Chillin'Competition

LSE Law School is proud to announce its 12th May conference, which will bring together top officials and academics to discuss the future of competition law and regulation. You can check the programme, with all confirmed speakers, below.

Registration (for free) is open here. The event will take place in the venerable Old Theatre (at the heart of the LSE campus) and we will continue the conversation over lunch and drinks at the no less venerable Shaw Library. If you have any questions about it, please get in touch. You can also reach my colleagues via law.events@lse.ac.uk.

Programme

9:15-9:30 | Welcome

David Kershaw (Dean and Professor, LSE Law School).

9:30-11:15 | Looking ahead: policy matters

Andrea Coscelli (Chief Executive, Competition and Markets Authority);

Cani Fernández (President, Comisión Nacional de los Mercados y la Competencia); and

Andreas Mundt (President, Bundeskartellamt).

In conversation with Thorsten Käseberg (Visiting Professor, LSE Law School and Head of Competition Policy, German Ministry for Economic Affairs and Climate Action).

11:15-11:30 | Break

11:30-13:00 | Looking ahead: substantive matters

Fernando Castillo (Principal Legal Adviser, European Commission);

Heike Schweitzer (Professor, Humboldt University of Berlin); and

Fabienne Siredey-Garnier (Vice-President, Autorité de la concurrence).

In conversation with Pablo Ibáñez Colomo (Professor, LSE Law School).

13:00-14:15 | Lunch (LSE Shaw Library)

14:15-15.30 | Coordination and enforcement in the new landscape

Sarah Cardell (General Counsel, Competition and Market Authority);

Niamh Dunne (Associate Professor, LSE Law School); and

Damien Gerard (Prosecutor General, Belgian Competition Authority).

15:30-15.45 | Break

15:45-17:00 | Lessons from other regulatory regimes

Claudia Berg (General Counsel, Information Commissioner’s Office);

Martin Cave (Visiting Professor, LSE Law School and Chair, Ofgem); and

Lindsey Fussell (Group Director Networks & Communications, Ofcom).

17:00-18:30 | Drinks (LSE Shaw Library)

[We are happy to publish a guest post from Stephen Kinsella touching on the VBER reform. We hope it will trigger a discussion; as always, we would be happy to hear different views]

Some time next month the Commission is due to adopt a revised version of the regulation that governs how the competition rules are applied to online sales in Europe. The Vertical Block Exemption Regulation (VBER) is set to run until 2034 and will have a major impact on the relationship between brand owners, retailers and consumers. It also risks causing harm to the European economy and creating considerable legal uncertainty because of the way in which the Commission has approached the renewal process.

The Commission does not have unlimited discretion when it passes laws in this area. It is bound by a Council Regulation dating from 1965 that only allows it to create a safe harbour for “vertical agreements” (agreements between parties at different levels in the supply chain) where it is clear that they are no more restrictive than necessary and will benefit consumers. In order to make sure that is the case, the Commission is supposed to carry out a rigorous assessment of the impact of its proposal on competition. Unfortunately in this instance, it failed to undertake that analysis. As a result the regulation it proposes goes beyond the powers it was granted back in 1965, and even beyond Treaty rules on competition, meaning its new regulation will be open to legal challenge. A regulation that is supposed to create legal certainty will instead generate considerable uncertainty.

A concrete example is the proposal relating to dual pricing. Under the existing regulation, when a brand supplies its goods to a retailer who then resells them both online and in its high street store, the brand owner has to offer a single wholesale price to the retailer. If the brand owner wants to encourage the retailer to invest in point of sale efforts, it can offer financial assistance. But it cannot “penalise” the retailer for reselling any of its stock online.

Under the new proposals, a brand owner will be able to say: here is a consignment of goods but for those you eventually sell in the store the wholesale price is X but for those you ultimately sell online the price will be Y. Meaning that it will only be apparent after a good has been sold to a consumer what will be the wholesale price that is retrospectively applied to that item.

So far so simple, one might say. But so many questions arise. Is the retailer to keep distinct consignments of stock, separating those to be sold online from those sold in-store? What if a customer comes into the store to view the goods but then places an order via the retailer’s website – is that an online or offline purchase? Conversely, if the customer orders online but for a click-and-collect purchase, how does one categorise that sale?

