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The book that has kept me away from the blog: The Shaping of EU Competition Law

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Juan Gris

There is a chance that some of you have realised that I have not been blogging in the past weeks. I have, I think, a good reason for this prolonged silence. I am about to finish a book that will come out with Cambridge University Press at some point next year. After much thinking (and some wise advice from, inter alia, Alfonso himself), it will be entitled The Shaping of EU Competition Law. And the painting you see above, by Juan Gris, is the one that I have chosen for the cover (what do you think?).

I have been revising the findings and I am at this stage where everything seems exciting . It is not only that the work is almost finished; it is also the feeling that comes from realising that the vague intuitions that I had at the beginning of the project seem to be confirmed.

So what is the book about, and what got me writing? Essentially, two ideas that I thought could be developed further:

  • Institutions and substance in EU competition law

We all know, and agree, that the underlying institutional structure has influenced the substantive evolution of US antitrust. For instance, the fear of type I errors, which has an enormous influence on the shaping of the law, results from some institutional peculiarities of the system. The European model is very different. As a result, one can expect the law to develop differently (for instance, one can expect it to be far less concerned with Type I errors). This is fine and understood, but another question remains, I think, largely unanswered: how, in turn, has the institutional structure influenced the evolution of EU competition law? How, in other words, does the centrality of an institution like the Commission impact on the substantive dimension of the field?

  • The need for comprehensive data

Last week at a conference, a speaker with whom I shared a panel emphasised the importance of supporting any claims with all of the case law, not only with the judgments that happen to support one’s views. I fully agree. I have come to realise, over and over, that our ideas about what the law is often change when one considers every single case. It takes time, but it is worth the effort. The problem I encountered when preparing the book is that it is difficult to find every case from a single reliable source.

The solution? A database including every Commission decision and every judgment of the EU courts. I could never have completed this database without the fundamental contribution of my amazing colleague Andriani Kalintiri. My idea is to reproduce the practices that are commonplace in other academic disciplines: with the help of CUP, I will make the data available to allow anybody to check and replicate the results of my findings.

How about the findings? Let me anticipate a couple of them:

  • The intensity of judicial review

Some people like to say that the EU courts are overly or unduly deferential to the Commission. There are instances where no evidence (or only anecdotal evidence) is provided in support of this claim. Sometimes, the claim is not properly substantiated. As I explain in the book, if one intends to argue that courts are overly or unduly deferential, it is simply not enough to come up with the percentage of Commission decisions that have been quashed when challenged.

Any careful study would need consider a whole range of other factors. For instance, one has to compare like with like (e.g. a prohibition decision is not a rejection or a commitment decision). Secondly, the success of the Commission may very well be explained by risk aversion (if it appears that it only takes action where there is a clear-cut infringement, it is only reasonable to expect its decisions to be upheld, at least on substantive grounds). When one examines carefully the case law, and takes these factors into consideration, the picture that emerges is much more interesting and much more nuanced.

  • Economics and EU competition law

According to conventional wisdom, the EU courts are reluctant to introduce economic analysis, which is relied upon by the Commission in its decisions and soft law instruments. I always suspected, and have argued in the past, that this depiction was far from the truth. I feel I can now properly substantiate this intuition. More often than not, economic analysis has been introduced by the EU courts, not the other way around. Moreover, economics plays a role that is often underestimated, or ignored: that of constraining, and defining the boundaries of, administrative action. In this sense, economics is seen, and has been used, by the EU courts as a valuable tool to make enforcement more predictable – and thus as a means to enhance legal certainty.

I hope to get back with more news soon!

Written by Pablo Ibanez Colomo

24 May 2017 at 7:24 am

Posted in Uncategorized

Robots and associate lawyers

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Remember this Forbes survey concluding that associate lawyer was the unhappiest job?

You know what they say about robots taking the most “dull, dirty an dangerous” jobs?

Yeah, well….

