Nobel Prize to the EU?
The Nobel jury got it wrong last week.
France and Germany never waged war at each other again for fear of Chuck Norris intervention. That’s as simple as that.
Correlation is not causation.
News from the Court
This was an unusual week at the European Courts. First, as we anticipated some time ago, the ECJ was partially renovated. The Member States have reappointed Judges Arabadjiev, Arestis, Berger, Bonichot, Fernlund, Jarasiunas, Levits, Malenovsky, Prechal and Von Danwitz as well as Advocate Generals Bot and Mengozzi.
The new faces at the ECJ will be Judge Da Cruz Villaça (replacing Cunha Rodrigues), Judge Vadja(replacing Schiemann), and AG Wathelet (replacing Masák). Nils Wahl (one of the good competition experts in Luxembourg) will have to remain at the General Court for a short period before swearing in as Advocate General (apparently the candidate proposed by Sweden to replace Judge Wahl was vetoed by the ‘Art. 255 Committee’).
The ECJ also held elections for President (Judge Skouris was re-elected), Vice President(Judge Lenaerts will be the first VicePresident in the history of the Court) and Presidents of Chambers (winners are: Tizzano; Silva de Lapuerta, Ilešič, Bay Larsen, and von Danwitz),
Here’s a video of the speeches pronounced that day at the Court (if you watch it, that means you’ve plenty of free time; we’re just saying 😉 ] Our highlight (as if we had watched the whole thing..) is Judge Schiemann’s great and very funny farewell speech (starting in minute 31.20).
By the way, our next Friday Slot interview will feature a member of the General Court. We’re sure you’ll love that one.
Have a great weekend!
More on Karate Competition Law
In the light of the current thresholds governing the grant of IP rights, we could have claimed a copyright for the term “Karate Competition Law” coined by Nicolas. Judging by the number of times that I’ve heard it since that post was published, I’m sure we (meaning him) would have made much more money than the …let me check… $ 10.33 that we made in July via advertising [P.S. this post was written in August and saved for a busy week].
Why did this come to mind? Because I just came accross the US Federal Trade Commission’s elegant formulation of what “karate competition law” is. In its Intel Complaint (for our previous and rather simple post on it, see here), the FTC asserted that:
“where a respondent that has monopoly power engages in a course of conduct tending to cripple rivals or prevent would-be rivals from constraining its exercise of that power, and where such conduct cumulatively or individually has anticompetitive effects or has a tendency to lead to such effects, that course of conduct falls within the scope of Section 5″.
Section 5 has been the primary tool to which US authorities have resorted in their attempts to fill in the perceived gaps of the Sherman Act. Some argue that there’s no EU competition law equivalent to Section 5 of the FTC Act. However, I’m not so sure that we need any equivalent instrument. Whether one likes it or not, as thing currently stand– and obviously leaving aside the dominance/monopoly threshold- I don’t think that the reference in Section 5 to “unfair methods of competition” or the above-quoted passage of the Intel Complaint encompasses much more than the wording of Article 102. “such abuse may, in particular, consist of (…) b) limiting production, markets or technical development to the prejudice of consumers” .
The General Court’s interpretations of this provision in Microsoft, Astra Zeneca Judgments appears to endorse this wide view of Art. 102.b) [arguably previous Judgments from the ECJ such as AKZO, Compagnie Maritime Belge or even Tetra Pak also opted for a quite wide construction of Art. 102]. Interestingly, whereas the case-law and precedents are endorsing a wide view of the protective scope of Art. 102, the effects of the effects-based approach on practical enforcement push in the opposite direction. Self regulation, I guess.
PS. With this I’m not criticizing the use of Section 5 by the FTC. I, for one, am a fan of the FTC’s theory in the Ethyl (Du Pont de Nemours) case, in which the FTC prosecuted unilateral practices by non-dominant firms that were used to facilitate parallel pricing. What I’m saying (and I use the first person here because Nicolas might disagree) is that European judges seem to have construed wider “standard provisions”. For instance, even the situation at issue in Ethyl could have been approached under Art. 102 under the Irish Sugar notion of individual abuses of a collectively dominant position.
SMP
During the WE, I read Pascal Lamy’s excellent note entitled “The Future of Europe in the New Global Economy“.
There are dozens of good points in this note.
In particular, I really liked Lamy’s rebuttal of the argument that European high salaries are the cause of our competitiveness deficit.
As he rightly argues, “when we look at salaries, we have to set them against worker productivity“. And on this, there is still a profound gap between the EU and other trade blocks like China and India.
Lamy, however, makes a more surprising point. He contends that in the global trade arena, EU firms should strive for what he calls “non-price competitiveness“.
So far, so good… But in his own words, non-price competitiveness covers:
“those characteristics that cause a product to stand out positively among its competitors, regardless of price. In particular, it comprises know-how, quality and innovation, which allow a company to sell the same products as its competitors but at twice the price“.
