Chillin'Competition

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What makes a great teacher?

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(by Pablo Ibañez Colomo)

The post Alfonso published last Monday made me think. It was controversial, but also a goldmine of follow-on topics. Call me oversensitive, but I could not help thinking he was targeting law teachers when he regretted the fact that fresh young graduates tend to be very critical of the case law without having always reached conclusions on their own. After a bit of back and forth, I thought I would write a post on what I think makes a great teacher, thereby mirroring Alfonso’s own recent post on what makes a great lawyer.

I will start by quoting some giants in our field, pretty much like Alfonso did. The intellectual ant that I am likes to learn from them and always bears their lessons in mind. To make it balanced (and thus to please Alfonso’s desire for neutrality), I will choose a lawyer and an economist, the first from Harvard and the second from Chicago.

In the Harvard Law Review issue dedicated to the memory of Phillip Areeda, Justice Stephen Breyer explained that the greatest antitrust lawyer of all time ‘did far more than simply teach antitrust law. [His casebook] showed the specialists how to blend economics with law (“economics informs the law”, Phil said), as it teaches both subjects together in plain and simple English. It showed the profession how law and lawyers can benefit from a knowledge of other disciplines. It tied this recondite specialty back to general legal principle. And it placed dramatically before the students’ eyes a clear demonstration of the necessary connections between intelligent analysis, law, and the more striking beneficial effects for society that law, when practiced properly, can help us all achieve’.

The Journal of Political Economy, one of the top economic reviews, and edited at Chicago, dedicated an issue to the memory of George Stigler. Thomas Sowell offered a student’s view on the Nobel Prize winner (and another one of my all-time favourites). When discussing the way in which Stigler approached the teaching of the economic side of our discipline, Sowell explained that ‘[f]ew, if any, areas of economics have as much confusion, circular reasoning, definitional traps, and fervent nonsense as industrial organization. It was the perfect place for Stigler to conduct a Demolition Derby. Nor was he hesitant about the task. Theories like “monopolistic competition” and “countervailing power”, which were treated reverently at Harvard (where they originated), were eviscerated by Stigler’. According to Sowell, ‘[w]hat Stigler really taught, whether the course was industrial organization or the history of economic thought, was intellectual integrity, analytical rigor, respect for evidence – and skepticism toward the fashions and enthusiasms that come and go’.

What do we get from these quotes? I would say the following:

  • A great teacher knows the stuff inside out: It is true that not all great researchers are good teachers. But without being at the top of the discipline, it is impossible to be a great teacher.
  • A great teacher necessarily conveys a view of the world: Somebody who has thought long and hard about a particular discipline necessarily comes up with strong views about it. It is inevitable that this (non-neutral) view of the discipline is conveyed when teaching students. There is nothing wrong about it. I would even say that this is what ideal university teaching is all about. Students are interested not only in the substance, but in how somebody, detached from commercial interests and focused only on seeking the truth, sees the discipline.
  • A great teacher takes students very seriously: Students need to be stretched and learn to think for themselves, and this is in no way in contradiction with the above. I fully agree with Alfonso when he suggests that a teacher who indoctrinates students is an absolute failure. The challenge for a teacher is to make students discover and understand for themselves the logic underlying the discipline, the crucial transversal issues that cut across topics.
  • A great teacher does not take her/himself too seriously: The teaching of a particular discipline should be put in perspective. For many, if not the majority of students, a particular subject may never be useful in practice. Therefore, teaching should be oriented towards contributing to a well-rounded education. And those of us teaching competition law are immensely fortunate: when taught properly, it has an awful lot to offer to students, even if they go on to do something completely different.
  • A great teacher shows respect for ideas, not for institutions or authority: I would say this should be (and has been) the central contribution of universities to society. Truth is to be sought without prejudices and without respect for rank or authority. Nonsense is nonsense irrespective of whether it comes from a first year undergraduate or from the highest of courts. Law students in particular should learn that there is nothing mystical or sacred about our legal institutions, even if they are populated by very intelligent and experienced women and men (‘only a brilliant mind can make a brilliant mistake’, Stigler liked to say of past economists).

