Chillin'Competition

Relaxing whilst doing Competition Law is not an Oxymoron

The Intel Judgment, by its main author

leave a comment »

vilaca

For several months now every conference and journal in our small world has featured a panel and a few articles on the Intel Judgment, on how to interpret it and on the impact it will have on enforcement and on judicial review going forward. But the most authoritative view has been written by the very Judge in charge of the case.

Judge da Cruz Vilaça was President of Chamber at the Court of Justice of the EU until a few weeks ago, when his term ended. He had also been the first President in the history of the General Court. He is one of the people that has most influenced the course of competition law in recent years, and also (now that he’s not at the Court we can say it) one of the nicest people in the world of EU Law (with a talent for surrounding himself with competent and nice people too). Focusing only on the Intel Judgment doesn’t do justice to his contribution to EU Law and to competition law. But doing justice to that would require much more than a blog post.

Back in August, Judge da Cruz Vilaça published a piece –that has only now come to our attention- titled “The intensity of judicial review in complex economic matters—recent competition law judgments of the Court of Justice of the EU”. It has been published in the Journal of Antitrust Enforcement.

This is a reflection on the role of the Court in competition cases, and in particular on how Intel fits within that case law and on how it is to be understood and interpreted. It does not represent the view of lawyers trying to push things in a given direction or of academics. It is an objective account by the most authoritative person possible. And it engages with academic commentary and is kind enough to cite our blog posts at different points..

We recommend you to read the full piece, but here are just some ideas that stand out:

Intel as an important yet limited step:the two EU courts have progressively strengthened the conditions of their review and developed a more intense scrutiny in competition cases (…) [the Intel] judgment constitutes an important—albeit limited—step made by the Court in strengthening its judicial control as regards the application of Article 102 TFEU”.

Evolution in the case law:The way the Court necessarily operates helps to explain why one may sometimes feel that the Court did not always follow an unambiguous line of reasoning in judgments concerning the same field of competition law. It may simply happen that time have not yet come for certain developments (…) But in a fast moving world, judges must also permanently listen to changes in the social, economic, technical, and political environment. How could it be different in the digital age, in a time of globalization and in a knowledge and information-based society?”

On the lessons to be learnt by the Commission: “the regulator would be well advised in the future not to expect any special indulgence for relying on a presumption of any kind of infringement per se of Article 102 TFEU when seeking to prove the anticompetitive character of such a system. Indeed, it would be odd to submit the European Commission to a stricter test when it carries out an analysis of all the circumstances than if it simply had relied on a per se infringement approach!

Consumer welfare as a useful reference point: “not every exclusionary effect is necessarily detrimental to competition, as a result of which less efficient and less attractive competitors may be forced to leave the market. I believe such statements are useful for clarifying what the Court considers to be the major goal of EU competition rules, which the Commission has articulated as being ‘to protect competition on the market as a means of enhancing consumer welfare and of ensuring an efficient allocation of resources” As Professor Jones put it, ‘the case-law of the EU courts does not unambiguously endorse’ that view. Rather it sometimes also placed emphasis on the interests of competitors or individual undertakings. I do not think this a serious defect: although perhaps not always 100 per cent consistent, the case-law places in general sufficient emphasis on consumer welfare as a goal”.

Making life harder for rivals is not the same as foreclosure [you will have heard me say this a few times..]: “Of course, the objective (or the result) of the competition process is to make life harder for any operator on the market, forcing it to be more efficient—which in general does not happen with monopolist”.

It is all about correctly allocating the burden of proof: “the ECJ also made it clear that the balancing of favourable and unfavourable effects on competition of the practice in question can be carried out only after the analysis has shown the intrinsic capacity of that practice to foreclose competitors that are at least as efficient as the dominant undertaking. I think this is nothing more than the correct apportionment of the burden of proof between the Commission and the defendant. The specificity of a system of rebates that includes an exclusivity clause is that once the Commission has discharged its duty to establish the likelihood of anticompetitive conduct, the hurdles will be particularly high for the latter when trying to rebut the Commission’s finding

(…)

the dividing line between margin of appreciation and duty to review is sometimes very thin, which makes it more difficult to maintain the consistency of the case-law in all circumstances. Courts, however, have an arsenal of legal weapons available to them in this challenge. The most obvious are the rules on the burden of proof. A fine example of how to use them is given in paragraphs 66 and 67 of the judgment of the General Court in Intel”.

