Archive for January 2012
Strike Party
A non competition related post.
Yesterday, Belgium was on strike (and so was lazy Alfonso, who did not post on the blog).
Guess what, this was a Monday. That is the day after Sunday, which itself is the day after Saturday.
Intriguing. I cant help but thinking that strikes are often a far cry from their purpose, i.e. genuine social protest, and in turn that they are a convenient means to make week-ends longer (or earlier).
The low turnout in the streets yesterday actually confirms this (in particular when the temperature comes close to 0°C).
I made a quick and dirty research on strikes in Belgium over 2011:
- The 4 March general strike took place on…. a Friday
- The 13 May strike in railways took place on … a Friday
I’d be interested to see a more comprehensive body of evidence, but my gut feeling is that there are many other examples.
The next question, obviously, is, how to handle this? After all, in several Member States the freedom to strike is protected by the law.
My take: maintain the freedom to strike, but prohibit 1-day strikes on Fridays and Mondays.
Our very own disclaimer
After reading the post written by Nicolas on Friday, I realized that we need a disclaimer too. Here it is:
The views reflected in our posts do not necessarily represent the views of Chilling Competition or of its authors. They merely reflect the thoughts that crossed our minds at the exact date and time that appears under each post. Those thoughts may actually be radically opposite to the ones that crossed our minds on the following second.
– If anyone feels offended or dislikes any of our posts, then we suggest that you assume that our opinion has evolved since the date of publication and that we have embraced more reasonable opinions.
– If, on the other hand, you like what we say, we recommend that you assume that since our opinions were sound, we will not have felt the need to change them.
Disclaimer
We have already talked of the Commission’s somewhat confusing disclaimers in official documents.
Think of §3 of the Guidance Communication on exclusionary abuses under Article 102 TFEU : “This document is not intended to constitute a statement of the law”
Or of the good old “The opinions expressed in this document are those of the author and do not represent the views of the European Commission nor of its services“.
Antitrust lawyers often make jokes about the Commission for those disclaimers. But should they?
During the consultation process on the settlement notice, a famous law firm inserted this courageous, delicious footnote in its position paper:
“These comments do not represent the views of the Firm or of its clients.”
So whose views are these? Please help me, because I am lost.
I am even more puzzled given that a few lines above, the same document explicitly mentioned that:
“These comments are offered by the Brussels office of __ & __ LLP in response to the Commission’s invitation to comment.”
Given our track record on this blog, we cannot be suspected of trying to stigmatize this particular law firm. We have very good friends there and they are all stellar professionals.
This is just to show that no one’s perfect in this business, and that it is quite easy to make fun of those who make fun.
PS: Thanks to my assistant N. Neyrinck for the pointer.
PS2: In a paper written with my esteemed colleague Miguel Rato (Shearman & Sterling), we stressed that regardless of those disclaimers, oral statements may to some extent limit the enforcement discretion of the Commission and, as a result, be relied upon by affected parties to challenge a formal Commission decision. In Case T-25/99, Roberts and Roberts v. Commission, the GC for instance reviewed the substance of a public speech given by a Commission official on specific aspects of the application of competition law to pub contracts (§§128-129).
PS3: Picture taken from a very good LP, if you do like post grunge music.
And the answer is….
Las Siete Partidas, passed by Alfonso X, El Sabio (1265) [Alfonso “The Wise”].
Congrats to Tatiana Siakka, David Mamane, Andrey, and Lorenzo Climenti! (Nico: you can afford 4 beers, right?)
Here is an explanation extracted from their answers:
Title 7 within Law 2 of the Fifth Partida, entitled “Of the shortages and bids that merchants create between themselves through oats and guilds” was the legal provision prohibiting traders from engaging in price-fixing and output restriction.
The Code was elaborated in Spain (Castile), but it was in force in Latin America until the modern codification movement (1822–1916). Until the beginning of the 19th century, they were even in effect in the parts of the United States, such as Louisiana, California or Nevada, that had previously belonged to the Spanish empire and used civil law. Furthermore, they served as the legal foundation for the formation of the governing juntas that were established in both Spain and Spanish America after the imprisonment of King Fernando VII during the Peninsular War.
Below you will find a scanned version of the relevant part by courtesy of José Luis Buendía.
[The text appears in Spanish and Latin. Since the short bios available at Brussels-based law firms suggest that all competition lawyers are fluent in practically every language, we trust that many of you will be able to understand it 😉 ]
P.S. Could someone please edit wikipedia´s entry for History of Competition Law?
A (kinda tricky) quizz
If we asked you what was the first antitrust legislation ever in force in part of the territory of what is now the United States you would probably respond that it was the Sherman Act.
This answers is wrong.
What then was the first antitrust law ever in force in America??
We can give you two hints: (i) it was drafted in the 13th century; (ii) the person who promoted its drafting is one of the 23 lawmakers depicted in the marble bas-reliefs of the House of Representatives chamber of the United States Capitol.
