Chillin'Competition

Relaxing whilst doing Competition Law is not an Oxymoron

‘Chinese Antitrust Exceptionalism’: a book by Angela Zhang

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[We are delighted to announce the launch of Chinese Antitrust Exceptionalism, the book Angela Zhang has recently published with Oxford University Press. As you all know, Angela is an Associate Professor of Law at the University of Hong Kong (she was previously based at King’s College London). Over the years, Angela has emerged as a leading Law & Economics scholar with an incredibly broad range of interests. We are pleased to see that competition law is still among the core areas of her research. She has been kind enough to share with us a taster of her monograph. Enjoy!].

Chinese Antitrust Exceptionalism explores the unique ways in which China regulates and is regulated by foreign countries, revealing a ‘Chinese exceptionalism’ that is reshaping the global antitrust regime.  

To help us understand this new force, I dive deep into unique Chinese political and economic institutions, examining bureaucratic politics, the power imbalances between businesses and the government, the highly decentralized economic system, and state-led governance. This allows me to explain the dilemmas foreign multinationals have faced in complying with Chinese antitrust law, as well as the difficulties Chinese firms have encountered overseas as U.S. and E.U. antitrust regulators tighten their scrutiny over Chinese businesses. 

My book consists of three parts—how China regulates, how China is regulated, and regulatory interdependence.  In Part I, I explore the first major dimension of Chinese antitrust exceptionalism by delving into Chinese political and legal institutions that have posed significant challenges for foreign firms operating in China.  I explain the rise of Chinese antitrust regulation by analysing the incentives of the antitrust enforcers, as well as the path dependent nature of the bureaucratic performance.  Then I try to unravel the myth behind the paucity of appeals against antitrust agencies in China. I specifically focus on the immense administrative discretion possessed by antitrust authorities and the media strategies that they can use to advance difficult cases.

Contrary to the popular western perception that the Chinese government is a monolith, I show that a key defining feature of the Chinese bureaucracy is that power is highly fragmented. For instance, Chinese merger control is a consensus-building process involving the antitrust authority, sector regulators, industrial policy planners, and occasionally local governments. And when it comes down to the regulation of large state-owned enterprises, the interaction between the different bureaucratic players has resulted in serious disagreements.

In Part II,  I explore the other dimension of Chinese antitrust exceptionalism by focusing on the antitrust challenges that Chinese firms experience overseas. I detail the unique way that Chinese firms have been treated by Western regulators and how such regulatory outcomes are also deeply rooted in China’s distinct political economy, particularly its decentralized economic structure and state-led model of governance.

Indeed, the European Commission has had a hard time assessing the independence of Chinese SOEs when dealing with acquisitions from China. The EU is used to applying a bright-line test in deciding whether an SOE is an independent entity, but this test does not work well when it is applied to Chinese SOEs.  Although the Chinese state has voting power to influence SOEs, it may lack both the incentive and the ability to coordinate competition between them. As a consequence, the formal corporate control of the Chinese state over SOEs is a poor indicator of the anticompetitive effects such control might produce.

Paradoxically, while this bright-line test can lead to an over-inclusion problem, it can simultaneously lead to an under-inclusion problem. The EU merger review only acts on acquisitions of controlling interests. This means that Chinese SOEs can bypass EU antitrust scrutiny by making minority acquisitions in Europe. Because there is a blurred line between SOEs and privately-owned enterprises in China, a Chinese SOE could escape antitrust scrutiny entirely by employing a non-controlling subsidiary as a vehicle to acquire European assets.

As the EU’s existing antitrust regulatory framework is not fully equipped to handle Chinese investments, I urge the Commission not to deploy competition policy too broadly when reviewing Chinese SOE acquisitions. I suggest that the Commission instead seek alternative regulatory tools such as investment review to tighten their scrutiny over Chinese takeovers. This appears to be exactly the direction the EU is heading towards, especially with the  recent promulgation of the White Paper targeting state-backed acquisitions.

