Chillin'Competition

Relaxing whilst doing Competition Law is not an Oxymoron

Archive for May 2016

NEW PAPERS: on market integration, Article 102 TFEU and network industries

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Three new papers of mine have just been made available on ssrn. They touch upon some of the issues I discuss regularly on the blog, so they will not surprise frequent readers. As usual, I would very much welcome your comments (e-mail: P.Ibanez-Colomo@lse.ac.uk).

Article 101 TFEU and Market Integration: Entire libraries have been written about EU competition law and parallel trade. Some of the landmark judgments were handed down more than three decades ago. I wrote this paper because I realised that, in spite of the above, there is still considerable confusion about some key aspects of the case law. Has the Court of Justice ever ruled that absolute territorial protection is NOT restrictive by object? It has, for instance in Coditel II. Why did the Court rule that absolute territorial protection is acceptable in Coditel II but not in Nungesser? The two judgments were delivered at pretty much the same time, is there a contradiction between the two? If the Court confirmed Coditel II in Murphy, why do the two judgments seem to contradict each other?

My paper, forthcoming in the Journal of Competition Law & Economics, seeks to explain the case law and gives an answer to the above questions. I develop a framework based on the counterfactual. I find the approach of the Court of Justice to be consistent and persuasive. Agreements aimed at partitioning national markets are deemed restrictive by object except when the analysis of the counterfactual shows that they do not restrict competition that would have existed in their absence. This simple framework explains cases like Coditel II and Murphy, mentioned above, and provides insights for ongoing ones. I test the framework against leading rulings, including Glaxo Spain, Nungesser and Micro Leader.

Beyond the ‘More Economics-Based Approach’: A Legal Perspective on Article 102 TFEU Case Law: It might sound strange to provide a legal perspective on Article 102 TFEU case law. But scholars and practitioners have focused so much on economic considerations that many of them are no longer interested in what the Court of Justice actually does. My article seeks to identify trends in the case law and provides a framework to address the frictions that have emerged over the years. Some authors like to think about Article 102 TFEU as an epic battle between good and evil. My paper shows that ongoing controversies are more modest. They relate to minor inconsistencies that can be addressed as such. Cartes Bancaires provides a most useful template in this regard.

The paper, forthcoming in the Common Market Law Review, consolidates many of the ideas that I have published here and in the form of working papers. The first key idea I wanted to develop is that the object/effect divide exists also in the context of Article 102 TFEU. It is important that this reality is acknowledged in the literature. It is now clear that some practices, like exclusive dealing, are put on a par with cartels. The implementation of these practices is sufficient to trigger the prohibition. Other conduct is put on a par with ‘by effect’ agreements. This makes it necessary to show not only that the practice has been implemented, but also that it is likely to have an anticompetitive effect.

There are frictions in Article 102 TFEU case law. Again, this is a reality that cannot be denied. Some legal inconsistencies have emerged in the case law. Like practices are not always treated alike within Article 102 TFEU. Similarly, the same practice is not always treated in the same way across provisions. Suffice it to think of the 2007 GC ruling in Microsoft (Article 102 TFEU) and its 2013 ruling on the Microsoft/Skype transaction. These frictions are natural and inevitable in a field like EU competition law. More importantly, they are not fundamental ones. They can be addressed on an incremental basis, drawing from the lessons of experience and economic analysis.

EU Competition Law in the Regulated Network Industries: This piece is a contribution to a collection put together by Jonathan Galloway (Newcastle) that is forthcoming with Oxford University Press. The volume examines the intersection of competition law with other disciplines. My contribution focuses on the interface with the network industries, which is a topic in which I have long been interested. It examines three dimensions of the interaction between the two fields: (i) convergence (the two fields pursue compatible objectives); (ii) tension (the objectives may be compatible, but are not identical); and (iii) complementarity (EU competition law can achieve what sector-specific regulation alone may not be able to achieve).

Have a great weekend!

Written by Pablo Ibanez Colomo

6 May 2016 at 4:45 pm

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Copyright and the Digital Single Market: geo-blocking is here to stay (or so it seems)

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here to stay

Last time Alfonso wrote on the Cross-Border Pay TV case (and the commitments offered by Paramount), he mentioned that the geo-blocking of copyright-protected content is not really a competition law issue. It is an intellectual property matter that should be addressed as such.

As the law stands, online providers can lawfully offer copyright-protected content only in the Member States for which they hold a licence. If they reach Internet users based in other Member States, they will infringe copyright. This reality will not change simply by declaring geo-blocking clauses to be restrictive of competition. The copyright infringement will not be less of a copyright infringement simply because some licensing agreements are amended.

Geo-blocking will only become a thing of the past if the Commission is able to persuade Member States to amend copyright legislation so that the ‘country of origin’ principle applies to online content. Where the ‘country of origin’ principle applies, a broadcaster that holds a licence to offer content in one Member State can reach users in the whole of the EU. This principle applies to satellite broadcasting. It is in light of this principle that the ECJ judgment in Murphy can be understood.

As part of the Digital Single Market Strategy, the Commission consulted last August on the possibility of extending the ‘country of origin’ principle to online transmissions. The results of the consultation have now been published, and can be checked here. In light of the responses, it looks like geo-blocking is here to stay. I do not have the impression that the idea gathers the necessary consensus, in particular considering the impact it would have on right holders and licensees.

The pro-status quo (or pro-blocking, if you prefer) side includes: right holders (no surprise), commercial broadcasters (read: Sky, Mediaset and all the others who devote substantial resources to buy content) and collective management organisations. More importantly, Member States appear to be, at best, lukewarm about the initiatives (the Commission report says that ‘there is a strong call for caution’ on their part). Certain Member States (can you guess which?) appear to oppose the initiative outright.

The pro-change (or anti-blocking) side includes: users (no surprise), public service broadcasters, commercial radios and ISPs.

If there is no enthusiasm for copyright reform, the open question is of course whether the case against the major studios and Sky has a point. Interestingly, many of the participants in the consultation (and in particular Member States) insisted on the need to respect ‘contractual freedom’. A bon entendeur…

Written by Pablo Ibanez Colomo

4 May 2016 at 8:37 pm

Posted in Uncategorized