Archive for the ‘Antitrust Scholarship’ Category
Antitrust Land
Congratulations to Pablo González de Zárate Catón, a former LLM student at the University of Liege (2012-2013) now at Clifford Chance, who just published his LLM dissertation in the College of Europe Research Papers in Law series.
The dissertation was truly excellent. The introduction tells it all (a taste hereafter):
Let us imagine a city, Antitrust Land, divided in two parts by a river. The growth of the city depends on its capacity to attract visitors. One part of the city attracts a lot of visitors (cartelists) since it is very well connected in terms of access (leniency programmes) and is therefore very rich. Everybody looks happy about that part of the city: the Mayor (the European Commission), since the whole country talks nicely about its access infrastructures, and tourist services (law firms), as they make a lot of money with visitors. This part of the city is called Public Enforcement Town and its citizen is the abstract consumer.
The other part of the city is called Private Enforcement Town, where the concrete consumer lives. It is surrounded by mountains. As a result of this, it is clearly not as wealthy as the other one since visitors hardly ever pass by. Besides, the level of income greatly varies from one neighbourhood to another one as some parts of the town are better connected due to their own cableways. These three neighbourhoods are called United Kingdom, Germany and the Netherlands. At some point, somebody realizes that a bridge linking both parts (disclosure of leniency materials) of the city could contribute to attract tourists to Private Enforcement Town and therefore to boost its economic growth. Nevertheless, tourist services are clearly against and they say that Private Enforcement Town is so ugly that tourists will immediately leave the city and never be back. They also say that with that bridge in the future nobody will be tempted to come to Antitrust Land.
The question is not as simple as ‘bridge: yes or no?’. If yes, it must also be decided its location. It could link the heart of both parts (total disclosure of leniency documents) or it could be built in the surroundings of the city (disclosure of preexisting documents).
What should the Mayor do?
Click here to download Pablo’s dissertation.
A thought on Microsoft/Nokia
As you know, a few days ago the European Commission unconditionally authorized the Microsoft/Nokia deal. I’m looking forward to reading the decision, which isn’t yet public. Whereas I expect to see nothing odd in there, a doubt did spring to mind when reading the press release last week.
When explaining its approach to the concern that Nokia could become a troll-like entity, the Commission’s Press Release says the following:
“The Commission considers that any possible competition concerns, which might arise from the conduct of Nokia, following the transaction, in the licensing of the patent portfolio for smart mobile devices which it has retained falls outside the scope of the EU Merger Regulation. The Commission cannot take account of such concerns in the assessment of the current transaction. Indeed, Nokia is the seller whereas the Commission’s investigation relates to the merged entity. However, the Commission will remain vigilant and closely monitor Nokia’s post-merger licensing practices under EU antitrust rules, in particular Article 102 (…)”. (Emphasis added).
Please correct me if I’m wrong, but isn’t that a wrong/arguable over-simplification? (although, to be sure, it wouldn’t be a crime for a press release to over-simplify). Does merger control really relate solely to the merged entity to the exclusion of other actors in the market? Isn’t it rather about the effect that the transaction may have on the structure of the market? I mean, can’t the Commission assess the effects that a concentration would cause on the market power of parties to the transaction as well as on that of third parties? Perhaps the press release only intended to refer to the Commission’s remedial powers, and not to its assessment powers, but even assuming that, the short explanation may be incorrect. Although infrequent, third party post-merger conduct may be potentially relevant in deciding a case.
Look, for instance, at recital 25 of the horizontal merger guidelines “under certain circumstances, concentrations involving the elimination of important competitive constraints that the merging parties had exerted upon each other, as well as a reduction of competitive pressure on the remaining competitors, may even in the absence of a likelihood of coordination (…) result in a significant impediment to effective competition”.
