The vertical expression of a horizontal desire
A few days ago someone sent us a very interesting piece published by Okeoghene Odudu (who is also the author of a great book on Art. 101) in European Competition Journal (August 2011) under the title: “Indirect Information Exchange and the Constituen Elements of Hub and Spoke Collusion“.
Although we have enjoyed the substance of this article, the reason why it was sent to us in the first place was not its content but rather a particular footnote at the very end of it. It reads as follows:
“187. In his blog posting of 21 February 2011, Nicolas Petit expressed the view that there was nothing worthy of analysis in the hub-and-spoke phenomenon and concluded by writing, “The bottom-line: I will fight any proposal to organise an event on hub-and-spoke agreements. See https://chillingcompetition.com/2011/02/21/much-ado-about-nothing/.”
[*Note by Alfonso: The original post features a smiley face like this 
right after this quoted statement. The face is nevertheless missing in the quote that appeared in the article. It’s a pity, because it would have been funny to see the smiley appear in European Competition Journal!].
However, by 24 May 2011 he seems to have had a conversion, announcing that, through the Brussels School of Competition Law, he had co-organised a seminar on information exchange, to deal in part with “Sharing Information through Intermediaries (supply-purchase relationships, distribution agreements, meet and release clauses, hub-and-spokes, etc)”. See https://chillingcompetition.com/2011/05/24/information-exchange-in-eu-competition-law-conference-22-june/“
We were surprised at this footnote (since we don’t always take what we write seriously, it’s curious to find out that people do), which nonetheless expresses a very legitimate opinion.
Beyond Endives
As most readers know, Alfonso has been gung ho about endives.
On pain of breaking the anti-food fatwa enunciated yesterday by my learned co-blogger, I must report today the ultimate case in this series of post.
Earlier in the month, the Belgian competition prosecutor issued the equivalent of a SO in a case concerning a “salad” of unlawful exchanges of information. Please tighten your seatbelt. The practices under investigation cover:
- Candies, including possibly chocolate;
- Ice-cream;
- Sauces (BBQ season is coming);
- Veggie and other stocks;
- Pet food…
Clearly, the scope of this investigation goes beyond anything reported earlier on this blog.
Thanks to Aoife White (Bloomberg) for the pointer.
One last thing: given my co-blogger’s obsessive focus on food, I suggest that, for our next quizz, chief Alfonso cooks an antitrust dinner to the winner, where endives will be served with flour and BBQ sauce.
Enforcement Menu
It all started with endives.
#endives became a trending topic on this blog. However, after two posts (here and here) we decided that we should prevent endives from turning from a hot topic into a reheated topic. Therefore, we decided to put endives and other gastronomic topics in the fridge for a while.
Then the French sanctioned flour makers in an unsuccesful attempt to lead us to write about croissants. We kept our position: if you want to make headlines on Chillin’Competition, you’ll have to do butter, we said.
The French then brought their big guns out. It has been reported that President Sarkozy attended the presidential debate with one main goal: appear on Chillin’ Competition. And he made it. We did yield to the temptation of posting the video in which he explains the difference between endives and apples Apple and Microsoft (this useful explanation prompted some of our readers to stop wrapping their iPods in ham). Yes we were weak, but the temptation to comment on Sarkozy-sponsored cartels was irresistible.
We saw that post as a last exception; we decided to follow a diet and agreed that there’d be no more food on the blog, at least until the summer was over. “I need to be bikini ready” said Nicolas. I also thought that a strict no-food rule was necessary, particulary since Hump-Pilates (incredible video…) doesn’t work well for us. We’ll start next Monday, we said.
And now, come Monday, here are the suggested courses topics that we get from our readers:
The Autorité de la Concurrence fines dog and cat food makers € 35 million.
The Autorité de la Concurrence investigates yogurt producers.
We have to acknowledge our respect for this multi-jurisdictional multi-product strategy to deviate us from our diet. They’ve managed to make it to the blog again. But seriously, we solemnly promise to forget about food:
As God is our witness, we’ll never be hungry food-obsessed again!
We’ll start our diet…next Monday?
