Relaxing whilst doing Competition Law is not an Oxymoron

Streaming for the Chillin’Competition Conference + thanks

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As we are getting ready for the 3rd Chillin’Competition conference tomorrow, there are a few things we need to say:

-First, given the length of the waiting list and some demand on your side, we will try out streaming parts of the conference live via Youtube (a technician swears it will work….). We will be streaming the introductory “Year in Review” remarks at 9.45 (excellent speaker don’t miss it), the individual Ted@Chillin’Competition talks (14-15 pm) and the Commissioners’s intervention starting at 15 p.m,

You will be able to follow it all via a link that we will be posting tomorrow at 9.30 sharp.

-Second, our special gifts have made it from China….

– Third, as we always say, none of this would be possible without our sponsors, so, truly, many thanks to all of them!


Written by Alfonso Lamadrid

24 October 2017 at 6:02 am

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XXI edition of the EU and Spanish Competition Law Course

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The EU and Spanish Competition Law Course that I co-direct together with Luis Ortiz Blanco is turning 21 in 2018.

The upcoming edition will take place between the 12th of January and the 16th of March in Madrid.

The course  will once again feature an impressive number of top-notch officials, academics and practitioners from all over Europe. To compensate, Pablo and myself will also be involved as much as possible.

More (preliminary) information is available here (in English, Program XXI Course IEB – 2018) and here (in Spanish, Programa XXI Curso IEB – 2018 ).

FOR THE FINAL VERSION OF THE BROCHURE, SEE HERE: Tríptico XXI Curso Derecho Europeo Español Competencia 2018

Written by Alfonso Lamadrid

18 October 2017 at 4:22 pm

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AG Saugmandsgaard Øe in Case C-179/16, F Hoffmann La Roche v AGCM: a canonical approach to restrictions by object

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It has taken us more than usual to discuss AG Saugmandsgaard Øe’s Opinion in Case C-179/16, which is the most recent Hoffmann-La Roche in town (and we had very good reasons to do so, as you will see below!). But here we are.

Above all, the Opinion is valuable in the approach that the Advocate General follows to identify restrictions by object. Not because it introduces any innovations – he just follows the case law – but because of how clean the analysis is.

The dispute at stake in the case is useful to illustrate the way in which the Court goes about the divide between restrictions by object and effect. An excellent candidate for classroom discussions.

The venerable Consiglio di Stato referred five questions to the ECJ. The most interesting one concerned the lawfulness of a concerted practice aimed at emphasising that a medicinal product is ‘less safe or less efficacious’ than another one. According to the Italian competition authority, this concerted practice sought to artificially differentiate between two medicinal products and thus share markets.

The referring court mentions a valuable aspect pertaining to the ‘scientific context’ of the practice: the Consiglio di Stato adds that, at the time, there was no reliable scientific evidence either to support or refute the claim about the relative safety and efficacy of the product.

Is a concerted practice (or agreement) of this kind caught by Article 101(1) TFEU insofar as its object is to share markets?

How to identify restrictions by object: AG Saugmandsgaard Øe gives a concise and elegant answer

Commentators struggle to define the criteria to draw the line between restrictions by object and effect. The Opinion shows that the task should not be difficult.

AG Saugmandsgaard Øe’s approach captures the essence of the case law in a concise and elegant way. As he explains in para 148 of the Opinion, understanding the object of an agreement is all about making sense of its ‘economic function’, that is, of its objective rationale.

When making sense of the economic function of an agreement or concerted practice, it is useful to examine whether the conduct is a plausible means to achieve a pro-competitive objective. This is something that Alfonso and I emphasised in a piece we published last year, and to which the Advocate General refers in the Opinion (at footnote 96).

When there is a plausible pro-competitive explanation for the practice, the agreement or concerted practice is not restrictive by object. This is a point that has been confirmed very many times by the Court (Cartes Bancaires is just a recent and particularly obvious example). In any event, it is useful that the Advocate General engages with this question explicitly (as many judgments address it only implicitly).

