Chillin'Competition

Relaxing whilst doing Competition Law is not an Oxymoron

Archive for May 2010

I love Rock’n Roll

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This one is to rock music what W. Baumol is to painting.

Most of the readers of this blog know Greg Sidak, the famous AT lawyer and economist, co-editor of the Journal of Competition Law and Econ, who co-authored a range of excellent papers with my former boss Damien Geradin.

Despite my incredulity, it seems that Sidak is also a serious musician. See picture hereafter:

I believe the URL and content of the website tell it all : http://www.gregorysidakmusic.com/

A quote worth reading (Sidak mission’s statement on the website)

I want to show that rock music can be a medium capable of expressing powerful, consequential ideas and emotions beyond the simplistic sexual ones from which it (like the tango) rose into a much more complex art form“.

Written by Nicolas Petit

31 May 2010 at 5:22 am

Posted in Uncategorized

New GC Ruling – EMC v. Commission

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The General Court has recently released what looks like an interesting judgment in Case T‑432/05, EMC Development AB v. Commission, which concerns inter alia, standardization, and which reaffirms the Commission’s discretion when it comes to rejecting complaints.
I will try to go through the judgment tomorrow, and post something on it in the coming days.

Written by Nicolas Petit

28 May 2010 at 7:17 pm

Posted in Case-Law

Database

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Article 15(2) of Regulation 1/2003 requires Member States to forward to the Commission a copy of any written judgment of national Courts deciding on the application of  Articles 101 or 102 TFEU. These judgments must be sent “without delay after the full written judgment is notified to the parties”.

Since the entry into force of Regulation 1, the Commission has published a database of the judgments it has received from the Member States. A year ago, during the review of the functioning of Regulation 1, stakeholders have criticized the database, as “far from complete“. The Commission has itself acknowldedged that “overall, options for ensuring a more efficient and effective way of providing access to national court judgments should be contemplated” (§291 of Commission Staff Working Paper, Report on the functioning of Regulation 1/2003 {COM(2009)206 final}).

I checked the database today. “Far from complete” exhibits a flavour of euphemism. The most recent Belgian judgments in the database date back to 2007. In France, it seems Courts have not ruled on Articles 101 and 102 TFEU since 2008. In the UK, the Courts have not dealt with EU competition rules since 2005…

Very unsatisfactory, and probably one of the most blatant failures of Regulation 1. I thought I would just help in publishing here a judgment of 6 May 2010, handed down by the Brussels Court of Appeal in  a margin squeeze case. See below.

Arrêt Cour d’appel 6 mai 2010 Belgacom Mobile KPN

Written by Nicolas Petit

27 May 2010 at 10:01 pm

Posted in Case-Law

Competition Law on Trial

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Once in their lifetime, academics in Belgium must deliver a public lecture on their particular field of expertise. This event – which is known under the name “leçon inaugurale” – is attended by students, but also colleagues, members of the civil society, family, etc. Mine took place two months ago.  I attach below my speech (in French). It is entitled “competition law on trial“.

Le droit de la concurrence au banc des accusés – FINAL

Written by Nicolas Petit

26 May 2010 at 9:27 pm

Posted in Uncategorized

Competition Cassandras

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There is a popular mantra in modern EU competition law. Competition enforcement ought to be case-driven, and substantive guidance to firms shall stem from individual decisions. At last week’s GCLC Lunch Talk, D. Schnichels repeatedly said that to justify that – 18 months following a wide-ranging sector inquiry – the Commission had not yet provided guidance to pharma firms over a number of disputed practices. Cases are in the pipe-line, and guidance will come, soon or later.

This has numerous  shortcomings. First, until a final decision is adopted with respect to each and every practice,  firms are left in a sea of doubt. Some may believe that the practice is not covered by the EU competition rules until a case has been completed (under-fixing problem) . An obvious example is abuse of collective dominance. Other firms,  on the contrary, may be willing to comply, but cannot optimally observe the rules absent substantive guidance on the applicable principle.   An obvious example is patent settlements (reverse payments).

Second, with the influence of economic analysis, cases become increasingly market-specific. The methodology, theories of harm and reasoning enshrined in decisions is growingly topical. As a result, individual decisions have only little normative value.

Regulation 1 provides a solution to (part of) this problem:  under §38 of the Recital of the Regulation, the Commission may provide guidance to firms. To date, however, the Commission has been reluctant to issue such letters. The official reason for this lies in the alleged risk of reintroducing, through the backdoor, a notification procedure similar to the one that existed under Regulation 17/62. The unofficial, but more convincing, reason is that guidance letters generate less press exposure – and political returns – than negative decisions.

Anyway, contrary to the arguments invoked by some EU Commission Cassandras against guidance letters, the UK Office of Fair Trading just proved that  issuing a guidance letter is perfectly compatible with a system of ex post enforcement, and does not entail the resurection of ex ante notification.

