Author Archive
Leverage
The term “leverage” is commonly used in antitrust law to refer to practices whereby a firm with market power exerts such power with a view to stretching it to a related market.
It seems that not only dominant firms may engage in such behavior. Last week gave us a couple of real-life examples of instances in which competition authorities may, perhaps, have also engaged in leverage:
This is the first one: “Commission market tests IBM’s commitments on mainframe maintenance and closes separate case into alleged unlawful tying“. The European Commission has been tough on IBM, and, in the end, it has been able to secure very significant commitments from it. Whether the Commission has or not used the “threat” of continuing the tying investigaton as a bargaining tool is unknown, but I would tend to imagine that, at the very least, this is a factor that was in the minds of all sitting at the negotiating table (particularly when the Commission always has the winning hand when it comes to Art. 102 cases). We are aware of the fact that the Commission denies that commitments are “voluntary” and that the process leading to their adoption does not imply any negotiation, but as we´ve stated before also with regard to settlements, such denial is reminiscent of one of Magristte´s best known works: 
(By the way, did you know that this image was used at the oral hearing of the Compagie Maritime Belge case? We´ll tell that story some other time..).
The second example of leveraging on the part of competition authorities comes from the US, is much more obvious, and was reported also last week by the Financial Times: “US accused of unfair antitrust tactic“. In a nutshell, the US DOJ is said to be resorting to immigration law with a view to obtaining guilty pleas from foreign businessmen. Views with respect to the legitimacy of this strategy are mixed; what´s yours?
On Cartels and Beers
Yesterday´s post was about Services of General Economic Interest and Sausages. Today´s deals with cartels and beers.
Some days ago we anticipated that we would comment on the latest cartel Judgment issued by the General Court in Case T-235/07, Koninklijke Grolsch v Commission in relation to the Dutch Beer Cartel, which was sanctioned by the Commission back in 2007. When we announced that we would comment on it we hadn´t yet read the Judgment but rather the Court´s press release about it, but the notice about the annulment of a Commission´s decision is something that always turns us on attracts our interest).
Those interested in an objective summary of the relevant facts and of the GC´s reasoning can read the Court´s Press Release. Those interested on some not objective opinions can keep on reading:
In our opinion, the annulment of the decision as regards Grolsch is, in a sense, quite logical: that is what happens when you conflate distinct legal entities into one (a temptation too often seen in EU competiton law) and distinct infringements into one single and continuous infringement (also quite usual) and then mix it all together. But there are two interesting aspects of the case that are worth commenting.
One is the manner in which the GC dismisses the validity of the evidence concerning the parent´s company possible participation in the infringement: After noting that the majority of the evidence put forward by the Commission related in reality to the participation of Grolsch´s subsidiary, the Court was left with a couple of evidentiary items that could be used to support the accusation against the parent company (see recital 61 of the Judgment). The GC however dismisses those elements in an interesting manner (in recitals 62-71 of the Judgment). In essence, the GC decomposes the elements of the single and continuous infringement into three, and, departing from the Commission´s summary description of each of those components, it attempts to check whether the evidence can fit into any of them (this is an interesting, and welcome, deconstruction exercise that I´d never seen before regarding “single and continuous infringements). The GC then underlines that some of the evidence (documents found at Heineken relating to telephone conversations with one of the parent company´s employees) did not fit into the description provided by the Commission and therefore dismissed it. The Court was then left with one piece of evidence (notes taken at a meeting by that same employee of the parent company), but this evidence was also considered insufficient on the basis of another interesting reasoning (see recitals 65-66). In essence, the GC´s stance is that a complex concertation necessarily involves regular contacts throughout a long period of time, and that a single element cannot prove the participation of one company over the whole of this period. Does this imply a raise in the evidentiary standard for complex and long infringements?
The other aspect worth mentioning is the Commission´s lapsus (probably due to a certain overconfidence) , that has cost the EU budget 31.66 million euros. As it is clear from the Judgment, the participation of Grolsch´s subsidiary in the infringement was clear and there was enough evidence to prove it. If the Commission had addressed the decision to both the parent company and the subsidiary (as it normally does, and as it did in this case with regard to all other groups of companies involved) the sanction would´ve been upheld. Ooops.