Don’t get me wrong: I’m not challenging the outcome of the Decision (it seems prima facie reasonable for the theory of harm at issue in that case to be monitored ex post), but, in my view, the explanation would have had to do with “causality” (à la Tetra Laval or GE/Honeywell), not with the scope of merger control. Perhaps this would seem to make no practical difference in principle (as we’ve learnt recently, in real life ends justify means, and reasonings aren’t really worth paying attention to), but inconsistencies in the formulation of policy positions might eventually come at a cost.
P.S. Following the advice of some of you, last night I created a Twitter account: @LamadridAlfonso; it’d now be nice to know how to use it and what for!
[Image possibly subject to copyright]
The Concept of Abuse in EU Competition Law
Note: The new release of Competition Law Journal features a book review that I wrote this past summer about Pinar Akman’s interesting book: The Concept of Abuse in EU Competition Law: Legal and Economic Approaches. I took advantage of the opportunity to voice out some perhaps not-so-frequent views on competition law in general and Article 102 in particular, mainly casting doubt on the convenience of upholding efficiency as its single, sacred, overarching goal and raison d’être. It is reproduced below:
The interest, apparent complexity and the peculiar nature of competition law stem to a great extent from the abstract nature and impreciseness of its main concepts. Most other areas of law have settled and well understood central notions. Competition law, by contrast, is premised upon particularly nebulous or malleable concepts (fortunately for those of us that make a living out of it, and perhaps not so much for those directly subject to it). Ask most lawyers about what a ‘restriction of competition’ is and you will get a surprising variety of theories, and most likely some striking silences. And whereas competition law concepts are open enough to accommodate different – often conflicting – interpretations, no other concept gives rise to the same level of controversy as the notion of ‘abuse of dominance’.
Indeed, despite longstanding efforts – including some notable recent ones by enforcers on both sides of the Atlantic – we still lack a precise idea of what an abuse of dominance is. Moreover, it has become common for partisans of different schools or viewpoints to point at the obvious irrationality of their counterparts: those ‘irrational ordoliberals’ on the one side, or those ‘irrational neoliberals’ on the other, both cross-criticized for obviously lacking any merit in their arguments. Article 102 elicits passions that move discussions away from ideally Cartesian legal debates and closer to those touching on more profound and vital issues such as religion, politics and football.
Our inability to come up with satisfactory rules to distinguish legitimate and illegitimate unilateral conduct by dominant firms has provided fertile ground for the creativity of both practicing lawyers and academics (and, to be sure, of competition enforcers as well). Focusing only on the academic domain, Pinar Akman’s book is preceded by an endless list of publications having as their object – but perhaps not as their effect – the clarification of Art 102 TFEU.
Against this background, Pinar Akman’s book stands out as a particularly original contribution to this debate, and one that is definitely worth reading. The book is very innovative in its approach, it is well written, and it visibly is the result of thorough research, reflection and drafting. Akman’s work is deliberately theoretical; it is not aimed at providing a systematic and thorough account of cases; it stays true to its stated purpose of proposing a ‘completely fresh approach’ to Art 102 TFEU, and it does indeed submit thought-provoking ideas.
The Concept of Abuse in EU Competition Law is grounded on the author’s arguable assumption that “the approach that has been adopted by EU authorities to date is far from desirable or appropriate and sometimes is even far from rational“. Consistent with this critical stance, the book seeks not to provide an analysis of the case law and decisional practice, but rather to propose its radical overhaul. This is boldly announced in its very first paragraph:
“The reader of this book is invited to put to one side her preconceptions of the prohibition of abuse of a dominant position in Article 102 TFEU, in particular those directly resulting from the judgments of the Court of Justice (ECJ). Fortunately, this is not asking for too much; after all, the ECJ is not legally bound by precedent.”
It is often said that the first phrase in any literary work should create a tension prompting the reader to continue the story. I acknowledge that the bold view of precedents as preconceptions made me read the rest of the book with increased interest.
News
Next week:
- On 17 December, we’ll have a GCLC lunch talk on the Aegean/Olympic merger decision. S. Simon (COMP), B. Durand (RBB) and A. Guttermuth (Arnold & Porter) will be our speakers. Registration here.
