Author Archive
7th Junior Competition Conference – Call for speakers
In our last post we stated that one of our goals for the future is to contribute to increasing the visibility of young lawyers. Here’s a way to start:
We would like to draw your attention to the Seventh Junior Competition Conference. The editors of the Competition Law Journal have informed us that the Conference will take place on Friday 25 January 2013 and will be dedicated to reform of the system of private enforcement in the UK; for further details please click here.
If you would like to speak at the conference, please contact Vian Quitaz – vjquitaz@hotmail.com – with an expression of interest and a short outline of your proposed topic.
A separate announcement will be made in due course for those interested in attending the Conference.
The editors of the Journal look forward to hearing from you!
And speaking of younger generations, we recommend you take a look at this: Tournament of Jokes: Generational Tension in Large Law Firms
Chillin’Competition turns 3
It’s Chillin’Competition’s birthday today.
It was on 20 October 2009 that Nicolas announced announced to the world that this blog was up and running. We’re thrilled about how this project has progressed since then. As of today, Chillin’Competition has had 368,000 visits and features 639 posts (!) 376 of you are suscribed to it through our homepage, and the LinkedIn group has 817 members.
But we can do much better. You guys are pretty sophisticated and heterogeneous readers, and it’s quite a challenge to provide you with ideas that most of you might find insightful or funny or cheeky or just a bit different from the tons of antitrust-related news that you get everyday. Actually, voicing out opinions in public every single day is in general risky, for as the wise aphorism states “it’s better to be silent and be thought a fool than to speak out and remove all doubt”… The past few months have moreover been particularly busy on our side (as anything liable of getting worse, this will too), and whereas our sector provides plenty of stuff that is interesting or absurd (the kind of material that we like here), we may sometimes lack the time to identify it and process it quickly, for which we apologize in advance. We are quite aware that we don’t operate under public service obligations, but we aspire to do better; if it’s not too much to ask for, we’d love to have more feedback from you on what it is that we can improve.
In the past year we started the quite successful “Friday Slot” section and we provided you with some food for thought (notably endives). In the coming months we’ll bring some other new sections which we hope will improve the quality of the blog. We also intend to bring the blog closer to international enforcers and in-house lawyers and to enhance the visibility of younger associates. We should also organize the Chillin’Competition conference soon (which we have been announcing for almost the 3 years this has been alive…).
We aspire not to take this stuff too seriously and to keep having fun while we do it.
Thanks so much!
Nicolas & Alfonso
On antitrust and hotels
We have discussed about hotels in previous posts (notably when I shamelessly unconsciously advertise my parents’ hotel (pictured above); you see? it just happened again!) (btw, top floor third window from the left is the room where I grew up). A couple of months ago I published a short piece on Competition law in the hotel sector in the industry’s magazine in Spain in which I highlighted (in, let’s admit it, a rather simple way), some of the interesting competition law issues that may arise in this sector; here are a couple:
OFT’s investigation on price-match guarantees
I’m following with interest the OFT’s investigation on price-match guarantees in the hotel sector (again, out of personal geeky interest, nothing professional). As you may know, in July the OFT addressed a statement of objections to Expedia, Booking and InterContinental Hotels challenging agreements that are said to restrict online travel agency’s ability to discount the price of room-only accomodation. The OFT considers that “the alleged infringements (…) could limit price competition between online travel agents and increase barriers to entry and expansion for online travel agents that may seek to gain market share by offering discounts to consumers“. It notes that it “limited the scope of its investigation to a small number of major companies, with a view to achieving a swift and effective outcome. However, the investigation is likely to have wider implications as the alleged practices are potentially widespread in the industry“.
Keep an eye open, because this is a case which may contribute to altering how we think about agency agreements and price matching guarantees. In the meanwhile, the OFT has published a most interesting report on “price match” or “lowest price” guarantees that makes a good read (that is, if you really have nothing else to do..).
A candidate to the worst antitrust development prize
In April 2011 we wrote a post announcing that there was an ongoing investigation that could yield a strong candidate for the Worst Antitrust Development Prize. Last week our forecast materialized. The Spanish competition authority (CNC) imposed a 150,000 euro fine on the Confederation of Spanish Industries, and an individual fine of 50,000 euro fine on the President of its Tourism Committee, a well known Spanish and former President of F.C. Barcelona (for full disclosure, my firm has no interest in this case, but I do know the person who was sanctioned).
