Chillin'Competition

Relaxing whilst doing Competition Law is not an Oxymoron

Archive for February 2013

Revolving doors (a markup)

with 12 comments

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Below in CAPS my markup on Alphonso’s post:

Nico and I have come up with a way of duplicating posts out of one piece of news; one of us writes something and then the other disagrees ;) [WE NOW TRIPLICATE MATE]

Last Tuesday Nico wrote a post titled “Revolving doors” in which he expresses the concern that “the cumulative effect of appointing previous Commission officials as judges, plus the very many référendaires who have spent some time in the EU administration may give rise to a pro-Commission bias at the Court“.

[I was actually in Luxembourg for a Court hearing -my first one in the front lawyer’s row- when Nico wrote it, but I’ll tell you about that some other time].

Without entering into the debate on whether there is or there isn’t too much of a pro-Commission bias at the Court (in my view, there is the same deference towards the public authority that we find in any European administrative system – in the US, on the contrary, that deference is less visible-), I don’t at all share Nico’s concern [CHECK CONSISTENCY: YOU DONT WANT TO ENTER INTO THE DEBATE, YET YOU EXPRESS DISAGREEMENT. WOULD SUGGEST DELETING THE INITIAL CAVEAT].

Assuming that there was such bias [YOU DEPART FROM MY INITIAL ASSUMPTION, WHICH POSTULATED THE ABSENCE OF BIAS, YET ANTICIPATED A RISK OF BIAS], I would argue that it has nothing to do with former Commission officials becoming members of the Court: [CORRECT. TO BE MORE ACCURATE, THIS POSSIBLE BIAS  HAS NOT ONLY TO DO WITH COMMISSION OFFICIALS BECOMING JUDGES AT THE COURT, BUT ALSO IS DUE TO SEVERAL OTHER FEATURES OF THE COURTS SYSTEM. A FREE PERSONAL SAMPLE: PRESUMPTION OF LEGALITY OF COMMISSION DECISION, DOCTRINE OF MARGINAL REVIEW OVER COMMISSION SUBSTANTIVE ANALYSIS, REPEATED APPEARANCE OF SPECIALIZED LEGAL SERVICE AGENTS ON BEHALF OF THE COMMISSION (AS COMPARED TO HIGH TURNOVER OF LAWYERS  REPRESENTING CLIENTS IN COURT), INEQUALITY OF APPLICANTS CHALLENGING A X-HUNDRED PAGES DECISION UNDER A 50 PAGES CAP ON SUBMISSIONS; SYSTEMATIC RELIANCE OF THE COMMISSION (READ THE LEGAL SERVICE) ON FORMS-BASED DEFENSE ARGUMENTS, ETC.]

Only two current Judges at the GC have previously worked at the Commission:  Marc van der Woude  (who was also a private practitioner, which should offset any bias; ask anyone in the business their opinion on him and you won’t hear a single negative one), and Guido Berardis (of whom I’ve also heard very positive things) [THE ISSUE IS NOT ABOUT WHAT WE PERSONALLY AND SUBJECTIVELY THINK ABOUT THEM; I TOO HOLD THOSE JUDGES IN GREAT ADMIRATION.  IT IS ABOUT COGNITIVE PROXIMITY TO CERTAIN IDEAS, OBJECTIVE QUIRKS AND BIASES, WHICH ARE HUMAN AND AFFECT ALL OF US, INCLUDING THOSE SEEN AS THE BEST PROFESSIONALS. THOSE THINGS HAVE BEEN ADUNDANTLY DOCUMENTED BY BEHAVIORAL ECONOMISTS]. 2 out of 27 (3 if the Committee gives the green light to Kreuschitz, which it undoubtedly should) does not appear to be an unreasonable proportion [UNLESS YOU PLEAD BEFORE A 3 JUDGES CHAMBER – THE STANDARD FORMAT FOR A GENERAL COURT CHAMBER – AND ALL THREE SIT IN IT]. Furthermore, all three of them were part of the Legal Service, which means that an important aspect of their work -aside from pleading- consisted in identifying flaws in the Commission’s work [NOT SURE THIS IS YOUR BEST SHOT. LET ME EXPLAIN. WHEN A DECISION IS APPEALED, THE LEGAL SERVICE HAS ALREADY CONCLUDED TO THE ABSENCE OF FLAWS [OTHERWISE THE DECISION WOULD NOT HAVE BEEN ADOPTED]. OUR JUDGES WHO IN THE PAST WORKED FOR THE LEGAL SERVICE WILL THUS LIKELY BE TEMPTED TO ASSUME THAT THE DECISION IS LAWFUL, AND DEFER TO THEIR FORMER COLLEAGUES ANALYSIS. WHY REDO THE ANALYSIS OF THEIR ***** PEERS? ].

