Chillin'Competition

Relaxing whilst doing Competition Law is not an Oxymoron

Archive for December 2018

4th ChillinCompetition Conference (Robert O’Donoghue – “Coming To Our Senses: Object And Verticals”)

leave a comment »

Coming-to-our-senses-e1545940157677.png

Robert O’Donoghue’s discussed the notion of restriction by object in relation to vertical agreements at the 4th Chillin’ conference (a matter that we discussed on the blog here and here during 2018).

The video of his superb presentation is available here, and the slide deck he used, here.

[Note: this is the fourth post in a series featuring videos of the individual interventions that took place at the Chillin’Competition conference on 30 November 2018. For more videos, click here]

 

 

Written by Pablo Ibanez Colomo

27 December 2018 at 8:51 pm

Posted in Uncategorized

4th ChillinCompetition Conference (Johan Ysewyn “What is a cartel? A Conceptual Waterloo”)

leave a comment »

JY-Chillin'Conf.jpg

Johan Ysewyn’s spectacular intervention at the 4th Chillin’Competition conference featuring provoking ideas, ABBA songs and his own singing (no kidding) is available here.

[Note: this is the third post in a series featuring videos of the individual interventions that took place at the Chillin’Competition conference on 30 November 2018. For more videos, click here]

 

Written by Alfonso Lamadrid

24 December 2018 at 9:30 am

Posted in Uncategorized

4th ChillinCompetition Conference (The Videos: Commissioner Vestager “Strenght in Diversity”)

leave a comment »

Conference- MV

Commissioner Vestager’s intervention (3rd in a row, as she explains at the outset, and for which we are very grateful) is available here.

[Note: this is the third post in a series featuring videos of the individual interventions that took place at the Chillin’Competition conference on 30 November 2018. For more videos, click here]

 

Written by Alfonso Lamadrid

21 December 2018 at 1:00 pm

Posted in Uncategorized

My Chillin’ talk (‘What is an anticompetitive effect?’) and more

leave a comment »

Pablo_Effects.jpg

The video of my Ted@Chillin’ Talk on ‘What is an anticompetitive effect?’ is available here. And the slides are available here. Our readers know that this is a question that keeps me busy. It is also a topical one. You may remember that I wrote a post about the MEO case earlier this year.

In MEO, the Court clarified that not every competitive disadvantage amounts to an anticompetitive effect under Article 102 TFEU. In my view, it is the single most important development in EU competition law this year.

Speaking of which: I am truly honoured to have taken part in Rupprecht Podszun‘s famous Advent Calendar, where I make that very point and discuss at length MEO and its implications (see here).

If you prefer to read rather than listen to my presentation, here is the (approximate) transcript of my Chillin’ talk:

What is an anticompetitive effect?

We have been hearing about the effects-based approach for over 15 years now. The effects-based approach is embraced in papers issued by the Commission, in papers issued for the Commission, in papers issued by Commission officials and is discussed many conferences and publications.

Since we have been talking about effects for all these years, you would be forgiven to assume that we know what we mean by effect, or at least that there is a consensus about what we should be looking for when we evaluate the impact of a practice on competition.

No matter how surprising this may sound, the truth is that this is a question we do not ask ourselves, and about which there is not unequivocal guidance in the case law and administrative practice. We need to dig very deep to find insights.

One can think of some reasons this may be so. But I will betray the supposed topic of the conference and will not make the ‘why, though’ the focus of my talk.

I will just mention that, if we do not discuss this question, this is not because the answer is an obvious one, or one that does not need to be discussed.

An effect can be anything from a competitive disadvantage to a consumer welfare loss – with some options in between.

The consequences of the choice we make in this sense are very significant in practice.

If we say that any competitive disadvantage amounts to an anticompetitive effect, then pretty much every practice can be safely assumed to have a negative impact on competition.

Just think about it: potentially anticompetitive practices inflict, by definition, a competitive disadvantage on rivals. That is the reason we look into them in the first place.

If we were to decide that any competitive disadvantage is an anticompetitive effect, then there would be no meaningful difference between restrictions by object and by effect.

The threshold would be so low that the line between object and effect would be blurred.

The veterans among you will remember the days of Regulation 17, where agreements were deemed restrictive of competition by object or effect. It did not matter whether one was chosen over the other, because pretty much every agreement was prohibited anyway.

If this were still the meaning we attached to the notion, the effects-based approach would have achieved exactly nothing.

The good news for those who believe in a meaningful analysis of effects is that this approach has been unequivocally rejected by the Court of Justice.

The MEO judgment, which was delivered earlier this year, is particularly eloquent in this regard. A difference in price, the Court told us in that judgment, is not sufficient to trigger the application of Article 102 TFEU.

One could also argue that anything that makes competitors’ life more difficult amounts to an anticompetitive effect.

