Chillin'Competition

Relaxing whilst doing Competition Law is not an Oxymoron

Archive for April 2016

Glamour: Cement? Star Wars, Hollywood and lawyers’ rankings

with 2 comments

 

BSC_case

Last week Pablo wrote a post describing his week of talks around Europe (Athens, Amsterdam for the Competition day, Bruges, etc) where he had been invited to discuss about the effects-based approach, recent 102 case law and online platforms.

My longest trip of the week was to Rue Ravensteim in Brussels (at the premises of the Brussels School of Competition –BSC-) to talk about cement. Life is unfair.

The talk at the BSC on the ECJ’s Judgments in the cement case was very interesting. I participated in the panel together with Manuel Kellerbauer (from the EC`s legal service) and Christian von Koeckritz, from Gleiss Lutz (the downside of speaking with two Germans is that I was the only one who didn’t get to be called “Dr.”). I did not innovate much from what I already said in my three posts on this case (here, here and here). Essentially, and given that –most likely due to procedural economy reasons- the ECJ annulled the decisions on the grounds of lack of motivation (only plea common to all applicants), the best we got out of this case were the sensible and well-reasoned Opinions of AG Wahl. If only for their persuasiveness, those are likely to be very influential in  the future with regard to issues that, despite their importance, are unlikely to be raised before the Court again in the near future (certainly not in a case as extreme as this one). Most important of all, I believe that in the light of the General Court’s Judgment in case T-296/11 (see the first hyperlink above) and the Opinions (see second hyperlink), the criterion of “necessity” contained in Art. 18 of Regulation 1/2003 might from now on be interpreted objectively and, in my view, correctly. The slides presented at the talk are available here: Dr. Christian von Köckritz, Dr. Manuel Kellerbauer, Alfonso Lamadrid.

Btw, I had also been lecturing at the BSC a couple of weeks before and on that occasion I did innovate a bit more. We spent practically the whole 4 hour lecture on procedure, running a practical case (from inspections to decision) where students took different roles and were free to set strategies; they did great. I’m likely to repeat that a few times in the future, if only for the vast amount of materials (evidence, fake evidence, Commission documents) that were created for students to do the case. The case involved intergalactic droids, and all documents and email chains related to “real” characters and companies that exist at the very least in the Star Wars Wikipedia (or so I’m told by the extremely competent geek who helped me). The result of this exercise is pictured above.

And speaking of Hollywood. If my cement lecture in rainy Brussels was not as glamorous as Pablo’s trips through Europe, I compensated a bit with some extensive quotes in the Hollywood Reporter this week. At first, when my colleagues tried to transfer the call from the publication I thought it was a prank (we run a prank scoreboard at the office in which I hold an unassailable lead 🙂  sorry Sam….), but it turned out that it was true. This time it was not about the rumors linking me to Monica Bellucci (please respect our private life), but about the Commission’s Pay TV case. Should you be interested, the piece is available here.

Also this week the new Chambers Europe 2016 guide came out ranking lawyers, including competition lawyers. I was very well treated, as “star associate” in Spain and sole “associate to watch” in Brussels (the office teasing that followed is actually what led me to suspect the Hollywood call was a joke..). I read this week that happy people don’t talk badly about others. If that’s the case Chambers researchers must be very happy people, as it is remarkable to find such an extensive publication that only says positive things about so many lawyers about whom there are not so many positive things to be said 😉 So I would take all that with many pinches of salt. Not that I complain, but I wouldn’t mind losing a title that only identifies me as the lowest paid guy in the rankings!  😉 Be that as it may, this reminded me of two earlier posts I wrote some time ago on What makes a great lawyer, and on Sunshine lawyering; there you’ll see my views on all these things.

Enjoy the weekend!