The application of the framework to the facts at hand

How does the Advocate General apply the principles of the case law to the facts at hand? The question of whether the concerted practice restricts competition depends, in his view, on whether the information provided by the parties to the concerted practice is misleading.

  • The concerted practice would be restrictive by object if the information about the efficacy and safety of the medicinal product is misleading.
  • If the information turns out not to be misleading, the concerted practice would not be restrictive of competition (that is, it would fall outside the scope of Article 101(1) TFEU).

The Opinion makes a lot of sense to me. I fail to see how providing misleading information about a product can serve a pro-competitive rationale. This practice can only be plausibly explained as an attempt to reduce demand for one product (that is, as an attempt to restrict competition). The ‘by object’ label is thus entirely justified. This practice would be similar to the exchanges of information at stake in T-Mobile and Bananas.

Where the parties convey information that is not misleading, on the other hand, it makes sense to leave the concerted practice outside the scope of Article 101(1) TFEU. As the Advocate General points out in para 181, such a concerted practice would improve, rather than restrict, the conditions of competition prevailing on the relevant market. If that is so, it would be a plausible means to achieve a pro-competitive objective. In this sense, the practice would be similar to the exchange of information at stake in Asnef-Equifax, which was also found to escape the prohibition.

Lessons from the Opinion: effects-based approach and ‘object box’

Three ideas came to mind when reading the Opinion:

  • The Court’s approach to the identification of ‘by object’ infringements is, and has always been, very ‘effects-based’.
  • Human ingenuity is much larger than the ‘object box’ will ever be.
  • The ‘effects-based’ approach is compatible with the ‘by object’ treatment of some practices

The concerted practice at stake in this case did not fall within any of the categories that are traditionally associated with ‘by object’ infringements (price-fixing, market sharing and so on).

Does this fact exclude the qualification of the agreement as restrictive by object? Of course not. As rightly explained in the Opinion – at para 150 – the form of a practice has never been enough to decide whether an agreement amounts to a ‘by object’ infringement.

The Court, by emphasising the need to consider the nature of the agreement, its content, and the economic and legal context of which it is part, has always placed substance above form (Allianz Hungaria, among many others, comes to mind). In other words, the Court has always rejected the ‘form-based’ approach to the analysis of ‘by object’ infringements.

I tell myself that ‘effects-based’ approach is perhaps a misnomer. I would rather call it the ‘substance-over-form’ approach.

An important consequence of the approach followed by the Court: the famous ‘object box’ is both over-inclusive and under-inclusive.

The ‘object box’ is over-inclusive in the sense that even price-fixing or market sharing can, in a given economic and legal context, fall outside the scope of Article 101(1) TFEU (e.g. Tournier and Ideal Standard). The Court has consistently held, since Societe Technique Miniere, that a restriction of competition cannot be established in the abstract (i.e. it has never ever been enough to cry ‘price fixing’).

The ‘object box’ is under-inclusive in the sense that ‘by object’ infringements can take many new forms – never underestimate the ingenuity of companies that are determined to restrict competition! F Hoffmann La Roche v AGCM is a wonderful example in this regard.

Against this background the question is: should we keep expanding the ‘object box’ with every new case that does not fit within existing categories or should we throw the box away as an imperfect and potentially misleading proxy? Discuss.

Finally: for some people, the ‘effects-based’ (‘substance-over-form’, I mean) approach means the demise of ‘by object’ infringements. I cannot disagree more.

The ‘substance-over-form’ approach is certainly compatible with the ‘by object’ treatment of some practices. If it turns out that an agreement serves no pro-competitive objective, there is no point in requiring anticompetitive effects. I would say more: requiring evidence of anticompetitive effects in such a case would make no sense.

Written by Pablo Ibanez Colomo

16 October 2017 at 3:11 pm

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Creative Tribes

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The pharmaceutical industry has always liked to emphasize the innovation factor, often to argue that any loss of income would result in less R&D.

