Author Archive
Patent wars (+ Faull&Nikpay)
It has been reported today that the European Commission is concerned about the use that is being made of patents essential to the 3G mobile communications standard in the context of the ongoing legal battles surrounding the smartphone technology markets.
The Commision has confirmed that it has addressed requests for information to both Samsung and Apple, but it has not yet provided any further details. A legal filing by Apple in the U.S. nevertheless reveals that this preliminary investigation on the part of the Commission may be targetting a possible abuse of FRAND (Fair Reasonable And Non Discriminatory) licensing agreements on the part of Samsung, which in the recent past has initiated a large number of proceedings against Apple in several jurisdictions.
This is not the first antitrust investigation regarding anticompetitive behavior related to enforcement, use and misuse of patents undertaken by the EU Commission (think, for instance, about the Qualcomm or Astra Zeneca cases), and it certainly won´t be the last. Patent wars may be a newcomer in the antitrust world, but they´re here to stay.
By the way, I´m very fortunate to be -together with Miguel de la Mano (Deputy Chief Economist at DG Comp and currently Acting Chief Economist at the UK´s Competition Commission), Hans Zenger (CRA), and Renato Nazzini (LMS and Southampton University)- part of the team that is currently should be drafting the chapter on Article 102 for the next edition of the Faull&Nikpay (which, as you know, is one of our favorite books), and given the rise of IP-related abuse of dominance cases we´re planning to devote a specific section to these issues.
Have a nice weekend!
(Image possibly subject to copyright)
The language of competition law
In a comment to a recent post we recently engaged in a discussion about the meaning of words and the importance of the proper use of terminology in light of the crucial meanings, nuances and attitudes that words often implicitly or explicitly convey. Words often “carry dynamite”, we said. A few days earlier, we had also written another post which -perhaps in a manifestation of wishful thinking- highlighted the fact that the Court had used the term “objective justification” in an area (Art. 101 TFEU) where it had never resorted to it before. In our view, words matter. A lot.
All this sprung a reflection about the importance of words and of languages when it comes to understanding, teaching or applying law in general, and competition law in particular:
The crucial influence of the use of certain words, metaphors or narratives has already been noted in the past by some of the most prominent antitrust scholars. Excellent examples of this can be found, amongst others, in the influential piece by late Prof. Areeda on “Essential Facilities: An Epithet in Need of Limiting Principles“; in “Antitrust Doctrine and the Sway of Metaphor” by Michael Boudin (who, btw, was my antitrust professor at HLS); or in Newberg´s “A Narrative Construction of Antitrust“.
One of our blogosphere colleages (Prof. Sokol) also wrote a post some time ago about The Language of Sex and Antitrust (if cheap advice on how to increase online readers is right, this is the link that most of you will be clicking…).
But beyond words, the language in which the law is conceived, drafted, learnt, taught, and interpreted or applied also makes a huge difference. I am not aware of the existence of any study on whether and how languages compete to shape the law, but it is undeniable that they do shape it, and that their influence can be much greater than that of words, because languages (i) are also vehicles for the diffusion of certain values; and (ii) because they are subject to very strong network externalities (if any enforcer is reading this, then languages -as beneficiaries of network externalities- may have just become a new antitrust suspect…).
Many of you may have first-hand experience of the fact that law is very often learnt, taught and understood differently depending on the language used. Nicolas and I, for instance, are currently working on competition law textbooks in our own languages, and it is not always easy to transform the input we normally receive (typycally in English) to our output. Mere translation is not always enough because the language strongly influences the way in which the information is rationalized. Examples abound:
Some posts ago we wrote about the future reform of the General Court and noted that more than 40% of référendaires (clerks) at the GC are of French nationality. This is obviously due to the fact that the official language at the Court is French, but, as we noted in that post, those numbers have implications far beyond the merely linguistic. In that case there are also cultural elements involved (in as much as the language may be associated to the values of a country), but the influence of the French values through the French language can be traced in many of the Courts attitudes and Judgments.