Written by Alfonso Lamadrid

29 April 2016 at 9:57 am

Posted in Uncategorized

Android meets Pronuptia, or why software licensing is like a franchising agreement

with 9 comments

Pronuptia and Android

Imagine the European Commission issued a Statement of Objections against McDonald’s saying:

The McDonald’s brand is commercially important for McDonald’s franchisees. In its franchising agreements, McDonald’s has made the licensing of its trade mark conditional on selling only its own products. As a result, competing products cannot become the default fast food served at McDonald’s restaurants. These clauses deprive consumers of more interesting, potentially superior, fast food combinations. Just think of how amazing it would be to have McDonald’s, Chipotle and Pizza Hut all in the same store. In addition, the Commission is concerned that McDonald’s insists on making money out of its licensing activities’.

The EU competition law community would unanimously disapprove such a Statement of Objections. Yet, if you think about it, this is pretty much what the Commission argues in its press release on Android. Arguably, the press release is more controversial, as it goes further (as if the above example did not go far enough).

It took me a while to realise, but the agreements concluded by Google and mobile phone manufacturers are essentially franchising agreements. Apple is a vertically-integrated operator that sells its own phones to create a unique ‘look and feel’. As is well known, it does not rely on third-party manufacturers. Google (like McDonald’s, Pizza Hut and Subway) uses various contractual mechanisms to mimic vertical integration and create a competing ‘look and feel’.

Android and the Pronuptia conditions

The Court of Justice realised early on, in Pronuptia, that franchising agreements are pro-competitive in the sense that they enhance inter-brand rivalry. It ruled that some clauses included in franchising agreements do not violate Article 101(1) TFEU at all. The Court did not say that they are not restrictive by object. It ruled that they are never restrictive of competition, irrespective of the market power enjoyed by the supplier (or franchisor).

In particular, the Court held in Pronuptia that any clauses that relate to the protection of the (i) know-how of the franchisor and (ii) the reputation and uniformity of the franchise are not caught by Article 101(1) TFEU. The restraints challenged by the Commission in Android could be examined in this light. Is the purpose of the alleged bundling of Google applications to create a uniform brand image across devices? Do the ‘anti-fragmentation’ clauses seek to preserve the reputation and integrity of the network?

Some people might react to the above by saying that the Android agreements are far less restrictive than the typical franchising agreement. Generally, a franchisor requires exclusivity from franchisees. Even then, the agreement does not fall within the scope of Article 101(1) TFEU. In Pronuptia, the Court accepted that (outright) exclusivity obligations may be necessary to protect the reputation of the franchise.

In Android, the Commission does not claim that Google requires (outright) exclusivity from third-party manufacturers. At most, the concerns relate to an alleged obligation to exclusively pre-install Google Search. This requirement, if established, would be considerably less stringent. If outright exclusivity would be acceptable in the context of a franchising agreement, why would a less stringent restraint be an issue?

The importance of the counterfactual

The Court understood in Pronuptia that, if a supplier were not able to protect its know-how and brand image, it would not use franchising. In the absence of some core clauses, franchising would simply not exist, which is why these core clauses are never caught by Article 101(1) TFEU. As other cases, Pronuptia is all about the analysis of the counterfactual: does the practice restrict competition that would have existed in its absence?

It is difficult to gather from the Android press release whether the Commission has assessed the conditions of competition with and without the restraints. This is (or should be) a fundamental step in the analysis. Google – it is not a secret to anyone – makes most of its money through advertising. By challenging, inter alia, its ability to bundle applications, the Commission is in fact challenging Google’s very business model.

Against this background, it would be necessary to consider what would have happened if Google had not been able to make money through bundling and/or by requiring that applications be pre-installed on third-party devices. Would Google have invested in the development of an ecosystem rivalling Apple’s if it had not been able to monetise its efforts?

If the answer to this question is no, then Google’s practices cannot be contrary to Article 102 TFEU. If the Android ecosystem would not have been created absent the clauses challenged by the Commission, the said clauses do not restrict competition that would otherwise have existed.

Now that Android is up and running the Commission may believe that the world could be a better place if some contractual restraints were removed. But looking at the matter from an ex post perspective alone is misleading. One cannot have it both ways. A world with the restraints may look imperfect to some, but it is definitely better than a world without Android. A proper analysis of the counterfactual should look at the practice from an ex ante and an ex post perspective.

