Archive for the ‘Antitrust Scholarship’ Category
Beach reads 2012
In order to stand up to our reputation of “competition geeks”, and following our own advice on the usefulness of “reading, not just consulting, competition law books“, both Nicolas and myself included some “professional readings” within our beach-reading-material [I also took some non-competition readings with me (American Pastoral and Soldiers of Salamis) and they were simply excellent, and perhaps a bit more fun…].
I chose to read several network-effects related pieces (which are useful both for my halted PhD research and for my current work). Some of what I read was crap perhaps not so useful (what’s going on with peer reviews these days?), but other pieces were very good. I’ll share some views on them (assuming that you don’t give a damn about what we read, but in the hope that we can help anyone interested on these matters to “sepparate the wheat from the chaff)”.
For instance, I re-read Pierre Larouche’s article “The European Microsoft Case at the Crossroads of Competition Policy and Innovation” and -regardless of whether one agrees with everything that is in it or not- I thought that it is a model of what a serious, balanced, well-though and well-written comment of a Judgment should be like. I also re-read (or read seriously for the first time) a somehow more difficult (given its economic nature and its lenght) but brilliant piece by J. Farrell and P. Klemperer “Competition and Lock-In: Competition with Switching Costs and Network Effects“. And I read for the first time a paper entitled “Monopolization via Voluntary Network Effects“, by Adi Ayal, that is both original and quite sensible.
Finally, I finished reading Competition Law and Regulation of Technology Markets, by Kevin Coates. In a previous post I said I would write a short review on it here, so here it goes. It may, however, come a bit late, since it’s most likely that you are already familiar with the existence of this work. Anyway…. Kevin Coates has produced a truly excellent book, and one that focuses on what is possibly the most timely subject in worldwide antitrust these days. The book deals with the application of competition law, intellectual property law, telecoms regulation, and data protectition law “accross the different layers of the value chain, from the underlying technology, through the networks and into services and applications in light of the disciplines“.
The book does a great job in presenting the reader with the particular features of technology industries (e.g. its rapidly evolving and innovation-driven nature, the existence of network effects, the multiplicity and complexity of market relationships or the crucial role of technical compatibility), and, most notably, in addressing the particular challenges that these features pose to antitrust enforcement.
The book’s analysis is lucid, its scope is comprehensive, its language is fresh and lively; it expresses some personal views, but objectively presents all possible sides to every debate. In no other book will you find a comparable coverage of the breadth of technology-related issues covered in this one. In sum, it’s a book that I would’ve loved to write myself, and that I would’ve been proud to write in the way it is written.
P.S. We have asked Kevin to develop in a guest post in Chillin’Competition some of the ideas that we found more interesting. We’ll let him rest for a few days, but we hope to have him here soon.
On competition and blogs
Competition seems to be moving moving to the blog arena.
Some of you may recall that a while ago we discussed the case of a Spanish professor who had been sued for accusing a Promusicae of anticompetitive behavior (see here). We are glad to report that the blogger has won the case, thereby establishing a good precedent to shield Nico and myself from possible similar attacks 😉
Another interesting blog-related development has taken in the U.S. In the context of a high-profile patent infringement case between Google and Oracle, district court judge Alsup has ordered these companies to diclose the identity of bloggers, journalists and consultants that they pay for favorable opinions or consultancy work (for more, see here or here).
This decision has been triggered by the revelation that Florian Müller a well-known IP blogger (from the blog FOSS Patents) had been hired by Oracle shortly after the trial begun.
This unprecedented move should cast light upon the problem related to the lack of transparency surrounding blog content. As the influence of certain blogs grows, it is necessary to start thinking whether the ethical rules governing traditional journalism should also apply in this area. It has certainly led Nicolas and myself to reflect on the way we want to do things.
