Chillin'Competition

During his presentation last week, Alfonso shed some light on why the Commission was so eager to settle abuse cases in the high tech sector. In brief, he argued that the Commission uses commitments decisions because it does not know how to handle those cases under the current Article 102 TFEU standards. Settlements arguably offer a convenient exit route, because remedies are brought to the table, and the Commission avoids the risks of annulment before the Court.

Similarly, in a comment a few weeks ago, Adrian made the following observation:

“Isn’t it because the EC shies herself away from building a rather complex novel case by reaching the compromise of commitments? And isn’t it the trend lately that the EC is less prone to take the risks of probing unwalked cases and prefers to plea bargain?!”

I quite like this judicial avoidance theory, not least because it also has a strong managerial angle. When DG COMP is taken to Court, the Legal Service normally deals with the case. But DG COMP is not entirely out of the picture. The case-handlers must indeed brief the agents of the Legal Service, and assist them throughout the proceedings. In other words, important human resources from DG COMP are diverted from case-handling to litigation. And this is somewhat disruptive from an enforcement perspective.

Now, this brings me to the substance of this post: we often are prompt to talk of cases as victories or failures either for the Commission or for the parties. On this blog, for instance, we have often written that the Commission had won (or lost, as the case may – more rarely – be) cases in Court. Whilst this language is clearly inappropriate from a formal standpoint – annulment proceedings are not trials against the Commission, but against decisions (“un procès à un acte” in the words of French administrative law) – it also shrouds that the Commission may “gain” when its decisions are set aside. In hindsight, for instance, the Airtours v. Commission case can be interpreted as a big win for the Commission, because it helped those in the Commission willing to adopt refined legal tools for merger analysis (amongst other things, the Guidelines on horizontal mergers) and it ushered in an unprecedented internal administrative reform that was praised by the whole antitrust community.

This reflection sprung to mind today when I read again the General Court’s judgment in T-427/08, CEAHR v. Commission. In this case, the Court quashed a Commission decision that had rejected a complaint out of market definition arguments. In essence, the Commission was arguing that the market for spare parts of luxury watches could be conflated with the primary market for luxury watches, and that all spare parts for luxury watches belonged to the same relevant market regardless of the brand. The General Court disagreed (rightly in my view), and forced the Commission to investigate the complaint. The General Court held that the Commission had not proven that a price increase in the secondary market would have led consumers (i) to switch to other secondary products; and (ii) to switch to other primary products. I note here in passing that contrary to routine decisional practice, the Commission was supporting here a very wide market definition.

Interestingly, the CEAHR v. Commission judgment – which had been at the time described as a big setback for the Commission (including by myself) – has served the Commission to an unexpected extent, providing it with useful ammunition to craft new abuse of dominance cases. The best proof of this is perhaps the IBM Mainframe case. In this decision, the Commission relied extensively on CEAHR v. Commission to suspect IBM of dominance on the  markets for “inputs needed in order to provide maintenance services to IBM mainframes which cannot be sourced outside IBM” (see §24 of the Decision).

The upshot of the above point is that behind the Commission’s judicial misfortune, lurk possible advances for EU competition law, including some that benefit to the Commission itself. This, in turn, should prompt us to stop talking of cases in terms of victories and defeats. Otherwise, as mentioned by Cedric Argenton last week at the same lunch talk, we will witness less and less standard Article 7 decisions, and a propagation of Article 9 decisions which insulate the Commission from judicial review and yield only little, if no, guidance on the substance of the law.

One of the good things about my powerpoint presentation on “Search engines and competition law”  is that it does not give a clue about the substance of what I said  😉

As you can infer from my previous posts on this investigation, I’m quite skeptical (to put it mildly) with regard to the legal basis for the accusations against Google (partly because I don’t know whether there are any…).

Whereas in my presentation I mostly addressed search bias-related allegations, there is another issue that raises pretty fundamental questions. I’m referring to the claim that Google “scrapes” content from other websites and appropiates it (these allegations refer to the small portion of black letter text that contextualizes search results and that you find below the green web address shown below every result).