According to one of our favorite sources: beveragedaily.com, the Commission is pondering whether to appeal the Judgment before the ECJ.
More on cartels and beers:
On 10-13 October the International Competition Network will be holding a Cartel Workshop in Bruges (Nicolas is attending, and I wouldn´t mind accompanying him if someone at DG COMP considers me -when I wear my blogger hat- as a stakeholder and kindly sends an invitation…). If any of our readers is attending the conference, I will now disclose one of Bruge´s most precious secrets: the most amazing beer that I´ve ever had can only be found in Bruges at a place called DeGarre. 
This is a traditional place for students of the College of Europe (because, you know, there are so many other things to do in Bruges…). Luis Ortiz Blanco also traditionally invites the students attending his seminar at the College for some beers at the end of the academic year. You really shouldn´t miss it.
PS. And speaking about the ICN´s Workshop, we very much recommend you to check out their blog at www.icnblog.org . It really is a great source of information on international antitrust.
On SGEIs and Sausages
As Nico advertised announced yesterday, on September 30th the GCLC will be holding a major conference on the Reform of State Aid Rules on Services of General Economic Interest (SGEI) in Bruges.
The conference couldn´t be more timely, because last Friday the European Commission launched a public consultation on some proposed new texts regarding the application of State aid rules to SGEIs.
This reform is set to be one of the highlights of Commissioner Almunia´s tenure. The Commission has been working on this for some time, and we can provide you with some insights on how they have undertaken this work.
A famous quote by John Godfrey Saxe -often attributed to Otto von Bismarck- states that “law and sausage are two things you do not want to see being made.”
Sure you don´t? We´ll show you anyway 😉
In the case of sausages, they are basically made like this:
And if you want to see part of the process of how law is made, check out this first draft of the SGEIs package that was circulated amongst the European Commission´s services under the coordination of the Commission´s General Secretariat, and promoted by Commissioners Almunia, Andor and Barnier:
It includes some highlighted internal comments, my favourite being this one:
“[voir absolument son [Judge Lenaert´s] intervention postée sur youTube in http://www.youtube.com/watch?v=L52IhxqxUXo ]”
It´s good to know that European Commission officials share our (and CPI´s) taste for competition law videos.
Note: We received this some months ago because our addressess were included in a large mailing list (no kidding).
Google´s Antitrust Hearing (Watch Live)
We´ve a very busy evening, but if any of you has time, we would recommend you to watch Eric Schmidt testifying before the US Senate´s Antitrust Subcommitte.
The Hearing is taking place as we write:
P.S. If you missed it live, click here to watch the webcast or here to read the statements.
Chillin´Leaks- WSGR opens in Brussels
Last Thursday we wrote this:
“Another significant move(s) to a new entrant in the Brussels market will be announced in the coming days (it involves a couple of well-known names). (Can´t say much more; you can consider this to be an incomplete Chillin´Leak)”.
This anticipated move has been confirmed today. As those who clicked the link we had included here last week already knew, the new entrant is Wilson Sonsini Goodrich & Rosati, a well known US law firm that specializes in antitrust in high tech industries and with an impressive portfolio of clients including Google in the US.
Wilson Sonsini´s Brussels office will be led by Michael Rosenthal (until now Partner at Hunton&Williams), who will be accompanied by Partners Götz Drauz (formerly Deputy Director General at DG Comp and former Partner at Howrey and Shearman Sterling) and Paul McGeown (formerly also Partner at Hunton&Williams and avid reader of this blog). Together with them goes a team of associates, including counsel Mathieu Guillaumond and associates Alexandros Papanikolaou, Juliette Orologas and Benjamin Record.
Last week we had only mentioned “a couple of well-known names” because, to be frank, we only knew about Drauz and Rosenthal, and have just found out that Paul McGeown, Alex Papanikolaou and the rest of the team were also involved. Best of luck to all of them and to Wilson Sonsini!
