Chillin'Competition

Relaxing whilst doing Competition Law is not an Oxymoron

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

3 Responses

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  1. Dear Alfonso:

    This is thought provoking stuff, but I would confess to being a little puzzled at the FT piece’s suggestion that the DoJ’s “tactics” are “unfair”.

    If I understand the complaint correctly, defense lawyers consider it unfair that the DoJ offers exemptions on travel restrictions in return for guilty pleas, but what would they prefer? That there was no such offer in the plea negotiation?

    The impression given is that the defense lawyers consider the travel restrictions inherently unfair since other jurisdictions and enforcement systems don’t have them, but that to me also seems to miss the point. Unless I am greatly mistaken, the alternative to a plea bargain is to fight your case in a court – and take the risk of sanctions far worse than travel restrictions.

    In short, I just don’t see how this particular bargaining chip renders the bargaining process unfair, but perhaps I am missing something.

    Cheers,

    Andrew

    Andrew Ward

    1 October 2011 at 4:35 pm

  2. Dear Andrew:

    I couldn´t agree more, and I´m equally puzzled at the FT´s piece as well as at people´s reactions to it. In addition to what you´re saying, I frankly can´t picture any executive pleading guilty and accepting a jail sentence only to be able to travel to the US.

    Cheers

    Alfonso

    Alfonso Lamadrid

    10 October 2011 at 12:02 pm

  3. Dear Alfonso:
    I completely agree with your agreement – and I think the blog is great – keep up the good work!
    Andrew

    Andrew Ward

    10 October 2011 at 3:25 pm


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