Archive for the ‘Uncategorized’ Category
The end of the US Microsoft case
13 years ago the US Department of Justice together with several States filed a suit against Microsoft that marked the beginning of what still remains as the most significant case in contemporary antitrust, and one that led to many changes in the way we approach high-tech markets, and antitrust enforcement in general.
The history of the US v. Microsoft antitrust battles is too rich in details to be summarized here, but those interested in a great brief explanation should watch this video in which Phil Malone (who was one of the leading prosecutors for the Antitrust Division -and also my Professor at Harvard Law School- makes this long story short).
But now more than ever, all of that pertains to history. The oversight mandated by the 2001 settlement (reached right after the DC Circuit Corut reversed part of the District Corut´s decision which had ruled for the Governmment) will expire on May 12th. However, the last oversight hearing before Judge Colleen Kollar-Kotelly occurred on April 27th and marks, in practice, the end of the story. In the words of Judge Kollar-Kotelly, the effective end of the Microsoft case “will close an important chapter in the history of antitrust law“.
I missed this in the selection of news that had taken place during our days off, and I have, very rightly, been “reprehended” for this omission by Craig Farringer, Assistant Attorney General for the District of Columbia, and one of the members of the so-called “California Group”. (as some of you will recall, several States decided in November of 2001 that they did not want to accept the settlement proposed by Microsoft; this lead to a full evidentiary remedy hearing which resulted in the California Group Final Judgment). Craig Farringer (who also had extremely nice words for this blog, for which we´re grateful) has sent us a picture of some California Group lawyers and experts taken moments after the status conference outside the Prettyman courthouse in Washington. Here it is:
(Pictured from left to right is Adam Miller of California, the now famous technical expert Craig Hunt, Layne Lindebak of Iowa, Stephen Houck (who signed the original complaint lodged by the States in 1998), economics expert Chuck Clarke, and Craig Farringer).
Our congratulations to all those who worked on the case, be it for the DOJ, for the States, for Microsoft or for other third parties involved in the case.
And, by the way, on this side of the Atlantic the General Court has scheduled for May 24th the hearing on Microsoft’s appeal against the Commission´s findings of non-compliance with the 2004 decision, which led to an additional 899 million euro fine.
Competition Law and Sport (VII) Belgian Competition Authority investigates Pro League rules
Back in November we devoted another of our posts on competition law and sport to a couple of cases on which I have been/am imvolved. The core issue in one of those cases -currently pending before the Court of Arbitration for Sport- relates to whether, or under which circumstances, a total or partial closure of a league, the decision to eliminate some of its members, or a modification of the promotion/relegation rules governing the functioning of a given league (in that case, the basketball Euroleague) might constitute a restriction of competition attributable to the league itself or to those of its members having voted for the new rules.
Some of our readers have contacted us to inquire about our thoughts on a new belgian case that contradicts the idea (apparently shared by some officials within DG COMP) that such decisions cannot give rise to any competition concerns. Indeed, some weeks ago the Belgian Competition Authority formally expressed its concerns with the modification of the relegation rules of the Belgian football league (Pro League). (See here for the Press Release).
I won´t enter fully into the debate given that I´m not aware of the specificities of the case, and because my objectivity and freedom to express an opinion are somehow compromised. Nonetheless, I think it´s interesting to remark that this is not the first time that competition rules have affected similar decisions. There is an interesting precedent in relation to rugby leagues in Australia , and in the US it has been taken for granted that, absent antitrust exemptions, decisions on the shrinking of a league or even on the relocation of clubs/franchises would fall under the scope of the antitrust laws (a clear illustration of this was the 1991 proposal for a Fairness in Antitrast in National Sports (FANS) Act. (I often wonder if they hire someone specifically to come up with “original” acronyms over there…)
It´s clear to me that decisions of the sort of those outlined above fall in principle under the scope of Art. 101(1). Accordingly, any assessment on their legality should maily focus on the application of the criteria laid down by the ECJ in para. 42 of the Meca Medina Judgment and on whether the four Art. 101(3) conditions are satisfied.
We´ll keep you posted on any developments.
