Relaxing whilst doing Competition Law is not an Oxymoron

Archive for October 2017

Non-Competition News (or sort of)

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[Below is a selection of top news stories of the day for subscribers of Chillin’Competition. We welcome cooperative journalism and will reward (with the last meme mug) the best additional news clip written in the comments to this post before the end of the week]

– A U.S operator has been charged with colluding with Russian competitors in order to boycott a rival. The parent operator argues with a forceful and carefully crafted detailed legal argument that THERE IS NO COLLUSION, denies any having exercised direct influence, claims that any wrongdoing is attributable to a rogue employee and invokes the counterfactual argument to claim that he would have won the targeted rival even in the absence of the restriction. 

-The geographic market definition of the Spanish market is being contested for reasons that reportedly have to do with a flawed underlying economic analysis and a will to prohibit cross subsidiziation across regional segments. Acting on that premise, certain operators decided to go ahead with a given split up (“the contemplated Transaction”) even though their shifting majority did not grant them control nor the ability to trump veto rights. Facing accusations of gun jumping, they have travelled to Brussels and now seek a referral. [Jokes aside, for my real views on this matter, see here]. 

-Propelled by the annulment of the decision in Liberty Global/Ziggo, a number of citizens in the U.K. are requesting a new analysis of the UK/NHS (Brexit) deal. They claim failure to state reasons to dismiss all theories of harm and also invoke the Facebook/Whatsapp precedent asking for a fine to be levied for the deliberate submission of inaccurate information to decision makers. 

– Pablo Ibañez Colomo, who holds simultaneous positions at competing Institutions including the College of Europe and the LSE, alleges that he was foreclosed from speaking at the Chillin’Competition conference last week, which he claims is an essential facility for the spreading of ideas with questionable merits. In a claim reminiscent of the one at issue in Flip Side Prods. Inc v. Jam Prods Ltd, 843 F.2d 1024 (7th Circ.) cert. denied 109 S.Ct. 261 (1988), he argues that he should have been given FRAND speaking terms and that his co-blogger favoured himself by self-benefitting from preferential placement in the conference programme.

Written by Alfonso Lamadrid

31 October 2017 at 12:40 pm

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Materials from the Chillin’Competition conference

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We had a very good time at the conference last week thanks to all the attendees, to the speakers,  to the sponsors, to our friends from We Exist (who made it to Commissioner Vestager’s Twitter account; see here) and thanks also to the wine tasting at the end.  The Commissioner delivered a great speech, was open to all sorts of questions and also teased us online about our long hashtag – we are Twitter novices…-,  admittedly, that was the least she could do considering that I had faked one of her tweets in my intro; see here.

It was a full day of interesting ideas (some of which are seldom voiced out) and nice people.  The only regrettable incidents were some isolated fights for the Ryan Gosling meme mugs…

In the coming days we will post here a photo gallery, videos of some sessions and guest posts from speakers.

For the time being, below are most of the presentations used at the conference. Philip Marsden’s and Mark Powell’s  much-taked-about masterpiece slide decks are not included, but you will see videos of their much-talked-about presentations.

Chillling Competition 2017- Introduction (A. Lamadrid)

 Chilling Competition 2017_Competition Law Everywhere 

Chillin Competition 2017- The Real Centre Stage

ChillinCompetition 2017-Antitrust as an Endangered Practice (A.Winckler)

Chilling Competition 2017- Blockchain – the next great disruptor_ (P. Karolczyk)

Chilling Competition 2017- Connected Cars (G De Stefano)

Chilling Competition 2017- Conglomerate Mergers (L. Crocco)

Chilling Competition 2017- Intel Back to the Future (J.Schindler)

Chillin Competition 2018- Brexit (N. Gracia)


Written by Alfonso Lamadrid

30 October 2017 at 7:26 pm

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Follow the 2017 Chillin’Competition Conference Live

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To follow the streaming of the conference, click here. (PLEASE NOTE THAT THE LINK HAS CHANGED- AGAIN)

We will be streaming the introductory “Year in Review” remarks at 9.45 (excellent speaker don’t miss it), the individual Ted@Chillin’Competition talks (14-15 pm) and the Commissioners’s intervention starting at 15 p.m,

For those following Twitter, the hashtag is #chillingcompetitionconf

Written by Alfonso Lamadrid

25 October 2017 at 10:20 am

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Streaming for the Chillin’Competition Conference + thanks

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As we are getting ready for the 3rd Chillin’Competition conference tomorrow, there are a few things we need to say:

-First, given the length of the waiting list and some demand on your side, we will try out streaming parts of the conference live via Youtube (a technician swears it will work….). We will be streaming the introductory “Year in Review” remarks at 9.45 (excellent speaker don’t miss it), the individual Ted@Chillin’Competition talks (14-15 pm) and the Commissioners’s intervention starting at 15 p.m,

You will be able to follow it all via a link that we will be posting tomorrow at 9.30 sharp.