If you ask me (and part of my job is to beat the Commission in Court), the problem lies not in Judge’s previous professional experience, but rather in Judges being appointed for political reasons other than their knowledge of the law (see here). And people who know about EU law are generally -there are a few exceptions- either academics (most of whom also have defined pro or anti Commission biases), practitioners (we may have the opposite bias, plus we’re too competition law oriented), and Commission officials.

In sum, I would argue that we need Judges that know their stuff inside out, no matter their nationality or whether they are national judges, academics, ex-Commission officials or former practitioners. [AGREED. I WOULD KEEP THE SENTENCE AS SUCH, AND SIMPLY ADD  “IMPARTIAL” AT THE BEGINNING:  “IN SUM, I WOULD ARGUE THAT WE NEED IMPARTIAL JUDGES THAT KNOW THEIR STUFF INSIDE OUT”]

A FEW OTHER COMMENTS/REMARKS:

YOU DO NOT ADDRESS THE REFERENDAIRES;

IN MOST MODERN SYSTEMS OF LAW, THERE IS A REAL SEPARATION BETWEEN PROSECUTORS AND JUDGES, AND FOR GOOD REASON; 

THE QUESTION IS NOT SO MUCH ABOUT WHETHER THERE IS OR NOT A BIAS. WHEN IT COMES TO JUSTICE, THE MERE SUSPICION OF A POSSIBLE BIAS IS INTOLERABLE. JUSTICE IS THE LAST RESORT REMEDY AGAINST RISKS OF ARBITRARINESS. IT THUS  MUST COMPLY WITH THE HIGHEST POSSIBLE STANDARDS OF IMPARTIALITY. PUT SIMPLY, IMPARTIAL JUSTICE MUST NOT ONLY BE DONE, IT MUST ALSO BE SEEN TO BE DONE.

Written by Nicolas Petit

13 February 2013 at 4:37 pm

Posted in Uncategorized

Materials from the GCLC lunch talk on Google

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Last Friday I was invited to speak on these issues at a GCLC lunch talk on “Google Search engines and competition law“.  I truly enjoyed it.

I might develop the content of my presentation in a series of forthcoming posts, but today we’ll simply provide you with the presentations projected at the lunch talk.

I had the impression that the audience was a bit surprised at my rather unusual power point, which you can see here:

GCLC_Google_Lamadrid  (looks better if you play the slide show; also, it’s password protected, so click “read-only”).

As I explained at the event, I decided to run the risk of projecting this ppp when I learnt that Google had pledged before the FTC not to ask for injunctions aimed at protecting its intellectual property 😉 Actually, I’m much more scared of my firm’s format-strict marketing department….

I shared the panel with Cédric Argenton (TILEC) and Anne Perrot (Mapp), both of whom did a great job.  Here are their presentations:  GCLC2013_Argenton  &  GCLC_Perrot

P.S.  A necessary and fair disclosure. The power point I had in mind became real thanks to Enrique Colmenero, a terribly nice and smart guy, a techie and an entrepeneur who is now fortunately working with me on a few tech-related cases.

Written by Alfonso Lamadrid

12 February 2013 at 4:59 pm

Revolving doors (a contrarian view)

with one comment

Nico and I have come up with a way of duplicating posts out of one piece of news; one of us writes something and then the other disagrees 😉

Last Tuesday Nico wrote a post titled “Revolving doors” in which he expresses the concern that “the cumulative effect of appointing previous Commission officials as judges, plus the very many référendaires who have spent some time in the EU administration may give rise to a pro-Commission bias at the Court“.

[I was actually in Luxembourg for a Court hearing when Nico wrote it, but I’ll tell you about that some other time].

Without entering into the debate on whether there is or there isn’t too much of a pro-Commission bias at the Court (in my view, there is the same deference towards the public authority that we find in any European administrative system – in the US, on the contrary, that deference is less visible-), I don’t at all share Nico’s concern.

Assuming that there was such bias, I would argue that it has nothing to do with former Commission officials becoming members of the Court:

Only two current Judges at the GC have previously worked at the Commission:  Marc van der Woude  (who was also a private practitioner, which should offset any bias; ask anyone in the business their opinion on him and you won’t hear a single negative one), and Guido Berardis (also an excellent and objective Judge).

This is 2 out of 27 (3 if the Committee gives the green light to Kreuschitz, which it undoubtedly should) does not appear to be an unreasonable proportion. Furthermore, all three of them were part of the Legal Service, which means that an important aspect of their work -aside from pleading- consisted in identifying flaws in the Commission’s work.