We´re back. And a few things happened while we were away
We´re back on track. Since, strangely enough, the world didn´t stop turning in our absence, there have been a number of interesting developments worth noting. Some of them will be the object of specific posts in the coming days, but, for the moment, here´s a choice of three: one from the EU, one from the US, and one from a third jurisdiction (Mexico), which are related to matters that have recently been/will soon be discussed on this blog:
Europe: Last Tuesday Commissioner Almunia delivered a speech at the GCLC´s Fifth Evening Policy Talk (by the way, the director of the host institution, who happens to be my co-blogger, Monsieur Petit, was absent; how rude is that?? 😉
Commissioner Almunia spoke about the “resilience and adaptability” of the competitition rules; he highlighted the four commitment decisions adopted by the Commission in the energy sector, pointed out that competition enforcement can achieve objectives other than the efficiency of markets (resorting to the example of facilitating generic entry into pharma markets), and insisted on the necessary complementarity of regulation and competition (with his eyes set on financial markets).
In addition, and very interestingly, Mr. Almunia announced plans to aim for a “better targetting” of State aid control, noting that the Commission´s services currently have too much on their plate. It will be most interesting to see the practicalities of how the Commission intends to “refocus” its resources on the State aid field. In the coming days one of the greatest experts on State aid matters will express his views on these plans on Chillin´Competition.
United States: More Google News (and this time we’re far from being the first ones commenting on them…). On earlier posts we referred to the controversy surrounding the Google/ ITA software deal. Some days ago the parties entered into a consent decree which imposes a set of detailed “regulatory” conditions upon Google’s future operation of ITA that would resolve all of the DOJ’s competitive concerns. Those concerns essentially related to the possibility of other flight search companies being foreclosed from access to QPX (ITA’s airfare pricing and shopping software). A press release from the DOJ briefly describes the conditions imposed by the consent decree in the following terms:
Under the proposed settlement, Google will be required to continue to license ITA’s QPX software to airfare websites on commercially reasonable terms. QPX conducts searches for air travel fares, schedules and availability. Google will also be required to continue to fund research and development of that product at least at similar levels to what ITA has invested in recent years. Google will also be required to further develop and offer ITA’s next generation InstaSearch product to travel websites, which will provide near instantaneous results to certain types of flexible airfare search queries. InstaSearch is currently not commercially available, but is in development by ITA.
To prevent abuse of commercially sensitive information, Google will be required to implement firewall restrictions within the company that prevent unauthorized use of competitively sensitive information and data gathered from ITA’s customers. The proposed settlement delineates when and for what purpose that data may be used by Google. Google is also prohibited from entering into agreements with airlines that would inappropriately restrict the airlines’ right to share seat and booking class information with Google’s competitors. Finally, the proposed settlement provides for a formal reporting mechanism for complainants if Google acts in an unfair manner.
(For a more detailed explanation on these conditions read the Proposed Final Judgment. Other documentation related to the case can be found here).
The consent decree is subject to the US District Court for the District of Columbia’s approval, and must now go through a 60 day comment period. As all Google-related stuff, the consent decree has instantly spurred different sorts of enthusiastic reactions. Google is excited because the deal is now “cleared for take off”, and rivals are happy too because one of the conditions imposed by the consent decree effectively creates a mechanism for the continued scrutiny of a narrow part of Google’s activities. Any reactions from our readers?
International antitrust: The impact of competition law is becoming increasingly more noticeable in Latin America. The Mexican Federal Competition Commission (COFECO) imposed a record MXN12 billion (USD 1 billion= 865 million euros) penalty on Telcel (a subsidiary of America Movil, owned by Carlos Slim). The sanction was announced some days ago, but it was only yesterday that COFECO gave details about its decision, explaining that Telcel had charged interconnection fees to terminate calls on the Telcel network that were above the implied charges for calls made within its own network, or even above the final charges Telcel makes to its own customers. The fact that Telcel was a repeat offender motivated the levying of the maximum possible sanction (i.e. 10% of Telcel´s turnover in the preceeding year). We don´t have much more info on this, but since I´ve been asked to write about it in the Mexican press, it´s quite likely that we´ll discuss the case more in depth in the near future.
Welcome back!
Time out
Chillin´Competition is asking for a time out. After some hectic weeks (during which we´re satisfied to have managed to keep the blog updated daily) we´ve decided to take some days off. Nicolas is currently missing in action somewhere in Indochina, and I should also be flying off to Spain in the coming days.
We´ll resume business as usual on April 25th.
Cheers!
A strong candidate
In the past few days we’ve learnt that President Obama will run for re-election in 2012 and that Zapatero won’t. But unfortunately not all candidate-related news could be so positive: we have a strong candidate for the 2011 worst antitrust development prize.
