Author Archive
New Book on Merger Remedies
European Merger Remedies
Law and Policy
By Dorte Hoeg
As merger transactions become more complex, so do the remedies involved. This book seeks to identify and examine the most important aspects of merger remedies, which have emerged and evolved in the European Commission’s policy and practice over the past 20 years. The in-depth analysis of applicable provisions and guidelines is structured in accordance with a typical ‘remedies lifecycle’: the negotiation, submission, assessment, adoption, implementation and enforcement of remedies. Furthermore, numerous conditional clearance decisions and judgments as well as studies and legal literature on the subject are described and put into a coherent analytical framework with the aim of providing as much nuance as possible in the evaluation of the Commission’s past and present remedies policy and practice.
While the Commission indisputably has accomplished numerous successes in its remedies enforcement over the years, it has also encountered some significant obstacles and shortcomings along the way. To this effect, the final chapter in the book critically assesses whether the current framework, which has remained unchanged since 2008, continues to provide an adequate regulatory response to today’s remedies issues and challenges. Where adjustments and improvements are deemed desirable or necessary, possible measures are considered.
Dorte Hoeg recently obtained her Doctor of Philosophy from King’s College London based on a thesis on EU merger remedies. She is a former national expert and case-handler at the European Commission’s Directorate-General for Competition and has also previously worked for the Danish Competition Authority, including representing the authority in the EU’s Advisory Committee on Concentrations.
December 2013 288pp Hardback 9781849464116 RSP: £65 / €85
20% Discount Price: £52 / €68 (+ Postage and Packing)
Order Online
http://www.hartpub.co.uk/BookDetails.aspx?ISBN=9781849464116
If you would like to place an order you can do so through the Hart Publishing website (link above). To receive the discount please type the reference ‘CCB’ in the voucher code field and click ‘apply’.
Hart Publishing Ltd, 16C Worcester Place, Oxford, OX1 2JW
Telephone Number: 01865 517 530
Fax Number: 01865 510 710
Website: http://www.hartpub.co.uk
Paper on Injunctions for FRAND-pledged SEPs and Article 102 TFEU
The “smartphone war” has reached the Court of Justice in Luxemburg (and before it the Commission).
With it a whole host of funny acronyms have made a foray in EU competition law = FRAND, SEPs, NPEs, etc.
But more importantly, the smartphone war raises many interesting questions on the appropriate legal standard under Article 102 TFEU.
I just posted a paper on ssrn.com about it:
This paper discusses the legal test under which owners of Standard Essential Patents (SEPs) who have pledged to grant licences to those SEPs on Fair Reasonable and Non-Discriminatory (FRAND) terms can be held guilty of an abuse of a dominant position under Article 102 of the Treaty on the Functioning of the European Union (TFEU) by seeking, or threatening to seek, injunctions against unlicensed implementers of their technology.
To that end, we use the theoretical framework described in a previous paper on rule-making in EU competition law (Petit, 2012). First, we sift through the various tests of abuse potentially applicable in positive EU competition law (I). Second, we show that an objective criterion should command the selection of a test of abuse, and suggests using the notion of ‘consistency’ (II). Third, we rank the applicable tests of abuse on grounds of consistency (III). Fourth, our paper generalizes those results to propose a framework for the assessment of new forms of conduct under Article 102 TFEU (IV).
Link here and comments welcome.
Words of Warning (to lawyers)
Note to readers: this will be controversial.
Disclaimer: the content of this post represents my sole opinion only, and does not reflect the official views of this blog or of Alfonso Lamadrid (who likes to be more politically correct than myself)
Lawyers arguing in Luxemburg are p*****g off the Members of the Court.