These issues and others could have been tested in a rigorous market study. After all, the process of renewing the regulation was launched over three years ago. But these dual pricing provisions (and a number of other changes) that were only proposed last summer, were never subjected to proper evaluation of their effects on the European economy, and there has been no attempt to explain what their impact will be. In particular, there has been no serious evaluation of what the impact of dual pricing could be when combined with other proposals, such as allowing brands to ban their retailers from selling via online marketplaces and allowing them to discriminate against online sales channels in general. Would not one outcome be that the majority of online sales are effectively reserved to suppliers via their own website? And is it not inevitable that measures that deter or make online sales more expensive are bound to lead to higher prices, undermining the Commission’s focus on controlling inflation?

The Commission itself recognises that the powers it was granted in 1965 are limited. A recital in the draft states that the benefit of the exemption “should be limited to vertical agreements for which it can be assumed with sufficient certainty” (my emphasis) that they satisfy the conditions for exemption laid down by the EU Treaty. Another provision goes on to say that the regulation “should not exempt vertical agreements containing restrictions which are likely to restrict competition and harm consumers or which are not indispensable to the attainment of the efficiency-enhancing effects”. Put simply, the Commission has the obligation to show that its proposals meet these tests.

The criticism of the approach adopted for this renewal, and the inexplicable failure to conduct a genuine impact assessment, is growing. BEUC, the pan European consumer body, expressed its concerns last year: “the Commission must be wary of unsubstantiated efficiencies. Any relaxation of the rules applicable to vertical agreements is likely to impact consumers.” Even national competition authorities, who take the vast majority of antitrust decisions regarding vertical / distribution agreements, do not seem convinced by the proposed relaxation regarding dual pricing. A senior French competition official recently described the proposal as “neither proportionate nor necessary”.

What can be done this late in the day? Many organisations who have contributed during the renewal process (and seen much of their evidence ignored) are weary of it, and it could be that the Commission is counting on that fatigue. But it may be that the only pragmatic solution would be to prolong the existing regulation for one year, to allow time for the objective empirical evaluation of effects that has been lacking to date. Otherwise we will find ourselves with a seriously defective regulation set to govern the digital space for the next 12 years, which is far too long when you consider how often the Commission talks about “future proofing” its legislation. By way of comparison, the parallel regulation that the UK intends to adopt will have a lifespan of 6 years.

If the Commission does not even now rethink its approach, the new regulation will certainly be open to legal challenge. That could arise in a number of ways, but will most likely come out of a dispute in a national court, where the question of validity will need to be referred to the European Court for an answer. In addition the national competition enforcers of the Member States will be asked to use their own powers to withdraw the benefit of the VBER because it will be permitting anticompetitive practices on a scale that threatens consumer interests. In short, we will be faced with an entirely avoidable mess.

Over the past few months, the European Institutions have been working on a major legislative initiative that seeks to leverage DG COMP’s experience to create a new regulatory instrument, close an enforcement gap and address some of the greatest distortions to competition and the internal market.

We are talking about a bold, but well-thought out and balanced initiative that pursues true public interest goals. Some aspects still need to be ironed out, but the proposal is sound. Its success, however, will be determined by its practical implementation in the face of political pressures, potential legal challenges and EU relationships with third countries. This is a legislative initiative that touches on issues that we have discussed through the years, and we will be following it closely.

We are, of course, talking about the European Commission’s Proposal for a Regulation on Foreign Subsidies distorting the internal market, which has arguably not received the attention it deserves.

The opposite is true of the Digital Markets Act, which has attracted lots of attention from the press, politicians, lobbysts and commentators. Last Thursday, an almost-final version of the final DMA text was leaked. This text is now circulating widely in Brussels circles. We figured you would be interested. It is available here:

On 12^th May, the London School of Economics will be hosting a major conference that will look into the future of competition law and regulation. The event is the product of joint work with Thorsten Käseberg, who moonlights as a Visiting Professor at LSE on top of his duties at the German Ministry for Economic Affairs and Climate Action.

The conference will address upcoming challenges from a legal, institutional and policy perspective. In addition, we will explore the lessons that can be drawn from sectoral regimes, in particular utility regulation and data protection.

We hope to see many of you in London in May. We will be providing all information on how to register (for free) and how to attend already next week: make sure you keep an eye on this blog and LSE Law School’s social media profiles (including Twitter and LinkedIn). In the meantime, do not hesitate to get in touch.

