Chillin'Competition

Relaxing whilst doing Competition Law is not an Oxymoron

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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?

Written by Nicolas Petit

25 January 2013 at 8:53 pm

Posted in Uncategorized

6 Responses

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  1. Hi Nicholas! Nice piece and keen observations!

    “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?”

    Isn’t it maybe because the EC shies herself away from building a rather complex novel case by reaching the compromise of commitments? And isn’t it the trend latelly that the EC is less prone to take the risks of probing unwalked cases and prefers to plea bargain?!

    Cheers!

    Adrian

    Adrian

    28 January 2013 at 8:21 pm

  2. Hi, hasn’t the Commission already settled cartel cases? on the basis of their 2008 notice on the settlement of cartel cases. I am thinking of DRAMS and animal feed phosphates. Please let me know if I have misunderstood. thanks, natalie

    Natalie McNelis

    29 January 2013 at 1:13 pm

    • Correct Natalie, I was talking of a different kind of settlements (i.e. Article 9 decisions), where the Commission closes the investigation without decision. In the cases you mention, the Commission settled, but it took an infringement decision and imposed a fine.

      Nicolas Petit

      29 January 2013 at 2:21 pm

  3. Hi Nicholas, thanks for answering, I’m enjoying the blog!
    I don’t think they’d “settle” a cartel case without a fine. What kind of behavioral commitment could you have? “We’ll never do it again”? I don’t think they can, under the fining guidelines and Art 23. Plus, unlike in other antitrust cases, you have leniency for cartels.
    I think what they’d do if they really didn’t want to fine is close the case, like they did in EPDM. what do you think? nat

    Natalie McNelis

    30 January 2013 at 12:00 pm

  4. Thanks Natalie. This is sci-fi competition law. Given what the Commission has done with Article 9, and the lax case law of the Courts, I see no theoretical limitations to settling a cartel case. In practice, they could commit to change the Libor system in some sort of quasi-regulatory undertaking.

    Nicolas Petit

    30 January 2013 at 12:13 pm

  5. […] A competitiona law co-blogger recently complained about how the European Commission was turning into a “settlement Junkie”.  While this is a debate which no doubt all EC competition law jurists and lawyers will seek to actively participate in and discusss, the post did get me thinking on any future prospective settlements with the CCI in India. […]


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