- On 18 December, we will have the graduation ceremony of the Brussels School of Competition. This is an open ceremony, and you can register here. There will be tons of good food and top notch tier antitrust lawyers. Not sure which of the two is the seller :). Above, some of last year freshly graduated studs.
Recently, our friend David Henry and his friend David Ashton have published a timely, thorough, thoughtful book on Competition Damages Actions in the EU. The book is impressive, it makes a thorough exploration of how the main EU MS have dealt with antitrust damages to date. Congratulations to them.
Yesterday: I was at a conference in Paris giving a presentation on IP and antitrust law. And I finally spoke of lions, black swans and butterflies. For more, see below (2 files, read 1 before 2).
Presentation ASPI – Rappel des grands principes applicables à la relation DEC-DPI (2) Presentation ASPI – Rappel des grands principes applicables à la relation DEC-DPI (1)
Thought of the day
The Law and judicial review would improve significantly if Court submissions were public.
Television Rights, Matches – pun intended – and Bad Competition Law
[Guest post by Pablo Ibañez Colomo]
It would seem that the Spanish super-quango is more active than one would have assumed (in particular given what is currently going on within the tax authority of the country). The newly-created CNMC has fined four football teams (including Real Madrid and Barcelona) and the broadcaster Mediapro EUR 15 million for concluding exclusive licensing agreements for a period exceeding three years. Such terms contravened a previous decision adopted by the – then – CNC in 2010.
The case is interesting, first, because the Spanish government passed (in 2010, at pretty much the same time that the original decision was adopted) legislation that set a four-year term for exclusive licensing agreements between teams and broadcasters. One could claim that, insofar as the contentious agreements complied with the relevant sector-specific legislation, they were concluded in good faith. Accordingly, the fine would be unjustified. In light (pun intended) of Consorzio Industrie Fiammiferi (pun intended, I’m on fire!), it is clear, however, that this is not a valid defence. Legislation did not preclude undertakings from concluding agreements for a shorter period and thus from complying with Article 101 TFEU (which was clearly applicable in this case).
A second reason why the case is interesting is because it shows that the three-year limit for exclusive licensing agreements is now set in stone. There is no reason why this should be the case. A three-year term is not necessarily pro-competitive. It all depends on the context in which the licensing agreement is concluded. If the goal of this bright-line rule is (as I assume) to preserve the contestability of markets for the acquisition of television rights, then it may sometimes be too short. A new entrant (as BSkyB was back in the early 1990s) may need a longer period to reduce uncertainty and recoup its investments. By ruling out any flexibility, a rigid interpretation of Article 101(1) TFEU can very well have the perverse effect of protecting the incumbent. These are the problems of applying competition law as regulation, which I highlighted elsewhere, and of assuming that UEFA Champions League, Bundesliga and Premier League were rightly decided, in spite of the overwhelming evidence suggesting the opposite.
Case C-58/12 P Groupe Gascogne v Commission + some other stuff
– Fresh off the Court. This morning the ECJ handed down a Judgment in which it has ruled that the Court itself is not supposed to reduce the fine imposed on a company whenever judicial review by the General Court exceeds a reasonable time. This Judgment effectively and explicitly overrules the Baustahlgewebe Judgment, in which the ECJ had followed the opposite (and in my view much more reasonable approach). Today’s Judgment is premised on the idea that an application for damages brought against the EU would in all circumstances constitute an effective remedy to compensate for any damages caused by the GC’s failure to adjudicate within a reasonable time.
For those of you with less background on general EU law, actions for damages against the EU shall be brought before the General Court. In other words, parties who believe that the duration of proceedings before the General Court was excessively lenghtly should, by means of a different application, ask the General Court itself to ascertain whether its own behavior was appropriate in the light of the circumstances specific to the case and whether the parties suffered any harm. Good luck with that…
– Save the date! On February 7th and 8th AIJA [Association Internationale de Jeunes Avocats) (a generous institution according to which lawyers below 45 qualify as young] will be holding a two-day conference in Bruges under the title “Competition Law 2.0- Competition Law and Technology“. A not-to-be-missed excuse to spend part of the weekend in Bruges and pay a visit to the greatest beer bar ever discuss hot topics in current antitrust. Both Prof. Petit and myself will be speaking there.
