Archive for the ‘Antitrust Scholarship’ Category
Ruminations on the Google investigation
Over the past few months we have provided you with our views on the investigation undertaken by the European Commission with respect to Google. Here is an account of recent developments, thoughts, concerns, readings, ideas, and possible questions to be posed:
The developments. As you all may well know, the Commission has sent Google a preliminary assessment (a necessary formal step towards a commitment decision under Article 9 of Regulation 1/2003) and has requested Google to provide swiftly proposals of possible commitments that could address the concerns set out on that document. For the Commission’s statement identifying in broad terms the practices it objects to, see here.
In parallel, Google has lodged a complaint against Microsoft and Nokia. Google claims that “Nokia and Microsoft are colluding to raise the costs of mobile devices for consumers, creating patent trolls that side-step promises both companies have made. They should be held accountable, and we hope our complaint spurs others to look into these practices“. We have no additional information on this complaint and therefore do not have any opinion on whether it may be well-founded or not, but we regard it as something potentially interesting given that, until now, patent trolls had managed to stay more or less away from the antitrust spotlight in this bout of “patent wars” (note the IPCom settlement).
(By the way, the European Commission has excellent staff working on the unit dealing with cases related to IT, Internet and Consumer Electronics, but they must be incredibly swamped with so many complaints piling up on their desks).
The substantive concerns. We’ve already been quite vocal about our substantive concerns with regard to this case (note the caveat that we speak about matters of principle and on the basis of almost no case-specific information), so we won’t insist on them today.
The policy concern. We fully understand the policy rationale for changing the tone and attempting to address competition concerns in high-tech innovative markets swiftly and on the basis of “negotiated” solutions. However, the increasingly frequent recourse to such solutions also gives rise to several concerns. One of them is that commitment decisions do not contain a final position on the existence or non-existence of an infringement. If such decisions become the standard way of dealing difficult with cases –which would then be left substantively unresolved-, this would imply blurring the contours of the law. Laws should be clear. How can we expect the law on Article 102 to be clear when 14 out of the past 17 abuse of dominance cases were put to an end by virtue of brief and unconclusive commitment decisions? How does one strike the right balance between setting the law straight and addressing competitive concerns rapidly and effectively?
The doubt. (this one is not our’s but Pablo Ibañez’s): does publicly requesting a company to offer commitments fit with the letter and spirit of Article 9 of Regulation 1/2003?
The idea. We feel a bit frustrated by the fact that we’ve spent months thinking about this investigation having no information other than news clips and press releases. We’d love to see how the Commission has framed its concerns regarding Google under current competition law standards. We do not rule out the possibility that we may have been wrong all along, and maybe (although I have my doubts) having a look at the Commission’s preliminary assessment would convince us. How about requesting access to the non-confidential versions of the key documents in the file pursuant to Regulation 1049 as soon as the investigation is over? It could be an interesting exercise…
Antitrust Hotch Potch
The title of this post is not to pay tribute to my former blog.
And it safely assumes that my former co-blogger will not sue us for unfair free-riding, or for some weird trademark infringement.
A hotch potch of antitrust-related ruminations:
- It struck me today as a little counter-intuitive that the upper Court of Justice (“CJ”) benefits from the advice of an Advocate General (“AG”) in all competition cases, whilst the General Court (“GC”) which hears more cases – and which reviews the whole of the case (facts + law) – does not enjoy the same luxury of perspectives. I know all too well that the GC may appoint an AG occasionally. But I have never heard that the GC availed itself of this opportunity in a competition case. I also know that AGs’ opinions focus primarily on points of law. But the GC also deals with issues of law. This situation is even more more surprising considering that before 1989, competition cases were handled by the Court of Justice in first instance, with the systematic assistance of an AG. A possible explanation for the degrading quality of first instance judgments in competition cases?
- Talking of AGs’ opinions, AG Mazak’s opinion on AstraZeneca’s appeal to the CJ is out. In short, AG Mazak advises the Court to dismiss all appeals.