The sanctions have been imposed because this person told the press at an industry fair that he thought there was a margin for hotels in certain cities of Spain to increase rates. No more. Admittedly, the fact that this personal opinion was accompanied by an inconvenient joke -“if there’d be someone from the competition agency here I’d be sanctioned“- may not have helped much… Later on, he was asked by a newspaper whether hotel rates would increase in the course of 2011. He responsed that rates had gone down 20% since 2007 and that a 6-7% increase could be reasonable, but that different hotel owners had different views.
If you ask me, such a statement can very hardly have led to any sort of collusion. There are thousands of hotels in Spain and hundreds of relevant markets evolving under different conditions, so this had nothing to do with setting a focal point to facilitate tacit collusion. Nonetheless, just as I feared on my previous post, the CNC decided to resort to competition authority’s favorite shortcut: the “object label”:
According to the CNC’s decision, one only needs to verify the content, author and diffusion of the statement. It explains that “it is not necessary to examine additional factors, such as the context in which the conduct takes place, the intention, the degree of furtherance, or the relevant market”. This paragraph alone makes this decision a good candidate to the “worst antitrust development prize”.
And, but the way, this “collective recommendation” was until now unknown to most hotels in Spain. The CNC has just ensured that everyone hears about it thus multiplying any potential effects. Now, in light of its new practice of sanctioning public authorities contributing to private breaches of the competition rules: should the CNC sanction itself for having acted as the loudspeaker and propagator for this alleged invitation to collude? 😉
Merging competition authorities and sector regulators; a good idea?
The Spanish Government has just sent to Congress a draft law that proposes the creation of the National Competition and Markets Comisión (Comisión Nacional de la Competencia y los Mercados). The Spanish Association for the Defence of Competition has just posted a link to the text of the draft law on its webpage ( thanks to Antonio Creus and Luis Ortiz for the pointer!).
The first draft of this law was not very well received (this is an understatement) by the current competition authority nor by the telecomm, energy and postal regulators, which issued fairly critical reports (available here). That first draft also raised falgs in Brussels, to the extent that the Euopean Commission publicly manifested its concern that the envisaged authority would lack the necessary independence (see pages 22-23 of this document). The proposal -which will most certainly materialize soon- does however raise interesting questions worth exploring.
Let’s leave aside the more practical issues as well as those purely national in order to focus on the big picture. Until now, the Member States of the European Union had generally opted for guaranteeing the competitiveness of certain network markets by resorting to dual institutional models featuring (i) an independent competition authority in charge of, well, you know, all the stuff that competition authorities do; and (ii) independent sector regulators entrusted with ex ante regulatory tasks. The dual model certainly has overall been decently effective, even though it has not always yielded perfect results; in some occassions, has led to contradicory decisions and legal uncertainty.
The preamble of the Spanish draft law states that the time is ripe to break apart with the prevailing institutional architecture. Looking at other States of the EU it observes two incipient trends whereby multiple specific/sector regulators are either (a) folded into one sole multi-market regulator (which allegedly takes advantage of economies of scale, minimizes the risk of regulatory capture and ensures a consistent approach to the regulation of network industries; this is the case of the German Bundesnetzagentu)or (b) merged with the competition authority. To my knowledge, the only example of the latter “trend” has been that of the NMa in the Netherlands.
I haven’t yet analyzed this new draft in detail but, whereas I don’t exclude that it might possibly be a good idea, I confess that I’m a bit concerned about this new institutional framework. Aside from the fact that it compels us to update our textbook on EU and Spanish competition law (excuses for postponing it seem to be over..damn!), my main concern -already voiced out in a previous post-is that blurring the frontiers between the applicable standards, attitudes and instruments used under competition law (a sanctioning system with criminal features) and those characterizing sector regulation risks affecting the way competition law is enforced, and could result in a lowering of standards.
We believe this is an interesting debate, and are willing to “market test” these institutional mergers by opening up this floor to anyone with strong views on these issues (pseudonyms are accepted). If that’s your case, please drop us a line at nicolas.petit@ulg.ac.be or alfonso.lamadrid@garrigues.com
And, by the way, I can’t miss the opportunity to do some additional advertising on the seminar on competition and regulation in network industries that I will be coordinating in Madrid in February, and in which we will cover all this stuff in depth.
On how to find the perfect couple (2012 Nobel Prize in Economics)
As announced yesterday by the Swedish academy, the recipients of the 2012 Nobel Prize in Economics are Angela Merkel and the German Government Al Roth and Lloyd Shapley.
