Author Archive
Google News
Things are developing on the Google front, and for some reason the timing of the most significant developments is practically coincidental:
The complainants in the EU investigation on Google are as active as we had forecasted. A supplementary complaint has just been lodged before the European Commission by the French company 1plusV, which controls ejustice.fr, one of the original complainants. More on the content of the complaint here.
Almost in parallel, the Texas Attorney General disclosed on Tuesday some details on the information that it requested from Google a year ago concerning the operation of its search algorithm (see here ).
The new complaint and those revelations come at at moment of growing rumors on the likelihood of an early settlement. Apparently there have been a number of preliminary talks (including a meeting between Eric Schmidt and Commissioner Almunia), although the Commission has made clear that the investigation is ongoing. An offer of commitments on the part of Google seems to be the most sensible solution from Google´s standpoint it it wants to avoid entering into a never-ending legal battle with the Commission. In fact, Google´s CEO has been reported to be thinking along these lines (see here). As we´ve said before, I very much doubt that complainants and other of Google´s competitors would be satisfied; I bet that the case will be taken to Luxembourg no matter what, but given the Commission´s litigation record in art. 102 cases (and ultimately the Alrosa litigation) there´s no doubt Google would rather have the institution on its side.
Unrelated to the EU investigation, but also of interest is the fact that the American Antitrust Institute has published a white paper arguing that the DOJ should seriously consider challenging Google´s acquisition of ITA Software. It strikes me that the AAI, whose members should probably have very divergent views, has taken such a defined institutional position on this particular deal, but the paper makes an interesting read anyhow.
PS. Once again, all the info above has been found through Google News.
TV and events of ‘major importance for society’
(Once again we have the pleasure of publishing a contribution by Pablo Ibañez Colomo. It seems that the future of broadcasting rights is being decided in Luxembourg, and as he did last week when Kokott´s opinion was issued, Pablo is sharing with us his views on the latest Judgment in this area).
More on TV rights this week. In Cases T-385/07, T-55/08 and T-68/08, the General Court dismissed an annulment action against a Commission Decision declaring the compatibility with EU law of national measures concerning the broadcasting of events of ‘major importance for society’ (read: the FIFA World Cup, the Euro, the Olympics and similar sports events). In accordance with Article 3 of the Audiovisual Media Service Directive, Member States may require that these events are offered on subscription-free TV channels.
Given the way in which the said provision is worded, the outcome of the action is as unsurprising as it is uncontroversial. Some bits of the judgment raise some interesting issues:
Freedom of information: I have always been surprised by the lightness with which freedom of expression issues are addressed in TV rights-related cases. The General Court (as does the Preamble to the Directive) argues that these measures are justified by Article 10 ECHR, which includes the ‘freedom to receive information’. It is far from clear that the freedom of speech encompasses a right to access an event offered by a private actor on a subscription-free basis . Does this mean that publishers breach the freedom of information of their readers when they charge for their newspapers informing about events of ‘major importance for society’?
Have your cake and eat it?: When reading about Article 3 of the Audiovisual Media Services Directive, I cannot help thinking about the hybrid situation they create. Sport has become a multi-million business benefitting its governing bodies. If governments do not object to these developments (and I am not suggesting that they should), I do not see why they interfere downstream in the value chain to create market distortions at the level of broadcasters (which very often means, moreover, that public broadcasters end up paying for the rights).
Apple´s offer to publishers & an overstatement on lawyers´(un)happiness
Today we´d like to point you to a couple of short and interesting pieces on which we would appreciate hearing your views:
As some of you may know, Apple recently announced that it will allow newspapapers, magazines and other publications to sell digital subscriptions of to iPhone, iPad and iTouch users (if you don´t, see here). An interesting post published yesterday on The Wall Street Journal Law Blog (see here) has highlighted the potential antitrust-related risks incurred by Apple with regards to some of the terms of its offer. One of the central issues essentially boils down to defining the relevant market affected by Apple´s offer: is there a relevant market for consumer tablet computers? A wider market for digital and print media outlets? Any opinions? And even case Apple were found dominant in a nascent market, should that warrant antitrust intervention?
A second interesting, and certainly controversial piece of reading, is this one. It´s an article written some years ago in The Sunday Times concerning lawyers´ dissatisfaction with their work. I have stated here some of my views on this topic, and I´ve even ventured some criticism on how things are often done (see here and here). However, I view this article as overstepping the mark and as a consequence it ends up depicting “City” lawyers -and, in a sense, the whole profession- in a way that makes lawyers appear as despicable inhuman beings. There are a number of cheap overstatements in this admittedly somewhat tongue in cheek article, but I´m sure it should elicit some reactions amongst our readership.
