Chillin'Competition

Dear Santa,

I have been very brave this year. So here’s my Xmas list for 2013:

• A Commission Article 10 inapplicability decision;
• An article 102 TFEU collective dominance case;
• A judgment quashing a Commission decision under Article 102 TFEU;
• Many, very many rulings in the spirit of Post Danmark;
• No ruling in the spirit of TeliaSonera;
• A recognition that dominant firm conduct can be de minimis, and in turn presumably lawful;
• Individual penalties for EU competition law infringements;
• Less articles on Article 6 ECHR and, more generally, on procedural issues;
• The clear recognition that the “restriction by object” concept is probabilistic in nature (i.e. a restriction by object means nothing but conduct which will very likely exert anticompetitive effects);
• A guidance letter from the Commission;
• DG COMP to take a few complaints lodged by SMEs, and not only open investigations when Google, Microsoft, Samsung or Apple are concerned;
• Shorter judgments;
• Judgments in understandable English (or French);
• A recognition that coordination theories of harm related to horizontal cooperation agreements should be assessed on the basis of the Airtours standard;
• Impact studies in competition cases (on this, am not so sure actually);
• A flexible traineeship at DG COMP 🙂

Thanks Santa. You can deliver all this throughout 2013, not need to bring everything tomorrow.

Nicolas

PS: to all readers, a terrific Xmas

A quick post.

Our email boxes are flooded with Xmas e-cards those days.

My preferred so far is Cromo’s (Crowell & Moring). Check it out, it is really nice.

Above, the Brussels School of Competition‘s Xmas e-card.

Last week-end, I watched “Inception” again. This is a terrific movie.

And it has an antitrust angle. The story is about a dominant energy conglomerate (Fischer industries if my recollections are correct).

And this dominant firm threatens to eliminate its main rival from the market.

The later thus hire someone to implant into the subconcsious of the heir of Fischer industries’ CEO the idea of disintegrating his father’s company (the father passes away in the beginning of the movie).

Now, the antitrust geek that sleeps in me cannot help but thinking that in XXVth century competition law, agencies will use this form of remedial intervention as an alternative/supporting device to conventional divestiture orders.

And surely XXVth century lawyers will look for a concept to denote for this new type of remedies. I’ll likely be dead and this blog will no longer exist (yet who knows?), but here’s my early take: why not talk of “chimerical remedies“, besides structural and behavioral remedies.

An alternative would be “Freudian remedies”.

If you have other ideas, please comment on this post.

No gym in 3 weeks; no free weekends in a few months (a bit of an exaggeration, but whining goes with the profession); quite few after-work beers, and then Mark English and Sarah Ashall send me this….thanks for the advice!

Btw, if you have 5 free minutes I would very very much recommend you to read this:  How will you measure your life? 

Until recently, I ignored that the Court was turning 60.

A book was published on this occasion. I had the great honour of being invited to write a paper in it.

There was also a formal lunch yesterday in Luxemburg. And I must say I have been quite lucky in terms of seat placement. My immediate left neighbor was Rafael Garcia Valdecasas y Fernandez, who was the ‘juge rapporteur’ in Airtours. And just on my right, Advocate General Juliane Kokott, who writes most opinions in competition cases…

For a competiton geek of my kind, this was clearly the best lunch I could think of.

Heard through the grapevine. At a recent conference, someone close to the General Court mentioned that the average total cost of a judgment would be in the ballpark of €240,000 (!). Don’t know how this figure was calculated, but this ain’t cheap justice to me.

I remind our readers that the average duration of competition proceedings before the Court is 50 months.

Some people are real professionals.

In response to a mass mailing a few days ago, we received the following Out of Office message:

Today, L. Gallois (former CEO of EADS) handed down to JM Ayrault a long awaited report on how to boost the competitiveness of the French economy.

This report comprises a section on competition policy. It is entitled “A competition policy that serves competitiveness“.

Hereafter is the text of the section (in French):