- Talking of pharmaceuticals, I feel I have to
self-promotewrite a line on a short, and modest text I wrote for the 1st edition of the Life Sciences College in March (see link below). This text deals with recent antitrust developments in the pharmaceutical industry. It has been published nowhere, and I just do not know what to do with it (expand, publish, update, trash?). If anyone has a clue, please drop a line.
Speech – A quick look into the past, present and future of AT enforcement in Pharma – (22 03 12) NP
The Friday Slot- Eric Gippini Fournier
You all are familiar with leading cases in the EU competitition law canon such as Michelin II, Pre-Insulated pipes, Métropole, O2, Cementbow, IMS, Endesa, Aer Lingus (in the Ryanair merger case), Glaxo Smithkline, Lélos, Astra Zeneca, Wanadoo, Telia Sonera, KME, Teléfonica or Tomra. A good question for one of our quizzes would have been to ask what it is that all of these cases have in commmon. The right answer would be that in every single one of them one of the Legal Service’s agents representing the European Commission in Court was Eric Gippini-Fournier.
Today’s Friday Slot features an interview with him. Eric is one of my (I don’t use the default plural here because Nico and Eric have not yet properly met, although this will be fixed soon) favorite people in this small competition law world. After reading his answers to our questionnaire you will understand why. Above all, Eric is an incredibly nice, reasonable, gentle and frank guy. But he’s also a brilliant and intellectually honest jurist, a tough adversary, and -like Fernando Castillo de la Torre and other members of the Legal Service– he’s a living encyplopedia on competition law. Eric is not contaminated or constrained by some of the oddities that at times surround the profit-making side of this business, and this often gives his views an added interest. On top of all of the above, we also share a taste for late Sunday lunch at Roi du Poulet… We are very thankful to him for having accepted our invitation to appear here.
“Oscar” of the best antitrust law book? Non-antitrust book?
The best antitrust books are slow food, the result of a long process by one or two cooks, not more. Areeda/Turner, Bork’s “Paradox” and Waelbroek/Frignani are great examples. Among recent books, I would nominate Luis Ortiz Blanco’s “Market Power in EU competition Law”.
Non-antitrust books? “Belle du Seigneur” by Albert Cohen comes to mind. Lately I have enjoyed Art Spiegelman’s “Maus“, and two great biographies, of Benjamin Franklin and of Franklin D. Roosevelt (both by Henry Brands).
“Oscar” of the best case-law development in the past year? “Oscar” of the worst case-law development?
My nominations in the first category will not necessarily please the blog hosts. They go to the ECtHR (Menarini Diagnostics), the ECJ (TeliaSonera, KME Germany and Tomra), and the EFTA Court (Posten Norge). On the “bad” side, I have misgivings –but only that, misgivings– about the hands-off approach to reverse payments, most recently by the court of appeals for the 11th circuit in Watson Pharmaceuticals.
Let’s do it like economists => assume that you could change rules, principles, judgments, institutions in the current EU antitrust system. What would you do?
I am not fond of the law on exploitative abuses, in particular excessive pricing. In fact I am not sure that prosecuting excessive pricing –essentially a consumer protection issue– fits with the overall design of EU antitrust, with its focus on protecting the competitive process.
I would revamp evidence rules before the EU courts, for example re-introduce the old ECSC rule that, in case of appeal against a Commission decision, the entire case file is automatically transmitted to the General Court. Right now the court file includes only evidence provided by the parties, which gives an incomplete view of a case.
Average working time/week?
Probably too much. I don’t count the hours but it should be possible to do the math. At any given time I have 40 or 50 cases pending before the EU courts and in a typical year I present oral argument in eight to twelve hearings, sometimes more. I should say that litigation is less than half of my workload.
Why do you work in antitrust law? How did you first get into it?
My home university inSpain has a tradition in IP and competition law. By law school graduation, the Merger Regulation had just been adopted, and it was the subject of my thesis. I then studied EU and U.S. antitrust at Bruges and Berkeley, with Robert Kovar and Einer Elhauge. These great teachers, and others like Val Korah and Louis Vogel inspired me. I also did some basic microeconomics coursework at LSE when I was a teaching assistant in Bruges and we were about to introduce a microeconomics course for lawyers.