In our case, we don’t pretend to be impartial informers. We are simply two young professionals who voice out subjective opinions in public to entertain and/or to spur some hopefully interesting debates. We see Chillin’Competition more like a diary than like a newspaper story or an academic paper, and therefore don’t feel under the pressure of being always perfectly informed, accurate, exhaustive and objective about what we write. Of course we try to do our best and to be as technically rigurous as possible, but we’re not afraid of posting first thoughts on some topics, even if our views may evolve afterwards (remember our disclaimer?) 🙂
The small dimension of the competition law community makes it practically unfeasible to continuously disclose personal links. We often know quite well, or are friends with, in-house counsel, external counsel, Commission officials, clerks or Judges involved in all sides of the cases on which we comment here. Disclosing friendship or other informal ties with the people involved in the cases on which we comment would be tremendously burdensome (and it would look a bit weird too…). As said above, we don’t pretend to be always objective. In fact, we generally try to be subjective, but we develop our reasons and we expose them to public criticism. For the time being, our policy is to indicate only the cases in which we are personally involved. Also, where we have written about a case and have later become involved in it, we have also publicly stated it. However, we are, as always, open to comments and suggestions on how to better do what we do.
Blogging law is getting increasingly complicated. Nico: we need a lawyer.
Fine and Punishment
In the article that kept me working during my otherwise summer holidays last year Luis Ortiz Blanco and myself wrote for the Fordham Conference held last September [the final version is published here; a draft version is available for free here] we quoted one of our “Friday Slotters”, Ian Forrester, (actually, he was the one who proposed “The Friday Slot” as a name for the section) saying that competition fines imposed by the Commission “exceed fines imposed by the public authority in any democracy of which I am aware for any offence“.
Some evolution is apparently taking place in this regard. Look, for instance, at the $3 billion fine that GlaxoSmithkline has agreed to pay for promoting its best-selling antidepressants for unapproved uses and failing to report safety data. Take a look also at this very interesting graph, which points out at the largest corporate fines and settlements in the past seven years, and also presents the fine as a percentage of the yearly income of the sanctioned companies.
During a Paris-Brussels train trip last night I read an interesting piece on The Economist that deals precisely with the recent increment in corporate fines using international cartel fines (which reportedly “rose by a factor of one thousand between the 1990s and 2000s”) as the main example.
The Economist‘s piece draws on economic research to justify the conclusion that “to deter bad behavior fines need to rise”.
You may recall that our guest Benoît Durand dealt with this same issue some posts ago and came to a contrary conclusion: that deterrence would be better served by envisaging individual sanctions (fines, disqualification and/or prison penalties) for the executives directly involved in cartel meetings. We haven´t really thought this through, but we’re not big fans of prison penalties, nor would we favor the imposition of disproportionate individual fines. A well designed disqualification sanction, however, would appear to us as a reasonable measure. Any views?
Do Fast Moving Markets require Fast (and Furious) Competition Authorities?
In support of his aggressive move against Google on 25 May 2012, Commissioner Almunia declared:
“I believe that these fast-moving markets would particularly benefit from a quick resolution of the competition issues identified. Restoring competition swiftly to the benefit of users at an early stage is always preferable to lengthy proceedings, although these sometimes become indispensable to competition enforcement“.
Later in June, he again said:
“I strongly believe that users and competitors would greatly benefit from a quick resolution of the case; it is always better to restore competition swiftly in fast-moving markets, provided of course that the companies concerned are ready to seriously address and solve the problems at stake“.
Commissioner Almunia, and his advisers, must have read Judge R. Posner who warned 10 years ago that:
“Antitrust litigation moves very slowly relative to the new economy. Law time is not real time. The law is committed to principles of due process that limit the scope for summary proceedings, and the fact that litigation is conducted by lawyers before tribunals that are not technically trained or experienced inevitably slows the process.
The mismatch between law time and new-economy real time is troubling in two respects. First, an antitrust case involving a new-economy firm may drag on for so long relative to the changing conditions of the industry as to become irrelevant, ineffectual. That was a problem even in the old economy. One recalls for example that by the time the monopolization case against Alcoa completed its journey through the courts, Alcoa had lost its monopoly for reasons unrelated to the litigation; as a result, the decree finally entered against Alcoa offered little more than nominal relief (the divestiture of Alcoa’s Canadian subsidiary). This type of problem is likely to be more frequent in the new economy.
