Chillin'Competition

The much awaited reform of the Belgian competition authority is now out in the open.

New positions are being created (see here for more):

– President;

– Chief Economist;

– General Counsel;

– General Prosecutor;

– 20 part time Assessors, i.e. 10 French speaking + 10 Dutch speaking => the assessors will hear cases within decisional chambers; those chambers will be composed of 2 assessors + the President).

All the info can be found in the Belgian Official Journal of 27 May 2013.

Now, the talk of the town about this recruitment process:

1. A puzzling feature of this call for application is that French will be tested for Dutch speaking applicants to the position of assessor (although they won’t hear cases in French), and vice versa; but no such test will take place for the Chief of Legal Affairs and the Chief Economist, who can be unilingual. Query why.

2. Some people have discretely lamented that (i) as usual in Belgium, the process will be heavily politicized; (ii) that the future organigram of the agency would be already decided; and (iii) that several of strong candidates would in turn be dissuaded to participate to the beauty context.

I have sought information on this. I have been repeatedly told that NOTHING has yet been decided. There is apparently no obvious candidate for any of those jobs => put simply, incumbents will not be favoured over new entrants and anyone interested shall apply.

3. Nothing seems to disqualify lawyers from private practice to apply for a job as part time assessor. Some rules on conflicts of interests, which to date do not exist, will need to be adopted, if the new authority wants to avoid endless procedural problems.

4. Nothing is said of the confidentiality of applications and of the members of the selection committee.

5. The deadline for applications is tight: 10 June. RUN!!!

Our friend and former boss Trevor Soames has lost his parrot Bombolini a dozen days ago.

Trevor and Camilla offer a €1,000 prize to anyone who will found him.

I attach below the notice that Trevor and Camilla put together.

You may contact Trevor at +32.491.378.946 or Sergio à Mondocane at +32.2.660.96.56

You can also email Trevor and Camilla at: trevorandcamilla@ymail.com

See here for the notice: Lost Parrot

My writing in the blog is not the only side effect of Alfonso’s long working hours. We should have run the Brussels 20k together (I bet he even forgot about that). Maybe next year!

As I have devoted part of my Sunday to update an article, I thought It could be a good idea to ask your views about one of my forthcoming pieces. The view that there is something wrong with Article 102 TFEU is far from unanimous, but it is certainly widespread. There is not even a consensus as to what exactly is wrong with the said provision. In my view, the problem with existing case law is not in any way economic, as many authors believe, but legal. Cases addressing the same questions (say, price cuts) follow different rationales (just compare AKZO and Compagnie Maritime Belge). The substantive standards of intervention also vary across practices. Sometimes, the mere potential of foreclosure is sufficient to trigger the application of Article 102 TFEU (rebates and exclusive dealing are a classic example). Other practices require concrete evidence of foreclosure (just think of the case law on refusals to deal and that on margin squeezes).

Read the rest of this entry »

Publicly exposed as I have been, I have no choice but to be back in my capacity as interim blogger (which I confess is something I pretty much enjoy). It is not even a bad time for Alfonso to be extremely busy. Some readers will remember a post I uploaded a few months ago on a ‘not-so-mainstream’ pending case, which addressed some questions that I follow closely. Right on time, Advocate General Cruz Villalon delivered his opinion on 30 April, which is for the time being only available in French.

The fundamental question raised was that of whether a multichannel bundle offered by a cable operator is an ‘electronic communications service’ within the meaning of the Regulatory Framework for electronic communications. The material scope of the Framework was defined in an awkward way, as ‘services providing, or exercising editorial control over, content transmitted using electronic communications networks and services’ were not covered by it. This would mean that audiovisual media services (TV channels, on demand services and others) are subject to a different set of rules (typically media laws, which follow a different logic).

A careful reading of the Regulatory Framework suggests that multichannel services provided by cable operators do not qualify as ‘electronic communications services’ . In that sense, the question raised by the Dutch Court looked like a non-issue. This seems to stem clearly from Recital 45 of the Universal Service Directive, pursuant to which ‘[s]ervices providing content such as the offer for sale of a package of sound or television broadcasting content are not covered by the common regulatory framework for electronic communications networks and services’. It is also something that derives from Article 31 of the same Directive, which is carefully worded so as to make it clear that ‘must-carry’ obligations do not apply to the said packages but only to the exploitation of the infrastructure. What is more, the Commission and the National Regulatory Authorities seemed to assume that the said services are not caught by the Framework.