Allegations over this practice strike me for various reasons and raise a few important questions, mainly what on earth does it have to do with competition law?

If the content at issue is not copyright-protected; if they are short informative excerpts originating from content made publicly available; if they contribute to “scraped” pages getting more traffic; and if they’re necessary for users to understand search results; why should competition law ban their use? Why should competition law create a second level of protection stricter than copyright law? Why second-guess copyright law?  This brings us back to an old debate: where does competition law stop? Should antitrust also second guess, for instance, environmental law, tax law, accountancy or data privacy? (I’ll come back to the data privacy-antitrust interface on a later post, for it “coincidentally” appears to be a hot academic topic nowadays).

Allegations on scraping were discussed within the framework of the FTC’s investigation. In fact, as part of the settlement with the FTC Google has committed to allow all websites to opt out of appearing on Google’s vertical sites while still appearing in organic results.

Given that complainants in the EU proceedings have also insisted on this matter [(probably scraping content from each others’ complaints ;)] it’s safe to guess that the European Commission might attempt to obtain a similar commitment, and I find this quite a problematic precedent.  Againg: why is scraping a competition law issue?

I’m comforted not to be the only dissenter. Commissioner Rosch authored a dissenting opinion accompanying the FTC’s statement in which he articulates the view that these practices “do not violate the antitrust laws in any respect“.  He notes that his colleagues manifested “strong concerns” about these practices, but that no one ever argued that they breached antitrust rules, not even Section 5 of the FTC Act.

For a sensible opinion on why the display of content from other websites in search results is a perfectly valid business practice, take a look at the German Supreme Court’s Judgment in the Paperboy case (click here for a summary in English)

Below in CAPS my markup on Alphonso’s post:

Nico and I have come up with a way of duplicating posts out of one piece of news; one of us writes something and then the other disagrees  [WE NOW TRIPLICATE MATE]

Last Tuesday Nico wrote a post titled “Revolving doors” in which he expresses the concern that “the cumulative effect of appointing previous Commission officials as judges, plus the very many référendaires who have spent some time in the EU administration may give rise to a pro-Commission bias at the Court“.

[I was actually in Luxembourg for a Court hearing -my first one in the front lawyer’s row- when Nico wrote it, but I’ll tell you about that some other time].

Without entering into the debate on whether there is or there isn’t too much of a pro-Commission bias at the Court (in my view, there is the same deference towards the public authority that we find in any European administrative system – in the US, on the contrary, that deference is less visible-), I don’t at all share Nico’s concern [CHECK CONSISTENCY: YOU DONT WANT TO ENTER INTO THE DEBATE, YET YOU EXPRESS DISAGREEMENT. WOULD SUGGEST DELETING THE INITIAL CAVEAT].

Assuming that there was such bias [YOU DEPART FROM MY INITIAL ASSUMPTION, WHICH POSTULATED THE ABSENCE OF BIAS, YET ANTICIPATED A RISK OF BIAS], I would argue that it has nothing to do with former Commission officials becoming members of the Court: [CORRECT. TO BE MORE ACCURATE, THIS POSSIBLE BIAS  HAS NOT ONLY TO DO WITH COMMISSION OFFICIALS BECOMING JUDGES AT THE COURT, BUT ALSO IS DUE TO SEVERAL OTHER FEATURES OF THE COURTS SYSTEM. A FREE PERSONAL SAMPLE: PRESUMPTION OF LEGALITY OF COMMISSION DECISION, DOCTRINE OF MARGINAL REVIEW OVER COMMISSION SUBSTANTIVE ANALYSIS, REPEATED APPEARANCE OF SPECIALIZED LEGAL SERVICE AGENTS ON BEHALF OF THE COMMISSION (AS COMPARED TO HIGH TURNOVER OF LAWYERS  REPRESENTING CLIENTS IN COURT), INEQUALITY OF APPLICANTS CHALLENGING A X-HUNDRED PAGES DECISION UNDER A 50 PAGES CAP ON SUBMISSIONS; SYSTEMATIC RELIANCE OF THE COMMISSION (READ THE LEGAL SERVICE) ON FORMS-BASED DEFENSE ARGUMENTS, ETC.]