All this was twenty years ago. What keeps me interested is that each antitrust case requires me to study and understand a different technical and economic reality: how Tetra Paks or CPUs are made, the intricacies of copyright management societies or the details of pharmaceutical pricing in Spain.
Most interesting, intense or funny moment of your career?
Around 1998 I had a hectic, but very interesting time with sports-related antitrust issues like FIA/Formula One and the FIFA player transfer regulations. I have had intense hearings over the years, including GlaxoSmithKline, Telefónica, and many others.
Funny moments came especially in non-antitrust cases. In a case involving regulatory obstacles to selling nutritional supplements, we arranged to meet with the complainant’s board of directors. Four huge bodybuilders showed up, each 150 Kg of muscle and built like trucks! We immediately agreed with everything they said and promised swift action.
Your role model (if any) in the antitrust community?
Reading Competition Law Books
In our “Friday Slot” interviews we ask what competition law book deserves an Antitrust Oscar. A frequent reply from our interviewees is that they do not read competition law books but rather consult specific sections of such books when they are looking for something in particular.
We don’t necessarily agree with this view. Even though there are certainly some books that we only use for reference, we believe that some of the best books on antitrust are texts that you will not come accross if you’re just looking for references or for the answer to a very particular problem.
In our very own experience, reading certain competition law books written by people who clearly outsmart us has provided us good general overview of issues that we may not had/have yet seen in our professional life, and, most importantly, it has obliged us to reflect and think about what makes sense and what doesn’t in a discipline to which we devote an insane proportion of our life. Personally, we have learnt most of the theory we know from books and not from attending courses, seminars or conferences, no matter how good they were.
The obvious -and reasonable- response is “if, as you say, you already devote an insane amount of time to this, why on earth would you spend non-working time reading about the same subject?”. That’s partly true, but, the way we see it, it is one thing to spend your time working on a particular issue, and a very different one to take the time and distance (not to let the trees hide the woods) to reflect on the reasonableness of the overall discipline in which we are immersed.
We’re not saying that we do -nor, of course, that anyone else should- read competition law books instead of non-competition law books. No matter how good a competition law book is, non-competition law books teach you or open your mind to much more important stuff. We are just saying that -when we’ve had the time- we have found it useful to include some competition law books in our reading list.
A (certainly non-exhaustive) selection of some of the competition law books that make a most interesting read could feature Hovenkamp’s “The Antitrust Enterprise“; Areeda and Kaplow’s “Antitrust Analysis: Problems, Text, Cases“; Bork’s “The Antitrust Paradox“; Posner’s “Antitrust Law“; Amato’s “Antitrust and the Bounds of Power“; Luis Ortiz’s “Market Power in EU Antitrust Law“, Giorgio Monti’s “EC Competition Law” or Odudu’s “The Boundaries of EC Competition Law; The Scope of Article 81“. There are many other great books but we can’t name them all (suggestions in the form of comments will be welcome!).
The ones I’m currently in the (slow) process of reading (alternating from one to the other) are “Creation without Restraint: Promoting Liberty and Rivalry in Innovation” by C. Bohannan and H. Hovenkamp; Kevin Coates’ “Competition Law and Regulation of Technology Markets” and Einer Elhauge’s (Ed), “Research Handbook on the Economics of Antitrust Law“. I´ll also be happy to read Nicolas’ most recent book ; sorry, wrong link; this is the right one! 😉 I intend to post a review of these books here once I´m done with them.
Regardless of all the above, my personal favourite antitrust book ever is one that I have only used for specific consultations and that I will most likely never read: the Treatise written by Areeda and Hovenkamp: “Antitrust Law: An Analysis of Antitrust Principles and their Application“. The reason why I know I won’t read it is that it looks like this:
Three additional comments:
– Herbert Hovenkamp -whose work is referenced above a few times- is clearly one of the 4 or 5 people from whom I’ve learnt more antitrust law, and the only one of these (aside from his co-author late Philip Areeda) whom I have never had the chance to meet in person (which again proves the importance of competition law books). We are very proud to anticipate that our next Friday Slot interview is with him!