Our quizz will be open for 24 hours. You can submit your answers either as comments to this post (they won´t be made public until tomorrow) or via email to alfonso.lamadrid@garrigues.com (I anticipate that I won´t be able to reply; actually, the reason why we´re posting a quizz is because these are busy -and fun- times at work).
Those who get the answer right are entitled to a free beer.
P.S. Since, as you know, “free” products are rarely ever free, the beer will be paid by Nicolas, who doesn´t yet know about it 😉
Chinese Antitrust Law – The Year of the Rabbit in Review (1)
The Year of the Rabbit is over, and the Year of the Dragon just started today in China. This is thus a good moment to look at the rabbit in the rearview mirror, and reflect on what has been achieved in Chinese antitrust over the past year. Our colleague and friend Adrian Emch from Hogan Lovells Beijing has proposed us a series of posts on the Year of the antitrust Rabbit. If time allows, Adrian has promised a “trilogy!”
For this first post, let’s just review the main developments in Chinese antitrust law over the year of the rabbit (the description is not meant to be exhaustive)? The year started with a bang: on 1 February 2011, a total of five new regulations implementing the Anti-Monopoly Law came into effect. Two of them were released by the National Development and Reform Commission (NDRC), and three of them issued by the State Administration for Industry and Commerce (SAIC). (For in-depth analyses of these regulations, see here.)
Besides this, and focusing on case-work, here’s a flavor of what Chinese agencies and Courts have been busy working on.
NDRC. As already reported, one of the highlights in NDRC’s activities was the Unilever decision in May. In November, NDRC also adopted a decision against two domestic pharmaceutical companies, with the highest fines ever imposed for an infringement of competition law. The case was about two of only a handful of distributors of a drug (promethazine hydrochloride) that entered exclusive supply arrangements with the two only domestic producers of the drug. The result was rather obvious – significant price increases. The legal reasoning in NDRC’s public announcement of the case, in turn, was less clear. Press reports indicated that the two distributors were affiliated, so a possible theory that the two distributors had engaged in cartel conduct would not make much sense if one were to accept the “single economic entity” defense (which is not explicitly in the law inChina, though). It seems that NDRC, instead, held that the distributors had abused their dominant position. But there is no explanation on this in the announcement, so one can only speculate whether the dominance was found pre- or post-agreement, and whether it was single or collective dominance.
Finally, in December, NDRC officials told the domestic press that they were investigating a potential abuse of dominance by two ofChina’s three large telecoms companies, China Telecom and China Unicom. In the absence of an official decision or announcement, the exact facts of the case are not fully clear. For example, it is, again, not entirely clear whether the dominant position would be each company individually (China Telecom is strong in the South of China, and China Unicom in the North) or jointly (collective dominance can be presumed if the aggregate market share of two companies is two-thirds or more). As for the alleged abuse, it seems it consisted of making difficult access to the broadband network. The particular allegation may be that the two companies granted access on a discriminatory basis, with higher access charges for companies that compete with them downstream.
Finally, in terms of human resources, NDRC has started restructuring its antitrust team in 2011. In July, the main body was re-named Price Supervision and Anti-Monopoly Bureau (in English), and the antitrust team inBeijingis scheduled to grow from half a dozen to over 20 in the coming months.
The Friday Slot (3) – Antoine Winckler
For this third edition of the Friday Slot, Antoine Winckler (Cleary Gottlieb, Brussels) has taken a shot at our questions. I met Antoine five years ago at a conference on “Non-competition concerns under the EUMR”. He made a great impression and since then, with my competition friends, we refer to him as the “Tribun”. A full biography of Antoine can be found here. I also know for a fact that Antoine reads our blog regularly. It is a great honor that he took the time to answer to our questions.
“Oscar” of the best competition law book? And of the best non-competition law book?
Judge Bork’s Antitrust Paradox
Boccacio’s Decamerone
“Oscar” of the best case-law development in the past year? “Oscar” of the worst case-law development?
Worst : CJEU, C 439/09, Pierre Fabre Dermo-Cosmétique SAS v Président de l’Autorité de la concurrence and Ministre de l’Économie, de l’Industrie et de l’Emploi (another move away from the effects theory)
Best: Advocate General Sharpston’s Opinion in CJEU, C-389/10 P, KME v. Commission
Let’s do it like economists => assume that you could change 3 rules, principles, judgments, institutions in the current EU competition system. What would you do?
I would transform DG COMP into an EU Prosecutor and give the General Court the power to make all antitrust decisions (but only after making sure judges have all followed economics 1.01).
Average working time/week?
When does work really stop?
Why do you work in competition law? How did you first get into it?
You get to work with non-lawyers a lot.
I really wanted to work in Brussels – just kidding.
Most interesting, intense or funny moment of your career?
Watching Judge Vesterdorf being shown a streamed James Bond movie (James Bond in his Aston Martin) during the Microsoft v Commission hearing.