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Although, why bother making robots when some law firms have perfected the art of having untiring,  uncomplaining human machines billing-4,000-hours-a-year?   Resultado de imagen de puzzled smiley

Plus, I’m not sure it’s that easy; associates have, in turn, perfected the art of dealing with contradictory instructions and coming up with bogus excuses (having surgery? come on…) to an extent impossible to replicate by artificial intelligence…

Written by Alfonso Lamadrid

11 May 2017 at 9:38 am

Posted in Uncategorized

The lifecycle of the competition and data debate and the misconception behind calls for antitrust intervention

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The Economist

The Economist devotes its front page and a feature this week to the question of how data affects competition and competition law. It was not my greatest concern this week, but ok [if this post, written on a Saturday morning, gets published on Monday that’s because Macron won and I have not jumped out of the window]. The newspaper -which we have often echoed on this blog- joins the chorus of those who want “changes” and “new tools” in competition law to deal with this allegedly new phenomenon. In a way, The Economist sides with economic populism on this one (we’ll explain why in a few lines from now).

You already know my views on this topic from the posts and presentations available here, here, etc, essentially summarised in this CPI contribution. Today let me address something fundamentally more important (albeit in a rush, while my kid is miraculously still asleep… )

Creating waves

Step 1. This whole debate was triggered and fuelled by some tech companies who, unlike their rivals, did not operate data intensive businesses, or certainly not to the same scale. For instance, a company whose name we don’t need to mention, appeared to share these views only a couple of years ago, but then -following its acquisition of LinkedIn-  😉 changed views and endorsed these (or at least their spokesperson redirected about 300 different media outlets to this blog, for which we are grateful). This is actually not new (a similar thing happened regarding SEPs) and I actually think it is legitimate, logical, and absolutely not reproachable for private companies to change stance according to their evolving interests. But the origins of the debate are interesting nonetheless.

Step 2. A debate that was part of a business strategy and in its own self-interest finds some well-meaning allies (EDPS and others) who are genuinely concerned about what they see as a problem and a regulatory void and are keen on having their message propelled.

Step 3. Then it’s the turn for us lawyers and conference organisers: since we have little else to talk about these days (and we like to talk, so much that some even pay to do it, a market failure well exploited by others) we make an issue out of this. The result being that the topic is everywhere (to be sure , I myself have contributed to this speaking about it at the European Parliament, ERA, the VUB, Leeds University, the IEB and others, even if to say it is a non issue). This, in turn, eventually reaches academia. And there we see interesting hypotheses and theoretical reflections, but most of which I am not sure correspond to what we actually see in the markets (and which, to the extent I know, have not offered conclusive answers as to how competition should allegedly be changed).

Step 4. The next phase consists in competition authorities showing that they listen and adapt to public debates and to seemingly changing markets, and we end up with joint reports and strange cases (see here for my comments on the German Facebook case). Only the European Commission has kept its cool, although lately there are signs of changing winds there too…

Step 5 is that part of the media -not an ally of many of these data-intensive business models and companies- echoes it and turns it into a wider issue of public policy. This is where we seem to be now. Admittedly, however, what you see in print may only be the tip of the iceberg;  one day someone should write about how the media is shaping competition law these days -both to widen is net (at least that is what other media reports, see here) and to narrow it (see here).

Step 5 is that politics (the most permeable of all, particularly these days) succumbs to the idea.

And this is how change and sausages are made.

Economic Populism?

Contrary to some, I have always accepted that data can give rise to barriers to entry, market power and that it can be used to foreclose competitors. The circumstances under which this can happen are much narrower that many now claim, but still possible, as precedents actually show. My point is nonetheless that we have the tools to deal with those problems whenever they arise. Caution is what is needed, not substantive changes [a different matter being the procedural reform of merger notification thresholds, a point we actually made here before this debate exploded]. If there is one thing that cannot be criticised if competition law is lack of flexibility. A set of wide, common sense (rule of reason) principles and rules that has been able to apply and adapt to every industry for over a century can certainly be applied to data.

To be sure, our economic and legal tools will not always yield conclusive results when applied to data (they often don’t either when it comes to price, including for market definition and others, but it looks somewhat more objective or seemingly mathematical and we are happy to play along. But when do we have conclusive results in social sciences? (Any pollsters have a view?)

