Chillin'Competition

Found in the final report on the pharmaceutical sector inquiry:

“§537. Patents are proprietary, exclusive rights and enforcing one’s patents against parties infringing them is a legitimate procedural dimension of the material right granted to the patent holder. It furthermore is part of the fundamental right to a fair hearing before court as manifested in Article 7 of the European Convention of Human Rights (ECMR)“.

PS: beware of acronyms. With this §, some may believe that the substantive scope of the ECMR has hugely expanded :).

In the past months, our savory series of posts on food and competition law had been kept in the freezer.

Thanks to the French Competition Authority (“FCA”), it is our pleasure today to defrost this category of posts.

In Groupe coopératif Agrial/Bakkavör (a merger case), the FCA concluded to the existence of a product market for salads, distinct from the product market for other fresh vegetables.

But this is not all. The FCA further delineated the market on the basis of the “technology“(sic!) applied in this sector. It accordingly distinguished between salads of 1st category (i.e. fresh, raw, unwashed, unpeeled) and salads of 4th category (i.e. fresh, raw, washed, peeled).

The bottom-line: there’s technology everywhere.

PS: thanks to A. Ronzano for the pointer.

With a group of LL.M. students from Liège, we attended last Wednesday the hearing at the General Court in Chimei InnoLux Corp v Commission (T-91/11).

This case is better known as the LCD panels cartel case. In a nutshell, Chimei InnoLux challenges a Commission infringement decision inflicting a €300,000,000 fine. Chimei seeks primarily to obtain a reduction of this fine. Its key argument is that the Commission could not include in the value of the sales used to calculate the fines, the so-called “Direct EEA sales  through transformed products“, namely sales of cartelised LCD panels incorporated into finished products (screens) by downstream Chimei subsidiaries located outside the EEA. According to Chimei, those internal sales were outside the juridictional reach of  EU competition law (the parties rely on Woodpulp).

On this occasion, we also had several most informative meetings with several people working at the GC and the CJ. Here’s a grab bag of impressions following this trip at the Court:

• It’s all about the facts => once again, I was amazed by the granularity of the arguments raised in proceedings before the General Court;
• G. Berardis, the juge rapporteur was just impressive. He was very picky, seemed to know the file inside out, and asked a gazillion questions to the parties. On several occasions, the parties had a tough time responding to his inquiries. External observers, like myself, often pass judgment on the intensity of judicial scrutiny just by reading judgments. I guess my views have slightly changed since last Wednesday. Judicial review is also about what happens in the Court’s room, and about how judges discharge their duties. Whilst I have, a few weeks ago, voiced concerns about the appointment of a former Commission official as judge at the GC, I also recognize that such appointments probably come with increased expertise, and in turn contribute to strenghtening the intensity of judicial review. The trade-off between impartial and efficient judicial review is clearly a complex one;
• Read Wouter Wils! We’ve praised Wouter’s papers on many occasions. But we did not know that his prose was that influential. In response to a question on the compatibility of administrative proceedings with Article 6 ECHR, someone working at the General Court said something close too: “we know there is a big debate over this issue in scholarship. I read Wouter Wils’ papers. Wils considers that there are no such problems. So my conclusion is that there are no problems“;
• Internal drafting guidelines: judges and référendaires are apparently requested not to quote any piece of scholarship, or at least to limit such quotes;
• And to conclude: rumour has it that the draft Intel judgment is approx. 700 pages long (double spaced)…

Overall, this was a great day in Court.

Today we hit the 500,000 visits mark on Chillin’Competition, so we just wanted to say THANKS!

Nicolas started this on March 2009, and I joined a few months later, in October (with a guest corner at the time). It’s been 4 years, 765 posts, 1 or 2 interesting posts, 763/4 nonsense ones, 1,050 comments, 1042 Linkedin group members, 506 WordPress subscribers, and a few hundred hours of telephone calls [during which I tried to censor persuade Nico not to publish some stuff (one I can tell you about is the proposal to do the EU competition law version of this) and he complained at my (alleged) lack of political incorrection], $ 72.08 of AdWords earnings and $ 65 spent in preserving the chillingcompetition.com domain (that’s a $7 profit in 4 years, or $ 0,02 per hour spent writing here; as you see, we’re still struggling with the notion of opportunity costs…).  Below’s the wordpress table depicting our evolution.

P.S. Nico has committed to pay you all a beer when we hit 1 million…

I had weird thoughts today:

When the agency dismantles a monopoly in a market, it expands the consumer wealth open to appropriation by monopolists on other markets.

When the agency dismantles a monopoly in a market, it expands the amount of resources on which government can raise taxes.

Or the proof that all too often, we forget the basic principle that the economy works as a general equilibrium.

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Competition conference organisers are yield management experts.

Take a look: if you register now for GCR’s next telco, media and tech conference due on 2 July, you will benefit from a  “super early booking rate” of £650.00!

You read well: £650.00 for a one day conference in one of the cheapest cities of Europe, London.

Sure, the programme mentions no such thing at this stage – I guess it is still too “super early” in GCR’s language – but you  may even get a free coffee/meal and a bunch of great GCR brochures for this price. Wow!