Again, if every practice that makes competitors’ life more difficult amounted to an anticompetitive effect, then the threshold would be very easy to meet in practice. After all, we pay attention to some practices precisely because they make competitors’ life more difficult.

Exclusivity obligations, tying and margin squeeze are examples that come to mind immediately.

So again, is it sufficient to show that a practice makes competitors’ life more difficult to trigger EU competition law?

There is a critical mass of case law already showing that an anticompetitive effect is something more than that.

It makes sense that I pause for a second and discuss three cases that illustrate this idea well.

The first one is Deutsche Telekom.

The Commission had found evidence that the rivals of the incumbent had been squeezed.

Surely a margin squeeze is sufficient to trigger Article 102 TFEU? What else do you need other than showing that competitors are being forced to sell at a loss?

That was the argument raised by the Commission. It is certainly not an unreasonable one. However, the argument did not win the day.

The Court made it clear that a margin squeeze, in and of itself, is not enough to establish an anticompetitive effect. This point would be confirmed in TeliaSonera.

The second one is Post Danmark I.

Again, there was evidence in that case that the dominant company was selling below cost, and that it had gained some customers from rivals.

And again, the Court ruled that these factors are not enough to establish an anticompetitive effect.

The reasoning of the Court is worth recalling.

The Court noted that, as a general rule, an equally efficient rival can match prices that cover the average incremental costs

It also noted that, in the meantime, the competitor had been able to gain back a customer it had previously lost to the dominant undertaking.

So yes, competitors’ life might have been made more difficult during the aggressive pricing campaign, but competitors stayed on the market and fought back

My third case is Intel. There is not much point in discussing it in detail. Suffice it to mention that exclusivity agreements make, by definition, competitors’ life more difficult (that was after all the point made in Hoffmann-La Roche). But even if this is so, the Court declared in Intel that the dominant firm can escape Article 102 TFEU

What do these cases tell us, when taken together?

I believe they tell us that a practice does not have an anticompetitive effect where the ability and the incentive of competitors is not affected by it.

In other words, conduct has an anticompetitive effect were rivals are no longer willing and able to fight. And a competitive disadvantage, or a practice that makes their life more difficult, may well incentivise them to fight even harder.

So there you have it, my definition of an anticompetitive effect.

This idea should come across as obvious if one pays attention to other areas of EU competition law.

Think of Tetra Laval/Sidel and GE/Honeywell. Think of Microsoft/Skype.

All these cases involved dominant companies. In all these cases the new entity enjoyed a competitive advantage that made rivals’ life more difficult. And we know that these facts, alone, were deemed insufficient to prohibit the mergers.

Is there a reason to define the notion of effects differently depending on the provision? I do not think so, and have never seen a cogent argument in favour of defining effects differently

Some in the audience, when listening to this, might have thought: ‘wait a second, you are cheating’.

Did the Court not say that there is no such thing as de minimis in Article 102 TFEU, and therefore anything that dominant companies do cannot fail to have an effect?

To which I would reply: I am afraid the appreciability issue is a different one. A third dimension of the analysis of effects if you will. But for that, I would need more than 10 minutes –  for today, I can leave it here

Thanks very much.

Written by Pablo Ibanez Colomo

20 December 2018 at 3:00 pm

Posted in Uncategorized

4th Chillin’Competition Conference (The Videos: Introduction and Highlights)

leave a comment »

Ted@Chillin Competition

Over the past few weeks many of you have asked whether there was any possibility to watch a recording from our conference or to have access to the materials presented. Well, now there is:

In the course of the Christmas period we will be publishing videos of all of TedTalks, most likely one a day. We will eventually publish other materials related to the panel discussions.

As a starter, here are:

Unfortunately, no material is capable of capturing the great, chilled, atmosphere. Thanks again to all those who made it possible. But even if you missed that, and the gifts, and the Syrian food, and the wine, we hope these materials may provide some compensation in the form of food for thought and laughs.

Written by Alfonso Lamadrid

19 December 2018 at 5:07 pm

Posted in Uncategorized

Servier and the myth that one could not challenge market definition

with 4 comments

myths

We have not yet had time to read  carefully analyze the Servier Judgment rendered today by the General Court and I’m afraid we’ll need the weekend to process a few hundred pages in French and to comment on the many interesting points it surely raises. Expect to hear from us about this case early next week.

For now, and as an appetizer, I’ll just say that the outcome of the case and a mere read of the press release confirms something we had been saying for a while: Courts do carefully review market definitions when asked to, and are open to annulling them when justified.

The perception that applicants have low probability of success in overturning the Commission’s decisions on the point of market definition is (was?), in my view, based on a mere statistical analysis of the cases in which the GC was receptive to the applicants’ arguments.

