Relaxing whilst doing Competition Law is not an Oxymoron

On the Apple State aid decision

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It seems State aid law is in fashion these days, and that experts in the field are flourishing.

This is in many ways a welcome development for some of us who have been working on tax State aid cases for over a decade (as I mentioned here once, my first contact with competition law 13 years ago while still at university was a not-so-ground-breaking paper on tax competition and State aid, and tax State aid is a significant chunk of our work; see e.g. here and here or my comments below the post here).

The Commission’s decision in the Apple case is responsible for putting EU State aid law under the world’s spotlight (even if some of the issues that are being re-discovered are pretty settled or had already been raised by the previous decisions on tax rulings).

The decision seems to have been mostly welcome, if only for apparent ethical reasons (the message that Apple pays 50 euros in taxes for every million in profits is quite powerful in that regard).

In fact, PR-wise this may be the most effective Commission action in years (well, in this side of the Atlantic and of the English Channel).

However, I’m not sure a morally desirable outcome should be achieved at the expense of stretching the boundaries of the law. The underlying problem here is a political one (tax competition due to lack of tax harmonisation) and should arguably be better tackled at the root.

[After publishing this post I  read an article (see here) that makes a similar point but that may be a bit more unexpected and controversial considering its author: former Commissioner Neelie Kroes…]

And as obvious as the advantage in this case may be, adopting a decision with regard to one/some specific company/ies without examining how other tax rulings treat other multinational companies (and whilst claiming that tax rulings in themselves are legal) is risky, as it deviates from the assessment of selectivity as we have always known it. I already made this point on day one.

Those interested in undertanding the legal issues that are key to this case should take a look at this recent presentation by one of the greatest experts in the field, my colleague José Luis Buendía. It illustrates wonderfully (and funnily) the apparent chicken-egg and apple-pear  problems in the Commission’s approach:

Are Tax Rulings Selective_JLB

By the way, the 13 billion figure has proven that my prescient, visionary, specific and detailed quote to the Financial Times in April 2015 was spot on: “We are talking about potentially very significant amounts of money, said Alfonso Lamadrid de Pablo, a senior associate at Brussels law firm Garrigues” (see here)

P.S.  And if interested in a timely conference on these matters, check this one out (co-organized by one of the sponsors of our own Chillin’Competition conference, Hart Publishing): (Early Bird Discount if you book your place before 9 September 2016).

Written by Alfonso Lamadrid

1 September 2016 at 5:17 pm

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Competition and Regulation in Digital Markets

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The University of Leeds has become in recent years one of the most active and ambitious academic institutions in the field of EU Competition Law.

On September 9 they will be hosting a top-level (and free) conference under the title that gives name to this post. 

The conference will comprise four panels on: Market Definition and Market Power in Digital Markets, Regulation vs. Competition in Digital Markets, Vertical Restraints in Technology-Driven Markets and Goods and Data in Online Markets  (I will be taking part in the latter).

More info is available here:
Hope to see a good number of you there!

Written by Alfonso Lamadrid

29 August 2016 at 6:12 pm

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Curso de Derecho de la Competencia 2017

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The EU and Spanish Competition Law Course is turning 20 this year (I was a student back in its 9th edition and started co-directing it in the 14th).

The course will run between 13 January and 17 March and it will once again feature an impressive line-up of international lecturers that includes Judges, officials from the European Commission and the Spanish authority and top-notch academics, in-house lawyers and practitioners. Lectures will be conducted in English and Spanish.

On top of the classic modules on cartels, vertical and horizontal agreements, abuse of dominance, merger control, State aid and the competition-regulation interface, we are putting together 3 one-day seminars (one focusing on all noteworthy developments that took place in 2016, one focused specifically on transport-related matters, and a final seminar looking back at the main cases of the past 20 years guided by those directly involved in them).

It is sponsored by the main international and national law firms and economic consultancies active in the Spanish market.

More information on the course will be out soon; for the time being, here is some advanced essential info in English and Spanish:

XX Curso de Derecho de la Competencia Europeo y Español

XX EU and Spanish Competition Law Course

If you want to know more feel free to drop us a line at


Written by Alfonso Lamadrid

26 August 2016 at 11:24 am

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AG Opinion in Joined Cases C-20/15 P y C-21/15 P, Santander and World Duty Free Group (ex-Autogrill): Wathelet proposes nothing short of a revolution

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Nobody doubts that the notion of selectivity is the single most complex issue in EU State Aid Law. There have been many genuinely hard cases in the past few years, and the issues raised by each of them are very different. On the other hand, I had the impression that we were coming close to reaching a point of consensus, and that, by bringing together the different strands of the case law, it was possible to come up with something that looks like a coherent framework.

