Relaxing whilst doing Competition Law is not an Oxymoron

Archive for March 2013

Law of Unintended Consequences

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It is often overseen that there is a nexus between substantive competition law principles and procedural issues.

In this context, the current “resilience” of the forms-based approach in substantive competition law (see the recent Dole v. Commission case or the Expedia judgment) is likely to undermine the development of private enforcement.

If we follow §65 of the recent ECJ ruling in C-199/11, Europese Gemeenschap. v. Otis, national courts dealing with claims for damages in follow-on cases must comply with the agency’s prior decision, and admit the existence of an infringement akin to a fault.

Whilst it is true that, because of its obligation not to take decisions running counter to a Commission decision finding an infringement of Article 101 TFEU, the national court is required to accept that a prohibited agreement or practice exists, the existence of loss and of a direct causal link between the loss and the agreement or practice in question remains, by contrast, a matter to be assessed by the national court.

In this setting, the  main role of national courts is thus confined to estimating the harm inflicted on victims and to establishing causality (assuming §65 also applies to NCAs).


But how can they possibly do this if the decision simply talks of anticompetitive “object” in the abstract, and fails to scrutinize the impact of the impugned practice?

In my opinion, if (i) we are serious about private enforcement; and (ii) we read Europese Gemeenschap. v. Otis in a “task sharing” perspective, then agencies must provide a necessary estimation of the anticompetitive impact of the unlawful practices. Alternatively, if they rely on “object” arguments, they should at least offer to national courts full access to the evidence in their possession, so the later can make the math.



Written by Nicolas Petit

29 March 2013 at 10:24 am

Posted in Uncategorized

The Shadow Procedure Rises

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Today, Prof. I. Govaere kindly invited me to give a Jean Monnet lecture at the University of Ghent.

The subject was “Public and Private Enforcement of EU Competition Law”. My slides can be found below.

The main point of my presentation was the following: a textual reading of Regulation 1/2003 suggests the existence of a single procedural framework for competition enforcement.

However, my impression is that altogether, several recent legal innovations are giving rise to a “shadow enforcement procedure“.

Under this procedure, the Commission can achieve more in terms of remedial outcomes, with less in terms of evidence.

And if, up to this point, the Commission has (wisely) not yet exploited the full potential of this procedure, it may one day be able to extort even more intrusive remedies from parties without ever having to prove an infringement of Article 101 and/or 102 TFEU. A bleak prediction indeed.

I just wish I have the time to write a full-blown paper on this.

Lecture Gent – 29 March 2013 – Public and Private Enforcement of Competition Law (N Petit)

Written by Nicolas Petit

28 March 2013 at 6:42 pm

Competition Bank Runs?

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Jeroen Dijsselbloem triggered a spate  of criticisms yesterday when he mentioned that the Cypriot deal was a “template” for future EU bailouts.

If this is true, the Commission may one day be subject to the sort of haircut imposed on wealthy Russian mobsters Cypriot bank account holders.

Up to this point, this is still sci-fi competition law. But take a look:

1. Fines paid to the Commission in cases with subsequent appeals are provisionally held in specific deposit accounts with commercial banks and they cannot be used to finance any other EU activities.

2. In 2009, a Special report of the Court of Auditors mentioned that the volume of fines held in such account lied in the ballpark of €5 billion.

3. At the time, the Commission had accounts with Fortis, BBVA, ING Belgium, KBC, ING NL and Citibank. In a not so distant past, several of those banks were bailed out. And it cannot be excluded they’ll  have to be rescued again.

Interestingly, the 2009 Report warned at §47 that “this approach [i.e. leaving fines in such accounts] exposes the Commission to risk of loss in the event of banking failure. An optimum approach to better managing has not been established“.

I have no information on the status of this issue, but I understand that the Commission has been working on a better approach to address such risks (notably by using banks with good credit ratings…).

Yet, given the recent turn of events in Cyprus, I cannot help but thinking that one day the Commission could lose big money.

Not to think to the flood of legal consequences this may have, should the General court or the Court of Justice subsequently rescind (in part or full) the fines held in the Commission’s accounts.

Written by Nicolas Petit

26 March 2013 at 4:10 pm

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Theories of Harm potentially applicable to Apple’s Distribution Tactics

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On TV last week, I looked dumb reciting the obvious: in the EU, the law forbids RPM as an outright unlawful practice. So if it was proven that Apple is RPMing, then there could be trouble down the road.

Some voices blarred amongst some competition lawyers’ friends, as I had proferred accusation on Apple (I have not).

So I made some research in the WE. Upon inquiry, it seems that Apple’s tactics are more subtle. If I understand correctly, Apple tells its independent retailers that consumers can take a price up to a certain level (let’s say 500€), but no more. In turn, Apple sets in the contract a recommended maximum price of 500€. And then, it sells them the product at a price slighlty below this (let’s say 495€). On top of this, Apple would allegedly charge lower prices to its own retail distribution network.

On face value, such maximum prices are per se lawful. But the question is whether this can be akin to de facto RPM, given that with the high input price, Apple in essence gives little choice to its independent retailers but to apply the maximum price. Further evidence that this constitutes hidden RPM would stem from the fact  that Apple accords much lower prices to its own retail operations  (incl. over the Internet).

But there’s something puzzling with this theory of harm: why on earth would Apple seek to harm independent retailers? Possible options are (1) Apple engages into de facto RPM in countries where it does not have large retail operations of its own, so as to yield as much profit as possible; (2) Apple is reluctant to sell through independent retailers in countries where it has its own retail operations, but anticipates that with control over a “must store” product, it would be forced to supply.

In option 1, we are looking at a theory of anticompetitive exploitation, amenable to an infringement under the RPM framework, pursuant to 101 TFEU or to unfair pricing rules pursuant to 102 TFEU (if Apple is proven dominant).

