Ménage à trois (part II; José Luis Buendía): Case T-169/08 PPC v Commission (… and Jules v Jim)
For this second part of our first ménage à trois discussion we are proud to present you with José Luis Buendía’s view of the Greek Lignite Judgment in response to Marixenia Davilla’s earlier post. Aside from being the head of Garrigues’ Brussels office -where I happen to work-, José Luis is widely regarded as “Mr Article 106”. He also masters the art of illustrating all hiw views with metaphores and parables. Continue reading and you’ll see what we mean….
[For a contrarian view of José Luis’ arguments check our Makis Komninos post (which we will publish here tomorrow)].
It is a real pleasure to be invited to contribute to this blog. This is even more the case given the topic, the format, and the identity of my nice and learned counterparts – Marixenia and Assimakis. Even if I don’t share their enthusiasm about this judgment, it is clear that they have done an excellent job as lawyers. So, congratulations to them and to their colleagues who worked om the case.
Contrary to them, despite having been in the past an EC official, I have not had any involvement in this particular case. I am nevertheless very interested in it, since I am working on a new edition of my book on Article 106. Moreover as I have explained in a recent article, unfortunately there are not so many Article 106 cases to comment. So I am glad to have this opportunity.
This case made me think of François Truffaut’s film Jules et Jim about a genuine ménage à trois. The Catherine of the movie (Jeanne Moureau) had – simultaneously – a husband and a lover. As Marixenia rightly implies in her interesting comment, Article 106 also has simultaneous links with State aid on the one hand and with antitrust on the other hand. In my view the problem with the judgment is to assume that Article 106 is only married with antitrust and faithful to it. It is not. Article 106 is about State measures and is therefore essentially different from antitrust.
It is for this reason that, in my opinion, this judgment is not really consistent with the previous case law that it claims to be following. Indeed, previous judgments, like RTT, considered that the mere granting of an exclusive right to a public undertaking previously enjoying a dominant position was in itself contrary to Article 106 combined with Article 102 TFEU. This conclusion was based on the effects of the State measure creating the extension of a dominant position from one market to another one (effects that were similar to those of an abuse). The said conclusion did not require any actual abusive behavior.
In today’s judgment the General Court reads the previous case law in a different manner and finds that it does require the existence of an abusive behavior, at least a potential one. Since the EC decision did allegedly not established the abuse but relied only on the effects, it was according to the Court in breach of the Treaty. This reasoning seems to me clearly contradictory with the case law.
This reasoning seems also a little bit abstract. Indeed, the judgment itself concedes that the mere possibility of a future potential abuse would have been enough to satisfy the legal test. However, since according with the judgment, the decision did not explore this issue in an explicit manner, it had to annul it. It seems however obvious to me that a State measure extending the dominant position from one market to a neighbor one has, at the very least, the potential to lead to abusive behaviors. So, the Court seems to say that it is only the lack of an explicit reference to this obvious consequence that leads to the annulment.
I assume that the Commission may appeal the judgment before the Court of Justice in order to clarify the application of Article 106 with regard to special or exclusive rights. I also think that in the future the Commission should be more active and more coherent in the application of this provision.
In any event, I also know that my Greek friends would have a view different from mine, so I really look forward to the continuation of the debate.
Antitrust Figure of the Day
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.
Ménage à trois: The General Court’s judgment in Case T-169/08 PPC v Commission
A few posts ago we decided to follow the Commission’s example and launched a reform aimed at working less. Our plan is to do so by opening this blog to comments on recent Judgments on the part of three experts: one writes a “standard post” on the Judgment, and two others comment on it. As anticipated, our first ménage à trois deals with the Greek Lignite case (concerning the inteface between Arts. 106 and 102 TFUE). Our three inaugural guests are three good friends of this blog: two of them (Marixenia Davilla -Shearman&Sterling- and Makis Komninos -White&Case- and were actually involved in the case (on the winning side) and the third (José Luis Buendía -Garrigues-) is the author of the bible on Article 106 (of which a new edition is on the pipeline). Marixenia has written an excellent post to get the ball rolling. Comments will follow soon. Enjoy!
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First things first…Many thanks to Chillin’ Competition for ambushing giving me the opportunity to participate in my first ever platonic ménage a trois. This is so exciting that I am contemplating making an addendum to my curriculum. I am certain it will boost my chances of being promoted before I turn 50.
Let’s move on to the juicy stuff now, namely, the PPC judgment rendered by the General Court on 20 September 2012. Having worked on this case whilst at Howrey (RIP), I am particularly pleased to see PPC winning a very difficult battle.