I do not have this certainty anymore after reading yesterday’s Opinion by AG Wathelet in the Santander and World Duty Free Group (ex-Autogrill) cases (on which Alfonso has been working). The Advocate General proposes a major departure from the consensus that had been developing. The Opinion appears to go further than Gibraltar, which is the most controversial case of the past few years.

There is nothing wrong, per se, in advocating a change in the law. We have been there before in the EU State Aid Law. I am ready to anticipate, however, that the position advanced by AG Wathelet will give rise to considerable controversy. I can think of three main lines of criticism:

  • From a strictly positive perspective, commentators are likely to argue that the opinion is at odds with the case law. Interestingly, this case law (such as 3M and a Germany v Commission judgment from 2000) is discussed in the Opinion. I explain this point in some detail below.
  • From a functional perspective, the Opinion, if followed, would have major consequences. The notion of state aid would be significantly broader, thereby leading to an appreciable increase in the range of measures that would be caught by Article 107(1) TFEU (and the volume of cases that the Commission could potentially handle).
  • From an institutional perspective, the Opinion would lead to a significant shift in powers to the Commission. The Commission would have greater discretion to scrutinise (and to have a say over) national tax systems. When reading the Opinion, I thought of AG Jacobs’ Opinion in PreussenElektra, who discussed in detail the institutional consequences of broadening the scope of the notion of aid.

The case was, I thought, relatively straightforward (just to give you an idea, I mention it just in passing in class). It is about a measure that allows firms that are tax residents in Spain to amortise the goodwill resulting from the acquisition of shareholdings in undertakings which are tax resident abroad.

The question is whether this measure is selective. The General Court concluded that it is not. After all, it does not discriminate between firms that are tax residents in Spain, and it is open, in fact and in law, to all undertakings. Sure, some firms benefit more than others from it, but this has never been enough to qualify a measure as State aid (or so I thought).

I can illustrate this idea by reference to a classic example discussed in the Commission Notice on direct business taxation. Consider a reduction in the tax burden of research and development activities. Not all firms would benefit from the measure to the same extent (some of them do not benefit from it at all). Insofar as it is genuinely open to all undertakings, however, it is not selective (this is in fact what the Commission itself said in the Notice).

AG Wathelet’s Opinion departs from this position. In his view, both the deduction at stake in Santander and ex-Autogrill and the tax break for research and development activities would be selective and thus would qualify prima facie as State aid. AG Wathelet appears to argue that any deduction in the corporate tax system would be selective insofar as it would have the effect of treating some firms more favourably than others. If you are familiar with the reality of corporate taxation across the EU you may have thought ‘well, then it means that pretty much all of the tax code is State aid’. I thought that too when I read the opinion, which is why I referred to institutional and functional issues above.

As I pointed out above, the fact that AG Wathelet proposes to broaden substantially the scope of Article 107(1) TFEU is not a ground of criticism in itself. Why will the Opinion be criticised from a positive standpoint, then? I can think of the following reasons:

  • The Opinion suggests that any derogation is prima facie selective. In doing so, it appears to conflate two separate questions. Contrary to what it is implied by AG Wathelet, not all derogations are selective, in the same way that a selective measure need not be derogation from a ‘normal regime’.
  • I also note that the Opinion reveals a tendency to conflate the notion of advantage and the notion of selectivity. Again, contrary to what is suggested, an advantage within the meaning of Article 107(1) TFEU is not necessarily selective. This is something that the Court has always made clear, more recently in MOL.
  • The Opinion can simply not be reconciled with the case law. Germany v Commission, which is a judgment that I have studied in some detail, is objectively at odds with the position taken by the Advocate General. Pretty much the same can be said of 3M. In essence, the Opinion is inviting the Court to overrule these precedents.

We will have to wait a few months. As I explained earlier this month, the Court has a preference for stability and continuity. But we know that changes happen, and this may be the occasion in which the notion of selectivity is given a whole new, much broader, meaning, to become something akin to an instrument to harmonise corporate taxation.

Written by Pablo Ibanez Colomo

29 July 2016 at 1:07 pm

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A reasonable solution, for no problem? Advance rate increase announcements under EU competition law (by Luis Ortiz Blanco)

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Intro by Alfonso: When the Commission recently announced the adoption of a commitments decision in the liner shipping case I asked my colleage Luis to write a post about the legal issues at stake (he was not involved in it, but wrote an expert academic report for a law firm involved). Luis, as you know, is a partner at Garrigues, a reputed academic, and the person responsible for me working in competition law (not sure that’s a good thing).  But what you may not know is that for 10 years he was a case handler at DG Comp dealing with transport cases, that he wrote his PhD on liner shipping and that he is about to publish the book “EU Regulation and Competition Law in the Transport Sector” (Oxford University Press). We leave you with him:



 On 7 July this year the European Commission adopted a Decision (not yet published) declaring legally binding the commitments offered by 14 container liner shipping companies allegedly aimed at increasing price transparency for customers and reducing the likelihood of coordinating prices and consisting on (i) stopping publishing and communicating General Rate Increases (GRIs) announcements, (ii) announcing figures including at least the five main elements of the total price, in order for price announcements to be useful for customers, and (iii) the binding character of the price announcements as maximum prices for the announced period of validity.

