Author Archive
The ‘Tu Quoque’ Fallacy – Some more thoughts on Commission v Google
Heard at today’s GCLC lunch talk, seemingly in defense of Google’s search manipulation tactics: Bing is also linking preferentially to its own related services (maps, etc.). So the complainants, and Microsoft in the first place, should take a pass.
On further thoughts, this is a pretty weak argument.
First, the idea underpinning this argument seems to be that Google’s strategy is standard industry practice. And the upshot would be that Google’s conduct has a rational business justification. But the fact that a course of conduct is frequent within an industry, and that it has been replicated by rivals, does not make it presumably lawful. Many drivers breach the law by speeding everyday, yet this is no reason to hold their conduct lawful. Similarly, the fact that conduct is rational is not a cause of antitrust immunity. Collusion is often rational, yet it is strictly forbidden.
Second, this argument actually works in favour of Microsoft’s allegations. It is precisely because preferential placement of links on search engines has the ability to steal competitors’ market share – and in turn to foreclose – that Microsoft uses this strategy. But Microsoft does this to penetrate the market and/or avoid market marginalisation. And there’s no cause for concern here: given Bing’s very low market share, the preferential placement of links at best yields minor foreclosure effects. You may call this procompetitive foreclosure. In contrast, Google has a paramount market position. Hence its conduct is likely to exert anticompetitive foreclosure effects.
On the link between the magnitude of dominance and the intensity of anticompetitive effects, see §20 of the Guidance paper:
“in general, the higher the percentage of total sales in the relevant market affected by the conduct, the longer its duration, and the more regularly it has been applied, the greater is the likely foreclosure effect”
And on the fact that not all foreclure is unlawful, see §22 of the CJEU ruling in Post Danmark:
“not every exclusionary effect is necessarily detrimental to competition”
Finally, the argument surmises that competition law should treat market players equally. But in this industry, Google is seems dominant, Bing not. Those two firms are thus in distinct situations, and the argument again does not fly. It is indeed well settled that pursuant to Article 102 TFEU, dominant firms are subject to a “special responsibility” (whatever this means) possibly for the reason set out in my second point. Like it or not, competition law imposes higher constraints on dominant firms than on non-dominant firms.
The sole possible way to make sense of this argument boils down to a moral issue, best expressed in the maxim: “nemo auditur propriam turpitudinem allegans”. But it is well known that this argument has no traction in competition law, which has no moral content, a point forcefully made by Bork – a late pro-Google advocate – in his early Antitrust Paradox. And this, in any case, would not bar the Commission from taking over the investigation on its own motion.
Overall, by trying to counter argue that Bing also manipulates search results, Google is falling into the well-known Tu Quoque fallacy.
PS: the Lunch Talk was great. We heard two economists, Anne Perrot and Cedric Argenton, speaking very clearly to lawyers. We also watched a lawyer, Alfonso, morphing into a complete hi-tech geek. The introduction of his presentation was simply hilarious. I rarely laughed so much at a conference. The slides will appear on the blog very soon.
PS2: link to the above pic here.
Reform of Private Enforcement of Competition Law in the UK: the Government’s Proposals
[Our friends Christopher Brown (Matrix Chambers and Eutopialaw) and Scott Campbell (Stewarts Law LLP) have kindly offered us a very interesting post on the reform of private enforcement of competition law in the UK. To the best of my knowledge, this is the first written piece commenting on the substance of the proposed reform. With those proposed changes, the UK may be trying to position itself as the leading forum for private actions in Europe. An absolute must read].
A while back, one of us blogged on the UK Government’s consultation, launched in April 2012, on possible reform of the private actions regime in the UK. The consultation was wide-ranging and included several radical proposals designed to facilitate redress for victims of anti-competitive conduct – most notably, the introduction of an ‘opt-out’ collective actions mechanism. Reaction to the consultation from lawyers and business was extensive: the Government received 129 formal responses, and opinion was sharply divided on some issues.
It has inevitably taken some time for the Government to take on board the responses and consider the way ahead, but, since the publication last week of its response to the consultation, we now know what it intends to do. In summary, the Government proposes to
- Strengthen the private law jurisdiction of the specialist judicial body, the Competition Appeal Tribunal (CAT);
- Introduce a “limited” opt-out collective actions regime, with “safeguards” designed to prevent frivolous or unmeritorious claims being brought;
- Promote alternative dispute resolution (ADR); and
- Take some limited action designed to ensure that private enforcement complements public enforcement.
In this post, we take a look at the main proposals, considering some of the likely practical implications of the reforms in the event that they are passed into law.
