Competition Parties
We recently received invitations to a new breed of parties. On 4 May, Compass Lexecon was having its “Exclusive Spring Party” (with “drinks and canapés“). Two days later, Crowell & Moring held its “CroMo Party” at Tour and Taxis (with DJ BENNY…).
Unfortunately, I could not attend any of those parties.
Yet, a question arose: what drives business law firms and economic consultancies to organize such summer parties?
In the case of Compass Lexecon, the answer is straightforward. The firm sought to celebrate the launch of Compass Lexecon Europe, following the acquisition of LECG’s EU Competition Policy Group. This party was a classic reception, similar in nature to many other receptions.
The case of Crowell and Moring is more interesting. The flyer and dressing code (“colorful casual”) suggest that CroMo’s party was primarily targeted at young professionals (from Cromo and elsewhere) rather than at partners and clients. No information was provided on drinks, but I suspect they came for free. There was no special thing to celebrate.
So why organize a loss-making party of this kind? Initially, the following reasons came to mind: acquiring information on competing law firms, possibly with the help of liquid substances; increasing busy associates’ procreation rate; assuaging partners’ midlife crisis.
On second thoughts, however, I dismissed most of them in favour of a more conventional explanation which has to do with “branding”. It plays at several levels.
First, with the commoditization of the profession, legal services are increasingly fungible. Clients shop around and competition amongst law firms becomes brutal. To prevail over rivals, law firms seek to be perceived as special. For a number of years now, law firms have organized academic conferences to look bright. Now, they organize parties to look cool, hype and creative.
Second, as stressed by Alfonso a while ago, there is an increasingly pervasive perception amongst students that working in a business law firm is “not cool”. Being an associate in a business law firm involves long working hours, little freedom and virtually no space for leisure and family life. This has dramatic consequences on law firms’ hiring opportunities. And unlike in the 1980s and 1990s, financial compensation no longer does the trick. No wonder why some law firms seek to change their image amongst young lawyers, and arguably organize parties to that end.
Please note that we are interested by pictures, feedback and stories in connection with those parties.
Day off for EU Civil Servants
Felt like filing a merger today? Or having a call with a Commission official to discuss a case of common interest?
Unlikely to happen. Today is Europe day or in EU jargon, Schuman day. Most competition civil servants are off duty, chillin’.
What the EU institutions celebrate today is the anniversary of the Schuman declaration of 9 May 1950. In this declaration, R. Schuman, the French Minister of Foreign Affairs (see above picture), invited the governments of France, Germany and other European countries to team up and build a federal state.
The celebration of this event triggers the following remark on my end: as it stands today, the EU is a direct emanation of the Schuman declaration. Yet, 61 years after, and with the exception of competition policy perhaps, we are still far from a federal state with some sort of political existence (nota: I am a convinced federalist). This is true both internally – ever heard anyone saying he was a EU citizen? – and externally – think of the EU’s invisibility in relation to Lybia.
In addition, I am pessimistic on the future, given the increased fragmentation dynamics at the domestic level (think of the nefarious state of Belgian politics) and the somewhat mechanical, ever-enlarging nature of the EU (think of Turkey’s accession demands, backed to a large extent by those who only conceive the EU as a shopping mall).
Weekend readings – Law firms: a less guilded future
I would very much recommend you to take a moment to read an excellent piece published on the latest issue of The Economist. (Thanks to Mark English for calling our attention to it)
At a moment where some are reporting on the pick up on profits and revenues at Big Law, this article from The Economist contains a very insightful analysis of the many challenges that lie ahead for the legal profession, not all of which are cyclical. I tend to agree with a lot of what’s said there (except, maybe, for that last phrase on how “a firm’s only real asset are its partners”…).
Click here to read the online version.
And, although I’m sure most of you have at least heard about it, those interested on further readings on the future of the legal profession should definetely read Susskind’s brilliant book The End of Lawyers.
IMEDIPA Conference on Competition Law and Policy
The 5th International IMEDIPA Conference on Competition Law and Policy will be held in Athens on May 27th -28th under the auspices of the Hellenic Competition Commission and the Competition Authority of Cyprus.
Aside from the venue, this Conference has many other attractives: a very comprehensive program, an impressive line-up of speakers, and a very affordable price (which is quite rare in the world of competition law conferences).
The program and registration information are available here.
(Thanks to George Pedakakis for the pointer!)
Subversive thoughts (1) – Fines, Leniency and the Search for an Optimal Detection Policy
A somewhat heretical idea sprung to mind yesterday. The mainstream will not like it (fortunately disputes with the mainstream are not any longer settled by recourse to bonfires).
(Note to our readers: the mainstream comprises adepts of Chicago School thinking and Public Choice theory. It combats, with caricatural arguments, all attempts to intensify competition enforcement. As if we were subject to Pavlovian conditioning, all too often we lawyers side with the mainstream, thereby failing to remember that competition enforcement is a genuinely good thing).
