Author Archive
ChillinLeaks (or kind of)
There’s been a bunch of significant antitrust news in recent days.
Since they have already been revealed on other websites, they are not genuine ChillinLeaks.
- We learned today that the august Trevor Soames had left Howrey Brussels. We wish him luck for his new ventures. We do also wish luck to our good friend Miguel Rato who, in addition to being one of the brightest young competition lawyers in the market, was recently made partner there (and to other friends who have left/stay with the firm).
- Very many thanks also Geoffroy Van de Walle de Ghelcke who informed us that the European Google Antitrust Questionnaire had been posted on the Internet (and on the excellent antitrust review).
- Finally, I have been interviewed yesterday on Apple’s threats to remove free newpapers’ applications from AppStore . Apple apparently wants to push newspapers to sell (read in exchange for a price) online subscriptions for iPads exclusively through iTunes (and not for free through other platforms or in connection with paper subscriptions). The Belgian Minister for economic affairs – yes, there is a government in Belgium, though it is well beyond use-by date – has requested the Competition Directorate General to open an investigation for abuse of dominance. According to the Minister, this issue, which seems to arise in other Member States, should be dealt with at the European level. Until recently, Apple has enjoyed a relative degree of immunity in so far as EU competition law is concerned.
Are Cartels Trendy?
I took the above picture last week in the centre of Brussels. This shop sells modern design furniture.
More importantly, this picture shows why competition agencies will never fully eradicate cartels. The very fact that design shops, political parties, and even modern rock bands deliberately use the world “cartel” as a marketing device brings proof that most people do not view cartels as a bad things. Much to the contrary, to many citizens, the word “cartel” relates to a range of positive things, such as solidarity, strength, etc.
Now, contrast this with Monti’s “cancer of the market economy” or Scalia’s “supreme evil of antitrust” (thanks to Alfonso for reminding me of those quotes)… The rift between antitrust specialists and society at large seems alarmingly wide.
To date, antitrust specialists have failed to explain the detrimental effects of cartels to society. Often, if not systematically, they have used complex language and obscure micro-economics concepts (e.g., deadweight loss, allocative inefficiency, etc).
There is an easy fix a long term remedy to this unfortunate state of affairs: competition authorities, academics, economists and lawyers should seek to quantify the harmful macro-economic impacts of cartels on growth, GDP, employment, productivity, etc. A number of interesting studies have been published on this issue in recent years (see here and here), but I believe that there is still scope for further research.
GCLC Lunch Talk this Friday – Rebates after Tomra v. Commission
We still have a few seats available for our upcoming lunch talk on Michelin III Tomra v. Commission.
This lunch talk features Alan Ryan (Freshfields) and Miguel de la Mano (DG COMP) as speakers.
Registration form can be found below.
Catching up
Because you missed us, here’s a brief summary of what happened in the past two weeks:
- Last weds, my students in Liege took their competition law exam. It was a funny exam, with references to F. Beigbeder’s famous book “99 francs”, electric guitars, etc.
- The latest monthly magazine of the Federation of Enterprises in Belgium (FEB, the organization that hosts the Brussels School of Competition) is devoted EU competition law. A very nice issue. See here.
- I have presented a paper on “Free riding under EU competition law” at a conference at the EDHEC Business School in Lille. A link to my ppt. presentation can be found at the end of this post. A working paper that I am drafting with my assistant N. Neyrinck will follow shortly.
- In a case involving gas distribution, the French competition authority found that the leniency applicant had sought to request immunity on the basis of falsified documents (just wonder what happened to the lawyers/in house who provided the advice)… and dismissed concerns of abuse of collective dominance with words/concepts close to those used in my Phd (thanks to Elise Provost and Joseph Vogel for the pointer).
Le droit de la concurrence face aux free-riders
Blogging from Madrid today, for the first class of the IEB programme in EU and Spanish competition law. Thanks again to Luis Ortiz and Alfonso for their kind invitation.
New Year Resolutions
Dear readers,
Best wishes for a happy and prosperous 2011. Our holidays away from blogging have extended a little more than what we´d initially announced. Sorry about that. The good news is: we´ve received plently of emails in which readers were wondering when we would open the shop again. Thanks so much for the interest!
Alfonso and I have agreed on a range of resolutions for 2011:
- Expand our readership and foster the interaction amongst readers. The fact that we are no longer boycotted by CPI’s Blog o’ Blogs (last week they recommended one post of ours for the first time) may help.
- Boost our Chillin’Leaks section
- Publish two substantive posts a week. Hopefully the Court and the Commission will give us timely “food for thought” (and draft concise, yet comprehensive opinions)
- Publish a monthly review of State Aid issues that antitrust lawyers should be aware of
- Organize more surveys
- Start doing some interviews (suggestions on names would be very welcome)
- Open Chillin’Competition to guest bloggers (as we did a few weeks ago with Pablo Ibanez)
- Ensure a timely and original coverage of the various Google investigations
- Keep our head cold and try to take things not too seriously
- Have our friends in China, Latin America and Russia inform us on what´s hot in their jurisdictions
The bottom line: This blog is yours. Please do not hesitate to send us suggestions and comments on what you would like to read here.
Now let’s chill competition again in 2011.
Xmas break
After a busy year, it is time for the authors of this blog to take a short break. Chillin’Competition will be closed until 3 January.
As usual, I attach a link here to Waldfogel’s seminal paper on the economics of Xmas presents.