In his analysis of the question, Advocate General Cruz Villalon does not refer to the Universal Service Directive. This is surprising, if only because it seems to provide the most straightforward and directly relevant answer to the question. The Opinion does not go beyond the generalities and the definitions found in the Framework Directive. As a result (and this time unsurprisingly), the answer suggested by the Advocate General fails to bring a satisfactory solution to the real problem created by the truncated scope of the Regulatory Framework. He takes the view that multichannel bundles qualify as ‘electronic communications services’ insofar as (my free translation of ‘des lors que’) they comprise the transmission of electronic communications signals. But then does this mean that only the transmission element of the activity is caught by the Framework? Or does it mean that the bundles as a whole are caught by it? I hope the ECJ will be more explicit in this regard.

A la prochaine!

Pablo

A post on food and competition law dedicated to our friend Alfonso, who is busy prepping for the big hearing in Cisco v. the two best antitrust friends Commission+Microsoft.  

One of our readers has informed us that the Bundeskartellamt has conducted dawn raids at firms active in the potato sector (growing and distribution). Although lengthy, the press release does not say much of the substance of the case. Apparently, the BKartA suspects price fixing.

Neither does it mention whether there was a leniency application. Yet, we are told that the BKartA never gives such info at this stage of a case.

Thanks to Andrea for the pointer.

Our friends from the University of East Anglia Centre for Competition Policy (CCP) have put together an original and attractive conference (see link at the end of this post).

This is not yet another conference on competition enforcement. The programme tackles institutions for competition enforcement, but offers to do this through several lenses:  historical, comparative, economics, etc.

Besides this, there’s a significant number of enforcers on the programme, which promises well informed discussions.

A must attend.

CCP Conference Programme – final version

We had this morning at the GCLC a half day conference on pay for delay arrangements in the pharmaceutical sector.

This was a great event, which triggered the following thoughts.

On the law, the problem is not the conduct in itself, i.e. the payment arrangement (also referred to as a “settlement” agreement). Any agreement which consists in paying to seclude a competitor can be unlawful. The FTC apparently talked of a “classic violation” in old documents. We see such agreements all the time in the area of vertical restraints, when firms pay distributors in exchange for exclusivity so as to keep rivals off the market.

The problem lies elsewhere, in the proof of the anticompetitive impact of the agreement, actual or potential (the second component of an infringement). Economists talk about a credible theory of competitive harm.

Now, a settlement payment from originator to generic can only be deemed to restrict competitive entry if the judge would invalidate the patent. In other words, a settlement payment can only be anticompetitive if the patent is invalid. Otherwise (if the patent is valid), competitive entry could just NOT occur, and the payment question is irrelevant.

If I understand correctly, the Commission apparently assumes invalidation. In other words, it assumes that judges would invalidate litigated patents. This stance on what the judge is poised to do is similar to that found in the abuse cases involving Standard Essential Patents, where the Commission seems also to assume that the judge will grant injunctions.

My take on this: this is a meritorious assumption to make if only because patents are deemed presumptively valid once granted. And this weak assumption is not good practice when one has to formulate new policy. As J. Wright, FTC Commissioner, explains beautifully in a recent speech: the formulation of new theories of harm should be based on empiricism, not on guesswork.

Now, the one funny thing here is that to overcome what I may call the weak assumption problem (and to make the case for enforcement), the Commission relies on classic Chicago school reasoning (or if you prefer on basic rational incentives theory). The idea is as follows: an originator cannot rationally be paying a generic firm to stay out of the market if its patent is valid. The sole rational explanation is that the patent is invalid.

This line of reasoning has some teeth in conventional EU competition law. The AKZO “sacrifice test” in predation cases is one example of this: a dominant firm cannot be rationally pricing below costs. The sole rational explanation is that it is seeking to predate.

I believe, however, that one should err on the side of caution when it comes to crafting such “rules of inference”. Indeed, inferential equations of the AKZO kind are not mundane in EU competition law. They are exceptional, based on rich doctrinal debate as the AKZO ruling shows (it transposes the AREEDA and TURNER test) and on years of judicial precedents. Moreover, the problem is that there are many other possible explanations to the originator payment (irrationality, aversion to risk, etc.), including a whole raft of behavioral economics reasons.

So for patent settlement cases, I would actually apply a different type of “rule of inference”, such as the one applied in Woodpulp or CISAC, whereby the Commission can only find infringement if it proves the conduct has no other purpose than the restriction of competition, and thus must dispel all alternative explanations.

Funnily enough, most of the discussion on patent settlements has not touched upon this issue, and has instead focused on the “object-effect” distinction. This debate is, however, an uneasy one, given the lax state of the case-law. Maybe discussing about patent settlements under a “rules of inference” angle could help reach new ground.