Archive for January 2013
Antitrust and the political center
A few weeks ago I published a post called “Antitrust and political imbecility“. The raw ideas in it had been in my mind for a while, but conscious that I would likely not take the time to refine them, I chose to publish them on this blog with the hope that they would benefit from public discussion. I wasn’t particularly proud of this post, but Lindsay Mcsweeney (Competition Policy International) thought it was original and asked me to develop it for a special issue of CPI’s Antitrust Chronicle to be published right after Christmas. I accepted thinking that it would only take a few hours of my holidays; little did I know that I would break my arm and go through some pains to finish it! (btw, I’m back on track as of today). In any event, and thanks to Lindays’s pressure encouragement, it’s done.
Those interested in reading my take on why antitrust law can be regarded as sensible centrist economic policy can do so here. Non-CPI suscribers can read it here (courtersy of CPI): Antitrust and the political center-
Any critical feedback would be most welcome!
New paper
I just posted a new paper on ssrn. It is entitled “New Challenges for 21st Century Competition Authorities“. It is a short and modest paper, which builds on my presentation in Hong Kong a few months ago. Hereafter, the abstract:
This paper discusses challenges for competition authorities in the 21st century. Those challenges were identified on the basis of a statistical review of the articles published since January 2011 in five major antitrust law journals. The assumption underlying this literature review is that the topics that statistically attract the most the attention from contemporary antitrust scholars are those that will likely constitute the main challenges for 21st century competition authorities.
On judicial appointments
We’re quite frustrated at the attitude of some Member States with regard to judicial appointments, which, to put it mildly, is disgraceful
First, because in spite of having been urged by the Court to confirm whether they would maintain or replace their judges, many Member States have remained totally inactive, thus effectively hampering the Court from planning its activities for the upcoming months. Second, because they fail to realize that continuity is a positive thing at an institution of this sort. Third, because they have found it impossible to agree on an increase in the number of judges and continue to lose time fighting as kids over who gets to nominate more judges. Fourth, because they fail to grasp the relevance of the Courts and of their members, and therefore take appointments lightly (hence the rejections of several unsuitable candidates proposed by Malta, Bulgaria, Sweden and Greece by the 255 Committee, which are shameful not for the individuals concerned, but for whoever nominates them).
We’ve said it before, but WE’LL SAY IT LOUDER NOW: WHY ON EARTH CANNOT MEMBER STATES FOLLOW THE EXAMPLE OF, E.G.,THE NETHERLANDS, THE UK, SLOVENIA OR CROATIA AND START SELECTING CANDIDATES PURSUANT TO OPEN MERITS-BASED FRAND COMPETITIONS?
Nailing Mittal?
Last week, the giant steel maker Arcelor Mittal announced the shutting down of several plants in Liege. 1,300 jobs are threatened.
This news has taken many by surprise. Politicians cry betrayal. Last year, Mittal had promised to invest millions of € in Liege.
In fairness, the posture of politicians is naive and cynical.
In Europe’s volatile and distressed economic context, how could politicians ever believe – and try to make believe – in the oral commitments made by Mittal (why did not they ask him to put commitments to paper?). All the more considering that since 20 years, industry analysts keep making cassandresque predictions, describing the steel industry in Liege as morribond.
At university, several colleagues asked me whether EU competition law could possibly undermine Arcelor Mittal’s proposed strategy. In the past hours, the debate has focused on whether a proposed nationalisation of the Liege plants by the Belgian State could constitute lawful/unlawful State aid. I am no State aid expert, so I’ll conveniently decline to answer.
A more powerful, yet wholly uncertain possibility would be to apply Article 102 (b) TFEU or its national equivalent under Belgian law. On its website, Arcelor Mittal says it enjoys a “leading market position and market share” in Western Europe and Eastern Europe. Under a narrow market definition, one may thus well find a dominant position. And given that the stated purpose of Arcelor Mittal’s strategy is to reduce overcapacities on Western steel markets and stabilize (or raise) prices, why not hold the shutting down of steel plants akin to unlawful abusive exploitation?
After all, if Mittal believes he can influence prices – and on this we may trust him – by closing off some plants, then this is implicit recognition that he enjoys some degree of monopoly power.
The bottom line: on cursory analysis, the law provides a legal basis to nail Mittal. But are the facts supportive?
If you need a fix
Has the Commission turned into a settlement junkie addict?
Until now, the Commission was ready to go through all sorts of legal compromissions to bring cases under the Article 9 commitments procedure:
- In Microsoft II, the Commission settled a case which 3 years before had been solved with a fine (thereby violating the principle that settlements are not apposite in cases where fines are warranted, see recital 13 of Regulation 1/2003).
- In S&P, IBM and in a gaggle of energy cases, the Commission settled cases where anticompetitive effects had lasted over a significant period of time, thereby failing to punish past anticompetitive conduct (and in turn, denying justice to the victims of the infringement).
- In the upcoming Google settlement, the Commission will close a case which raises novel legal and economic issues. Yet, how can the Commission possibly suspect an infringement short of any significant precedent?