Ex ante thinking transpires from Pronuptia and other Article 101(1) TFEU rulings such as Nungesser. An ex ante approach to the analysis of practices also explains why a refusal to license an intellectual property right is only abusive in ‘exceptional circumstances’. If the Court had looked at the matter solely from an ex post perspective in Magill, every refusal to license would be abusive: ex post, every single compulsory licensing obligation promotes competition and benefits consumers.

Yes, but Google is dominant: a ‘special responsibility’ not to make money?

One could argue that all of the above is irrelevant, because Google is allegedly dominant in one or more of the markets covered by its practices. Some people like to claim that, when a firm is dominant, anything goes. After all, it is argued, Article 102 TFEU cases are very different from each other and dominance is an exceptional occurrence.

I do not see things that way. It would be a mistake to stop thinking rationally simply because a case is about a dominant firm. The logic behind Pronuptia is not less compelling just because Article 102 TFEU is potentially applicable to an agreement. Arguably, the case for protecting the know-how, reputation and uniformity of a franchise is stronger when it has become really successful.

I am also uneasy with intervention that questions the business model of a company, even if the company is dominant. The ‘special responsibility’ under Article 102 TFEU is a nebulous concept. But I do not believe the concept can be stretched as far as to support the claim that dominant firms have a ‘special responsibility’ to give up their way of making money (and thus to subsidise rivals).

Written by Pablo Ibanez Colomo

25 April 2016 at 10:28 am

Posted in Uncategorized

Back from the conference tour: presentations and thoughts

leave a comment »

Charlatan on tour

I arrived yesterday from a pretty long conference tour (probably my longest one to date): in the course of a week I have been in Athens, Amsterdam and Bruges. This is the definitely the last time I do this… until next time I do this. The conferences were all very interesting and, more importantly, very varied in their context and approach.

IMEDIPA Conference (Athens)

In Athens, I attended the 9th IMEDIPA Conference, organised by the London-based Ioannides (Kokkoris, from Queen Mary; and Lianos, from UCL). Those who have attended their events know well they are amazing hosts. I was invited to take part in a panel discussing the rise (and demise?) of the effects-based approach in EU competition law.

Victoria Mertikopoulou and Lia Vitzilaiou gave an overview of recent Article 102 TFEU case law from different perspectives. See here for Victoria’s presentation and here for Lia’s. After the presentations I took part in a panel, chaired by Ioannis Lianos (the other speakers were Damien Gerard, Yannis Katsoulacos, Giorgio Monti and Renato Nazzini).

The fundamental idea I sought to emphasise is that the purpose of the effects-based approach is to preserve values that are dear to lawyers. This approach is indeed first and foremost about ensuring legal certainty and consistency (treat like practices alike). Economic analysis is only an instrument that serves these aims. In the same vein, I reminded the audience that the form-based approach came under attack primarily because it failed to provide a set of stable and predictable legal principles.

European Competition and Consumer Day (Amsterdam)

In Amsterdam, I took part in the European Consumer and Competition Day, organised in the context of the Dutch EU Presidency. A different city and a wholly different event, albeit not necessarily because of the speakers. President Bruno Lasserre and President Jacques Steenbergen, who were also in Athens, took part in the panel in which I shared my thoughts (see here) on the application of EU competition law to online platforms. The other participants were Thomas Kramler (aka Mr Digital Single Market) and Guido Lobrano (Business Europe).

The point of my presentation is quite simple. I tried to show how relying on fairly simple and well-established principles of EU competition law can take us a long way in the analysis of restrictions in the online world. One of this basic principles is the counterfactual (does the practice restrict competition that would have existed in its absence?), which is particularly relevant to scrutinise concerns with geo-blocking. I also explained that, following Cartes Bancaires, it is clear that, as a rule, restraints that are a plausible means to address free-riding are not restrictive by object. This principle is key to understand the approach of the French authority in Booking.com.

To be sure, our panel was not the high point of the European Consumer and Competition Day. That was instead Commissioner Vestager’s speech in the morning. The Commissioner hinted at what was going to happen on Wednesday (and which Alfonso reported, as usual, on the very day) and gave a good sense of future reforms in the field of merger control.

