted in Events

Anticompetitive partiality?

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We have all heard people complaining about how a case turned out in a particular way due to the special relationship that the contrary party had with the decision maker (be it a judge or an administrative agency), but I suspect that categorizing that as an anticompetitive practice hadn’t crossed the minds of many of us.

Apparently it did occur to someone that fostering a good relationship with judges could amount to an anticompetitive practice. The Spanish Audiencia Nacional has issued a Judgment upholding a decision issued by the CNC in 2006 which shelved a complaint alleging that a Bar Association infringed the competition rules by paying judges to intervene at conferences and seminars organized by the Bar. The complainant argued that those judges could eventually be called upon to decide on cases on which the Bar itself or the members of its Board might be interested parties.

The legal basis for the complaint was a provision in the former Spanish Competition Act which targeted acts of unfair competition that significantly distort competition and therefore affect the public interest (the current Act retains a similar but amended provision). The alleged act of unfair competition is envisaged in Article 15 of the Unfair Competition Act, which provides that it is deemed unfair to obtain benefits from a significant competitive advantage obtained by illegal means.

The complainants firstly alleged that the retribution perceived by judges in exchange for their attendance to a given conference could compromise their impartiality. With respect to this claim, the Court responds that judicial activity is not an economic activity carried out in the market, and therefore cannot be reviewed in the light of the Competition Act.

Secondly, it was argued that the practice could have an affect on the market for legal services in as much as the attendance of judges to such conferences could create an impression upon clients that a particular lawyer is more trustworthy because of his ability to have built a relationship with judges over the course of those events.

The Judgment also rejects this second contention stating that in order for such practice to affect competition it would be necessary that (i) potential clients had a very extensive knowledge of the particular relationships between specific lawyers and judges; and (ii) the cases affecting those clients would fall under the jurisdiction of the said judges. The Court underlined that the parties had not put forward any evidence showing that such information existed on the market, nor had they provided examples of particular cases.

I certainly would never support applying competition law to this sort of conduct, and therefore believe that the Judgment is a sensible exercise of common sense. In fact, I would encourage fostering as much interaction as possible between enforcers and lawyers. It is a healthy way of exchanging viewpoints which can be enrichening for all: lawyers can convey their concerns to enforcers, and the latter are able to receive feedback and have the opportunity to publicly explain and debate their views without the constraints posed by formal acts. In this sense, enhancing communication results in benefits to the functioning of the system. In addition, I very much doubt that in most instances an enforcer’s independency could be undermined because of their attendance to a conference or seminar.

Nonetheless, reading the Judgment I couldn’t help wondering whether some aspects of the reasoning put forward by the Audiencia Nacional are truly applicable to the little and idiosyncratic world of competition law to the same extent as they are to other areas. Don’t get me wrong; it’s not that I believe there’s anything wrong with how things are done in our field; my point is that the Judgment’s reasoning departs from an assumption regarding legal markets that highlights the difference of niche areas of practice, and particularly of ours:

Competition is surely one of the areas of law practice where there is a greater interaction between enforcers, lawyers, economists, academics, and even clients. It is a somehow narrow and certainly specialized area, and its enforcement has traditionally been entrusted to specific authorities located in a handful of cities (most relevant EU Competition law cases are still dealt with in Brussels).

All those factors mean that not only are we relatively few people working on these issues (which explains the astonishing cult of personality that exists here in comparison to other areas of law), but also that enforcers and lawyers or economists on the other side of the table are in constant interaction: many are friends or have very similar backgrounds: some have probably studied together, some others have worked together, and in many instances people’s lives take place in the same communities.

In this context, it is not rare for lawyers and officials to write books or articles jointly, and it is all the more common to attend conferences or seminars together. Accordingly, contrary to what the Audiencia Nacional assumes to be standard market circumstances, in our field many potential clients do have a “very extensive knowledge of the particular relationships between specific lawyers and judges”, and “the cases affecting those clients would fall under the jurisdiction of the said authorities”.

Does this affect the perception clients have of their lawyers? Sure it might, and in fact it’s one of the main marketing tools for some law firms. Does this mean that fostering interaction with judges or competition authorities is an anticompetitive practice? Surely not, but because of different reasons to those stated in the Judgment above. Is it unethical or morally/professionally reprehensible? Not at all provided that deontological boundaries are effectively respected and appear to be respected (Caesar’s wife must be above suspicion). Should lawyers ‘sell’ clients their good relationships with enforcers? I don’t see the problem provided that it is done prudently: a lawyer may sell the fact that he’s respected in the legal community since clients will surely appreciate having a lawyer perceived as trustworthy by people on the other side of the table, but it could be imprudent on the part of the lawyer to imply more than that, and naive on the part of the client to think that an enforcer might adopt a different stance towards matters defended by lawyers with whom they have a closer relationship. One can understand suspicions on the part of contrary parties, but at the end of the day, it all comes down to having a little more faith on the enforcers.

(Image possibly subject to copyrights: source here)

Written by Alfonso Lamadrid

11 February 2010 at 8:14 pm

Posted in Guest bloggers