Recent publications
In the past few days there have been several publications on which we hadn´t had the chance to comment:
Some days ago the European Commission published a document stating its position regarding the nowadays common claims on inability to pay made by undertakings on which a fine has been imposed. Interestingly, the document was published on a Commission´s site on transparency, but not on DG Comp´s website.
Last week, DG COMP also launched the public consultation on collective redress (thanks to P. Sabbadini for immediately pointing us to this).
On the European Courts side (and aside from an arguably insufficient but nevertheless welcome fine reduction that some colleages of mine got in the Spanish raw tobacco case), Advocate General Kokott issued a very important Opinion in the Greek decoders case (the one concerning Karen Murphy, the owner of the Red White & Blue pub in Portsmouth, who cancelled her licence with BSkyB -who holds the right to broadcast live Premier League games in the UK-, and instead signed up with a Greek provider and imported its decoders). The matter eventually arrived at the ECJ by way of a reference for a preliminary ruling. In her Opinion, AG Kokott considers that “territorial exclusivity agreements relating to the transmission of football matches are contrary to EU law“. Were the Court to follow its Advocate General, its Judgment would constitute a revolution that would shock the world of sports in a way only comparable to the Bosman Judgment, not to mention its potential implications for the cinema and TV industries in general. We´ll post a comment on the Opinion here as part of our “Competition Law & Sport” series as soon as we get the time to read it and think it through.
And speaking of publications, there´s a new journal which might be of interest to many of us: the Journal of Universal Rejection They will reject absolutely everything submitted to them 🙂
More competition related entertainment
Our readers are proposing some additional nominations as well as the creation of a new categores for comic books and online games. We are obedient guys and we do what we´re asked, so we´re now beyond movies and looking for nominations on competition entertainment…
Best animated feature
A brief history of the creation of the FTC
Best online game
A visit to the mall, by the FTC
Best competition law comics
Two mangas by the Competition Commission of Singapore: Foiled (Abuse of dominance) and Fixed (price fixing)
O Cartel da Limonada, by the Brazilian Ministry for Justice
Io Non Abbocco, by the Italian Competition Authority
La Breve Storia di Borgo Allegro, by the Italian Competition Authority
Una Brutta Sorpresa, also by the Italian Competition Authority (I´m sure they work on other stuff too over there)
The info on the comics is available at the ICN Blog (thanks a lot to Kartellblog for the pointer!). I´ve actually found quite interesting info in there. An example: anyone interested in doing competition law research in Fiji?
Antitrust Oscars
The significant rise in visits experienced by the blog in the past week (we had close to 3000 visits) has opened our eyes to a reality: there´s a lot of people with free time out there! That’s why, considering that nominations for the oscars were made public last week, determined to fill your spare time with entertainment, and in the spirit of that weird phrase that appears on our header¨”Relaxing whilst doing Competition Law is not an oxymoron“, we´ve put together for you a list of nominees for the best antitrust-related videos on youtube. All of them are really worth watching (although you know that THE RAID is clearly our favorite..)
Suggestions for additional nominations and/or categories are accepted. Vote for your favorite!
Best film by a competition authority
Leniency in cartel cases, by the Dutch Competition Authority.
Be the first to tell; a film on leniency, by the Swedish Competition Authority.
Best antitrust lawyer starred videos
ABA Antitrust Section kicks off year 2010/2011
Best competition law book review
Great video-reviews of the EC Competition Law Handbook 08/09 and of EC Merger Control. Really worth watching; I keep telling Nicolas that this is how he should do his reviews..) They are full of highlights.
Best non-fiction films
The lysine cartel : The real story on which the movie The Informant was based (my favourite scenes are on minutes 1.44 and 2.46). For an interview with the real Mark Whitacre see here
Bill Gates´deposition before the DOJ in the Microsoft trial. In youtube you can find the whole series (for season 1 see here), and also a compilation of greatest hits (the videos give, I think, an unfair portrayal of him so, to balance things here is his great commencement speech at Harvard). Btw, Microsoft´s Steve Ballmer has also starred a short film which escapes any definition
Best politician starred video
Chuck Norris´ Neelie Kroes´ statement (some of the best lines in the history of competition movies) after fining Intel 1 billion euros: “Intel´s latest advertising campaign proposes Intel as the sponsors of tomorrow; well, now they are the sponsors of the European tax payer” and “My vision of tomorrow for Intel, here and now; obey the law“.
The Lisbon Treaty and Competition Policy: A Story of Two Views, by Nicolas Sarkozy and Tony Blair (from 0.40 onwards).
Best non-English speaking video
Apparently (¿?) this video deals with leniency
Best educational video “for dummies”
What is a cartel? (Unfortunately we could not nominate it for the category on best special effects)
¿Por qué la competencia importa?
Best critical video on antitrust
Don´t trust antitrust: the incredible bread machine (watch from minute 2 onwards).