But let´s get back to this idea: to improve cartelists incentives to report infringements to agencies, why not allocate the entire amount of the fines (or a significant proportion thereof) to the whistle blower?
As long as the ring leader(s) is (are) excluded from a such reward, I see no obvious perverse effects to the proposal.
Surely, it sounds quite immoral to reward financially what is plain and simple betrayal. But on the other hand, it is fair and efficient that society rewards those firms that exhibit the strongest desire to comply with the law.
Also, one cannot rule out that clever firms involved in multiple cartels will coordinate leniency applications so that each participant benefits at least once from the reward (some sort of market sharing on leniency applications). Yet, this hypothesis rests on restrictive factual assumptions. More importantly, given that the fine will likely change from one cartel to the other, cartelists will not withdraw equal benefits from leniency applications. In turn, this will undermine their incentives to join/observe the coordination.
Finally, some could be warry for the EU budget to which competition fines contribute. Again, the objection is not decisive. This is because competition fines do not increase the EU budget but finance it. Technically, they are deducted from MS contributions, who pay less when competition fines are high. The sole and whole issue there is thus distributional: shall we transfer the product of fines from MS to whistle blowers? I am not sure of the answer, but I am incline to believe that competition fines are just a drop in the sea of MS contributions.
Those thoughts came yesterday whilst I was preparing a lecture on public and private enforcement for the LL.M students of the University of Gent (see ppt. below). I am very grateful to Prof. Govaere for her kind invitation.
5 May 2011 – Public and Private Enforcement of Competition Law
Next GCLC Lunch Talk – EU and National Leniency Applications – 27 May
Our next lunch talk will be devoted to the interplay between national and EU leniency procedures.
It will take place on 27 May at The Hotel in Brussels. For this event, we’ll follow a somewhat specific format, with 4 speakers and a roundtable discussion.
Registration form can be downloaded below.
Chillin´Competition Group on LinkedIn
We are that close to becoming IT geeks.
We have just created a Chillin´Competition group on LinkedIn! (you can click here to join it). The above picture is the group´s image.
In addition to the existing CompetitionProf Twitter account (see sidebar on this page), this will improve the ability of our readers/friends to meet and interact with us/each other.
This blog currently has more than 3000 visits a week, but we can only put a face to the people that contact us by email and to the 75 readers who have so far suscribed to the blog (by the way, in case you haven´t noticed, there is a “Suscribe” link on the right side of the screen). We also hope that by having a little more information on who you are, we will be able to improve the contents of this blog with “more targeted” posts. In turn, this will entitle us to obliterate our competitors chill competition even further.
Looking forward to linking up with you there
Nicolas & Alfonso
The end of the US Microsoft case
13 years ago the US Department of Justice together with several States filed a suit against Microsoft that marked the beginning of what still remains as the most significant case in contemporary antitrust, and one that led to many changes in the way we approach high-tech markets, and antitrust enforcement in general.
The history of the US v. Microsoft antitrust battles is too rich in details to be summarized here, but those interested in a great brief explanation should watch this video in which Phil Malone (who was one of the leading prosecutors for the Antitrust Division -and also my Professor at Harvard Law School- makes this long story short).
But now more than ever, all of that pertains to history. The oversight mandated by the 2001 settlement (reached right after the DC Circuit Corut reversed part of the District Corut´s decision which had ruled for the Governmment) will expire on May 12th. However, the last oversight hearing before Judge Colleen Kollar-Kotelly occurred on April 27th and marks, in practice, the end of the story. In the words of Judge Kollar-Kotelly, the effective end of the Microsoft case “will close an important chapter in the history of antitrust law“.
I missed this in the selection of news that had taken place during our days off, and I have, very rightly, been “reprehended” for this omission by Craig Farringer, Assistant Attorney General for the District of Columbia, and one of the members of the so-called “California Group”. (as some of you will recall, several States decided in November of 2001 that they did not want to accept the settlement proposed by Microsoft; this lead to a full evidentiary remedy hearing which resulted in the California Group Final Judgment). Craig Farringer (who also had extremely nice words for this blog, for which we´re grateful) has sent us a picture of some California Group lawyers and experts taken moments after the status conference outside the Prettyman courthouse in Washington. Here it is:
(Pictured from left to right is Adam Miller of California, the now famous technical expert Craig Hunt, Layne Lindebak of Iowa, Stephen Houck (who signed the original complaint lodged by the States in 1998), economics expert Chuck Clarke, and Craig Farringer).
Our congratulations to all those who worked on the case, be it for the DOJ, for the States, for Microsoft or for other third parties involved in the case.
And, by the way, on this side of the Atlantic the General Court has scheduled for May 24th the hearing on Microsoft’s appeal against the Commission´s findings of non-compliance with the 2004 decision, which led to an additional 899 million euro fine.