The European Commission formally opened infringement proceedings in November 2013 against container liner shipping companies that have regularly carried out similar price announcements (the General Rate Increases or GRIs), allegedly intentionally aligning them with the ones announced by other carriers.

The Commission had concerns that these GRIs announcements did not provide full information on new prices to customers but merely allow carriers to be aware of each other’s pricing intentions and make it possible for them to coordinate their behaviour, what may lead to higher prices for container liner shipping services and harm competition and customers.

Although no infringement has been identified, there are some aspects of the Commission’s intervention in this case that are worth noting:

First, the fact that more than two years elapsed from the inspections to the first requirements for information sent to the lines gives the impression that the initial intention of the Commission was not to put forward the theory of harm finally adopted; but rather that it was initially seeking to establish some form of explicit collusion and that this novel theory of harm might aim at not seeing the extensive efforts made by the Commission go to waste.

Second, the Commission is taking a very bold step, beyond the T-Mobile Netherlands and Wood Pulp case law. Indeed, the Commission’s case does not fit into what Wood Pulp would require to establish a concerted practice; neither does it fit into T-Mobile Netherland’s conditions required for a concerted practice to amount to an infringement by object. In fact, the Commission may have considered price announcements as an infringement by object in themselves and not as an evidence or sign of contacts or meetings between competitors as in Wood Pulp. Furthermore, while T-Mobile Netherlands established that the information exchange must be considered capable of harming competition depending on its legal and economic context, the European enforcer has refused to even consider such frame, eluding its duty to set up the whole picture of the case at hand.

Finally, the Commission has admitted that contrary to T-Mobile Netherlands, the information was disclosed to the public – making possible customers to benefit from it – and no evidence of contacts between the lines has been established.

The Commission apparently relies on ¶63 of the Horizontal Guidelines – which states that for unilateral announcements to constitute a concerted practice they must be shown to be a strategy for reaching a common understanding about the terms of coordination – and it seems to believe it has nothing to prove beyond that which is obvious and no one denies, i.e., that shipping lines make advance price announcements which they are not always able to implement. The Commission’s theory is not impossible, but clearly less likely to believe than alternative, simpler explanations of the facts.

Leaving aside all the above, the crucial question is whether the object or the effect of the announcement of GRIs is to create conditions of competition which do not correspond to the normal conditions of the market in question regard being had to the nature of the products or services offered, the size and number of the undertakings involved and the volume of that market (T-Mobile Netherlands, ¶33), as established by the Court of Justice case law. The Commission may believe it is indeed the object of these advance announcements to restrict competition in the internal market, on the basis that they allegedly do not benefit consumers as much as shipping lines, at least when they are made too far in advance.

In this respect two issues must be highlighted. Firstly, if the purpose of this practice is not clearly to restrict competition because it prima facie has a different purpose – to inform customers on future prices –, then it should not be considered a restriction by object. Secondly, and if the length of time between announcement and implementation of GRIs is of importance in determining whether this practice is restrictive or not, what is the maximum period of notice at which announcement is deemed to be restrictive (and possibly neither redeemable under Article 101(3) TFEU)?.

Considering that it is not really obvious that price announcements enable shipping lines to know the market positions and strategies of their competitors (T-Mobile Netherlands, ¶34) (as in the end many of them are not implemented as announced) and assuming both that there is a sufficient degree of parallelism in shipping lines’ conduct and that that parallelism is suspicious, it is necessary to determine whether this parallel conduct can be traced to the fact that competitors have adopted a concerted action with an anti-competitive object, [in this case] an exchange of information capable of removing uncertainties between participants as regards the timing, extent and details of the modifications to be adopted by the undertakings concerned (T-Mobile Netherlands, ¶41).

The answer to this question must necessarily be negative. Indeed, price transparency in respect of base rates and surcharges – a simple point of departure for real prices – is a fact in this industry and any non-public advance price announcement is bound to be known by all market participants very soon anyway, so that publicizing them simply makes lines’ lives easier given the number of customers they have.

Last by not least, according to the European Court of Justice case law, a concerted practice is a form of coordination between undertakings by which, without it having been taken to the stage where an agreement properly so called has been concluded, practical cooperation between them is knowingly substituted for the risks of competition (T-Mobile Netherlands, ¶26). Therefore an element of consciousness is required. Accordingly, the Commission should have at least gathered a reasonable amount of evidence showing that a non-negligible number of lines did knew that what they were doing might be anti-competitive.