1. Putting the CAT front and centre of private enforcement in the UK
The first broad proposal is one on which most respondents agreed, at least in broad outline: to make the CAT the ‘go-to’ venue for private competition litigation in the UK. Since acquiring its private law ‘follow-on’ jurisdiction upon the entry into force of the Enterprise Act in 2003, the Tribunal has seen relatively little action, and much of the action it has seen has been in the form of procedural skirmishes relating to the ambit of that jurisdiction (several of which have gone on appeal to the higher courts). In many cases, claimants have preferred to commence follow-on proceedings in the High Court instead.
Revolving doors
Those days, I feel strongly about conflicts of interests.
Not those that affect lawyers and economists. Almost inevitably, their prose is influenced by the business interests of their clients. We all know this. And subject to full disclosure, I see no evil in the fact that lawyers and economists publish papers in academic journals.
No, those that affect the EU institutions. Yesterday, M-Lex reported a blatant example of “revolving door“.
V. Kreuschitz will succeed to J. Azizi as the Austrian Judge at the General Court.
In a previous life, Kreuschitz served as a Commission legal adviser on State aid and antidumping.
It certainly makes sense to have this kind of expertise at the Court. But the cumulative effect of appointing previous Commission officials as judges, plus the very many référendaires who have spent some time in the EU administration may give rise to a pro-Commission bias at the Court. This, in turn, is not in line with the right to equality of arms in legal proceedings, as protected under Article 6 ECHR.
There would also be much to say about the conflicts of interests that plague academia. On this, I leave you with a reference to the great documentary the “Inside Job“, where Ferguson showed how the banking industry litteraly “bought” dozens of influential US scholars, to shut out any sort of academic criticism against nefarious financial practices.
The Odds of Commission v Google
A few days ago, a funny post of mine scheduled for publication was deleted by my one-handed friend Alfonso.
With his dysfunctional arm he can’t write. But he certainly can press the erase button.
I will not ressuscitate this post on pain of causing him a heart attack.
But I have decided to write something in the same spirit. After all, we (luckily) don’t live in North Korea. I leave it to our readers to guess what my censored post was about.
So here we go. With the expiration of Commissioner Almunia’s ultimatum on 31 January 2013, journalists were star crazy yesterday.
Habemus papam “It has arrived” said today a popelike Joaquin Almunia, alluding to Google’s proposed settlement package.
Now the question is as follows. In Commission v Google:
I will try to run more polls of this kind in the future (subject to the prior authorization of my learned co-blogger).
New paper
I just posted a new paper on ssrn. It is entitled “New Challenges for 21st Century Competition Authorities“. It is a short and modest paper, which builds on my presentation in Hong Kong a few months ago. Hereafter, the abstract:
This paper discusses challenges for competition authorities in the 21st century. Those challenges were identified on the basis of a statistical review of the articles published since January 2011 in five major antitrust law journals. The assumption underlying this literature review is that the topics that statistically attract the most the attention from contemporary antitrust scholars are those that will likely constitute the main challenges for 21st century competition authorities.
Nailing Mittal?
Last week, the giant steel maker Arcelor Mittal announced the shutting down of several plants in Liege. 1,300 jobs are threatened.
This news has taken many by surprise. Politicians cry betrayal. Last year, Mittal had promised to invest millions of € in Liege.
In fairness, the posture of politicians is naive and cynical.
In Europe’s volatile and distressed economic context, how could politicians ever believe – and try to make believe – in the oral commitments made by Mittal (why did not they ask him to put commitments to paper?). All the more considering that since 20 years, industry analysts keep making cassandresque predictions, describing the steel industry in Liege as morribond.
At university, several colleagues asked me whether EU competition law could possibly undermine Arcelor Mittal’s proposed strategy. In the past hours, the debate has focused on whether a proposed nationalisation of the Liege plants by the Belgian State could constitute lawful/unlawful State aid. I am no State aid expert, so I’ll conveniently decline to answer.
A more powerful, yet wholly uncertain possibility would be to apply Article 102 (b) TFEU or its national equivalent under Belgian law. On its website, Arcelor Mittal says it enjoys a “leading market position and market share” in Western Europe and Eastern Europe. Under a narrow market definition, one may thus well find a dominant position. And given that the stated purpose of Arcelor Mittal’s strategy is to reduce overcapacities on Western steel markets and stabilize (or raise) prices, why not hold the shutting down of steel plants akin to unlawful abusive exploitation?
After all, if Mittal believes he can influence prices – and on this we may trust him – by closing off some plants, then this is implicit recognition that he enjoys some degree of monopoly power.
