Chillin'Competition

Relaxing whilst doing Competition Law is not an Oxymoron

Archive for the ‘Market News (and AT Implications)’ Category

Preliminary thoughts on Google’s proposed commitments

with 3 comments

As long anticipated, here are some comments on the proposed commitments in the Google case (I graciously granted myself an extension, like the one other third parties have received; it actually is convenient because I can comment on others’ comments as well).

Four caveats are in order:

  • The views expressed below are written against the background of the Commission’s concerns as set out in the press release and the Q&A doc. accompanying the market testing of Google’s proposal. The relevant question to keep in mind is whether the proposed commitments –in their current form- are apt to address the concerns identified by the Commission in its preliminary assessment, not whether they are apt to lead to candy world for satisfy the wishes of all third parties.
  • My views are necessarily incomplete and they’re also work in progress. I’ve only read the limited publicly available information and have not had access to any confidential info or documents that might be contained in the case-file.  Moreover, I have allocated two flights time to draft this (and I should ideally also do some billable work, you see), so I’ll (i) update and improve this document on the basis of any new thoughts or possible feedback and (ii) refine my thoughts for a forthcoming piece on Oxford’s Journal of Competition Law and Practice
  • My views are mine (sounds like a tautology, but don’t always take this for granted in our area of work…); some of my colleagues and clients may well have different opinions.
  • I haven’t worked nor for Google nor for any of the 17 complainants.

In case I haven’t yet got you tired before even starting, here is a methodological explanation. This will be a five-pronged analysis; I will very succinctly summarize (i) DG Comp’s concerns; (ii) my take on the substantive concerns; (iii) the content of the proposed commitments; (iv) third-party criticism of the proposal (notably that read here, here, here or here) (I actually read some favorable comments as well); and (v) my take on the proposed commitments.  And this for each of the four concerns flagged by the Commission (although only the two first ones raise interesting issues).

The structure will make this post longer. In order not to cram the page, click if interested.

Read the rest of this entry »

Written by Alfonso Lamadrid

13 June 2013 at 7:00 pm

European Commission prohibits Ryanair/Aer Lingus deal

with 3 comments

Last Wednesday the Commission confirmed that it has decided to prohibit -for the second time- the proposed merger between Ryanair and Aer Lingus merger (click here for the press release). This is the fourth prohibition decision adopted under Commissioner Almunia, and the 24th in the history of EU competition law.

The decision has not yet been published. We had assumed that while we waited for it we could at least report on Michael O’Leary’s (Ryanair’s CEO) reactions. However, Mr. O’Leary has not made any public statements of the kind that we were expecting (remember his analogy between the European Commission officials and North Korean economists?  🙂

Ryanair has issued a press release in which it argues that its offer “was supported by an historic and unprecedented remedies package that included not one, but two upfront buyers (BA/IAG & Flybe) to take over approximately half of Aer Lingus’ short-haul business (…) The transfer to these upfront buyers of Aer Lingus’ business on the 46 crossover routes identified by the EU Commission, together with the relevant slots, aircraft, personnel and branding, was ensured by binding, irrevocable commitments by those upfront buyers including Board approvals”. In Ryanair’s view, “[t]he history of the EU’s treatment of Ryanair’s two offers for Aer Lingus conclusively proves that this prohibition is a “political” decision to pander to the vested interests of the Irish Government (a minority 25% shareholder in Aer Lingus) and is not one that is based on a fair and reasonable application of EU competition rules or precedent airline merger approvals in Europe”.

We have no clue on whether the allegations over the political motivations of the decision are founded or not. But politics aside, this case resuscitates some tricky substantive/institutional questions. The nature and scope of the remedies proposed by Ryanair was indeed pretty substantial, and arguably unprecedented (Ryanair had even pledged to give 100 million to Flybe to ensure its sustainability) so, query:

Are EU merger control rules on when an up-front buyer is a suitable one sufficiently clear? What discretion should the Commission enjoy in this regard? Ryanair has announced that it will appeal the decision before the General Court, so we should expect to have some answers to these question soon.

Written by Alfonso Lamadrid

1 March 2013 at 4:51 pm

Where’s the Law? (or Google and the European Commission)

with 2 comments

where

I said to myself I would keep up the promise I made to Alfonso and continue writing in the blog until Nicolas is back or he recovers (which we hope will be very soon) and starts posting notes again (I failed to anticipate that he wouldn´t stop…)

More to the point: as a complete outsider, I find the lack of publicly available information on the European Google case frustrating, as it is fascinating on more than one level. I just thought that the best way I could rebel against this situation is by making my views on the ongoing proceedings publicly available.

