Chillin'Competition

(Official pictured just hours after having clicked “Send”)

Competition law enforcement is also a multi-sided industry. Optimal enforcement depends on a complex balancing of incentives between enforcers, Courts, companies, lawyers, economists, politicians, journalists and other stakeholders.

This means that we often forget about the implications of certain initiatives on other sides of the market. And there is one of these cross-side effects on which (for several reasons) I have particularly strong feelings this year.

You know the joke about how the Commission plays with lawyers holidays adopting Decisions, Statements of Objections and Information Requests just before August? Well, some lawyers are lucky enough to have just received all three.

So at a time when many are asking for summer read suggestions, this is my suggestion to DG Comp: “LEISURE AS A COPING RESOURCE“, a study of how lack of holidays impacts lawyers’ life based on a sample of 900 law firm lawyers.    😉

This is the abstract:

Enjoy your time off! 

The Ithaca Competition Summit is just a month away! There are still a few places available, and you can register until 8 August here. All extra info you need (or so I think) can be found in this file.

The programme is as stellar as last time you looked at it. You should note, in addition, that there will be a discussion on AT&T/Time Warner following recent developments. And that CPD/CLE points will be available.

If you still have any questions, you can always send an email to Ithaca.Summit@gmail.com.

To nobody’s surprise, the Commission has announced, today, the adoption of a decision concerning Android. The stakes in the case are so high that the outcome was known well in advance. The only open question related to the amount of the fine. But even then, it looked like a given that it would be the highest ever. Which turned out to be correct.

When the stakes are so high, corporate strategies tend to dominate the landscape and the discussions.

Some aspects of these strategies are beyond reproach. It makes sense for companies to hire the very best lawyers – a category that definitely includes Alfonso, who has always been open about his involvement in this case.

Alfonso, by the way, will not be blogging again on Android, no less because he is likely to have very little time in the coming months (bye bye summer holidays and bye bye paternity leave, I guess).

I regret other aspects of these corporate methods. Companies tend to make loads of noise when their interests are at stake. Big Food, for instance, has perfected a strategy of confusion that gives many people the impression that beef and cheese are perhaps healthy after all (they are not).

There has certainly been a lot of noise recently in the competition law community – coming from all over the place.

The ongoing cacophony is a real pity, since there is a lot of exciting legal stuff beneath the noise. And it is worth discussing it.

For those interested in the law bit of competition law and policy, here are some thoughts.

According to the press release, the Android decision finds that three main practices amount to an abuse of a dominant position:

• The tying of Google Play to other applications: Google does not license its applications a la carte. In particular, the Commission takes issue with the fact that Google Play Store is not available as a stand-alone product. For a comparable practice, think of pay TV providers preventing users from cherry-picking the channels to which they subscribe.
• Compensation for exclusive pre-installation: According to the press release, mobile phone manufacturers are given financial incentives for exclusively pre-installing Google Search. This arrangement makes me think of a supermarket chain receiving compensation as consideration for prime shelf space – or perhaps an online store receiving compensation for placing some products as default choices.
• Android Forks: If mobile phone manufacturers choose to offer the Google version of Android, they may not offer rival versions of Android. It is like McDonald’s requiring its franchisees not to run their own burger joints (or a Burger King restaurant) in parallel.

The second of these practices is perhaps the least exciting one. The only intriguing question is perhaps whether the exclusive pre-installation amounts to an exclusivity obligation a la Hoffmann-La Roche (which is what the press release seems to imply) or to a practice falling elsewhere along the spectrum of schemes that can have a fidelity-building effect. Either way, the legal framework is firmly in place after Post Danmark II and Intel.

The two other practices, on the other hand, raise more fundamental issues. So much so, in fact, that this case may mark the evolution of EU competition law. Allow me to explain.