-Second, our special gifts have made it from China….

– Third, as we always say, none of this would be possible without our sponsors, so, truly, many thanks to all of them!


Written by Alfonso Lamadrid

24 October 2017 at 6:02 am

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XXI edition of the EU and Spanish Competition Law Course

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The EU and Spanish Competition Law Course that I co-direct together with Luis Ortiz Blanco is turning 21 in 2018.

The upcoming edition will take place between the 12th of January and the 16th of March in Madrid.

The course  will once again feature an impressive number of top-notch officials, academics and practitioners from all over Europe. To compensate, Pablo and myself will also be involved as much as possible.

More (preliminary) information is available here (in English, Program XXI Course IEB – 2018) and here (in Spanish, Programa XXI Curso IEB – 2018 ).

FOR THE FINAL VERSION OF THE BROCHURE, SEE HERE: Tríptico XXI Curso Derecho Europeo Español Competencia 2018

Written by Alfonso Lamadrid

18 October 2017 at 4:22 pm

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AG Saugmandsgaard Øe in Case C-179/16, F Hoffmann La Roche v AGCM: a canonical approach to restrictions by object

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It has taken us more than usual to discuss AG Saugmandsgaard Øe’s Opinion in Case C-179/16, which is the most recent Hoffmann-La Roche in town (and we had very good reasons to do so, as you will see below!). But here we are.

Above all, the Opinion is valuable due to the approach that the Advocate General follows to identify restrictions by object. Not because it introduces any innovations – he just follows the case law – but because of how clean the analysis is.

The dispute at stake in the case is useful to illustrate the way in which the Court goes about the divide between restrictions by object and effect. An excellent candidate for classroom discussions.

The venerable Consiglio di Stato referred five questions to the ECJ. The most interesting one concerned the lawfulness of a concerted practice aimed at emphasising that a medicinal product is ‘less safe or less efficacious’ than another one. According to the Italian competition authority, this concerted practice sought to artificially differentiate between two medicinal products and thus share markets.

The referring court mentions a valuable aspect pertaining to the ‘scientific context’ of the practice: the Consiglio di Stato adds that, at the time, there was no reliable scientific evidence either to support or refute the claim about the relative safety and efficacy of the product.

Is a concerted practice (or agreement) of this kind caught by Article 101(1) TFEU insofar as its object is to share markets?

How to identify restrictions by object: AG Saugmandsgaard Øe gives a concise and elegant answer

Commentators struggle to define the criteria to draw the line between restrictions by object and effect. The Opinion shows that the task should not be difficult.

AG Saugmandsgaard Øe’s approach captures the essence of the case law in a concise and elegant way. As he explains in para 148 of the Opinion, understanding the object of an agreement is all about making sense of its ‘economic function’, that is, of its objective rationale.

When making sense of the economic function of an agreement or concerted practice, it is useful to examine whether the conduct is a plausible means to achieve a pro-competitive objective. This is something that Alfonso and I emphasised in a piece we published last year, and to which the Advocate General refers in the Opinion (at footnote 96).

When there is a plausible pro-competitive explanation for the practice, the agreement or concerted practice is not restrictive by object. This is a point that has been confirmed very many times by the Court (Cartes Bancaires is just a recent and particularly obvious example). In any event, it is useful that the Advocate General engages with this question explicitly (as many judgments address it only implicitly).

The application of the framework to the facts at hand

How does the Advocate General apply the principles of the case law to the facts at hand? The question of whether the concerted practice restricts competition depends, in his view, on whether the information provided by the parties to the concerted practice is misleading.

  • The concerted practice would be restrictive by object if the information about the efficacy and safety of the medicinal product is misleading.
  • If the information turns out not to be misleading, the concerted practice would not be restrictive of competition (that is, it would fall outside the scope of Article 101(1) TFEU).

