Archive for the ‘Subversive Thoughts’ Category
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!
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 »
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:
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…
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?
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 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.
The Endive Brainstorming Room
Yesterday we said we were surprised by the number of people who had suggested us to comment on the fine imposed on French endive growers. Our post on this issue has given rise to very profound competition law related thoughts.
This is why we have created The Endive Brainstorming Room.
In addition to Hans Zenger’s brilliant comment on endives and Giffen goods (see the comments to yesterday’s post), over the past few hours several people have conveyed to us their views on endives:
– Well-known Commission official:
“I think the typically insightful analysis on your blog of the endives cartel has left a couple of important questions unanswered:
First, given that endives figured large on the menu at Garenmarkt a full 20 years ago, I think we should be looking at the possible 102 aspects and not only the 101. There’s clearly some durable market power at work here. The only plausible explanation of this continuing position of dominance must be exclusionary conduct as against those vegetables that are not utterly unpleasant.
Second, I think this cuts to the heart of the consumer welfare problem in antitrust. Surely consumer welfare is enhanced by endives being priced at as high a possible level, thereby reducing demand? Is the cartel therefore not welfare enhancing?”
– Raymond Radiguet:
“Alfonso and Nicolas use this blog to promote vegetables other than endives, which is fine with me. However, the claim that no one likes endives is so obvious that it is simply hilarious“.
– Current students at the College of Europe:
One student says “there is a maverick around here: last week (during dinner on Wednesday 29) a law professor was heard stating “I like endives; it’s a pity that they are not as bitter as they used to be”. “Seed selection should be blamed for this”, he added.
Another student tells us that in reality endives are not dominant: “at most, they are part of a duopoly; I would argue that endives and frites are collectively dominant“.
A third ELEA student commented that ” ‘Roulade de jambon avec endives’ sounds good but tastes horrible“.
– The anonymous lawyer who has found the solution to the debt crisis:
First email: “Great post! So the French are enforcing competition law in the agricultural sector. Cripes – whatever next?! Will DG COMP pay OPEC a visit in Vienna??
Second email (2 minutes later): “Thinking about it, that would be a way to solve Europe’s debt problem – fine all OPEC countries 10% of their turnover! This is brilliant! I’ve found the solution to the crisis!!!!”
If you have any additional reflections on the relationship between endives and competition law/economics that you just can’t keep for yourself, please share them with us.
Economics in competition law
Nicolas’ post from yesterday was somewhat of a declaration of lawove to economics. However, as the post noted, in my personal case this love is not at all unconditional.
Nico’s post stated that the “reptilian reflex of dismissing economics as a source of legal uncertainty is misguided“, but acknowledged that “on this point Alfonso has more nuanced views that he will develop here“.
So, here they are.
Those “more nuanced views” have been recently developed in a couple of pieces co-written by Luis Ortiz Blanco and by myself (one was presented at Fordham’s Annual Conference and the other at a GCLC Annual Conference, and both are about to be published as part of the proceedings of these two events). In these papers we argue that the growing influence of economics in competition law enforcement has brought about many positive consequences, but that we should be mindful of letting the about pendulum swing too far. We submit that there is a limit to the concessions that a legal regime can make without renouncing its nature, and that effects-based legality tests might approach decision-making to economic divination to the prejudice of legal certainty.
I’m conscious that these thoughts may not appear be shared by the mainstream (I don’t expect them to make me the most popular guy if I go to Place Lux for a drink tonight). Nevertheless, I do tend to think that there is a silent large minority/majority that supports these ideas. In fact, a very prominent European Commission official read outloud the following paragraphs from one of our papers at a conference held two or three months ago (by the way: he said he liked them, not that he endorsed them), and invited the attendants to reflect on them:
(If interested, click here to continue reading)
Chillin'Competition 