Hearing my learned colleague/partner/dear friend Mario Siragusa and his opponent Antonino Abate from the Legal Service – both pure Sicilians – plead a State-aid case in re-invented French.
Your role model (if any) in the competition community? And outside of it?
Don Holley and Mario Siragusa (my mentors at Cleary)
Winston Churchill
What do you like the least about your job?
Difficult clients
What do you like the most about your job?
Difficult clients
What you like the most about economics in competition law?
Finding an economist coming up with the right answer
What you like the least about economics in competition law?
Economists who repeat what lawyers say
What career/personal achievement are you most proud of?
Having had fun (most of time) working
A piece of “counterfactual” analysis: what would you do if you weren’t in your current position?
Teaching philosophy/literature/history or riding horses
Besides being a “competition geek” (sorry for this one, but we all are), what are your hobbies?
Philosophy and horses
Favorite movies?
Gilda, The Night of the Iguana, Hitchcock and Marx Brothers generally
Favorite music style in general?
Opera
Your favorite motto?
Work is the curse of the drinking classes (Oscar Wilde)
Websites that you visit the most (besides Chillin’Competition)?
Google of course
A piece of advice for junior competition professionals?
Have fun
An”toy”trust
It was reported yesterday that construction toy manufacturer Mega Brands has lodged a federal antitrust complaint against its competitor Lego in order to “stop Lego’s illegal efforts to monopolize the construction toy market through illegal anti-competitive practices including, but not limited to, use of fraudulently obtained IP [intellectual property] rights to interfere with Mega Brands’ right to continue to import certain competitive products [cylindrical studs] into the United States.”
More information is available here. The original complaint is available here.
PS. The picture above is supposed to be one of a Lego Courtroom, although I´m a bit confused by the cook handing a pizza to one of the strangely-dressed members or the Jury…
For real?
In the last weeks, France lost its triple A, but gained a fourth operator in the mobile telephony sector.
The chronology of events that led to the entry of Free Mobile brings a good illustration of what may constitute retaliation tactics amongst semi-collusive oligopolists. A reminder of what happened:
- Since last year, rumour has it that a new operator contemplates entering the French mobile telephony triopoly;
- In the summer 2011, the 3 incumbent oligopolists introduce low cost subscriptions in a bid to possibly dissuade the new entrant;
- As the threat of entry grows in the first days of 2012, the incumbents make statements in the press that they are ready to throw heavy artillery at Free mobile;
- On 10 January, Free Mobile launches its mobile telephony service, cutting the incumbent’s mobile offers by several €s, and outcompeting them on voice, sms and the Internet;
- In the following days, all three incumbent players align their offers on Free, with Bouygues Telecom even applying similar prices as Free ;
- Yesterday, one incumbent send bailiffs to witness that Free’s network is dysfunctional, in violation of a number of contractual obligations.
Looks to me as if 2, 3, 5 and 6 are clear examples of ex ante and ex post retaliation tactics. Thanks to Free Mobile for offering an opportunity to put pictures on theory. Will likely use this as a case-study with my students.
Now, the theoretical question is: can Free Mobile rely on the competition rules to block incumbents’ retaliation tactics? As a matter of theory, retaliation practices of collectively dominant oligopolists could fall within the scope of Article 102 TFEU’s under-used abuse of collective dominance doctrine (O’Donoghue and Padilla, 2009, p.158).
That said, traditionnally, the economics of oligopolistic retaliation are still seen as too equivocal to be imported into a legal standard. Economists for instance disagree on the magnitude of retaliation measures. Whilst some believe that only measures akin to predatory pricing constitute an effective retaliatory mechanism, others view a mere temporary breakdown of collusion as a sufficient deterrent mechanism. Moreover, economists still disagree on whether retaliation must be specifically targeted at the cheating firm or whether general retaliation through market-wide price reductions is a sufficient disciplining factor.
Now, what is interesting in the Free Mobile case, is that retaliation is not just confined to prices. Incumbents seems to be engaged in a broadening pattern of retaliation tactics, the purpose of which is to force Free Mobile off the market. Those include the sending of anticompetitive signals through the press, agressive price competition, and possibly judicial/contractual harassment.
If things go on this way, and new retaliation measures are taken by incumbent oligopolists, Free Mobile may well solicit the protection of competition authorities under Article 102 TFEU. The fact that there are additional retaliation measures in addition to aggressive price competition could indeed make a strong case of abuse, under a Karate-competition law approach. Moreover, the incumbents might have coordinated their response to Free Mobile’s entry, as they did back in the day when they organized a Yalta on mobile telephony.
A last reason to believe: at the press conference announcing the launching of Free Mobile’s offer, X. Niel, the CEO of Free Mobile praised Bruno Lasserre, the head of the French CA, for his support in the last few years. And in reading Bruno Lasserre’s own words about free, it seems the French CA is quite enthusiastic with the entry of a fourth player in the market.
Chillin'Competition 