Chillin'Competition

Relaxing whilst doing Competition Law is not an Oxymoron

Archive for April 2013

Tidbits from Luxembourg

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beamer_display_s

With a group of LL.M. students from Liège, we attended last Wednesday the hearing at the General Court in Chimei InnoLux Corp v Commission (T-91/11).

This case is better known as the LCD panels cartel case. In a nutshell, Chimei InnoLux challenges a Commission infringement decision inflicting a €300,000,000 fine. Chimei seeks primarily to obtain a reduction of this fine. Its key argument is that the Commission could not include in the value of the sales used to calculate the fines, the so-called “Direct EEA sales  through transformed products“, namely sales of cartelised LCD panels incorporated into finished products (screens) by downstream Chimei subsidiaries located outside the EEA. According to Chimei, those internal sales were outside the juridictional reach of  EU competition law (the parties rely on Woodpulp).

On this occasion, we also had several most informative meetings with several people working at the GC and the CJ. Here’s a grab bag of impressions following this trip at the Court:

  • It’s all about the facts => once again, I was amazed by the granularity of the arguments raised in proceedings before the General Court;
  • G. Berardis, the juge rapporteur was just impressive. He was very picky, seemed to know the file inside out, and asked a gazillion questions to the parties. On several occasions, the parties had a tough time responding to his inquiries. External observers, like myself, often pass judgment on the intensity of judicial scrutiny just by reading judgments. I guess my views have slightly changed since last Wednesday. Judicial review is also about what happens in the Court’s room, and about how judges discharge their duties. Whilst I have, a few weeks ago, voiced concerns about the appointment of a former Commission official as judge at the GC, I also recognize that such appointments probably come with increased expertise, and in turn contribute to strenghtening the intensity of judicial review. The trade-off between impartial and efficient judicial review is clearly a complex one;
  • Read Wouter Wils! We’ve praised Wouter’s papers on many occasions. But we did not know that his prose was that influential. In response to a question on the compatibility of administrative proceedings with Article 6 ECHR, someone working at the General Court said something close too: “we know there is a big debate over this issue in scholarship. I read Wouter Wils’ papers. Wils considers that there are no such problems. So my conclusion is that there are no problems“;
  • Internal drafting guidelines: judges and référendaires are apparently requested not to quote any piece of scholarship, or at least to limit such quotes;
  • And to conclude: rumour has it that the draft Intel judgment is approx. 700 pages long (double spaced)…

Overall, this was a great day in Court.

Written by Nicolas Petit

30 April 2013 at 10:33 am

Posted in Uncategorized

Breaking News: Google’s proposed commitments are out

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Capture Proposed Commitments

 

Google’s proposed commitments have just been made public. You can read them here: http://ec.europa.eu/competition/antitrust/cases/dec_docs/39740/39740_8608_5.pdf

And here’s DG Comp’s interesting Q&A memo on the market test.

I’ve only skimmed through them, but they are not as densely worded as I thought + they include quite useful screenshots. By the way, the Commission should get some market testing-advertising revenues too: the screenshots contain some good avertising of Digital SRL cameras (see capture above; btw, pay special attention to (i) the “sponsored” label at the top and the box that appears when you hover on it; and (ii) the line at the very bottom: “Search on Site 1, Site 2 or Site 3”; we’ll come back to these),  of restaurants in Mountain View, and of President Obama.

The complainants have asked for an extended review period -3 months instead of 1-. Due to various reasons these are particularly busy days on our side, but we’ll try to to provide you with a summary and our first comments asap.

Written by Alfonso Lamadrid

25 April 2013 at 4:41 pm

500,000 visits!

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Today we hit the 500,000 visits mark on Chillin’Competition, so we just wanted to say THANKS!