Now English has become the lingua franca (a fact of which this blog stands as evidence). This may have had some disadvantages for the English language (because being used by non-natives it risks deteriorating, as this blog also illustrates..), but overall it offers many advantages to anglosaxon values and ideas which enjoy an “unparalleled competitive advantage” (to use the words of the CFI´s Judgment in Microsoft). Ask the Financial Times or The Economist…
But competitive advantages arising from the use of language in competition law are not merely enjoyed by ideas and policies, but also by firms. One example of this could be the legal market, where anglosaxon firms enjoy a competitive advantage on the worldwide market just because they´re anglosaxon firms. I´m not necessarily criticizing this; my firm, for instance, also benefits from a competitive advantage derived from huge brand recognition in its main market. I do nevertheless have a problem with the legal market becoming a “luxury” market where brands matter more than quality and outcomes (and I know many examples where this is true in the EU competition law world), but this is another matter that perhaps we´ll deal with in another future post.
The slow death of Article 101(3)
Yesterday we attended the first session of the annual conference of the Global Competition Law Center (of which, btw, Nicolas is the director). As expected, the conference was extremely interesting, and gave us plenty of ideas for future posts. Here´s one.
Our friend Damien Gerard made a very good presentation in which, following a historical approach, he presented several paradoxes of the modernisation of EU competition law. After he concluded, I posed a question to the panel, asking whether the interplay of the three dimensions of modernisation that Damien mentioned (substantive, procedural and institutional) may have had the effect -or perhaps the object..- of killing Art. 101(3). The comments that followed showed that this is a widespread concern.
Let me now explain to you how I view this, and why the usual question (who did it?) has no clear answer. My take is that all the usual suspects bear some responsibility:
In the early days of the classic case law, EU Courts paid great attention to Art. 101(3) because they were conscious of the crucial role that the drafters of the Treaty had attributed to this provision. But it wasn´t their task to apply it. They saw it as something too complex and abstract, so they washed their hands off: they left its application up to the Commission and decided to apply a light standard of review. That is, in fact, where the “manifest error of appraisal” test of judicial review was born for EU competition law.
For many years, the Commission exercised its monopoly over the application of 101(3). Those were, in a way, the “golden days” of this provision (even though there were some obvious disfunctionalities as a consequence of the centralized system). With the entry into force of Regulation 1/2003 this whole situation changed. The Commission shifted its priorities to focus on the “most serious infringements” which, as a matter of fact, are also the “most obvious” ones. It therefore also washed its hands and left the cases where Art. 101(3) would be relevant to national competition authorities (NCAs) and national courts.
But NCAs and national courts also regard the application of 101(3) as something which is too complex, and, let´s face it, the Commission´s Guidelines on Art. 101(3) are far from being decisively helpful. Couple that with the feeling that undertaking an effects analysis under 101(1) is also too burdensome, as well as with the fact that NCAs have, logically, their own priorities, and what you get is a situation where at the national level there are essentially only “object cases” where 101(3) assessments are reduced to an absolute minimum under the argument that “object restrictions” are hardly redeemable (which, btw, is at odds with all case law departing from European Night Services) There are no available stats on this, but I bet they would be mindblowing.
The Commission hasn´t done much to solve this situation. It has failed to provide case by case guidance, and has instead focused on sanctioning cartels, abuses of dominance (mostly in network industries) and in releasing general guidance; moreover, where an issue appears as uncertain, the usual solution is to adopt a commitment decision. Not really helpful. Furthermore, the Commission has contributed to fostering the confusion by enlarging (with the help of EU Courts) the “object” category (e.g. with regard to information exchanges).
EU Courts, on their part, could also be charged as accomplices. Three pieces of incriminating evidence are (i) the enlargement of the “object” category in T-Mobile; (ii) the ruling in Tele 2 Polska precluding NCAs from adopting negative decisions; (iii) the adoption of distinct standards for the review of 101(3) assessments: would the overly simplistic Premier League Judgement, where the Court says, without providing much support for its assertion, that the exclusivity arrangements at issue do not meet the conditions of Art 101(3) (see para 145 of the Judgment) comply with the Court´s tough stance against the Commission in Glaxo Spain?