And Lamy further adds, that non-price competitiveness has this good that it:
“shields manufacturers from having to worry about fluctuating global prices and competitor attacks“.
In my own professional language, I call this “market power“.
So here’s a nut to crack: can market power be the way forward for the EU in terms of achieving a comparative advantage on the international trade scene?
On the price of beer and bread
In his post earlier today Nicolas was whining wrote about the price of beer in Belgian supermarkets (the fact that he complains about the price of beer when he had never complained about actually cartelized products -such as endives- reveals a typical single-man’s pattern of consumption).
Anyway, he fails to see that things could be worse. Below you can see a pic of a beer taken in India a few days ago. The label features (i) an “MRP” or “minimum resale price” ; and (ii) a prohibition to sell the beer in any place other than the Goa area. That’s a possible infringement combo right there!
[P.S: Following the publication of this post our Indian readers have clarified that the M in MRP in reality stands for “maximum” not “minimum”, and that there is an explanation for the market partitioning clause].
Want more? Take a close look at this news: The All Goa Association of Bakers decides to increase the price of bread.
[P.S. Our Indian readers have confirmed that in this case there is no explanation other than price-fixing].
Good luck to our readers from India, who are making a great effort in fostering a culture of compliance in their country (way to go!). The CCI has earned a reputation for investigating Tacit Cartels, but apparently it won’t run out of explicit ones any time soon.
(Thanks to Christian Bulzomi -also the person half-responsible for this– for the great pics!)
Perpendicular Collusion
Last summer, I rediscovered how tasty a good old Desperados beer was.
But I was also amazed to discover how pricy that good old Desperados beer was.
In a standard Belgian supermarket, it cost me a little more than 16€ to acquire a pack of 6 Desperados… I recall that I actually complained to the cashier.
Now, the press in Belgium reports today that Belgian supermarket chains may have colluded to artificially push prices up. And on top of this horizontal price fixing scheme, they may have also colluded with suppliers of cosmetic and hygienic products, in some sort of large-scale RPM scheme…
I am now a little less surprised by the price of Desperados in Belgian supermarkets (although beer does not seem to be a target of the inquiry).
If the infringement is confirmed, we’ll have to come up with a creative label for this type of horizontal+vertical collusion. Here’s my take: perpendicular collusion.
But the decision may never come. The case has now landed on the desk of the decisional organ of the Belgian NCA. And, to put it euphemistically, this organ has not seemed very keen on actually enforcing the Belgian competition rules… This actually explains the recent legislative proposal that purports to suppress the existing NCA and replace it with a brand new competition watchdog, tailored alongst the lines of the French Competition Authority.
Best book review ever
As you know, Nicolas is one of the co-authors of a new book on EU Competition Law and Economics.
Oxford University Press has sent me a review copy. I was intending to write a serious review, but now I’ve watched a youtube-review of the book that is much better than anything I could ever write.
Those interested can watch it here: Youtube review of EU Competition Law and Economics
My favorite comments” “it is not too heavy”, “it’s got a useful index at the back” and “it has lots of footnotes” . I also enjoyed the way the reviewer pronounces the authors’ names, including Nikos Petite and Demien Geraden (although, to be fair, in Damien’s case I think it must be a Youtube dialect; here’s a precedent). 😉 He does better with Anne Layne-Farrar’s name.
P.S. This reviewer has featured in previous post here at Chillin’Competition. In fact, he had two nominations to our Antitrust Oscars.
P.P.S. By the way, Val Korah has also written a review of this book in World Competition which Nico is described as an “eminent professor” and a “partner at a famous law firm” (?!).
Heard through the Grapevine
Down here in Brussels, there is rising speculation over who will step-in to replace Kai Uwe Kühn when his term arrives.
Rumour has it that Massimo Motta is a very strong (Universitat Pompeu Fabra and Barcelona Graduate School of Economics) contender for a place in the seat of DG COMP’s Chief Economist.
Would be a very good decision. For long, I am a great fan of Massimo Motta’s book entitled Competition Policy – Theory and Practice.
Amongst others, his innovative paper on the effect of antitrust fines on share valuation is also a must read.
The Friday Slot (12) Einer Elhauge
For this twelfth edition of The Friday Slot Chillin’Competition is proud to bring to you an interview with a true antitrust guru: Einer Elhauge. Einer is the Petrie Professor of Law at Harvard Law School, where he teaches antitrust and many other subjects. He was actually one of the reasons why I applied for the Harvard LL.M (I got unlucky because he did not teach antitrust that year!). When someone asks me about the students and professors at HLS my usual response is that most people there are generally as smart/dumb as most other people, with the difference that they’ve had more opportunities in life. There are some exceptions to this and Einer is one of them: you can quickly tell that his mind works at a different pace…. Aside from teaching at Harvard he also testifies regularly as an expert in antitrust economics and is President of Legal Economics; he was Chairman of the Antitrust Advisory Committee to the 2008 Obama Campaign, and is currently on the 2012 ABA Antitrust Transition Task Force. His most recent book is Obamacare on Trial, and his past books include Global Antitrust Law and Economics; Global Competition Law and Economics; U.S. Antitrust Law and Economics; Statutory Default Rules; and Research Handbook on the Economics of Antitrust Law. He has also authored many other articles on antitrust and other topics.