Second, even if the case is not obsoleted by passage of time, its pendency may cast a pall over parties to and affected by the litigation, making investment riskier and complicating business planning“.
Does this call for novel enforcement tactics, with increased recourse to settlements and interim measures?
Or, in evidentiary words, does this require doing away with “cogent evidence” in exchange for “serious doubts“? I have my own doubts.
And Posner too. As he, very humbly, recognizes: “This problem will be extremely difficult to solve; indeed, I cannot even glimpse the solution“.
If God Posner cannot find it, we are indeed all doomed.
Competition enforcement in Spain
A member of the Board of the Spanish Competition Authority said a few weeks ago that the institution is on the verge of a dismantling process. The statement was made in relation to a draft law that aims at merging the competition authority with sector regulators in order to create synergies, avoid inconsistencies and save some money (the latter being, of course, the current overarching principle of all Spanish policies).
Although I could see some usefulness in discussing some of the proposed changes, most Spanish practitioners, the members of the CNC, and the current sector regulators are not big fans of the current hastily drafted draft Law. We personally tend to share some concerns with regard to the current version of the project.
I have not always agreed with the CNC’s way of doing some things, but disagreeing with them is part of my job. Overall, however, the CNC has done a good job, and it has certainly increased the public awareness about competition law in Spain to unprecedented levels. Attempting to save some pennies by reshuffling an efficient (and “profitable”) organization may not be a smart move.
At the political level there’s the question of whether this reform should be one of the countries’ priorities right now. From a strictly legal point of view, blurring the frontiers between the applicable standards, attitudes and instruments used in competition enforcement (a sanctioning system with criminal features) and those characterizing sector regulation can be -if not well thought out- very problematic.
We’ll develop our views in a few days (consider this as an appetizer); for now, it suffices to observe that the uncertainty brought by the prospect of immediate changes (which are also reportedly aimed at expected to affect the members of the Board) is significantly affecting enforcement. Whereas in the past we branded the CNC as “overzealous“, the tide has now turned and the Spanish watchdog seems to be on a sleeping mode waiting mood. (yes, we like complaining no matter what).
The latest investigation concerns bullfighters. No kidding: see here.
As if I hadn’t heard enough clichés about Spain over the past few weeks!
Interesting New Book
Hart Publishing has a new volume which looks very interesting. Hart Publishing has offered to send a free copy in exchange for ad placement. Given my current research focus on IP and Antitrust, I have decided to accept the offer.
Intellectual Property, Antitrust and Cumulative Innovation in the EU and the US
By Thorsten Käseberg
For decades, the debate about the tension between IP and antitrust law has revolved around the question to what extent antitrust should accept that IP laws may bar competition in order to stimulate innovation. The rise of IP rights in recent years has highlighted the problem that IP may also impede innovation, if research for new technologies or the marketing of new products requires access to protected prior innovation. How this ‘cumulative innovation’ is actually accounted for under IP and antitrust laws in the EU and the US, and how it could alternatively be dealt with, are the central questions addressed in this unique study by lawyer and economist Thorsten Käseberg.
Taking an integrated view of both IP and antitrust rules – in particular on refusals to deal based on IP – the book assesses policy levers under European and US patent, copyright and trade secrecy laws, such as the bar for and scope of protection as well as research exemptions, compulsory licensing regimes and misuse doctrines. It analyses what the allocation of tasks is and should be between these IP levers and antitrust rules, in particular the law on abuse of dominance (Article 102 TFEU) and monopolisation (Section 2 Sherman Act), while particular attention is paid to the essential facilities doctrine, including pricing methodologies for access to IP.