The extent to which that may be true is the subject of incandescent debates (remember, for example, the late AG Ruiz-Jarabo’s views in Lélos that this was a “misleading” argument “aimed only at seducing public opinion”).

But what is undeniable is that the industry is at the avant-garde of legal innovation. Already in my very first post on this blog (just realized it’s been 8 years, to the day, already!) I already made a comment abut this (resorting to the traps set for the Roadrunner as the image). Here is a new, and delicious, chapter to that story:

Allergan was the target of patent challenges on the part of generic drugmakers; these challenges took place both before US federal courts and via the IPR (inter partes review) system. Allegan came to realize that certain entities (like Native American Tribes or public universities) enjoy sovereign immunity from challenges under the IPR system (“sovereign immunity”, codified in the 11th Amendment of the Constitution, implied that entities assimilated to sovereign rules –like monarchs- and arms of the state could not be sued without their consent).

So in order to fend off all IPR challenges, Allegan had an idea: transfer its patent rights to the Mohawk tribe, which would then license them back to Allergan (we discussed on this blog a similar –albeit much less creative- arrangement). The end-result is that Allergan pays a few million to shield its patents from a certain kind of challenge. To be sure, this had happened before with universities. But involving Native American Tribes adds a nice twist to it. As one would expect, this strategy is now extending to other fields, and Apple has already been sued by the so-called Three Affiliated Tribes.

Some US Senators have claimed that this strategy was “blatantly anticompetitive”. Others argue, however, that the patent rights continue to face challenge in federal courts and that the Mohawk deal cannot protect the patent against those; the argument would therefore be that the deal only helps the company avoid a “double jeopardy situation” created by an imperfect legal system. The Mohawk tribe has issued a Q&A document about its new patent business availabe here.


-Under EU Law, would this by a “by object” or “by effect” restriction? What does “experience and economyc analysis” tell us about transferring IPRs to Native American Tribes?

Resultado de imagen de thinking emoji

Is this case more similar to:

a) the Lithuanian Railways case discussed in Pablo’s last post (a case that has remarkably led my co-blogger to defend a Commission decision and to label the case as one of the most straightforward ever)?

b) ITT Promedia and AstraZeneca (instances where companies were accused of gaming the legal system to obtain an advantage)?

c) Pseudo-assignments of IPRs to patent trolls?

c bis) the Microsoft-Nokia deal (again also discussed on the blog) and which triggered no action on the part of competition authorities?

d) pay-for-delay arrangements (also discussed at length on this blog)? Btw, last week I read and graded a very good BSC master thesis by Anne Robert from Sidley which somehow managed to bring together pay-for-delay and Game of Thrones; Allergan does at least not have a monopoly over creativeness…

Written by Alfonso Lamadrid

10 October 2017 at 11:05 am

Posted in Uncategorized

Lithuanian Railways: the most straightforward abuse case ever?

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Lithuanian Railways

On Monday, the European Commission announced its decision to fine Lithuanian Railways more than 27 million for abusing its dominant position. The practice itself is remarkable: the company dismantled 19 km of railway connecting Lithuania and Latvia to prevent a major customer from using the services of a competitor.

I welcomed the decision for two reasons.

It adds to the topicality of the seminar on network industries that I give in Bruges (and which, coincidence, I presented last Friday). I cannot wait to start.

More importantly, the information available on the case suggests that Lithuanian Railways may very well be part of a rare breed of practices: those that serve no purpose other than the elimination of competition. It would be great if a body of decisions concerning such practices developed.

Article 102 TFEU enforcement is controversial because the vast majority of potentially abusive practices have ambivalent effects on competition: they are capable of having both pro- and anticompetitive effects. Sometimes it is even trickier: the very effect that is potentially problematic is what makes the practice pro-competitive (think of combining two features in a single product).

But there are practices out there that are not capable of having pro-competitive effects or, more generally, that cannot be plausibly explained as a means to enhance competition.