The Opinion makes a lot of sense to me. I fail to see how providing misleading information about a product can serve a pro-competitive rationale. This practice can only be plausibly explained as an attempt to reduce demand for one product (that is, as an attempt to restrict competition). The ‘by object’ label is thus entirely justified. This practice would be similar to the exchanges of information at stake in T-Mobile and Bananas.

Where the parties convey information that is not misleading, on the other hand, it makes sense to leave the concerted practice outside the scope of Article 101(1) TFEU. As the Advocate General points out in para 181, such a concerted practice would improve, rather than restrict, the conditions of competition prevailing on the relevant market. If that is so, it would be a plausible means to achieve a pro-competitive objective. In this sense, the practice would be similar to the exchange of information at stake in Asnef-Equifax, which was also found to escape the prohibition.

Lessons from the Opinion: effects-based approach and ‘object box’

Three ideas came to mind when reading the Opinion:

  • The Court’s approach to the identification of ‘by object’ infringements is, and has always been, very ‘effects-based’.
  • Human ingenuity is much larger than the ‘object box’ will ever be.
  • The ‘effects-based’ approach is compatible with the ‘by object’ treatment of some practices

The concerted practice at stake in this case did not fall within any of the categories that are traditionally associated with ‘by object’ infringements (price-fixing, market sharing and so on).

Does this fact exclude the qualification of the agreement as restrictive by object? Of course not. As rightly explained in the Opinion – at para 150 – the form of a practice has never been enough to decide whether an agreement amounts to a ‘by object’ infringement.

The Court, by emphasising the need to consider the nature of the agreement, its content, and the economic and legal context of which it is part, has always placed substance above form (Allianz Hungaria, among many others, comes to mind). In other words, the Court has always rejected the ‘form-based’ approach to the analysis of ‘by object’ infringements.

I tell myself that ‘effects-based’ approach is perhaps a misnomer. I would rather call it the ‘substance-over-form’ approach.

An important consequence of the approach followed by the Court: the famous ‘object box’ is both over-inclusive and under-inclusive.

The ‘object box’ is over-inclusive in the sense that even price-fixing or market sharing can, in a given economic and legal context, fall outside the scope of Article 101(1) TFEU (e.g. Tournier and Ideal Standard). The Court has consistently held, since Societe Technique Miniere, that a restriction of competition cannot be established in the abstract (i.e. it has never ever been enough to cry ‘price fixing’).

The ‘object box’ is under-inclusive in the sense that ‘by object’ infringements can take many new forms – never underestimate the ingenuity of companies that are determined to restrict competition! F Hoffmann La Roche v AGCM is a wonderful example in this regard.

Against this background the question is: should we keep expanding the ‘object box’ with every new case that does not fit within existing categories or should we throw the box away as an imperfect and potentially misleading proxy? Discuss.

Finally: for some people, the ‘effects-based’ (‘substance-over-form’, I mean) approach means the demise of ‘by object’ infringements. I cannot disagree more.

The ‘substance-over-form’ approach is certainly compatible with the ‘by object’ treatment of some practices. If it turns out that an agreement serves no pro-competitive objective, there is no point in requiring anticompetitive effects. I would say more: requiring evidence of anticompetitive effects in such a case would make no sense.

Written by Pablo Ibanez Colomo

16 October 2017 at 3:11 pm

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Creative Tribes

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The pharmaceutical industry has always liked to emphasize the innovation factor, often to argue that any loss of income would result in less R&D.

The extent to which that may be true is the subject of incandescent debates (remember, for example, the late AG Ruiz-Jarabo’s views in Lélos that this was a “misleading” argument “aimed only at seducing public opinion”).

But what is undeniable is that the industry is at the avant-garde of legal innovation. Already in my very first post on this blog (just realized it’s been 8 years, to the day, already!) I already made a comment abut this (resorting to the traps set for the Roadrunner as the image). Here is a new, and delicious, chapter to that story:

Allergan was the target of patent challenges on the part of generic drugmakers; these challenges took place both before US federal courts and via the IPR (inter partes review) system. Allegan came to realize that certain entities (like Native American Tribes or public universities) enjoy sovereign immunity from challenges under the IPR system (“sovereign immunity”, codified in the 11th Amendment of the Constitution, implied that entities assimilated to sovereign rules –like monarchs- and arms of the state could not be sued without their consent).