– There is much to be said about the pricing of many of these books. But we’ll deal with that in a separate post.
– I recently recommended here a non-competition book -in Spanish, though- and a few (four) of you have sent emails saying that you loved it, which is nice to hear. Here is another suggestion, in English this time: A Heartbreaking Work of Staggering Genious.
Output
With today’s announcement that Harvard University will soon endorse an “open-access” policy for academic publications, I thought time was ripe to post something on recent interesting publications (including my own :).
There’s a new journal coming, The Journal of Antitrust Enforcement, Oxford University Press. A label of quality => the journal is edited by Ariel Ezrachi (Oxford CCLP) and William Kovacic (George Washington University). More here.
A new GCLC book is out: “The Role of the Court of Justice of the EU in Competition Law Cases”, M. Merola & J. Derenne (eds), Bruylant. As the title suggests, the book contains papers on issues related to judicial review, in all areas of EU competition law. The list of authors is impressive, not least because my co-blogger is in. Topics covered include effectiveness, intensity and scope of judicial review, specialized courts, expert economic evidence, effects-based standards and legal certainty. A must read: Alfonso and Luis Ortiz Blanco’s paper. In short, they advocate that “legal certainty is hardly compatible with effects-based enforcement“. This view, which still holds sway in most of the Brussels legal community, would certainly deserve to be further discussed and researched (through, for instance, a survey with in-house counsels).
Finally, on a market where the “Whish” remains by far the dominant player, a maverick has made entry : It is entitled “EU Competition Law and Economics“. It is edited by Oxford University Press. And it was written by Damien Geradin, Anne Layne-Farrar and myself. This is the first edition, yet the end of a long story. Our goal has been to integrate as much basic, non quantitative economics into the book. Given that we will shortly start working again on the next iteration, we’d be glad to have your comments.
One last puzzling thing: in OUP ‘s catalogue competition law titles are classified under the category Public International Law…
PS: I forgot a piece of importance, i.e. a book on Vertical and Distribution Agreements in EU Competition Law edited with my colleague and friend Charles Gheur, from the Brussels School of Competition.
Sunday readings
There’s generally a moment every Sunday in which I try to catch up reading newspapers and magazines that I haven’t had the time to check out during the week. I’m doing this right now (while, btw, I listen to great music that Nicolas recommended me yesterday) and I’ve come accross something which deserves a comment here.
Today’s edition of El Pais features an interesting piece by Paul Krugman called “Europe’s Economic Suicide” (originally published in The New York Times) in which he argues that fiscal austerty imposed by Germany is pushing other Member States -and very particularly Spain- to the disaster. I cannot but agree with practically everything he says.
Krugman’s article has spurred a thought (not a brainy one; after all it’s Sunday):
It is funny (and funny may not be the adequate term) to realize that the people in charge of getting the EU economy out of trouble are competition economists. I bet that a most of you reading this will immediately think of Mario Monti (former Competition Commissioner who is now Italy’s Prime Minister), of Spain’s Minister for the Economy -Luis de Guindos-, who used to head of the competition authority, and maybe even of Spain’s Secretary of State for the Economy -Fernando Jimenez Latorre- who was also in charge of competition policy in Spain and who prior to his recent appointment directed NERA’s business in Spain.
What you may not know is that there is another well-known competition economist who is not in the first political line but who probably has even more influence on the European economy than any of the above-mentioned. This would be the person who inaugurated the Chief Economist post at DG COMP, Lars-Hendrik Röller, and whose current position is Economic Advisor to Chancellor Angela Merkel. A few months ago The Economist had a piece which read as follows: “Mrs Merkel may be lacking high-quality advice. Her newish economic adviser is Lars-Hendrik Röller, known for his writings on competition rather than high finance“.
