Chillin'Competition

We´re back on track. Since, strangely enough, the world didn´t stop turning in our absence, there have been a number of interesting developments worth noting. Some of them will be the object of specific posts in the coming days, but, for the moment, here´s a choice of three: one from the EU, one from the US, and one from a third jurisdiction (Mexico), which are related to matters that have recently been/will soon be discussed on this blog:

Europe: Last Tuesday Commissioner Almunia delivered a speech at the GCLC´s Fifth Evening Policy Talk  (by the way, the director of the host institution, who happens to be my co-blogger, Monsieur Petit, was absent; how rude is that??  😉

Commissioner Almunia spoke about the “resilience and adaptability” of the competitition rules; he highlighted the four commitment decisions adopted by the Commission in the energy sector, pointed out that competition enforcement can achieve objectives other than the efficiency of markets (resorting to the example of facilitating generic entry into pharma markets), and insisted on the necessary complementarity of regulation and competition (with his eyes set on financial markets).

In addition, and very interestingly, Mr. Almunia announced plans to aim for a “better targetting” of State aid control, noting that the Commission´s services currently have too much on their plate. It will be most interesting to see the practicalities of how the Commission intends to “refocus” its resources on the State aid field. In the coming days one of the greatest experts on State aid matters will express his views on these plans on Chillin´Competition.

United States: More Google News (and this time we’re far from being the first ones commenting on them…). On earlier posts we referred to the controversy surrounding the Google/ ITA software deal.  Some days ago the parties entered into a consent decree which imposes a set of detailed “regulatory” conditions upon Google’s future operation of ITA that would resolve all of the DOJ’s competitive concerns. Those concerns essentially related to the possibility of other flight search companies being foreclosed from access to QPX (ITA’s airfare pricing and shopping software). A press release from the DOJ  briefly describes the conditions imposed by the consent decree in the following terms:

Under the proposed settlement, Google will be required to continue to license ITA’s QPX software to airfare websites on commercially reasonable terms.  QPX conducts searches for air travel fares, schedules and availability.  Google will also be required to continue to fund research and development of that product at least at similar levels to what ITA has invested in recent years.  Google will also be required to further develop and offer ITA’s next generation InstaSearch product to travel websites, which will provide near instantaneous results to certain types of flexible airfare search queries.  InstaSearch is currently not commercially available, but is in development by ITA. 

To prevent abuse of commercially sensitive information, Google will be required to implement firewall restrictions within the company that prevent unauthorized use of competitively sensitive information and data gathered from ITA’s customers.  The proposed settlement delineates when and for what purpose that data may be used by Google.  Google is also prohibited from entering into agreements with airlines that would inappropriately restrict the airlines’ right to share seat and booking class information with Google’s competitors.  Finally, the proposed settlement provides for a formal reporting mechanism for complainants if Google acts in an unfair manner.

(For a more detailed explanation on these conditions read the Proposed Final Judgment. Other documentation related to the case can be found here).

The consent decree is subject to the US District Court for the District of Columbia’s approval, and must now go through a 60 day comment period. As all Google-related stuff, the consent decree has instantly spurred different sorts of enthusiastic reactions. Google is excited because the deal is now “cleared for take off”, and rivals are happy too because one of the conditions imposed by the consent decree effectively creates a mechanism for the continued scrutiny of a narrow part of Google’s activities. Any reactions from our readers?

International antitrust: The impact of competition law is becoming increasingly more noticeable in Latin America. The Mexican Federal Competition Commission (COFECO) imposed a record MXN12 billion (USD 1 billion= 865 million euros) penalty on Telcel (a subsidiary of America Movil, owned by Carlos Slim). The sanction was announced some days ago, but it was only yesterday that COFECO gave details about its decision, explaining that Telcel had charged interconnection fees to terminate calls on the Telcel network that were above the implied charges for calls made within its own network, or even above the final charges Telcel makes to its own customers. The fact that Telcel was a repeat offender motivated the levying of the maximum possible sanction (i.e. 10% of Telcel´s turnover in the preceeding year). We don´t have much more info on this, but since I´ve been asked to write about it in the Mexican press, it´s quite likely that we´ll discuss the case more in depth in the near future.

Welcome back!