This case concerns Article 106 TFEU, a provision that cannot be implemented on its own, but must be combined with another EU law provision, in this case Article 102 TFEU. Article 106 can also be described as a sort of transgender hybrid enforcement tool, existing in limbo somewhere between antitrust and state aid law, without really being any of the two. Commission decisions under Articles 106/102 are addressed to member states, but are not state aid decisions. They make findings regarding actual or potential abuse of dominance, yet the level of analysis required in such cases to prove an infringement is notably lower compared to that required for establishing a “pure” abuse of dominance under Article 102. Pursuant to Article 106(1)/102 case law, the Commission is not required to show that the company in question abused its dominance, but that it can be led to committing an abuse merely by exercising the state measure in question. In other words, Article 106 is not a bird, is not a plane, but does (still) fly, and has been a pretty handy weapon for the Commission, particularly in cases concerning network industries.
But the fun does not end there. The case law developed in relation to Articles 106(1)/102 predominantly comprises preliminary rulings by the Court of Justice, which are neither consistent with each other, nor that easy to categorise. That said, a broad categorisation is possible, and in PPC’s case the Commission relied upon the so-called “inequality of opportunity” case law (Raso and Others, France v Commission, GB-Inno-BM, and Connect Austria). According to the Commission, based on that case law, there is no need to identify a specific type of abuse; suffice to show that the state measure in question leads to an inequality of opportunity between market operators. Haha, piece of cake! Prove that, dear Commission official, and you’re done, you can close the shop and go on holiday!
This interpretation is somewhat unsatisfactory. In its appeal against the contested decision of March 2008 PPC invited the General Court to clarify this issue, and the latter bravely took on that challenge.
Marketing domination
In a previous post we explained why, in our view, the criticism that DG Comp only targets U.S. companies does not make much sense (see here) .
But now we have discovered -with the help of the above pic (thanks to Gil Ohana for sending it to us!)- that antitrust enforcement concerning U.S. corporations may be based on a big misunderstanding rooted on different terminology. Whereas in Europe we’re suspicious of any reference to dominance , in the States this term does not have the same connotations. By bragging about their dominance on the market (like S&M does in the photo), some firms might be unvoluntarily attracting antitrust scrutiny. The bottomline: there are no U.S. dominant firms, only marketing tricks.
[Yes, I know, this “theory” doesn’t pass the laugh test, but the pic is good anyway].
A piece of important advice: don’t make the same mistake I made, and don’t google SM domination (at least while at the office…). Really, don’t!
Last Call – Conference on EU Competition Law and Financial Markets
The Brussels School of Competition (BSC) and the Liege Competition and Innovation Institute (LCII) are pleased to invite you to their joint conference on 22 November 2012.
This event is devoted to Competition Law and Financial Markets (see link to programme at the end of this post). Issues covered span the emerging role of competition law amidst large scale price fixing allegations in the financial industry, the prohibition of the Deutsche Börse/NYSE merger, open and fair access to financial infrastructure, competition in credit rating services, the trade-off between competition enforcement and financial stability, the impact of prudential rules, etc.
To discuss those issues, we have invited a range of triple A experts, including EU Commission and ECB officials, industry representatives, lawyers as well as leading academics.
Programme for download: INVITATION BSC – 22 11 12
For more information, please contact Cécile de Grand Ry (Phone: +32 2 515 08 36 – @:cgr@vbo-feb.be )
The Friday Slot (13) – Marc van der Woude
For this new edition of the Friday slot, we are thrilled to publish our first interview with a member of the EU judicature, Mr. Marc van der Woude. On this blog, we hold Marc in great admiration. To us, he represents the ‘total’ competition lawyer. In his career, Marc has worked as a Commission official, as a member of the bar, as an academic and now as a Judge. In other words, Marc has seen the discipline from every possible angle. This gives him an unparalleled ability to ‘think’ competition issues with a rich and creative 360° perspective. I am sure most of you will notice this in reading his great interview. On top of this, Marc has made a very impressive appearance in the competition-Oscar winning movie, “The Raid”. Marc’s career is a true source of inspiration for us. We are so so grateful to him that he accepted to answer to our questions.
1. Why do you work in antitrust law? How did you first get into it?
My first experience of competition law was academic in nature. I was taught competition law for the first time by René Joliet at the College of Europe in 1983. The following year I worked as an assistant to Valentine Korah and Robert Kovar who remain brilliant academics approaching competition law in different ways. Valentine Korah tended to focus on the specific facts of the case whereas Robert Kovar had a broader approach focusing on the system as a whole. My first practical experience dates back to 1986 when I started to advise companies occasionally alongside my job as a lecturer of economic law at the University of Leiden. Ever since I joined DG COMP in 1987, competition law matters have been my daily bread and butter.