In option 2, we are looking at a theory of anticompetitive exclusion, amenable to an infringement under article 102 TFEU (if Apple again is proven dominant), under the refusal to supply/price discrimination/margin squeeze doctrines.

A related puzzling thing is about retailers’ incentives to buy a product on which they make so little margin. But again, one may consider that they have incentives to do so at any rate, because this brings traffic towards their shop. And after all, each distributor is likely to believe that it is better to be the one to make the sale, rather than to leave it to another distributor.

All this, of course, should be backed by facts. The Commission is apparently looking into this, if I believe the latest news.

Written by Nicolas Petit

25 March 2013 at 12:55 pm

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Nicolas on TV

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Those of you watching Belgian TV on Wednesday night (not many, I guess) might have have come accross a program on RTBF about competition policy as seen from the perspective of consumers. Prix trop élevés : arnaques bien ficelées?  (i.e. Too High Prices: a well set up robbery?; please excuse my French..).

The program features some big names, including our Friday slotee J.F Bellis, P. Nihoul and a certain Nicolas Petit (who’s becoming an ubiquitous TV presence; he’s becoming the Kim Kardashian of antitrust) 😉

Ckick here to watch the video:

Written by Alfonso Lamadrid

22 March 2013 at 2:32 pm

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To our lawyer readers: competition for rankings just got much tougher.

Today, Alfonso has become a contender for the 40 below 40 ranking.

Happy Bday mate.

Written by Nicolas Petit

19 March 2013 at 8:38 pm

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Open Academic Position in IP and Innovation Law – University of Liege School of Law

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Logo LLM

Come work with me :)!

The University of Liege School of Law and Political Science is opening a part time academic position – 65% of a FTE – in the field of Innovation and Intellectual Property Rights. Appointments will be effective as of 1st October 2013.

This position may be split into two academic positions, and give rise to two distinct appointments (respectively covering a 50% part time position and a 15% part time position).

This appointment is for an initial duration of 5 years (max), and may subsequently lead to a definitive appointment (at the earliest after 3 years).

The 65% part time academic position covers:

Read the rest of this entry »

Written by Nicolas Petit

18 March 2013 at 5:50 pm

Posted in Life at University

Next GCLC Lunch Talk

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At the GCLC, we have just scheduled a promising lunch talk on the Commission’s UPS/TNT Decision on 4 April.

Our speakers are Stephan Simon (DG COMP), Winfred Knibbeler (Freshfields Bruckhaus Deringer) and Andrea Lofaro (RBB Economics).

For registation see here.

For more, see Andrea’s excellent RBB Brief hereafter: RBB_B41_Brief_V3.

Written by Nicolas Petit

17 March 2013 at 6:52 pm

Learning curve

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Random thoughts following yesterday’s discussion:

  • Google translate is an ordoliberal software
  • Or … the systematic removal of “effect” from Treaty translations may be part of the settlement currently discussed with DG COMP (in a bid to please the ordos within the Commission)
  • The bad news about inconsistencies in the various language versions of the horizontal cooperation guidelines and of the guidance paper? EU law not applied uniformly.
  • The good news? Entitles to perform natural experiments, and test in real life the economic impact of distinct legal standards

Written by Nicolas Petit

16 March 2013 at 4:17 pm

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Lost in Translation

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[Please read this post with caution] Heard from a seasoned German-speaking Member of the Court of justice of the EU.

The fuzz about the object-effect dichotomy that has kept generations of EU competition lawyers busy would be a moot issue. We dumd: last year, at the GCLC, we devoted a full conference and book to this issue.

This is because this distinction arguably does not exist [following Hans, Petra and Rainer’s clarifications, I suspect this eminent person meant is “not really relevant”] in the German-language version of the Treaties. Hence the Court’s reluctance to consider effects in antitrust cases.

Puzzled by this assertion, I ran my investigation. At this juncture, I must mention that I am a complete German illiterate.

So here we go: I first consulted the wording of Article 101(1) of the Treaty in German:

“(1) Mit dem Binnenmarkt unvereinbar und verboten sind alle Vereinbarungen zwischen Unternehmen, Beschlüsse von Unternehmensvereinigungen und aufeinander abgestimmte Verhaltensweisen, welche den Handel zwischen Mitgliedstaaten zu beeinträchtigen geeignet sind und eine Verhinderung, Einschränkung oder Verfälschung des Wettbewerbs innerhalb des Binnenmarkts bezwecken oder bewirken, insbesondere”

Then I asked Google to translate this text to English:

“(1) The internal market incompatible and all agreements between undertakings, decisions by associations of undertakings and concerted practices which may affect trade between Member States and which have as their object the prevention, restriction or distortion of competition within the internal market and in particular those”

No trace of the word “effect“.

I did the same in French:

“(1) Le marché intérieur incompatibles et interdits tous accords entre entreprises, toutes décisions d’associations d’entreprises et toutes pratiques concertées qui sont susceptibles d’affecter le commerce entre États membres et qui ont pour objet d’empêcher, restreindre ou de fausser la concurrence au sein du marché intérieur et en particulier ceux”

Again, no trace of the word “effect“.

A weird finding. All the more so given that the official Treaty translation explicitly talks of “effect“.

So here I am, pondering whether I am making this up or if, as this distinguished Court Member hinted, there is a linguistic reason for the absence of serious effects analysis in the Court’s case-law.

Now, if the other language versions of the Treaty talk of “effect“, which version of the Treaty is the right one?

Gee, me completely lost in translation.

PS1: On this, I’d advise Google to manipulate its translation service, and reintroduce the “effect” word in all Treaty translations.

See below for more evidence (a print of my screen).


Written by Nicolas Petit

15 March 2013 at 9:33 am