I respect Röller as a competition economists and I believe he did well during his period at DG Comp but, to be frank, I think that him and the German government are not getting it right nowadays. This makes me share The Economist’s concerns that there might be different relevant markets for competition economics and for macro economics.
P.S. More on politics: the French presidential election is being held today. We are worried, because we have realized that apparently one of the candidates -Marine Le Pen- shares our concerns with regard to endives and cat food cartels and is campaigning on them (see here). Thanks to Caroline Si Bouazza for mentioning Chillin’Competition in her comments about this curious video!
The Economist Corner (III): “Intent” in Article 102 cases
For this third edition of The Economist Corner we have invited Hans Zenger. Hans used to be a member of the Chief Economist Team at DG Comp and is currently Senior Consultant at CRA. He’s is not only one of the most brilliant economists in town, but he’s also a great gruy.
As noted here some months ago, and even though there remains much to be done, Hans will also be one of the co-authors (the others will be Miguel de la Mano, Renato Nazzini and myself) of the Article 102 chapter of the next edition of Faull & Nikpay’s The EU Law of Competition.
We leave you with his ruminations on the role of intent in Article 102 cases. This topic, and many others, are dealt with in his article “Loyalty Rebates and the Competitive Process”, which is forthcoming in the Journal of Competition Law & Economics.)
***
In criminal law, proof of intent plays an important role in establishing the scope of liability. If A intends to benefit at the expense of B, then A is probably up to no good. In antitrust, this principle has all too easily been extended to unilateral conduct law. The problem is that the intent of benefitting at the expense of others is essentially what generates the beneficial outcome of a market economy:
• The prospect of “exploiting” consumers is what provides firms with an incentive to produce valuable products that improve over existing varieties.
• And the prospect of “excluding” rivals from making sales is what provides firms with an incentive to cut price to expand output.
In other words, the self-serving intent to “exploit” and “foreclose” is a cornerstone of the competitive process.
Adam Smith succinctly explained this in 1776: “It is not from the benevolence of the butcher, the brewer, or the baker, that we can expect our dinner, but from their regard of their own interest … By directing that industry in such a manner as its produce may be of greatest value, he intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention.”
If one too readily transposes the zero-sum logic of criminal law to unilateral conduct investigations, then Smith’s conclusion constitutes a paradox: If A intends to benefit at the expense of B, how could that possibly be good for B? But as Schumpeter has explained, “There is no more of a paradox in this than there is in saying that motorcars are traveling faster than they otherwise would because they are provided with brakes.”
The evidentiary value of intent evidence in Article 102 cases therefore has its limits. Perhaps not surprisingly, regulators on occasion have shown a tendency to read too much into such documents. As Judge Easterbrook has noted, “firms ‘intend’ to do all the business they can, to crush their rivals if they can … Rivalry is harsh, and consumers gain the most when firms slash costs to the bone and pare price down to cost, all in pursuit of more business. Few firms price unaware of what they are doing; price reductions are carried out in pursuit of sales, at others’ expense. Entrepreneurs who work hardest to cut their prices will do the most damage to their rivals, and they will see good in it. You cannot be a sensible business executive without understanding the link among prices, your firm’s success and other firm’s distress. If courts use the vigorous, nasty pursuit of sales as evidence of forbidden ‘intent,’ they run the risk of penalizing the motive forces of competition.”
And the winners are….
Concurrences and George Washinton Law School presented their Antitrust Writing Awards on Tuesday night in D.C.
The list of winners is available here.
Bill Kovacic was in charge of announcing the winners. We weren’t there, but we can imagine him saying something like: “And the award to the best academic paper on unilateral conduct goes to…….. Nicolas Petit, for “Credit Rating Agencies, the Sovereign Debt Crisis and Competition Law“!l
Yep, Nicolas is the proud winner of the award to the best academic article on unilateral conduct. His piece was also the most publicly voted one (the readers of this blog probably have something to do with that, so thanks on his behalf).
I want to congratulate not only Nicolas, but also all other winners as well as all the authors of all the other articles that had been selected for the competition.