And now I leave you. I have to teach in an hour.

[Pictured above are two evil Chicagoans (Friedman and Stigler) after a discussion with a colleague].

Written by Alfonso Lamadrid

18 March 2014 at 5:09 pm

State aid: you don’t know what you’re missing (+ thicko of the day award)

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Montebourg

Some of you might remember one of ours posts titled State aid conferences: that’s where the fun is! (Michael O’Leary and Kim Jong Il make for a great marketing combination and attracted quite a few readers) [Btw, today’s picture features another “peculiar” character; see below for an explanation].

In reality, and jokes aside, State aid is a field where much is currently happening, and that most antitrust lawyers often fail to follow and even perceive as distant.  Let me explain why that may not make much sense:

Off the top of my head, I would say that around 40% of DG Comp’s decisional output and resources are devoted to State aid. In economic terms, State aid issues generally have much greater repercussions than most antitrust cases (to put just one example, the guys at my office are advising Spain on how to use some tenths of billions granted by the European Council to restructure the financial sector). The substantive issues are no less interesting, complex, and challenging as the one’s posed by antitrust law.

On the other hand, to be sure, political interference is much more frequent, intense, and often less camouflaged (politicians, very particularly French and British ones, seem to be the ones realizing about the impact of these rules) than in antitrust. You might have read this morning about the French Industry Minister, Arnaud Montebourg, openly attacking both State aid rules in general and Vice-President Almunia in particular. In the Minister’s words, the Commission lives in a “legal delirium” and “makes up rules that don’t exist in the Treaties in order to perpetuate its powers”. He also referred to the Commissioner an “obsolete liberal integrist” and asserted that he has the backing of 11 Member States to “revise and liberalize State aid”. For once I will be the controversial one here instead of Nico, and I’ll refer to Monsieur Montebourg as the first recipient of the “Thicko of the day” award (pictured above proudly receiving his trophy)    🙂

Despite all the above (the fun, the legal complexity and the political and economic importance), State aid is not paid the attention it deserves by practicing lawyers. Why? Easy:  because those most directly affected often seem to be public authorities (many companies haven’t yet understood the opportunities and the risks associated to these rules), and those don’t pay as high bills as private companies do. (I guess efficiency and profit-maximizing related incentives also give rise to market failures/externalities).

Whereas I agree with the idea that State aid DNA shares more chromosomes with internal market rules than with antitrust law, there are some common feature between the two disciplines. Aside from the fact that they were placed in the same chapter of the Treaty –which led to their enforcement being entrusted to the same body: DG Comp-, State aid law is also always constantly in the making and questioning itself, which is what initially seduced me from antitrust.

An example: on January 17th the European Commission launched a consultation paper on the very the notion of aid. Think about it; no one would dare of doing the same in antitrust, even if very few people (perhaps with the exception of the influential Giuliano Marenco) have a comprehensive theory to explain what a restriction of competition actually is (an idea I also stated here and here).

There’s loads of “low-hanging fruit” in this domain. If you’re interested in an overview of the legal issues involved in determining what an State aid really is, I very strongly encourage you to read Andrea Biondi’s recent piece: State aid is falling down, falling down: An analysis of the case law on the notion of aid (very recently published in Common Market Law Review).

In the past few weeks I’ve taken a few initiatives to compensate for our State aid deficit. On a personal level, I got heavily involved together with José Luis Buendía in drafting and lodging no less than 12 State aid appeals concerning a particularly controverted and interesting decision (little did I know that I’d have to do that in the course of the Christmas holidays; btw, the experience left me wondering how we could manage in the pre e-Curia days). On a blog-related level, we’ve just asked a couple of the best minds in the field to become regular contributors to Chillin’Competition. We hope to be able to announce their coming on board soon.