If you ask me (and part of my job is to beat the Commission in Court), the problem lies not in Judge’s previous professional experience, but rather in Judges being appointed for political reasons other than their knowledge of the law (see here). And people who know about EU law are generally -there are a few exceptions- either academics (most of whom also have defined pro or anti Commission biases), practitioners (we may have the opposite bias, plus we’re too competition law oriented), and Commission officials.

In sum, I would argue that we need Judges that know their stuff inside out, no matter their nationality or whether they are national judges, academics, ex-Commission officials or former practitioners.

Written by Alfonso Lamadrid

12 February 2013 at 4:58 pm

Antitrust Writing Awards- The campaign begins

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(Since this post is about awards, we thought a pic form last night’s grammys ceremony would be appropriate. I randomly came accross this one, but it risked being inappropriate, so we’ve decided to go for a more politically correct one).

You may remember that last year we ran a campaign (see here) for Nicolas to win one of Concurrence’s Antitrust Writing Awards, which he did for his paper on Credit Rating Agencies.

This year the Editorial Committee at Concurrences has shortlisted 3 pieces written by people who have contributed to this blog, so we thought we’d ask you to please take a minute to give them your 5-star vote 😉

The nominees are:

– On the category for Academic paper on Anticompetitive Practices: Pablo Ibañez Colomo (LSE), for Market Failures, Transaction Costs and Article 101(1) TFEU Case Law,  You can read it and vote for it at:  http://awards.concurrences.com/academic-articles-awards/article/market-failures-transaction-costs  By the way, Pablo gave a lecture on this topic at the IEB in Madrid a few days ago; the slides are available here: Making sense of Article 101 TFEU

– On the category for Academic papers on Economics: Hans Zenger (CRA) for Loyalty Rebates and the Competitive Process : You can read it and vote for it athttp://awards.concurrences.com/academic-articles-awards/article/loyalty-rebates-and-the

– On the category for Business papers on Economics, myself, for Economics in competition lawYou can read it and vote for it at (no need to read this one,  you can skip it provided that you vote for it): http://awards.concurrences.com/business-articles-awards/article/economics-in-competition-law  (actually, the nominated post does not rank among the ones I’m proudest of, but I’m nevertheless grateful for the nomination).

– We are told that Chillin’Competition has also been shortlisted as one of the top 30 professional publications that will be reviewed by Concurrence’s editorial board, which will then come up with a ranking (for more info, click here). You cannot vote for us here, but we’d be thankful if you could please exert any sort of coercion on the jury

Written by Alfonso Lamadrid

11 February 2013 at 5:57 pm

The ‘Tu Quoque’ Fallacy – Some more thoughts on Commission v Google

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tu-quoque

Heard at today’s GCLC lunch talk, seemingly in defense of Google’s search manipulation tactics: Bing is also linking preferentially to its own related services (maps, etc.). So the complainants, and Microsoft in the first place, should take a pass.

On further thoughts, this is a pretty weak argument.

First, the idea underpinning this argument seems to be that Google’s strategy is standard industry practice. And the upshot would be that Google’s conduct has a rational business justification. But the fact that a course of conduct is frequent within an industry, and that it has been replicated by rivals, does not make it presumably lawful. Many drivers breach the law by speeding everyday, yet this is no reason to hold their conduct lawful. Similarly, the fact that conduct is rational is not a cause of antitrust immunity. Collusion is often rational, yet it is strictly forbidden.

Second, this argument actually works in favour of Microsoft’s allegations. It is precisely because preferential placement of links on search engines has the ability to steal competitors’ market share – and in turn to foreclose – that Microsoft uses this strategy. But  Microsoft does this to penetrate the market and/or avoid market marginalisation. And there’s no cause for concern here: given Bing’s very low market share, the preferential placement of links at best yields minor foreclosure effects. You may call this procompetitive foreclosure. In contrast, Google has a paramount market position. Hence its conduct is likely to exert anticompetitive foreclosure effects.

On the link between the magnitude of dominance and the intensity of anticompetitive effects, see §20 of the Guidance paper:

“in general, the higher the percentage of total sales in the relevant market affected by the conduct, the longer its duration, and the more regularly it has been applied, the greater is the likely foreclosure effect”

And on the fact that not all foreclure is unlawful, see §22 of the CJEU ruling in Post Danmark:

not every exclusionary effect is necessarily detrimental to competition

Finally, the argument surmises that competition law should treat market players equally. But in this industry, Google is seems dominant, Bing not. Those two firms are thus in distinct situations, and the argument again does not fly. It is indeed well settled that pursuant to Article 102 TFEU, dominant firms are subject to a “special responsibility” (whatever this means) possibly for the reason set out in my second point. Like it or not, competition law imposes higher constraints on dominant firms than on non-dominant firms.