– Speaking of current antitrust debates: the last number of the Journal of European Competition Law and Practice (a great journal that has rightly earned a prominent place in a saturated? market) features various very good articles, including one by our guest blogger Pablo Ibañez on State aid litigation. At another level, it also features a brief piece of mine [the hyperlink only leads to the abstract] about Google’s commitments (you already know my views). Ironically, my comment was written in relation to the first version of the commitments but features in the “current intelligence” section of the journal. Fortunately I did explicitly envisage “likely further tweaks over specific details” and all comments are applicable to the new (leaked) proposal.
Cartel fines (an illustrative graph)
These are the stats available in DG Comp’s webpage for cartel fines imposed in the period 2009-2013.
Do you see anything remarkable?
After years of lawyers whining about sky rocketing fines, will we now see a reverse trend of lawyers whining about too few cartel decisions and too small fines?? We are funny whining beings…
In spite of temporary appearances, though, one should not expect these figures to remain as they are. The upcoming LIBOR decision will certainly inject some significant (record breaking?) “capital” into this years’s numbers. On top of that, there appear to be a number of cartel decisions stuck somewhere in the pipeline (interestingly, only one cartel decision has so far been adopted in 2013).
P.S. For the one true masterpiece on cartel fines –Fine Arts in Brussels- click here (the fact that I co-wrote it doesn’t of course compromise my objectivity…).
Random thoughts
In the past few days I haven’t been very diligent at keeping up with posting. My bad conscience has led me to write the hastily written random thoughts below. I might come back to develop some of them in posts to come:
1) On joint v individual assessment of (incriminatory v exculpatory) evidence in cartel cases. For some time now I have been (intermittently) attempting to finish a lengthy piece about evidence in cartel cases (surprisingly enough, there are only a handful of publications worth reading on this subject). One of the interesting things I’m observing is that EU Courts and the Commission [please note that I’m being critical with them; as some of you have reproached me, that doesn’t happen so often] is that whereas the principle of “joint assessment of evidence” is consolidated and very much followed when it comes to assessing the evidentiary value of incriminatory items, the same cannot be said about exculpatory ones.
In most cases, a bunch of elements are put together and assessed jointly in order to declare that an undertaking has committed an infringement. I’ve nothing to object to this logical approach (even more so in cartel cases otherwise these could hardly be brought). My concern on this particular point is limited to the fact that [in another illustration of the tendency of many legal principles to expand themselves until a point of absurdity that eventually must lead to their nuancing] the principle of joint assessment of evidence is often resorted to as an easy escape to avoid discussing individual evidential items that the parties consider worth discussing. In my view, the Commission and the Courts should always first engage in the individual assessment of each evidentiary item, and only then (once the value or lack thereof of every standalone item is established) move on to the joint assessment of all available evidence.
Interestingly, the contrary tendency can at times be observed regarding the assessment of exculpatory evidence. I’ve come across a few Judgments that address exculpatory items one by one concluding that “x is not in itself sufficient to rebut whatever”, that “y is not sufficient to prove whatever” or that “z cannot on its own lead to whatever conclusion”. The “joint assessment” of x, y and z as exculpatory items sometimes just doesn’t happen. For some examples, take a look at recent cases in which parties tried to rebut the AEG (parent liability) presumption (which, btw, turned 30 a few days ago). I hope to develop –and substantiate- my thoughts on this soon.