What does this imply for competition law:
In my view, this situation is dramatic for EU competition law (well, as dramatic as a legal matter in the competition law field can get, which, to be frank…). The interplay of all the factors above has led to an overly simplistic view of competition law, to a shifting of the burden of prove, and to even more arbitrariness and uncertainty.
PS. The painting illustrating the post is “Prometheus bound” by Rubens. As Art. 101(3) in the world of competition law, Prometheus was “credited with -or blamed for- playing a pivotal role in the early history of mankind“. As you know, immortal Prometheus was punished by Zeus to a -quite nasty- eternal punishment: he was bound to a rock where his liver was eaten daily by an eagle, only to regenerate and be eaten again the following day. Mithology has it that Hercules finally slayed the eagle and freed Prometheus. Will anyone eventually free Art.101(3)?
XV edition of the EU & Spanish Competition Law Course
Some of you may recall from previous posts that both Nicolas and I are heavily involved (although in this case I clearly beat him..) in the organization of an excellent competition law course that Luis Ortiz Blanco has been directing for 15 years in Madrid. Actually, that´s where we met four or five years ago.
We are of course biased, but we must say that the line-up of more than 70 guest speakers who come every year from all over Europe to lecture in Madrid is a true Who´s Who of EU competition law experts. Moreover, the 115 hours of scheduled classes allow for a more detailed coverage than that offered by many other competition law courses on the market. About half of the course is lectured in English.
The final program for each module and seminar has not yet been decided, but the overall structure and dates have been set, so I´ve included the info below. Anyone interested can register both for the full program or just for specific module/s or seminar/s. If any of you would like more information you can contact me at alfonso.lamadrid@garrigues.com
The 2012 program will be structured as follows:
– An introductory session -in which Nicolas will play a very prominent role- will take place on January 13.
– A module on cartels (coordinated by Jerónimo Maíllo; San Pablo CEU University) will be held on January 16-18.
– A module on other restrictive agreements and practices (coordinated by Juan Andrés García Alonso; Peugeot) will take place on January 23-25.
– On February 3 there will be a seminar on recent developments in relation to Art. 101 (coordinated by Fernando Castillo de la Torre and Eric Gippini Fournier, both from Legal Service of the European Commission).
– A module on abuse of dominance coordinated by myself will be held on February 6-8.
– A seminar on recent developments in abuse of dominance and merger control (8 hours) jointly coordinated by Cecilio Madero (Deputy Director General at DG COMP) and by myself will be held on February 24.
– A module on merger control coordinated by Jerónimo Maíllo will be held on February 13-15.
– A module on the application of competition and state aid rules to public entities coordinated by José Luis Buendía (Garrigues) and Jorge Piernas (EUI) will take place on March 1-2.
– A seminar on competition law in regulated markets coordinated by myself will be held on March 12-14; and
– A seminar on competition law and IP coordinated by Álvaro Ramos (Legal Director at Cisco) will take place on March 23.
Our second birthday!
On 20 October 2009, Chillin´Competition opened for business.
In the two years that have gone by since then, this blog has taken up a considerable part of our “free time”, but it has taught us a lot and it has rewarded us with a great deal of satisfaction as it has introduced us to many new friends and opportunities. As we replied in an email to one of you last week, as most parents we´re very proud of our baby, but we are ambitious parents and we want it to get better and better in every possible way.
One year ago, we confessed to be “frankly surprised by the reach of this tool” because we´d had nearly 70.000 visits and an average of 350 visits a day. As of today, we´ve had 177.000 visits and our daily average has constantly increased to the extent that this week we´ve had over 1 , 000 visits a day. Over 450 of you receive our daily posts via subscriptions or via our LinkedIn group.
Over the lifetime of the blog, we have been lucky enough to receive some really excellent input, from both guest contributors and from you in the form of your comments.