For these practices, the ‘by object’ label is entirely justified. When a practice serves no purpose other than the elimination of competition, there is no reason to require evidence of anticompetitive effects on a case-by-case basis. This is a point that the Commission made in the Guidance, and I agree.

Examples of conduct of this kind? Pricing below average variable costs. Doing so is in principle irrational for a firm. Thus, the only plausible explanation for the conduct is that it is part of a plan to drive a rival out of the market.

I struggled to think of other examples of practices of this kind (besides that of a company blowing up a rival’s plant, which is a classic). Now Lithuanian Railways potentially provides a wonderful one (I have to say nothing similar ever crossed my mind).

It is not obvious for me to see, prima facie, how dismantling a railway connection can be plausibly explained on efficiency grounds. It is an Aspen Skiing sort of situation. And I look forward to the details of the decision (i.e. how the absence of a pro-competitive rationale for the behaviour has been established).

In this respect, the case appears to be different from others involving the leveraging of a dominant position. For example, while vertical integration (via organic growth or via a merger) can foreclose upstream and/or downstream rivals, we know that it can also have pro-competitive effects. What are exactly the pro-competitive effects of dismantling capacity in the circumstances of this case?

Similarly, I believe there is a clear difference between Lithuanian Railways and the famous ‘strategic underinvestment’ decisions in the energy sector. I fail to see why it would be an abuse for a dominant firm not to invest in capacity to accommodate (read: subsidise) rivals. But I certainly see how removing existing capacity to hinder competition can be in breach of Article 102 TFEU.

I look forward to your comments on the above (in particular, this time around, those of economists!).

Written by Pablo Ibanez Colomo

5 October 2017 at 5:10 pm

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On Excessive Pricing and Subjectivity- The CJEU’s Judgment in case C-177/16 AKKA/LAA

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Too Much

Excessive pricing has been one of the topics of the year. It’s also an issue close to our heart, first because Commissioner Vestager’s speech about it includes our names (the text is here and the full video is available here) and, second, because we are victims this practice daily (Pablo in his quest for vegan/bio products and me as a frequent purchaser of products for kids).

In spite of the public perception that competition law should be there to intervene directly against excessively high prices, these cases have –maybe for good reasons- been uncommon at the EU level (as explained before, at the national level things are quite different; see e.g. the CMA’s Phenytoin case). A cause and consequence of this situation is the lack of clarity on the applicable legal criteria, which have remained elusive. The prevailing legal test in this area was the fairly subjective “I-know-it-when-I-see-it-approach”. On a less legal note, that subjective approach is the rule in day-to-day life too; for example, my wife believes that whatever I buy is excessively priced and I think the same of what she buys. Fortunately I have the good sense of not saying it and of crossing this, she certainly wouldn’t have liked me to write that on the blog.

A recent Latvian case provided a good opportunity to clarify these criteria. A few months ago we commented on AG Wahl’s Opinion in the case (see here for our comments). The CJEU delivered its ruling on 14 September. It is available here. The name of the case is “Autortiesību un komunicēšanās konsultāciju aģentūra/Latvijas Autoru apvienība’ v Konkurences padome”. Since the acronyms aren’t so easy to remember either, it will probably be verbally referred to in the future as “the collecting societies case in…was it Latvia??”

As noted in our earlier post, the questions posed by the Latvian Supreme Court were right on the mark (except for one on the effect of trade between Member States the answer to which was evident and on which we will not comment). There is also a quite interesting issue regarding calculation of fines that is unrelated to the discussion on excessive pricing and on which we will comment in a future post.

In a nutshell, the issues posed by the case and the responses from the CJEU are the following:

Issue 1: In order to identify excessive pricing, “is it appropriate and sufficient-and in which –cases- to draw a comparison between the prices in the market in question and the price (rates) in neighbouring markets”? (underlining added)

The CJEU reformulates the question in para. 31 as only referring to whether the comparison is “appropriate”. Accordingly, the CJEU only responds to that question saying that yes, it is appropriate. It refers to established case law pursuant to which “a method based on a comparison of prices applied in other Member States must be considered valid” and that “that difference must be regarded as indicative of an abuse” (para. 38, citing Tournier and Lucazeau).

