Archive for the ‘Breaking – Antitrust – News’ Category
More on AG Ruiz-Jarabo Colomer
“1. Dans les premiers temps de l’État-providence, certains domaines économiques ont été soustraits à la logique du marché afin de réduire l’écart entre «espace vital dominé» et «espace vital effectif».(2) Au nom de valeurs qui n’étaient pas strictement économiques et qui sont consacrées dans la notion juridique continentale classique de service public, l’intervention de l’État a été intensifiée dans certains domaines, des monopoles ont été créés et la réglementation a été renforcée.
2. À partir de l’Acte unique européen, qui a érigé «sur l’autel des idées politiques» une nouvelle idole, la concurrence, le service public est devenu un obstacle à surmonter en vue d’une libéralisation devenue source de toutes les espérances.(3)
3. L’ouverture du marché est la première étape de cette politique, mais l’élimination des barrières laisse subsister des besoins que le marché ne peut satisfaire à lui seul, d’où l’intervention publique, sous forme de «services d’intérêt général» et d’«obligations de service public», que les autorités imposent aux entreprises des secteurs libéralisés pour sauvegarder des intérêts publics dont la satisfaction est impérative et ne peut donc être laissée au libre jeu des forces du marché.
4. Le grand défi du droit économique actuel réside dans la délimitation de ces interventions publiques. À ce jour, la question ne s’est posée que par rapport à l’existence de droits exclusifs ou au financement des services en question, mais rarement à propos des obligations de service public, qui font précisément l’objet des questions préjudicielles posées en l’espèce“.
“Born 1949; Judge; Member of the Consejo General del Poder Judicial (General Council of the Judiciary); Professor; Head of the Private Office of the President of the Consejo General del Poder Judicial; ad hoc Judge at the European Court of Human Rights; Judge at the Tribunal Supremo (Supreme Court) from 1996; Advocate General at the Court of Justice since 19 January 1995“.
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Spanish Court of Appeal strikes down CNC’s Inspection Practices
The Audiencia Nacional (‘AN’) – i.e. the Spanish Court in charge of the review of acts and decisions adopted by the Spanish National Competition Commission (‘CNC’) – recently delivered an important judgment quashing some of the CNC’s investigatory practices, which had elicited a great deal of controversy over the past few months.
Background: In a raft of recent cases, the CNC investigatory branch made use of the new investigatory powers provided for under Competition Act 15/2007. Those cases triggered a stern opposition from the legal community, which voiced that the CNC’s inspections might have deviated (i) from the standards set out by the ECJ in relation to inspections under EC competition rules, as well as (ii) from the limitations imposed by Spanish Courts with regards to police/and or administrative inspections, thereby breaching the rights of defense of the inspected undertakings. Disregarding the criticism, the CNC’s Council nonetheless adopted a number of decisions supporting the interpretation of the CNC’s Investigation Directorate.
The judgment: the AN’s Judgment originates in an appeal against one of those decisions. In essence, it can be summarised as follows:
1) The Court observes that many of the documents obtained -collected pursuant to the copying of computer hard drives- are unrelated to the sector under investigation as identified in the mandate as well as in the judicial authorization granted to the CNC, and therefore cannot be deemed to be covered by them. Consequently, the Judgment declares that there was a breach of the right to inviolability of the domicile of the undertaking inspected.
2) As to the consequences of the said breach, the Court rejects the claim that the whole inspection should be declared void. Instead, it holds that the documents related to the subject matter of the investigation did fall within the scope of the mandate and of the judicial authorization and were thus lawfully collected, and orders the CNC to return all other documents.
3) The Judgment affirms the rights of firms subject to an inspection to have access to the search criteria used to retrieve information stored in hard drives (allegedly no search criteria had been used in the inspection at stake).
4) The AN dismisses the claims related to the alleged violation of legal privilege arguing that the CNC has merely collected possibly privileged documents but has not made use of them.
5) The arguments related to a possible breach of the rights to privacy of correspondence of the undertaking’s employees are also dismissed on the basis that the inspection was not aimed at collecting such documents. Accordingly, the Court holds that any extra-limitation with regards to employee’s private documents stored in computers located at the undertaking’s premises must be subsumed within the breach of the rights of the undertaking inspected.
In my view, this is a most welcome judgment if only because it narrows the gap between the standards applied by the CNC and those of the European Commission.
However, the non-conformist lawyer that sleeps inside me has a couple of comments:
– First: the AN’s argument that there cannot be a breach of the rights of defense unless privileged documents are effectively used as evidence seems to be at odds with the ECJ’s ruling in Akzo with regards to the ‘cursory glance’ practice.
– Second: in this case, unlike in a number of other recent ‘dawn raids’ in Spain, the subject matter of the investigation had been clearly defined in the mandate as well as in the judicial authorization. Both identified the specific conduct under investigation, the product and geographic market affected, as well as the years during which the agreement was thought to have been implemented. Nevertheless, for the purpose of determining which documents can be deemed to be comprised within the scope of the mandate, the Judgment prescinds of those and merely takes into consideration whether it is related or not to the sector under investigation without any further qualifications, which is arguably still a wide criterion.
See below for link to the judgment.
(Image possibly subject to copyright. Source)
The “Last Hundred Days” Strategy – Is the Qualcomm Case Over?
Milton Friedman and his wife Rose Friedman are known for having theorized that recently elected governments generally enjoy a period of political immunity following elections, which allows them to push reforms, including tough ones, relatively easily (see Tyranny of the Status Quo, New York: Harcourt Brace Jovanovich, 1984). This theory is often related to the “first hundred days” honeymoon period enjoyed by political leaders.