PS: I feel today like saying thank you. To our readers, to my co-blogger Alfonso, but also to my colleagues at university, the BSC staff, and last but not least, to my terrific groups of students in Liege and Lille.
GCLC Lunch Talk on Tomra – 21 January
The GCLC’s 50th Lunch Talk will take place on 21 January and will be devoted to the General Court Judgment in Michelin III Tomra v. Commission.
The registration form can be downloaded below.
The European Fordham
Like last year, N. Charbit (concurrences) has managed to put together an impressive programme for the second edition of “New Frontiers of Antitrust“.
The conference will take place on Friday 11th February, at the House of Parliament in Paris.
See link hereafter for the programme. New Frontiers of Antitrust Paris 110211
Horizontal Cooperation Agreements
Last week, I faced the very pleasant situation of having to lecture on horizontal cooperation agreements a day only after the adoption of the new horizontal framework by the Commission…
The good thing is that it gave me an opportunity to read the text from top to bottom.
So here’s my own assessment of this lenghty set of Guidelines. I like: (i) the introduction of a chapter on information exchange agreements; and (ii) the examples, which are very instructive and draw on national practice, §§107 and 109 notably (or the bottom-up learning effects that arise with decentralization)..
However, there’s a heap of less satisfactory things in the Guidelines. To structure things a little, I distinguish between formal (1) and substantive (2) issues.
1. Formal issues
Unpractical self-assessment method. The Guidelines stick to the good old Article 101(1)-Article 101(3) sequence. But why not endorse a simpler self-assessment method which involves:
- First step: screening of the agreement through incompatibility presumptions (hardcore provisions); followed by screening of compatibility presumptions (de minimis; market share thresholds; and conditions);
- Second step: detailed assessment of possible restrictive effects under 101(1); followed by detailed assessment of possible pro-competitive effects
Incorporation of the rules on environmental agreements within the standardisation section. Why are those agreements no longer worth a specific section?
Linguistic mistakes in French version. The concept of “vente groupée” used under the section on agreements on commercialization is confusing. The Commission and Court routinely refer it in relation to bundling under Article 102 and the EUMR (see Microsoft and Tetra Laval).
Perfunctory treatment of Article 101(3) arguments. The Guidelines often say that horizontal cooperation agreements bring significant efficiencies, pro-competitive effects, and so on. Yet, when it comes to providing guidance on efficiencies, the Guidelines dedicate little time and space to the issue (or they simply restate in substance what has been said under Article 101(1), check the section on standardization agreements). True though, one can find help in the unhelpful Article 101(3) General Guidelines.
2. Substantive issues
Inconsistent, and old-fashioned analytical framework for collusion. There’s been a number of great books on tacit collusion in the past decade, and more importantly, good judgments and soft law instruments (the Airtours ruling, the Guidelines on horizontal mergers, the Article 102 Guidance Communication). All set out a modern, consensual framework for the assessment of collusion concerns which hinges on the proof of 4 cumulative conditions. Very remarkably – and to the exception of a footnote in the section of information exchanges – the new Guidelines suggest however to test tacit collusion through an impressionistic, structural, and reduced range of factors. The section on purchasing agreements which refers to commonality of costs and exchange of information (§§213-216) brings a glaring illustration of this. But the same applies to production (§§175-182) and commercialization (§§242-245) agreements. My question: are the dark times of the checklist approach back? Of course, this approach leaves more leeway to enforcement authorities, but it generates huge legal uncertainty + high type I errors risks. And it is wholly inconsistent with the approach taken under the EUMR, which pursuant to §21, has “certain common elements … pertaining to the potential restrictive effects, in particular as regards joint ventures“.
The §§ on FRAND terms are devoid of legal basis, and should be disregarded. To draw possibly on the expertise gathered in the Qualcomm and Rambus cases, the section on standardisation agreements devotes some wording to what is, and how to self-assess, a FRAND price. Now, under EU competition law, it is well settled that unilateral conduct falls short of an agreement under Article 101 TFEU. Assume that following the adoption of a standard, a party unilaterally decides to request terms which other parties challenge as unFRAND (the classic patent ambush story). In such a setting where firms antagonize, there is no, and there cannot be, an unlawful agreement under Article 101 TFEU. Since the Bayer and VW rulings, the fact that the parties have, in the past, co-operated in the SSO is no longer sufficient to trigger the applicability of Article 101 TFEU (those cases repealed the “contractual framework” doctrine inherited from the Ford case). And by the way, everyone knows this. To date, allegations of unFRAND terms have only been brought under Article 102 TFEU (notably by discontent parties which had participated to the standardization process).
PS: The new texts were given a number today. The R&D BER is Regulation 1217/2010 and the specialisation BER is Regulation 1218/2010.
PS2: The GCLC will have a conference on the horizontal package in February 2011.
Early Sunday Quote
Ronald Coase once said:
“One important result of this preoccupation with the monopoly problem is that if an economist finds something—a business practice of one sort or other—that he does not understand, he looks for a monopoly explanation. And as in this field we are very ignorant, the number of ununderstandable practices tends to be very large, and the reliance on a monopoly explanation, frequent.”
A quote worth ruminating, in light of the increased interest of antitrust agencies’ for unilateral conduct in dynamic industries.
Found on TOTM. The real source is Ronald H. Coase, “Industrial Organization: A Proposal for Research,” in Victor Fuchs, ed., Policy Issues and Research Issues in Industrial Organization (New York, NY: National Bureau of Economic Research, 1972), p. 69.
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