And this brings us to the fundamental misconception of these debates. Whenever politicians, respected economists or the media -including the ones with whom I would generally agree-  discuss competition law, they tend to view it as one more took among those available for economic regulation to pursue legitimate goals [admittedly, competition authorities have facilitated that by using enforcement to shape markets and fill in perceived regulatory voids particularly in recent years]. But it’s not. Competition law, rather antitrust (admittedly we can leave mergers and State aid aside), is a sanctioning regime. Dettaching the discipline from its legal nature (remember?) is wrong, and is a bit populist too.

So, yes, its  correct application will (most often) naturally improve the functioning of markets and contribute to a fairer society (more on this here), and yes, enforcement discretion can be exercised to target the greatest perceived social concerns.

But in a sanctioning regime there are limitations inherent to the very rule of law. We don’t get to change the rules in the middle of the game, we don’t (should not) get to strecth the rules to impose sactions nor do (should) we intervene in the face of uncertainty and doubt. Competition law should not prohibit what it does not understand, it should not meddle with ecosystems or with the very core of business models (including those based on data) when the effects of intervention are uncertain. This, until now, was uncontroversial. It all goes back to basics: general principles of law trump or should trump expediency and effectiveness.

Written by Alfonso Lamadrid

8 May 2017 at 10:56 am

Posted in Uncategorized

On Excessive Pricing: The Common Ground in AG Wahl’s Opinion and Commissioner Vestager’s Chilling’Competition Speech

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On 6 April AG Wahl delivered an Opinion in a case that he sees as “an opportunity to clarify he conditions under which the imposition of high prices by a dominant company” might run afoul of the competition rules. The Opinion is timely. It comes a few months after Commissioner Vestager delivered a speech –precisely at our Chillin’Competition Conference- that focused on excessive pricing. The Commissioner’s speech (a full video of which is available here, including Q&As) spurred quite some commentary, but we had yet to give our views. The Opinion gives us the opportunity to also do that now.

AG Wahl’s Opinion has been reported as somehow contradicting the Commissioner’s speech –and in fact has been portrayed by Trevor Soames –our former “correspondent” at the Intel Hearing; see here– as an “antidote” to that speech. In my view, however, on closer inspection both are pretty much aligned, and both are welcome examples of common sense.

To be sure, there are differences between the two. For one, you can expect more of a detailed legal discussion in an Opinion than you would from a short speech, and AG Wahl’s proposal refers to elements that the speech could not touch upon [By the way, another difference is that the Commissioner’s speech did refer to us by name, AG Wahl is yet to do so, although you know we are trying to fix that; see here 😉 ].

Below I set out the key messages contained in the Opinion and the way in which they tie in with the Commissioner’s speech. A few personal comments will follow:

On prudence. The Opinion starts off saying that “there is simply no need to apply [the prohibition against unfair trading conditions in Art. 102] in a free and competitive market: with no barriers to entry, high prices should normally attract new entrants. The market would self-correct”. AG Wahl notes that this is why the Commission has, “rightly” been “extremely reluctant to make use of that provision”.

Commissioner Vestager also insisted that “most of the time, we get consumers a fairer deal by keeping markets competitive, not by correcting prices or other outcomes in the market”, and emphasized that “we have to be careful in the way we deal with [exceptions to this rule]. The very conclusion of the speech was that “we need to act carefully when we deal with excessive prices. The best defense against exploitation remains the ability to walk away. So we can often protect consumers just by stopping powerful companies from driving their rivals out of the market. But we still have the option of acting directly against excessive prices”.

On the circumstances in which action may be needed. The Opinion nevertheless explains that markets may not be able to self-correct when there are “legal barriers to entry or expansion and, in particular, [when] there is a legal monopoly”. The Opinion relates to a case concerning allegedly excessive rates set by a collecting society. As AG Wahl observes, this is not a first. Actually, my second ever publication in the field of competition law already 12 years ago was precisely about excessive prices and collecting societies (the first was about fiscal state aid, all of which shows that in competition discussions we are cyclically reinventing the wheel…).

