Chillin'Competition

We are starting off a new section at Chillin’Competition called “Ménage à Trois”.

Readers of this blog know that I have a tendency not to over-criticize the European Commission. This doesn’t however blind me;  anyone familiar with the permanent revolution suffered by EU competition law in recent years will find a common denominator in all major policy reforms in which the Commission has embarked: they were all aimed at working less under the pretext of refocusing  (think about 1/2003; the State aid action plan, the Guidance paper on Art. 102, etc)      🙂

Nicolas and myself have decided to follow the Commission’s lazy wise approach to policy reforms:

We  have realized that we often can’t find the time to timely report to you the most interesting aspects of case-law developments. Also, we tend to give you our personal views on issues, which by definition are subjective and incomplete. So we asked ourselves (i) how can we follow case-law developments more closely and give readers subjective yet balanced opinions?; and (ii) how can we do that by working less? (i.e. what would the Commission do?)

So here’s the plan: each time a relevant development takes place we will contact three people. The idea is for one of them to write a post on the development at issue. Instead of publishing the post right away, we will circulate it among the three experts, who will then discuss it by email (Nico and I may intervene as well). We will then post on the blog the  original post together with the trilateral debate that it may have given rise to.

We welcome applications for experts who wish to be contacted, as well as suggestions for possible topics.  We also want to profit from this new section to bring younger lawyers or academics to the sporlight and to have the minteract with other established heavy weights.

Our first ménage à trois will deal with last week’s Judgment in the Greek Lignite case (concerning the inteface between Arts. 106 and 102 TFUE). Our three inaugural guests will be three good friends of this blog: two of them (Makis Komninos -White&Case- and Marixenia Davilla -Shearman&Sterling- were actually involved in the case (on the winning side) and the third (José Luis Buendía -Garrigues-) is the author of the bible on Article 106 (of which a new edition is on the pipeline).

[As Nico mentioned on his last post, he’ll soon be travelling to Hong Kong to participate at a conference on 21st century competition authorities. The timing is not accidental: at the beginning of the summer Hong Kong adopted its first comprehensive competition law. We have invited a friend of this blog, Sandra Marco Colino, currently an Assistant Professor at The Chinese University of Honk Kong to share her views on this new law. Sandra has a PhD on competition law issues from the EUI, and prior to moving to Hong Kong was a lecturer at the University of Glasgow. We leave you with her post on caffeine and competition law in Hong Kong].

It was close to midnight on June 14, 2012 when Hong Kong’s Legislative Council finally adopted the region’s first ever cross-sector Competition Ordinance (hereinafter ‘the Ordinance’). Rather geekishly, I remember exactly where I was the following morning when I first heard the long-awaited news: sipping my first espresso “ristretto” of the day at a café in the heart of the city’s financial district (strong coffee is a delightfully resilient habit I picked up in Florence). The news came almost two years after the Bill was originally tabled, and the debate
surrounding the legislative proposal has not been for the faint-hearted. Although preliminary studies indicated that the local community would welcome the introduction of the law, businesses and stakeholders repeatedly voiced their concerns about the threat it could pose to Hong Kong’s open economy. For many years, initiatives to regulate competition seemed to be frustrated before they even developed into concrete proposals as a consequence of a predominant mistrust towards any form of market intervention.

As I read through the text of the new Ordinance while enjoying my coffee, I couldn’t help wondering whether the twists and turns of the lingering ‘to antitrust, or not to antitrust’ discussion would have left a decaf taste on the law. As originally drafted in the summer of 2010, the Ordinance does indeed tackle anti-competitive agreements (the ‘first conduct rule’) and the abuse of a substantial degree of market power (the ‘second conduct rule’). For the time being, only anti-competitive mergers in the telecommunications industry may fall within the scope of the legislation. As regards institutional enforcement, an independent Competition Commission and Competition Tribunal will be set up to conduct investigations and decide whether there has been a breach.

Overall therefore, the general framework of the new legislation follows long-established principles of modern antitrust regimes.  But when fleshing out the nitty-gritty, already in October 2011 the government had been forced to water down the original text of the Bill to respond to critics. For instance, it vowed distinguish between ‘hardcore’ and ‘non-hardcore’ violations
under the first conduct rule, the former comprising those restrictions of competition that are considered anti-competitive by object under Article 101(1) TFEU (price fixing, market sharing, output restrictions). In addition, it agreed to reduce the maximum pecuniary penalty to 10 percent of local turnover for each year of infringement, up to a maximum of three years. Moreover, the Competition Commission’s ability to impose fines in the original infringement notice would be removed from the Bill. The government also promised to introduce a de minimis threshold for the application of the first conduct rule for all agreements among undertakings with an aggregate turnover of HKD 100 million or less in the preceding financial year. Importantly, it gave consideration to the possibility of precluding private parties from bringing claims before the Competition Tribunal altogether.