As the Court says, this was all “apparent from the case-law”. Actually, the referring Court was very much aware of it, as evidenced by the summary of its views contained in para. 20 of the Ruling. But can it be “sufficient” and, if so, “in which cases”? Those questions remain unanswered.

Issue 2: When is a comparison across markets sufficiently representative?

This is actually not a question that had been explicitly asked by the referring Court, but it certainly something that was in its mind, as perceptively observed in para. 39 of the Ruling. Since comparative exercises often boil down to this question (the apples and pears issue that we see everywhere), it is commendable that the Court went on to address it. It is however unfortunate that we may not be able to extract practical lessons. What the CJEU says in this regard is that:

  • “A comparison cannot be considered to be insufficiently representative merely because it takes a limited number of Member States into account” (40).

This is pretty common-sensical, but does the inclusion of the word “merely” suggest that it nevertheless is a relevant factor?

  • “Such a comparison may prove relevant on condition (…) that the reference Member States are selected in accordance with objective, appropriate and verifiable criteria” (41), that these “may include, inter alia, consumption habits and other economic and sociocultural factors, such as GDP per capita and cultural and historical heritage” (42), and that the comparison “must be made on a consistent basis” (44).

“Objective, appropriate, verifiable and consistent” all sound great and make sense, but I’m not sure they offer much practical guidance as they lend themselves to interpretation and gerrymandering as many different choices and divergent results can be said to be covered by those. Also, the examples provided by the Court “other sociocultural factors” or “cultural and historical heritage” are arguably perhaps not the best examples of objective and verifiable criteria. The CJEU concludes that all this is for national courts to assess depending on the circumstance of the case (42). If the comparison of prices requires competition authorities and courts to compare cultures and historical heritage, well, subjectivity will continue to play a major role.

Issue 3: In order to identify excessive pricing, “is it appropriate and sufficient- to use the Power Parity Index based on gross domestic product”?

Paras. 45 and 46 of the Judgment now make it clear that the PPP index “must be taken into account” when conducting comparisons between Member States. Whether the outcome of this assessment is or not conclusive or “sufficient” remains unclear (AG Wahl had said that it was useful and appropriate, its sufficiency depending on other factors), but we now know that it is not only “appropriate” but “mandatory”. This is a genuine development.

Issue 4: Should one compare user segments or average rates for all segments?

That was, again, an excellent and tough question. The CJEU’s sort-of-response is that it is possible to look at “one or several specific segments” (50), so that the assessment of average rates is not the only possible method. But the Court makes it clear that “it falls to the competition authority concerned to make the comparison and to define its framework, although it should be borne in mind that that authority has a certain margin of manoeuvre and that there is no single adequate method” (49). In other words, this is the sort of “complex economic assessment” for which some latitude on the part of the auhority is accepted.

Issue 5: When is a difference between prices “appreciable” and indicative of its abusive nature?

Once again, excellent question. The CJEU observes, first, that the differences in this case (twice as high in comparison to Estonia and Lithuania and between 50-100% higher than the average EU rates) were not as large as the differences that gave rise to the finding of excessive pricing by collecting societies in Tournier and Lucazeau (para. 54). It then notes, however, that this doesn’t mean that differences like those at issue cannot be abusive, given that “there is in fact no minimum threshold above which a rate must be regarded as “appreciably higher, given that the circumstances specific to each case are decisive in that regard.” The CJEU clarifies, along the lines of what AG Wahl had suggested, that “a difference between rates may be qualified as “appreciable” if it is both significant and persistent on the facts” (55) and that “that difference must persist for a certain length of time and must not be temporary or episodic”.