[By the way, that last bit makes exactly the same point as that made by General Court Vice-President in the abstract of an article to be published soon in JECLAP. He also says that, following Cartes Bancaires and Intel, the key to striking the right balance between the Commission’s margin of discretion and the Court’s in-depth review “can be found in the burden of proof that rests upon the Commission pursuant to Article 2 of Regulation 1/2003”. We couldn’t agree more]

***

The article contains much food for thought. And, incidentally, as frequent readers of the blog will have already noticed, it confirms the understanding of the case that we had been positing here and elsewhere for a while..

Written by Alfonso Lamadrid

16 November 2018 at 11:54 am

Posted in Uncategorized

An Update on What We Have Been Up To + Important Upcoming Events

with one comment

The excessively generous eulogy that Pablo wrote a few days ago, together with my inactivity on the blog over the past few months weeks, have led some to suspect of my demise.

The absurd number of extremely kind messages that I’ve received over the past few days even made me doubt it…  But I’m happy to confirm that reports in this regard have been greatly exaggerated:

After a few months locked in the office for different and very good reasons (piece of advice: don’t try to combine that with the additional sleep deprivation linked to having a 4 month old baby!), I’m now starting to see the light again  and hope to be back blogging regularly very soon.

In the meanwhile, and beyond work, we have made some conference outings to start regaining the habit:

  • On 11 October I was in Helsinki for a great conference organized by Ilkka Leppihalme. Director General Laitenberger, Richard Whish, Jorge Padilla and John Rattlif were the other speakers. Richard and John used some slides to accompany their excellent presentations and kindly gave green light for us to post them on the blog (thanks!). Here they are:

Richard Whish- Recent Cases on Vertical Agreements and Excessive Pricing

Kilpailuoikeus 2018 – EC Competition Cases before the European Courts – John Ratliff

I won’t share my slides for now because I might use them again in the future and they’ll lose the surprise factor 😉 But here is a teaser.

  • On 24 October I participated at another very good conference put together by Lexxion’s CoRe, the VUB and CCIA on “Competition Policy in Online Markets”. A video with the highlights of the event is available here. While we are not (yet) subject to must-carry remedies, here is a succinct recap of the event published in a “competing” blog;
  • And today I spoke on the impact of the Intel Judgment at this LeadershIP conference in Brussels. There was much to discuss and little time, but my main message was one of optimism (and I think realism) and trust regarding EU Courts, who are often the target of what I think is (mostly) unwarranted criticism. Will leave the details for a separate post;
  • My efforts to catch up with Pablo re conference appearances were doomed, as he has been not only taking care of the blog but also actively travelling around (see here).

Future events

Looking to the future now, there are several must-attend events coming up:

-First of all, we are very excited to be hosting the 4th Chillin’Competition Conference next Tuesday (20 November). With the help of some overbooking we will try to release some additional seats for those in the waitlist. If you did not get a ticket (apologies), we will try to make sure you are well informed of what goes on. If you registered but cannot make it, please let us know so that we can get someone else in.

-The very day after, on 21 November, there will be an interesting debate on procedural issues in Luxembourg (“Due Process in Competition Law Enforcement: A Comparative Perspective”). More info is available here. I won’t be able to attend, but if any of you can and is willing to report on it, please drop us a line.

-On 26 November I will be speaking at the AEDC’s annual conference (that is the Spanish Association for the Defence of Competition) in Madrid. The programme is here: Programa Jornada Anual AEDC 2018.  The conference is sold out but will be streamed live.

-On 17 January Commissioner Vestager will be hosting her conference “Shaping Competition Policy in the Era of Digitalisation”. Registrations are now open and here is all the relevant info (again, stay tuned, because we hear additional speakers may be announced soon…)

 

Written by Alfonso Lamadrid

13 November 2018 at 7:44 pm

Posted in Uncategorized

Finding the appropriate legal test in EU competition law: on presumptions and remedies

with 10 comments

There is not a single legal test in EU competition law.

Some practices are deemed prima facie lawful, and other practices prima facie unlawful irrespective of their effects. In between, there is conduct subject to a (standard) analysis of effects. As I explained recently on the blog, there is yet another category of practices; these are subject to an ‘enhanced effects’ analysis. By ‘enhanced’ I mean that it is necessary to provide, at the very least, evidence of indispensability before intervening.

I like to think of the applicable legal tests in EU competition law as discrete points along a spectrum.