The Ordinance, as adopted in June, includes most of these mitigating alterations, with two clarifications: the de minimis threshold (set at a combined worldwide turnover of HKD 200 million) will only be applicable in the absence of ‘serious anticompetitive conduct’; and ‘follow-on’ private rights of action have finally been granted to those who have suffered loss or damage as a consequence of an antitrust violation, once a breach of the Ordinance has been established.

My initial thoughts? Clearly, some concerns do spring to mind associated to the devil that might be in the detail. Nonetheless, with the adoption of the Ordinance Hong Kong has certainly taken a colossal and much-needed step towards the building of a palisade against the dangers of unrestrained market power. The strength of that palisade will, of course, very much depend on the implementation of the rules, unlikely to materialise before the end of 2013. For the time being, it appears that the Ordinance may indeed have sufficient caffeine to awaken competition in Hong Kong.

Even though it’s only Tuesday, a few people in the Brussels competition law world are surely having a long and tough week. A number of us have been badly damaged by the 4-day feast incredible wedding we attended last weekend at a bullfighting ring in León (no kidding).

I’m telling you this for two reasons:

The first is that an official at DG Comp challenged me to write a post here about how among those attending there was a good mix of Commission officials, Court clerks, economists and lawyers (both in-house and from a few firms), which reveals how tiny our professional world is. This is undisputably a fact of our professional life. I’ll give you one example: two of the people (an in-house lawyer and an economist) with whom I’m currently working on a daily basis were present. Thank God we didn’t engage in any professional discussions, as I wouldn’t know how to bill it  😉

The second reason why I’m telling you this is that I’m trying to justify why I don’t feel in shape to come up with anything original to write, which is why I’m linking to another blog’s (Abovethelaw.com) content also dealing with facts of our professional life:  How to Drive Associates Nuts!  and  What Drives Partners Nuts?

Two days ago I read the obituary of Roger Fisher -Emeritus Professor  at Harvard Law School and director of the Harvard Negotiation Project.  Fisher was a co-author of one of the best-selling books in the art of negotiating: “Getting to Yes, negotiating agrement without giving in“.  Reading this book was one of the requirements of the Harvard negotiation program to which I devoted 3 intense weeks of my LLM’s winter term.

Skimming again through its pages last night I remembered the paper that I wrote also as part of the requirements for the negotiation program; I chose to do it about the specific features of the negotiations that take place in the field of antitrust (as is the case with other competition lawyers my mindset is programmed to think mainly about one subject…). I would post it here, but my only digital copy of that paper was lost under very peculiar circumstances that would merit an ad hoc post.

Anyway, let’s cut to the chase:

Antitrust practice nowadays requires inmense negotiation skills. In many cases, and after the law plays its role, the final outcome is determined pursuant to a negotiation. Moreover, quite often practitioners and authorities don’t limit themselves to the application or establishment of liability principles, but rather negotiate in the shadow of the principles that regulators and courts may be expected to apply (for some material about negotiating” in the shadow of the law”, click here or here). In other words, very often a negotiation is what determines the success or failure of the project or case at issue.

In spite of the increasing prominence of negotiated solutions in antitrust enforcement (think of cartel settlements, settlements in actions for damages, commitment decisions in abuse of dominance cases, or the design of remedies, among others), awarenesss about the importance of negotiation skills in our profession is still scarce. To be sure, this attention deficit is not exclusive to negotiation abilities; the same happens with other non-legal abilities that in practice are as important -or much more- than a thorough knowledge of the law (notably writing).

Law firms often attempt to resolve the issue through one day talks and other brief  and not-so-serious means, but I’m not sure of whether that’s enough. Universities and postgraduate centers would be providing a great service should they focus on these extra-legal abilities.

Don’t get me wrong. I don’t think that doing a course/seminar on negotiation or on many other skills is going to radically change anyone’s life. Negotiation skills (like salsa dancing, basketball playing, maths, and almost anything) are to some extent natural abilities. In fact, the best negotiators I’ve ever seen in action act by instinct or experience and would probably laugh at the idea of “studying” about it. Moreover, in a field of repeated interactions like ours, building the necessary trust from your counterparts (authorities or competitors) takes time. In spite of it all, it is a fact that most skills are perfected upon reflection and training.