Only two current Judges at the GC have previously worked at the Commission:  Marc van der Woude  (who was also a private practitioner, which should offset any bias; ask anyone in the business their opinion on him and you won’t hear a single negative one), and Guido Berardis (of whom I’ve also heard very positive things) [THE ISSUE IS NOT ABOUT WHAT WE PERSONALLY AND SUBJECTIVELY THINK ABOUT THEM; I TOO HOLD THOSE JUDGES IN GREAT ADMIRATION.  IT IS ABOUT COGNITIVE PROXIMITY TO CERTAIN IDEAS, OBJECTIVE QUIRKS AND BIASES, WHICH ARE HUMAN AND AFFECT ALL OF US, INCLUDING THOSE SEEN AS THE BEST PROFESSIONALS. THOSE THINGS HAVE BEEN ADUNDANTLY DOCUMENTED BY BEHAVIORAL ECONOMISTS]. 2 out of 27 (3 if the Committee gives the green light to Kreuschitz, which it undoubtedly should) does not appear to be an unreasonable proportion [UNLESS YOU PLEAD BEFORE A 3 JUDGES CHAMBER – THE STANDARD FORMAT FOR A GENERAL COURT CHAMBER – AND ALL THREE SIT IN IT]. Furthermore, all three of them were part of the Legal Service, which means that an important aspect of their work -aside from pleading- consisted in identifying flaws in the Commission’s work [NOT SURE THIS IS YOUR BEST SHOT. LET ME EXPLAIN. WHEN A DECISION IS APPEALED, THE LEGAL SERVICE HAS ALREADY CONCLUDED TO THE ABSENCE OF FLAWS [OTHERWISE THE DECISION WOULD NOT HAVE BEEN ADOPTED]. OUR JUDGES WHO IN THE PAST WORKED FOR THE LEGAL SERVICE WILL THUS LIKELY BE TEMPTED TO ASSUME THAT THE DECISION IS LAWFUL, AND DEFER TO THEIR FORMER COLLEAGUES ANALYSIS. WHY REDO THE ANALYSIS OF THEIR ***** PEERS? ].

If you ask me (and part of my job is to beat the Commission in Court), the problem lies not in Judge’s previous professional experience, but rather in Judges being appointed for political reasons other than their knowledge of the law (see here). And people who know about EU law are generally -there are a few exceptions- either academics (most of whom also have defined pro or anti Commission biases), practitioners (we may have the opposite bias, plus we’re too competition law oriented), and Commission officials.

In sum, I would argue that we need Judges that know their stuff inside out, no matter their nationality or whether they are national judges, academics, ex-Commission officials or former practitioners. [AGREED. I WOULD KEEP THE SENTENCE AS SUCH, AND SIMPLY ADD  “IMPARTIAL” AT THE BEGINNING:  “IN SUM, I WOULD ARGUE THAT WE NEED IMPARTIAL JUDGES THAT KNOW THEIR STUFF INSIDE OUT”]

A FEW OTHER COMMENTS/REMARKS:

YOU DO NOT ADDRESS THE REFERENDAIRES;

IN MOST MODERN SYSTEMS OF LAW, THERE IS A REAL SEPARATION BETWEEN PROSECUTORS AND JUDGES, AND FOR GOOD REASON; 

THE QUESTION IS NOT SO MUCH ABOUT WHETHER THERE IS OR NOT A BIAS. WHEN IT COMES TO JUSTICE, THE MERE SUSPICION OF A POSSIBLE BIAS IS INTOLERABLE. JUSTICE IS THE LAST RESORT REMEDY AGAINST RISKS OF ARBITRARINESS. IT THUS  MUST COMPLY WITH THE HIGHEST POSSIBLE STANDARDS OF IMPARTIALITY. PUT SIMPLY, IMPARTIAL JUSTICE MUST NOT ONLY BE DONE, IT MUST ALSO BE SEEN TO BE DONE.