The bottom line: on cursory analysis, the law provides a legal basis to nail Mittal. But are the facts supportive?
If you need a fix
Has the Commission turned into a settlement junkie addict?
Until now, the Commission was ready to go through all sorts of legal compromissions to bring cases under the Article 9 commitments procedure:
- In Microsoft II, the Commission settled a case which 3 years before had been solved with a fine (thereby violating the principle that settlements are not apposite in cases where fines are warranted, see recital 13 of Regulation 1/2003).
- In S&P, IBM and in a gaggle of energy cases, the Commission settled cases where anticompetitive effects had lasted over a significant period of time, thereby failing to punish past anticompetitive conduct (and in turn, denying justice to the victims of the infringement).
- In the upcoming Google settlement, the Commission will close a case which raises novel legal and economic issues. Yet, how can the Commission possibly suspect an infringement short of any significant precedent?
As I was hearing exams all day, I had the occasion to read more on the commitments from Apple and four publishing groups for the sale of e-books.
I was truly baffled when I realized, in this case, that the Commission had accepted to settle what it otherwise deems a “hardcore restriction“, namely an industry-wide resale price maintenance scheme.
With this new precedent, the next question is: will the Commission ever cross the rubicon and accept to settle a cartel case? The Libor investigations could provide good candidates for such a new policy. In those cases, the Commission may be reluctant to hammer the Libor participants with fines, on pain of undoing 5 years of accomodating State aid policy with Article 101 TFEU penalties. An article 9 settlement would provide the Commission with a “good looking” exit strategy.
From a more general standpoint, the Commission’s “Settle ‘Em All” policy finds no merit in our opinion, and may well have adverse effects. After all, if firms know they can settle anything and face no penalties, why should they observe the law in the first place?
Should I Stay or Should I Go?
Comes the end of the day, most young lawyers face this question.
And many decide to stay at the office even if they have nothing to do, just to look busy before partners.
Courtesy of a keen reader of this blog possibly underoccupied in her own professional organisation ;): a nice chart on when to go home
State aid and the European Economic Constitution
With tough budget cuts in State universities and the bonkers rates charged by some academic publishers, university libraries are being margin squeezed.
At chillin’competition, we have thus decided to advertise competition law and economics books, provided we receive a free copy from the editor.
It is our pleasure today to advertise a new book entitled “‘State Aid and the European Economic Constitution” by Francesco de Cecco. The book is published by Hart Publishing. A full description + all relevant info can be found hereafter.
State Aid and the European Economic Constitution
By Francesco de Cecco
Recent years have seen the rise of EU State aid law as a crucial component of the European economic constitution. To date, however, the literature has neglected the contribution of this area of EU law to the internal market. This book seeks to fill this gap in our understanding of the economic constitution by exploring the significance of State aid law in addressing questions that go to the core of the internal market project. It does so by examining the case law relating to three different activities that Member States engage in: market participation, market regulation, and funding for Services of General Economic Interest. Each of these areas offers insights into fundamental questions surrounding the economic constitution, such as the separation between the State and the market, the scope for Member States to engage in regulatory competition, and the tension between market and nonmarket concerns.
Link to table of contents http://www.hartpub.co.uk/pdf/9781849461054.pdf
The Author
Francesco de Cecco is a Lecturer in Law at Newcastle University.
December 2012 210pp Hbk 9781849461054 RSP: £50 / US$100
20% DISCOUNT PRICE: £40 / US$80
If you would like to place an order you can do so through the Hart Publishing website (links below). To receive the discount please mention ref: ‘CCB’ in the special instructions field. Please note that the discount will not be shown on your order but will be applied when your order is processed.
UK, EU and ROW: http://www.hartpub.co.uk/books/details.asp?isbn=9781849461054
US: http://www.hartpublishingusa.com/books/details.asp?isbn=978184946105
If you have any questions please contact Hart Publishing
Hart Publishing Ltd, 16C Worcester Place, Oxford, OX1 2JW, UK
Tel No: 01865 517530
Fax No: 01865 510710
E-mail: mail@hartpub.co.uk
Website: www.hartpub.co.uk
Hart Publishing Ltd. is registered in England No. 3307205
Xmas Gift
My Xmas gift here: Poster – LLM in Competition and IP Law, the new poster of the University of Liege LL.M in Competition and IP law.
This programme keeps improving.
We have this year a very enthusiatic group of studs’ from all over Europe and beyond.
And for the upcoming year, we plan to (i) open a new academic position (senior lecturer) on a set of IP courses; and (ii) pursue the official lauching of the Liège Competition and Innovation Institute (LCII)
Chillin'Competition 