If you want a taster of the conference, here is the lineup of confirmed speakers:

On policy matters:

• Andrea Coscelli (Chief Executive, Competition and Markets Authority);
• Cani Fernández (President, Comisión Nacional de los Mercados y la Competencia); and
• Andreas Mundt (President, Bundeskartellamt).

On legal issues:

• Fernando Castillo (Principal Legal Adviser, European Commission);
• Heike Schweitzer (Professor of Law, Humboldt University of Berlin); and
• Fabienne Siredey-Garnier (Vice-President, Autorité de la concurrence).

On institutional and coordination matters:

• Sarah Cardell (General Counsel, Competition and Market Authority);
• Niamh Dunne (Associate Professor, London School of Economics); and
• Damien Gerard (Prosecutor General, Belgian Competition Authority).

On lessons from other regulatory regimes:

• Claudia Berg (General Counsel, Information Commissioner’s Office);
• Martin Cave (Chair, Ofgem); and
• Lindsey Fussell (Board Member, Ofcom).

Enjoy the break!

On behalf of JECLAP‘s editorial team, I am proud to announce the publication of the Special Issue dedicated to the General Court’s ruling in Google Shopping.

You can be access it here. Choosing the pieces was not an easy task (we received over 30 submissions in no time), but we could not be more delighted about the end-product.

The contributions are invariably thoughtful and approach the judgment from different angles (some more practical, other more theory-minded). As an editorial team, we are particularly happy that this Special Issue provides a platform to new voices in academia and the world of practice (we are convinced they will become household names in the near future).

If you are curious, below is a glimpse of what the Special Issue offers (I will be discussing some pieces in closer detail in the coming weeks). If (for reasons beyond comprehension) you or your institution are not yet subscribed to JECLAP, you will be pleased to see that some contributions are available in Open Access format.

Enjoy and do not hesitate to contact us and/or the authors with any comments!

Rules, Discretion, and Reasoning According to Law: A Dynamic-Positivist Perspective on Google Shopping (open access), by Justin Lindeboom (Groningen).

The General Court’s Google Shopping Judgment Finetuning the Legal Qualifications and Tests for Platform Abuse, by Friso Bostoen (Leuven).

Bronner revisited: Google Shopping and the Resurrection of Discrimination Under Article 102 TFEU, by Christian Ahlborn, Gerwin Van Gerven and Will Leslie (Linklaters).

Article 102 TFEU, Equal Treatment and Discrimination after Google Shopping, by Lena Hornkohl (Max Planck Institute Luxembourg).

Anticompetitive Effects and Allocation of the Burden of Proof in Article 102 Cases: Lessons from the Google Shopping Case, by Raffaele Di Giovanni Bezzi (European Commission).

Google Shopping and the As-Efficient-Competitor Test: Taking Stock and Looking Ahead (open access), by Germain Gaudin (Freiburg) and Despoina Mantzari (University College London).

Business Models and Incentives: For an Effects-Based Approach of Self-Preferencing?, by Patrice Bougette (Côte d’Azur), Axel Gautier (Liège) and Frédéric Marty (Côte d’Azur).

Between Substance and Autonomy: Finding Legal Certainty in Google Shopping (open access), by Yasmine Bouzoraa (Groningen).

Following the Google Shopping Judgment, Should We Expect a Private Enforcement Action?, by Jeanne Mouton (Côte d’Azur and College of Europe) and Lewis Reed (College of Europe).

On 1 April 2020 we lost Rubén Perea, a truly extraordinary young man who was about to start a career in competition law. We decided to set up an award to honour his memory, and to recognize the work of other promising competition lawyers/economists under 30. Today we are announcing the winner and runners-up of the 2nd edition of this award.

The winner of the 2nd (2021) edition of the Rubén Perea Award is JÉSSICA NEMETH, for her paper “Blockchain, Behavioral Remedies and Merger Control: How can access remedies do better?”.

