Archive for the ‘Uncategorized’ Category
Twilight of the Idols
The Van den Bergh Foods case, aka the Ice Cream case, if often cited as one of the best Article 101 TFEU judgments ever handed down by the General Court.
Many praise its modern, unformalistic approach of vertical ties.
They like its focus on the economic magnitude of the foreclosure yielded by the freezer exclusivity clause.
I too have rallied this optimistic interpretation. In a case note published 10 years ago, I had laudated the General Court for its analysis.
As with novels, I should have applied the rule never read again.
Despite economic improvements in judicial reasoning, the Ice Cream judgment is fraught by several unfortunate logical shortcuts.
A quick reminder: the crux of the case was that Unilever, the largest player in the market (and the incumbent) had given freezer cabinets for free to retailers and forbidden them to store non-Unilever ice creams in those cabinets.
This, in the Commission’s view, yielded anticompetitive foreclosure, in particular in those shops where only one freezer cabinet could be stored because of space constraints.
Interestingly, the typical contract with retailers could be terminated flexibly, under a 2 months notice. Unilever thus made the rather convincing counter argument that as efficient rivals – those who could too offer cabinets for free – were not foreclosed from the market.
The GC and the Commission nonetheless based their case on the fact that despite open termination opportunities, there was a “reluctance” from retailers equipped with Unilever cabinets to terminate their contract. As a result of retailers’ reluctance, rival ice cream producers were harmed.
On cursory analysis, the “reluctance” story was reasonably plausible. But the problem is that the evidence adduced by the Commission and the GC to prove reluctance was quite weak.
Let’s take a look: the reluctance argument seems wholly based on the unproven assumption that retailers who would terminate their Unilever contract would no longer be able to procure Unilever products. Hence, retailers just decided to stay with the contract, as Unilever products were “must store” goods.
But on the facts, the decision and judgment did not exclude that retailers remained free to use a rival freezer and still procure from Unilever without terminating the contract in the first place. This, to me, is a major flaw of the decisions. Retailers could just have trashed the Unilever freezer or tell Unilever to recover it.
An alternative is that the Commission and the GC may have assumed that Unilever would have de facto stopped supplying it products to retailers using a rival freezer cabinet. But this would have been a stand-alone, separate infringement which would have deserved proof under the Brönner standard.
Surely, it may be that the Commission and the GC had in mind a “behavioral” reluctance theory, similar to those used in the Microsoft Media Player and Browser cases or in the ongoing Google investigation.
The idea would have been that retailers were content with their Unilever cabinet, and because of some statu quo bias or of hassle costs, they just reclined on changing freezers.
Again, however, no corroborating evidence of biases and retailers’ ineria appears in the decision and judgment.
A bit disappointing, for a judgment that has been elevated to the hall of fame of competition case-law. But overall, a good ruling.
Hiring
I am looking for a full or (or 2 half time) academic assistant(s), starting on 17 October 2013 at the University of Liege.
This position is for a period of one year.
If things go well, the contract may be turned into a PhD student position.
It offers teaching and publication opportunities.
If you are interested, please send me your CV at nicolas.petit@ulg.ac.be
Convergence Rule – A Spanish Example
The convergence rule of Regulation 1/2003 (Article 3(2) sets that:
“The application of national competition law may not lead to the prohibition of agreements, decisions by associations of undertakings or concerted practices which may affect trade between Member States but which do not restrict competition within the meaning of Article 81(1) of the Treaty, or which fulfil the conditions of Article 81(3) of the Treaty or which are covered by a Regulation for the application of Article 81(3) of the Treaty“.
Often, I have struggled to find concrete examples of such situations.
Our friend Miguel Troncoso Ferrer (Gomez Acebo Pombo) has offered us a very good illustration of this.
A recent amendment to the Spanish Hydrocarbons Act sets out a blanket prohibition of non-binding price recommendations in distribution agreements in the hydrocarbons industry.
This prohibition covers agreements below the 30% market share threshold.
It thus prohibits conduct which is covered by “a Regulation for the application of Article 81(3) of the Treaty“.
And this amendment purports to regulate competition (according to the Preamble of the new statute).
It thus violates EU law. The full analysis is available here: Analysis_On the compatibility with Eu Law of the new Section 43 A
In light of the Italian Matches case-law, publics authorities, national courts and firms can disregard this legislative provision.
@Alfonso: an apology. I did not mean to promote of a rival shop.
New job (2)
Nico just got a new job, as an advisor of the Belgian Competition Authority. Other good friends of this blog, like Laurent de Muyter and Charles Gheur, have also been appointed as advisors to the new authority:
This means that every once in a while Nico will now get to decide over real cases. 
!!
Now that he belongs to the authority I guess he won’t be able to comment academically about their cases, for there could be a conflic of interest… 🙂
Now seriously, congrats to Nico, Charles, Laurent and all other newly appointed advisors.
P.S. And yes, he did get a new car as well, but he doesn’t want to post the pic (I guess he’s afraid that his students will want to scratch it…)
Competition Law Everywhere
In Montenegro, where I spent my hols, the price of a liter of gasoline is €1.38.
This price is the same everywhere in the country. And it is the same in all petrol station networks.
Me find this reasonably cheap as compared to most Western EU countries. But me also find this price curiously uniform.
Two obvious explanations spring to my obsessed antitrust mind: 1. cartel; 2. government regulation.
There’s worse though: a well-known car rental agency has confronted me with a real life example of abusive unfair pricing.
If you don’t return the car with the initial quantity of oil, the car rental company charges three times the price per missing liter of gasoline (!) – unless you pay black cash, in which case they charge you €1.5/liter to refuel the car…
I fully grasp that car rental firms want to recover vehicles with a sufficient quantity of gasoline, so as to avoid the costs of refueling them constantly.
But the alternative would be to charge customers for the missing quantity of gasoline at a rate equal to 1.38€ liter + an average increment covering the cost incurred for refuelling the vehicles.
I have not done the math short of data on this (+ I was on hols), but the 3x price formula looks really excessive.
The bottom line: yet another tactic that seeks to exploit the lazy mind bias of locked-in consumers.
A competition authority closed for business
A friend kindly pointed us to this “We’re-at-the-beach-so-dont-bother-looking-for-us-sign” with a comment: “Transparency and vacation should be the unrenounceable principles of any public authority“.
Krugman
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.
Review of China’s Anti-Monopoly Law – The First Five Years (Adrian Emch & David Stallibrass, eds.))
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.
Breaking News
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.
Chillin'Competition 