This proves once again our ability to give you fresh news 😉 (even though this time the news was incomplete because providing names was a bit delicate). Competition for competition leaks news is actually quite tough, with excellent guys our there such as Mlex or GCR. In addition to them, we discovered this summer that the actual Wikileaks (which, by the way, has later turned out not to be so concerned with human rights as it seemed) is also active in this market niche: Wikileaks releases US diplomatic cable about Oracle-Sun merger deal
Stay tuned for more Chillin´Leaks…
New members of the Spanish Competition Authority
We have just learnt that this afternoon the Spanish government has appointed Joaquín García Bernaldo de Quirós as the new President of the Comisión Nacional de la Competencia (CNC), and Paloma Ávila de Grado as a new member of the CNC´s Council.
García Bernaldo de Quirós was until now the President of the Administrative Law section of the Tribunal Superior de Justicia of Andalucía. An interesting interview with the soon-to-be President of the CNC is available here (in Spanish).
Paloma Ávila de Grado was until now the director of the Advocacy Division of the CNC. Click here to check her CV (English)
Congratulations to both for the appointment, and the best of lucks in the exercise of their new responsibilities.
The current President of the CNC, Luis Berenguer (pictured above), will therefore be stepping down from the post in a few days. We will not hide now that we have been, and are, critical with some of the CNC´s recent attitudes and decisions, and in the past we have clearly stated in this blog the reasons underlying our criticism. However, now that no one can take our words as interested praising, we also want to acknowledge the many good things that Luis Berenguer has done during his tenure. Berenguer was one of the greatest supporters of the Competition Act passed in 2007; he is to a great extent responsible for the increased awareness of Spanish society about competition law issues; and he has been a respected leader of an institution whose members he has consistently supported against all criticism. In sum, he has been a good President, and as such he should be acknowledged.
Tough Competition
Competition is tough nowadays, even in competition law blogging!
Check this out:
Some weeks ago, when introducing “THE RAID”, we wrote the following:
“In Chilling Competition we have devoted a number of posts to antitrust-related movies (see our previous posts on: “First ever Hollywood competition law movie?”; “More competition-related entertainment“; “OFT goes to Hollywood”, and, very specially, our nominations to the “Antitrust Oscars”). Given that all of those posts received a crazy amount of visits, we can reasonably presume that you too like this sort of videos.”
This afternoon, one of our readers sent us a link to CPI´s September Antitrust Chronicle, where we see that CPI has created its “First CPI Film Festival”. Does this sound familiar?
Not only the concept “sort of” ressembles our “Antitrust Oscars”, but the films are also the same ones that we had referred to in our previous posts, and that you had referred to in previous comments.
It´s nice to know that even though CPI Blogs o´Blogs has tipically “boycotted” our posts (with one exception; Nico had already referred to this in the past), their ideas and tastes are so strikingly similar to ours!
Our competition lawyers mindsets lead us to the conclusion that there´s not much that can be done here since this situation can be regarded as either
a) a case of Conscious Parallelism (CPI) in an oligopolistic setting where CPI´s conduct can be qualified as a follow-the-leader reaction? 😉
or
b) a situation in which the content of our most visited posts must be regarded as an essential facility that needs to be shared with competitors.
We´re back
We´re back. Our holidays away from blogging took a little longer than expected, but these past days turned out to be quite busy for both of us. Nico has already explained that he´s been working on his “big book” and on bashing credit rating agencies. On my side, apart from some ongoing cases on which I will eventually comment, I attended Fordham´s annual antitrust conference in NY last week. As expected, it was excellent. In a few days I will comment on what happened there as well as on the paper that Luis Ortiz Blanco and myself drafted during a considerable part of what were supposed to be our summer holidays, and which relied heavily on the impressions and ideas conveyed to us by readers of this blog.
Some interesting stuff occurred in our absence. Amongst others, the following: as we had anticipated, on August 5th the European Commission initiated a formal investigation concerning the luxury watches market (in essence, it will seek to further investigate whether what it said was ok for companies to do in 2005 is still ok in light of the parameters for market definition in aftermarket settings laid down by the General Court in CEAHR); on September 1st the US DOJ filed a suit to block AT&Ts merger with T-Mobile; on September 9th the General Court issued Judgments in the Italian Raw Tobacco case (most of what is said on the Judgment is business as usual; the news is that the Court has endorsed the Commission´s withdrawal of the conditional leniency that had been granted to Deltafina before it disclosed the fact that it had applied for leniency to other members of the cartel). Today, the General Court has also issued some interesting Judgments in a couple of cartel cases, but that can wait until tomorrow.