In order to contribute to filling this void,  Nicolas  is devising (and trying to sell) an executive training program for lawyers in order to deal precisely with all these non strictly legal skills.

Any suggestions you may have about it would be most welcome!

As I was reading a few online pieces on Apple’s victory over Samsung in one of the multiple patent battles confronting them (btw, you can check out this interesting interview with Richard Posner, as well as this piece on how jury deliberations took place) I came accross an article that blames not the proliferation of trivial patents but “suit-and-tie lawyers” for stiffling creativity and innovation.

Leaving aside the easy attack on lawyers, the “suit-and-tie” expression has always intrigued me: I’ve heard it many times, but I seldom hear it applied to other “suit-and-tie” professionals. I did a quick search on it and quickly came up with some material for a post on lawyers and suits; it later expanded to more suit related stuff. Here it goes:

Patent suits

Before continuing with the suit talk, a quick remark on the proliferation of patent suits and on the accusation about lawyers’ destructing creativity. I agree that some degree of oddness may be inevitable when competition and the battle for innovation moves from the markets to the courts. And even though in some (many) cases such a move may also be inevitable (which not only is natural, but also convenient because otherwise most of us would be unemployed), the level of litigation that is taking place in relation to the smartphone industry is simply nuts. Posner has a point (there’s definately something wrong with the system that feeds “trolls” or that forces a company is forced to buy another just to acquire its patents to avoid future suits). Given the enormous cash reserves that these companies have ($110 billion in the case of Apple), legal fees and expenses derived from multiple and expensive parallell lawsuts are not a major concern, much less when these suits often pay-off (it’s hard to speak of sham litigation in this setting) and even have the potential to significantly alter the market. Patent lawyers are benefitting from this, but is it their fault? Nope, what happens is that companies are rationally exploiting the opportunities that an arguably ill-designed legal regime offers them. And speaking about system design, I admit that I also have issues with the fact that the outcome of cases like this one depends on the decision that 9 jurors take over highly technical matters.

[I said above that patent lawyers are doing well. Want to know the estimated legal fees of Morrison&Foerster, Wilmer (both representing Apple) and Quinn Emanuel (Samsung)  for this case? You do, uh? 😉  Check here then (for the lazy ones: the range goes from $10 million to several hundred million dollars per party…).

Lawyers’ suits

Now back to the other suits (I bet Apple and Samsung’s lawyers will be buying some pretty expensive ones in preparation for the appeal). My saturday-morning Google search on “suit-and-tie lawyers” [btw, Google is searching for an in-house competition lawyer] made me realize how candent this issue is. The suit has traditionally been lawyers’ uniform (I’m sure you’ve heard about “power suits”; see here) but it is a fact that lawyers are “dressing down” these days (although some say the contrary). I, for one, typically feel like a living old-school reminiscence when I meet friends working for US firms and I’m the sole one wearing a tie (at my firm we’ve so far only managed to make inroads into casual Fridays and casual August…).

There are many pieces that pose the question of whether we should start dressing differently (see, e.g. here). The proliferation of such questions have spurred vehement reactions from those who claim that “Enough is enough, lawyers should look like lawyers!” . Does this look like a trivial issue to you? In some places it apparently isn’t. Just a few days ago, a lawyer from Pakistan wrote a piece in the Herald Tribune advocating for the abandonment of western-suits with the argument that “if we are able to achieve that (at least with our lawyers’ uniform) then we can be at the threshold of reconstructing a new, more culturally connected and logically sound society. This change can lead to a domino effect that results in the recapturing of other areas of society and public discourse that are being dominated by the colonial mindset“.  No less!

Btw, if you want to know which is the world’s smartest law firm, click here.

I’m generally in favor of wearing suits for meetings, but I’m not so sure about the usefulness of doing it during those many days that we spend isolated in our offices (I sometimes have the feeling that I dress only for my next-door neighbor Napoleon; I think he likes my fashionable style, though…). I admit suit wearing is sometimes convenient, but other times it’s a pain (I was already an intern at Garrigues during my two last years of law school, and every day after class I had to run to my student’s residence to suit up for work -how many hours did I lose doing that??-; a more recent example, I came back from holidays last week and I had to spend x hours  quite some time in an attemp to iron a suit for a meeting the following day (that really took time!)

Suits

In our post about legal movies and TV series we forgot to mention the much acclaimed Suits. I watched the pilot last night (what better to disconnet from a working weekend than to watch a series about a law firm, right?) and I can confirm that it’s pretty good.

P.S. This post was brought to you by Suit Supply.