An extra
A video not on competition law, but on competition in law (on 0.37 law school is compared to a situation where “you take a group of alcoholics and then open the bar for three years”, and law students are defined as “insecure, grade obsessed, status obsessed people). It also features Elizabeth Warren, one of the best professors I´ve ever seen in a classroom.
Everything antitrust lawyers should know about State aids (but were afraid of asking)
Note by Alfonso: We are inaugurating our new section on “Everything Competition Lawyers should know about State aids” with a contribution by Napoleón Ruiz, a great friend and a great State aid specialist at Garrigues´ Brussels office. We asked him to write about a sexy topic and, well, this is what we got..
Everything antitrust lawyers should know about sex State aids (but were afraid of asking)
Thanks to Nicolas and Alfonso for giving me the opportunity -and the honor- of inaugurating this new section of their blog (which actually reminds me of the title of a well-known movie of Woody Allen…).
I believe that creating a new section devoted to State aid issues is indeed a good idea. Firstly because despite the fact that they target member States –and not companies- State aid rules play a fundamental role in addressing restraints of competition. Secondly, because State aid control has lately become the “rising star” of the Commission’ competition policy. Since the beginning of the crisis, State aid practice has boomed within DG Comp in the attempt to control that the fabulous amount of money (around 4 trillion euros mainly in the financial sector) poured by member States into their economies does not distort -too much- competition. Quite a herculean task, I’d dare to say…
One of the first things that antitrust lawyers should know is that, perhaps even more than antitrust or merger control, State aids is an incredibly dynamic practice, given that some of its main legal concepts have not yet been completely fixed. Many State aid lawyers would agree that one of the most (probably the most) raging debates amongst scholars, practitioners and enforcers, which has been going on for years now, concerns the notion of selectivity:
According to article 107 TFEU, a measure is deemed to constitute a State aid if it favours “certain undertakings or the production of certain goods”; in other words, whether the measure constitutes an exception deviating from the general rule.
Even though the concept appears to be conceptually clear -in theory-, in practice it has proven to be diabolically difficult and so far its boundaries remain unclear. In general (but not always), while member States and companies seek to clarify and restrict the application of selectivity, the Commission tries to expand its scope. Obviously, the larger the concept of selectivity, the easier it would be for the Commission to qualify as State aid virtually any State measure.
We, antitrust lawyers, are used to expansive, non-determined, concepts, but this one is, in my experience, the most nebulous one of those with which I´ve worked.
Actually, one of the current cases regarding selectivity that may lead to a clearer definition of the concept is one in which I have the fortune of being involved. The case, currently pending before the General Court (the Commission´s decision was appealed by a significant number of Spain´s flagship companies), concerns a provision in Spanish corporate tax law laying down the amortization of financial goodwill for the acquisition of significant shareholdings in foreign targets (a.k.a 12.5 TRLIS). Although the subject sounds like ancient Sanskrit for many non-tax lawyers, I believe it has the ingredients to become a landmark case, for instance:
The case concerns the very substance of selectivity, since the appeal challenges not only the methodology used by the Commission to define the general rule and its exception, but also the interface drawn by the Commission between selectivity de iure and de facto; and
Since tax provisions are selective by nature, the judgement to be delivered by the Court will likely determine how much room for intervention the Commission has regarding member States’ tax systems. Taxation has been -and remains- one of the few fields where unanimity between member States is required in order to legislate. Therefore, many think that in case the ECJ “expands” the notion of selectivity, it will be difficult for the Commission to resist the temptation of using its broad powers as competition watchdog in order to intervene in member States taxation (especially now when voices requesting deeper tax harmonization in the EU are growing).
In any event, it would be desirable that the European Courts –be it in this one or in another case- shed some light into the debate, so that I don’t find myself quoting –again- the great Allen in the above said movie to [sadly] declare that: “When it comes to sex State aids there are certain things that should always be left unknown, and with my luck, they probably will be”.
A Competition Law Quiz
In the past few days both Nicolas and I have commented on the Tomra and General Química Judgments. Both cases can be useful starting points for a quizz (we´ve got a special prize for anyone who replies all 5 questions correctly):
1) When was the last time that the European Courts annulled a Commission´s decision on abuse of dominance?
2) When was the last time that the Europen Courts reduced a fine imposed by the Commission on an abuse of dominance case?
3) When was the last time that US agencies successfully litigated an abuse of dominance (Section 2) case before the courts?
4) When was the last time that a company was able to rebut the presumption on the exercise of decisive influence applicable to 100% owned subsidiaries?
5) Which one of the Judges at the General Court directed and starred a movie on competition law (also starred by other well known competition lawyers and officials), and what was the title of the movie?