The Division of Competences in the EU Legal Order: a Post-Lisbon Assessment (Bruges)

The tour ended at my second academic home, the College of Europe in Bruges. Sacha Garben and Inge Govaere managed to attract a truly impressive line-up of senior academics, judges and officials. It is pointless to mention any of them because I would have to mention them all, but you can take a look at the programme here. The conference was the most academic of the three, and the one that was emphatically not devoted to competition law. Still, the organisers were able to find two competition lawyers interested in institutional and constitutional matters. Damien Gerard, another member of the ‘flying circus’ (to use Jacques Steenbergen’s expression), was invited to take part in a panel discussion. The presentation I gave can be found here.

Have a great weekend!

Written by Pablo Ibanez Colomo

22 April 2016 at 6:57 pm

Posted in Uncategorized

Breaking news: Pay-TV investigation- Paramount offers commitments

leave a comment »

a2bguard2bof2bhonor2bpasses2bout2bas2bqueen2belizabeth2bii2brides2bpast2bduring2bthe2btrooping2bthe2bcolor2bparade2b1970

It has just been announced that Paramount Pictures has offered commitments to address the Commission’s concerns in the context of the high-profile Pay-TV investigation (in which, for full disclosure, I represent a third party, PACT -British Independent Producers-). Pablo has also in the past commented on this case in some detail (see here and here).

This looks like surprising news, as until now Paramount, like every other affected party, strongly disputed the Commission’s allegations. As you may remember, the allegations in this pilot case (with potential huge ramifications) relate to clauses present in bilateral agreements between Hollywood majors and Sky pursuant to which Sky must ensure that content is not broadcast outside of the territory covered by its license. The case relates both to satellite transmission and to online transmission, even if the two are subject to different copyright regimes (more on this in a second).

This is being portrayed as big news in the press, but is it really that relevant? Let’s see:

-For Paramount: I can’t judge on whether yielding makes business sense for Paramount. Surely they have their reasons (which are seemingly financial rather than legal). They are paying a price but they’re the only one who can judge whether the compensation is worthy from a business standpoint. Thus, logically, no comments on our part.

-For other companies: If this were a standard poker game appearances could suggest that Paramount is folding in the light of a strong hand on the part of the Commission. I doubt this is the case given the specificities of Paramount’s situation, but arguably that’s only an outsider’s impression. The only objective, legally relevant fact is that commitments do not imply the admission of an infringement, so the debate remains entirely open and this does not legally place others in a worse position.

Much to the contrary, it could even be argued that once the Commission has accepted commitments with regard to one undertaking, it could now not impose fines on others for exactly the same practices.  This is because, as you know, commitments are only appropriate in cases where the Commission does not intend to impose fines. In fact, unless I’m mistaken there has never been a case or cases involving the same practices where the Commission accepted commitments and imposed fines. Last time a “hybrid” comparable scenario arose (in the Samsung and Motorola cases; see here for my comment on this point), the Commission decided not to impose fines on Motorola but rather to limit itself to declaring an infringement.

 -For the Commission: For the Commission this means good press (it did get something out of the case), a bit less work (but not that much less since most of the work was done). As explained, it also arguably could mean that perhaps it cannot now impose fines on others. At the same time, it could also be argued that this move would somehow set the Commission on a pre-judged inevitable path (as it would appear odd that charges were withdrawn with regard to others after one has yielded), but in my personal view that would be a great mistake, as cases are not to be decided on the basis of a company’s strategy, but rather on the merits, and the Commission should continue examining the feedback it received in the replies to the SO and at the hearing, as I’m sure it is doing.

But forget about PR, and about winning or losing a specific case; is this offer something that changes anything in the marketplace or that achieves the Commission’s wider objectives? I’m not so sure.

Even if every major studio (or even every copyright holder in the world) were to offer similar concessions -which imply renouncing to given clauses that enforce their IPRs in a given way- the copyright legislation would still be in place (unless changed by the legislature, which is unlikely). This means that even if all geo-blocking clauses were suppressed, the “passive sales” that the Commission would like to see would not exist, because they would still be precluded by the regulatory framework (which in the online world grants copyright holders the right to authorize or prohibit communications to the public in every territory of broadcast; see Art. 3.3 of the Copyright Directive). I already hinted at this here.

