Enforcement menu: shrimps
Last Friday the European Commission confirmed that it has addressed a Statement of Objections to four traders of North Sea Shrimp over a suspected cartel. We learnt the news through one of the sites that we check several times a day: www.seafoodsource.com; see here).
Some of you have conveyed to us the suspicion that, in reality, DG Comp has sent this SOs in an attempt to force us to write about it. According to this theory, the guys at Bubba Comp, DG Gump. DG Comp were worried about our silent week and decided to resort to the big guns: a food case. Judging by precedents (notably our well known endive saga), they knew that we wouldn’t let it pass by without a comment.
As credible as this theory may sound…. the sending of these SOs at this time of the year is in reality a classic piece of July desk clearing on the part of the Commission. Getting one of these right before the holidays is one of the occupational hazards of being a competition lawyer in private practice in Brussels (the other one coming the run up Christmas).
In any event, we should not be making jokes about this. It is a serious matter. Nicolas – a renowned shrimp consumer may moreover be a victim of this alleged shrimp conspiracy- One nonetheless wonders: have they caught the big fish? It certainly isn’t small fry!
PS. A Chillin’Leak: We have been told by very reliable sources that the Commission found the evidence for this case during a “fishing expedition”.
On inactivity, records, and Chillin’Competition becoming a real estate portal
Last week we broke two records.
First, we broke our inactivity record. Christmas holidays aside I believe this was the first “blank week” in the two years of existence of this blog. The reason: I took a week off (some days of calm before a storm, or at least that was the idea…it didn’t quite work) and asked Nicolas to take care of the blog. You saw how diligent he was. In any event, we hope you were entertained by the comments to the last of our posts (they were practically posts in themselves, and from extremely qualified commentators).
Second, in spite of this inactivity we were rewarded by readers, by reaching 310,000 visits we overpassed Nicolas’ former blog The Antitrust Hotch Potch in terms of historical number of readers. For the sake of transparency: our 20,000 visits during June yielded $ 3.60 of revenues, unfortunately not enough for the two monthly beers we had hoped for 😦
One more thing: A few days ago I had a conversation with Conor Maguire (who is doing a great job at Brussels Matters) about what we try to do at Chilling’Competition, how we try to do it, and where we get our ideas from. He mentioned in passing that he had liked one post where we acted as intermediaries for the sale of a competition lawyer’s car and one in which I “advertised” my parents’ hotel. This conversation, as well as the fact that you tend to click more on gossip links than on serious ones (stats don’t lie!) spurred an idea: to act as an intermediary for the sale of my co-blogger’s former house. I already showed you his desk one (see here), but those of you curious enough potentially interested can check out the whole house and ad here. (Btw, the pic at the top of this post is that of the house’s terrace).
The usual incentive applies: anyone who contributes to an aventual sale of Nicolas’ house will be rewarded with 3% of the price of the house… in Belgian beers.
Microsoft v Commission (T-167/08) – The Magill-IMS Health Re-Animator?
I was about to fall asleep reading the Microsoft judgment of last week (T-167/08), when I stumbled into paragraph 139.
This paragraph implicitly reverses the CFI’s Microsoft I ruling on the legal standard of abusive refusal to supply (CFI, Case T-201/04, Microsoft Corp. v Commission, ECR [2007] II-3601).
Remember, in this judgment the CFI had departed from the IMS Health and Magill “new product” condition.
It had held that:
“§647. the circumstance relating to the appearance of a new product, as envisaged in Magill and IMS Health . . . cannot be the only parameter which determines whether a refusal to license an intellectual property right is capable of causing prejudice to consumers within the meaning of [Article 102(b) TFEU]”.
The CFI further added that it was sufficient for the Commission to prove that the refusal to supply interoperability information gave rise to a “limitation […] of technical development”.
This new concept was (and still is) rightly criticized by scholars and practitioners as a loose, elusive and murky legal standard. Many expressed regrets over the disappearance of the simple three-pronged Magill-IMS Health test. Others argued that the CFI’s “technical development” standard was wholly inapplicable, and advised to rely on the Magill and IMS Health judgments of the upper ECJ. Finally, some practitioners (amongst others, D. Waelbroeck) talked of a lex specialis Microsoft.
Interestingly, the latest Microsoft judgment no longer talks of the “limitation of technical development“.
Rather, in what reads like an obiter dictum, the GC explicitly refers to the “new product” condition, and quotes IMS Health as the sole source of precedent on refusals to supply involving IPRs.