In the last part of my book, I return to the analysis of China’s antitrust law, albeit in a different context, showing that there exists a close interdependence between the regulatory moves of the United States and those of China. In addition to launching a trade war against China, the United States is aggressively claiming extraterritorial jurisdiction over Chinese technology companies and executives, and China is now emulating this practice by wielding its antitrust law to demonstrate its own extraterritorial regulatory capacity. 

In my book, I have tried my best to present a neutral, balanced, and honest view of regulatory conflicts between the East and the West. I sincerely hope Chinese Antitrust Exceptionalism can facilitate dialogue between the two sides in dealing with some of the thorniest regulatory issues that have beset their relationship.

This book has proven to be incredibly timely.  In the past few months, China has taken unprecedented action to enforce antitrust regulations against its leading firms, such as the fintech conglomerate Ant Group and its affiliate Alibaba.  Based on insights from this book, my responses to these events have been quoted by numerous media outlets and my commentaries have appeared   in   Project   Syndicate, Nikkei Asia, Fortune and Bloomberg.  Recently, I was featured on CNBC, as well as the Economist’s virtual event on balancing innovation and regulation. For more details, please visit the book’s website: Chinese Antitrust Exceptionalism | Angela Zhang 

I very much look forward to hearing your feedback! (twitter @AngelaZhangHK)

Written by Pablo Ibanez Colomo

29 March 2021 at 4:25 pm

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Thoughts on today’s judgments in Lundbeck and Slovak Telekom: expected and valuable clarifications for the future

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Just as expected - Photos | Facebook

The Court of Justice has delivered an important set of judgments in the Slovak Telekom and Lundbeck cases (see in particular here and here). As widely anticipated, all appeals have been dismissed. This fact does not deprive the cases of interest, which always lied in the points of principle at stake in them.

The Slovak Telekom case raised issues relating to the scope of Bronner and the indispensability condition. The Court confirms that Bronner is alive and well and defines the scope of the ruling in a manner that is consistent with its spirit and logic (today’s judgments are very much in line with the Advocate General’s Opinion, which we discussed here). Crucially, the judgment also provides a valuable template for the evaluation of cases in digital markets.

The issues raised in Lundbeck, in turn, concerned the notion of restriction by object. It was an occasion to test the meaning of the ‘robust and reliable experience’ test laid down in Budapest Bank. Unsurprisingly, the Court concludes that the lack of experience in pay-for-delay cases is of no assistance to avoid a finding of a ‘by object’ infringement. As I explained here, cartel-like conduct is cartel-like conduct, irrespective of whether it is disguised as a pay-for-delay arrangement. And we have decades, if not centuries, of ‘robust and reliable’ experience concerning cartels and analogous practices.

In addition, the Court dismisses, in Lundbeck, the interpretation of the counterfactual advanced by the appellants. Again, this is hardly surprising. I explained in this post why the appellants’ understanding of the notion was not obvious to reconcile with the case law and why, in all likelihood, it would be rejected by the Court (in the same way it was rejected by AG Kokott).

Slovak Telekom: Bronner is alive and well, and has a definite scope of application

Following AG Saugmandsgaard Øe’s Opinion in Slovak Telekom, some commentators expressed concerns about the demise of Bronner. We can now safely say that Bronner is alive and well: in fact, its scope of application and the rationale underpinning it have never been clearer.

In essence, the Court has ruled that the indispensability and elimination of all competition conditions are part of the legal test where intervention would force a dominant firm to conclude a contract with a competitor. As the Court explained in the Slovak Telekom judgment:

’45. The imposition of those conditions [indispensability and elimination of all competition] was justified by the specific circumstances of that case [Bronner] which consisted in a refusal by a dominant undertaking to give a competitor access to infrastructure that it had developed for the needs of its own business, to the exclusion of any other conduct’.