The Commissioner’s speech also identified, as an exception, that the Commission is “still bound to come across cases where competition hasn’t been enough to provide a real choice” and after explaining why competition authorities “have to be careful” (see below), she mentioned 3 examples of instances where action could be justified: Gazprom, pharmaceuticals and standard-essential patents, all of which share in common allegedly high legal barriers to entry.

On the methodology to assess allegedly excessive prices. As recalled in the Opinion (16-18), back in United Brands [1978] the CJEU laid down a two-step test to discern whether prices were “unfair”, “disproportionate” or “exorbitant” with regard to the value of the product at issue. First, one is to determine whether there is a significant difference between the price charged by the dominant company and what would have been charged in a competitive environment. Secondly, one needs to assess whether the price at issue is unfair in itself or when compared to competing products. In theory it sounds easy, right?

No method is perfect. When discussing how to approach the first step and determine the benchmark price, AG Wahl –as he often does- looks for the consensus in economic thinking, and in para. 36 states that “at the current stage of legal and economic thinking, there is no single method, test or set of criteria which is generally accepted in economic writings or across jurisdictions” . He –quite logically- observes that each of those methods “reveals some inherent weaknesses” (36), that their suitability depends “on the specific features of each case” (37); that the information required to conduct them may be missing, incomplete or controversial (usefully noting how different accounting methods may provide inaccurate pictures) (38); that mere comparisons across geographic markets are risky as markets are rarely so homogeneous as to allow for immediate and automatic meaningful comparisons (39) [on that point see also  paras. 61 and 65 ]; that comparisons between undertaking may overlook different qualities or value (40), and that comparisons over time may fail to account for rapidly changing business strategies or market conditions (41). The Opinion underlines that “because of those limitations, antitrust authorities and economists generally agree that the exercise consisting of determining the benchmark price (…) carries a high risk of producing both type I (…) and type II (…) errors”.

A combination of methods as the most perfect of imperfect solutions. Given the observed limitations, the main proposal in the Opinion is that in order to minimize risks, “competition authorities should strive to examine a case by combining several methods among those which are accepted by standard economic thinking” (43). Whilst recognizing that the weakness of one method is not remedied by applying other weak methods, the Opinion states that the convergence of results may be taken as an indicator of the possible benchmark price in a given case (45).

Additional indicators when only one method is available. According to AG Wahl, when only one method is available competition authorities should double check its results considering other indicators, including, (i) whether the market is or not protected by high barriers to entry or expansion (48); (ii) whether there is an expert sector regulator whose task is inter alia to control prices (in which case intervention may appear less warranted except, very importantly, in cases “where the sectoral authority should have intervened and erroneously failed to do so” (49); (iii) whether there is market power on the buyers’ side (50); and (iv) other factors relevant depending on the case (51).

[Commissioner Vestager’s speech also noted that “the best answer is often to adjust regulation” (…) even if “there can be times when competition rules need to to their bit to deal with excessive prices”.]

Purchasing Power Parity Index. In the case at issue the Latvian competition authority had “corrected” the rates applied in other 19 Member States in order to account for differences in purchasing power prior to comparing them with those applied in Latvia. AG Wahl notes that any comparison must be among very similar products and also in a broadly similar economic context (84), acknowledges that significant price differences exist for the same goods even in the EU (85) and therefore concludes that the PPP index can be a useful and appropriate instrument (86 and 92), its sufficiency depending on other factors. The bottom-line is that 1 euro in Germany has a different value than 1 euro in, say, Portugal, and that this should be reflected in the comparisons. Makes sense to me.

On when a price difference is excessive. It all often boils down to this. The Opinion states that theoretically any deviation from the competitive price may warrant intervention, but that this approach would “neither be realistic nor advisable” (102) given (i) the complexities inherent to establishing a benchmark and the risk of type I errors (which, citing Easterbrook, he notes involve a much larger cost for society in unilateral conduct cases) (103); (ii) the difficulty for the dominant company to estimate in advance what price would be legal and the legal certainty issue this entails (104); and (iii) the fact that competition authorities are not well-suited to be turned into price regulators.