That is why, at least in my view, the only concessions with which the Commission could achieve something meaningful in this case would be those of Member States in the context of the legislative process.

Written by Alfonso Lamadrid

22 April 2016 at 11:24 am

Posted in Uncategorized

The Commission’s Statement of Objections in the Android case

with 2 comments

european-competition-commissioner-margrethe-vestager-google-antitrust

The competition news of  the past couple of days have just been confirmed. The European Commission has annnounced that it has addressed Google and its parent company Alphabet a Statement of Objections regarding its Android mobile operating system and apps. The Commission’s press release is available here.

Here are all of the previous posts that Pablo and I have written on the case. In the light of today’s press release they would still appear to be relevant and valid:

  • More on Android (includes presentations on the case positing contrarian views, including one by Microsoft’s lawyer in the case)
  • A comment on the Microsoft/Skype Judgment (although not directly related to this case, it dealt with many of the issues relevant to it. It seems I was among the few who read it attentively and took it seriously…).
  • Also, you should check out this recent piece on “Systemic Efficiencies in Competition Law: Evidence from the ICT Industry” by Konstantinos Stylianou (who did the Harvard LLM with me and who is now at the University of Leeds).

P.S. 1- We have some new ideas on the bundling aspect of the case, but we still need to decide whether these should be “open source” or “licenseable” 😉

P.S. 2- In addition to the bundling allegations discussed in our posts above, the press relese refers to two other challenged practices concerning the anti-fragmentation policy and alleged exclusivity arrangements. These are new to us and we don’t yet have a view on them.

Written by Alfonso Lamadrid

20 April 2016 at 12:34 pm

Posted in Uncategorized

Burning issues at the ABA’s Antitrust Spring Meeting

leave a comment »

 

ABA Marijuana Panel Entrance

This year’s ABA’s Antitrust Spring Meeting featured a panel on the antitrust issues faced by the marijuana industry (see here).

This is no joke; it seems that following its legalization by 23 States marijuana is the fastest growing industry in the U.S., currently worth  $4 billion-per-year but this budding economy is expected to grow tenfold in the near future.

As in any rapidly growing semi-regulated industry, marijuana is poised to be an interesting green field for the application of competition law. Some report instances of boycotts, price fixing, false advertising, output limitation, distributor concentration and state-mandated vertical monopolies. Some of you may actually remember how alcohol provided many of the most interesting cases in EU Law (see here)

Since many of these issues remain in a doobious, funny smelling nebulous state,  even expectations were high.

And mysteriously enough, although we are told that this was attended by the entire army of MLex journalists present in D.C, there is no public information about the content of the panel.

This is why we at Chillin’Competition have enquired among those who attended about what it was that happened there.

Their testimony is as follows:

  • LC. Anonymous MLex Chief Correspondent , “We did our best. If anyone tells you that they remember what went on at the panel, they’re lying”.
  • Mary Jane Green, Senior Associate, Wandon & Scott: “It was a very disappointing panel. Bingham´s “Port and Chocolate” reception always delivers what it promises, but the marijuana panel was a fraud; talk about false advertising! ”.
  • Adam Smith, Senior Economist: “Nothing special went on. You know, people of the same trade seldom meet together in smoke-filled rooms, even for merriment and diversion. There’s nothing wrong with that
  • S. Senate aide: “It was half baked. The transatlantic perspective was missing. All the European officials interested in the topic were attending the panel on tax rulings…”.
  • Panel moderator: “Let’s roll !
  • Curro Farlopez, Partner, Baked and Stoned: “I swear I never tried that and I’ll never do it again”
  • Senior Associate, Herb Smithsonian, “Best discussion on “Joint” ventures I ever attended“.
  • Two LLM students at a Washingdon D.C college, who were denied entry to the panel: “We can’t help you. We toke a joint decision to attend, but the organisers really made a hash of the registrations.”
  • Partner, Housefed, “ I smell the greatest collective action case in history”.

