Chillin'Competition

Relaxing whilst doing Competition Law is not an Oxymoron

A fresh start to the year: three controversial doctrines with which I agree

with 3 comments

Image result for positive thinking

I look back at the past few posts I have written and realise (well, I sort of knew that already) that they tend to be critical. In a sense, this is inevitable. We pick controversial matters and, as an academic, I instinctively focus– and always will – on the issues which I find to be inconsistent with my understanding of the law.

As positive thinking is in vogue at this time of the year, however, I thought the first post of 2017 would be devoted to three aspects of EU competition law that are seen by many as controversial and that are often criticised (or have often been criticised)… but with which I have no problem at all. Before I forget about it in the next couple of weeks in the same way others (not me!) forget about dieting and exercising, here’s to the power of positive thinking:

Market integration as an objective of EU competition law. This is a classic. Many people believe that EU competition law should not be enforced to achieve market integration, as it has been since Consten-Grundig. This policy goal, the argument goes, is not really about competition; it is a political one. I do not see things this way. Market integration is in fact where we come from, and the very reason we have a competition law system in Europe. Does it mean that our competition law is less ‘pure’ – whatever that means – as a result? Maybe, but I can certainly live with that.

Recoupment and predatory pricing: It is sometimes criticised that predatory pricing can be an abuse without evidence of the ability of the dominant firm to recoup its losses. I have little trouble with this rule. Pricing below average variable costs is in principle an irrational strategy for a firm to adopt. In this sense, it is the closest we can get to a ‘by object’ infringement in the context of Article 102 TFEU. And we know that it is not necessary to show the effects of a practice when it is restrictive by object.

Information exchanges under Article 101 TFEU: T-Mobile is a more recent judgment, but it has attracted a great deal of criticism. Does it make sense to prohibit as restrictive by object an exchange of information in the circumstances of that case, or in a situation like the one at stake in Bananas? Of course. There is no good reason why companies would get together to engage in such discussions. This is something that, as a company, you just do not do. It is true that fines, if imposed at all, should be proportionate to the gravity of the infringements (which means that in cases like T-Mobile and Bananas they should be modest). However, the fact that such exchanges are unlikely to have anticompetitive effects should not influence their qualification as ‘by object’ infringements.

Happy 2017 to all!

Written by Pablo Ibanez Colomo

5 January 2017 at 11:53 am

Posted in Uncategorized

3 Responses

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  1. Pablo, thanks for your posts which are consistently interesting, challenging, extremely well-reasoned etc. Your readership benefit a great deal from your insight so thanks a lot; a very happy new year to you!

    As to this post, I agree with point 1, this is just one specificity of EU competition law that one needs to accept.
    I would tend to agree with point 2., but there can be predation even above AVC and that price level is a lot less irrational, which makes the recoupment question more relevant (on an unrelated note, I must say I am not a big fan of importing the object/effect dichotomy into 102 matters since article 102 does not mention these notions).
    As to point 3. I agree exchange of information can, and should in certain cases, be by object. I don’t have any issue with the outcome of T-Mobile which IMHO is a correct one. I just have issues with some of its wording that the EC uses in other cases to conclude that showing a mere possibility of anticompetitive effects is enough to show an object (a theory you seem to have at least some sympathy with, if I understood correctly your last post on the subject?); this seems to be lowering excessively the burden of proof for the EC (and cannot be reconciled with Cartes Bancaires that in my view states the opposite).

    adrien

    5 January 2017 at 12:17 pm

    • Thanks for your very kind comment, Adrien! I hope you enjoyed these days

      On point 2, I agree it can be trickier when prices are above AVC. This said, if an authority can otherwise establish that the practice serves no purpose other than the exclusion of competition (which is what the AKZO test is essentially about), I can live with it. The issue of course, is that evidence in this sense is very difficult to establish. But I can live with that too!

      On point 3, If by ‘possibility’ you mean ‘capability’, I happen to agree with the Commission on this one. Any other approach would blur the distinction between object and effect. This is not to say that your point has no merit. I fully understand where you come from. You may want to take a look at our paper on the notion of restriction of competition, in which we try to make sense of this seeming paradox. Your comments on it would be most welcome: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2849831

      Pablo Ibanez Colomo

      5 January 2017 at 5:14 pm

      • Happy New Year, Pablo!

        I am not sure I fully agree re 1. I am not even sure it follows from the black letter of the Treaties (even less so with the post-Lisbon emphasis in the values of the EU). I would tend to think / hope that the original functionalist project of the likes of Shuman and Monnet does not require rules on (private) entities to be applied in a way which decreases consumer welfare. On the contrary – I am not sure if making consumers worse off is something that will make the EU more popular, or its law more consistent. I am not an expert – but would tend to assume that the the US’ internal market functions perfectly without the distinction between active and passive sales. I am even more certain that the additional resources of monitoring this could be better spent in the cartel units of the COMP and the NCAs.

        I am not sure I agree on 2 or 3 – more some other time. Meanwhile my opinions are not those of my firm, or its client’s. They are, as in many other domains, my nan’s 😉

        Congrats to both of you on a great blog!!!

        Very best

        Pablo

        Pablo Figueroa

        22 January 2017 at 7:02 pm


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