(Image possibly subject to copyright: source here)


Written by Nicolas Petit

25 May 2010 at 10:02 pm

Admission of Guilt

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On Weds, the Commission adopted its first settlement decision in a cartel case. In a nutshell, the settlement procedure seeks to incentivize parties to cartel proceedings to admit early that they are guilty.

The procedure was introduced in 2008. It is based on Regulation (EC) No 622/2008 of 30 June 2008, which amended Regulation 773/2004. At the time, the procedure attracted much criticism, in particular because it allegedly forces firms to forfeit their right to judicial review (see paper by D. Waelbroeck et. al). Back in the day, I have published in Concurrences a chart which summarizes the procedure.

The ratio behind the procedure is plain simple: with leniency being a potential time-bomb in terms of workload, the Commission is adamant on achieving “procedural efficiencies” (sic). It thus tries to gain time in inducing parties to acknowledge their guilt. In turn, the Commission can reallocate scarce administrative resources to other – more demanding – investigations.

Importantly, this procedure is only likely to succeed if incentives for companies are right. On paper, the rewards for firms contemplating a settlement look attractive. In addition to the 10% potential discount on the fine, the limitation of the duration of proceedings leads companies to face lesser regulatory exposure over time, and management can return quickly to normal business. In addition, because “a sin confessed is a sin half pardoned“, companies may view new procedure as a means to exhibit repent, and minimize risks of follow-on proceedings.

Now the key question is whether the EU procedure is in practice workable, and delivers sufficient incentives to bring companies to the table of negotiation. On this, I have some doubts. The new system was introduced in June 2008. With this case – which started before this date – it took almost two years to the Commission to land its first settlement. On pure performance grounds, I do not view this as particularly efficient. The Commission implicitly confirms this in its press release, stating:

With experience and as the procedure applies to new cases, the Commission will deal with investigations more expediently

Written by Nicolas Petit

21 May 2010 at 9:50 am

Wonder What’s Next

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Then read the two presentations of D. Schnichels and J. Killick at today’s GCLC lunch talk. Great event. Surprisingly very few questions.

GCLC – Dominik Schnichels – 20 05 10

GCLC – James Killick – 20 05 10

Written by Nicolas Petit

20 May 2010 at 4:05 pm

Motto

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DG Comp has a slogan!

This appears now on top of DG Comp’s webpage, and if my recollections are correct, it was not there a year ago.

I made a quick search: this expression has been, and is still, used on many occasions by other Commissioners (consumer protection, internal market, etc.). “Making markets work better” has thus apparently became the grand, unifying goal of the Commission.

This motto sends a number of messages including subliminal ones:

  • Markets do not necessarily work optimally (no kidding…)
  • As far as DG Comp is concerned, an alternative suitable motto could have been “making markets competitive“. The fact that the motto does not refer to the concept of competition (or to a related concept) implicitly signals that DG Comp may seek to use competition rules to achieve goals not entirely related to competition.
  • The choice of the word “better” (rather than “optimally” for instance) arguably indicates that full, cut-throat competition on markets might not always be a desirable outcome, let alone an achievable outcome.
  • The choice of the word “Making” implicitly indicates that DG Comp believes it can manipulate pro-actively markets and steer them towards better outcomes. Again, this lends support to the view that the Commission does, and will, rely on the EU competition rules to regulate markets.

Written by Nicolas Petit

19 May 2010 at 11:36 am

Posted in Uncategorized

The Greek Gang

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This is not a post on Greece’s corrupt politicians.

There’s a bunch of promising competition scholars from Greece: Ioannis Kokkoris, Ioannis Liannos and Assimakis Komninos.

To frame their activities, they have built an organization called IMEDIPA. This organization will have its 4th annual conference in Cyprus in the next few days. The programme looks excellent and the fee is very affordable.

See link hereafter to the registration form.

IMEDIPA Cyprus

PS: we have a GCLC lunch talk on the follow up of the pharmaceutical sector inquiry on Thursday.

Written by Nicolas Petit

18 May 2010 at 10:54 am

Posted in Events

Predatory Pricing?

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In a move that many analysts view as an act of war, Microsoft will release a free version of its upcoming Office 2010 suite… This looks like good news for consumers.

Office has long been the “cash cow” of the Redmond giant. With a price now equal to 0, and possible foregone profits in the short run, the new Office suite may raise questions in terms of predatory pricing. This being said, Microsoft’s offer could also constitute a good illustration of so-called “penetration-pricing”, or of a “meeting competition” – read Google Docs – counter-strategy.

The bottom-line: Advising Microsoft on a daily basis must be really exhausting.

(Image possibly subject to copyright: source here)

Written by Nicolas Petit

17 May 2010 at 9:30 am