My intuition is that this theory also applies to administrations reaching the term of their mandate and, in particular, the current European Commission. In this regard, Neelie Kroes, the Commissioner for competition, certainly enjoys an unprecedented ability to increase output in the last months of her mandate in deciding/closing cases. This is partly due to the fact that the repeated game of political interaction – where disgruntled colleagues, rivals, parties, etc. might retaliate in the future (and kill proposed decisions/legislative proposals) – comes to an end. At this stage, Neelie Kroes, who most likely will not be reappointed as Commissioner for competition (and, if I understand correctly, whose domestic carreer is largely over), has thus a relatively large margin of enforcement manoeuvre. In addition, ending administrations face lower exposure than newly appointed administrations: (i) other Commissioners might also be busy cleaning their desk, and in turn unable to scrutinize competition enforcement initiatives; (ii) journalists, medias, citizens, MEPs, etc. primarily care for the yet to be appointed Commission and its programme, and no longer pay much attention to what the present Commission is doing.
In this context, the Commissioner has given indirect signs that she may soon close the long-standing, high-profile, Qualcomm case (full disclosure: my former law firm, Howrey LLP has been working intensively on this case over the past years). In a nutshell, this case is about the amount of royalties charged by the US firm Qualcomm for its 3G WCDMA technologies, deemed to be excessive by a number of complainants, some of which are big EU telcos manufacturers. The case exhibited a number of interesting, controversial, features. To name only a few: should the cryptic, unpractical, case-law on exploitative abuses be applied to dynamic, R&D-driven markets?; does an ex ante FRAND commitment go beyond a mere commitment to negotiate licensing terms in good faith?; should the Commission get involved in a case that exhibits a strong revenue distribution (or “revenue sharing”) dimension, as well as industrial policy features (the classic US v. EU trade war story)?
In a speech entitled “On ex ante standards setting and new horizontal agreement guidelines ” delivered last week, Neelie Kroes unusually emphasized the difficulties encountered by enforcers in bringing forward excessive pricing cases:
In my view, there are a number of ways to assess whether there has been an excessive pricing abuse under Article 82 EC and the methodologies used will depend on the factual matrix. One method is to compare the (ex-ante) market value of the relevant IPR with the ex post royalty rate, if the evidence clearly permits such a comparison. If the ex post royalty is significantly and unjustifiably higher than the ex ante price, then we may have an excessive pricing case. In practice, such assessments may be much more complex than this brief description of the issues implies, and any antitrust enforcer has to be careful about overturning commercial agreements without a clear and coherent evidence base.
Matthew Newman, a Bloomberg journalist further reported:
When asked whether there’s enough evidence to pursue the Qualcomm case, Kroes said that “as a commissioner for competition policy, it’s always good to recognize if it’s well thought over, if it’s proven. If it’s not really proven, we should be careful — you can read between the lines.” Kroes added that the case has been “fascinating” and that she used a panel, known as a devil’s advocate, to weigh the nearly 4-year-old investigation.
In supporting negotiated solutions that are allegedly in the interest of both consumers and business, and dismissing unproven cases, the current Commissioner may also seek to raise her profile in the history of EC competition enforcement, in particular in defusing criticism that her enforcement record is only about harsh, tough, negative competition enforcement (read hefty fines), sometimes at the expense of the rights of defense.
Apple, Google, and more on Interlocking Directorates
Last Monday, Arthur Levinson -until now a member of the board of both Apple and Google- resigned from the board of Google. The resignation follows that of Eric Schmidt (Google’s CEO), who abandoned his position on the board of Apple in August. Both moves were aimed at addressing the FTC’s concerns over the possible anticompetitive effects arising from the close inter-personal nexus between the two companies.
Even though the FTC’s investigation on this matter may have reached its end, Google has not moved away from the antitrust spotlight. The initial book settlement was derailed pursuant to the numerous objections put forward against it, and the District Court has required a new version to be delivered by November 9th for preliminary approval. Meanwhile, the DOJ’s investigation concerning hiring practices at Google, Yahoo and Apple is ongoing. And some suggest that this could only be the beginning…
Those cases, as well as last week’s announcement of the opening of an investigation about IBM’s conduct in the mainframes market, have been seen as consequences of the stricter approach undertook by antitrust enforcers under the Obama administration regarding high-tech markets, particularly in the presence of network effects.
Now, coming back to the Google/Apple issue: in the US, the Google/Apple investigation constitutes the second challenge to interlocking directorates brought by the FTC under Section 8 of the Clayton Act over the past two years (the case brought against Commscope was resolved by a consent decree in December 2007).
In Europe, the ECJ and the European Commission have acknowledged that interlocking directorates and, more generally, minority shareholdings, could wield anticompetitive effects. It has also been held that such effects could be dealt with under Articles 81 and 82 EC (see the Judgment in cases 142 and 156/84, British American Tobacco and Reynolds v. Commission, and the Commission’s decision in case 93/252, Warner-Lambert/Gillete).
However, in spite of recent evolutions in merger control (see the Ryanair/Aer Lingus decision, currently pending before the CFI), to my knowledge, the Commission has never initiated any proceedings challenging the acquisition of minority shareholding and/or interlocking directorates since the Gillete case in 1993.
As a consequence of this lack of interest on the part of antitrust authorities and, to a certain extent, of commentators too, this remains, one of the under-explored areas of EC competition law. In contrast with the clear prohibition contained in Section 8 of the Clayton Act, companies in Europe are again faced with considerable legal uncertainty. In sum, a great topic for research if anyone’s interested.
For a brief and recent account of the state of the law in the US and the EU on this subject, check out these: US – EU.
(Source: image possibly subject to copyrights)
Belgacom might have unlawfully abused a dominant position
The Belgian college of prosecutors has issued a Report which concludes that Belgacom is guilty of unlawful margin squeeze. See here for more (in French).
Chillin'Competition 