There is certainly a surprising paucity of precedents in which market definition had played a significant role, but that is not the Court’s fault. Sousa Ferro observed, in a 2015 piece, that within a universe of 608 annulment proceedings concerning substantive competition issues, the issue of market definition was only raised in 134 cases (22%). Within those, the Commission decision under appeal was only wholly or partly annulled in 5 cases (3.75%) on the basis of an incorrect or insufficiently justified market definition, whilst in another 4 cases the Court expressed some dissatisfaction with the market definition but without annulling the decisions at issue.  The article concluded that “applicants have only succeeded in persuading the Court that the Commission erred in its delineation of the market in 6.7% of the cases where the issue was raised”.

Whilst interesting, the figures presented in this recommendable article (one among the very few on the subject) may not provide the full picture. The selection of cases considered includes all types of competition cases, including those in which market definition was not required from the Commission (e.g. cartel cases) as well as, admittedly, the “very large number of cases” in which a precise definition would not have altered the Commission’s findings and that, consequently, failed to be examined by the Court.  The analysis understandably also fails to account for the way in which arguments were pleaded or substantiated.

Other commentators – including experienced Commission litigators in high-profile abuse of dominance cases (remember Eric Gippini’s “It’s the dominance stupid!” intervention at one of our workshops) coincide in underlining the paucity of challenges to market definition and dominance in many of the abuse of dominance cases litigated within the past 20 years.

Note, for example, that market definition – and dominance – were not contested in a number of the leading abuse of dominance cases in the EU, including Intel, Tomra, Deutsche Telekom and Michelin II. And we haven’t had many other abuse of dominance cases brought before the Courts in the past few years.

Full annulments of market definition are certainly rare, although not unprecedented, as shown long ago by Continental Can, some time ago in Tetra Laval (merger case), more recently in CEAHR (concerning a decision to reject a complaint) and today in Servier. But the objective reality is that the Court has most often (albeit admittedly not always) undertaken a very thorough review of market definitions, and this regardless of the outcome of the case. If one looks closely at the case law, this has happened both in cases where the GC referred to the manifest error of assessment standard (e.g. Clearstream or Astra Zeneca) and in cases where it did not (see e.g. Wanadoo or Telefónica). And the same is true of merger control cases, such as Tetra Laval or NVV.

So don’t let labels such as that of the “manifest error” standard fool you. A careful read of the formulation of the Tetra Laval standard of review (what President Jaeger has called “the forgotten paragraph”), and particularly an analysis of how it has been implemented in practice, reveals that Courts have a wide margin of review and that they can intervene whenever they are persuaded about possible gaps in the Commission’s analysis. [Btw, this confirms what our friends Fernando Castillo and Eric Gippini say in their excellent book, that “practice shows that the manifest error concept captures much more than a decision that is facially or self-evidently wrong. In a way, manifest is whatever the judges consider to be manifest”].

The trend is much more evident in recent years, and my take is that it is here to stay, particularly after  KME and Chalkor and perhaps even more following the Court’s enlargement.

And this makes sense, for if everyone were easily found dominant in a narrowly defined market, then the special responsibility would become ordinary and one could easily abuse the notion of abuse. Servier’s lawyers, who clearly did not buy the myth, actually made this point at the oral hearing citing the Bicycle Repair Man Monty Python sketch, showing how ordinary it would become if everyone were superman.

The bad news is that we may run out of material to continue this saga of posts….  😉

Written by Alfonso Lamadrid

12 December 2018 at 7:17 pm

Posted in Uncategorized

JECLAP endorses ASCOLA’s Declaration of ethics

leave a comment »

A while ago, I wrote about ASCOLA’s conference at NYU School of Law. There was a bit I did not mention: at the same gathering, the ASCOLA General Assembly unanimously approved a Declaration of Ethics, which can be found here. The initiative seeks to preserve the integrity and trustworthiness of legal research. Ioannis Lianos headed the committee that worked on the declaration.

If you take a look at my profile on the blog, you will see that I now make it explicit that I abide by it.

By and large, this declaration overlaps with the principles that have guided the publication of pieces in the Journal of European Competition Law & Practice (JECLAP) since I became its joint general editor (alongside Gianni De Stefano). Because it is intended for academics, the ASCOLA declaration is stricter in some respects . In this sense, it is a wonderful complement to JECLAP’s policy.

At our last meeting, JECLAP’s editorial team endorsed the declaration. Accordingly, authors submitting a piece to JECLAP are assumed to abide by ASCOLA’s declaration of ethics if they claim an academic affiliation. We are confident other competition law and economics journals will follow, and we have no doubt our authors and readers welcome the initiative.

And since I am speaking ASCOLA: remember that, if you want to take part in the next annual conference – Aix-en-Provence (!), 27-29 June – you have until 15 January 2019 to submit your articles and extended abstracts (more info here).

Written by Pablo Ibanez Colomo

11 December 2018 at 8:41 pm

Posted in Uncategorized