REGISTER! (here)

Had not spotted this one.

Krugman on market concentration (referring to an interesting study):

“We don’t talk much about monopoly power these days; antitrust enforcement largely collapsed during the Reagan years and has never really recovered. Yet Barry Lynn and Phillip Longman of the New America Foundation argue, persuasively in my view, that increasing business concentration could be an important factor in stagnating demand for labor, as corporations use their growing monopoly power to raise prices without passing the gains on to their employees“.

Am intrigued.

I see the link between excessive concentration and high profits.

But I am less comfy with the nexus between excessive concentration and stagnating labor demand.

The point is: I am not sure that less industrial concentration would bring about more jobs.

And I don’t really get it how more competition would, as such, induce corporations to pass-on profits to employees.

On the occasion of the publication of “China’s Anti-Monopoly Law – The First Five Years”, our friend Adrian Emch (Hogan Lovells Beijing) has offered us two presents: 1. A hardcopy of the book; 2. A book review by no other person than Professor Bill Kovacic! Yes, you read well, Bill Kovacic himself. This is the second time Bill appears on Chillin’Competition. Thanks to him and to Adrian for doing us this honour.

Review of China’s Anti-Monopoly Law – The First Five Years (Adrian Emch & David Stallibrass, eds. Wolters Kluwer, 2013)

By William E. Kovacic, George Washington University Law School (c)

On August 1, 2008, China’s new competition law system opened for business.  Three agencies — the Ministry of Commerce (MOFCOM), the National Development and Reform Commission (NDRC), and the State Administration for Industry and Commerce (SAIC) — began to implement China’s Anti-Monopoly Law (AML), and their work in the past five years has reshaped the global practice of competition law.

The fifth anniversary of the AML is a most suitable occasion for some stock-taking. The first five years have provided considerable experience with public and private enforcement.  China’s immense and expanding economy ensures that firms engaged in global trade must take the AML seriously.  Particularly for merger control, China is quickly acquiring the capacity to influence international competition law norms through the application of its own law.

The development of competition law in China has created a hunger for knowledge among academics, practitioners, and public officials about the AML’s origins, content, and application.  This interest has inspired the publication of a fast-growing body of books on China’s antimonopoly system.  A number of these volumes are exceptionally strong,[1] and other promising contributions are on the way.[2]

Amid the excellent modern commentary on the AML, China’s Anti-Monopoly Law – The First Five Years now stands atop the ladder.  All observers with an interest in China’s competition law system will find that this book greatly enriches their understanding of China’s competition law system.

For several reasons, First Five Years will receive, and deserves, a broad readership.  Five features of the book stand out. The first is the consistently superior quality of an exceedingly ambitious project.  The book includes 27 essays authored by a total of 41 authors.  In many instances, an undertaking of this scale suffers from unevenness in quality across the contributions.   Reasonable expectations might lead a publisher to be pleased if half of the papers are superb, the rest are merely average, and only a handful are entirely forgettable.  Through the skill and effort of its editors, Adrian Emch and David Stallibrass, First Five Years performs extremely well from the first essay through the last.  This is a formidable achievement. The perspectives in each chapter typically are candid, fresh, and insightful.  The extensive participation of Chinese authors, either writing their own chapters or collaborating with foreign specialists, ensures that the essays accurately portray China’s AML system’s broad conceptual architecture and its technical details.  Foreign competition law experience is related in a manner that  is meaningful to the Chinese context.

A second impressive contribution is the book’s examination of the institutional foundations of the Chinese competition law system.  The first four chapters of the book are rich in history and political science, and they are worth the price of admission, alone.   Huang Jong and Richean Zhiyan Li describe how the fragmentation of enforcement power among MOFCOM, NDRC, and SAIC have impeded the development of a “coherent antitrust policy.[3] Hao Qian sets out the antecedents of the AML and explains why China chose to distribute enforcement authority among three agencies.[4]  Wendy Ng considers the aims that appear to have guided public enforcement against the backdrop of goals – a diverse array of objectives featuring some fundamental internal contradictions – that motivated the AML’s adoption.[5]   Deng Fei and Gregory Leonard study how China’s economic conditions inform the AML’s application.[6]  As a group, these introductory chapters supply necessary and enlightening context for understanding the AML’s current, and they set a valuable foundation for seeing how the Chinese system might evolve in the future.

A third noteworthy element of First Five Years is its insightful treatment of important developments in doctrine and policy.  The examination of traditional enforcement focal points typically goes beyond a mere recital of activity and present informative interpretations of actions or omissions in the public enforcement program.  Good examples include the chapters on refusals to deal (and the lack of effort to date to apply this concept to expand competition in sectors controlled by state-owned enterprises);[7] vertical restraints;[8] supplier cartels and information exchanges among rivals;[9] dominant firm pricing strategies having exclusionary or exploitative effects;[10] and merger control and the treatment of joint ventures.[11]  The book’s treatment of these subjects is remarkably current, given the lag the inevitably occurs between the completion and publication of manuscripts.

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Appointments at the head of the new Belgian NCA are ongoing.