The Spanish CNC announced on Tuesday its decision to initiate a formal investigation concerning the Tourism Committee of the Confederation of Spanish Industries (CEOE) as well as one of its executives (well known in Spain as a former president of FC Barcelona) on the basis of allegations that the latter had stated at a tourism fair held in Madrid last January that it would be necessary to increase hotel rates for 2011.
I was completely puzzled when I read the CNC’s press release (and many of you will recall that this is the second time that this has happened lately with a press release from the CNC).
I don’t see how such a general non-developed statement could potentially have the effect of giving rise to a raise of prices (although in view of the prevailing trends, it’s likely that the CNC won’t discuss this and will rather consider that in addition to info exchanges or collective bargaining agreements, public speeches such as this one constitute a restriction by their object..) in view of the number of hotels operating in Spain, of the hundreds of relevant markets with different competitive conditions on which they operate, and given the absence of any reference to what the recommended raise was or of any other alternative focal point. According to economic theory it’s simply absurd to pretend that an statement such as the controverted one can, without more, generate any collusion at all.
What’s more shocking here is that almost no one within the sector was until now aware of the existence of such statement on the need of raising prices, and so the main effect of the CNC’s intervention has been to expand the reach of what it sees as an invitation to collude. A cynic could even argue that the CNC is mediating in an info exchange amongst competitors…
Looking at the positive side of it, the “good” news is that for as long as some competition authorities continue to measure theis success in terms of volume/number of cases dealt with, there’ll be plenty of competition..for the worst antitrust development prize.
Information Exchange and Cartels – Dangerous Liaisons?
Are information exchanges really = cartels under EU competition law?
The issue has triggered many discussions on the blog lately. I just thought I’d post my own ruminations on this.
The Guidelines do not really say that information exchanges are cartels. Let’s take a close look. There are four references to cartels in the guidelines that concern information exchanges. The first one, which is general in scope, can be found at §9 and expressly says the contrary: “Although these guidelines contain certain references to cartels, they are not intended to give any guidance as to what does and does not constitute a cartel as defined by the decisional practice of the Commission and the case-law of the Court of Justice of the European Union”. The three other references, which can be found at §§59 and 74, do not quite say that information exchanges are cartels. It is stated there that exchange of information, in particular on future prices, “with the object of fixing, in particular, prices or quantities” will be “considered and fined as cartels”, which is quite different from saying that they are cartels (and which is in line with the existing case-law on “concerted practices”). Moreover, in so doing, the Guidelines accurately indicate that only a subset of information exchanges may be treated as cartels (am a “glass half-full”, optimistic person) . Those are information exchanges that have the object of fixing prices or quantities. It is thus incumbent on the Commission – or on the complainant, applicant, whatever – to prove that the information exchange has an anticompetitive object, which I understand here as purpose (or intention). Not all information exchanges are thus treated as cartels.
From an economic perspective, what the Guidelines say is not illegitimate. Moving beyond the possibly unfortunate semantics of the Guidelines (why not stick to the good old concept of a “hardcore restriction”), exchanges of information on future prices in the market place are, from an economic standpoint, quite a bad thing. First, such practices are known to facilitate tacit collusion on tight oligopolistic markets. Second, in many cases, exchanges of information on future prices are just the tip of the iceberg: they serve as the adjustment mechanism of an otherwise unproven, but explicit collusion.
Are the Guidelines really tougher on information exchange? On this blog and elsewhere, it has been argued that the reference to cartels could signal a tougher regime for information exchanges. On this, a counterintuitive reflection springs to mind: from a defense counsel perspective, equating information exchange on future prices with cartels may actually mark a relaxation of the legal regime applicable to such hardcore restrictions. Think about it: the culprits now can benefit from leniency and enjoy the penalty discounts afforded under the settlement notice. To me, this does not really sound like an aggravation of the legal regime applicable to exchange of future information (which as I said were treated in the case-law as egregious restrictions of competition).
Where the concerns really are. Don’t get me wrong: I am not a fan of the Guidelines’ infuriated semantics. But I think there are other, more important areas of concern in relation to information exchange. I regret in particular that the Guidelines espouse a checklist (or “laundry list”) approach to information exchanges, which provides little, if no, legal certainty to firms willing to self assess proposed agreements. To assess such agreements, firms must review a long range of factors of seemingly equal importance, and the calibration of pro v. anti-collusive factors is notoriously daunting. Given that the theory of harm ascribed to information exchange is tacit or overt collusion, the Guidelines should have subordinated a finding of incompatibility under Article 101(1)TFEU to proof of the 3 cumulative Airtours condition (there’s a discrete reference to Airtours at fn61). This would have been sensible from both a legal certainty and an economic standpoint. Moreover, this solution would have ensured legal consistency across the various areas of EU competition law.