This is what the spectrum looks like under Article 102 TFEU:

Spectrum Art 102

It makes sense to zoom into the right end of the spectrum, which is a bit crowded. It looks like this:

Spectrum - enhanced

This is what the spectrum looks like under Article 101 TFEU (ATP stands for ‘absolute territorial protection’ in case you are wondering):

Spectrum Art 101

One question that keeps me busy (and which I discussed, inter alia, in Ithaca and Vilnius) is why and how the Court of Justice chooses the applicable legal test in individual cases. Why is some behaviour deemed prima facie lawful? Why is the enhanced effects analysis chosen for some practices but not for others?

The question is important, and the answer not immediately obvious. For instance, leveraging conduct is not subject to a single legal test under Article 102 TFEU. ‘Leveraging abuse’ is not a legal test. These words do not say anything about the conditions under which a given practice is deemed abusive.

In some instances (e.g. tying), leveraging is prima facie unlawful irrespective of its effects. In other instances (e.g. refusal to deal), it is subject to an enhanced effects analysis. What explains the disparate treatment of the various leveraging strategies?

I found the question interesting for other reasons. For instance, the Court has been criticised for applying different legal tests to refusals to deal, on the one hand, and ‘margin squeeze’ practices, on the other. The latter are subject to a standard effects analysis whereas the enhanced effects analysis applies to refusals to deal. Could it be that the Court has a point in spite of the criticisms? Spoiler alert: I believe it might.

***

Why are some practices prima facie unlawful under both Articles 101 and 102 TFEU?

The case law suggests that a practice is deemed prima facie unlawful irrespective of its effects – i.e. it is a by object infringement – where:

  • It is presumed to serve no purpose other than the restriction of competition; and
  • It is presumed to be capable of having restrictive effects on competition.

Intel (in the context of Article 102 TFEU) and Murphy (in the context of Article 101 TFEU) make it clear that firms can always provide evidence to rebut the presumption of capability.

Why are some practices prima facie lawful? I can identify two instances in this sense:

  • Where the practice is objectively necessary to attain a pro-competitive aim (think of Metro I, Coty, Pronuptia and so on as clear examples); or
  • Where the effects would not be attributable to the practice. For instance, the effects of above-cost price cuts are not attributable to the dominant firm, but to rivals’ inefficiency.

And finally: why is it that sometimes the Court of Justice has required an enhanced effects analysis? And why, for instance, is the enhanced effects analysis required in refusal to deal but not in ‘margin squeeze’ cases?

It all has to do, I believe, with the remedy. One needs to turn the analysis on its head and start by figuring out what intervention might entail in practice.

The standard effects analysis applies where the remedy is reactive in nature – a one-off obligation not to do something. These are instances in which a cease and desist order can effectively deal with the issue (no monitoring, no complexity with the implementation and/or with compliance).

The enhanced effects analysis applies where the remedy is proactive – that is, where it amounts, directly or indirectly, to imposing positive obligations on firms (a requirement to do something). These are instances in which the remedy comes with all sorts of potential difficulties (related either to the design, the implementation or the monitoring of the obligations).

The Microsoft I case (and, more precisely, the obligation to supply interoperability information on FRAND terms) is a good example of proactive enforcement. Determining the fair price of interoperability information is incredibly complex. So much so, in fact, that the Commission left it for the firm to figure out.

Against this background, one can understand why the Court may have deemed it justified to differentiate the legal treatment of refusals to deal and ‘margin squeeze’ practices.

A ‘margin squeeze’ can be effectively addressed through reactive intervention. Dealing with an abusive refusal to deal, on the other hand, is much more complex. One has to determine (directly or indirectly) a wholesale price, and then monitor compliance with the remedies on a lasting basis.

In cases like Commercial Solvents, Magill or IMS Health, the Court may have felt that the complexity of the remedy justified raising the substantive bar. The remedy, accordingly, is not an afterthought, but a key question that informs substantive analysis.

Ordering a company to resume supplies with a rival, to start licensing its intellectual property or to change the design of its products (as in the Internet Explorer case) can go wrong for several reasons – this is where I generally crack my joke about Richard Whish being probably the only person with a version of Windows without the Media Player.

If this is true (which it is), it makes sense to confine to exceptional circumstances the instances in which these remedies may apply.

I would say more: looking at the remedy to identify the appropriate legal test is a much more meaningful exercise than all other attempts to distinguish between categories of practices.