Moreover, we want to congratulate the organisers: Concurrences (in the person of Nicolas Charbit) and George Washinton Law School. The creation of these awards is a fantastic initiative; we hope that they’re here to stay.
A few non-politically correct comments now:
1: To a certain extent Nicolas deserves credit for this prize. Nonetheless, any impartial observer should rapidly realize that I -in my capacity as the manager of Nico’s brilliantly conceived campaign– am the one responsible for his victory.. 😉 We’ll ask a credit rating agency who deserves more credit (wow, this is incredibly bad even for my standards…).
2: The picture illustrating one of our “campaign” posts was premonitory.
3: This must be the first time in a decade or so that a Frenchman wins any competition (except, certainly, for this one) 😉 In fair reciprocity (some background here), I -as a Spaniard- should write a piece hinting that Nicolas owes his victory to doping (which, by the way, was definetely the case since he finished it during a trip to Scotland; this is how his desk must have looked like).
4: How much sense does it make for a paper on “collective” dominance to be awarded the prize to the best article on “unilateral” conduct?? Just kiddin’ here: the core of the paper apparently deals with individual abuses of collective dominance, so it makes perfect sense.
5: You caught me: I just wrote “apparently”. I guess I’ll now have to read Nicolas’ paper.
P.S. One suggestion for the organizers of the Writing Awards: since client alerts and articles published in newsletters are elegible for the prizes in the “Business” category, why not extend it to blog posts? We also need incentives to compete!
The vertical expression of a horizontal desire
A few days ago someone sent us a very interesting piece published by Okeoghene Odudu (who is also the author of a great book on Art. 101) in European Competition Journal (August 2011) under the title: “Indirect Information Exchange and the Constituen Elements of Hub and Spoke Collusion“.
Although we have enjoyed the substance of this article, the reason why it was sent to us in the first place was not its content but rather a particular footnote at the very end of it. It reads as follows:
“187. In his blog posting of 21 February 2011, Nicolas Petit expressed the view that there was nothing worthy of analysis in the hub-and-spoke phenomenon and concluded by writing, “The bottom-line: I will fight any proposal to organise an event on hub-and-spoke agreements. See https://chillingcompetition.com/2011/02/21/much-ado-about-nothing/.”
[*Note by Alfonso: The original post features a smiley face like this 
right after this quoted statement. The face is nevertheless missing in the quote that appeared in the article. It’s a pity, because it would have been funny to see the smiley appear in European Competition Journal!].
However, by 24 May 2011 he seems to have had a conversion, announcing that, through the Brussels School of Competition Law, he had co-organised a seminar on information exchange, to deal in part with “Sharing Information through Intermediaries (supply-purchase relationships, distribution agreements, meet and release clauses, hub-and-spokes, etc)”. See https://chillingcompetition.com/2011/05/24/information-exchange-in-eu-competition-law-conference-22-june/“
We were surprised at this footnote (since we don’t always take what we write seriously, it’s curious to find out that people do), which nonetheless expresses a very legitimate opinion.
You’re invited
It’s very impolite to speak about parties to which only you have been invited. Yet, this is exactly what Nicolas did last Friday!
Nico talked about all these competition law-related social events that are taking place in Brussels this week, without realizing that many of us have not been invited (I guess this was not on the piece of Social Do’s and Don’ts that he suggested on his post…) 😉
To compensate for my co-blogger’s mistake, I will free-ride on my firm to invite you to some free drinks extend a personal invitation to all readers of Chillin’Competition for THE competition law social event of the month in Brussels: the launch of the book “Market Power in EU Antitrust Law” (we had intended to write a review here, but our objectivity is so compromised that we will ask someone else better placed than us to do it) next Tuesday.
I’m not kidding; you’re all welcome to share a drink with us. You only have to confirm your attendance to the email address that appears on the invitation.
Hope to see you there!
P.S. Nicolas will miss it because he will be lecturing in Russia, so here is another incentive to come.
Chillin'Competition 
