Chillin'Competition

Relaxing whilst doing Competition Law is not an Oxymoron

Archive for November 2010

Ruminations on Market Definition in Merger Cases

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A thought to share:

In going through the RyanAir/AerLingus and Iberia/Vueling/Clickair cases – and following a discussion with David Hull yesterday –  I have increased difficulties with the idea  that low cost companies and flag carriers operate on the same relevant market.

Intuitively, I am prone to think that the demand served by low costs companies and flag carriers comprises several groups of customers, with different elasticities. In particular,  low costs carriers likely face a bunch of captive customers, which would never switch to a flag carrier. In the same vein, flag carriers probably face a share of captive demand, which would never switch to a low cost carrier.  I may be wrong out of sufficient technical knowledge, but it seems possible to argue that we have two distinct product markets (which, as the case may be, possibly exercise a competitive constraint on each other). My intuition is further confirmed by the fact that the features of low cost and flag carrier services are very different.

If I find time I’ll try to go through the decisions again, which might conceal the answer to this.

Written by Nicolas Petit

30 November 2010 at 7:33 pm

Posted in Uncategorized

Save the Date – Best Conference ever on Belgian Competition Law

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I have just finalized the programme of a major conference on Belgian Competition Law. This conference will take place on  11, 18 and 24 February, respectively in Liege, Charleroi and Brussels.

The purpose of the event is to provide an exhaustive overview of the first years of enforcement under the Belgian competition law passed in 2006.

To benefit from fresh input, I have applied the “below 40” rule. Most of the speakers are young practitioners. Hereafter, an overview of the programme:

  • Le droit belge des ententes et de l’abus de position dominante, Damien Gérard (U.C.L.)
  • Le droit belge des concentrations, Marc Abenhaïm (Van Bael & Bellis)
  • Le droit processuel de la concurrence, Xavier Taton (U.L.B., Linklaters) et Joachim Marchandise (Linklaters)
  • L’application du droit belge de la concurrence dans les secteurs libéralisés, Laurent de Muyter (Jones Day et U.Lg.)
  • Le point de vue de l’autorité de contrôle, Laura Parret, Présidente de chambre au Conseil de la concurrence

Looks like we are going to have a lot of fun. A book will be given to registered participants on the day of the event. An official programme and a registration form will be posted here shortly.

Written by Nicolas Petit

29 November 2010 at 7:49 pm

Posted in Events

Single Market and Competition Policy

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In past decades, the Commission repeatedly insisted on the importance of competition policy for the purposes of achieving the Single Market.

A few weeks ago, the Commission adopted a Communication entitled “Towards a Single Market Act – For a highly competitive social market economy“. Quite strikingly, the word “competition” appears only 9 times in this document.

Of course, this document is not competition law related. Yet, it seems to place only little emphasis on competition in general, not to talk of competition policy. This ought to be contrasted with the earlier Report of Mario Monti which referred 69 times to competition, and pleaded amongst other things in favour of:

a new approach to industrial policy which builds on a mutually reinforcing relation with single market and competition rules“.

As a matter of fact, the concept of competition seems primarily quoted in relation to the international competition faced by EU businesses, and the need to foster the competitiveness of European firms.

A little disappointing.

Btw: Mario Monti’s report has gone relatively unnoticed in the competition law community, and this is extremely unfortunate.

Written by Nicolas Petit

26 November 2010 at 8:48 pm

Posted in Uncategorized

The beginning of an enforcement paradigm?

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As noticed yesterday by Nicolas, the Commission´s stance with regards to 102 TFEU cases has certainly evolved under Almunia, in the sense that the Commission is nowadays more cautious in pursuing cases where it may lack sufficiently convincing evidence. Nico referred to this as “the end of an enforcement paradigm”.

However, it seems like this approach could be confined to cases related to alleged abusive conduct.  The reason: rumor has it that the Commission may be thinking about initiating  a “test case”, in which it would attempt to prove a cartel by virtue of economic evidence. The Chief Economist and its team would be playing a major role in the case. Could this be the beginning of an enforcement paradigm?

Such approach is certainly not  unheard of (it was in fact trendy in the 70s given the influence of the Chicago School), but managing to prove a cartel by resorting exclusively to economic analysis is far from being a piece of cake. Discussions on the possibility to follow this path have previously been held, for instance, within the framework of the OECD  (a policy brief is available here). In the course of those discussions, the Commission acknowledged that its “past experience has shown that it is very difficult to base a decision imposing fines on undertakings relying exclusively or in a large  extent on economic evidence” (see here).

If the opening of such case were to be confirmed, it could be a clear indicator of the fact that the Commission´s self-confidence is not at all at its lowest.  Whereas I acknowledge that economics could possibly play a greater role regarding the detection of cartels (an interesting presentation by DG Comp´s staff on this issue is available here), I´m somehow more skeptical in relation to the sufficiency of economic evidence to prove their existence.