[Commissioner Vestager’s speech also acknowledged some of these problems, and insisted that “we also need to be careful that we don’t end up with competition authorities taking the place of the market. The last thing we should be doing s to set ourselves up as a regulator, deciding on the right price”]

AG Wahl takes the view that a price can only be deemed excessive under 102 when it is both “significantly and persistently above the benchmark price” (106). Significant is simply described as “appreciably higher” and “persistently” as remaining/being recurrently above the benchmark price for a “substantial period of time” (107 and 108). The Opinion (109) acknowledges the remaining crucial question: how significant and how persistent? In Wahl’s view, neither the case law nor the decisional practice provide precise guidance or clear patterns (110), and this because the question cannot be responded in the abstract, it all depends on the case (111). As a consequence, he proposes that an authority should intervene “only when it feels sure” that “almost no doubt remains” as to the abusive nature of a price. The more significant the difference and the longer the period, the easier it should be to build a case. (112)

Prices unfair in themselves or when compared to competing products. In order to assess the fairness of a given price, the United Brands case law offers two possibilities, deciding on the basis of the price in itself or comparing it to other products. The AG provides some explanations on these alternative conditions. He explains that prices may be considered unfair in themselves when, for instance, the legislation enabled a dominant company to demand payment for services not requested (Merci Convenzionali or Grüne Punkt), as well as when the excessive price is a means to pursue a different anticompetitive aim (such as curbing parallel trade, e.g. General Motors and British Leyland).

The alternative comparison is presented as a “sanity-check” of the assessment made with regard to the benchmark price, particularly to include factors that were overlooked or that were not easily quantifiable in financial terms (including some types of costs, demand, consumers’ perceptions on the value or superior quality of the dominant company’s product) [Commissioner Vestager’s speech also made the point that caution was needed because “sometimes a company is dominant simply because it’s better than its competitors. And when that’s the case it’s only fair that it should get the rewards of its efforts”]

In sum, the Opinion explains that “it is only when no rational economic explanation –other than the mere capacity and willingness to use market power even when abusive- can be found (…) that a price may be qualified as excessive under Article 102”.

My personal comments:

As explained above, the Commissioner’s speech and AG Wahl’s Opinion have much more in common than some have suggested. They both acknowledge that competition law is to be prudent but that there are instances where intervention may be warranted, and both logically coincide in pointing to markets with high barriers to entry and particularly to legal and natural monopolies and, more generally, to market and regulatory failures. If anyone can point to real differences in their content, I’m happy to pay a round of beers.

Cases concerning exclusive rights are in my view clear candidates. For example, I have lately discovered a new phenomenon that consists of privatizing without liberalizing, whereby a legal monopoly is granted to a private party that is allowed or required under the national regulatory system to charge excessive prices. After all, if the concession holder is able to extract high prices it will be willing to pay more in exchange for the privatization. That way, the State gets more money, and so does the concession holder under the umbrella of national law. It’s a win-win for them, and a clear loss to everyone else, starting with consumers/citizens… ]

-I would therefore interpret the speech and the Opinion as supporting intervention in the right cases. But that may be my interested view (as a father of a 2 years old and purchaser of baby stuff I’m now very sensitive to excessive pricing ripping off consumers…).

-Actually, I had a recent conversation with the President of a national competition authority in which he expressed the view that running excessive pricing cases was almost a matter of legitimacy. After all, citizens/consumers have the impression that competition law is there precisely to combat excessive pricing and may not be so perceptive of the attempts to avoid these via the protection of competitive structures. Sometimes, he said, direct intervention would send a right message. This reminds me of the very last phrase in the Commissioners’ speech: “we still have the option of acting directly against excessive prices. Because we have a responsibility to the public. And we should be willing to use every means we have to fulfill that responsibility”. For more on my views on fairness and legitimacy in the Commissioner’s speeches, see here.

As a matter of fact, the widespread view that excessive pricing cases are rare in the EU is a bit misplaced. If one looks closely at national cases you will find that a surprising number of cases on unilateral conduct relate to exploitative abuses. My most frequent co-authors (Luis Ortiz Blanco and your very own Pablo) teamed up some years ago to write this article where they brilliantly make this point looking at Spanish practice.

