Archive for July 2013
Operation Ghostfruit
What if Google and Apple waged war at each other?
I mean real war, not patent war.
In one of the best tech columns of the year, F. Manjoo and M. Yglesias (Slate) take a try at wargaming.
Manjoo plays Google. Yglesias plays Apple. And the outcome is spectacular. A must read.
The story has several antitrust angles:
- Google’s “operation ghostfruit” shares analogies with the Commission’s “search bias” theory of harm;
- Google’s dominance is certainly undisputable in the narrow, antitrust sense. But it is far less clear from a business perspective. If anything, the story shows that a company deemed dominant by antitrust standards – i.e. in a given relevant market – can be seriously threatened by a company active in a wholly distinct market. Put simply, the battlefield in the high tech sector is not an antitrust relevant market. It is the sector as a whole. And companies that sell distinct unsubstitutable products may well – and do – engage in competition. A further reason to abandon market definition in high tech industries, and switch to novel concepts (the “relevant sector”)?;
- Dominant firms may rationally try to exclude non competing firms;
- Antitrust agencies (and governments) are instrumentalised by dominant firms to exclude other companies;
- Microsoft is no longer a player
SEP Injunctions under Article 102 TFEU
Two weeks ago, I was the lucky dude from academia attending a conference in Rome on the role of courts and agencies in innovation markets.
The conference was organised by Assonime, CASRIP and LUISS University.
Interestingly, the organisers had invited judges and officials at grips with injunction cases. I attach some of their presentations hereafter:
Grabinski-Orange-Book-Approach-Rome-15-July-2013 SEP Michael Adam Slide_July15_Giudici Takenaka_Very Final 071513 SEP Rome
I also attach my own presentation: Information Technology, Innovation and Competition Law – Assonime Conference (15 07 13) N PETIT
The teaser: my slides reveal what substantive test should apply to the act of seeking injunctions on FRAND pledged SEPS.
Breaking News
Appointments at the head of the new Belgian NCA are ongoing.
The following people are in the cards (subject to approval by the Council of Ministers this week):
President: Jacques Steenbergen
General Prosecutor: Véronique Thirion
Chief Economist: Alexis Walckiers
Chief of Legal Affairs: Joachim Marchandise
This means that no former official of the Belgian Competition Council will seat on top of the new agency.
But two incumbents from the Directorate General, Jacques Steenbergen and Alexis Walckiers, will take key positions in the agency.
The new kids on the block are Joachim Marchandise and Véronique Thirion.
Joachim is a very skilled practitioner who used to work as an associate for the Brussels office of Linklaters.
We do not know Ms. Thirion who is poised to occupy the critical function of General Prosecutor. For more on her background, see here.
Chilling Case
In hot Brussels, our friend Johan Ysewyn kindly points us out to a “chilling” case: abuse of dominance by freelance ski photographers. Seems I am not the only competition geek on this planet
The facts are cool (cheap punning again). CAPSA runs the ski lift infrastructure of Cerro Catedral, Argentina.
CAPSA has contractually reserved the provision of photography services to DEFOTOS.COM.
And CAPSA has imposed an an extra fee for the use of lifts by freelance photographers.
The Argentinian Competition Commission and the Ministry of Commerce have found abusive discrimination.
This looks to me like the Argentinian version of Aspen Skiing Co. v. Aspen Highlands Skiing Corp., 472 U.S. 585 (1985).
However, unlike the US gem, this case is about a secondary line injury discrimination (the sole type of discrimination covered under Article 102 c) TFEU).
Sexy Cases
Journalist, practitioners and scholars often accuse agencies of putting resources on “sexy” cases.
This would be particularly true in matters where agencies can prioritize cases and select enforcement targets: e.g., in unilateral conduct cases and to a lesser extent in merger cases (the argument has less traction in cartel and State aid cases).
True, untrue?
A sexy case can be defined as one which brings large public exposure.
Sexy cases often involve popular consumer goods/services: search engines, smartphones, LCD screens, etc. They may also concern “evil“, John Grishamesque industries: oil, tobacco, pharmaceuticals or finance. Or they may feature non EU firms which threaten domestic operators (Gazprom, Boeing, etc.).
With this background, there’s a good proxy to determine whether agencies focus on sexy cases: brands rankings.