Many recent decisions and judgments are put into a coherent analytical framework, such as IMS Health, AstraZeneca, GlaxoSmithKline (in the EU), Apple (France), Orange Book Standard (Germany), Trinko, Rambus, NYMEX, eBay (US), Microsoft and IBM/T3 (both EU and US). Further topics covered include: IP protection for software, interoperability information and databases; industry-specific tailoring of IP; antitrust innovation market analysis; and the WTO law on the IP/antitrust interface.
Link to table of contents http://www.hartpub.co.uk/pdf/9781849463065.pdf
The Author
Dr Thorsten Käseberg, a lawyer and economist, was a case-handler at the European Commission’s Directorate-General for Competition between 2009 and 2011. He is currently working in the competition policy unit of the German Economics Ministry and was previously a lecturer in the Faculty of Law and Faculty of Economics at the Humboldt University Berlin, and a research assistant at the law firm Cleary Gottlieb Steen & Hamilton in Brussels.
June 2012 330pp Hbk 9781849463065 RSP: £75 / US$150
20% Discount Price: £60 / US$120
If you would like to place an order you can do so through the Hart Publishing website (links below). To receive the discount please mention ref: ‘CCB’ in the special instructions field. Please note that the discount will not be shown on your order but will be applied when your order is processed.
UK, EU and ROW: http://www.hartpub.co.uk/books/details.asp?isbn=9781849463065
US: http://www.hartpublishingusa.com/books/details.asp?isbn=9781849463065
Thoughts on Transfer of Technology, and More
At today’s GCLC lunch talk on transfer of technology agreements, a number of thoughts sprung to mind. Here they are.
- As part of our professional ethics, we competition lawyers should stop saying that IP confers a form of “monopoly” on its owner. Like property rights over tangible goods, IP – I talk here essentially of patents – confers property. A patent confers property over the usage of technical specifications, full stop. But – and this is a big But – IP does not imply, as the term monopoly suggests, the absence of alternative technical specifications. On many markets, several IP compete for a given product, service, functionality.
- Aren’t we over-regulating the issue of standard-essential patents? There’s no robust evidence that patent thickets are a widespread + harmful phenomenon. However, as a result of the mass-mediatization of several cases, and of the possible inability of the Commission to deal with those cases swiftly and thoroughly, we are heading towards the adoption of general rules in a range of soft law instruments. Last year, we got a new section on standardisation in the Guidelines on Horizontal Cooperation Agreements. The upcoming revised TTBER and its set of accompanying Guidelines may just bring about more rules. As a matter of principle, I would question such an approach, absent empirical case-related evidence.
- The use of “double negatives” in the list of hardcore restrictions should be avoided. D. Woods said the Commission would make some thinking on this. And I trust most EU competition law students would be grateful if the Commission made progress on this.
- The SEP=SMP shortcut is misconceived. It fails to grasp that several standards, or non-standardized technologies can compete for a given functionality, product, service. Moreover, standardization is a repeated game, so any attempt by a SEP holder to raise fees may be sanctioned at a later stage by other standard participants. And finally, SEP holders must often obtain licences from other SEP holders.
- A speaker made the point that it would be counterintuitive if participants to patent pools had to pay experts to determine on an ongoing basis whether the patents are valuable (or not) and in turn should (or not) stay in the pool. It is indeed a little weird to pay someone and entrust him with the mission, and power, to kick you out. And there are other risks: conflict of interest, bribes, etc. But aren’t most trade associations paid by their members, and yet keep a right to exclude participants if the membership conditions are no longer met?
