Chillin'Competition

Relaxing whilst doing Competition Law is not an Oxymoron

Archive for March 2018

Ithaca Competition Summit (23-24 August 2018): REGISTRATION NOW OPEN

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Vathy

The programme for the 1st Ithaca Competition Summit is now closed, and is available in pdf format here. As you will see, there are very few events with such an amazing line-up – and definitely none that takes place in western Greece during the summer.

Spread over two half-days, the event is intended to give room for extra-curricular activities in and around Ithaca. But there will be time for intense discussions too: speakers will be presenting a set of papers that will come out in a special issue of the Journal of European Competition Law & Practice.

If you are interested, you can register in the following Eventbrite page. Prices are merely intended to cover the costs. If you access the page, you will see there are two ticket categories:

  • General admission tickets, at a price of EUR 160.
  • A special price for current students in EU or Competition Law, at a (bargain) price of EUR 40.

You better run: there is only room for 120 attendants!

Want to know how to get to Ithaca? Check the programme above. If you have any other questions, you can send an email to Ithaca.Summit@gmail.com.

Written by Pablo Ibanez Colomo

29 March 2018 at 8:23 am

Posted in Uncategorized

Horizontal mergers and innovation: why I agree with Tommaso Valletti

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Tommaso

It is only fair that I start this post by thanking those who have congratulated me on my recently announced promotion – including Alfonso, who could not have used nicer words.

Now that the announcement is behind us, it makes sense to go back to what really matters: weekly blogging. Few things have given me more satisfaction in my academic career.

And what a better way to do so than to comment on a recent speech of an academic-in-exile. Tommaso Valletti is one of the most articulate, thoughtful and entertaining speakers around. So when he takes part in a conference, we can be pretty sure something exciting and topical will have been discussed.

Last week he addressed one of the big issues of the day: the introduction of innovation considerations in merger control – and more precisely horizontal mergers.

In essence, Tommaso argued that there is nothing new, unusual or exceptional in recent mergers (such as Dow/DuPont) that have looked at the effects on innovation. In this sense, recent criticism of the Commission practice would not be justified.

I agree with this point of view. These cases – as far as I can tell – are competition law as usual. What is more – and perhaps more importantly – there is nothing parameter-specific about innovation. If cases like Dow/DuPont are criticised many cases concerning parameters other than price could also be criticised, and for the same reasons.

The Commission need not show harm to innovation – or any other parameter – in EU competition law

There is a key point which, I believe, has never been given the importance it should have – which is why I think it makes sense to insist on it.

A lot of criticism of the Commission practice seems to be based on the assumption that the Commission, when evaluating the likely effects of a merger, needs to show, to the requisite legal standard, its impact on innovation – or price, or quality, or output.

This assumption is not supported by the case law (the opposite is true, in fact). The Commission can show that a transaction will give rise to a significant impediment to effective competition without – just to mention an example – quantifying the price increases in the post-merger scenario.

It is clear from the relevant rulings that an impediment to effective competition can be established by proxy – in light of the nature of the product, the features of the relevant market and so on.

In other words: if it can be shown that a significant source of competitive pressure will disappear after the merger, and that nothing suggests that this loss of competitive pressure will be corrected by the behaviour of competitors, suppliers and/or customers, a finding of significant impediment to effective competition will naturally follow.

Thus, the Commission does not need to enter into discussions about whether the rate of innovation will go up or down after the merger. All that it would have to show is that two competitors were exercising significant competitive pressure on each other. Just remember the GC judgments after Ryanair/Aer Lingus and Deutsche Borse/NYSE Euronext are challenged.

A proxy is a proxy is a proxy

If the above is – I think – clear from the Guidelines on horizontal mergers and the case law, why so much controversy?

This controversy is in part explained by the fact that the Commission may take action without there being a market in the strict sense of the word. According to some views, this shift would represent a major development in merger control. There would be a difference between intervening in cases where competitive pressure does not revolve around a distinct product that can be readily identified.

Again, I am not sure I am convinced. We have always known that the definition of the relevant product and geographic market is not an end in itself – it is just a tool (or proxy) to identify the competitive pressure faced by firms.

If that is the case, it is difficult to argue that the definition of the relevant market is, as a matter of law, a prerequisite for intervention. In other words, there has never been anything sacred about market definition.

If the degree of competitive pressure can be identified by means of other proxies – research poles, or capabilities and so on – this should be perfectly acceptable. This, I believe, is one of the key points that Tommaso Valletti is making. And it is not even a new one: the Guidelines on horizontal co-operation agreement have suggested that these alternative proxies can always be used.

As can be seen, I fail to see what is really new under the sun.

Well, perhaps there is something new. The argument some stakeholders are making, which amounts to suggesting that a reduction of competitive pressure is not necessarily problematic in innovation-intensive industries.

That claim is not implausible and is worth debating. But the EU merger control regime is already equipped to deal with it. The efficiency defence is the appropriate forum in which to advance such claims. Would it be difficult, if not impossible, for them to suceed in practice? Of course. But such difficulty is in line with the exceptionality of the claim itself.