Written by Alfonso Lamadrid

23 January 2014 at 5:58 pm

Follow-on thoughts on (and beyond) Microsoft/Nokia (by Luis Ortiz Blanco)

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[Note by Alfonso: A few weeks ago I wrote a brief post regarding one particular aspect of the Commission’s press release about the Microsoft/Nokia decision that caught my attention. Before posting it, I discussed the matter with two of my bosses’ colleagues: Luis Ortiz Blanco and Marcos Araujo, both with significantly more merger experience than myself, and both of whom initially agreed with the point I was trying to make. A few days ago this question came up again, and I managed to extract from Luis the commitment that he would write his views on a guest post here (all previous attempts to get him to do that and a Friday Slot interview were unsuccessful…). Luis needs no introduction; he’s an exceptional person, professor, lawyer, and was even also one of the best men at my wedding… He’s also the reason why I work in competition law, but that’s a long story. I leave you with him].

Readers of this blog may by now be familiarized with Alfonso’s and Nicolas’ well-known “persistence”. I admit to be and old-school guy, more prone to do my writings with time, pen and paper rather than swiftly and informally on blogs, but this time they caught me off guard and suggested an interesting topic, so here I am, giving blogging a try.

Despite the title of this blog entry, my intention is not to comment on the Microsoft/Nokia decision specifically, not the least because the decision is not yet available and I have not directly or indirectly worked on the case. My intention is to discuss an interesting theoretical point that appears to have arisen in that case and that prompts very relevant legal question for practitioners, academics and competition authorities which go beyond the facts of a given matter: do or should merger control rules and remedies apply also to impediments to competition that a transaction may generate on the seller’s side?

Alfonso already touched on this issue in a previous post. In my view, he rightly identified what I also see as an erred reasoning in the European Commission’s press release, according to which:

  • 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.

Now, do really merger control rules really relate only to the merged entity, to the exclusion of the seller?

Prior to providing you with my answer to this question, I would remark that, in my experience, it is most unusual to see the European Commission (or any other competition authority for that matter) self-limiting its own powers. Competition enforcers often tend to do the contrary, that is, to explore the powers they have, even if at the risk of perhaps going beyond them at times.

If among the readers of this blog is the one person that bought my book Market Power in EU Antitrust Law, she or he might recall the criticism I directed (pp. 77-78) at a few cases (ExxonMobil, and particularly at Grupo Villar Mir/EnBW/Hidroelectrica del Cantábrico and EnBW/EDP/Cajastur/Hidrocantábrico in relation to the ‘third-party dominance theory”) in which the Commission had intervened aggressively on the market in order to address effects unrelated to the transaction. In those cases the Commission extended and arguably exceeded its powers because of its will to address what it saw as a competitive problem. In its Microsoft/Nokia press release, however, the Commission does the contrary: it appears to restrain or limit the powers it has in order to justify not evaluating what many saw as a competitive problem.

This stance is all the more surprising if one recalls that in the past the Commission has accepted/required some “soft commitments”  in Oracle/Sun and, in a  more similar setting, on the part of Google at the time it acquired Motorola Mobility. The theory of harm in both the latter case and Microsoft/Nokia related to the alleged possible anticompetitive use of patent portfolios. If anything, Microsoft/Nokia would seem to give rise to increased suspicion [the deal was structured in a way that has resulted in an unusual situation: Microsoft buys Nokia’s mobile device business but not valuable mobile device patents, which it will only license. Nokia, in turn, will be under pressure to assert its patents aggressively, may possibly also act under the influence of Microsoft, and would be immune from possible retaliatory strategies because it will not manufacture smartphones anymore. The move is smart, but, in my personal view, maybe also a bit obvious too].

The sole argument seemingly adduced by the Commission to justify its different treatment of the two deals seems to be the precisely the one we are discussing in this post. But, think for a second, would it make sense to endorse an interpretation of the merger regulation that would enable parties to avoid scrutiny by carefully tailoring the structure of a deal?