2. What do you like the most about your job?
I am very pleased at the General Court. The large majority of cases we have to deal with are extremely interesting and well presented. I also have the privilege to work on these cases with pleasant and competent colleagues. Exchanging ideas and arguments, agreeing and disagreeing, keep you sharp. In addition, it remains fascinating to see how people of 27 different nationalities and of various professional backgrounds work together in harmony.
3. What do you like the least about your job?
I have difficulties in finding negative aspects of my current job. However, there may be two things which I sometimes find irritating and inefficient: formalism and conservatism. Like many other lawyers, judges tend to have a disproportionate interest in form. Obviously, form is important, but the attention to form and detail should never distract from the substance of a case. Also, lawyers tend to be conservative and feel comforted by the existence of precedents. I am regularly confronted with arguments that do not have any other merit than referring to past practices or customs. This backward-looking mentality is not very helpful, if one wants to increase the Court’s productivity and the quality of its judgments.
4. Any favorite antitrust law books? And favorite non-antitrust law books?
To be frank, even if I sometimes enjoy reading law books, I rarely read them for leisure. The book on “antitrust and the bounds of power” which Giuliano Amato wrote in the nineties is an exception. He describes in a very simple and concise manner the problem of balancing private and public power in a liberal democracy. This question is at the core of all competition law discussions. Public intervention has a societal cost, but the absence of such intervention as well. Where do you put the cursor for intervention?
It is hard to say what my favorite non-law book is. It depends on my mood. There are three books which now come to my mind. The first is “Het grijze kind” (The grey child) by Theo Thijssen, a Dutch prewar author. It is about childhood endurance: there is no reason to get upset by unpleasant things that will not last. The second book is “Belle du Seigneur” by Albert Cohen. It is about a passionate love story between the secretary general of the League of Nations and the wife of one of his subordinates. The early parts of the book are compulsory reading for all those who work in international institutions. The same holds true for Tony Judt’s “Postwar”. His book is not a compilation of “national histories”, but offers a comprehensive approach of the phases and trends in our common European history.
Expert economic evidence(?) in competition cases
On 21 November Concurrences, A&O and MAPP will be holding a worskshop on “Standard of Proof for Economic Evidence” (registration is free and still possible through this website).
The topic is very interesting. I don’t know whether I’ll be able to attend, so I’ll make a point in public here (or rathe repeat what I co-wrote on a piece published here) in relation only to the assessment of economic evidence in judicial proceedings. To me, it’s more appropriate to refer to “economic argument” than to “economic evidence”. Unless the expert is appointed by the Court (off the top of my head I can only remember this being done in Woodpulp) or comes from the Commission (which has the winning hand enjoys a margin of discretion in this regard), I do not see many differences between legal and economic argument put forward by the parties in competition proceedings, and no one would call lawyers´ pleadings “legal expert opinions”.
Certainly, in some cases there will be a hardcore of economic data which is not contested by opponents (be it the Commission, the parties, or complainants), but a great part of the “evidence” will be opinion and based on each one’s assumptions, not strictly evidential. An expert presenting evidence is supposed to act as a translator for the judge on areas on which the latter lacks the appropriate training. However, in real life, expert economic evidence has a “strong tendency” to favor the argumentation of one particular party, and is often contradictory with that presented by other parties.
In the end, economic evidence offered by the parties will be assessed by the European Commission and EU Courts as a friendly (former CFI Judge Huber Legal would call it “sisterly”) statement commanded by the interested party with a view to making its case more palatable to the deciding authority or court. Its value will depend on how persuasive the economist in question can be, just like lawyers and their plaidoiries. In the words of Hubert Legal at the 2006 Fordham conference “[T]he way we proceed is compatible with our Rules of Procedure because [economists] are not pleading under oath; it is only a part of the pleading, like you would have the possibility to ask a member of the board of a company to speak, or your sister or whoever is interested in the case”.
Best competition law course ever (?)
Ok, yes, I might perhaps have exaggerated a bit, but I needed a catchy title to call your attention to this one 😉
On a previous post we already referred to the competition law course that pays me a few weekend trips to Spain I’m co-directing at the IEB in Madrid. The brochure is finally now available: XVI_Curso_Competencia_IEB_2013.
We already have a bunch of students from the Spanish competition authority, Latin american competition authorities, as well as from several companies and law firms.
We would be grateful if you could please pass the brochure on to anyone who you think might be interested!