Written by Pablo Ibanez Colomo

23 March 2018 at 8:58 am

Posted in Uncategorized

Developments in Art. 102 + Competition Law in Digital Markets

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ERA

The Academy of European Law (ERA) has kindy invited us to take part in two upcoming events. Given the topics, it was an offer we couldn’t refuse.

On 12 April I will be chairing an afternoon workshop titled “Abuse of Dominance: Recent Developments and Practical Implications”. We will discuss the Intel Judgment, the Google Shopping case as well as Excessive Pricing following Akka/Laa.  The speakers will be Brice Allibert (DG Comp), Oliver Bethell (Google),  Thomas Graf (Cleary Gottlieb) and Agustin Reyna (BEUC). You can see the programme and info on registration here. It will take place in Brussels but will be streamed live.

And on 4 July, Pablo and I will be jointly teaching a 4hour session on competition in digital markets at ERA’s Summer Course on European Antitrust Law (which I attended as a student 13 years ago!). Our session will focus on vertical e-restraints, algorithmic collussion, multi-sided markets and abuse of dominance in the online world. All relevant information is available here.

 

 

Written by Alfonso Lamadrid

19 March 2018 at 10:56 am

Posted in Uncategorized

Is the Guidance Paper on Article 102 binding on the European Commission?

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descarga.jpg

A few posts ago (here) Pablo challenged me to explain my view on the binding force of the Guidance paper on Art. 102. The answer is crystal clear in my mind (and Pablo already anticipated the answer years ago labelling it as a “pre-commitment device”), but I have never seen the debate spelt out in full, nor have I seen what I think is the killer argument.

This is actually an issue that I have discussed with many people over the past few years, but never on this blog as it was pretty much a moot question. Until now every Commission decision challenged before EU Courts had been adopted prior to the release of the Guidance Paper. But the debate will now get serious, as the issue may come up in the Qualcomm (AEC test or no AEC test?) and Google Shopping cases (the first 102 standard infringement decisions adopted after the Guidance paper that does not mention it at all). All others mention it on substantive points unrelated to prioritization. [For the meticulous, ARA was a “settlement” and Romanian Power Exchanges was about an exploitative, not exclusionary abuse].

For various reasons I won’t discuss anything specific about those cases but rather the general theoretical point. I of course only work for non-dominant companies 😉 but since that view may be disputed (on the basis of a flawed dominance assessment…), please consider what I am about to say on its merits and with a critical mind. I am confident you will agree.

First, we can all agree that the Guidance Paper is not the law and that it is not binding on EU Courts, national courts or NCAs in spite of its persuasive value as a “useful point of reference”. EU Courts are the sole and ultimate interpreters of the law. Recital 3 of the Guidance acknowledges this otherwise evident reality.

Second, we surely all agree that EU case law has consistently established the principle that “in adopting [soft law instruments] and announcing by publishing them that they will henceforth apply to the cases to which they relate, the institution in question imposes a limit on the exercise of its discretion and cannot depart from those rules under pain of being found, where appropriate, in breach of the general principles of law, such as equal treatment or the protection of legitimate expectations. It cannot therefore be precluded that, on certain conditions and depending on their content, such rules of conduct, which are of general application, may produce legal effects”. (See, among many others, paras. 209-211 here).

This means that even if the Guidance Paper is not the law and cannot bind courts, it certainly might bind the institution which adopted it and committed to apply it to future cases.

The Guidance Paper seems to meet all conditions. It was formally adopted, publicly announced and presented, published in the Official Journal of the European Union and it is currently listed in DG Comp’s website under “Legislation in force” (here). The Guidance itself stated (para. 2) that its purpose is to “provide greater clarity and predictability” and “to help undertakings better assess whether certain behavior is likely to result in intervention by the Commission”. The Commission also made sure to clarify that it would “fully apply the approach set out [in the Guidance Paper] to future cases”.

I actually had a hearing in Luxembourg some weeks ago where we discussed the legitimate expectations generated by a statement from a Commissioner in response to a parliamentary question. There is, in fact, an established line of case law making clear that legitimate expectations may arise not only from administrative or legislative acts, but also from settled practice and even from oral or written representations (State aid lawyers know this all too well). If a random oral representation can have such effects, does the same reasoning really not apply to a document like the Guidance Paper?

Third, we surely all agree that deviations are certainly possible provided a special statement of reasons is given. The EU Courts have recently clarified in ICAP that the duty to state reasons “must be complied with all the more rigorously” when the Commission departs from guidelines (para. 289).

The interesting debate comes now.

Fourth (the Commission’s counterargument)

Some of the Commission’s top legal minds (whom for understandable reasons wouldn’t have agreed with the Guidance Paper in the first place) argue that the Guidance Paper is in reality a different animal because it is a “Guidance paper” (as opposed to Guidelines)? that refers only to “enforcement priorities”. This was also the view eventually advocated by the Commission in the Intel hearing as transcribed here.