Mistress AG Sharpston made this very clear in a recent editorial in the Journal of European Competition Law & Practice (2013) 4 (6): 453-454:
“Finally, you the reader of this editorial—the advocate pleading competition cases before the EU courts, or the in-house adviser analysing the merits of challenging a Commission decision or lodging an appeal—can also make a major contribution towards ensuring that the courts function effectively and smoothly and can deliver effective judicial review. Please (I beg you) consolidate your arguments and only run with the points that have some real substance to them. Don’t put in an application with six grounds of appeal, each divided into several sub-points (you know, and I know, that not all are of equal merit!). Please plead succinctly and clearly (think of translation!) and please don’t throw in an additional 600 pages of annexes in case something there might help to swing the case your way. And, by the way: please don’t appeal a clearly hopeless case to the Court of Justice just to show the client that you’ve tried everything you can. We too are worried about our workload—particularly the part of that workload that consists of wholly unmeritorious or manifestly inadmissible appeals—and we are looking at ways to streamline how we deal with such cases. You have been warned. Ensuring effective judicial protection against the background of increasing workload and financial constraints is a real challenge. It can be achieved; but everyone needs to play their part“.
You read well: you have been warned.
Now, how bout’ the sanction? After all, the rethorics of fear cannot work effectively, if not accompanied by subsequent implementation (for more evidence, see the recent purge in North Korea). In the antitrust field, our friend Wouter Wils would say that enforcement cannot be optimal without a credible (probable) sanction.
With notable exceptions (CISAC), judgments like Dole, Tomra or Telefonica say it all.
Most of the applicant’s arguments are purged swept aside, without being subject to the simplest discussion.
Now who’s the culprit?
- A milky business-model based on billable hours, information asymetries and moral hazard between principal (client) and agent (lawyer)?
or
- A
politicaljudicial institution of non specialist judges, who exhibit interest for principled issues only and a correlative sense ofcontemptdisinterest for factual and technical issues?
PS: Not everyone in Luxembourg seems to side with the official party line AG Sharpston. In his opinion under Telefonica, AG Whatelet also complained of overlenghty submissions. Yet, he reviewed the parties’ arguments. See hereafter.
“7. Force est de constater que: i) le pourvoi, formulé de façon confuse et peu structurée, est extrêmement long – la traduction française de la requête ne comptant pas moins de 133 pages, et ce en interligne simple, pour 492 points (8) – et répétitif, en présentant plusieurs centaines de moyens, branches, griefs, arguments et éléments d’arguments (ce qui constituerait, selon la Commission, un record dans l’histoire contentieuse de l’Union); ii) le pourvoi vise presque systématiquement à obtenir un nouvel examen des faits, sous le couvert d’allégations selon lesquelles le Tribunal aurait appliqué un «critère juridique erroné»; iii) les moyens sont souvent présentés comme de simples affirmations dénuées de toute motivation, et iv) les requérantes, d’une part, critiquent souvent la décision litigieuse et non l’arrêt attaqué et, d’autre part, lorsque leurs critiques s’adressent effectivement à l’arrêt attaqué, elles n’identifient pratiquement jamais les passages ou les points précis de cet arrêt qui contiendraient de prétendues erreurs de droit.
8. Ces constatations et la difficulté, voire l’impossibilité, pour la Commission d’exercer ses droits de la défense ont inspiré l’exception d’irrecevabilité qu’elle a soulevée à l’encontre de l’ensemble du pourvoi. Même si je peux avoir quelque sympathie pour cette exception d’irrecevabilité – et d’ailleurs de nombreuses parties du pourvoi me paraissent manifestement irrecevables – il n’en demeure pas moins que le pourvoi en tant que tel ne peut être déclaré irrecevable dans son intégralité, dans la mesure où quelques-uns des moyens ou arguments du pourvoi (même si c’est à l’aune d’aiguilles dans une botte de foin) remplissent les exigences de recevabilité. Ces aiguilles soulèvent en outre des questions de principe, parfois inédites, concernant notamment l’obligation du Tribunal d’exercer un véritable contrôle de pleine juridiction”.
Antitrust Land
Congratulations to Pablo González de Zárate Catón, a former LLM student at the University of Liege (2012-2013) now at Clifford Chance, who just published his LLM dissertation in the College of Europe Research Papers in Law series.