And this recent ranking seems to confirm agencies interest for sexy cases: the top 5 brands are Apple, Google, Amazon, Microsoft and Samsung. All those companies are currently wrestling with DG COMP.
So much for the facts.
Public choice theory has an appealing explainer for public authorities’ focus on sexy cases: like standard businessmen, agency officials are profit maximisers. Yet, given that they cannot maximize revenue, they strive to make good on other variables, such as press recognition, reputation, etc.
In the week-end, I had some time to think on whether it is good for agencies to focus on sexy cases.
The answer to this is unclear. On the one hand, sexy cases are likely to improve the taxpayer’s knowledge of competition policy, and disseminate the “culture of competition” accross society. In brief, sexy cases are good in terms of competition advocacy.
On the other hand, sexy cases nurture disinterest for competition policy. Let me explain. Sexy cases generate the perception that competition policy is public policy for the rich and wealthy. On complainants’ side, if you don’t have a complaint against a Google or a Microsoft, you feel you are unlikely ever to attract agency interest. This, in turn, has a cost for society. Cases which are potentially serious, yet unsexy, will not be reported to the agency (a type II error). Similarly, on infringers’ side, firms with little public exposure know that there are quasi-immune from prosecution if the enforcement system is focused on sexy cases. Thus, they have little incentives to comply with competition law (another type II error).
With this background, I still fail to figure out which of those two effects – knowledge v disinterest – dominates the other.
Yet, I intuitively believe it is good administrative policy for an agency like DG COMP to also run ‘small‘ abuse cases like Tomra or the recent ARA case.
I conclude with a thought, which just sprung to mind whilst writing this post: may agencies be sometimes tempted to hide sexy cases? I mean look: the CDS and Libor investigations or the Gazprom case make remarkably little noise in the news, despite their considerable interest for society at large.
Just Married
Important message to all Chillin’Competition groupies:
Alfonso just exited the market.
He and Lali signed a very long term contract this week end in Reinosa, which includes exclusivity provisions, joint production, infrastructure sharing, information exchanges, financial integration, etc.
This alliance is welfare-enhancing. I can personally testify that a gargantuesque wealth of cheese, jamon and wine resources was put on table this week-end.
But what this pact first and foremost generates are non-economic efficiencies.
There is a lot of love, true, genuine, sheer love between the two parties (and amongst their families and friends).
Congratulations to Alfie (my co-blogger’s nickname) and Lali.
And a huge, enormous thank you for the amazing ‘turnkey‘ wedding.
Google Dissertation
A post to be taken with a grain of salt.
There’s a Google Prize at the College of Europe.
It rewards the best thesis on “EU competition rules and policy relating to information technology“.
This prize was just awarded. Here’s what has been published on the College of Europe website:
GOOGLE Prize – Open to all students from the legal studies department or following the ELEA programme in Bruges.- Best thesis on “EU competition rules and policy relating to information technology”.- Prize of €2000. Procedure : all thesis titles are submitted to GOOGLE which selects the theses with relevant topics. An electronic version of the preselected theses which receive the minimum mark of 15/20 will be sent to GOOGLE at the beginning of June 2013.
Decision taken by GOOGLE.
CALDINI Giuditta (DR) (IT) Thesis title : “Commitment Decisions under Article 9 of Regulation 1/2003. Does the Shortcut Arrive at Destination?” Thesis supervisor : Prof. L. ORTIZ BLANCO
I guess it is fair to congratulate Giuditta (and Luis too BTW) for the prize.
As for the rest, no comment…
Or maybe a comment: Google was again in the news yesterday. The concessions offered do not sufficiently meet the Commission’s concerns. My two cents on this here.
Weapon of Constitutional Destruction
On 5 July, the French Constitutional Court (FCC) issued a decision that may have massive repercussions in France (and which may trigger debate elsewhere).
In Société Numéricable et autres, the FCC was asked to rule whether the sanctioning powers bestowed upon the French regulator for Telecommunications (ARCEP) were compatible with the Constitution.
In brief, the litigated provision entitles the ARCEP to remove market authorisations and/or to slap financial sanctions on electronic communications operators.