-In sum AG Wahl’s Opinion is a welcome exercise of common sense and contains interesting points even if it still unavoidably leaves pretty open some the relevant questions. In practice, he advocates for prudency but ultimately relies on authorities’ discretion to pursue cases depending on whether they “feel sure” (see paras. 35 and 112) (and, to be sure, proposing a high burden and very much insisting on safeguarding the presumption of innocence in the face of uncertainty). This is a rare instance when AG Wahl appears to (unavoidably?) rely on the Commission’s enforcement-setting priorities as the main limitation to a wide prohibition (which he has rebelled against in Intel, for example).

Written by Alfonso Lamadrid

3 May 2017 at 4:57 pm

Posted in Uncategorized

Events coming soon

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In the past few weeks some friends and readers of this blog have asked us to help advertise a few interesting events, so here they go:

-On 2 May 2017 the College of Europe’s GCLC will host its 9th Lunch Talk; the topic is “Algorithms and Markets: Virtual or Virtous Competition”. It is a must-attend, not only because of the subject-matter, but also because of the speakers: Maurits Dolmans, Ariel Ezrachi and our blogger emeritus Nicolas Petit, with Pascale Déchamps acting as moderator.

-On 4 May 2017 our friends at ERA will be organizing an afternoon workshop on  Dawn Raids and Requests for Information in Competition Cases: Recent Trends (which, for those interested, will also be streamed live; see here). We had discussed these issues in too many posts to bother including the hyperkinks, but the idea is that they are certainly of interest.

-On the same day, 4 May 2017 the ABA Section of Antitrust Law will be hosting a free event on the very topical issue of merger control and innovation.  The event will take place here in Brussels. For more info, click here. [For Pablo’s earlier post on the topic, see here]

-On 12 May 2017, an international conference will be held in Amsterdam on the theme “Economic evidence in competition lawand the future of the” more economic “approach“. The aim of this conference is to make a systematic analysis of the role of economic evidence in competition law proceedings. The speaker line-up is truy excellent and includes representatives of the General Court of the EU, national courts, the Netherlands, UK, and German competition authorities, legal practice and academia, including some good friends.

-On the same day, 12 May 2017, Queen Mary’s Interdisciplinary Centre for Competition Law and Policy (ICC) and Baker McKenzie will be hosting their Annual Conference in Brussels under the title “Trends and Developments in Global Competition Law”. Click here for the very interesting programme.

-On 15 May 2017 the newly launched Lexxion Journal CoRe (European Competition and Regulatory Law Review) will be holding a symposium titled “Competition Law and Regulation: Boosting E-Commerce in the EU’s Digital Economy”. Our very own Pablo will be participating. For more info, click here.

-On 18 – 19 May 2017, ERA will be hosting a most interesting event on State Aid Proceedings and Litigation (ah, an area where litigation is fortunately still relevant!).

-And on 29-30 May Nicolas Petit and his colleagues will be hosting in Brussels the LCII-TILEC Conference on Innovation, Research and Competition. The conference offers an interesting forum for debate on topical issues in SEP licensing and standard setting at the intersection with competition law. The panels consist of renowned experts from European institutions, academia and private practice. The programme is available here Program LCII-TILEC Conference SSO

 

Written by Alfonso Lamadrid

25 April 2017 at 1:46 pm

Posted in Uncategorized

Derogations from competition law (and yes, endives)

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There are good chances that many of you have read/heard me say before (the last time towards the end of this speech) that whilst competition law is important, there are many more important things, some of which should not be subject to the competition rules, or even to competition.

Most jurisdictions contemplate legislative or judge-made specific derogations from application of the competition rules. Those derogations, and the way they are interpreted, are actually quite telling about a given society and its values:

In the EU, for instance, the Treaty provides for derogations for services of general economic interest [something largely and effectively called into question in a stream of cases in which I have been working for some time now; see here for one of them]. for defense or for agriculture. The EU Courts have also recognized that certain areas enjoy precedence over competition law (this is the case, for example, of collective bargaining agreements (in Albany). Then there are also a number of exceptions or special rules that apply regarding some areas (e.g. sports) or national interests (see Art. 21 of the Merger Regulation).