In contrast, GCR seems less familiar with the output-enhancing effect of  third degree price discrimination. Take a look:

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There are no categories for “academics“, let alone “students”. Sheeze.

Maybe it’s just that the event has no academic ambition, as the list of stakeholders speakers suggests.

After all, it’s all bout the business. And Chinese-speaking academics do not write on those issues: #1; #2; #3; #4; #5; #6.

PS: Kaï-Uwe Kuhn is presented as CRA. Did he quit the CET yet?

PS2: If agencies seek a target for excessive pricing investigations, they should sure throw an eye on the lucrative conference business.

Google is a clever company.

Remember: as part of a proposed settlement with the Commission, Google has offered to brand search results.

Under this remedy, users can spot if Google preferentially displays links towards its own related services.

But if my understanding is correct, the nub of the issue is not one of consumer information, but rather one of users’ reaction to Google’s preferential search tactics.

Put differently, what matters is how users behave when Google’s own related services appear prominently in search results lists.

I have qualms with the idea that a remedy of this kind can change anything. It may even backfire. Faced with branded search results, users may increasingly click on Google’s related services, at the expense of competing services. This is because a large number of users find value to using services that belong to one single IT ecosystem (a sort of service-based network externality, driven by economies in transaction costs – no need to login twice, for instance – technological stability and service integration). Not to talk of the fact that Google has strong image in the public that users may associate with higher quality.

This thought came whilst reading Josh Wright’s excellent paper on Evidence-Based Antitrust. In essence, Wright makes the point that antitrust enforcement should be based on existing empirical data and on robust economic analysis. In contrast, antitrust enforcement should stray from predictive analysis, and avoid using untested economic models, brought by parties and elaborated by economic consultants in the context of particular cases.

This paper is refreshing. It illustrates the profound intellectual schism that separates antitrust enforcement in the US and the EU. For a number of years, I had been leaning with the view that both sides of the Atlantic had achieved convergence . But Wright’s arguments that antitrust enforcers should display”humility” and avoid a too predictive approach to antitrust enforcement shines a bright light on the arrogant resilience, in the EU, of the object-based enforcement model. A must read.

As any other bias – including prosecutorial bias – Commission bashing is bad (and boring).

So the other day, I thought to myself what makes a true”Commission basher” (I was told confidentially that my piece on conflicts of interests had been seen as Commission bashing :()?

Here’s a personal four-pronged proxy. To be a Commission basher one must:

1. never say anything good about the Commission’s output
2. reserve criticism only to the Commission, and fail to extend to other EU organs
3. address criticism exclusively to the Commission, and not to other competition agencies
4. express criticism in crushing language

At times, I reckon that the content of this blog may have read a bit like Commission bashing. Since we don’t want our readers to have this impression, two clarifications are in order.

Number 1 is that good news don’t sell. This may explain that this blog tends to focus on bad case-law, which is also funnier to comment upon. Note that we have never refrained from saying very good things on EU competition law developments, much to the contrary. Recent examples include our comments on Post Danmark, on DG COMP’s effects-based approach or on the Article 102 TFEU Guidance paper, etc. Alfonso even turned cyranesque, with his poignant love declaration to Commission officials.

Number 2 is that we tend to focus a lot on Commission’s output because it has kept a predominant position in EU competition enforcement. Yet, we often cover the case-law of the EU courts too, as well as interesting national competition developments when we can.

The bottom-line: at Chillin’competition we are not Commission bashers.

My university is offering scholarships for admission in LL.M programmes, including in our LL.M in IP and Competition Law. EU and non-EU students are eligible.

A full description of the scholarships can be found here.

Please do not hesitate to contact me, should you have any queries on this.

It is often overseen that there is a nexus between substantive competition law principles and procedural issues.

In this context, the current “resilience” of the forms-based approach in substantive competition law (see the recent Dole v. Commission case or the Expedia judgment) is likely to undermine the development of private enforcement.

If we follow §65 of the recent ECJ ruling in C-199/11, Europese Gemeenschap. v. Otis, national courts dealing with claims for damages in follow-on cases must comply with the agency’s prior decision, and admit the existence of an infringement akin to a fault.

Whilst it is true that, because of its obligation not to take decisions running counter to a Commission decision finding an infringement of Article 101 TFEU, the national court is required to accept that a prohibited agreement or practice exists, the existence of loss and of a direct causal link between the loss and the agreement or practice in question remains, by contrast, a matter to be assessed by the national court.

In this setting, the  main role of national courts is thus confined to estimating the harm inflicted on victims and to establishing causality (assuming §65 also applies to NCAs).

But how can they possibly do this if the decision simply talks of anticompetitive “object” in the abstract, and fails to scrutinize the impact of the impugned practice?

In my opinion, if (i) we are serious about private enforcement; and (ii) we read Europese Gemeenschap. v. Otis in a “task sharing” perspective, then agencies must provide a necessary estimation of the anticompetitive impact of the unlawful practices. Alternatively, if they rely on “object” arguments, they should at least offer to national courts full access to the evidence in their possession, so the later can make the math.