Now, and more importantly, why do I say that the Commission must have the power to assess the effects of a merger on the selling party?

First of all, because it makes sense. If a merger does affect the incentives of the players in a given market in such a way that competition may be significantly impeded, there would seem to be no valid reasons for competition authorities not to look at the problem and, where necessary, accept (i.e. demand) commitments The contrary would undermine the effectiveness of the merger control system. Why could not the Commission condition the authorization of a transaction to a commitment from one of the parties to it (the seller)?

Secondly, because as Alfonso pointed out in his previous post, the letter of the Merger Regulation supports this idea. He referred to recital 25 of the Horizontal Merger Guidelines; I would also argue that the references in articles 6(2) and 8(2) to “modifications [of the concentration] by the undertakings concerned” shall logically encompass the parties to the transaction (the only ones that can modify it), which obviously would include the seller.

Thirdly, because the Commission’s practice reveals that in the past remedies have been required from the selling party. Think of cases such as E.ON/MOL, where the commitments accepted by the Commission concerned the seller (interestingly, the commitment was drafted in a way such that E.ON would “undertake to procure MOL to dispose of [certain shares in the transferred companies]’. Think also of Alcatel/Telettra, where assurances by a third-party (Telefonica) were relied on by the Commission in accepting commitments. This is not to mention the cases in which the Commission relied on Member State’s (i.e. third parties) assertions and declarations of intentions in support of certain commitments.

Perhaps the Commission would benefit from a third party appeal (not that these have been successful lately) prompting the Courts to rule that the Institution has more powers than it now purports to have. Once again –just like it happened in Camera Care regarding interim measures (a story that I always like to tell my students about)- the Commission could experience the serendipity of obtaining increased powers without even seeking them.

Written by Alfonso Lamadrid

17 January 2014 at 1:31 pm

AG Wathelet’s Opinion in the Greek lignite case

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The Opinion of Advocate General Wathelet in the very interesting Greek lignite case came out yesterday. This is the second time in recent weeks that the AG’s Opinion makes an impact in the competition scene with a tightly argued proposal (the previous one was his Opinion in Teléfonica).

You might remember that sometime ago we held our first and so far only ménage à trois debate precisely in relation to the General Court’s Judgment in the Greek lignite case:

For the moment, the AG’s Opinion essentialy sides with what José Luis Buendía wrote in his contribution to this debate a year ago (see here), and criticizes the solution adopted by the General Court.

There are however other very valid contrarian arguments, all brilliantly outlined in the pieces we published from Marixenia Davilla (part I ), and Assimakis Komninos (part III).

Written by Alfonso Lamadrid

6 December 2013 at 11:20 am

Television Rights, Matches – pun intended – and Bad Competition Law

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[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.

Pablo

Written by Alfonso Lamadrid

5 December 2013 at 7:18 pm

Android, Google and bundling: some follow-up thoughts

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Android

[By Pablo Ibañez Colomo (LSE)]

The following thoughts were inspired by Alfonso’s recent post on bundling allegations against Google. As usual, it is tightly argued and persuasive. I wish competition authorities took such points into consideration when assessing tying and bundling claims. My objections are of a different nature. The fact that I agree with most, if not all, of what he writes does not mean that his points would be conclusive or even relevant in practice after the Microsoft saga. More than anything, Alfonso’s post reminds one (or at least me) of the uncertainties that remain in the field of Article 102 TFEU even after the adoption of the Guidance Paper.

Alfonso starts by wondering whether the complaint brought by Google’s rivals involves a bundle in the first place. Following the GC judgment in the first Microsoft decision, I would be tempted to reply by saying that anything under the sun can be constructed as a bundle or, put differently, that the legal construction around third party claims need not make sense for Article 102 TFEU to apply. If a tying claim is valid even when nobody wants an operating system without a media player or a web browser, it probably follows that the plausibility of the bundling claim would not be – unfortunately, may I add – a conclusive aspect in the hypotheticals he discusses.