Nicolas started this on March 2009, and I joined a few months later, in October (with a guest corner at the time). It’s been 4 years, 765 posts, 1 or 2 interesting posts, 763/4 nonsense ones, 1,050 comments, 1042 Linkedin group members, 506 WordPress subscribers, and a few hundred hours of telephone calls [during which I tried to censor persuade Nico not to publish some stuff (one I can tell you about is the proposal to do the EU competition law version of this) and he complained at my (alleged) lack of political incorrection], $ 72.08 of AdWords earnings and $ 65 spent in preserving the chillingcompetition.com domain (that’s a $7 profit in 4 years, or $ 0,02 per hour spent writing here; as you see, we’re still struggling with the notion of opportunity costs…).  Below’s the wordpress table depicting our evolution.

P.S. Nico has committed to pay you all a beer when we hit 1 million…

blog stats

Written by Alfonso Lamadrid

24 April 2013 at 7:25 pm

Posted in Uncategorized

Commission bashing (part II)

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A few days ago Nico wrote a post about “Commission bashing” in which he acknowledged that, in reality, he’s not a Commission basher but rather appreciates the good things that Comp does [the fact that one of the three examples given -next to the Guidance Paper and the effects-based approach..-  was Post Danmark -a Court Judgment- reveals that Nico struggled to find good deeds on the Commission’s part :)]

Until now, the most vocal Commission basher I knew of was Michael O’Leary, Ryanair’s CEO (check out his CV and the accompanying Commission disclaimer here.) We’ve previously referred to his comparison of Comp officials with Kim Il-Jung (sic) and with North Korean economists, but you may not have watched his equally… outspoken intervention at the EU Innovation Convention in 2011 (worth checking it out here)

But Mr. O’Leary now faces fierce competition. A blog called Venitism appears to overpass Ryanair’s chief’s tone; it has just published a post mildly titled: The stupid European Commission harassess the chip industry. Actually, the title is much softer than its content and than its pics. It’s so overdone that it’s worth taking a cursory look if you’ve a minute.

Aside from insulting the Commission, the post states that its authors have conducted a survey that reveals that 80% of economists would favor the abolition of antitrust rules. I’m told by my economist friends that this cannot be true, for, they say “the literature makes it clear that antitrust law promotes our welfare” 😉

Written by Alfonso Lamadrid

23 April 2013 at 8:19 pm

Private Enforcement in Ireland

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Hart has offered us a book in exchange of some advertisement on this blog.

So here we go: their latest competition law volume is a book by David McFadden entitled “The Private Enforcement of Competition Law in Ireland”.         

Abstract: Competition is recognised as a key driver of growth and innovation. Competition ensures that businesses continually improve their goods and services whilst striving to reduce their costs. Anti-competitive conduct by businesses, such as price-fixing, causes harm to the economy, to other businesses and to consumers. It is small businesses and the consumer who ultimately pay the price for anti-competitive conduct. A coherent competition policy that is both effectively implemented and effectively enforced is essential in driving growth and innovation in a market economy. The importance of competition was recently emphasised when the EU/ECB/IMF ‘Troika’ included a number of competition specific conditions to the terms of Ireland’s bailout. Both Irish and Community law recognise the right for parties injured by anti-competitive conduct to sue for damages. This right to damages, in theory allows those that have suffered loss to recover that loss whilst helping to deter others from taking the illegal route to commercial success. However private actions for damages in Ireland are rare.

This book asks what the purpose of private competition litigation is and questions why there has been a dearth of this litigation in Ireland. The author makes a number of suggestions for reform of the law to enable and encourage private competition litigation. The author takes as his starting point the European Commission’s initiative on damages actions for breach of the EC antitrust rules and compares the position in Ireland to that currently found in the UK and US.

David McFadden is Legal Adviser and solicitor to the Irish Competition Authority and has published extensively on competition law and other regulatory issues in Ireland.

April 2013   302pp   Hbk   9781849464130  RSP: £50 / €65 / US$100 / CDN $80

20% DISCOUNT PRICE: £40 / €65 / US$80 / CDN$80

Order Online in US

USA: http://www.hartpublishingusa.com/books/details.asp?ISBN=9781849464130

If you would like to place an order you can do so through the Hart Publishing website (link above). To receive the discount please type the reference ‘CCB’ in the special instructions field. Please note that the discount will not show up on your order confirmation but will be applied when your order is processed.