Their research has mainly focused on the stable allocation of resources in markets where prices are inexistent. They focused on two-sided markets where monetary exchanges would be inappropriate (i.e. patients-kidney donors or the two individuals in a marriage) and figured out the way to strike non improvable (stable) matches.
As we wait for Nico to come up with a Chuck Norris joke on this, we can point you to Al Roth’s blog . In yesterday’s entry he said that his daily post could be delayed, and on Sunday Roth had written a post on the correlation between national chocolate consumption and per-capita Nobel prizes (Belgium is the exception that confirms the rule) 😉 (there is, however, a correlation which seems even stronger than the chocolate one: if you’re a US citizen, a Harvard Professor, and your research is on game theory then it’s pretty clear that you’ll get a Nobel sooner or later!).
We could also recommend you to read Shapley’s seminal paper on Long term competition (a game theoretic approach) (if you do, please tell us what it says, because we can’t really read equations!).
Now, since you probably won’t read neither Roth’s blog nor Shapley’s 1992 paper, and since the only think in this post that caught your attention was that they figured out the best way to find the perfect match in marriage, that’s where we will focus on:
In a 1962 paper Shapley and Gale assumed a market in which men propose to women (a debatable assumption as it is a bit male-chauvinist and also leaves out people who wish to stay single, gay and bisexual people and a bunch of other “real life stuff”), in which each individual has views about what their ideal couple should be like, but in which those views do not lead to perfect matching [otherwise a bunch of us would be matched to Monica Bellucci or Bar Refaeli, and that can’t work; or could it?? (note to my girlfriend: this is only a joke mandated by our editorial line; don’t worry)]. Shapley and Gale stood up for the proposition that an stable result could only be attained if women applied a “deferred acceptance” strategy. This would work as follows:
First, men would propose to their favorite woman. This means that Monica and Bar (which is how Nico and I call them in private) would have multiple choices but that other women would have less or zero choice, which (even if certainly acceptable by some of us) is unfortunately not stable. Instead of accepting their favorite “candidate”, they argue that women should “pocket” the strongest offer without accepting it and reject all others. Rejected men would then make a second proposal, which would allow women to stick to their previous pick or to replace it by one of the new candidates. Shapley and Gale proved that, if repeated enough times [1st round Monica Bellucci, 2nd round Bar Refaeli… 1456th million round Snowwhite’s evil stepmother –with two notable exceptions-] the algorithm will lead to stable non-improvable matches.
Sure this doesn’t seem to “match” the real world and, although intellectually interesting, its practical application seemed doubtful (and discouraging!). But Roth figured out that Shapley’s algorithm could have enormous practical applications on students-schools, patient-donors, and doctors-hospitals. A great example where the intelectual beauty of economics results in very practical solutions to real problems that truly affect peoples lives. In sum, a very deserved prize.
News from the Court
This was an unusual week at the European Courts. First, as we anticipated some time ago, the ECJ was partially renovated. The Member States have reappointed Judges Arabadjiev, Arestis, Berger, Bonichot, Fernlund, Jarasiunas, Levits, Malenovsky, Prechal and Von Danwitz as well as Advocate Generals Bot and Mengozzi.
The new faces at the ECJ will be Judge Da Cruz Villaça (replacing Cunha Rodrigues), Judge Vadja(replacing Schiemann), and AG Wathelet (replacing Masák). Nils Wahl (one of the good competition experts in Luxembourg) will have to remain at the General Court for a short period before swearing in as Advocate General (apparently the candidate proposed by Sweden to replace Judge Wahl was vetoed by the ‘Art. 255 Committee’).
The ECJ also held elections for President (Judge Skouris was re-elected), Vice President(Judge Lenaerts will be the first VicePresident in the history of the Court) and Presidents of Chambers (winners are: Tizzano; Silva de Lapuerta, Ilešič, Bay Larsen, and von Danwitz),
Here’s a video of the speeches pronounced that day at the Court (if you watch it, that means you’ve plenty of free time; we’re just saying 😉 ] Our highlight (as if we had watched the whole thing..) is Judge Schiemann’s great and very funny farewell speech (starting in minute 31.20).
By the way, our next Friday Slot interview will feature a member of the General Court. We’re sure you’ll love that one.
Have a great weekend!
More on Karate Competition Law
In the light of the current thresholds governing the grant of IP rights, we could have claimed a copyright for the term “Karate Competition Law” coined by Nicolas. Judging by the number of times that I’ve heard it since that post was published, I’m sure we (meaning him) would have made much more money than the …let me check… $ 10.33 that we made in July via advertising [P.S. this post was written in August and saved for a busy week].