“§139. In that regard, it should be recalled that, in order for the refusal by an undertaking which owns a copyright to give access to a product or service indispensable for carrying on a particular business to be regarded as abuse, it is sufficient that three cumulative conditions be satisfied, namely that that refusal is preventing the emergence of a new product for which there is a potential consumer demand, that it is unjustified and that it is such as to exclude any competition on a secondary market“
Of course, the Court would not acknowledge that it applied a wrong legal standard in 2007.
It thus goes on to state at §140 that those three conditions were met in the Microsoft I case (they were not).
That said, paragraph 139 marks a welcome evolution of the case-law on abuse.
Case C-128/11 UsedSoft v Oracle
Note by Alfonso: The Court of Justice has published yesterday its long-awaited decision in UsedSoft v. Oracle. Even though the matters are issue are mainly IP-related (they concern the application of the so-called “exhaustion doctrine” to computer programs), they have important competition law implications. Marcos Araujo (a friend of ours and a partner at Garrigues) has followed closely this case as well all others concerning the intersection of IP and competition law. We’ve asked him to provide us with his first views on this very fresh Judgment. Here they are:
In a Grand Chamber judgment, the ECJ has taken a determined stance in favour of THE free movement of goods and the exhaustion doctrine. Today’s Judgment has dismissed not only Oracle’s arguments, but also those raised by the Commission and by the various intervening Member States, and has affirmed vigorously the right of licence holders to “resell” their rights of use of computer programs, supporting intermediaries and end customers in the way.
The case had attracted much attention given the contradictions in this area of European Law, which on the one hand declares that the sale of computer programs exhausts the rights of the owner (art. 4.2 of Directive 2009/24) and therefore that the program can freely be re-sold, and, on the other hand, states that the provision of services over the Internet does not cause exhaustion of rights (Recital 29, Directive 2001/29). In this situation, software companies which license (and arguably do not “sell”) software over the internet may claim that their IP rights should not be deemed to become “exhausted”, as they would be providing a service rather than selling a product.
Intel Hearing at the General Court today
The Court hearing in the Intel case started today in Luxembourg.
Aoife White from Bloomberg has written a piece on it in which she quotes my view that, following the Tomra Judgment, Intel’s chances of having the fine annulled or reduced appear to lie more on procedural than on substantive grounds.
Thanks to a a very kind Luxembourg-based reader of this blog we can make the Court’s report for the hearing available to you: Intel Report Hearing
Chuck Norris Antitrust Facts
- If Chuck Norris had been Commissioner for competition in the 1980s’, Microsoft would have never achieved dominance
- Chuck Norris can dismantle barriers to entry with a roundhouse kick
- Areeda and Turner did not invent the price-cost test for predatory pricing cases, Chuck Norris told them to do so
If you think of more Chuck Norris Antitrust Facts, pls send them to us.
Tacit cartels
A year and a half ago we anticipated that there was a rumor that the European Commission was thinking about attempting to prove a cartel by resorting to indirect economic evidence instead of to “smoking-gun” sort of evidence. See here. We said back then that economic analysis may be very useful for the purpose of identifying cartels, but that it may not be sufficient to prove their existence.
A few developments have taken place since we wrote that post. To mention only three: (i) the case -concerning cement producers- was indeed formally opened; (ii) I became involved on it as one of the lawyers for one of the investigated companies, which is why I’ve never referred to it again on this blog; and (iii) a number of affected companies -including our client- appealed the Commission’s decision requesting the said companies to dig their own grave provide the millions of data necessary to cook the economic evidence.
We won’t talk about this ongoing investigation nor about the pending Court cases. What we want to bring to your attention is that the Competition Commission of India (CCI) has already made a very similar move by sanctioning (with $ 1.26 billion) 11 cement producers for an alleged cartel on the basis of circumstantial economic evidence. See the press release here.
The CCI’s case is built on the observation of price paralellism, increases in price following certain meetings, low levels of capacity utilization, dispatch paralellism and the earning of super-normal profits.
As I told my new Korean friends last Tuesday, competition law is becoming a discipline with no center. It’s therefore safe to guess that we will be seeing many additional test-cases initiated in jurisdictions other than the US and the EU.
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Another different but very important news: more than a month has gone by since WordPress selected us for a pilot project pursuant to which AdWords are now displayed on Chillin’Competition. We are very happy to report that the approximately 25.000 visits that we’ve had since then have almost made us rich. We have so far earned 9,80 euros!!! In another month we’ll save enough money to pay a couple of beers 😉
Case T-167/08, Microsoft v European Commission
I’ve just returned to Brussels after spending a great day of immersion into Korean culture in Frankfurt. The Korean Fair Trade Commission invited me to speak about international cartels to approximately 100 Korean executives of Korean companies operating in Europe within the framework of an Anti-Cartel Workshop [check out the program: Anti-cartel workshop :)] I had a great time in our very unorthodox and fun session as well as in the different social events with which they treated me afterwards. To all of them: 감사합니다 !! We have more things to tell you about this event and about recent trends in cartel case-law, but, first, let’s deal with today’s big news:
This morning the General Court issued its judgment with regard to the periodic penalty payment of 899 million euros that the Commission imposed on Microsoft for not complying adequately with the Commission’s 2004 infringement decision and, in particular, with the obligation to provide interoperability information under reasonable and non-discriminatory conditions. (Click here to read the Judgment).