This all makes sense, the next question (aside from the unavoidable “what is significant”), being:  “what is a certain length of time?”, what counts as “temporary”? Wahl’s Opinion (at 109) had acknowledged that those questions would always be there. His proposed solution was that an authority should intervene “only when it feels sure” that “almost no doubt remains” as to the abusive nature of a price.


-Unlike AG Wahl’s Opinion in this case, and somewhat unlike in the Intel Judgment, the Ruling does not contain any wider statements of principle. Perhaps unsurprisingly, the Court does not delve into discussing why prudence may or not be needed in these cases, nor about the exceptional circumstances in which action may be needed. As AG Wahl had observed, legal monopolies –including collecting societies, at issue in this case, and companies benefitting from exclusive rights- are exceptional and perfect candidates in this regard.

-At the end of the day, the CJEU ultimately says that the elusive riddles are for national authorities and courts to solve on a case by case basis (although with a different “background music”, this is actually not so different from the bottomline of AG Wahl’s Opinion). Indeed, the end result of this story is that it is up to national Courts or competition authorities to (a) determine whether to rely on a comparison across Member States or on other methods also/instead (37-38); and, in case a comparison is used, to (b) come up with a relevant benchmark for the comparison considering objective, appropriate and verifiable criteria which include economic, sociocultural and historical elements (40-41); (c) decide whether to make the comparison within one or several specific segments (50), and (d) determine whether a given price difference is “both significant and persistent” (55).

-However, and as we said then, the main contribution in AG Wahl’s Opinion was the idea that since no method is perfect, a combination of methods would be the most perfect of imperfect solutions: “competition authorities should strive to examine a case by combining several methods among those which are accepted by standard economic thinking” (Opinion, 43). That made sense to me. The CJEU’s ruling, as explained, falls short of saying this. It appears to be less conscious, or less concerned, about the alleged flaws inherent to a methodology of comparison across Member States (arguably, the CJEU understandably operates under an internal market logic which might play a role) and seems to leave the door open to the idea that this method may be sufficient.

-To be sure, the CJEU has nonetheless clarified that any comparison analysis must take into account the PPP index, and that “appreciable” means “significant and persistent”  (well, that last one we could have guessed… )

-In reality, however, and in the Court’s defence, perhaps this is all unavoidable. This may very well be one of the cases that is impossible to discuss in the abstract and that can only be assessed on a case by case basis. But as unavoidable as this might be, it says something (once again) about the lack of predictability of Art. 102 TFEU. If one admits that there is a large “margin of manoeuvre” for an authority to (a) define a relevant market; see here; (b) identify dominance; see here, (c) choosing what to compare to what; and (d) determining whether the result of the comparison is satisfactory, well, there may be an issue there.

But like Ortega y Gasset said of another problem that is unfortunately making headlines this week, this is one that perhaps cannot be resolved and that we need to carry on and live with…

Written by Alfonso Lamadrid

28 September 2017 at 3:21 pm

Posted in Uncategorized

Pop Antitrust

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A few years ago we presented you with a selection of the best antitrust-related videos (see here, here and here) and comics (see here and here).

All those were made by, and mainly for, experts. But since then antitrust has made inroads as an element of popular culture (now there’s even hipster antitrust!) . Think about it, today:

-Messages are conveyed via comics (see here; source: Pablo’s favorite site:; you probably think I am kidding…)

-Competition Commissioners deliver TED-Talks (read Commissioner Vestager’s talk here);

-And antitrust is even the subject of US late night shows (watch John Oliver’s latest show here);

On second thought, however, antitrust has always had some role in popular culture. Don’t believe me? Well, check out this report “Antitrust in Pop Culture, A Guide for Antitrust Gurus” (by the Institute for Consumer Antitrust Studies) discussing how antitrust has featured in movies, theater, television, music, books, cartoons, and more. If you have additional suggestions to include in that list, please feel free to comment on this post; we can then send a compilation of suggestions to Spencer Webber Waller



Written by Alfonso Lamadrid

26 September 2017 at 5:53 pm

Posted in Uncategorized