At the litigation workshop we held back in June, some of the Commission representatives added that the Guidance Paper is also different from other soft law in the competition field because it relates to an element (the notion of abuse) on which the Commission lacks any discretion. The idea is that the Commission cannot limit the discretion it does not have regarding the substantive assessment of cases.

[Note that these two views appear to contradict each other, because the Commission does have prioritization discretion and could therefore limit it and commit to pursue only some types of pre-defined cases. Let us in any event consider both lines of reasoning for the sake of argument]

Fifth (my rebuttal)

I have told my friends holding this view that:

  • The case law makes it clear that the title of the document is irrelevant. Under EU law the denomination of an act is not decisive as regards its legal effects. This also applies to soft law instruments (se e.g. C-322/88). Rules of conduct of general application adopted by the EC may produce legal effects “depending on their content”. The Guidance Paper is drafted as substantive guidelines and refers to elements of the assessment that are only undertaken at every step of the investigation of a given case, not just in deciding what to prioritize.
  • There is no reason to treat the Guidance Paper differently to all other EC Communications to which the EU Courts have applied the said reasoning. If anything, there are reasons to conclude that the protection of the principle of legitimate expectations is even of greater importance here. Indeed, the EU Courts have considered that a deviation from the fining guidelines will, absent a statement of reasons, be considered contrary to the principle of legal certainty even if fining policy is an area where predictability and foreseeability may not be desirable.
  • The killer argument: The argument that the Commission could not limit its discretion with regard to its substantive assessment of Art. 102 cases because the notion of abuse is an objective one (and therefore the Commission would lack any such discretion) has already been disproven by EU Courts. The CJEU ruled in Expedia(para. 28) that the Commission is bound by its De Minimis Notice in the sense that a failure to state reasons for a deviation would imply a breach of the principle of legitimate expectations. Very importantly, the De Minimis Notice, like the Guidance Paper, refers to an objective notion in relation to which the EC enjoys no discretion (as confirmed in Case T-7/93, Schöller,  para.75). And very importantly, all versions of De Minimis notice, like the Guidance Paper, have also been clearly drafted in terms of prioritization and in order for “undertakings to be able to judge for themselves whether their agreements do not fall within the prohibition” (pretty much what para. 2 of the Guidance Paper says). In my view, paragraph 28 of the Expedia Judgment pretty much closes any possible debate.    

 I rest my case. Look forward to reading your views!

Written by Alfonso Lamadrid

15 March 2018 at 7:05 pm

Posted in Uncategorized

Professor Ibañez Colomo

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Professor

Barriers to academic promotion are lower than we thought… The London School of Economics has now officially announced that Pablo will be a full Professor as of the 1st of August. 

This is big and excellent news and it could not be more deserved.  I have said before that he is the prime academic of his generation, but that is an understatement.

Since this may be my last chance to justify a eulogy (from today on I will keep running jokes on him), let me just underline how extremely unlikely it is for someone to combine that kind of brain power (and freak memory that I enjoy showcasing at dinners), curiosity, hard-working nature, passion for a discipline and bullet-proof ethics. On top of that he is one of the most genuinely good people I know.

It’s a luxury to have him here and to learn from him everyday. His co-blogger could not be more proud.

 

P.S. Forget about all the above. I’m just trying to sugar coat him to see if that way he can go back to writing more frequently…

Written by Alfonso Lamadrid

12 March 2018 at 6:08 pm

Posted in Uncategorized

Judicial Review in Competition Law (Madrid, 9 March 2018)

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9 march

The 21st edition of the Competition Law course that Luis Ortiz Blanco and myself co-direct in Madrid is coming to an end this week (and with it, my chances to go to Spain for at least a few hours…)

From today until Wednesday our very own Pablo will be coordinating a module on network industries featuring a stellar line up of experts who also happen to be good friends of this blog.

And on Friday 9 March, Judge Mercedes Pedraz (Audiencia Nacional/Spanish Court of Appeal) has put together a programme for the closing seminar. Take a look:

Friday, 9 March 2018- IEB (Madrid): Los Jueces Nacionales y el Derecho de la competencia

12:00 – 13.00: The application of Article 102 on abuses of dominant position in the case law of the Court of Justice of the European Union. 

José Luís Da Cruz Vilaça (President of Chamber, Court of Justice of the EU and rapporteur in the Intel Judgment)
13:00 – 14:00: El control judicial en materia de cárteles en la jurisprudencia del Tribunal Supremo

Eduardo Espin (Presidente de la Sección Tercera – Sala de lo contencioso administrativo,
Tribunal Supremo)
14:00 – 15:30: Lunch Break
15:30 – 16:30: La cuestión prejudicial con especial atención a las relativas a ayudas de Estado

David Ordoñez (Magistrado, Juzgado de lo Contencioso-administrativo nº 4 de Oviedo)

16:30 – 17:30: Judicial review in competition law cases

Peter Freeman CBE QC (Hon) (Chairman, UK Competition Appeal Tribunal)

For registration and more info, click here.

Written by Alfonso Lamadrid

5 March 2018 at 12:56 pm

Posted in Uncategorized