2) A suggestion to improve the Court’s rules of procedure. Nicolas has lately pushed for reform of EU Courts’ rules of procedure regarding conflicts of interest. We have not agreed much on that issue, but I too have a suggestion to improve the rules of procedure. Unless I’m wrong, the current rules do not envisage any sanctions nor any other sort of legal consequences for parties that provide the Courts with false information to (let’s leave misleading aside, for the concept is arguably too wide, for lawyers at least). Most legal systems do envisage such rules. Imagine the Court were to ask a question (written or oral) to a party, and that the information given in response were not only inaccurate, but untrue; should that not have any consequences?
3) A solicited response to Nico’s views about the effect on trade between MS criterion. In a recent post Nico referred to the effect on trade criterion, complaining that in the eBooks case the Commission had not undertaken any serious assessment, and had swiftly concluded that the conduct at issue did affect trade between Member States. He wisely noted that I’d probably have a divergent view, and I do (he knows me well…). If you ask me, in that case the effect on inter-State trade was crystal clear, as the Commission’s reasoning in paras. 91 and 92 (noting that the conduct at issue was implemented in the whole of the EEA and that agency agreements covered UK, France and Germany) sufficiently shows. Nico says that “[w]ith this kind of reasoning, everything may affect trade between Member States (though I understand Alfonso has a dissonant view on this”. Since I’m asked, my view is that with that reasoning, practices that are implemented throughout the EEA and that manifest themselves with a certain intensity in 3 Member States will be deemed to affect trade between Member States, which, to me, could not be more logical. In fact, as the Decision shows, no party ever challenged this specific point.
4) A great read. Finally, I confess my (very) geekish action of the month: I’m currently reading R.Odonoghue and J. Padilla’s book on The Law and Economics of Article 102 from beginning to end, as if it were a novel (in my defense: I hadn’t done that in a very long time). The book is a monument; it’s smart, balanced, exhaustive, very well thought and written and deserves (although doesn’t need) all possible publicity. Hats off to the authors. In fact, as soon as I’m done publishing this post I’ll send both authors an invite to participate in our currently lethargic Friday slot section.
Latest ECJ features a bunch of very good papers
EUROPEAN COMPETITION JOURNAL
Volume 9 . Number 2 . August 2013
ONLINE ACCESS
To access this issue online and purchase individual papers please click here
SUBSCRIPTIONS
To subscribe please click here
CONTENTS
Vertical Antitrust Enforcement: Transatlantic Perspectives on Restrictions of Online Distribution under EU and US Competition Laws
Gabriele Accardo
Abstract: This article looks at how EU and US competition laws deal with restrictions of online sales in distribution agreements, respectively. The growing importance of online commerce highlights how vertical competition law enforcement is still an important building block of competition law policies, both in the US and in Europe. Businesses who are either engaged in online activities or deal with online intermediaries in the US and EU should be aware of the rules of the game, since vertical antitrust issues are generally subject to different principles on the two sides of the Atlantic. The European Commission recently adopted new competition rules that specifically target restrictions of online sales in distribution agreements, acknowledging the importance of e-commerce for consumers and its instrumental role in achieving the paramount goal of a single internal market in Europe. Conversely, unlike in the EU, several factors, such as the existence of a developed online market, the absence of single market considerations, the paramount importance of freedom to contract and the role of inter-brand competition under US antitrust law, arguably explain why US antitrust doctrine is less concerned about the need to adopt specific rules applicable to restrictions of online sales.
Alternative Approaches to Sentencing in Cartel Cases: The European Union, Ireland and the United States
Paul K Gorecki and Sarah Maxwell
Abstract: The paper examines the approach used in sentencing in hard core cartel cases in the European Union, Ireland and the United States. These approaches are not considered in a vacuum, but rather use the facts of the successful prosecution of the Citroen cartel in Ireland. While the EU and the US both use sentencing guidelines, the US guidelines are more evidence based and transparent. In contrast, the judiciary in Ireland has yet to develop a systematic clear policy for determining sentences in cartel cases. Applying the EU and the US sentencing guidelines to the facts of the Citroen cartel suggests that, in any event, the sentences imposed in cartel cases Ireland are too low. Some suggestions for rectifying the situation are discussed.
Chillin'Competition 