And in the US, well, there is an antitrust exemption for baseball….

The preliminary reference (C-671/15) in the French endives (argh..) case brings these key issues back to the fore. Last week we sort-of-commented jokingly on AG Wahl’s Opinion (see here), but today we want to go beyond easy endive puns and instead put the issues on the grill. Whilst the case is about the boundaries of the agriculture derogation, the rationale applies to policing the confines of any exemption or derogation.

The legislative exemption as such is not the subject of the debate (it is accepted that some forms of coordination and concertation on the part of producers are needed for them to carry out the functions that EU law attributes them, namely those of adjusting production to demand, reducing the costs of production and stabilizing producer prices). In fact, both Art. 42 TFEU and the case law give precedence to the Common Agricultural Policy over competition policy. The case at issue is rather about practices (in this case a fixing of minimum prices, the agreement of quantities placed on the market and the exchange of strategic information) not referred to in the “general derogations” but that are somehow linked to those objectives (some argue that so much that they should benefit from “specific derogations”). In a nutshell, AG Wahl considers that only practices that are strictly necessary for the fulfillment of the tasks attributed to producer organisations may escape the reach of competition law. Conversely, he understands that practices that merely contribute to those tasks cannot be exempted from the competition rules.

This is an approach that fits squarely within the principle that exceptions are to be interpreted narrowly. Actually, a very similar logic has been endorsed by the CJEU, the Commission and national competition authorities regarding collective bargaining in the wake of Albany. Admittedly, as we know well in the competition field, requiring indispensability (something to be “strictly necessary”) equates to setting a pretty high burden, more than a requisite of “necessity and proportionality” more typically applied for State measures to be able to benefit from derogations under EU Law or, within competition law, to sporting regulations following Meca Medina. Another valid analogy could be drawn with Deutsche Telekom, where the Court ruled that the existence of sector regulation only precludes the application of the competition rules when it eliminates any possible scope for autonomous action on the part of the firms at issue.

Interestingly, when attempting to discern what is strictly necessary to the fulfillment of the tasks assigned to producer organizations, AG Wahl places the greater emphasis not so much on the actual necessity link but rather on the identity of the undertaking(s) adopting the practice (or perhaps in doing so he bridges the two elements). In essence, he considers that only practices adopted within a given producer organization (or association thereof) actually in charge of managing the production and marketing of the product concerned can escape the competition rules. On the other hand, he proposes that practices within or with entities not responsible for marketing for their members products be subject to competition law. This is interesting but in my view (and this is just a first thought or a thought in progress) not may always be such a bright line, as some agreements with third parties might in some cases be necessary to practically implement what is decided within a given organization (admittedly, these questions of severability are pretty thorny and largely unresolved; for a related comment on this point see the discussion on “fruit agreements” here).

We won’t go into how he applies these principles to the facts of the case (which at first sight I think makes perfect sense if you agree with the bright lines proposed) as we are more interested in the general logic. More than other times, these are our first impressions after a quick read. As always, your thoughts would be most welcome.

Written by Alfonso Lamadrid

19 April 2017 at 11:53 am

Posted in Uncategorized

Evidence, Proof and Judicial Review in EU Competition Law

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FC & EG

Fernando Castillo de la Torre and Eric Gippini Fournier have produced what I certainly one of the most interesting competition law books on the market. Readers of this blog are already familiar with the authors: Eric is one of our Friday Slots interviewees (see here), and Fernando is the author of the downloadable compendium of cartel law that broke some of our records last year (see here); for those interested in an update on 2016 cartel case law, a gift is available here: Cartel case law 2017 (Castillo)

Their publisher sent us their book for review. Reading the book over the Easter holidays was actually enjoyable (in my defense, I had this review to write; Pablo on the other hand read it out of pure enjoyment…).  Admittedly, my review does face a problem, which is my lack of objectivity. They are both friends and some of the people with whom we most enjoy discussing antitrust issues. As President Lenaerts’ notes in his foreword to the book, each of them has acted for the Commission in over 300 cases before the EU Courts (including many of the 102 and 101 seminal cases we have all studied). Few people have their inside-out, theoretical and practical, historical and current, knowledge of the law. Their knowledge is not only encyclopedic, but particularly in the case of Fernando, also based on an scary photographic memory (he knows by heart case numbers, paragraphs and the most tiny details of cases….).  And I know well what I am saying: I have worked against and with Fernando on a number of cases, and only at present I oppose Eric in, I think, 32 pending cases before the General Court and the Court of Justice.

