Chillin'Competition

Happy New Year! 2018 was an intense year for the two of us. But we already look forward to what promises to be an exciting 12 months.

Competition law thinking has become more polarised in the past couple of years. By and large, this is great, as it reflects vibrant competition in the marketplace of ideas. It also shows that our discipline is at the heart of some fundamental choices that our society is to make.

What is my wish for 2019, against this background? More than wishing that courts and authorities ‘get it right’ (whatever that means), I wish that they engage with the hard questions and that they do not dodge them under the pretence that things are easy.

Readers of the blog know that I do not care much about outcomes (who ‘wins’ or who ‘loses’ an individual case). That is a very poor measure of a legal system, let alone the performance of a court or authority.

A reasonable person can come to a decision that contradicts my own views on what the sensible outcome should have been in an individual case. There is nothing wrong with that. I very much struggle, on the other hand, with decisions that dodge the fundamental questions at stake.

And, at present, there is a growing market for commentators declaring that things could be very easy if we were to follow their infallible recipes.

For some people, it is all about words (or magic spells, as if we lived in Harry Potter’s universe). According to this view, magic happens when we pronounce the right words. If we proclaim that we are embracing, say, the ‘real deal competition standard’, all perceived problems in the system will vanish.

For other commentators, the secret to wisdom is to follow the long-forgotten teachings of our most virtuous ancestors. Thus, if we pick a large multinational and perform a ritual sacrifice in the form of a breakup, markets will become competitive again.

Alas, the fundamental question at the heart of any competition law system (when and how to take action against practices with ambivalent effects on the competitive process) is pretty hard.

I would say more: competition law is fascinating precisely because it is so hard. That is why reasonable people can disagree about the outcome of individual cases, and why I never take issue (or engage) with outcomes as such.

The past and coming months have given us a few good examples of the sort of tough questions that should not be dodged. Here are a couple:

• Pay-for-delay: This area is certain to be discussed abundantly in the coming months (including on this blog). According to the Curia website, the hearing in Lundbeck (just to mention one) will take place later this month. This case and similar ones give rise to really tricky points of law.
  Is there potential competition if market entry makes it necessary to infringe a presumptively valid patent? Is there a restriction of competition if the regulatory framework makes market entry unlawful?
  I do not believe anyone claiming that pay-for-delay cases are straightforward, or just plain vanilla market-sharing arrangements. Perhaps the outcome is justified in an individual instance, but this does not mean that these cases are easy.

• ‘Margin squeeze’ and refusal to deal: We have not yet discussed the Slovak Telekom judgment (it’s coming). This is the seminal case nobody discusses. Why? Because it has shown that the relationship between outright and constructive refusals to deal needs to be carefully pondered. Contrary to what has been suggested by some commentators, it is an incredibly tricky one.
  What Slovak Telekom has shown, first and foremost, is that the difference between refusal to deal and ‘margin squeeze’ abuses is, in and of itself, an artificial one. Some of the practices at stake in that case were half-way between a ‘margin squeeze’ and a refusal to deal à la Bronner, in the sense that they could be characterised either as the latter or as the former. Since the legal tests are so different, the question arises of how to deal with them. Should we require indispensability or not?
  I wrote last year that the relevant case law is sensible, and that its underlying logic is far less obscure than commonly argued. The Court has suggested, and I agree, that indispensability should not be required in every (outright and constructive) refusal to deal case. The remaining questions relate to the instances in which indispensability is a necessary condition for intervention, and the instances in which it is not.

These are just two examples, and I guess my message is clear. The temptation for short-cuts, or to take a ‘big picture’ (i.e. lazy) approach to tricky legal questions is always strong (in the same way that the temptation not to take the law seriously is strong).

Here’s to hoping that difficult stuff will be addressed in the way it deserves to be adressed. We will, as usual, try to contribute to these debates.