- A popular policy argument to discard the need (and legitimacy) of antitrust intervention is that contemplated market failures are caused by regulatory frameworks. And the argument logically follows that regulatory defects should be solved by bringing changes to the regulatory framework, not by applying the competition rules. This argument has been made in virtually all sectors of the economy that have attracted antitrust scrutiny in the past decades, e.g. pharma, financial markets, telecoms, etc. I have, myself, made this point in a number of papers, but I have second thoughts on it now. Whilst I still believe that pieces of legislation adopted under a fully democratic procedure should not be undermined by ex post bureaucratic competition enforcement, I am also a pragmatist. In this respect, I tend to consider that antitrust enforcement may bring quicker, and better fixes, than protracted regulatory action (for instance, a reform of the IP system in the case of patent thickets). Plus antitrust enforcement is more reversible than regulatory action (in case of mistake). And finally reforms of regulatory regimes just have corrective effects for the future, and do not address existing problems…
Random thoughts on life at law firms
Our most recent posts speak for themselves: both Nico and myself are currently quite absorbed by work and have struggled to find the time to write some sensible and substantive stuff here (we’ll be back to substance next week) nor to attend the various social competition law events taking place these days. [Query: if everyone is partying or writing blogs, who works here??!] . However, the “hecticness” of these past few days has spurred some random thoughts with regard to life at law firms (the fact that for the first time ever I have to alter my summer holiday plans because of work has also contributed to some intense reflection). Here they are, in the hope that they give rise to some debate: Read the rest of this entry »
Self promotion
We like to self promote at chillin’competition.
For instance, you will have noticed from yesterday’s post that Alfonso likes to incidentally recall that he works on a pending case against a giant US corporation.
So I take my turn to self promote a little, with a recap on recent and forthcoming chillin’competition-related activities:
- I was in Helsinki with my friend Miguel Rato (Shearman & Sterling). We were invited to deliver a presentation at the 11th Annual Conference of the Association of European Competition Law Judges (AECLJ). With 60 judges from accross Europe in the room (including judges from Luxemburg), Richard Whish, Alexander Italianer and Nick Banasevic on the podium, this was a very challenging talk. I attach the presentation here: Slides – Petit & Rato – Abuse in Technology-Enabled Markets – 11th AECLJ Conference (14 06 12. A paper on “Abuse in Technology-Enabled Markets” is in the making;
- The registration process for the 2012/2013 edition of the LLM in Competition Law & Economics at the Brussels School of Competition is now opened. We have a new brochure in which you will find a number of changes. A teaser: F. Jenny will teach on abuse with JF. Bellis, Alfonso’s existence is now official and several ***** economists have joined;
- We have a GCLC lunch talk this Friday, on the Commission’s review on the rules on technology transfer agreements. Our speakers are Donncadh Woods (DG Competition), Frédéric Louis (WilmerHale) and Paul Lugard (Tilburg Institute for Law and Economics (TILEC) and ICC Commission on Competition);
- Ana Paula Martinez (Levy & Salomao) is the editor of a new, impressive volume entitled Temas Atuais de Direito da Concorrencia with written contributions (in English) from S. Salop, E. Elhauge, D. Geradin, Mariana Tavares de Araujo, Ian S. Forrester and Francisco Enrique González-Díaz. Here’s the leaflet and table of contents: GED_LS-#845180-v1-2012_Brazil_Competition_Book
- I was in Strasbourg yesterday to lecture on IP and competition law at the CEIPI and I will be in Bruges tomorrow to give a presentation at the 8th ELEA symposium. It is a very busy week, like last week… and hopefully unlike next week.
Some very personal views on the College of Europe
Every time we meet for the first time a reader of this blog, we get the question of how Nicolas and I met. Most people guess we studied together at the College of Europe, but that’s not the case. In fact, next weekend Nicolas will be celebrating the 10th anniversary of his promotion, whereas last weekend I celebrated the 5th anniversary of mine (I´m not used to telling the truth here; people often assume that I was there much longer ago –which doesn’t say much about my juvenile looks..- and I always fail to tell them wrong).
With all these current commemorations it seems like an appropriate moment to share some of our views on the College, an institution which elicits all kinds of reactions from different people [an illustration of those reactions: a recent book titled “Intimate Brussels” characterizes alumni of the College of Europe as the evil characters in Brussels and profiles them/us as a much hated secret society (!)]
This post is not entirely competition law-related and we don´t want to bore you, so click here if you’re interested on this long story:
Chillin'Competition 