Anti-doping and Antitrust
(Note by Alfonso:Pablo Ibañez Colomo is once contributing to our blog, and, as usual, he provides us with his original views. This time he resorts to a recent high profile doping case to highlight the common features between anti-doping and antitrust law. By the way: cycling is a very sensitive issue for me nowadays since the brand new bike that my friends recently got me for my birthday was stolen during the weekend..)
I have always been a cycling fan (and I am now the proud owner of a proper road bike, happy to report that London is a bike-friendly city—and not only because it does not rain that much). After this introduction you will not be surprised to learn that I have been closely following the doping case involving Alberto Contador, three-time winner of the Tour de France.
For those of you who are not familiar with the case, let me give a brief introduction. Two months after last year’s Tour de France, it was made public that Alberto Contador had tested positive for clenbuterol in the race. This looked like a borderline case from the beginning (it has been reported that the case was made public only because the information was leaked to a German journalist). Apparently, the amount of clenbuterol detected was really really small, and the possibility that the cyclist had ingested contaminated beef could not be ruled out at the outset (at the very least, it did not seem to be one of these improbable excuses advanced by athletes in similar circumstances). Against this background, the Spanish Cycling Federation cleared the cyclist. This decision has recently been appealed by the UCI (Union Cycliste Internationale) and the WADA (World Anti-Doping Agency) before the TAS (Tribunal Arbitral du Sport).
The more I read about this case, the more I thought about the analogies between anti-doping and antitrust in many respects. These are relatively young legal disciplines that are at the crossroads of administrative and criminal law, of private and public law and in which authorities still have a long way to go in many respects. Let me mention two aspects in which the analogy between the two fields is particularly marked:
(click here to continue reading)
ABA 2010 Antitrust Year in Review
The very active International Antitrust Law Committee of the American Bar Association (ABA) will present tomorrow, at the ABA’s Section of International Law Spring Meeting, a most interesting report that analyses and summarises the key antitrust developments that took place during 2010 in 49 jurisdictions around the world.
Check it out here: ABA 2010 Antitrust Year in Review.
The report (which has been coordinated by Susana Cabrera, Konstantin Jörgens and Álvaro González, friends and colleagues at Garrigues) really is an excellent tool for anyone interested in a quick but thorough update on international antitrust.
Microsoft´s complaint against Google
It´s been reported today that Microsoft has lodged a formal complaint with the Commission. So far the news have basically reported what was said in a blog post published last night by Microsoft´s General Counsel, so we´re going to try to be the first ones going a little beyond.
I´ve already stated my views on many of the issues which the complaint presumably deals with, but I will add here some ideas (and insist on others). As usual, a disclaimer is in order: my views are those of an outsider with no access to information other than that which is public.
This will, once again, be a bit lengthy, so, if interested, you can click here to keep reading.
ULg – New Full English Version of the LL.M. in EU Competition and IP Law
To many people, Liege is an old industrial city which has little to offer.
But Liège has a great geographical position. It is just a 100 kms away from Brussels. Thanks to this, it is close from many brainy competition (and IP) professionals. This is what prompted my predecessor Prof. Geradin to create a bilingual LLM in EU Competition and IP law.
Now that we have a 8 years track record, I think I can modestly pretend – pardon the bias – that we have the best, and most likely the cheapest – several hundred € – LL.M in competition (and IP) law of Europe :).
Obviously there’s a downside with cheap tuition fees: little money for my research centre. But there’s a big upside: in Liege, we are not bound to award degrees to poor LL.M students that should be failed. Put differently, our evaluation process is not influenced by the risk of losing money out of a decrease in prospective applications [on second thoughts, it may not be good advertisement to say publicly that we fail students: we do not fail that many].
Now, our LL.M has been increasingly successful in the past years, attracting students from everywhere in Europe and outside (Peru, China, Russia, etc.). I trust the many conferences we organize in Brussels and the opportunities for publication in e-competitions are interesting for prospective students.
This year, we’ll open a full-english version of the LL.M programme. It will be opened to students from far-away countries, who have no background and no professional interest in the French language. The programme of this English-based LL.M can be found hereafter.
Chillin'Competition 