Chillin'Competition

Relaxing whilst doing Competition Law is not an Oxymoron

Archive for September 26th, 2011

Leverage

with 3 comments

The term “leverage” is commonly used in antitrust law to refer to practices whereby a firm with market power exerts such power with a view to stretching it to a related market.

It seems that not only dominant firms may engage in such behavior. Last week gave us a couple of real-life examples of instances in which competition authorities may, perhaps, have also engaged in leverage:

This is the first one: “Commission market tests IBM’s commitments on mainframe maintenance and closes separate case into alleged unlawful tying“.  The European Commission has been tough on IBM, and, in the end, it has been able to secure very significant commitments from it. Whether the Commission has or not used the “threat” of continuing the tying investigaton as a bargaining tool is unknown, but I would tend to imagine that, at the very least, this is a factor that was in the minds of all sitting at the negotiating table (particularly when the Commission always has the winning hand when it comes to Art. 102 cases). We are aware of the fact that the Commission denies that commitments are “voluntary” and that the process leading to their adoption does not imply any negotiation, but as we´ve stated before also with regard to settlements, such denial is reminiscent of one of Magristte´s best known works:

(By the way, did you know that this image was used at the oral hearing of the Compagie Maritime Belge case? We´ll tell that story some other time..).

The second example of leveraging on the part of competition authorities comes from the US, is much more obvious, and was reported also last week by the Financial Times: “US accused of unfair antitrust tactic“. In a nutshell, the US DOJ is said to be resorting to immigration law with a view to obtaining guilty pleas from foreign businessmen. Views with respect to the legitimacy of this strategy are mixed; what´s yours?

Written by Alfonso Lamadrid

26 September 2011 at 11:38 pm