If any reader finds out more, please drop us a line.

 

 

Written by Alfonso Lamadrid

18 April 2016 at 4:06 pm

Posted in Uncategorized

Book Review: The Concept of State Aid under EU Law

leave a comment »

Piernas

[The ECLR has just published my review of Jorge Piernas’ book on EU State Aid Law, which I reproduce below. I definitely recommend this monograph!]

EU state aid law has become a complex area. It is challenging for practitioners and academics. While publications for the practising lawyers keep growing (there are some excellent monographs and a specialised journal), works of a more theoretical nature remain relatively rare. Volumes approaching the subject from an academic perspective, such as Juan Jorge Piernas Lopez’s, are thus most welcome.

The thesis advanced by the author helps explain why it is difficult to find similar literature on the topic. Piernas argues that the (evolving) policy preferences of the European Commission (the Commission) are a major driver in the evolution of EU state aid law. If this is so, one would expect to find inconsistencies in the case law, as well as fluctuations in the emphasis given to some conditions of art.107(1) TFEU. Trying to develop, against this background, a systematic analytical approach to the case law is unlikely to prove easy.

Piernas’s approach reflects these difficulties. Instead of providing a top-down approach to the topic, and instead of offering a theoretical account capable of explaining the rationale behind the case law, the thrust of the monograph revolves around some of the leading cases in the field, which are presented in the form of short case notes. The absence of theoretical ambition is refreshing. Piernas argues that the policy position of the Commission in each of the cases is a more meaningful way to understand the outcome in each case. Thus, the description of the judgments takes into account the interpretation of art.107(1) TFEU proposed by the Commission. The effort in this sense is welcome and most illuminating.

Following a first part in which the author puts EU state aid law in perspective, he devotes four chapters to the elements of art.107(1) TFEU. The notions of advantage and selectivity are covered in Chs 4 and 5, respectively. The requirement that state aid be granted “by the State or through State resources” is addressed in Ch.6. Finally, the effect on trade and distortion of competition conditions are discussed in Ch.7.

Those interested in the field of state aid will be familiar with the choices made by Piernas. These are classic judgments that are likely to feature in any course devoted to EU state aid law. For instance, Ch.4 covers landmark rulings relating to the notion of advantage, includingSteenkolenmijnen, SFEI, Altmark and EDF. The reader is guided to the introduction of some key notions, including that of aid itself (which is an advantage that comprises measures such as tax breaks or sales below the market price) and the so-called market economy investor principle. Chapter 4 also discusses the conditions under which compensations for public service obligations fall outside the scope of art.107(1) TFEU.

The choices made by the author in Ch.5 are equally unsurprising. Piernas drives the reader through the landmark rulings that have contributed to the controversies around the notion of selectivity. This guide comprises old cases such as Italy v Commission . The Court held in that case that state aid is concerned with the effects of measures and not with their causes or aims. This statement, which was arguably uncontroversial and meaningful in the context in which it was introduced, has become an important source of confusion, as subsequent case law shows. British Aggregates, which is the ruling chosen by Piernas, illustrates this confusion particularly well.

Gibraltar is the last case discussed in Ch.5. It epitomises better than any other ruling how impenetrable the concept of selectivity has become. The judgment of the Court of Justice in this case has notable consequences that are difficult to ponder. It seems clear that all Member States use the tax system in a way that accommodates the economic structure of the country and the policy objectives of governments. It was safe to assume before the judgment, as explained by the Commission in its 1998 Notice on direct business taxation, that not all of these measures were caught by art.107(1) TFEU. For instance, a reduction in the taxation of labour is necessarily a general measure. According to the Notice, the fact that it favours, by definition, labour-intensive industries is not sufficient to trigger the application of art.107(1) TFEU.

It is no longer possible to have any certainty about the scope of the notion of selectivity after Gibraltar. The Court held that the application of art.107(1) TFEU should not depend on the “regulatory technique” chosen by the state, which means that even formally general measures may qualify as state aid insofar as they are designed to favour some undertakings over others. The additional layer of difficulty created by Gibraltar was reflected in the Draft Notice on the notion of state aid, in which the Commission struggled to reconcile the judgment with its general approach to the notion of selectivity.