For those wondering: the pic above shows Einer trying to move mountains 😉 We leave you with his great replies:
Why do you work in antitrust law? How did you first get into it?
I loved antitrust from the first class I had with Phil Areeda. It just came so easily and naturally to me, and it involved a combination of creativity and analytical precision that I found very attractive from the get go. I knew immediately that I had found my calling. (I had already gone to and left medical school, so finding my calling did not initially come easily to me.)
What do you like the least about your job?
Grading exams. But then again, the rest of the job of being a law professor is something I would do for free, so it is not so bad if I take the view that my entire annual salary is for grading exams.
What do you like the most about your job?
Thinking about whatever I find most interesting. Really, that is an incredible luxury that I am thankful for every day.
Any favorite antitrust books? And favorite non-antitrust law books?
Favorite antitrust books. Bork’s The Antitrust Paradox: A lot was wrong in it, but he was also right in skewering many bad prior antitrust doctrines, and it is still the best written antitrust book ever. Carlton & Perloff, Modern Industrial Organization: A wonderfully clear exposition of the antitrust economics that every antitrust lawyer and professor should master.
Favorite non-antitrust law books. Ely’s Democracy and Distrust: Of course, that may be because it essentially used an antitrust theory to explain constitutional law. Black’s Law Dictionary: I have always been impressed by the incredible brief lucidity of this book; it explains an amazing amount of conceptual logic in few words on every legal topic under the sun. The Federalist Papers: A beautiful exposition of political thought, even though recent historical work suggests it might not have influenced the Constitutional adoption that much. Richard Posner, Economic Analysis of Law: Never has any human said so many insightful things about so many areas of law in just one book; he had the advantage of living at a time when there was lots of low-hanging fruit, but by God he picked them all clean. Bruce Ackerman, Social Justice in the Liberal State: It kept me up all night once because I found it so fascinating. David Strauss, The Living Constitution: An elegant explanation for many anomalies in constitutional law. John Rawls, A Theory of Justice: The philosopher most relevant to many legal issues, even though his mini-max is to me implausibly risk-averse. Bob Woodward, The Brethren: Just a lot of fun; the stories about Chief Justice Burger are worth the price alone. John Haar, A Civil Action: I could not put it down; who would have thought one could make civil tort litigation so gripping?
You teach comparative US-EU antitrust law. How big is the transatlantic divide?
I think it is actually quite exaggerated. Having co-written a Global Antitrust Casebook and taught Global Antitrust many times, I find that when you teach the cases on any particular topic side by side, you generally find that often there is a formally different way of expressing things, but a lot of substantive convergence. And when the substance diverges, I think it can often be explained by a divergence in remedies. The US courts repeatedly cite the overdeterrence threat from criminal penalties, private treble damages and class actions as a justification for narrowing US antitrust law. That same logic suggests that competition law should be broader where those remedies do not exist, like in the EC.
You were the chairman of the Antitrust Advisory Committee for the Obama campaign in 2008 (also of the Blogs and Op-Eds Committee and a member of the health policy group –congrats on this last one!). How has antitrust enforcement under the Obama administration performed in comparison with previous Administrations?
I think it is impossible for any outsider to tell for sure because performing well is not being more active or less active in the abstract. It is bringing antitrust cases when they should be brought and not bringing them when they should not. And to tell whether that is happening to a great or lesser extent than prior administrations, one would need the confidential case information on all the cases, which obviously we lack. The only ones who really know for sure are the agency officials, and they are not the most neutral judges of how well they have done.
Let’s do it like economists => assume that you could change 3 antitrust rules, principles, judgments or institutions. What would you do?
Conference on Fines, 3 December 2012
On 3 December 2012, TILEC and the Liege Competition & Innovation Institute (LCII, under construction) will hold in Brussels a one day event entitled:
Deterring EU Competition Law Infringements:
Are We Using the Right Sanctions?
This event will gather prominent speakers including judges from the EU and the US, Commission officials, academics, practitioners and in-house counsels.
I attach the programme below.
This is undoubtedly one of the hotest issues in modern EU competition law. Hopefully, after this event, we’ll see a little clearer on what needs to be done to achieve optimal deterrence.
Download full programme and registration form:
Deterring Competition Law Infringements – Conference Programme and Registration Form
Chillin'Competition 