Instead of using more or less artificial labels and discussing whether one label is more appropriate than another, it makes sense to look at what remedial action may involve in practice, and infer the legal test from this exercise.

As ever, I look forward to your thoughts!

Written by Pablo Ibanez Colomo

2 November 2018 at 4:28 pm

Posted in Uncategorized

Alfonso is promoted to partner: an appreciation

with 6 comments

Foto grupo nuevos socios B

The news is out there: Alfonso has been promoted to equity partner, and he will be able to introduce himself as one on 1 January 2019.

I could say that the promotion is deserved several times over (which it is). But it would not really capture how I feel about it. That needs a few more words.

I met Alfonso when he was a 23-year old LLM student. In my mind he was a partner already back then.

Let me be clear: it is not that Alfonso ‘had the potential’ in his early 20s. All the qualities of the best law firm partners were already there, in full bloom, ready to be put to the best use. He could very well have acted as a partner at the time (as I suspect he might occasionally have done and know for sure he has in the past few years).

What I admire in top practising lawyers is that they have to be good across the board – unlike academics, who, so long as they are solid researchers, can afford to be walking failures in pretty much every other aspect.

Alfonso has acquired such fabulous reputation in record time because he is not just skilled in many disparate areas (technical, analytical, managerial and so on); he excels at every single one of them, which is quite unique.

And I mean this in the best possible sense. For instance, it is said that practising lawyers need to be ‘good with people’, which is often taken as code for ‘good at networking’. Alfonso is much more than that. He is good with people in the sense that he is generous, genuinely cares about others, and people like him a lot (in part, but not only, because he is great fun to have around).

I am sure many of our younger readers look up to Alfonso. They should. In fact, I cannot think of a better role model.

I have no doubt you will find the way to join me in congratulating him for this milestone!

Written by Pablo Ibanez Colomo

30 October 2018 at 4:55 pm

Posted in Uncategorized

Chillin’Competition on tour: Vilnius (26 Oct), Brussels (7 Nov) and Tilburg (9 Nov), with a special offer for our readers!

with 2 comments

Vilnius

Autumn is here with us (as the pic above attests), and conference season, which is never over, appears to be picking up speed as days get shorter.

Many would never have told, but I took the picture last Saturday in central Vilnius. I was there – my first time ever in Lithuania – for a lecture at the competition authority. It was really enjoyable. I am grateful to Gintarė Surblytė-Namavičienė and Šarūnas Keserauskas for being such amazing hosts. I already look forward to coming back.

UCL | White & Case Brussels: Autumn Competition Law Conference (7 November)

On 7 November I will be in Brussels (a place that I have visited before) for the first Autumn Conference jointly organised by University College London and White & Case Brussels. The programme of this great initiative, which features yours truly on innovation (alongside much more prestigious specialists), is available here.

IMPORTANT: Makis Komninos and Ioannis Lianos, joint organisers of the conference, are kind enough to allow up to 15 of Chillin’Competition readers for free. When booking a ticket via this website, use this promotional code: lse-ibanez-colomo. Thank again, Ioannis and Makis!

TILEC 15th Anniversary Conference: Legal and Economic Challenges in Competition Policy (9 November)

A couple of days later, I will have the honour to be one of the speakers at the conference celebrating the 15 years of the Tilburg Law and Economics Center. I have always admired TILEC and have followed closely its many achievements over the years.

If you are interested in the programme and/or in signing up for it (I believe there are still a few spots available), please see the programme here.

 

 

 

Written by Pablo Ibanez Colomo

29 October 2018 at 5:00 pm

Posted in Uncategorized

Registrations Now Closed

leave a comment »

visitors.PNG

All tickets released for the Chillin’Competition 2018 Conference were gone in 4 minutes. Thanks so much for the interest! We hope you won’t be disappointed; the food at least should be good 😉

There are already another 250 people on the waitlist, and we also need to reserve seats for our sponsors, so unfortunately we need to close registrations now.

But there is still one way for you to make it: you can always persuade one of our sponsors (soon to be announced) to register you with their reserved seats…

 

 

 

Written by Alfonso Lamadrid

19 October 2018 at 10:28 am

Posted in Uncategorized

Chillin’Competition 2018- REGISTRATIONS NOW OPEN!

with one comment

You can register via this link.

Written by Alfonso Lamadrid

19 October 2018 at 8:59 am

Posted in Uncategorized