Lass Tuesday Jessica and the winner of the first edition (Vladya Reverdin) received their awards from EVP Vestager, who very kindly accepted to give out the awards at her offices:

The jury also selected 4 finalists whose papers will be published in a special JECLAP issue. The finalists are:

-“Firm’s own price elasticity of demand in dominant position analysis” (by Jan Kupcik)

-“Trading Off the Orchard for an Apple: the iOS 14.5 privacy update” (by Alba Ribera)

-“Is ‘‘more’’ better? Broadening the right to sue in competition damages claims in both sides of the Atlantic” (by Grigorios Bacharis)

-“Should the New Competition Tool be put back on the table to remedy algorithmic tacit collusion?” (by Vasileios Tsoukalas)

Congratulations to Jessica, Alba, Jan, Grigorios and Vasileios, and many thanks to my fellow members of the jury, namely Damien Gerard, Lena Hornkohl, David Pérez de Lamo, Michele Piergiovanni and Gianni De Stefano.

We will soon be announcing the 3rd edition of the Rubén Perea Award. Stay tuned!

The lunchtime seminars at Cambridge’s Centre for European Legal Studies have long been an institution in EU law. Having followed the activities of the Centre since my days as a Teaching Assistant in Bruges, I was delighted to accept their invitation. You can access the video of my presentation here, and the PPT I used here.

The topic I chose, judicial review, is dear to my heart (and hopefully relevant for EU lawyers at large). My presentation focused on the complex relationship between law, policy and expertise. In our field, the EU courts are consistently asked to walk the fine line between the exercise of effective judicial review and the respect for the policy choices of the European Commission.

Judicial review is particularly complex considering that issues of law are subject to full review whereas policy-making is, if at all, only controlled for manifest errors of assessment. As I put it during the lecture, the challenge for the EU courts is thus to avoid the cross-contamination of standards of review.

Against this background, I discussed what I called some of the hallmarks of effective judicial review in the case law. They include the following:

1. Policy must be implemented through clear legal criteria that can be anticipated and subject to judicial review
2. Policy must be grounded on the expert consensus
3. Policy-making must be consistent with prior commitments
4. The relevant economic and legal realities must be considered
5. Consistency within and across provisions

On the first of these hallmarks, I pointed out that the interpretation of legal provisions must make it possible to distinguish between issues of law and issues of policy. The case law suggests that, where the interpretation would blur the line between both issues, it is unlikely to survive judicial review. CK Telecoms provides a wonderful example in this regard.

The second hallmark is one that I have discussed at length. The interpretation of the law must be grounded on the expert consensus (as opposed to informal, fringe or heterodox views). Ongoing developments raise a couple of fascinating questions:

• First: can an infringement be established in the absence of consensus? The rules on the allocation of the burden of proof would suggest that consensus is a precondition for a finding of infringement.
• Second: can the review of administrative action itself rely on informal analysis? The logic of the system would lead to the conclusion that it cannot.

Finally, the renvoi judgment in Intel was very useful to illustrate the third and fourth hallmarks (the fifth was left for a forthcoming paper). That judgment shows that the EU courts expect the Commission to behave in a manner consistent with its policy commitments (for instance, if a policy document declares that it will consider the coverage of a practice, one can reasonably expect it to look at the matter subsequently, unless it explains why it is not appropriate in a particular case).

The fourth hallmark addresses what is arguably the most consistent lesson of the past few years: any legal conclusions must result from a careful analysis of the relevant economic and legal realities. The object and/or effect of a practice cannot be based on hypotheticals or on abstract considerations. By the same token, arguments capable of casting doubts on the premises on which administrative action is based must be taken seriously by an authority if a decision is to survive judicial scrutiny.

It would be wonderful to get your views on the presentation. Have a wonderful weekend!

The Global Competition Law Centre will be holding its annual conference at the College of Europe in Bruges (as well as online) on 25-26 March 2022. For many years, and leaving Chillin’Competition conferences aside, this has been arguably the most substantive event on EU competition law. This is a conference with no agenda other than contributing to the understanding and the refinement of our discipline. Every year it brings together a balanced mix of competition law experts from public institutions, academia and private practice genuinely interested in discussing substance.

This year’s program is available here.

I will be taking part in panel 6 on the role of the EU Courts, together with General Court President Marc van der Woude, Judge Ingeborg Simonsson and Damien Gerard as Chair. My presentation will be titled “The role of the EU Courts: a view from the Bar“.

You can CLICK HERE for further information and registration. Whoever registers via this link (and lets me know) will get a post-conference beer at my favorite bar in Bruges (here is a view from that, the, Bar).