The Friday Slot (7)- Maurits Dolmans
This seventh edition of The Friday Slot features an interview with Maurits Dolmans (Cleary Gottlieb). Most of us are aware of his tremendous reputation as a leading antitrust lawyer, but his answers to our questionnaire will reveal facets of his personality and of his life that, until now, remained mostly unknown. It’s a privilege for us to publish Maurits’ bright and most interesting answers. Enjoy!
“Oscar” of the best competition law book? And of the best non-competition law book?
I do not read competition law books; I just use them as reference. A truly memorable “legal” book is Natural Justice by Ken Binmore, with fascinating game theory showing how, for all our competitive spirit, justice and fairness are innate in the human existence – a comforting thought in a turbulent world.
My non-legal favourites are probably Robertson Davies’ Deptford trilogy (The Manticore) and Cornish trilogy (What’s Bred in the Bone). I re-read these every once in a while – the sign of a great novel. Recent great reads include The Elegance of the Hedgehog, Robert Merle’s Fortune de France, and Het Woud der Verwachting (a magnificent historical novel by Hella Haasse on the life of Charles d’Orleans). From more innocent days, I loved reading The Education of Little Tree to our children (writer was a horrible man, but it’s a lovely little book).
“Oscar” of the best case-law development in the past year? “Oscar” of the worst case-law development?
Best non-case law are the Horizontal Guidelines. Undisputably the best judicial decision is KME v. Commission. The detailed and intensive review required in merger cases after Tetra Laval now also applies also to cartel cases. It is already having effect: In the hearing on the appeal for Masco in the bathroom fittings and fixtures case in February, the Commission explicitly agreed that the General Court should exercise a complete judicial review over the facts.
The worst is Pfleiderer v. Bundeskartellamt. Leniency statements should not be disclosed. The Court did not distinguish self-incriminating leniency applications from pre-existing documents. That is a mistake and could interfere with public policy to encourage revealing and closing down cartels.
Let’s do it like economists => assume that you could change 3 rules, principles, judgments, institutions in the current EU competition system. What would you do?
- The Commission should recognize privilege for in-house counsel who are full members of the Bar. Even after AKZO, the Commission has the discretion to do so. It is even more wrong for the Commission to reserve the right to seek access to legal advice from outside counsel who are members of a non-EU bar. It is a fundamental right of every client to seek legal counsel in confidence from a lawyer of his/her choice.
- To avoid confirmation bias, the DG Comp team that investigates a case and writes an SO should not be the one to make and write the final decision. The decision should be adopted (or recommended to the College for adoption) by a separate panel chaired by the Commissioner, which should independently review SO and written pleadings and attend oral hearings. Right now, decisions are adopted by a College of Commissioners none of whom have read the pleadings or attended the oral hearing, based on internal notes written by the team than write the SO, not accessible to the defendant. I have great respect for the integrity of EC officials, but this process is institutionally unsound.
- The “me-too” spirit of international merger control has led to a glut of unnecessary merger laws requiring parallel notifications. This is a monumental waste of time and resources, combined with a risk (already materializing) that merger control is used by “new authorities” to give advantages to national industries. Some kind of comity rules should be set out to allow the, say, three jurisdictions most affected to review a case, with others declining or focusing on local product markets.
Average working time/week?
Too long. Fortunately I love what I do and have an understanding wife, our children have grown up, and the firm has a generous sabbatical and vacation policy.
Why do you work in competition law? How did you first get into it?
It’s intellectually satisfying and relevant. I have always believed in the European ideal. Integration of national economies should prevent re-emergence of the old enmities that we have not seen for 67 years, and hope never to see again.
Most interesting, intense or funny moment of your career?
White Russian
Photographed yesterday, in Moscow’s metro. I know, I am a real antitrust geek…
Now, more seriously, I am spending the week in white Russia – it has been heavily snowing here – where I teach a course on competition law at MGIMO university. This is the third year I do this. Again, it is a very pleasant experience. I am very impressed by the level of the students.
Teaching EU competition law outside Europe requires some adaptations, in particular when it comes to give examples. I thus did my homework to get acquainted with the names of (i) national telco incumbent and of the big supermarket chains; (ii) the basic structure of Russian competition law; (iii) the Customs Union between Belarus, Kazakhstan, and Russia.
A final thing. I made a presentation at Deloitte and Touche Moscow yesterday on recent developments in EU competition law (see link to the ppt below). It is a rather basic presentation. I have to make a similar presentation in several law firms in Brussels in the upcoming months, but I intend to sophisticate it a little. If you have any comment/input/remarks that may help, please write to me.
