Chillin'Competition

Ronald Coase once said:

“One important result of this preoccupation with the monopoly problem is that if an economist finds something—a business practice of one sort or other—that he does not understand, he looks for a monopoly explanation. And as in this field we are very ignorant, the number of ununderstandable practices tends to be very large, and the reliance on a monopoly explanation, frequent.”

A quote worth ruminating, in light of the increased interest of antitrust agencies’ for unilateral conduct in dynamic industries.

Found on TOTM. The real source is Ronald H. Coase, “Industrial Organization: A Proposal for Research,” in Victor Fuchs, ed., Policy Issues and Research Issues in Industrial Organization (New York, NY: National Bureau of Economic Research, 1972), p. 69.

A thought to share:

In going through the RyanAir/AerLingus and Iberia/Vueling/Clickair cases – and following a discussion with David Hull yesterday –  I have increased difficulties with the idea  that low cost companies and flag carriers operate on the same relevant market.

Intuitively, I am prone to think that the demand served by low costs companies and flag carriers comprises several groups of customers, with different elasticities. In particular,  low costs carriers likely face a bunch of captive customers, which would never switch to a flag carrier. In the same vein, flag carriers probably face a share of captive demand, which would never switch to a low cost carrier.  I may be wrong out of sufficient technical knowledge, but it seems possible to argue that we have two distinct product markets (which, as the case may be, possibly exercise a competitive constraint on each other). My intuition is further confirmed by the fact that the features of low cost and flag carrier services are very different.

If I find time I’ll try to go through the decisions again, which might conceal the answer to this.

In past decades, the Commission repeatedly insisted on the importance of competition policy for the purposes of achieving the Single Market.

A few weeks ago, the Commission adopted a Communication entitled “Towards a Single Market Act – For a highly competitive social market economy“. Quite strikingly, the word “competition” appears only 9 times in this document.

Of course, this document is not competition law related. Yet, it seems to place only little emphasis on competition in general, not to talk of competition policy. This ought to be contrasted with the earlier Report of Mario Monti which referred 69 times to competition, and pleaded amongst other things in favour of:

“a new approach to industrial policy which builds on a mutually reinforcing relation with single market and competition rules“.

As a matter of fact, the concept of competition seems primarily quoted in relation to the international competition faced by EU businesses, and the need to foster the competitiveness of European firms.

A little disappointing.

Btw: Mario Monti’s report has gone relatively unnoticed in the competition law community, and this is extremely unfortunate.

Not much to report today, so here’s a full account of my day (I admit this is of limited interest for our readers, but (i) I have little inspiration today, and (ii) it will at least prove that some academics do work).

5.00 am: wake up call.

6.00 am-10.30 am : draft a paper on the new EU framework on vertical restraints (which I co-write with my friend and colleague David Henry).

10.30 am-11.00 am: answer to emails and call with my secretary at university.

11.00 am-11.45 am: read a paper on trademarks and antitrust law.

12.30 am-2.30 pm: lunch with JJ Evrard, re. possible conference on trademarks and antitrust law in early March.

2.45 pm-3.30 pm: answer to emails.

3.30 pm-5.00 pm: review outline of Elise Provost doctoral thesis.

5.00 pm-5.30 pm: call with Elise.

5.30 pm-6.30 pm: prepare annual meeting of the GCLC scientific council.

7.00 pm-10.00 pm: annual meeting of the GCLC scientific council.

10.30 pm : s***t, I forgot to post shting on the blog…

Probably less than most private practitioners, but still a pretty busy day after all.

PS1: the dominant OS for PCs turned 25 a few days ago.

PS: We still have a few seats for tomorrow’s Evening Policy Talk with D. Neven. Please drop me a line if you want to participate.

The College of Europe – the academic institution which hosts the GCLC – made the buzz yesterday. I paste hereafter the full AFP story.

Belgian premier butt of linguistic gaffe

(AFP) – 1 day ago

BRUSSELS — The premier of linguistically-divided Belgium, Yves Leterme, came in for a shock on being told Tuesday that French was the nation’s official language as well as his own — though he is a Flemish-speaker.

The gaffe came when Leterme, who has a French name and speaks the language fluently, visited the prestigious College of Europe in Bruges, flanked by German Chancellor Angela Merkel, who is on an official visit to Belgium.

Delivering a speech to the pair, the head of the institution, Spaniard Inigo Mendez de Vigo, said he would conclude in Belgium’s official language, French, “the language of Yves Leterme”, raising eyebrows in the room.

Leterme currently heads a caretaker government following inconclusive general elections in June that have left the country rudderless as parties on both sides of the linguistic divide quarrel over a deal to form a government.

Sixty percent of the country’s around 10 million people speak Flemish, the remainder French.

This story is a telling illustration that no one understands a d***** thing as to what is currently going on in Belgium.

Also, the head of the College is currently Rector Paul Demaret.

So far so good. The first BSC seminars were a great success. Simon Bishop (and B. Durand) are truly great speakers.

As some of you may have seen, we have decided to offer the BSC seminars on a modular basis. Because we are capacity constrained (we already have a good bunch of students), we can only accomodate a few registrations.

The next seminar is starting this Friday. J. Ysewyn and E. Sakkers will teach the law and econs of cartels for 15 hours.

For more info, please contact Pierre Sabbadini at psa@vbo-feb.be

There’s only a few excellent speakers on the AT conference circuit. I though I knew most of them.

At yesterday’s Amcham annual conference, I had the great pleasure to meet Bill Batchelor (Baker McKenzie).

Bill is certainly one of the best speakers I met in the past months. Lively, funny and to the point. He made an excellent presentation on a very complex, and possibly borying, subject, i.e. tying and rebates.

I attach his slides  below.

Bill Batchelor – AMCHAM – TYING REBATES

(PS: for my part, I had the difficult task of delivering a talk just after him. I talked about  tying-law post Microsoft. A paper, that I am co-writing with my assistant Norman Neyrinck, will shortly be released on this website).

I attach the slides of our ppt. presentation on judicial review in competition law cases (delivered at the GCLC annual conference last week). A paper will shortly be posted on ssrn.

Slides DG – JUDICIAL REVIEW IN EUROPEAN UNION COMPETITION LAW

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The funniest market sharing agreement ever (video in French).  Thanks to Sonia for the pointer.