The 2022 edition of the annual IEB seminar on “Competition Law in Hi-Tech markets” will take place next Friday 25 February at 16 .00 CET. This will be a hybrid seminar, with most speakers participating in-person at the Instituto de Estudios Bursátiles in Madrid and others joining via Teams. Should you be interested in joining, either in-person or remotely, please contact competencia@ieb.es

The program is the following:

Panel I- Recent competition law developments in hi-tech markets  (16.00-17.30 CET)

-Moderator: Lewis Crofts (MLex) 

-Nicholas Banasevic (Gibson Dunn)

-Milan Kristof (Court of Justice of the European Union)

-Alfonso Lamadrid (Garrigues)

Panel II- From antitrust to ex ante regulation (17.45-19.15 CET) 

-Moderator: Lewis Crofts (MLex)

-Pedro Hinojo (CNMC)

-Kay Jebelli (Computer and Communications Industry Association)

-Natalia Moreno (European University Institute)

-Anne Witt (EDHEC Business School)

The most recent developments on exclusionary abuses suggest that the reports of the demise of the Guidance Paper on exclusionary abuses might have been exaggerated. Just when we thought that it might have fallen out of favour, it has been cited in AG Rantos’s Opinion in Servizio Elettrico and by the General Court in its Intel renvoi.

These references might seem surprising at first glance. After all, the Guidance Paper is not, and was never intended to be, a statement of the law. It is for the Court of Justice, not the Commission, to interpret the scope of Article 102 TFEU. Why, then, the references to the instrument? I can think of a number of legal and non-legal reasons.

The legal: pre-commitment devices and good administration

A point that transpires clearly from a reading of the Intel renvoi is that, while the Guidance is not a statement of the law, it is not devoid of effects, either. We have long known that soft law instruments bind the authority that has issued them. Suffice it to think in this regard of the de minimis Notice (as explained by the Court in Expedia; and by Alfonso in a number of posts, such as this one).

The above is a logical and necessary corollary to the principle of good administration: if a public authority has publicly announced that it will exercise its powers in a certain way, it is reasonable to expect that its subsequent behaviour will follow the position stated in the relevant instrument (irrespective of whether it is a form of ‘soft’ or ‘hard’ law). And it is likely that review judges will assume that an administrative authority will keep its word in its dealings with individuals.

In the specific context of the Guidance, it is reasonable to anticipate that the Commission will follow the approach to the prioritisation of cases that is enshrined in the document. If there was any doubt: this fact does not mean that the Commission can never depart from the Guidance. It simply means that, if it ever prioritises a case in accordance with a different set of criteria, its decision must at least explain the reasons why it is following another approach.

The non-legal: a good, concise document that captures the case law and the expert consensus

The above is certainly relevant, but I do not believe it tells the whole story. Reading the Intel renvoi and AG Rantos’s’ Opinion in Servizio Elettrico suggests that the reasons behing the rising prominence of the Guidance Paper in the case law go beyond the strictly legal.

Arguably, the main reasons are in fact non-legal. I can think of three interrelated ones. The Guidance Paper is, first and foremost, a very good policy document. It is concise, clear and useful for courts. It provides the right amount of detail in an orderly way.

What is more, the Guidance Paper is very much in line with the case law as it has evolved since Post Danmark I. As the Intel saga shows, the criteria to assess foreclosure, as laid down in the relevant judgments, is aligned with para 20 (extent of the dominant position, coverage of the practice, features of the relevant market, evidence of actual effects and possible foreclosure strategy).

As far as price-based conduct is concerned, the approach proposed in paras 23-27 faithfully reflects the consistent case law since Deutsche Telekom and TeliaSonera all the way to Post Danmark II and Intel (not only because of the cost benchmarks proposed, but also in relation to the ‘as efficient competitor’ principle and the potential exceptions to the principle that might arise in a given economic and legal context).

Finally, the Guidance Paper captures the expert consensus. Its primary purpose was in fact to bring the Commission’s practice in line with mainstream economics. And if there is something that my research has taught me, it is that the Court of Justice has consistently crafted the law around the expert consensus. The latter is, in fact, a key constraint on administrative action in the context of Article 102 TFEU. From this perspective, the Guidance could be seen as a digest of mainstream positions and, as such, the sort of document that review courts are likely to cite.