We believe this post is the first hastily written analysis of the Judgment. Apologies for the long post, but this time we think we have something interesting to say.
[btw, you might recall that in previous posts we talked about the Hearing in this case (here), and even provided you with the report for the hearing (see here)].
I have only had time to skim through the Judgment, but here’s how I think its main points can be interpreted: Read the rest of this entry »
Do Fast Moving Markets require Fast (and Furious) Competition Authorities?
In support of his aggressive move against Google on 25 May 2012, Commissioner Almunia declared:
“I believe that these fast-moving markets would particularly benefit from a quick resolution of the competition issues identified. Restoring competition swiftly to the benefit of users at an early stage is always preferable to lengthy proceedings, although these sometimes become indispensable to competition enforcement“.
Later in June, he again said:
“I strongly believe that users and competitors would greatly benefit from a quick resolution of the case; it is always better to restore competition swiftly in fast-moving markets, provided of course that the companies concerned are ready to seriously address and solve the problems at stake“.
Commissioner Almunia, and his advisers, must have read Judge R. Posner who warned 10 years ago that:
“Antitrust litigation moves very slowly relative to the new economy. Law time is not real time. The law is committed to principles of due process that limit the scope for summary proceedings, and the fact that litigation is conducted by lawyers before tribunals that are not technically trained or experienced inevitably slows the process.
The mismatch between law time and new-economy real time is troubling in two respects. First, an antitrust case involving a new-economy firm may drag on for so long relative to the changing conditions of the industry as to become irrelevant, ineffectual. That was a problem even in the old economy. One recalls for example that by the time the monopolization case against Alcoa completed its journey through the courts, Alcoa had lost its monopoly for reasons unrelated to the litigation; as a result, the decree finally entered against Alcoa offered little more than nominal relief (the divestiture of Alcoa’s Canadian subsidiary). This type of problem is likely to be more frequent in the new economy.
Second, even if the case is not obsoleted by passage of time, its pendency may cast a pall over parties to and affected by the litigation, making investment riskier and complicating business planning“.
Does this call for novel enforcement tactics, with increased recourse to settlements and interim measures?
Or, in evidentiary words, does this require doing away with “cogent evidence” in exchange for “serious doubts“? I have my own doubts.
And Posner too. As he, very humbly, recognizes: “This problem will be extremely difficult to solve; indeed, I cannot even glimpse the solution“.
If God Posner cannot find it, we are indeed all doomed.
Competition enforcement in Spain
A member of the Board of the Spanish Competition Authority said a few weeks ago that the institution is on the verge of a dismantling process. The statement was made in relation to a draft law that aims at merging the competition authority with sector regulators in order to create synergies, avoid inconsistencies and save some money (the latter being, of course, the current overarching principle of all Spanish policies).
Although I could see some usefulness in discussing some of the proposed changes, most Spanish practitioners, the members of the CNC, and the current sector regulators are not big fans of the current hastily drafted draft Law. We personally tend to share some concerns with regard to the current version of the project.
I have not always agreed with the CNC’s way of doing some things, but disagreeing with them is part of my job. Overall, however, the CNC has done a good job, and it has certainly increased the public awareness about competition law in Spain to unprecedented levels. Attempting to save some pennies by reshuffling an efficient (and “profitable”) organization may not be a smart move.
At the political level there’s the question of whether this reform should be one of the countries’ priorities right now. From a strictly legal point of view, blurring the frontiers between the applicable standards, attitudes and instruments used in competition enforcement (a sanctioning system with criminal features) and those characterizing sector regulation can be -if not well thought out- very problematic.
We’ll develop our views in a few days (consider this as an appetizer); for now, it suffices to observe that the uncertainty brought by the prospect of immediate changes (which are also reportedly aimed at expected to affect the members of the Board) is significantly affecting enforcement. Whereas in the past we branded the CNC as “overzealous“, the tide has now turned and the Spanish watchdog seems to be on a sleeping mode waiting mood. (yes, we like complaining no matter what).
The latest investigation concerns bullfighters. No kidding: see here.
As if I hadn’t heard enough clichés about Spain over the past few weeks!
Chillin'Competition 