The dissertation was truly excellent. The introduction tells it all (a taste hereafter):
Let us imagine a city, Antitrust Land, divided in two parts by a river. The growth of the city depends on its capacity to attract visitors. One part of the city attracts a lot of visitors (cartelists) since it is very well connected in terms of access (leniency programmes) and is therefore very rich. Everybody looks happy about that part of the city: the Mayor (the European Commission), since the whole country talks nicely about its access infrastructures, and tourist services (law firms), as they make a lot of money with visitors. This part of the city is called Public Enforcement Town and its citizen is the abstract consumer.
The other part of the city is called Private Enforcement Town, where the concrete consumer lives. It is surrounded by mountains. As a result of this, it is clearly not as wealthy as the other one since visitors hardly ever pass by. Besides, the level of income greatly varies from one neighbourhood to another one as some parts of the town are better connected due to their own cableways. These three neighbourhoods are called United Kingdom, Germany and the Netherlands. At some point, somebody realizes that a bridge linking both parts (disclosure of leniency materials) of the city could contribute to attract tourists to Private Enforcement Town and therefore to boost its economic growth. Nevertheless, tourist services are clearly against and they say that Private Enforcement Town is so ugly that tourists will immediately leave the city and never be back. They also say that with that bridge in the future nobody will be tempted to come to Antitrust Land.
The question is not as simple as ‘bridge: yes or no?’. If yes, it must also be decided its location. It could link the heart of both parts (total disclosure of leniency documents) or it could be built in the surroundings of the city (disclosure of preexisting documents).
What should the Mayor do?
Click here to download Pablo’s dissertation.
A thought on the failing division defense, industrial policy, and commitments
The EU Commission has often been – in our view incorrectly – criticized for its blindness to industrial policy considerations.
Caution: propaganda With my assistant Norman, we wrote a lenghty paper explaining how such considerations can, and should, play a – circumscribed – role in EU antitrust law.
A recent case suggests that industrial policy arguments are not devoid of all traction.
In Nynas/Shell’s Harburg Refinery, the Commission cleared the acquisition of distressed oil refineries by Nynas (a nice an EU firm) on the basis of the failing division defense.
Interestingly, the reasoning seems based on the conjecture that absent the merger, the refineries would be shut down. As a result, there would be “reduce[d] production capacity in Europe for a number of specific oil products”. And the closure of those refineries would expose European consumers to the full exploitative might of Ergon, a bad US importer.
Of course, the reasoning remains competition based. The Commission stresses that absent the merger, prices would likely increase. And assumes that with the merger, prices will not.
But this is only true if Nynas keeps the refineries in business.
My question then is: shouldn’t failing division defenses be systematically accompanied with a commitment from the acquiring firm to keep (all or part of) the acquired assets in operation?
After all, some companies do purchase fledging entities to shut them down, and meanwhile acquire technology, know-how, other intangible assets. This may be part of a strategy to actually gain control over supply and reduce capacity (think of Mittal Steel).
News
Next week:
- On 17 December, we’ll have a GCLC lunch talk on the Aegean/Olympic merger decision. S. Simon (COMP), B. Durand (RBB) and A. Guttermuth (Arnold & Porter) will be our speakers. Registration here.
- On 18 December, we will have the graduation ceremony of the Brussels School of Competition. This is an open ceremony, and you can register here. There will be tons of good food and top notch tier antitrust lawyers. Not sure which of the two is the seller :). Above, some of last year freshly graduated studs.
Recently, our friend David Henry and his friend David Ashton have published a timely, thorough, thoughtful book on Competition Damages Actions in the EU. The book is impressive, it makes a thorough exploration of how the main EU MS have dealt with antitrust damages to date. Congratulations to them.
Yesterday: I was at a conference in Paris giving a presentation on IP and antitrust law. And I finally spoke of lions, black swans and butterflies. For more, see below (2 files, read 1 before 2).
Presentation ASPI – Rappel des grands principes applicables à la relation DEC-DPI (2) Presentation ASPI – Rappel des grands principes applicables à la relation DEC-DPI (1)
The Unintended Consequences of the Case Law on Restrictions by Object
On second thoughts, the recent bad case law on the notion of “restriction by object” may incidentally, and unexpectedly, fetter the margins of the Commission, and in particular its ability to handle all cases under the obese Article 9 procedure.