In his interview with us back in the day, Eric said that “[t]he best antitrust books are slow food, the result of a long process by one or two cooks, not more”. This book meets both requirements, it was slowly cooked by only two chefs, knowingly for the past 8 years, and unknowingly for perhaps a couple of decades.

Enough about the authors’ authority; let’s move to the substance. Importantly, the book is not about black letter law. The book explores issues of evidence, proof and judicial review based on a systematic analysis of a vast amount of cases. And I mean cases, not case law. Anyone who has experience before the EU Courts is well aware that reading Judgments does not provide one with a full understanding of the case, of the evidence of the debates and, therefore, of proof and judicial review. This book builds on underlying knowledge of facts, techniques, approaches and mindsets that are not always –or almost never- evident from a mere reading of Judgments (not that many people read Judgments in any case…). Their effort to build on that knowledge and systematize it or discuss it comprehensively is particularly important in an area where, as they note, EU Courts “tend to be reluctant to develop general theories and would rather decide on the facts of the case”.

You will find in the book thorough discussions of general rules on the assessment of evidence, specific discussions on single and continuous infringements, duration, defenses and fines, followed by a most useful assessment of the probative value of different types of evidentiary means [these are, by the way, topics on which they had written extensively before and on which I have also given my views, although so far only in relation to cartel law (see here); another friend of this blog and colleague of Pablo, Andriani Kalintiri, has authored two excellent pieces on this, see here].The book also includes two chapters on judicial review centered on how judges assess evidence and on the different standards of review that Courts apply, in reality, beyond semantics.

The book states and summarizes the state of the law, but it does more than that. The authors also provide their personal insights and views on the issues they discuss. This means that reading the book will give you further objective knowledge and also additional elements for debate. It also means that, inevitably, there will be points on which the reader may disagree with the authors or where one would like to go even deeper into the debate. I, for one, share many but not all of their views and would have perhaps liked a more extensive debate on evidence, standard and burden of proof in conducting counterfactual assessments (a topic that is touched upon in the book, but not extensively, despite the Commission’s struggles -and even Court defeats- in past and ongoing cases). For a work with a scope as large as that of this book, however, the authors have remarkably managed to treat a huge number of issues with just the right level of depth.

In the book you will also find  a [spoiler alert] reasoned defense of the case law, the current system of enforcement and judicial review.  To be sure, they note that “the temptation to argue that courts apply ‘light’ or ‘heavy’ standards, depending on the outcome, is high when the person has represented the losing side” and, whilst there is certainly some truth to this observation, the fact that both authors have represented the winning side in an overwhelming majority of cases may perhaps also influence their view [with this I’m now on the verge of losing a free beer from them for this review….]. But even, or specially, those who may not share the author’s views should read the book, for nowhere else they will find an open, bold and tightly argued explanation and defense of those views, which in their large majority hold sway within the Commission and the Courts. In my view, regardless of agreements or disagreements, understanding these views in indispensable to anyone working in this field.

In sum, this is a one-of-a-kind contribution to the competition law literature and, truly, a must-read not only for litigators, but for any competition lawyer, for I have always believed that any argument in an administrative case should be framed with  eventual judicial scrutiny in mind. Unless you are willing to read some few hundred Judgments and process them systematically, the only available option is for you to read the book.

You can buy it here.

Should you have doubts about my standard of (book) review, I can produce evidence to support my conclusions: the freely downloadable chapter available here should constitute proof of everything I say in this review.

Enjoy!

Written by Alfonso Lamadrid

18 April 2017 at 10:07 am

Posted in Uncategorized