Tying: how products are sold vs how products are made

Some people will argue that the application of Article 102 TFEU in relation to the tying aspect of the decision cannot surprise anyone. And it is a reasonable point to make. After Microsoft I, any tie-in that gives a distribution advantage to the dominant firm’s tied product amounts to an abuse – which is another way of saying that tying is presumptively abusive under Article 102 TFEU.

What can be exciting around this case, then? Well, the fact that, in some respects, the setting is different from that found in traditional tying scenarios. Inevitably, the remedy is also different.

Traditional competition law in general, and tying in particular, typically interferes with how products are sold. By the same token, competition law is generally wary not to second-guess how products are made.

What do I mean by this distinction? I mean that, absent exceptional circumstances, competition law is not there to tell companies how to run their business. The point of competition law is to ensure that companies have the ability and the incentive to thrive in the marketplace using the strategies of their choosing.

Competition law is agnostic about whether companies vertically integrate or sell their products through third parties, whether they choose selective distribution over franchising or (more to the point) make money through advertising (like a free-to-air TV channel) or through subscriptions (like HBO). For the same reasons, authorities dislike telling firms what prices they should charge.

How is Android different from traditional tying cases?

It is obvious to everyone why Play is tied to Search (and why Search is given a distribution advantage). It is through this mechanism that a company like Google makes money. Thus, if the tying of content and advertising is made unlawful, Google will have to find new ways to make money – or perhaps reinvent Android as a non-profit entity.

The remedy in the case is likely to lead to a fundamental rethink of Android. This issue does not arise in traditional tying cases. If a firm like Coca-Cola is not allowed to engage in tying, it can carry on making money the same way it used to. Not even Microsoft had to change its business strategy – this said, the Media Player remedy failed, which is not an unimportant factor in this context.

To sum up: Android will inevitably lead to more intrusive intervention than usual. And the potential unintended consequences of second-guessing firms’ strategies are universally acknowledged in the competition law community (and have often informed legal analysis).

Against this background, the open question, I guess, is whether, and to what extent, this difference should be reflected in the law.

Is this factor irrelevant from a legal standpoint? If it is not irrelevant, how does (or should) the law adapt to the increased intrusiveness? What are the closest precedents at which the remedy hints?

The reach and scope of competition law intervention may vary significantly depending on how these questions are answered.

Android forks and the legal status of non-compete obligations

What I say above can also be extended to the issue of Android forks. As explained above, obligations relating to this matter are like the sort of non-compete obligations found in franchising agreements or in those seeking to protect the goodwill around a business (think of Remia). From this perspective, one could argue that they are reasonable.

Is it not sensible for a company to prevent free-riding and to make sure that it does not create competition to itself when licensing its products and services? One could point to the Guidelines on technology transfer agreements to suggest that, indeed, it is. In relation to these agreements, Valentine Korah consistently emphasised that competition cannot be examined from an ex post perspective alone.

One could also argue, equally reasonably, that dominant firms have a special responsibility. I agree that they do. This point, however, does not say anything about the relevant legal test. Under what conditions are dominant firms precluded from taking measures against free-riding? Can they avoid creating competition to themselves when licensing their products? How are these considerations integrated in the legal framework?

These are questions, again, for which there is no clear-cut answer in the case law – Article 102 TFEU case law, that is. In that sense, Android looks like a good opportunity to evaluate and clarify the status of these business strategies – and similar ones raising the same issues.

Conclusions

These are not the only questions in which I am interested. But it gives you an idea of the sort of major points to which I will jump when the decision is made available. The telecoms lawyer in me is also intrigued by some aspects of market definition mentioned in the press release (in particular the reference to indirect constraints). And I am curious to know how the notion of effects is defined.

If you are interested in making sense of the law (as opposed to making noise) too, I would very much welcome your thoughts.

The 4th Chillin’Competition Conference will take place in Brussels on 20 November 2018.  

Here is what we can tell you for now:

-It took us a while to settle on a venue (because Pablo mocks my ambitions; the picture above corresponds to a real recent Whatsapp conversation regarding possible venues. His counterproposal reveals how seriously he takes me…).