Why did this come to mind? Because I just came accross the US Federal Trade Commission’s elegant formulation of what “karate competition law” is. In its Intel Complaint (for our previous and rather simple post on it, see here), the FTC asserted that:
“where a respondent that has monopoly power engages in a course of conduct tending to cripple rivals or prevent would-be rivals from constraining its exercise of that power, and where such conduct cumulatively or individually has anticompetitive effects or has a tendency to lead to such effects, that course of conduct falls within the scope of Section 5″.
Section 5 has been the primary tool to which US authorities have resorted in their attempts to fill in the perceived gaps of the Sherman Act. Some argue that there’s no EU competition law equivalent to Section 5 of the FTC Act. However, I’m not so sure that we need any equivalent instrument. Whether one likes it or not, as thing currently stand– and obviously leaving aside the dominance/monopoly threshold- I don’t think that the reference in Section 5 to “unfair methods of competition” or the above-quoted passage of the Intel Complaint encompasses much more than the wording of Article 102. “such abuse may, in particular, consist of (…) b) limiting production, markets or technical development to the prejudice of consumers” .
The General Court’s interpretations of this provision in Microsoft, Astra Zeneca Judgments appears to endorse this wide view of Art. 102.b) [arguably previous Judgments from the ECJ such as AKZO, Compagnie Maritime Belge or even Tetra Pak also opted for a quite wide construction of Art. 102]. Interestingly, whereas the case-law and precedents are endorsing a wide view of the protective scope of Art. 102, the effects of the effects-based approach on practical enforcement push in the opposite direction. Self regulation, I guess.
PS. With this I’m not criticizing the use of Section 5 by the FTC. I, for one, am a fan of the FTC’s theory in the Ethyl (Du Pont de Nemours) case, in which the FTC prosecuted unilateral practices by non-dominant firms that were used to facilitate parallel pricing. What I’m saying (and I use the first person here because Nicolas might disagree) is that European judges seem to have construed wider “standard provisions”. For instance, even the situation at issue in Ethyl could have been approached under Art. 102 under the Irish Sugar notion of individual abuses of a collectively dominant position.
On the price of beer and bread
In his post earlier today Nicolas was whining wrote about the price of beer in Belgian supermarkets (the fact that he complains about the price of beer when he had never complained about actually cartelized products -such as endives- reveals a typical single-man’s pattern of consumption).
Anyway, he fails to see that things could be worse. Below you can see a pic of a beer taken in India a few days ago. The label features (i) an “MRP” or “minimum resale price” ; and (ii) a prohibition to sell the beer in any place other than the Goa area. That’s a possible infringement combo right there!
[P.S: Following the publication of this post our Indian readers have clarified that the M in MRP in reality stands for “maximum” not “minimum”, and that there is an explanation for the market partitioning clause].
Want more? Take a close look at this news: The All Goa Association of Bakers decides to increase the price of bread.
[P.S. Our Indian readers have confirmed that in this case there is no explanation other than price-fixing].
Good luck to our readers from India, who are making a great effort in fostering a culture of compliance in their country (way to go!). The CCI has earned a reputation for investigating Tacit Cartels, but apparently it won’t run out of explicit ones any time soon.
(Thanks to Christian Bulzomi -also the person half-responsible for this– for the great pics!)
Best book review ever
As you know, Nicolas is one of the co-authors of a new book on EU Competition Law and Economics.
Oxford University Press has sent me a review copy. I was intending to write a serious review, but now I’ve watched a youtube-review of the book that is much better than anything I could ever write.
Those interested can watch it here: Youtube review of EU Competition Law and Economics
My favorite comments” “it is not too heavy”, “it’s got a useful index at the back” and “it has lots of footnotes” . I also enjoyed the way the reviewer pronounces the authors’ names, including Nikos Petite and Demien Geraden (although, to be fair, in Damien’s case I think it must be a Youtube dialect; here’s a precedent). 😉 He does better with Anne Layne-Farrar’s name.
P.S. This reviewer has featured in previous post here at Chillin’Competition. In fact, he had two nominations to our Antitrust Oscars.
P.P.S. By the way, Val Korah has also written a review of this book in World Competition which Nico is described as an “eminent professor” and a “partner at a famous law firm” (?!).