W hen we stated out, we couldn’t have imagined the interest that Chillin’ Competition would generate. Thanks so much!!
Nicolas & Alfonso
Case C-439/09: Is it just us, or is the ECJ naming the “EU rule of reason”?
Last Thursday, the ECJ issued its Judgment in Case C-439/09, Pierre Fabré Dermo Cosmétique v. Président de l´Autorité de la Concurrence. Little attention has so far been paid to this Judgment which, to me, appears as having more substance than it meets the eye. Let´s see:
In 2009, the French Conseil de la Concurrence adopted a decision sanctioning Pierre Fabré (“PF”) for including a de facto ban on the sale of its cosmetics and personal care products via the internet in its selective distribution contracts. In reality, PF´s contracts obliged its distributors to sell its products in the physical presence of a person with a degree in pharmacy. The Conseil considered that this constituted a restriction of passive sales in so far as it precluded online sales. PF appealled the decision and the Cour d´Appel de Paris addressed a reference for a preliminary ruling to the ECJ.
What meets the eye:
The specific and obvious discussion at stake relates to whether the exception contained in Art. 4 c) of Regulation 2790/1999 (now replaced by the same Art. of Regulation 330/2010 ) [pursuant to which ” the exemption to the prohibition laid down in Article 101(1) TFEU is not to apply to vertical agreements which, directly or indirectly, in isolation or in combination with other factors under the control of the parties, have as their object (…) c) the restriction of active or passive sales to end users by members of a selective distribution system operating at the retail level of trade, without prejudice to the possibility of prohibiting a member of the system from operating out of an unauthorised place of establishment“) (emphasis added)] justifies a requirement such as that included in PF´selective distribution contracts. The solution adopted by the Court is that, given that companies will allways enjoy the possibility of benefiting from an individual exemption pursuant to Art. 101(3) TFEU, it is not necessary to give a broad interpretation to the provisions bringing agreements within block exemption regulations.
In sum, the ECJ ruled that in case of doubt Block Exemption Regulations are not to be interpreted broadly, and that in such circumstances the competitive assessment of the agreements at issue shall be carried out within the framwork of Article 101(3). You may or may not agree, but it is reasonable enough.
What doesn´t meet the eye:
As we said above, there might be more about this Judgment than meets the eye. Perhaps we´re wrong; the fact that this Judgment has grabbed no one else´s attention does not mean we´re smarter (which is definately not the case), but simply that we may not be right. Let us explain ourselves:
(Click here to continue reading)
Reforming the EU General Court
Last week, the European Commission adopted a formal position on the reform of EU Courts. The document refers to both the ECJ and the General Court, but for the moment we will focus on the latter as the main subject of the proposed reform.
The Commission´s position advocates for the appointment of 12 new Judges to the General Court (which would make a total of 39) as well as for the creation of at least two new specialised chambers (one of which would most likely be devoted to competition cases). These reforms are aimed at addressing the enormous workload that the General Court currently faces (with over 600 new cases registered every year and ever growing delays).
The Commission´s proposal -which to a great extent endorses that of the President of the ECJ, Mr. Skouris- has now been circulated to the Parliament and to the Council.
Unsurprisingly, the most contentious issue that has arisen in the context of the ongoing discussions between Member States relates to the designation and nationalities of the new Judges. As you know, the method for the designation of Judges falls entirely upon Member State, which have always acted on the basis of informal consensus. The Commission, fully aware of the fact that abandoning the principle of equal representation would be tough to swallow for some Member States, has attempted to tackle the issue by proposing two alternative methods of designation (see recitals 42-50 of the document that appears in the link above). In our view, the merits of the candidates should weigh much more than their nationality, and therefore the second option proposed by the Commission appears to be preferrable.
We feel nonetheless, that several important issues remain unaddressed:
First, whereas the nationality of the Judges may certainly be important, there is another very relevant nationality factor at the General Court that has so far gone unnoticed.