The sole possible way to make sense of this argument boils down to a moral issue, best expressed in the maxim: “nemo auditur propriam turpitudinem allegans”. But it is well known that this argument has no traction in competition law, which has no moral content, a point forcefully made by Bork – a late pro-Google advocate – in his early Antitrust Paradox. And this, in any case, would not bar the Commission from taking over the investigation on its own motion.

Overall, by trying to counter argue that Bing also manipulates search results, Google is falling into the well-known Tu Quoque fallacy.

PS: the Lunch Talk was great. We heard two economists, Anne Perrot and Cedric Argenton, speaking very clearly to lawyers. We also watched a lawyer, Alfonso, morphing into a complete hi-tech geek. The introduction of his presentation was simply hilarious. I rarely laughed so much at a conference. The slides will appear on the blog very soon.

PS2: link to the above pic here.

Written by Nicolas Petit

8 February 2013 at 6:49 pm

Reform of Private Enforcement of Competition Law in the UK: the Government’s Proposals

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[Our friends Christopher Brown (Matrix Chambers and Eutopialaw) and Scott Campbell (Stewarts Law LLP) have kindly offered us a very interesting post on the reform of private enforcement of competition law in the UK. To the best of my knowledge, this is the first written piece commenting on the substance of the proposed reform. With those proposed changes, the UK may be trying to position itself as the leading forum for private actions in Europe. An absolute must read].

A while back, one of us blogged on the UK Government’s consultation, launched in April 2012, on possible reform of the private actions regime in the UK.  The consultation was wide-ranging and included several radical proposals designed to facilitate redress for victims of anti-competitive conduct – most notably, the introduction of an ‘opt-out’ collective actions mechanism.  Reaction to the consultation from lawyers and business was extensive: the Government received 129 formal responses, and opinion was sharply divided on some issues.

It has inevitably taken some time for the Government to take on board the responses and consider the way ahead, but, since the publication last week of its response to the consultation, we now know what it intends to do.  In summary, the Government proposes to

  • Strengthen the private law jurisdiction of the specialist judicial body, the Competition Appeal Tribunal (CAT);
  • Introduce a “limited” opt-out collective actions regime, with “safeguards” designed to prevent frivolous or unmeritorious claims being brought;
  • Promote alternative dispute resolution (ADR); and
  • Take some limited action designed to ensure that private enforcement complements public enforcement.

In this post, we take a look at the main proposals, considering some of the likely practical implications of the reforms in the event that they are passed into law.

1. Putting the CAT front and centre of private enforcement in the UK

The first broad proposal is one on which most respondents agreed, at least in broad outline: to make the CAT the ‘go-to’ venue for private competition litigation in the UK.  Since acquiring its private law ‘follow-on’ jurisdiction upon the entry into force of the Enterprise Act in 2003, the Tribunal has seen relatively little action, and much of the action it has seen has been in the form of procedural skirmishes relating to the ambit of that jurisdiction (several of which have gone on appeal to the higher courts).  In many cases, claimants have preferred to commence follow-on proceedings in the High Court instead.

Read the rest of this entry »

Written by Nicolas Petit

6 February 2013 at 11:35 am

Posted in Guest bloggers

Revolving doors

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Image

Those days, I feel strongly about conflicts of interests.

Not those that affect lawyers and economists. Almost inevitably, their prose is influenced by the business interests of their clients. We all know this. And subject to full disclosure, I see no evil in the fact that lawyers and economists publish papers in academic journals.  

No, those that affect the EU institutions. Yesterday, M-Lex reported a blatant example of “revolving door“.

V. Kreuschitz will succeed to J. Azizi as the Austrian Judge at the General Court.

In a previous life, Kreuschitz served as a Commission legal adviser on State aid and antidumping. 

It certainly makes sense to have this kind of expertise at the Court. But the cumulative effect of appointing previous Commission officials as judges, plus the very many référendaires who have spent some time in the EU administration may give rise to a pro-Commission bias at the Court. This, in turn, is not in line with the right to equality of arms in legal proceedings, as protected under Article 6 ECHR.

There would also be much to say about the conflicts of interests that plague academia. On this, I leave you with a reference to the great documentary the “Inside Job“, where Ferguson showed how the banking industry litteraly “bought” dozens of influential US scholars, to shut out any sort of academic criticism against nefarious financial practices.

 

 

 

Written by Nicolas Petit

5 February 2013 at 4:53 pm

Posted in Uncategorized