Chillin'Competition

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?