As I was hearing exams all day, I had the occasion to read more on the commitments from Apple and four publishing groups for the sale of e-books.
I was truly baffled when I realized, in this case, that the Commission had accepted to settle what it otherwise deems a “hardcore restriction“, namely an industry-wide resale price maintenance scheme.
With this new precedent, the next question is: will the Commission ever cross the rubicon and accept to settle a cartel case? The Libor investigations could provide good candidates for such a new policy. In those cases, the Commission may be reluctant to hammer the Libor participants with fines, on pain of undoing 5 years of accomodating State aid policy with Article 101 TFEU penalties. An article 9 settlement would provide the Commission with a “good looking” exit strategy.
From a more general standpoint, the Commission’s “Settle ‘Em All” policy finds no merit in our opinion, and may well have adverse effects. After all, if firms know they can settle anything and face no penalties, why should they observe the law in the first place?
Should I Stay or Should I Go?
Comes the end of the day, most young lawyers face this question.
And many decide to stay at the office even if they have nothing to do, just to look busy before partners.
Courtesy of a keen reader of this blog possibly underoccupied in her own professional organisation ;): a nice chart on when to go home
State aid and the European Economic Constitution
With tough budget cuts in State universities and the bonkers rates charged by some academic publishers, university libraries are being margin squeezed.
At chillin’competition, we have thus decided to advertise competition law and economics books, provided we receive a free copy from the editor.
It is our pleasure today to advertise a new book entitled “‘State Aid and the European Economic Constitution” by Francesco de Cecco. The book is published by Hart Publishing. A full description + all relevant info can be found hereafter.
State Aid and the European Economic Constitution
By Francesco de Cecco
Recent years have seen the rise of EU State aid law as a crucial component of the European economic constitution. To date, however, the literature has neglected the contribution of this area of EU law to the internal market. This book seeks to fill this gap in our understanding of the economic constitution by exploring the significance of State aid law in addressing questions that go to the core of the internal market project. It does so by examining the case law relating to three different activities that Member States engage in: market participation, market regulation, and funding for Services of General Economic Interest. Each of these areas offers insights into fundamental questions surrounding the economic constitution, such as the separation between the State and the market, the scope for Member States to engage in regulatory competition, and the tension between market and nonmarket concerns.
Link to table of contents http://www.hartpub.co.uk/pdf/9781849461054.pdf
The Author
Francesco de Cecco is a Lecturer in Law at Newcastle University.
December 2012 210pp Hbk 9781849461054 RSP: £50 / US$100
20% DISCOUNT PRICE: £40 / US$80
If you would like to place an order you can do so through the Hart Publishing website (links below). To receive the discount please mention ref: ‘CCB’ in the special instructions field. Please note that the discount will not be shown on your order but will be applied when your order is processed.
UK, EU and ROW: http://www.hartpub.co.uk/books/details.asp?isbn=9781849461054
US: http://www.hartpublishingusa.com/books/details.asp?isbn=978184946105
If you have any questions please contact Hart Publishing
Hart Publishing Ltd, 16C Worcester Place, Oxford, OX1 2JW, UK
Tel No: 01865 517530
Fax No: 01865 510710
E-mail: mail@hartpub.co.uk
Website: www.hartpub.co.uk
Hart Publishing Ltd. is registered in England No. 3307205
Where’s the Law? (or Google and the European Commission)
I said to myself I would keep up the promise I made to Alfonso and continue writing in the blog until Nicolas is back or he recovers (which we hope will be very soon) and starts posting notes again (I failed to anticipate that he wouldn´t stop…)
More to the point: as a complete outsider, I find the lack of publicly available information on the European Google case frustrating, as it is fascinating on more than one level. I just thought that the best way I could rebel against this situation is by making my views on the ongoing proceedings publicly available.
The behaviour of the European Commission in the past few months is interesting (if not puzzling) in at least three important respects:
- The Commission has repeatedly asked Google to submit commitments. One could very well argue that nothing prevents the Commission from doing this. At the same time,this conduct is at odds with the logic of Article 9 of Regulation 1/2003. At least it shows (as if we did not know it already) that the ECJ judgment in Alrosa (as well as AG Kokott’s opinion) ignores how negotiations between firms and competition authorities are conducted in reality.
- A commitment decision is the only acceptable outcome for the Commission. In his public statements Commissioner Almunia suggests that the case will only be closed once the authority accepts the commitments submitted by Google. Put differently, we have reached a point where the case is not so much about an authority establishing an infringement by a firm but about a firm proposing a settlement that is acceptable for the authority.
- The Commission assumes that the alleged discriminatory conduct is an abuse of dominance: The whole case seems to be based on the premise that the fact for Google to favour its own services is an abuse of dominance within the meaning of Article 102 TFEU. Commissioner Almunia has even been explicit about this matter. This conclusion is very far from straightforward to reach. It is a factual scenario that can be approached in many different ways. It raises novel and complex questions to which different (and contradictory) lines of case law seem to apply .Unfortunately, the Commission has never even attempted to articulate the legal framework potentially applicable to this case. This would be most desirable, if only because it would make it possible to ascertain whether the Guidance Paper was just the expression of a moment of temporary folly, and not (as I assumed it would) a pre-commitment device designed to preserve long-run legal certainty.