Recent Developments in EU Competition Law – Deloitte (21 03 12) NP
PS: to avoid any misunderstanding, the title of this post is in relation to The Dude’s favorite drink…
The Economist Corner (2) – Patent Settlements in the Pharmaceutical Sector
For this second edition of the Economist Corner, Benoît Durand from RBB Economics has sent us a post on patent settlements in the pharmaceutical sector. Benoît advocates against a per se approach to such agreements, and gives examples of pro-competitive settlements. The topic of Benoît’s post is timely. At a Brussels event last week, an EU official hinted that COMP would likely not treat such agreements under a per-se approach. He also said that the Commission would seek to provide as much legal certainty as possible on the issue. As some of you may know, the Commission dropped several settlement cases lately (GSK; AstraZeneca) but still continues to scrutinize other cases (J&J v. Novartis; Cephalon v. Teva; Servier (Perindropil); Lundbeck).
Following the conclusion of the pharmaceutical sector market inquiry in 2009, the European Commission has launched a number of investigations on patent-settlement agreements that include a payment between an originator and a generic company (also called “reverse payment” settlements[1]). The Commission is worried that some of these payments may be used used by originators to reward generic manufacturers for postponing the launch of cheaper drugs on the market. It is easy to see that the originator has a strong incentive to delay generic entry in order to continue earning a monopoly rent on the sale of its patented drug. When the patent exclusivity expires generic drugs may begin challenging the originator’s monopoly position. In this case, sharing part of the monopoly profit with a potential entrant is a better outcome than letting competition eat the rent away.[2]
However, as you might have guessed, reality is more complicated, and perhaps surprisingly, patent settlement agreements involving reverse payment need not necessarily be anti-competitive. The first thing to note is that the originator drug is protected by a patent, and it is only when the legal exclusivity expires that generic drugs may begin challenge the originator drug. The second thing to note is that the validity of a patent is never a sure thing, and therefore its expiry date is uncertain. Even though a pharmaceutical company has filed a patent, generic entrants may still challenge the incumbent before the formal expiry date. Generic producers may consider that they have a good chance of challenging the patent in courts. In the case of entry, the patent holder would seek an injunction to prevent entry, but judges may or may not grant the injunction, and they may or may not uphold a patent.
Presidential Endives
Endives have been a highlight of this blog.
They have become a presidential topic.
Last week, in a large-audience TV programme, N. Sarkozy discussed – and actually lambasted – the decision of the French competition authority (FCA). This comment was in reaction to a question by a woman in the audience, who complained that the FCA decision prevented agricultural producers to coordinate selling prices.
Here’s N. Sarkozy’s answer (quick and dirty translation):
The FCA “went a little to far … I would like agricultural producers to be able to sell at prices above production costs … hence one must define, with other production groups, what is an average production price … and the competition authorities must not consider this average production price as a restriction of competition“.
In clear, the price of veggies should be defined collectively amongst producers at a level > costs, and the competition watchdogs should not challenge this.
But there comes my preferred part. To conclude N. Sarkozy added, referring to the FCA officials:
“They must have the intelligence of understanding that were are not talking about Microsoft and Apple“.
Check the video above or here between 2:00:45′ and 2:01:57′.
European Competition Football Championship 2012
[Note by Alfonso: That competition authorities compete to be among the world-class enforcers is something we all knew (see for instance GCR’s Ranking Enforcement Special Issue). What you probably didn’t know (and, frankly, we didn’t either) is that there is a football championship in which competition authorities also sweat out their competitive spirit. We have been asked by the organisers of the upcoming edition to help promote this event among competition authorities, and we’re glad to do it; it looks like sure fun!]
After two highly successful and memorable events hosted by the NMa and the Bundeskartellamt in 2010 and 2011, the Hungarian Competition Authority (GVH) has the pleasure to announce that the 3rd European Competition Football Championship (ECFC) will take place in Budapest this year.
The GVH is pleased to invite all European competition authorities to the 2012 ECFC in Budapest, which will be organised together with a workshop on sports and competition law.
Workshop on sports and competition law
3rd European Competition Football Championship 2012
7-8 September 2012
Budapest, Hungary
Should you have any questions, don’t hesitate to contact the organisers at ECFC2012@gvh.hu. Any interest in participating at the event should be made by the end of April.