What would you say is the percentage of French référendaires (clerks) at the General Court? Under a system of equal representation, the answer should be approximately 4%. In real life, that number is however…..40%!
We know some truly excellent French référendaires, and of course French is the working language at the Courts, but, as a mater of principle, when it comes to judging shouldn´t quality and credentials matter more than language abilities? (I´m using “we”, but maybe Nico, being a froggy French citizen sees things differentlly…) 😉
Secondly, there is nothing the Commission can do about designations of candidates at the national level. The Committee envisaged in Art. 255 TFEU has certainly helped by acting as minimum filter in the most flagrant cases. Nonetheless, some Member States may still be tempted by the possibility of appointing candidates on grounds other than those strictly technical (although the second option proposed by the Commission has the virtue of perhaps shifting those incentives).
In our view, Member States should ideally follow the Dutch example (we believe that other Member States are already doing it). They arranged a merit-based competition and eventually appointed two outstanding Judges such as Sacha Prechal (ECJ) and Marc van der Woude (GC).
Chillin´Competition: The Conference
As our usual readers know by now, this blog was born out of the conviction that it was possible to do and say some things differently within our small competition law world. We have intended to do that on the blog, and now we want to extend this attitude to a conference -the 1st Chillin´Competition conference- which will be somehow different from what you may be used to. We can´t say much more for now (except that it will be held in Brussels), but details will follow soon.
We want you to be involved to the greatest extent possible, and therefore we would like you to please send us your ideas on possible topics and speakers: we´re looking for excellent and open minded practitioners, officials or academics who might give brilliant, fresh and even humorous views on competition law issues. We already have ideas on a number of people who fit that description, and some of them have already expressed their willingness to participate in this initiative. Please send us your suggestions either publicly by commenting on this post or in private at nicolas.petit@ulg.ac.be and alfonso.lamadrid@garrigues.com
Thanks!
Our Fordham Paper
Just before the summer we anticipated that Chillin´Competition readers would have a virtual seat at the mother of all antitrust conferences Fordham´s Annual Antitrust Conference (see here and here). As you may recall, Luis Ortiz Blanco had been asked by Barry Hawk to chair a panel on European competition law enforcement featuring a very impressive line-up of speakers (namely Alexander Italianer, John Finfleton, Bruno Lasserre, Andreas Mundt, and Manuel Sebastiao).
Luis and I decided that it could be interesting to profit from this opportunity to draft a paper examining the current state of EU competition law enforcement in terms of effectiveness and uniformity. We decided to draft an unorthodox paper which touches upon many issues and that concludes every section with a question. Those questions were the ones posed to the panelists at the roundtable.
The brainstorming work that preceded the drafting of the paper was mainly based on the suggestions and ideas that we received from readers of this blog. Accordingly, Barry Hawk has given us his very kind permission to post the version of the paper that was distributed at the conference on this blog.
Here it is: Ortiz & Lamadrid_European Comp. L. Enforcement
(Considering that drafting this took a substantial portion of my summer holidays, I really hope that at least one or two of you read it! )
Our intention is to edit it and turn it into a standard academic paper with a view to its publication in the annual volume edited by Barry Hawk. Any comments that any of you may have on the current version of the paper would therefore be most welcome and, of course, duly acknowledged.
Competition Law and Sports: Conference in Budapest
This afternoon I will be travelling to Budapest to participate at a conference on “Olympics – Competition – Sports – Law: Competition and sports law issues of today’s sport”. The conference´s program is available here,
My presentation will deal with the competition law implications of the rules establishing the obligation for clubs to release players for international competitions. In essence, I will focus on the Oulmers and Asobal cases, that we already briefly discussed here on a previous post.
A very impressive line-up of speakers will be covering many other issues related to the application of competition law to the sports sector. If any of you is interested in this topic, I have been told that the discussions will be broadcasted online via the web page of the Hungarian Olympic Committee.
Thanks to Ádám Remetei-Filep and to Pal Szilágyi for their invitation.
Chillin'Competition 