All the above elements seem to indicate that price signaling is not the most obvious explanation for advance GRIs announcements; rather, the most obvious explanation is clients’ convenience and the dynamics in a market where list prices are easily available, with or without public announcements, but effective prices are not.

Will the commitments enhance the opacity of the market? One could think so. But will they solve a competition law issue? Many would say there was nothing to solve.

Written by Alfonso Lamadrid

28 July 2016 at 6:50 pm

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The Commission accepts Paramount’s commitments: what limits for remedies in EU competition law?

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The Outer Limiits KI

The Commission announced yesterday that it has accepted the commitments submitted by Paramount. This is an important landmark in the Pay-TV case [Alfonso, who is representing an interested party, already wrote about Paramount’s commitments here]. It is in any event far from being the last chapter. There are no indications that the other major studios are willing to follow the same path.

The commitments offered by Paramount are very far-reaching, but not totally unheard of. As I understand them, Paramount has committed not to enforce its intellectual property rights against Sky (or any other broadcaster). More precisely, it has accepted not to require by contract the respect of copyright legislation and not to bring an action against Sky when the latter responds to unsolicited offers from subscribers based in EEA Member States other than the UK (sigh) and Ireland. The latter commitment may sound surprising, but we know at least since Huawei that enforcing intellectual property before a court may be a breach of competition rules.

What is truly extraordinary about these commitments is what the Commission does not say about them. The remedy package may not work at all, and it is likely that the Commission will not reach the outcome it wishes (i.e. that copyright-protected content is offered online across borders). One obvious reason is that taking action against a single copyright holder does not really change anything for as long as the legal status of the contested practices remains unclear.

The second reason is perhaps the most interesting. For these commitments to achieve anything meaningful, Sky (or any other broadcaster) would have to play the game. In other words, Sky would have to decide that it is willing and able to breach copyright. And I can think of many reasons why it may not be in the interest of a pay-TV operator to do so. If a pay-TV operator decides to undermine the value of copyright in other territories, the studios may decide to license their rights to other operators in the following auction. In addition, licensees in other territories may decide to fight back, making everybody worse off.

The third reason is (sigh) that referendum…

If it is far from clear that the remedies will achieve the outcome desired by the Commission, it is almost certainly because there was not a competition law problem in the first place. If you can’t fix it, it ain’t broke.

Written by Pablo Ibanez Colomo

27 July 2016 at 1:54 pm

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Brexit, experts, courts and EU competition law

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Gove - Experts

One of the most distressing aspects of the EU referendum campaign in the UK was the way in which expert advice was ridiculed by Vote Leave. Hard facts, evidence and serious research were dismissed and derided as irrelevant ‘scaremongering’. This high-point of this feast of anti-intellectualism was no doubt reached when Michael Gove, one of the leaders of Vote Leave, infamously declared that ‘people in this country have had enough of experts’.

As President Obama puts it, when ‘experts are dismissed as elitist, then we’ve got a problem’. This trend is now making the headlines the world over (thanks, Mr Trump), but it has a familiar flavour to us competition lawyers and economists. Expert-bashing has long been fashionable in our field. Some lawyers and academics believe it is cool to dismiss economic expertise as irrelevant at best and suspicious at worst. We have all heard that ‘economists use too much math’, ‘they make comically unrealistic assumptions’ and that, in any event, ‘the only thing they want is their consulting business to grow’.

The problem with expert-bashing is that it is systematically given considerable prominence in public debates. Serious economic research tends to be put on a par with nonsense, intuition, or outright falsehoods. As a result, the two are presented as being equally respectable. A serious paper published in Econometrica is worth as much as someone’s lay opinion, which may not be grounded on formal analysis. And the latter may be wittier, more controversial or more spectacular (i.e. a la Boris Johnson, with or without the hair).

I often think about it, and I worry. But when I look beyond the short run I tend to be more optimistic. My impression is that the ‘white heat’ of science and progress, to paraphrase Harold Wilson, irradiates everything in the end. As far as EU competition law is concerned, my optimism comes from the attitude of the EU courts, which, at critical moments, have always sided with formal analysis and consensus positions. Just think of AKZO, Airtours, Tetra Laval or Wood Pulp. This is not a coincidence. The core task of courts reviewing administrative action is after all to protect citizens against charlatans, megalomaniacs and, to be sure, the occasional errors made by authorities. And this task cannot be meaningfully achieved without listening to experts.

Written by Pablo Ibanez Colomo

25 July 2016 at 10:10 am

Posted in Uncategorized