So in order to fend off all IPR challenges, Allegan had an idea: transfer its patent rights to the Mohawk tribe, which would then license them back to Allergan (we discussed on this blog a similar –albeit much less creative- arrangement). The end-result is that Allergan pays a few million to shield its patents from a certain kind of challenge. To be sure, this had happened before with universities. But involving Native American Tribes adds a nice twist to it. As one would expect, this strategy is now extending to other fields, and Apple has already been sued by the so-called Three Affiliated Tribes.

Some US Senators have claimed that this strategy was “blatantly anticompetitive”. Others argue, however, that the patent rights continue to face challenge in federal courts and that the Mohawk deal cannot protect the patent against those; the argument would therefore be that the deal only helps the company avoid a “double jeopardy situation” created by an imperfect legal system. The Mohawk tribe has issued a Q&A document about its new patent business availabe here.


-Under EU Law, would this by a “by object” or “by effect” restriction? What does “experience and economyc analysis” tell us about transferring IPRs to Native American Tribes?

Resultado de imagen de thinking emoji

Is this case more similar to:

a) the Lithuanian Railways case discussed in Pablo’s last post (a case that has remarkably led my co-blogger to defend a Commission decision and to label the case as one of the most straightforward ever)?

b) ITT Promedia and AstraZeneca (instances where companies were accused of gaming the legal system to obtain an advantage)?

c) Pseudo-assignments of IPRs to patent trolls?

c bis) the Microsoft-Nokia deal (again also discussed on the blog) and which triggered no action on the part of competition authorities?

d) pay-for-delay arrangements (also discussed at length on this blog)? Btw, last week I read and graded a very good BSC master thesis by Anne Robert from Sidley which somehow managed to bring together pay-for-delay and Game of Thrones; Allergan does at least not have a monopoly over creativeness…

Written by Alfonso Lamadrid

10 October 2017 at 11:05 am

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Lithuanian Railways: the most straightforward abuse case ever?

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Lithuanian Railways

On Monday, the European Commission announced its decision to fine Lithuanian Railways more than 27 million for abusing its dominant position. The practice itself is remarkable: the company dismantled 19 km of railway connecting Lithuania and Latvia to prevent a major customer from using the services of a competitor.

I welcomed the decision for two reasons.

It adds to the topicality of the seminar on network industries that I give in Bruges (and which, coincidence, I presented last Friday). I cannot wait to start.

More importantly, the information available on the case suggests that Lithuanian Railways may very well be part of a rare breed of practices: those that serve no purpose other than the elimination of competition. It would be great if a body of decisions concerning such practices developed.

Article 102 TFEU enforcement is controversial because the vast majority of potentially abusive practices have ambivalent effects on competition: they are capable of having both pro- and anticompetitive effects. Sometimes it is even trickier: the very effect that is potentially problematic is what makes the practice pro-competitive (think of combining two features in a single product).

But there are practices out there that are not capable of having pro-competitive effects or, more generally, that cannot be plausibly explained as a means to enhance competition.

For these practices, the ‘by object’ label is entirely justified. When a practice serves no purpose other than the elimination of competition, there is no reason to require evidence of anticompetitive effects on a case-by-case basis. This is a point that the Commission made in the Guidance, and I agree.

Examples of conduct of this kind? Pricing below average variable costs. Doing so is in principle irrational for a firm. Thus, the only plausible explanation for the conduct is that it is part of a plan to drive a rival out of the market.

I struggled to think of other examples of practices of this kind (besides that of a company blowing up a rival’s plant, which is a classic). Now Lithuanian Railways potentially provides a wonderful one (I have to say nothing similar ever crossed my mind).

It is not obvious for me to see, prima facie, how dismantling a railway connection can be plausibly explained on efficiency grounds. It is an Aspen Skiing sort of situation. And I look forward to the details of the decision (i.e. how the absence of a pro-competitive rationale for the behaviour has been established).

In this respect, the case appears to be different from others involving the leveraging of a dominant position. For example, while vertical integration (via organic growth or via a merger) can foreclose upstream and/or downstream rivals, we know that it can also have pro-competitive effects. What are exactly the pro-competitive effects of dismantling capacity in the circumstances of this case?

Similarly, I believe there is a clear difference between Lithuanian Railways and the famous ‘strategic underinvestment’ decisions in the energy sector. I fail to see why it would be an abuse for a dominant firm not to invest in capacity to accommodate (read: subsidise) rivals. But I certainly see how removing existing capacity to hinder competition can be in breach of Article 102 TFEU.

I look forward to your comments on the above (in particular, this time around, those of economists!).

Written by Pablo Ibanez Colomo

5 October 2017 at 5:10 pm

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