-We have so far invited only one speaker, who has very kindly accepted: Commissioner Vestager will once again be our star speaker;

-The theme of the conference will be: “Concepts“. We will pick a few common but often misunderstood, or yet unclear, concepts and we will invite a group of experts to discuss their meaning and implications. It’s a bit what we did with the notion of “neutrality” in our 2nd conference, but with a broader scope. We will discuss horizontal concepts, not cases or industries.

-We are selecting the specific concepts that will be disected and your feedback would be most useful; what are the concepts that you think are in need of clarifications?

–We are open to fresh ideas and new speakers, so if you think you can astonish the competition community with a brilliant speech on any particular concept, please send us a one pager with your ideas. Depending on what we get, we might invite those with the best ideas to deliver a brief Ted-like talk (note that candidates will be selected “on the merits”; i.e. on the basis of wholly subjective and undisclosed criteria);

-Our non-business model consists in making the conference accesible to everyone by offering the service for free. If you want to be one of the sponsors that makes this possible, please shoot us a line;

-It will be, by far, the best Chilling Competition conference to date;

-Yes, yes, there will be drinks afterwards 

More info on the programme, registration, etc. will follow in September…

REGISTRATION for our Chillin’ Event in London (14 September, at LSE) is now open. Please click here to sign up!

UPDATE: The event is now sold out. But please sign up to the waitlist if you are interested in attending! Thanks everybody for the interest! We look forward to seeing many of our readers in September.

You will remember that we will be celebrating (bits of) our eventful year on the afternoon of 14 September in London (first ever Chillin’ event across the channel!).

Our idea is to discuss with some friends the central ideas of my book (the relationship between institutions and substance, judicial review, constraints on administrative action). You can check the programme below – as you can imagine we are grateful and humbled to have such an amazing line up for the occasion.

Note that the workshop will take place at LSE (Wolfson Theatre, New Academic Building).

REGISTRATION INFO: Registration will open on Friday of this week at 9.30am London time (ie 10.30am Brussels time). You will be able to register here for the event. Please note that only 100 tickets will be released.

The Shaping of EU Competition Law: a workshop and celebration

13.30-14.00 Registration

14.00-14.10 Welcome: Niamh Moloney (Head of Department, LSE)

14.10-14.45 Introduction: Pablo Ibáñez Colomo (LSE)

14.45-15.45 Institutions and substance in competition law

Chair:

Alfonso Lamadrid de Pablo (Garrigues)

Speakers:

Michal Gal (University of Haifa)

Eric Gippini Fournier (European Commission)

Ioannis Lianos (University College London)

15.45-16.15 Break

16.15-16.45 Keynote speech: Marc van der Woude (Vice-President, General Court)

16.45-17.45 Specific issues: proof, economic evidence, institutional change

Chair:

Denis Waelbroeck (Ashurst and Université libre de Bruxelles)

Speakers:

Damien Gerard (College of Europe)

Andriani Kalintiri (City Law School)

Jorge Padilla (Compass Lexecon)

17.45-18.00 Break

18.00-19.00 Beyond Europe, beyond competition law

Chair:

Carol Harlow (LSE)

Speakers:

Paul Daly (University of Cambridge)

William Kovacic (George Washington University and King’s College London)

Joana Mendes (University of Luxembourg)

19.00-20.00 Drinks reception

Pablo’s new book “The Shaping of EU Competition Law” is out and only two clicks away.  You can verify this yourselves; just click here.  Anyone working in this field should read the book (this includes me, btw, as I miserably failed to read the proofs on time!). Nowhere else will you find such a thoughful and data-intensive analysis about the role of institutional interactions in the evolution of EU competition law.

For our other recommendations on what competition law books to read this summer, click here and here.

And remember that on 14 September we will be holding an event in London (@LSE) to celebrate the launching of the book and discuss some of the issues it raises with an amazing line up of speakers. You should not miss that either; more info is available here.