The behaviour of the European Commission in the past few months is interesting (if not puzzling) in at least three important respects:

  • The Commission has repeatedly asked Google to submit commitments. One could very well argue that nothing prevents the Commission from doing this. At the same time,this conduct is at odds with the logic of Article 9 of Regulation 1/2003. At least it shows (as if we did not know it already) that the ECJ judgment in Alrosa (as well as AG Kokott’s opinion) ignores how negotiations between firms and competition authorities are conducted in reality.
  • A commitment decision is the only acceptable outcome for the Commission. In his public statements Commissioner Almunia suggests that the case will only be closed once the authority accepts the commitments submitted by Google. Put differently, we have reached a point where the case is not so much about an authority establishing an infringement by a firm but about a firm proposing a settlement that is acceptable for the authority.
  • The Commission assumes that the alleged discriminatory conduct is an abuse of dominance: The whole case seems to be based on the premise that the fact for Google to favour its own services is an abuse of dominance within the meaning of Article 102 TFEU. Commissioner Almunia has even been explicit about this matter. This conclusion is very far from straightforward to reach. It is a factual scenario that can be approached in many different ways. It raises novel and complex questions to which different (and contradictory) lines of case law seem to apply .Unfortunately, the Commission has never even attempted to articulate the legal framework potentially applicable to this case. This would be most desirable, if only because it would make it possible to ascertain whether the Guidance Paper was just the expression of a moment of temporary folly, and not (as I assumed it would) a pre-commitment device designed to preserve long-run legal certainty.

I do not think an expert poker player would advise the Commission to take these moves. Even outsiders like me cannot avoid inferring from them that the (legal) case is probably weaker than the Commission appears to suggest. As an academic, it is the fact that the law has disappeared from the case that I find most worrying, in any event. The question of whether, and why, Google’s conduct would be abusive seems to be no longer of relevance for its outcome. In this sense, this case shows the dramatic impact that the abusive recourse to commitment decisions (in particular where, as is the case here, genuinely novel legal questions are at stake) can have on the evolution of our discipline.

Pablo

Written by Alfonso Lamadrid

19 January 2013 at 7:56 pm

On competition and blogs

with one comment

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.

 

 

 

 

 

Written by Alfonso Lamadrid

14 August 2012 at 7:55 pm

Oops!

with 4 comments

Monsieur Petit seems to have abandoned this blog in order to share his thoughts on an exclusive basis with US media. On Wednesday he was quoted again in The New York Times, this time in relation to yet another a new investigation on Microsoft’s non-compliance with a Commission’s decision.

As you may know, the Commission issued a statement announcing an investigation over Microsoft’s possible non-compliance with the 2009 commitment decision which obliged it to include a brouser choice screen to enable users to pick a browser instead of using the pre-installed one (until then Internet Explorer).

Microsoft has also issued a statement apologizing and explaining that:

“We have fallen short in our responsibility to do this. Due to a technical error, we missed delivering the Browser Choice Screen (BCS) software to PCs that came with the service pack 1 update to Windows 7. The BCS software has been delivered as it should have been to PCs running the original version of Windows 7, as well as the relevant versions of Windows XP and Windows Vista. However, while we believed when we filed our most recent compliance report in December 2011 that we were distributing the BCS software to all relevant PCs as required, we learned recently that we’ve missed serving the BCS software to the roughly 28 million PCs running Windows 7 SP1”.

The Commission has anticipated that it might impose “severe” penalties.

Keith Hylton (Boston University) has stated that the Commission is overreacting because “there may be a few people on the planet, living deep in forests on the Marshall Islands, who are not already aware that Microsoft’s Internet Explorer is not the only browser available”.

The well-informed and ironic reader who has conveyed Mr. Hylton’s statement to us responds that “whoever at Microsoft was not aware that they had to include a browser choice screen in Windows must also live deep in the forests in the Marshall islands, and whoever told the Commission in December that such error had not happened must live in the woods next door”.

We lack any precise information about this investigation but it’s hardly conceivable that Microsoft would do this on purpose, so, just as Microsoft says, this is most certainly due to an unfortunate mistake.

In any event, this story shows that antitrust law does perhaps not worry some companies as much as we usually think. Most importantly, the fact that nobody had noticed until now that 28 million copies of Windows had been sold since February 2011 without the browser choice screen says something about how compliance with antitrust commitments is monitored…

Written by Alfonso Lamadrid

20 July 2012 at 1:43 pm

Ruminations on the Google investigation

with one comment

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…

Read the rest of this entry »

Written by Alfonso Lamadrid

5 June 2012 at 9:36 pm

François Hollande and Competition Law

with one comment

The French Presidential election was held yesterday and, as you know, François Hollande won.

There is significant expectation as to the changes that the result of this election might entail for the rest of the European Union.  Now, should we expect any changes in the competition law domain?

Nicolas Sarkozy did have an undeniable impact on competition law. First he managed to delete from the Lisbon Treaty the reference to the objective of ensuring “free and undistorted competition” in the EU (see here and here) and then he taught us the difference between endive growers, Apple and Microsoft (an explanation that, as you may remember, prompted our friend Mark English to stop wrapping his iPhone in ham).

Those interested in Hollande’s views on competition law should read his replies to Concurrences’ interview (in French, though).

Written by Alfonso Lamadrid

7 May 2012 at 11:49 pm