Competition Law and Sport (VII) Belgian Competition Authority investigates Pro League rules
Back in November we devoted another of our posts on competition law and sport to a couple of cases on which I have been/am imvolved. The core issue in one of those cases -currently pending before the Court of Arbitration for Sport- relates to whether, or under which circumstances, a total or partial closure of a league, the decision to eliminate some of its members, or a modification of the promotion/relegation rules governing the functioning of a given league (in that case, the basketball Euroleague) might constitute a restriction of competition attributable to the league itself or to those of its members having voted for the new rules.
Some of our readers have contacted us to inquire about our thoughts on a new belgian case that contradicts the idea (apparently shared by some officials within DG COMP) that such decisions cannot give rise to any competition concerns. Indeed, some weeks ago the Belgian Competition Authority formally expressed its concerns with the modification of the relegation rules of the Belgian football league (Pro League). (See here for the Press Release).
I won´t enter fully into the debate given that I´m not aware of the specificities of the case, and because my objectivity and freedom to express an opinion are somehow compromised. Nonetheless, I think it´s interesting to remark that this is not the first time that competition rules have affected similar decisions. There is an interesting precedent in relation to rugby leagues in Australia , and in the US it has been taken for granted that, absent antitrust exemptions, decisions on the shrinking of a league or even on the relocation of clubs/franchises would fall under the scope of the antitrust laws (a clear illustration of this was the 1991 proposal for a Fairness in Antitrast in National Sports (FANS) Act. (I often wonder if they hire someone specifically to come up with “original” acronyms over there…)
It´s clear to me that decisions of the sort of those outlined above fall in principle under the scope of Art. 101(1). Accordingly, any assessment on their legality should maily focus on the application of the criteria laid down by the ECJ in para. 42 of the Meca Medina Judgment and on whether the four Art. 101(3) conditions are satisfied.
We´ll keep you posted on any developments.
Competition Law and Sport (VI) The NFL Lockout
Our “competition law and sport” series (see posts I, II, III, IV, and V) was born out of our belief that the application of competition law to the world of sports has a tremendous potential that still today remains to a great extent unexplored in the EU. As I´ve said before, not only are sports-related cases some of the most visible ones at the EU level (for the general public Bosman is very likely the best known ECJ Judgment of all times), but given the peculiar features of the activities and markets at stake they also raise particularly interesting issues that push competition law outside of its comfort area, some of which we´ve previously discussed here.
In the US they were much quicker than us to realize that. In fact, the application of the antitrust laws has shaped much of the current organization of professional sport. A good and very hot illustration of this influence is the controversy surrounding the NFL lock out, which was recently challenged on antitrust grounds by several NFL players, including superstars Tom Brady, Peyton Manning and Drew Brees (Read their complaint here). The players also asked for an injunction to freeze the lock out that was finally granted last Monday.
Background and issues in a nutshell: the activities of all major leagues have enjoyed until now some degree of inmunity to the application of antitrust laws. The clearest example is baseball, which enjoys a controverted antitrust exemption that was ratified by the Supreme Court in Flood v Kuhn (1972) on the basis of a really absurd reasoning that put a curious interpretation of stare decisis before sound legal reasoning and common sense. Other sports have not been treated with so much deference, and so they have resorted to collective bargaining so as to escape the application of the Sherman Act. That was the case of the NFL, which, until now, had always negotiated all sorts of issues with the players union (NFLPA).
On March 11th, and in light of the unlikelihood of reaching a satisfactory deal on how to divvy up the $ 9.3 billion that the NFL makes, franchise owners announced a lock out (which, amongst others, implies no salary, no hiring, and no access to training facilities) (btw, it seems that the NFL´s tactics are somehow similar, and coincidental in time, to those of the Republican party..) and players decided to decertify their union and cease the collective bargaining process in order to deactivate the non-statutory exemption and lodge an antitrust complaint (see the link above for the content of the complaint).
The complaint challenges the compatibility with Section 1 of the Sherman Act some of the NFL´s basic arrangements, namely those related to salary caps, drafting of new players and free agent restraints, as well as of the lock out itself.
On Monday, Judge Nelson (District Court for the District of Minnesota) issued an order granting an injunction which freezes the lock out (finding that players/plaintiffs have a fair chance of prevailing and that absent the injuction they would suffer irreparable harm). The order, however, does not deal with the merits of most of the players´claims, and rather states that “[r]esolution of the issue of whether the exemption precludes relief on the NFL’s various Player restraints must await another day”. (Click here to read the order).
If the litigation were to reach an outcome in the form of an Opinion on the merits (which is not so obvious in light of the White v NFL precedent and of the ongoing court-ordered mediation talks) that would mean that a court would undertake a competitive assessment of several practices that have never carefully scrutinized so far. This could most certainly have an impact on the debate surrounding the possible implementation of salary caps and other similar arrangements in European sports and particularly on their assessment under EU competition rules. We´ll deal with those in future posts.