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Unrelated: the companies sanctioned in the air cargo cartel case have lodged their appeals before the General Court, including Lufthansa, who received full inmunity in application of the leniency notice (very probably with the aim of reducing its exposure to damage claims). By the way, the registrar at the General Court has numbered Air Canada´s appeal as Case 9/11…
Chillingleaks: European Commission investigates Telefónica and PT
It appears that DG Comp has initiated a formal investigation in relation to a possible non-compete agreement between Telefónica and Portugal Telecom. The two companies have now unofficially confirmed this news, which could become public in the next few hours.
People involved in the case have indicated that the agreement could have been entered into last July, at the time Telefónica bought PT´s shares in Vivo (a reminder: the Portuguese government had opposed this acquisition by virtue of its “golden share” in PT. Although the ECJ recently declared that the existence of such “shares” infringes the Treaty provisions on freedom of establishement, the golden share on PT is still there). The agreement is suspected to have consisted of a commitment not to compete in each other´s “home” market until December 2011.
Similar “ancillary restrictions” have also been subject to recent investigations by the Commission.
The ECJ rules on parenthood (General Química v Commission)
The ECJ issued a Judgment yesterday in the General Química-Repsol case in which it partly upheld and partly annulled the General Court´s judgment dismissing the appeals against the Commission decision in the rubber chemicals cartel.
In its Judgment the Court provides some guidance on the operation of the iuris tantum presumption pursuant to which the exercise of decisive influence of a parent company over the conduct of its subsidiaries (and, accordingly, the responsibility of the parent for the wrongdoing of its subsidiary) can be presumed, always subject to rebuttal, in case of 100% ownership.
The Commission and the General Court had held that the infringement commmited by General Química (GQ) could be attributed to the owner of the totality of its shares: Repsol Química (RQ), and -climbing one additional step up the ladder- to Repsol YPF, who, in turn, was the owner of the totality of RQ´s shares.
Leaving aside some of the details and specificities of the case, and focusing on the general application of this Judgment to future cases, the ECJ has ruled that :
(i) The operation of the presumption shall not be dependent upon the existence of additional evidence on the exercise of decisive influence over the conduct of the subsidiary; on the contrary, it will be triggered automatically in cases of 100% ownership (paragraphs 41 and 42);
(ii) The General Court did not adequately motivate some of its conclusions (recitals 58-63) and failed to examine in detail the evidence submitted by the appellants to demonstrate the commercial and operational independence of GQ in relation to RQ (recitals 75 and 76), this being precisely one of the relevant factors with which the presumption could have been rebutted (recital 77). Consequently, the Judgment holds that “the General Court committed an error of law in affirming, in paragraph 74 of the judgment under appeal, that the arguments raised in order to establish such independence could not succeed ‘in the light of the case-law cited’, without carrying out a concrete examination of the factors raised by the appellants” (recital 79).
After having set aside part of the General Court´Judgment, the ECJ itself undertakes the task of giving final Judgment on the matter, and rules that:
a ) the mere fact, first, that RQ was made aware of the infringement only after an inspection of GQ´s premises and, second, that it did not participate directly in that infringement or encourage it to be committed is not such as to show that those two companies do not constitute a single economic unit. Such a fact is not sufficient to rebut the presumption that RQ actually exercised decisive influence over GQ’s conduct
b) Although it was true that certain documents submitted by the appellants show that many of GQ’s management and administrative competencies had been delegated to the executives of that company, other evidence in the file showed, by contrast, the existence of significant interference on the part of RQ in several aspects of GQ’s strategy and commercial policy.
The Judgment attributes particular importance to several facts: Firstly, it notes that RQ’s board of directors intervened significantly in matters concerning the sale of real estate and shareholding in other companies. Secondly, it underlines that GQ’s sole director designated by RQ constituted a link between those two companies, by which the information concerning sales, production and financial results were communicated to RQ. Thirdly, the ECJ explains that the fact that information was provided on the implementation stage of strategic and commercial plans constitutes an additional indication that RQ exercised control over the decisions drawn up and executed by GQ’s executives.
At the end of the day, the ECJ has reminded the General Court of its obligation to assess and motivate with greater care its conclusions on the elements put forward by companies attempting to rebut the presumption on the exercise of decisive influence. But at the same time it has validated the Commission´s decision on the basis of a reasoning that, in the face of conflicting evidence, seems inclined to favor the Commission´s discretion.
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Also, and totally unrelated, I leave you a link to an article discussing whether lawyering can be compatible with work/life balance (it´s also interesting to check the first comment, positing that quality of life in accounting firms is due to the oligopolistic nature of that market). As I´ve said before, unless law firms become more progressive on the quality-of-life front they risk disencouraging the brightest people (their only asset) to choose this job or to continue working at it.
Have a great weekend!
Chillin'Competition 