More stuff that happened during our holidays: those diffuse entities called “the markets” (which in the past few weeks have been reported to be attacking my country..) kept on giving us bad news. But contrary to financial markets, the legal market for competition lawyers is thriving: on Monday it was announced that Johan Ysewyn (previously Head of Competition at Linklaters and, like Luis, Professor at the BSC) has been hired by CliffordChance; Assimakis Komninos made a timely move and returned from the Greek competition authority to White&Case as a partner. Another significant move(s) to a new entrant in the Brussels market will be announced in the coming days (it involves a couple of well-known names). (Can´t say much more; you can consider this to be an incomplete Chillin´Leak).
Competition authorities are also doing some very smart hiring: in October Miguel de la Mano (with whom, btw, I will most likely co-author a text on abuse of dominance soon) will be joining the UK´s Competition Commission as its Chief Economist while on a secondment from DG Comp. I kinda like competition authorities who (like the CC, the OFT, the Dutch NMa or the Autorité de la Concurrence) hire qualified officials even if they´re non-nationals of their respective countries. Maybe one day we will end up with a new relevant market of an EEA dimension for competition enforcers…
Closed for the summer
It is time for Chillin´Competition to take a summer break.
The past few months have been hectic for Nicolas and for me both at work (we´re working on really interesting cases, books and papers on which we´ll comment in a few weeks) and on this blog (where we´ve managed to publish a post a day; this is our 429th post!)
Chilling Competition has already accomplished most of the objectives that we set at the beginning of the year, and has exceeded all our expectations in many ways. Thanks to you, we recently crossed the 150.000 visits threshold; we currently have nearly 500 visits a day, 200 members in our LinkedIn group, and more than 150 subscribers from all over the world. We´re even having lots of visits on our new youtube channel thanks to “The Raid“!
Most importantly, we´ve had a lot of fun. If you enjoyed what you´ve read too, then we have so far succeeded.
We´re committed to getting better, and for that reason we´ve got some quite interesting new projects on the pipeline that we´ll be announcing right after the holidays.
It´s a pity that we won´t be able to provide you with timely coverage of any competition law related developments that may take place in the coming days, such as the first-ever non-consensual Commission decision withdrawing an NCA´s competence to handle an ongoing case under Art. 11(6) of Regulation 1/2003, which should be out soon (you can consider this to be the last Chillingleak of the season..)
Have a great summer!
Nicolas & Alfonso
THE RAID: An antitrust movie
In Chilling Competition we have devoted a number of posts to antitrust-related movies (see our previous posts on: “First ever Hollywood competition law movie?”; “OFT goes to Hollywood”, and, very specially, our nominations to the “Antitrust Oscars”). Given that all of those posts received a crazy amount of visits, we can reasonably presume that you too like this sort of videos.
Today Chilling Competition is proud to release a true gem, a “classic” on its own right that we have digitalized for our readers: The Raid.
In our opinion, The Raid is the best and funniest antitrust movie of all times. It has everything: it is a comedy with action, romance, and an educational purpose (it was filmed -a few years ago- as part of a compliance program for Neste).
If you think we’re not objective, then you’re absolutely right:
The Raid is directed and starred by very special actors to whom we profess great admiration: General Court’s Judge Marc van der Woude (who plays the character of Luc Desmet, a Commission inspector); Toni Huopalainen (who, in addition to being the scriptwriter, plays the role of European Commission official Tom Jenssen); and our friend and favorite competition lawyer Luis Ortiz Blanco (to see a moustached Luis in his role as a priest confessing a cartelist jump to minute 20.33).
A million thanks go to all three of them for granting us the permission to digitalize their movie and for their great sense of humor.
Enough for introductions…
(Only accessible on Chilling Competition’s youtube channel via this link).
Chillin'Competition 