Here are some pics from the winners of the previous editions: The Ducth NMa (2010) and the Hungarian GVH (2011).
You’re invited
It’s very impolite to speak about parties to which only you have been invited. Yet, this is exactly what Nicolas did last Friday!
Nico talked about all these competition law-related social events that are taking place in Brussels this week, without realizing that many of us have not been invited (I guess this was not on the piece of Social Do’s and Don’ts that he suggested on his post…) 😉
To compensate for my co-blogger’s mistake, I will free-ride on my firm to invite you to some free drinks extend a personal invitation to all readers of Chillin’Competition for THE competition law social event of the month in Brussels: the launch of the book “Market Power in EU Antitrust Law” (we had intended to write a review here, but our objectivity is so compromised that we will ask someone else better placed than us to do it) next Tuesday.
I’m not kidding; you’re all welcome to share a drink with us. You only have to confirm your attendance to the email address that appears on the invitation.
Hope to see you there!
P.S. Nicolas will miss it because he will be lecturing in Russia, so here is another incentive to come.
A turn of the screw (José Luis Buendía on SGEIs)
[Note by Nicolas and Alfonso: Since we learnt the news that the Commission was preparing a reform of the State aid rules applying to services of general economic interest we have been trying to have our friend (also Alfonso’s boss) José Luis Buendía to give us his views on the reform. Apart from a being a top-notch State aid lawyer and the author of the seminal (and perhaps only) book on Article 106 (a new edition is in the pipeline), he was heavily involved in the drafting of the original “Altmark package” at the time when he was working for the European Commission. In fact, a few months ago a member of the European Commission said at a conference that whereas some people call this package the “Monti package”, many Commission officials refer to it as the “Buendía package”. We are very thankful for him for having taken the time to write this insightful piece that we believe will be a “must” for anyone dealing with this subject. It’s a privilege for us. Enjoy!]
The editors of this blog have kindly invited me to comment the recently adopted ‘Almunia package’, in which the EC has revisited the State aid rules applicable as regards the financing of Services of General Economic Interest (SGEI).[1]
I have chosen the expression “a turn of the screw” to introduce this short comment for two reasons. The first and most obvious reason is that the new rules would – at least at first sight – increase the pressure and make life more difficult for the big operators of SGEI. The second relates to a Henry James novel, “The Turn of the Screw” (1898), subsequently adapted to cinema by Jack Clayton under the title “The innocents” (1961). The reference to the story seems pertinent to me because it has had very differing interpretations, often mutually exclusive. The ambiguity of the story makes difficult to conclude whether the governess has actually seen the ghosts or whether she simply dreamed. “The Turn of the Screw” definitively looks like a ghost story but… is it really a ghost story? In any case it is a great story I can recommend.
As I will try to explain, when comparing it with the previous post-Altmark (or Monti-Kroes) Package, the Almunia package definitively looks as a turn of the screw as regards the rules applicable to the financing of SGEI.
In my opinion, and given the current political context, the most remarkable feature is the mere adoption of the package by the Commission. One has to remember that some Member States wanted that the rules on SGEI were adopted, not by the Commission but by the Council and the Parliament, under the new legal basis introduced in Article 14 TFEU by the Lisbon Treaty. Despite this political pressure the Commission chose not to make a proposal under this new basis (probably for the same reason that turkeys do not vote for Thanksgiving). Instead, it revisited the package under its own powers under Articles 106 and 107 TFEU. This decision seems wise and legally well founded, in particular given the limits of Article 14, but is still quite courageous in this time of centrifugal tendencies at the EU level.
Obviously this small comment cannot cover all the interesting issues raised by the package. It is however fair to say that the content of the reviewed package does not look as particularly conciliatory with those who wanted more flexibility for SGEI. It is true that there are some changes going in that direction. This is the case for the small operators in charge of SGEI that are exempted from notification (in particular, there is a new exemption of some social services and a new draft de minimis specially conceived for SGEIs), but the story seems quite different for the bigger operators that remain subject to individual notification. Under the Almunia package – and contrary to the previous Monti-Kroes package – the rules applicable to the big operators are going to be different and stricter from the rules applied to the smaller.
Chillin'Competition 