He goes on to argue that Google Play is not the only means through which one can download applications. I am sure more than a reader reacted to this argument in the same way I did. Could not one also claim that it is possible to download web browsers or media player and that the tying of these applications with an operating system are unproblematic as a result? Well, of course, but this fact did not prevent the Commission from taking action against Microsoft not once but twice. All that remedial action would require is an analysis of consumer behaviour allegedly inspired in behavioural economics (the flavour-of-the-month that I fear most, by the way).

If the above arguments are not decisive, we are left with the issue of foreclosure (the ‘everybody does it’ and the ‘business rationale’ arguments would not be relevant even before the wisest of competition authorities, as what matters in contemporary competition law, or so I want to believe, is not the motivation behind the behaviour, but its effects on the market). Besides the fact that foreclosure is plain irrelevant in tying cases according to the General Court, I will mention that, according to what I read the other day, Android’s market share is approaching 80%. This does not mean in any way that Android is dominant, let alone superdominant (and, again, very sensible arguments can be developed to show why this is not the case). But we all know strange things happen to law and policy when firms reach such market share levels.

What conclusions do I draw from the above? It seems to me that self-restraint is the only limit to the ability of the Commission to interfere with product design in high-technology industries. The second reflection relates to the behaviour of complainants. They cannot be blamed for taking advantage of the confusion created by the Microsoft saga around tying and bundling (i.e. for behaving opportunistically). One could even go as far as to claim that this saga created the expectation that the Commission will intervene when a firm’s market share approaches or exceeds 80%.

Written by Alfonso Lamadrid

16 September 2013 at 8:44 am

ECJ’s ruling on France Telecom’s State aid case (Joined Cases C-399/10 P and C-401/10 P)

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Note by Alfonso: As some you may have noticed, I’ve taken an unusually long blogging break from which I’m now back. As every time I’m out of combat, Pablo Ibañez Colomo (who, by the way, has recently been fast-track tenured -major review- at LSE and has just received a major review teaching prize; congrats!) comes up with a replacement post that’s better of what I would’ve written (we have a luxury bench at Chilin’Competition…). A few days ago Pablo sent us this post on France Telecom that we(I)’ve been slow to publish due to the easter holidaus and to to the frenchy’s posting frenzy 😉 We leave you with Pablo:

Some readers wll remember that during my short-lived tenure as a substitute blogger a few months ago, I wrote about a pending State aid case involving France Telecom. I guess that at least a fraction on those readers will be interested in knowing that the Court of Justice delivered its Judgment in the case on 19 March.

Unsurprisingly, the judgment is in line with AG Mengozzi’s (very sensible) opinion. The General court annuled the Commission’s decision on grounds that the Commission had not identified a clear link between the advantage deriving from  a shareholder loan offer in favour of France Telecom and the State resources allegedly involved by virtue of the measure. As I argued in my previous post, the Court of Justice takes the view that the General Court’s interpretation of Article 107(1) TFEU would leave outside the scope of the provision measures suh as guarantees departing from market conditions (see paras 107-111). Such measures do not immediately place a burden on the budget of the State, but a ‘sufficiently concrete risk of imposing an additional burden on the State in the future‘. According to the Court, it is sufficient to identfy such a ‘sufficiently concrete risk‘ for State aid rules to come into play.

The broader picture is aguably more interesting than the outcome of this case. As I mentioned in the previous post, the Court of Justice has sided with the Commmission (thereby departing from the analysis of the General Court and the theses advanced y Mmember States) in some key cases revolving around the notion of selectivity. France Telecom, arguably the single most important case of the past years on the notion of State resources, seems to confirm this trend. The old principles of Article 107(1) TFEU case law, if anything, seem more solid following these high-profile disputes

Antitrust Writing Awards- The campaign begins

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(Since this post is about awards, we thought a pic form last night’s grammys ceremony would be appropriate. I randomly came accross this one, but it risked being inappropriate, so we’ve decided to go for a more politically correct one).