Against this background, the reader is left with the impression that the discussion of Gibraltar is perhaps too brief. The author seems to express sympathy for the outcome of the judgment, but does not fully address its  implications. One interesting issue that would have justified a lengthier development relates to the reference by the Court to the “regulatory technique” chosen by the state. The outcome in Gibraltar, which favours substance over form, is at odds with the judgment in PreussenElektra, in which the Court conceded that some “regulatory techniques” fall outside the scope of art.107(1) TFEU, even though they are equivalent in their effects. The reader has to wait until the section devoted to the latter to find a discussion of (only some) of these questions.

There is an omission in Ch.6 that some readers will find controversial. The question of whether aid must be granted by the state and/or through state resources has long been contentious. It says much about the conceptual confusion around the boundaries of the notion of aid. Uncertainty in this regard only disappeared in the early 2000s. The question was only truly settled after AG Jacobs’ magisterial opinion inPreussenElektra. Prior to that ruling, case law suggested that a measure need not involve the use of state resources for it to be caught by art.107(1) TFEU. What Piernas calls the Poor Farmers case is a clear example of this line of case law.

It cannot be disputed that Sloman Neptun and PreussenElektra deserved a lengthy discussion in the monograph. On the other hand, the reader is left with the impression that a full understanding of the evolution of this condition is only possible by expanding the analysis to include the subsequent ruling in Stardust Marine . While it was not possible to dispute after PreussenElektra that the use of state resources is required to trigger the application of art.107(1) TFEU, the scope of that concept remained undefined. In addition, the application of state aid rules to state-owned undertakings was contentious at the time (this is an issue that becomes apparent in the monograph through the discussion of cases like EDF and SFEI).

Stardust Marine is important insofar as it clarified that the concept of state resources comprises all resources that the state can use to achieve its objectives. In this sense, the ruling supported a relatively expansive understanding of art.107(1) TFEU. On the other hand, the Court was unambiguous in holding that a measure must not only be granted through state resources, but must also be “imputable” to the state. In this sense, it narrowed down the potential reach of art.107(1) TFEU.

Stardust Marine is the ruling that “closes the circle” in relation to this condition of art.107(1) TFEU. Piernas is right in suggesting that prior judgments were difficult to reconcile with one another. What is interesting about Stardust Marine is that it shows that the outcome in prior cases like Poor Farmers was not necessarily incorrect. The legal route that the Court would have followed after Stardust Marine , however, would have been markedly different.

In more general terms, it is likely that not all readers will agree with the thesis advanced by the author. The idea that the legal notion of aid has evolved in line with the policy priorities of the Commission is controversial. The cases chosen by Piernas appear to contradict this thesis. For instance, it is difficult to argue that the condition whereby aid must be granted by the state and through state resources results from the policy choices of the Commission. It is apparent that the Commission supported a notion of aid that was more expansive than that endorsed by the Court in PreussenElektra. Similarly, Stardust Marine contradicted the interpretation of art.107(1) TFEU defended by the Commission in the decision that was at the origin of the ruling.

A similar conclusion follows from an analysis of other cases. If one considers the broad context in which SFEI was adopted, it is difficult to argue that the Commission was the driver behind the ruling (given the reluctance of the Commission to intervene in such a case, there would be valid grounds to argue the opposite). Similarly, EDF, Azores and British Aggregates contradicted the policy choices made by the Commission. The monograph gives the impression that other factors (in particular, the liberalisation of major sectors of the economy) have been fundamental drivers in the evolution of the notion of aid, and that these factors have not been given sufficient weight.

In spite of these comments, there should be no doubt that the monograph makes a major contribution to the literature. It will be a lasting reference in the field both from a substantive and a methodological perspective. The author displays a very sophisticated understanding of the field and of the factors at play in the decision-making process. More importantly, he has found an elegant and effective way to introduce these factors in the analysis.

Written by Pablo Ibanez Colomo

12 April 2016 at 3:30 pm

Posted in Uncategorized