Archive for October 2012
More on Karate Competition Law
In the light of the current thresholds governing the grant of IP rights, we could have claimed a copyright for the term “Karate Competition Law” coined by Nicolas. Judging by the number of times that I’ve heard it since that post was published, I’m sure we (meaning him) would have made much more money than the …let me check… $ 10.33 that we made in July via advertising [P.S. this post was written in August and saved for a busy week].
Why did this come to mind? Because I just came accross the US Federal Trade Commission’s elegant formulation of what “karate competition law” is. In its Intel Complaint (for our previous and rather simple post on it, see here), the FTC asserted that:
“where a respondent that has monopoly power engages in a course of conduct tending to cripple rivals or prevent would-be rivals from constraining its exercise of that power, and where such conduct cumulatively or individually has anticompetitive effects or has a tendency to lead to such effects, that course of conduct falls within the scope of Section 5″.
Section 5 has been the primary tool to which US authorities have resorted in their attempts to fill in the perceived gaps of the Sherman Act. Some argue that there’s no EU competition law equivalent to Section 5 of the FTC Act. However, I’m not so sure that we need any equivalent instrument. Whether one likes it or not, as thing currently stand– and obviously leaving aside the dominance/monopoly threshold- I don’t think that the reference in Section 5 to “unfair methods of competition” or the above-quoted passage of the Intel Complaint encompasses much more than the wording of Article 102. “such abuse may, in particular, consist of (…) b) limiting production, markets or technical development to the prejudice of consumers” .
The General Court’s interpretations of this provision in Microsoft, Astra Zeneca Judgments appears to endorse this wide view of Art. 102.b) [arguably previous Judgments from the ECJ such as AKZO, Compagnie Maritime Belge or even Tetra Pak also opted for a quite wide construction of Art. 102]. Interestingly, whereas the case-law and precedents are endorsing a wide view of the protective scope of Art. 102, the effects of the effects-based approach on practical enforcement push in the opposite direction. Self regulation, I guess.
PS. With this I’m not criticizing the use of Section 5 by the FTC. I, for one, am a fan of the FTC’s theory in the Ethyl (Du Pont de Nemours) case, in which the FTC prosecuted unilateral practices by non-dominant firms that were used to facilitate parallel pricing. What I’m saying (and I use the first person here because Nicolas might disagree) is that European judges seem to have construed wider “standard provisions”. For instance, even the situation at issue in Ethyl could have been approached under Art. 102 under the Irish Sugar notion of individual abuses of a collectively dominant position.
SMP
During the WE, I read Pascal Lamy’s excellent note entitled “The Future of Europe in the New Global Economy“.
There are dozens of good points in this note.
In particular, I really liked Lamy’s rebuttal of the argument that European high salaries are the cause of our competitiveness deficit.
As he rightly argues, “when we look at salaries, we have to set them against worker productivity“. And on this, there is still a profound gap between the EU and other trade blocks like China and India.
Lamy, however, makes a more surprising point. He contends that in the global trade arena, EU firms should strive for what he calls “non-price competitiveness“.
So far, so good… But in his own words, non-price competitiveness covers:
“those characteristics that cause a product to stand out positively among its competitors, regardless of price. In particular, it comprises know-how, quality and innovation, which allow a company to sell the same products as its competitors but at twice the price“.
And Lamy further adds, that non-price competitiveness has this good that it:
“shields manufacturers from having to worry about fluctuating global prices and competitor attacks“.
In my own professional language, I call this “market power“.
So here’s a nut to crack: can market power be the way forward for the EU in terms of achieving a comparative advantage on the international trade scene?
On the price of beer and bread
In his post earlier today Nicolas was whining wrote about the price of beer in Belgian supermarkets (the fact that he complains about the price of beer when he had never complained about actually cartelized products -such as endives- reveals a typical single-man’s pattern of consumption).
Anyway, he fails to see that things could be worse. Below you can see a pic of a beer taken in India a few days ago. The label features (i) an “MRP” or “minimum resale price” ; and (ii) a prohibition to sell the beer in any place other than the Goa area. That’s a possible infringement combo right there!
[P.S: Following the publication of this post our Indian readers have clarified that the M in MRP in reality stands for “maximum” not “minimum”, and that there is an explanation for the market partitioning clause].
Want more? Take a close look at this news: The All Goa Association of Bakers decides to increase the price of bread.
[P.S. Our Indian readers have confirmed that in this case there is no explanation other than price-fixing].
Good luck to our readers from India, who are making a great effort in fostering a culture of compliance in their country (way to go!). The CCI has earned a reputation for investigating Tacit Cartels, but apparently it won’t run out of explicit ones any time soon.
(Thanks to Christian Bulzomi -also the person half-responsible for this– for the great pics!)
Perpendicular Collusion
Last summer, I rediscovered how tasty a good old Desperados beer was.
But I was also amazed to discover how pricy that good old Desperados beer was.
In a standard Belgian supermarket, it cost me a little more than 16€ to acquire a pack of 6 Desperados… I recall that I actually complained to the cashier.
Now, the press in Belgium reports today that Belgian supermarket chains may have colluded to artificially push prices up. And on top of this horizontal price fixing scheme, they may have also colluded with suppliers of cosmetic and hygienic products, in some sort of large-scale RPM scheme…
I am now a little less surprised by the price of Desperados in Belgian supermarkets (although beer does not seem to be a target of the inquiry).
If the infringement is confirmed, we’ll have to come up with a creative label for this type of horizontal+vertical collusion. Here’s my take: perpendicular collusion.
But the decision may never come. The case has now landed on the desk of the decisional organ of the Belgian NCA. And, to put it euphemistically, this organ has not seemed very keen on actually enforcing the Belgian competition rules… This actually explains the recent legislative proposal that purports to suppress the existing NCA and replace it with a brand new competition watchdog, tailored alongst the lines of the French Competition Authority.
Best book review ever
As you know, Nicolas is one of the co-authors of a new book on EU Competition Law and Economics.
Oxford University Press has sent me a review copy. I was intending to write a serious review, but now I’ve watched a youtube-review of the book that is much better than anything I could ever write.
Those interested can watch it here: Youtube review of EU Competition Law and Economics
My favorite comments” “it is not too heavy”, “it’s got a useful index at the back” and “it has lots of footnotes” . I also enjoyed the way the reviewer pronounces the authors’ names, including Nikos Petite and Demien Geraden (although, to be fair, in Damien’s case I think it must be a Youtube dialect; here’s a precedent). 😉 He does better with Anne Layne-Farrar’s name.
P.S. This reviewer has featured in previous post here at Chillin’Competition. In fact, he had two nominations to our Antitrust Oscars.
P.P.S. By the way, Val Korah has also written a review of this book in World Competition which Nico is described as an “eminent professor” and a “partner at a famous law firm” (?!).
Heard through the Grapevine
Down here in Brussels, there is rising speculation over who will step-in to replace Kai Uwe Kühn when his term arrives.
Rumour has it that Massimo Motta is a very strong (Universitat Pompeu Fabra and Barcelona Graduate School of Economics) contender for a place in the seat of DG COMP’s Chief Economist.
Would be a very good decision. For long, I am a great fan of Massimo Motta’s book entitled Competition Policy – Theory and Practice.
Amongst others, his innovative paper on the effect of antitrust fines on share valuation is also a must read.
Chillin'Competition 