 

Order Online in the UK, EU and Rest of World

UK, EU and ROW: http://www.hartpub.co.uk/BookDetails.aspx?ISBN=9781849464130

If you would like to place an order you can do so through the Hart Publishing website (link above). To receive the discount please type the reference ‘CCB’ in the voucher code field and click ‘apply’.

Hart Publishing Ltd, 16C Worcester Place, Oxford, OX1 2JW

Telephone Number: 01865 517 530

Fax Number: 01865 510 710

Website: http://www.hartpub.co.uk

Written by Nicolas Petit

23 April 2013 at 6:10 pm

AT Paradoxes of the Day

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Weird

I had weird thoughts today:

When the agency dismantles a monopoly in a market, it expands the consumer wealth open to appropriation by monopolists on other markets.

When the agency dismantles a monopoly in a market, it expands the amount of resources on which government can raise taxes.

Or the proof that all too often, we forget the basic principle that the economy works as a general equilibrium.

 

Written by Nicolas Petit

22 April 2013 at 9:01 pm

Posted in Uncategorized

Auto-critique + Mixed bag of thoughts

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I’ll tell you a secret. I’ve lately been quite frustrated with regard to my latest contribution to this blog. In the past few weeks there have been very interesting substantive developments that we could’ve covered, but I’m having increasing trouble to find the time to write here. That’s a problem, for it makes little sense to write for a (now) large audience unless you’ve something meaningful to say. So I thought, either I quit, either I make an enhanced effort to post some -arguably decently- interesting stuff. Risking sleep deprivation I’ve chosen option 2.

But, as with all important commitments, I’ll start next week 🙂  For the time being, I’ll leave you with some brief thoughts on some of the different issues that we’d like to cover more in depth in posts to come:

1)     On Google’s proposed commitments: Some basic elements of Google’s proposed commitments were leaked to the press (see the Financial Times’ piece on this). Rumor has it that the text to be market tested next week will be a bit dense, which has given us an idea for our very own commitment: we commit to explaining its content as objectively as we can in order to make Chillin’Competition a forum of discussion on this topic.

Some preliminary comments: (i) DG Comp appears not to object to Universal search itself; the basic description of the commitments reveals that the Commission has sensibly engaged in a balancing exercise which aims at creating more room for competition without disrupting too severely Google’s successful and innovative business model; (ii) apparently the commitments in relation to search mainly concern changes in Google’s user interface (UI). I would be curious to know who within COMP took responsibility for assessing what changes needed to be effected on something as important to Google as their UI (some say that the Commissioner himself had a significant intervention on this point!). We’ll come back to this as soon as there’s more info available.

2)     On the reactions of Google’s complainants to the commitments: A few weeks ago –while teaching a 6 hour course on procedure at the BSC in the middle of easter (my gf appreciated that we had to break our holidays for this…) I had to talk about, among others, commitment decisions and I used the Google case to illustrate some points. I realized then that many people don’t know that when the Commission adopts an Art. 9 decision in a case in which it has received complaints, it also has to adopt specific decisions rejecting each complaint. Now, if complainants were really sure that their theory of harm fits within current legal standards and that the commitments are insufficient, they would appeal the decisions rejecting the complaints, right? I’m not sure they will (even if it would be interesting to read for once how this case can be framed in legal terms).

Also, some complainants are there to address a specific business concern that they have concerning Google’s practices; others seem to be there just to put some sticks on Google’s wheels no matter what. I’m intrigued as to whether these two categories of interested parties will adopt the same approach from now onwards or not…

3)    On Nico’s yesterday post on the Expedia Judgment: Readers of this blog will not be surprised at the fact that Nico and I disagree on something 😉 I told him yesterday that I didn’t share his reading of the Expedia Judgment. In fact, when it came out I thought about writing a post on it, but when I read it I thought it was so common-sensical that there was little to be said.