It´ll be interesting to see whether this rumour actually turns into a reality or not. And in case it does, would the Court be prepared to undertake a proper review of the Commission´s economic assessment in such a case?

PS. For anyone interested on these matters I recommend a brilliant article by G. Werden: “Economic Evidence on the Existence of Collusion: Reconciling Antitrust Law with Oligopoly Theory”, 71 Antitrust Law Journal 719 (2004).

Written by Alfonso Lamadrid

25 November 2010 at 5:15 pm

The End of an Enforcement Paradigm?

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In going through Damien Neven’s latest paper entitled “Economics at DG COMP” (with M. de La Mano, see link hereafter), it seems now clear that the tough, negative enforcement paradigm that prevailed under Aricle 102 TFEU in the Kroes years is over.

In recent years, the Commission has dumped several cases for lack of convincing evidence. The Qualcomm excessive pricing case and the Velux rebates case  provide good illustrations of this.

In other cases, the Commission has renounced to follow a hard line, and negotiated a settlement with the parties.  Rambus and Microsoft II (Browser) are the main cases here.

The tone of the new Almunia administration is far less agressive, and it seems that the adoption of prohibition decisions is no longer an enforcement priority. Interestingly, and contrary to what was argued by the former senior staff at the Commission, cases like Port of Helsingborg (rejection of complaints re. excessive and discriminatory pricing ) bring almost as much guidance as prohibition decisions.

The only area where I disagree with D. Neven and M. de La Mano’s paper is judicial review. The authors seem to consider that the General Court is ready to undertake serious economic assessments. The thing is, Judge Wahl told us the contrary a month ago at the GCLC annual conference. Plus this may be true in the area of merger control (Ryan Air v. Commission, and before Airtours, Tetra Laval, etc.), but is certainly less obious in other areas (Article 102 TFEU).

Neven & de la Mano 2010

Written by Nicolas Petit

24 November 2010 at 4:33 pm

Posted in Case-Law

A day in my (professional) life

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Not much to report today, so here’s a full account of my day (I admit this is of limited interest for our readers, but (i) I have little inspiration today, and (ii) it will at least prove that some academics do work).

5.00 am: wake up call.

6.00 am-10.30 am : draft a paper on the new EU framework on vertical restraints (which I co-write with my friend and colleague David Henry).

10.30 am-11.00 am: answer to emails and call with my secretary at university.

11.00 am-11.45 am: read a paper on trademarks and antitrust law.

12.30 am-2.30 pm: lunch with JJ Evrard, re. possible conference on trademarks and antitrust law in early March.

2.45 pm-3.30 pm: answer to emails.

3.30 pm-5.00 pm: review outline of Elise Provost doctoral thesis.

5.00 pm-5.30 pm: call with Elise.

5.30 pm-6.30 pm: prepare annual meeting of the GCLC scientific council.

7.00 pm-10.00 pm: annual meeting of the GCLC scientific council.

10.30 pm : s***t, I forgot to post shting on the blog…

Probably less than most private practitioners, but still a pretty busy day after all.

PS1: the dominant OS for PCs turned 25 a few days ago.

PS: We still have a few seats for tomorrow’s Evening Policy Talk with D. Neven. Please drop me a line if you want to participate.


Written by Nicolas Petit

22 November 2010 at 11:51 pm

Posted in Uncategorized

An Antitrust Challenge to God

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Almost 9 years ago a U.S. district judge issued a divesture order that, to my knowledge,  has not yet been executed. As reported by The Onion, District Judge Elliot Schofield ordered God to break up into smaller deities arguing that HE had “willfully and actively thwarted competition from other deities and demigods, promoting His worship with such unfair scare tactics as threatening non-believers with eternal damnation (…) In the process, He has carved out for Himself an illegal monotheopoly.”

For more info on this case see here http://www.theonion.com/articles/judge-orders-god-to-break-up-into-smaller-deities,404/

It is not the first time that God faces a trial in the US. Some time ago a State Senator from Nebraska lodged a suit againts God arguing that he was responsible for a wide array of catastrophes. You can read the actual suit here, it´s hilarious. http://www.wired.com/images_blogs/threatlevel/files/chambersversusgod.pdf

But legal threats not only come from the States. Within the EU an earthly subsidiary of the ABOVE-mentioned was also sanctioned for abusing its dominant position in the market for funeral services. See here http://www.concurrences.com/abstract_bulletin_web.php3?id_article=520

Strikingly, no one seems to have considered the possibility of challenging God under Article 106. Pursuant to the “automatic abuse” doctrine stated in Hofner-Elser it could be argued that God has attributed himself exclusive rights and is manifestly unable to satisfy demand or prevent catastrophes. 

Moreover, and according to Stephen Hawking´s new book that posits that God is not necessary to explain the creation, the conditions laid down in Article 106(2) would not be satisfied! http://www.usatoday.com/tech/science/columnist/vergano/2010-09-06-hawking-book_N.htm

Written by Alfonso Lamadrid

19 November 2010 at 1:43 pm

Posted in Guest bloggers, Jokes