The FCC analysis is straightforward, blunt, brutal:
“Considérant que, selon le premier alinéa de l’article L. 132 du code des postes et des communications électroniques, les services de l’Autorité de régulation des communications électroniques et des postes sont placés sous l’autorité du président de l’Autorité ; que, selon l’article D. 292 du même code, le directeur général est nommé par le président de l’Autorité, est placé sous son autorité et assiste aux délibérations de l’Autorité ; que, par suite et alors même que la décision de mise en demeure relève du directeur général, les dispositions des douze premiers alinéas de l’article L. 36-11 du code des postes et des communications électroniques, qui n’assurent pas la séparation au sein de l’Autorité entre, d’une part, les fonctions de poursuite et d’instruction des éventuels manquements et, d’autre part, les fonctions de jugement des mêmes manquements, méconnaissent le principe d’impartialité ; que celles de ces dispositions qui sont de nature législative doivent être déclarées contraires à la Constitution“
In English now: the disputed provision does not provide for the separation of investigative and decisional functions within ARCEP. This breaches the principle of “impartiality” . As a result, the sanctioning powers of ARCEP must be declared contrary to the Constitution.
The French competition authority will likely not be impacted by this ruling, given that it is built on the bifurcated agency model.
And other integrated competition agencies can sleep tight (e.g. DG COMP), given the lack of FCC jurisdiction over non domestic affairs.
However, the merit of the FCC decision is to show that the “prosecutorial bias” issue is not a rethorical invention, concocted by disgruntled EU antitrust lawyers at grips with DG COMP.
Even in a country like France, where there is a considerable sympathy towards public institutions and where government agencies are almighty, some fundamental procedural safeguards are to be observed. And it starts with the idea that “he who prosecutes shall not judge (and sanction)“.
Thanks to Elise for the pointer.
Summer Conference on the Merger Review
On Friday, the GCLC will hold a half-day conference entitled “EU Merger Control in Review – Taking Stock“.
The seller: Commission officials will present the reform.
I attach the programme below. A registration form can be found here.
Light summer reading
It’s July; the weather is good even in Brussels; you should be either on holidays, enjoying outdoors, or finishing off work in order to be able to go out and to do some photosynthesis; but nevertheless you’re reading a competition law blog… (yes, writing it is even worse, but we aren’t talking about us now…).
So, there is cogent, consistent and sufficient evidence to indicate that you’re a bit of a geek. If that’s the case, these are 3 recommendations of short reads, all of which deal with issues on which we’ve touched in the past:
– Wouter Wils, Ten Years of Regulation 1/2003, A retrospective– A very good and concise overview of the history and results of the procedural modernization of EU competition law (my only negative comment is that, for some unknown reason, it doesn’t cite my masterpiece, excellent, quite good, good, decent? more or less tolerable paper on the issue…)
– Thomas Graf – who together with Maurits Dolmans (click here for his Friday Slot interview) is the main lawyer for Google in the framework of the Commission’s investigation- has written a blog post about Google’s proposed commitments., available here. It’s always interesting to know the impressions of those with first hand knowledge of cases. My own post on this subject is referred to as a one among three “thoughtful comments”; not sure if that is because my post was any good or because we actually have similar views on the main issues…
– Also on Google, last week I received a piece published in the Financial Times positing that “true progressivists” would seek Google’s break up.
Actually, this was of quite some interest to me, since (as frequent skimmers may remember) I’ve devoted a few posts to what “true progressivism’ or “radical centrism”should mean to the antitrust world: see here (for the original post), here (for the short article developing the post), and here (for an interview in which I’m quoted saying that both the post and the article are superficial exercises of wishful thinking -I’ve original marketing techniques, you see..-).
Not being a fan of labels, I would have more or less defined myself as a radical centrist, and nevertheless I fail to see the reasons for Google’s breakup; query: does that make me a bad centrist?! The author of this interesting piece is Prof. Richard Sennet, a LSE professor. Since I didn’t recognize the name I “Googled” it and saw that he’s professor and expert in urban sociology.
Now, this is a worrying development for most competition lawyers. First it was economists who (quite successfully) started to eat “our cake” become antitrust experts, and now it’s urban sociologists!! I guess it’s time to retaliate and send the FT my expert piece on the effects or rural migration in postmodern Spain.. 😉
Chillin'Competition 