I do not think an expert poker player would advise the Commission to take these moves. Even outsiders like me cannot avoid inferring from them that the (legal) case is probably weaker than the Commission appears to suggest. As an academic, it is the fact that the law has disappeared from the case that I find most worrying, in any event. The question of whether, and why, Google’s conduct would be abusive seems to be no longer of relevance for its outcome. In this sense, this case shows the dramatic impact that the abusive recourse to commitment decisions (in particular where, as is the case here, genuinely novel legal questions are at stake) can have on the evolution of our discipline.
Pablo
Discriminatory online advertising – Upcoming events
As Pablo noted yesterday, my blogging urgers trump doctor’s recommendations; I figured that if Cervantes could write Don Quijote with one hand I could at least try typing a couple of posts on competition law single handedly..
We’ve undertaken a search for the most relevant competition law events to be held in February, and decided to advertise the results here. Coincidentally (or not) the events shown below are related either to friends or to us. We are aware that promoting one’s own stuff has for some become a risky business, but oh well…
On 1 February 2013 we will be holding a seminar on recent developments in relation to Article 101 within the framework of the IEB course in Madrid. Eric Gippini Fournier and Fernando Castillo de la Torre have come up with a great line-up of speakers: Viktor Bottka (Legal Service); Pablo Ibañez Colomo (LSE) and Luis Ortiz Blanco (Garrigues) will be dealing with object/effect issues; Cani Fernández (Cuatrecasas), Marisa Tierno Centella (DG Comp until recently, now CNC) and Fernando Castillo will speak about sanctions (fines, leniency and private enforcement); Lorena Boix (DG Connect), Helena Larsson Haug (DG Comp) and Ainhoa Veiga (Araoz&Rueda) will focus on online distribution and distribution of digital works. For further info you can drop me a line (alfonso.lamadrid@garrigues.com)
On Friday 8 February at 12.00 h. there will be a Global Competition Law Centre lunch talk in Brussels on “Google Search Engines and Competition Law“. The speakers will be Anne Perrot, Cédric Argenton and myself (photo taken on 30 December..). Click here for further info and registration. (I’ve already checked all the publicly available materials about the European Commission’s investigation (piece of cake since there are practically none) and I’m in the process of reading relevant U.S. materials, national cases and academic papers; I’d be very grateful in case any of you could recommend any particularly interesting materials.
On a larger scale, on 22 February 2013 our friends at Concurrences will be holding the New Frontiers of Antitrust 2013 conference at the Assamblée nationale in Paris. This conference has earned its place among the top competition law events of the year. Even though it’s not cheap, it’s always packed, so that should tell you something about the quality of the sessions. For info and registration see here. As you will see in the program, the interface between data protection and competition law will be one of the main topics dealt with; we’ll provide you with some personal views on this non-?issue soon.
Not-so-mainstream pending cases (II)
I am back with a reference to another ‘not-so-mainstream’ case (you could all see that Alfonso cannot control his blogging urges)
This one is probably more mainstream than the previous one, but the whole field of State aid remains conveniently ‘underground’, so it probably belongs here too (incidentally, my State aid seminar has just started). This case brings us back to the good all days of the dot-com bubble (and we all thought that was a recession). As many other ‘convergent’ firms, France Telecom was in big trouble. In those dramatic circumstances, the French government stepped in and essentially announced that it would do anything to save the company. The goal was to stabilise the credit ratings of the firm. Now that we are undergoing a dramatic recession we understand the importance of ratings much better (just think of Mario Draghi’s bold statement in July last year).
The question raised in the case was that of whether the steps taken by the French government to preserve the viability and creditworthiness of France Telecom amounted to State aid. The General Court disagreed with the Commission and concluded that, while granting an advantage, such steps did not involve the use of State resources, as consistently required by the ECJ since Preussen Elektra. In an interesting opinion (in French only) issued in June last year, AG Mengozzi proposes to set aside the GC judgment. He considers that the interpretation given by the GC (at least as far as some of the measures are concerned) is excessively formalistic. I am looking forward to the judgment. If one considers the case law on guarantees and similar measures, AG Mengozzi is probably right.
A couple of thoughts in relation to the judgment:
- This is a good reminder of why the Trinko doctrine will never carry the day in Europe. I think Trinko is a sensible and thoughtful opinion that is widely misunderstood. However, if one takes account of the links between incumbent operators and Member States, it probably makes sense to leave room for the application of competition law in Europe. Let us not forget that the facts giving rise to the Wanadoo decision (predatory pricing) took place at roughly the same time.
- The GC and the ECJ have recently and notoriously disagreed on some high profile State aid cases. These cases relate to the notion of selectivity (British Aggregates, Gibraltar, NOx). The GC tends to side with Member States and the ECJ with the Commission. AG Mengozzi’s opinion suggests that this will be the case here. We will see
Pablo
Chillin'Competition 