As hinted recently by DG Italianer in a most interesting speech, cases such as Irish Beef (C-209/07), Expedia (C-226/11), Slovak Banks (C-68/12) and Allianz Hungary (C‑32/11) all suggest that agreements which are devoid of the “obvious” capacity to harm competiton are nonetheless “restrictions by object” because they are “serious” violations of the law.
In other words, those infringements are restrictions by object because they are sinful – in competition cases, the Court says “by nature injurious to the proper functioning of normal competition” – so sinful that they should be prosecuted even absent anticompetitive intent or effects.
This line of judicial precedents brings restrictions of competition close to the notion of “infractions objective” known in criminal law. Take murder: you can be convicted of homicide even if you unsuccessfully or unwittingly try to kill someone (in some legal orders, it is even illegal to shoot a dead body). Closer to competition law, take insider trading. You can be sentenced even if you use insider information unknowingly or ineffectively.
The bottom line: such infringements are so morally sinful that they should be prosecuted just for the sake of it. Regardless of their impact. Regardless of their motives. Full stop.
Now, let us revert to competition law. If the concept of a restriction by object means infringements that are morally sinful or morally so “serious” that they should be unlawful for the sake of it, then the Commission should no longer be free to settle such cases and decline to reach a finding of infringement.
This is the rule applied in most criminal law systems, where in principle the gravest infringements (eg crimes such as homicide, rape, etc.) cannot be subject to settlements.
The same should apply in competition proceedings. Restrictions by object ought to be treated under Article 9. If restrictions by object are that bad, then the sole procedural way to handle them is under Article 7 . Full stop.
Microsoft/Skype – or the Commission in the Shadow of Parties Submission
The Commission’s decision in Microsoft/Skype contradicts its previous Article 102 decisions in Microsoft I (WMP) and Microsoft II (Internet Explorer).
Read §152 of Microsoft/Skype :
“consumers do not simply use whatever communications product is provided with Windows. The consumers use multiple communications services on multiple platforms, such as Apple iOS and Android, which include their own built-in communications services (Facetime and Google Talk). The parties further submit that some online communications applications such as Facetime and Viber are not even made available for the Windows platform, and yet they are very successful”.
This § tramples on the theory of harm used by the Commission to nail Microsoft in 2004 and 2009: ie that lazy consumers do not use more than one software (no multi-homing), and that they tend to stick to the the default software preinstalled on the platform (users inertia).
Now, the § reproducted above misquotes the Commission’s decision.
In reality, § 151 starts with: “In addition, the parties claim that consumers do not simply use whatever communications product is provided with Windows” blablabla.
But is this really the parties talking here?
Take a look at the full section of the decision:
“151. With regard to a possible tying between Skype and Microsoft’s products, the Commission considers that most of the arguments mentioned above in order to demonstrate the absence of incentives for a strategy of degradation of interoperability (in particular the necessity for Microsoft to maintain and enhance the value of the Skype brand) are also relevant to the assessment of the strategy of tying. 152. In addition, the parties claim that consumers do not simply use whatever communications product is provided with Windows. The consumers use multiple communications services on multiple platforms, such as Apple iOS and Android, which include their own built-in communications services (Facetime and Google Talk). The parties further submit that some online communications applications such as Facetime and Viber are not even made available for the Windows platform, and yet they are very successful.153. Moreover, consumers increasingly prefer services that offer online communications as part of a broader user experience such as Facebook, the recent Google+ and Gmail, which all run on Windows. 154. Competitors would therefore have many possibilities to market and many different means available to attract consumers. 155. In the course of its investigation, the Commission has not received any substantiated replies demonstrating that Microsoft has incentives to tie Skype and Microsoft’s products”.
Read in context, §151 sounds like Commission’s thinking.
There is no rebuttal, no discussion of the parties’ submission. And §151 is planted in the middle of bunch of other Commission arguments, all supportive of the view that there is no risk of bundling.
Now, it would have looked bad for the Commission to say black in 2004 and 2009, and then reverse to white in 2011.