The following people are in the cards (subject to approval by the Council of Ministers this week):

President: Jacques Steenbergen

General Prosecutor: Véronique Thirion

Chief Economist: Alexis Walckiers

Chief of Legal Affairs: Joachim Marchandise

This means that no former official of the Belgian Competition Council will seat on top of the new agency.

But two incumbents from the Directorate General, Jacques Steenbergen and Alexis Walckiers, will take key positions in the agency.

The new kids on the block are  Joachim Marchandise and Véronique Thirion.

Joachim is a very skilled practitioner who used to work as an associate for the Brussels office of Linklaters.

We do not know Ms. Thirion who is poised to occupy the critical function of General Prosecutor. For more on her background, see here.

Journalist, practitioners and scholars often accuse agencies of putting resources on “sexy” cases.

This would be particularly true in matters where agencies can prioritize cases and select enforcement targets: e.g., in unilateral conduct cases and to a lesser extent in merger cases (the argument has less traction in cartel and State aid cases).

True, untrue?

A sexy case can be defined as one which brings large public exposure.

Sexy cases often involve popular consumer goods/services:  search engines, smartphones, LCD screens, etc. They may also concern “evil“, John Grishamesque industries:  oil, tobacco, pharmaceuticals or finance. Or they may feature non EU firms which threaten domestic operators (Gazprom, Boeing, etc.).

With this background, there’s a good proxy to determine whether agencies focus on sexy cases: brands rankings.

And this recent ranking seems to confirm agencies interest for sexy cases: the top 5 brands are Apple, Google, Amazon, Microsoft and Samsung. All those companies are currently wrestling with DG COMP.

So much for the facts.

Public choice theory has an appealing explainer for public authorities’ focus on sexy cases: like standard businessmen, agency officials are profit maximisers. Yet, given that they cannot maximize revenue, they strive to make good on other variables, such as press recognition, reputation, etc.

In the week-end, I had some time to think on whether it is good for agencies to focus on sexy cases.

The answer to this is unclear. On the one hand, sexy cases are likely to improve the taxpayer’s knowledge of competition policy, and disseminate the “culture of competition” accross society. In brief, sexy cases are good in terms of competition advocacy.

On the other hand, sexy cases nurture disinterest for competition policy. Let me explain. Sexy cases generate the perception that competition policy is public policy for the rich and wealthy. On complainants’ side, if you don’t have a complaint against a Google or a Microsoft, you feel you are unlikely ever to attract agency interest.  This, in turn, has a cost for society. Cases which are potentially serious, yet unsexy, will not be reported to the agency (a type II error). Similarly, on infringers’ side,  firms with little public exposure know that there are quasi-immune from prosecution if the enforcement system is focused on sexy cases. Thus, they have little incentives to comply with competition law (another type II error).

With this background, I still fail to figure out which of those two effects – knowledge v disinterest – dominates the other.

Yet, I intuitively believe it is good administrative policy for an agency like DG COMP to also run ‘small‘ abuse cases like Tomra or the recent ARA case.

I conclude with a thought, which just sprung to mind whilst writing this post: may agencies be sometimes tempted to hide sexy cases? I mean look: the CDS and Libor investigations or the Gazprom case make remarkably little noise in the news, despite their considerable interest for society at large.

Important message to all Chillin’Competition groupies:

Alfonso just exited the market.

He and Lali signed a very long term contract this week end in Reinosa, which includes exclusivity provisions, joint production, infrastructure sharing, information exchanges, financial integration, etc.

This alliance is welfare-enhancing. I can personally testify that a gargantuesque wealth of  cheese, jamon and wine resources was put on table this week-end.

But what this pact first and foremost generates are non-economic efficiencies.

There is a lot of love, true, genuine, sheer love between the two parties (and amongst their families and friends).

Congratulations to Alfie (my co-blogger’s nickname) and Lali.

And a huge, enormous thank you for the amazing ‘turnkey‘ wedding.

On Friday, the GCLC will hold a half-day conference entitled “EU Merger Control in Review – Taking Stock“. 

The seller: Commission officials will present the reform.

I attach the programme below. A registration form can be found here.

We live in a world of “experts“.

Readers, corporations, public institutions all crave for expert advice.

And the beauty of it is that we are all experts at something, including at unexpected subjects.

Take a look at what landed in my mailbox last week:

“Dear Nicolas,

Chambers & Partners is producing a new guide for clients which provides practical insights into doing business around the world.

We are currently doing research for the guide on Merger Control. The contributing editor is John Doe of Doe, Doe & Doe LLP.

I am writing a chapter in the guide which will give useful advice to clients who are new to undertaking mergers in Spain. Given your experience in merger control proceedings in Spain, I was hoping you might talk to me for a few minutes to pass on some of the insights that you’ve gained.

The interview would be in complete confidence.

If you are willing to be interviewed, please let me know a time that would be convenient for me to ring you. My email is: JohnQ@chambersandpartners.co.uk. Or please feel free to call my direct line: +__________.

 With thanks for your consideration.

Kind regards,

John Q.

Legal Practice Guides

Chambers and Partners”

I guess the selling argument in this email is the “Given your experience in merger control proceedings in Spain“.

John Q must have been confused by my credentials as a founding partner of Lamadrid & Petit LLP.

To me, this says it all about the reliability of those “guides“.

On second thoughts, I should have taken the interview to prove my point.