Archive for 2011
Some interesting and recent stuff
There has been some interesting stuff going on in the past few days that we haven´t been able to cover. Here’s a brief (and subjective) account of some recent antitrust related news:
– Bill Gates has been (and at the time of writing he may well still be) testifying in a Utah Court in the framework of a case initiated by Novell. Novell is arguing that Microsoft encouraged them to develop WordPerfect software for Windows, only to later withdraw its support because WordPerfect competed with other Microsoft products. Judge Motz, who is presiding over the case, has reportedly expressed skepticism that Novell’s claims have merit.
– Chinese authorities confirmed that there is currently an ongoing investigation concerning a possible abuse of dominance on the part of two State-owned companies (China Telecom Corp. and China Unicom). The antitrust branch within the NDRC is investigating whether these two companies -allegedly dominant in the market for broadband internet services- may have been charging their competitors higher fees for broadband access while offering favorable prices to non-competitors. This is to our knowledge the first high profile abuse of dominance investigation since the Antimonopoly Law was enacted in 2008. The fact that it is targeting two State owned companies makes it particularly interesting. We’ll be asking our “Chinese correspondent” to keep an eye open for any possible developments.
– Here´s one that I´m following with particular interest: NBA players hired the very well known antitrust lawyer David Boies to represent them in their battle against franchise owners that has led to the NBA lockout. The players have now filed two class action lawsuits (one in Minessota and one in California, which are considered to be favorable venues) asking for treble damages (that is, triple the amount of the more than $ 2 billion they would´ve made this season). The lawsuits argue that the lockout “constitutes an illegal group boycott, price-fixing agreement, and/or restraint of trade in violation of the Sherman Act” an hat the owners´ final offer for a new collective bargaining agreement would have “wiped out the competitive market for most NBA players”. (For our comments on the very similar NFL precedent see here).
– Giorgio Monti (Professor at the European University Institute in Florence and author of one of our favorite competition law textbooks) read our posts on Pierre Fabre and on the future of Article 101 and invited us to participate at a workshop in Fiesole on January 5th. Should be very interesting; we’ll give you more details in the coming days.
– Antitrust students at Berkeley have started their own Berkeley Global Antitrust Blog. Best of lucks to them!
-Finally, last week we received a couple of emails from readers that reveal that my co-blogger Nicolas is apparently becoming a celebrity. One reader told us about the fact that there is a Nicolas Petit street in Luxembourg, and another reader sent us a picture that shows that a young competition lawyer has a picture of Brad Pitt Nicolas above her desk (!)
See pic below for evidence. We´ll keep the identity of Nico´s fan secret in order to avoid any incidents with Ms. Petit ; )
The Rick Perry Syndrome
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“Oops“, the Commission did it again…
Yesterday, in the S&P case, the Commission again closed abuse of dominance proceedings with an Article 9 decision. As already explained, Article 9 decisions have become the conventional procedure in Article 102 TFEU cases.
What is less conventional is that the lion’s share of recent Article 102 TFEU cases involves exploitative abuse allegations. Think of Rambus, S&P, IBM – where the Commission dumped bundling allegations to focus on excessive pricing – and the recent Apple-Samsung investigation.
As a matter of principle, I see no wrong to this. But, this raises several interesting questions, which cast doubt on a number of commonly accepted viewpoints.
First, is there a Rick Perry problem at the Commission? I mean how could our Commission friends forget that the Guidance Paper states that exploitation cases are no enforcement priority?
Second, does the focus on exploitation means that those cases are easier to manage than exclusion cases, in particular under the effects based approach (where proof of anticompetitive foreclosure involves proof of exclusionary effects + proof of subsequent exploitation).
A final remark. Exploitation cases are conceptually close to constructive refusal to supply cases (see what the Commission says in IBM, §3), and thus can be also deemed exclusionary cases. But the crux of the matter is that all exploitation practices necessarily foreclose someone. From an economic standpoint, the deadweight loss of monopoly that arises out of price hikes is nothing but the foreclosure of customers. Hence my question: is the distinction between exploitation/exclusion really useful?
Forthcoming Events
A quick post to update our readers on forthcoming events:
- GCLC Evening Policy Talk on 1 December with B. Kovacic (former US FTC Commissioner);
- A set of three BSC seminars on the Law & Econ of Horizontal Cooperation Agreements (incl. recent developments) with M. Bennett (OFT), A. Lofaro (RBB Econ) and S. Völcker (WilmerHale);
- A half day conference on the future of Belgian Competition Law on 12 December (in the framework of the BSC);
- GCLC Lunch Talk on 8 December on the ECtHR Judgment in Menarini Diagnostics v. Italy (with M. Bronckers and C. Bellamy).
Boutique
On the market for antitrust economics consultancy, a bunch of solo practictioners have embraced the “boutique” business model:
- Some time ago, Juan Briones founded the firm e-Konomica (a strange name, true, for a field of business where free market economics are king);
- More recently, David Spector founded MAPP;
- And even more recently, Paul Höfer created AMC economics.
There’s no way, but the hard way
The Commission’s Draft Proposal for a New Regulation on Credit Rating Agencies (“CRAs”) is just out.
It enshrines a whole host of competition-related remedies (see text at the end of this post). Amongst the proposals on the table:
- A limitation of the duration of CRA-issuers business relationships to a maximum of 3 years (article 6b);
- Injunctions on outgoing CRAs to exchange information with incoming CRA (article 6b);
- A 10 years general ban on merger and acquisitions, that applies to CRAs holding a market share > 20% (article 6c);
- Remedies including fines, which bear intriguing resemblance to penalties for competition infringements.