So our Commission friends probably decided to use the parties as scapegoats, and (i) conveniently avoid the blame of inconsistency in decision making; or more plausibly, (ii) the pain of explaining why users of communications services are geeks shopping for software, distinct from the lazy users of media players and browsers.
Improper decision drafting…
PS: stay tuned, my little finger tells me that Alfonso will report on this case very soon.
New Book on Joint Ventures
Joint Ventures and EU Competition Law by Luis Silva Morais
This book examines the treatment of joint ventures (JVs) in EU Competition Law, and at the same time provides a comparison with US law. It starts with an analysis of the rather elusive concept of JV, encompassing both concentrative JVs (subject to merger control) and non-concentrative JVs. Although focused on possible definitions of joint ventures in terms of competition law, it also includes a broader perspective (going beyond competition law) on the different legal models of structuring cooperation links between undertakings.
At the core of the book is an attempt to build an analytical model for the assessment of JVs in terms of antitrust law, especially as regards Article 101 of the TFEU. The analytical model used proposes a set of sequential analytical levels, taking into account structural factors and specific factors related to the main constituent elements of the functional programmes of JVs. The model is applied to a substantive assessment of four main types of JVs identified on the basis of their prevailing economic function: research and development JVs; production JVs; commercialization JVs; and purchasing JVs. Also covered are particular situations of joint ownership of undertakings falling short of joint control.
In the concluding part of the book recent developments in JV antitrust law are put into context within the wider reform of EU Competition Law. The book is also comprehensively updated with the latest developments concerning the reform of the EU framework of horizontal cooperation between undertakings that took place at the end of 2010.
Luis Silva Morais is a Professor at the University of Lisbon Law School (FDL) and holds a Jean Monnet Chair of EU Law (Competition and Economic Regulation). He is a founding partner of ‘Luis Silva Morais – Law Firm’ (based in Lisbon). He has been Vice-President of the Privatization Advisory Board of the Portuguese Ministry of Finance (2001-11), Member of the Board of the Portuguese Insurance and Pension Funds Supervisory Authority-ISP (1998-2001) and currently chairs the Research Centre on Regulation and Supervision of the Financial Sector of FDL in scientific partnership with the Bank of Portugal and the ISP. He is a member of several arbitral courts.
November 2013 586pp Hbk 9781841137933 RSP: £95 / €123.50
20% Discount Price: £76 / €98.80 (+ Postage and Packing)
Order Online
http://www.hartpub.co.uk/BookDetails.aspx?ISBN=9781841137933
If you would like to place an order you can do so through the Hart Publishing website (link above). To receive the discount please type the reference ‘ CC B ’ in the voucher code field and click ‘apply’.
New Book on Chinese Competition Law
Competition Laws, Globalization and Legal Pluralism – China’s Experience By Qianlan Wu
Building upon a theoretical framework and empirical research, this book provides a thought-provoking analysis of the interests, strategies and challenges that China has faced in developing its Anti-Monopoly Law (AML) in the context of economic globalization.
The book comprises three main parts: Part I reviews the directions of convergence of global competition law; Part II provides a contextual analysis of China’s market governance and its strategic interests; and Part III examines the latest enforcement of the Anti-Monopoly Law by focusing on the interactions between global actors and China, the relationships between Chinese competition and sectoral regulators, and the enforcement of global competition law norms in the Chinese context.
This book is one of the first to provide a critical understanding of China’s experience as a new competition regulator, set against the background of the plural sources of global competition laws.
Qianlan Wu is a Lecturer in Law and Senior Fellow of the China Policy Institute in the School of Contemporary Chinese Studies, University of Nottingham, UK. Dr Wu holds a PhD in Law from London School of Economics and Political Science and an LLM from the University of Edinburgh, UK.
November 2013 242pp Hardback 9781849464321 RSP: £55 / €71.50
20% Discount Price: £44 / €57.20 (+ Postage and Packing)
Order Online
http://www.hartpub.co.uk/BookDetails.aspx?ISBN=9781849464321
If you would like to place an order you can do so through the Hart Publishing website (link above). To receive the discount please type the reference ‘CCB’ in the voucher code field and click ‘apply’.
Chillin'Competition 