The Friday Slot (12) Einer Elhauge
For this twelfth edition of The Friday Slot Chillin’Competition is proud to bring to you an interview with a true antitrust guru: Einer Elhauge. Einer is the Petrie Professor of Law at Harvard Law School, where he teaches antitrust and many other subjects. He was actually one of the reasons why I applied for the Harvard LL.M (I got unlucky because he did not teach antitrust that year!). When someone asks me about the students and professors at HLS my usual response is that most people there are generally as smart/dumb as most other people, with the difference that they’ve had more opportunities in life. There are some exceptions to this and Einer is one of them: you can quickly tell that his mind works at a different pace…. Aside from teaching at Harvard he also testifies regularly as an expert in antitrust economics and is President of Legal Economics; he was Chairman of the Antitrust Advisory Committee to the 2008 Obama Campaign, and is currently on the 2012 ABA Antitrust Transition Task Force. His most recent book is Obamacare on Trial, and his past books include Global Antitrust Law and Economics; Global Competition Law and Economics; U.S. Antitrust Law and Economics; Statutory Default Rules; and Research Handbook on the Economics of Antitrust Law. He has also authored many other articles on antitrust and other topics.
For those wondering: the pic above shows Einer trying to move mountains 😉 We leave you with his great replies:
Why do you work in antitrust law? How did you first get into it?
I loved antitrust from the first class I had with Phil Areeda. It just came so easily and naturally to me, and it involved a combination of creativity and analytical precision that I found very attractive from the get go. I knew immediately that I had found my calling. (I had already gone to and left medical school, so finding my calling did not initially come easily to me.)
What do you like the least about your job?
Grading exams. But then again, the rest of the job of being a law professor is something I would do for free, so it is not so bad if I take the view that my entire annual salary is for grading exams.
What do you like the most about your job?
Thinking about whatever I find most interesting. Really, that is an incredible luxury that I am thankful for every day.
Any favorite antitrust books? And favorite non-antitrust law books?
Favorite antitrust books. Bork’s The Antitrust Paradox: A lot was wrong in it, but he was also right in skewering many bad prior antitrust doctrines, and it is still the best written antitrust book ever. Carlton & Perloff, Modern Industrial Organization: A wonderfully clear exposition of the antitrust economics that every antitrust lawyer and professor should master.
Favorite non-antitrust law books. Ely’s Democracy and Distrust: Of course, that may be because it essentially used an antitrust theory to explain constitutional law. Black’s Law Dictionary: I have always been impressed by the incredible brief lucidity of this book; it explains an amazing amount of conceptual logic in few words on every legal topic under the sun. The Federalist Papers: A beautiful exposition of political thought, even though recent historical work suggests it might not have influenced the Constitutional adoption that much. Richard Posner, Economic Analysis of Law: Never has any human said so many insightful things about so many areas of law in just one book; he had the advantage of living at a time when there was lots of low-hanging fruit, but by God he picked them all clean. Bruce Ackerman, Social Justice in the Liberal State: It kept me up all night once because I found it so fascinating. David Strauss, The Living Constitution: An elegant explanation for many anomalies in constitutional law. John Rawls, A Theory of Justice: The philosopher most relevant to many legal issues, even though his mini-max is to me implausibly risk-averse. Bob Woodward, The Brethren: Just a lot of fun; the stories about Chief Justice Burger are worth the price alone. John Haar, A Civil Action: I could not put it down; who would have thought one could make civil tort litigation so gripping?
You teach comparative US-EU antitrust law. How big is the transatlantic divide?
I think it is actually quite exaggerated. Having co-written a Global Antitrust Casebook and taught Global Antitrust many times, I find that when you teach the cases on any particular topic side by side, you generally find that often there is a formally different way of expressing things, but a lot of substantive convergence. And when the substance diverges, I think it can often be explained by a divergence in remedies. The US courts repeatedly cite the overdeterrence threat from criminal penalties, private treble damages and class actions as a justification for narrowing US antitrust law. That same logic suggests that competition law should be broader where those remedies do not exist, like in the EC.
You were the chairman of the Antitrust Advisory Committee for the Obama campaign in 2008 (also of the Blogs and Op-Eds Committee and a member of the health policy group –congrats on this last one!). How has antitrust enforcement under the Obama administration performed in comparison with previous Administrations?
I think it is impossible for any outsider to tell for sure because performing well is not being more active or less active in the abstract. It is bringing antitrust cases when they should be brought and not bringing them when they should not. And to tell whether that is happening to a great or lesser extent than prior administrations, one would need the confidential case information on all the cases, which obviously we lack. The only ones who really know for sure are the agency officials, and they are not the most neutral judges of how well they have done.
Let’s do it like economists => assume that you could change 3 antitrust rules, principles, judgments or institutions. What would you do?
Chillin'Competition 