However, and whereas I still like the overall Judgment, I now get Nico’s point, and I understand that para. 37 of the Judgment  might sound equivocal. I also see the point in the comments made by Bagnole and Asimo to that post. My take on it: the criterion of “appreciability” of restrictions of competition has a qualitative and quantitative dimension; restrictions by object are qualitative appreciable by definition; the quantitative appreciability criterion should be assessed separately. In this case the Court appears to assume that, to the extent that trade between Member States is affected the quantitative requirement is fulfilled, which could be understandable, but it’s also very arguable. Effects on inter-State trade may be an acceptable proxy as Bagnole and Asimo say, but I’d rather regard this as a different jurisdictional element not necessarily related to the quantitative significance of the restriction. True that in practice the Völk Judgment mixes them, and true that Expedia does too, but strictly speaking they’re different things.

(I hope this is clear despite the abstraction; I’m writing while on a plane next to someone who’s snoring [(-_-)zzz]  and trying that my diet coke doesn’t spill on me, so I’ve trouble concentrating…) 

Pay also attention to the fact that para 11 of the de minimis notice solely states that the threshold in the Notice are not applicable to hardcore restrictions, but it does not exclude the possibility that a hardcore restriction could be considered of minor importance when the combined market power of the parties is significantly below those thresholds.

4)     On the CISAC Judgments: Last Friday the General Court issued its Judgments in the Cisac case. We haven’t commented on them because the case is quite complex, and having only skimmed through it I would risk saying some stupidity missing something. We’ll come back to it. A couple of non-substantive interesting things in the meanwhile: (i) There have been various outcomes to the case for different parties: some did not appeal –apparently because they liked the new scenario-; others (the Spanish applicant) missed the deadline to lodge the appeal (I’ve nightmares about this ever happening to me), and others appealed everything but the point on concerted practices, which is the one that has been quashed. At the end of the day, however, the result may matter little in practical terms, for collecting societies could always unilaterally decide to do adopt any licensing policy, including the same one challenged by the decision (only on the grounds that it had been collectively agreed upon).  In any case, I’m told that market circumstances may have changed, and that some collecting societies are now interested in the “liberalization” (in terms of multi-territorial licenses)  that the decision sought to promote.  (ii)  It’s funny to read the Court saying that the Commission failed to explain some stuff; these cases required more than 100 hours of hearings (as our readers may know, the hearings had to be repeated for procedural reasons); Fernando Castillo, the lead Commission agent in the series, is well known for speaking extremely fast; surely he must have explained quite a few things in the course of so many hours !

5)     Remember the debate on exhaustion of copyrights in the case of computer programs and the most interesting Usedsoft/Oracle Judgment? The Spanish Competition Commission just issued a decision concerning Microsoft’s policies in this regard. It’s not yet published, but we’ll give you our views on it as soon as it is. [If you prefer not to wait for the free comments that we’ll publish here, I can always offer a premium version at hourly rates 😉 ]

6)      More on Microsoft. Some of you may have read that Microsoft is the target of a complaint lodged by Spanish users of Linux. I have no knowledge of this case other than what has appeared on the press (which sounds a bit odd, since it was reported that the complaint was lodged at the Commission’s delegation in Madrid and that it refers to Arts 81 and 82…). Reports say that the complaint alleges that the secure boot system in Windows 8 forces developers to conform to Microsoft’s requirements, thus extending the latter’s dominance in the OS market. Apparently, the new firmware supports authentication with digital certificates of the installed OS and their loader; in order for OEMs to get a “Designed for Windows 8″ label they must comply with Microsoft’s requirements, among which is the one (applicable to ARM equipment) of only booting Microsoft-certified software. Whereas I can’t comment on whether there’s any actual legal basis for this complaint, I’ve come across an interesting technical piece that explains what’s the factual background thereto: see Arstechnica’s piece here.

Written by Alfonso Lamadrid

19 April 2013 at 2:22 pm