You may remember that last year we ran a campaign (see here) for Nicolas to win one of Concurrence’s Antitrust Writing Awards, which he did for his paper on Credit Rating Agencies.

This year the Editorial Committee at Concurrences has shortlisted 3 pieces written by people who have contributed to this blog, so we thought we’d ask you to please take a minute to give them your 5-star vote 😉

The nominees are:

– On the category for Academic paper on Anticompetitive Practices: Pablo Ibañez Colomo (LSE), for Market Failures, Transaction Costs and Article 101(1) TFEU Case Law,  You can read it and vote for it at:  http://awards.concurrences.com/academic-articles-awards/article/market-failures-transaction-costs  By the way, Pablo gave a lecture on this topic at the IEB in Madrid a few days ago; the slides are available here: Making sense of Article 101 TFEU

– On the category for Academic papers on Economics: Hans Zenger (CRA) for Loyalty Rebates and the Competitive Process : You can read it and vote for it athttp://awards.concurrences.com/academic-articles-awards/article/loyalty-rebates-and-the

– On the category for Business papers on Economics, myself, for Economics in competition lawYou can read it and vote for it at (no need to read this one,  you can skip it provided that you vote for it): http://awards.concurrences.com/business-articles-awards/article/economics-in-competition-law  (actually, the nominated post does not rank among the ones I’m proudest of, but I’m nevertheless grateful for the nomination).

– We are told that Chillin’Competition has also been shortlisted as one of the top 30 professional publications that will be reviewed by Concurrence’s editorial board, which will then come up with a ranking (for more info, click here). You cannot vote for us here, but we’d be thankful if you could please exert any sort of coercion on the jury

Written by Alfonso Lamadrid

11 February 2013 at 5:57 pm

Reform of Private Enforcement of Competition Law in the UK: the Government’s Proposals

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[Our friends Christopher Brown (Matrix Chambers and Eutopialaw) and Scott Campbell (Stewarts Law LLP) have kindly offered us a very interesting post on the reform of private enforcement of competition law in the UK. To the best of my knowledge, this is the first written piece commenting on the substance of the proposed reform. With those proposed changes, the UK may be trying to position itself as the leading forum for private actions in Europe. An absolute must read].

A while back, one of us blogged on the UK Government’s consultation, launched in April 2012, on possible reform of the private actions regime in the UK.  The consultation was wide-ranging and included several radical proposals designed to facilitate redress for victims of anti-competitive conduct – most notably, the introduction of an ‘opt-out’ collective actions mechanism.  Reaction to the consultation from lawyers and business was extensive: the Government received 129 formal responses, and opinion was sharply divided on some issues.

It has inevitably taken some time for the Government to take on board the responses and consider the way ahead, but, since the publication last week of its response to the consultation, we now know what it intends to do.  In summary, the Government proposes to

  • Strengthen the private law jurisdiction of the specialist judicial body, the Competition Appeal Tribunal (CAT);
  • Introduce a “limited” opt-out collective actions regime, with “safeguards” designed to prevent frivolous or unmeritorious claims being brought;
  • Promote alternative dispute resolution (ADR); and
  • Take some limited action designed to ensure that private enforcement complements public enforcement.

In this post, we take a look at the main proposals, considering some of the likely practical implications of the reforms in the event that they are passed into law.

1. Putting the CAT front and centre of private enforcement in the UK

The first broad proposal is one on which most respondents agreed, at least in broad outline: to make the CAT the ‘go-to’ venue for private competition litigation in the UK.  Since acquiring its private law ‘follow-on’ jurisdiction upon the entry into force of the Enterprise Act in 2003, the Tribunal has seen relatively little action, and much of the action it has seen has been in the form of procedural skirmishes relating to the ambit of that jurisdiction (several of which have gone on appeal to the higher courts).  In many cases, claimants have preferred to commence follow-on proceedings in the High Court instead.

Read the rest of this entry »

Written by Nicolas Petit

6 February 2013 at 11:35 am

Posted in Guest bloggers

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

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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