La politique de la concurrence « domine » toutes les politiques européennes qui ne peuvent se déployer que dans le cadre qu’elle définit. Cette « domination » est également idéologique ; elle s’appuie sur une administration extrêmement compétente devant laquelle les autres administrations s’inclinent le plus souvent. La politique de la concurrence de la Commission souffre de deux faiblesses : d’une part, elle intègre mal la dimension de la compétition mondiale à laquelle l’industrie européenne est confrontée et donne la priorité au consommateur par rapport au producteur ; d’autre part, les décisions relatives à la concurrence (aides d’État ou concentrations) ne peuvent être remises en cause que devant la Cour de Justice Européenne ; elles sont donc très largement fondées sur des critères juridiques et prennent mal en compte la dimension économique, la taille du marché pertinent, les dynamiques des secteurs à moyen terme, les effets d’échelle ou les régimes d’aide dont bénéficient les concurrents. Nous ajoutons que les délais des procédures sont déconnectés de la réalité industrielle. La politique de la concurrence doit être davantage mise au service de l’industrie européenne et de sa compétitivité. Nous proposons donc que toutes les décisions concernant la concurrence soient accompagnées d’un avis d’experts économiques et industriels, extérieurs à la Commission ; cet avis serait public. Il permettrait, sans remettre en cause les prérogatives de la Commission de la conduire à mieux intégrer l’économie réelle dans ses décisions. Un pas supplémentaire conduirait à ouvrir une possibilité d’appel des décisions de la Commission devant le Conseil des Ministres européen qui se prononcerait alors à la majorité qualifiée ; cette possibilité remettrait, sans doute, en cause une des prérogatives « fédérales » de la Commission. Elle ne ferait pourtant que reproduire les dispositifs nationaux où les décisions des autorités de la concurrence sont susceptibles d’appel devant les instances politiques.

On grounds of legal certainty, risks of decisional capture and other evils of the same kind, I can only disagree with the proposal to subject Commission decisions to appeal before a political organ.

And I actually fail to see where he found that NCA decisions were in general already subject to political appeal.

The same applies to his proposal to create a panel of external economists and industry representatives, with advisory power on the Commission. Most CAs, including the Commission, now have teams of economists that advise at all stages of the decisional process. Do we really need another layer of bureaucracy?

Gallois makes however several good points. First, when he says that the case-law of the EU Courts is overly legalistic. Second, when he contends that the Commission’s obsession with consumer welfare may not always be apposite. Third when he criticizes the protracted nature of competition proceedings.

But anyway, who cares. After all, this document will likely be watered down real bad, as most such reports have been in the past.

[We were a bit inactive this week; Nico is at a conference in Hong Kong (lucky b…) and I had an important deadline to meet. We have some long and substantive geeky boring posts on the pipeline that we intended to post this week (on the MasterCard Judgment, on recent cartel case law and on Google), but have been unable to think/write them through properly. In the meanwhile, here’s an “easy” post to finish the week off]

A few days ago the Financial Times featured a piece  (click here for a podcast) discussing a recent report from the Competition Commission (“CC”) that concludes that the alumni networks of the “Big 4” auditing firms (who have a practical joint monopoly over the auditing of publicly traded companies; 99% of the FTSE 100 according to the report) stiffle competition in the business.

According to the CC, 60% of audit committee chairs and 66% of Chief Financial Officers in FTSE 100 companies had previously worked for the Big Four firms. The report states that “it is possible that this familiarity will make them more favourably disposed to the appointment of a Big Four rather than a non-Big-Four firm” and that “it could make them less aware of the quality and experience of the non-Big-Four firms”, thus raising barriers to entry.

The Financial Times’ piece takes a different view. It argues that “alumni networks are not  a problem at all – in fact they are a thoroughly good thing. Think about it. If  you have worked somewhere, you know what it is like. You know exactly how hard  people work, how straight they are, how often they screw up and, above all,  whether they are charging a fair price for what they do (…)  So an honest thumbs-up from a current employee means quite a lot. But one  from a former one means even more. When you leave a company, it is human nature  to pretend that the move was a success. That may mean bigging up the new place  and littling down (to coin a useful new phrase) the old one. If, in the case of the big four, the alumni are prepared to spend huge  amounts of their current employer’s cash on their ex-employer’s services, that  suggests that the market is working rather nicely“.

So, is this an unavoidable fact of life or a market failure calling for intervention? Any views?

The truth is that this issue is not confined to the audit world. For good or for bad, there’s a lot of this, for instance, in investment banking, and even in the legal -academic and professional- world too (although the inferior level of concentration in the legal world certainly mitigates the issue to the extent that, if anything, it would be a de minimis concern).

What could actually call for intervention (if true) are the findings in this most interesting report “Bank ratings: what determines their quality”  It argues that “rating agencies assign more positive ratings to large banks and to those institutions more likely to provide the rating agency with additional securities rating business (as indicated by private structured credit origination activity). These competitive distortions are economically significant and contribute to perpetuate the existence of ‘too-big-to-fail’ banks”.  If interested on finding what could be the legal grounds for antitrust intervention in this sector,  you really should read  Prof. Petit’s award-winning piece on Credit Rating Agencies, the Sovereign Debt Crisis and Competition Law.

Have a great weekend!