Antitrust Rumours
Heard three weeks ago in Hong Kong: our antitrust master, our antitrust icon, our antitrust god Prof. Richard Whish – who will be leaving King’s College London in August 2013 – would be a strong contender for a high-level position at the forthcoming Hong Kong Competition Authority.
Heard last week in Brussels: people close from the Court case have leaked to Chillin’Competition that the draft ruling in Intel v. Commission (T-286/09) will likely be an outstanding piece of nonsense ordoliberalism. Not yet out, and we already have a candidate for the worst 102 judgment of 2012. Wow!
Antitrust and political imbecility
(The post below will perhaps be a bit more controversial than the stuff we usually publish here. I nonetheless bet that its title will draw some additional readers to it: insults -particular when linked to politics- are always good marketing tools! Please note that these are simply some Sunday afternoon ruminations that aren’t that well though through; they are rather “thoughts in progress”. Would be happy to further distill/refine them through public discussion, so feedback will be appreciated).
In The Revolt of the Masses, Ortega y Gasset wrote a phrase that I often quote:
“Aligning oneself with the left, as with the right, is only one of the numberless ways open to man of being an imbecile: both are forms of moral hemiplegia.”.
This quote has in the past got me into trouble long discussions. There can certainly be some nuances to be made to it (some issues traditionally defended by the left, or by the right, -extremisms aside- are certainly worth aligning with; the quote rather refers to all accross the board uncritical alignments), but, frankly, I think Ortega had a point.
Another great writer -Orwell- said that “to see what is in front of one’s nose needs a constant struggle”. Undertaking such exercise from a pre-defined right or left perspective makes things easier, for you know in advance about what stance to take on most issues. On the contrary, assessing all issues objectively and on their merits (to end up agreeing sometimes with the left, sometimes with the right, and often benefiting from a mixture of the two) is complex, tiring and some would say perhaps unfeasible.
Now, considering that you probably – and rightly- don’t give a damn about our views on politics, you might legitimately ask why on earth I’m telling you all this. Well, because I think that the expansion and consolidation of antitrust laws accross the world can actually contribute to mitigating political imbecility through the promotion -even if implicit- of sensible centrist attitudes (actually, I’m not sure I think it, but it’s an interesting thesis anyway). Let me try to explain what I mean, and please tell me what you think:
The widespread adoption of antitrust rules implies a recognition that (i) freedom of enterprise and free competition is positive; and (ii) for such freedom to be real market forces and excessive market power need to be effectively supervised and corrected through public intervention. This crucial paradox -to limit some sorts of freedom for the sake of freedom itself- might sound obvious to you (after all the laws themselves are “those wise restraints that make men free“), but it has not been a feature of the economic policies pursued in many places around the globe. As a matter of principle, the recognition of the need to strike a balance between the two principles outlined above through the very enactment of antitrust rules (unless purely cosmetic) around the world constitutes a giant step towards the construction of centrist economic policies.
The enactment of antitrust rules also obliges public authorities in many jurisdictions to make complex economic decisions (notably on when to intervene and when not to). To be sure, these decisions may certainly be (and often are) infused by different ideologies, and instrumentalized to pursue non-centrist political agendas. However, as experience, precedents, inter-relations and peer pressure consolidate, it will (I hope) become increasingly harder for decision-makers to adopt decisions on the basis of elements other than objective ecomomic and legal knowlegde. That, to me, would be sensible centrist economic policy too.
The underlying assumption that smart public intervention might not only restrict but also actually promote economic freedom could hopefully be extended to other economic domains. For instance, it would be nice if some (not only in developing countries, think of the Tea Party movement) who identify themselves as pro-individual freedom (a principle with which I agree) would realize that for freedom to be real (and not confined to a few) public intervention is required in order to provide effective and equal opportunities to actually exercise it.
I was positively surprised to see that I may not be sole one thinking this way. A recent editorial in The Economist (which I would very much suggest you read; available here) not only called for “radical centrist policies” (what the piece also referred to as “true progressivism”) to combat growing inequalities, but also attributed antitrust a primary role in the pursuance of a centrist agenda. (“The priority should be a Rooseveltian attack on monopolies and vested interests, be they state-owned enterprises in China or big banks on Wall Street. The emerging world, in particular, needs to introduce greater transparency in government contracts and effective anti-trust law“).
Btw, I have the feeling (no evidence though) that The Economist drew inspiration for some these ideas from a recent and truly great book: Why nations fail -which I’m trying to read when work allows-. This book also contains compelling arguments about why the promotion of competition through the application of antitrust rules is one of the most effective ways to contribute to the development of any given nation.
Chillin'Competition 