The proposal however abandons the option of creating a publicly funded European rating agency, given “concerns relating to conflicts of interest and its credibility, especially if such CRA would rate sovereign debt”.
In light of this, a question springs to mind: if (i) the problems that plague the rating industry are competition related; and (ii) similar remedies can be ordered on the basis of the competition rules, why follow a cumbersome legislative approach, rather than using the good old, flexible Articles 101 and 102 TFEU?
The answer is relatively straightforward: the competition rules only kick in in the presence of a competition infringement in the form of an unlawful agreement or an abuse. To date, no such conduct has been reported in the ratings industry (that said, I have argued elsewhere that cooking an Article 101 or 102 TFEU case might not be that difficult).
Because all competition problems cannot be solved with the competition rules, there is thus a “gap” in the competition toolbox of the TFEU.
In some Member States, like the UK, this gap is filled with the possibility to launch “market investigations” and possibly order intrusive remedies where “any feature, or combination of features, of each relevant market prevents, restricts or distorts competition“.
It is certainly about time for the EU to enjoy similar powers. The sector inquiries found at Article 17 of Regulation 1/2003 only provide an imperfect substitute.
Otherwise, the EU might have no other choice but to follow the “hard way” with competition issues subject to political maneuvers of all sorts and endless, protracted negotiations (but true though, in Airbourne’s lyrics “there’s no way but the hard way“).
Draft_Regulation_CRAs_20111104 clean FINAL-1 (1)
11/11
Today is a day off in Belgium and France. A quick post though.
A group of Phd students from University College Dublin is organising a Postgraduate Workshop (in March 2012) on competition law enforcement.
Hereafter the link to the call for papers.
The Italian Way
A message of hope, for our Italian readers.
In Italy, competition experts face promising career prospects:
- Giulanio Amato, once Chairman of the Italian competition authority, twice held the position of Prime Minister – albeit for an ephemeral period;
- Mario Monti, once EU Commissioner for Competition is poised to become the next Italian Prime Minister.
Assorted links
- Wouter Wils has a new paper on recidivism. I understand it will appear in World Competition. A question: Does Wouter have an exclusive supply agreement with Kluwer?;
- At the GCLC we are DESPERATELY looking for a Commission official to come present the best practices on the conduct of proceedings in antitrust cases (101 and 102 TFEU) at a forthcoming lunch talk;
- I gave a presentation on standardisation agreements, IP and competition law. See link thereafter for the ppt. Droit des brevets et droit de la concurrence – Accords de normalisation A paper is in the making;
- A good New Yorker paper on why the current laudative discourse on small business is misguided;
- And a rumination/question: what makes it that in some markets, the supplier pays for distribution (publisher-search engines, airlines-travel agents), and in other markets, the supplier sells to distributors (consumer goods-supermarkets)?
On the EU and the sovereign debt crisis (because life isn’t just competition law)
We spend most of our time working on competition law matters – be it in academia or in private practice-, and we also spend part of our free time trying to look at competition law from a different angle on this blog. If we devote so much time to try to make sense –and sometimes fun- out of competition law it isn’t because we believe that competition law is more important than other stuff. For all its many virtues, it actually isn’t.
We started this because we thought there was something a bit different that could be done within our tiny and endogamic professional circle, and because we only feel comfortable speaking out loud about issues on which we feel we can add something coherent and hopefully useful (as you can imagine, writing every day what comes off the top of our heads without thorough reflection and in front of such an informed audience as you are means entails certain challenges and risk, notably the risk of making fools out of ourselves). In other words, we do this because we thought there was something meaningful –if only a tiny bit- that we could add to the area in which our professional lives are focused.
But even though our economist friends could argue that we are rationally choosing to exploit our competitive advantage, we can’t help thinking sometimes that maybe our priorities are somehow skewed. One example: while EU leaders were holding crucial talks in Brussels–just a few meters away from my office- on October 27th and 28th, we were writing here about the names of partners at an American firm as well as about the “slow death of Article 101(3)”. Wouldn’t it have made much sense for us to write about the slow death of the European project?
We are just as politics geeks and fervent EU supporters as we are competition law geeks; the difference is that we feel, or rather know, that you wouldn’t give a damn about our personal views on general issues on which our opinion is not different from anybody else’s; that’s why we’ve only gone off track on very rare occasions. There are times however where we feel that we have to give vent to some non-competition related thoughts.
There are some things we simply can’t understand. We don’t have solutions and are not going to fix the world, but since we need to let some steam off, we thought we’d use this platform.
If interested in knowing what we can’t understand, keep on reading. If not, we’ll be back tomorrow with the usual stuff, and apologies for going off-track.
28th Annual AmCham EU Competition Conference
Next Wednesday (November 9), the American Chamber of Commerce to the European Union will be holding a most interesting conference in Brussels.
This event may have gone unnoticed for some of you, but we think it´s interesting enough to bring it to your attention (it´s also good way for us to show that we don´t discriminate the links displayed on our blog in favor of our own events…).
The AmCham Conference will feature one panel on the role of EU Courts, one on fining policies, and one on procedural rights. The line up of speakers is also impressive (and includes some friends and readers of this blog). For more details, the program is available here.
Those interested in registering can still do so via this link.
Chillin'Competition 