In other words: the key lies in the remedy (in what a finding of infringement would entail in effect). By the same token, where intervention in a competition law case does not necessitate a duty to deal, indispensability would not be an element of the legal test. Such was the case in Slovak Telekom (and TeliaSonera, which is also confirmed), where remedial action only required the Commission to tackle the unfair nature of the practices involved.

The rationale behind the definition of the scope of Bronner is twofold. First, the Court explains that intervention mandating shared access to a facility interferes with the right to property and with freedom of contract (para 46). Second, it concludes (in para 47, and in line with AG Jacobs’ Opinion in Bronner) that promoting short-term competition by means of shared access may be harmful in the long run insofar as it would negatively impact firms’ incentives to invest and innovate.

These clarifications provide a useful template for the evaluation of cases in the digital arena. We now know that, when intervention interferes with a firm’s right to property and/or its freedom of contract, indispensability (and the elimination of all competition) will be a precondition for intervention.

What are the remaining pieces in the puzzle? Mandated shared access to a facility is not the only way in which intervention might interfere with a firm’s right to property. Such interference would also occur when a firm is asked to cease an activity or to sell its assets to a third party (a structural divestiture). Consistency would demand that such forms of intervention, which intrude as much as a duty to deal (if not more) with the right to property, be treated in the same way.

Where does this leave us for the future? My impression is that indispensability would be an element of the legal test, inter alia, in the following scenarios:

  • Intervention requires, in effect, a firm to remove some features from a product (say, a camera from a smartphone).
  • Intervention requires, in effect, a firm to redesign its product so that rivals have shared access to it (for instance, an interoperability duty).
  • Intervention requires, in effect, a firm to change its business model and adopt one that requires dealing with third parties with which it has chosen not to deal (for instance, by forcing a firm to start licensing a product).

Lundbeck: some refinements, and more clarity, about the scope of restrictions by object

Entire libraries have been written about the notion of restriction by object in the past couple of decades. Lundbeck confirms that we may be reaching the ‘end of history’ in relation to the notion. Most controversies have now been addressed and future rulings will provide, if at all, incremental refinements to the concept. Today’s judgments confirm the fundamentals about the Court’s approach. First, considering whether an agreement is restrictive by object demands a case-by-case, context-specific inquiry (see para 115 of Lundbeck).

Second, the fundamental question in this regard is whether the agreement can be explained on grounds other than the restriction of competition. If there is an alternative rationale for the practice, its treatment as a ‘by object’ infringement would not be warranted. In the specific context of pay-for-delay agreements, the analysis would revolve around the size of the payment (see for instance para 115 of the Lundbeck judgment). The qualification of the agreements in Lundbeck was particularly straightforward, as no plausible pro-competitive rationales had been advanced (para 118).

At the margin, however, the judgments provide useful clarifications. Reasonably, Lundbeck argued that there was no experience about the agreement and that, at the time of the infringement, it was not clear whether they were in breach of Article 101(1) TFEU. As a matter of substantive law, this argument was not deemed persuasive.

The Court’s reasoning comes across as sensible. There is certainly a great deal of experience about ‘naked’ market-sharing arrangements. Accordingly, once it is shown, to the requisite legal standard, that the object of the agreement is to restrict competition by paying a potential competitor to stay out of the market, we are in the realm of cartel-like conduct, which has long been known to be harmful, by its very nature, to the competitive process.

A second point concerned the counterfactual. Lundbeck argued in the case that the qualification of the agreement as a restriction by object demands the evaluation of a ‘counterfactual scenario’. This argument failed. According to the appellants, this analysis would have revealed that the generic producers would not have entered the market.

As explained in the judgment, the case law cannot be interpreted as supporting such an interpretation of the notion of restriction ‘by object’. Showing that a firm is a potential competitor is not the same as showing that its entry into the market would have occurred. In this sense, Lundbeck’s argument was found to relate more to the evaluation of the restrictive effects of the agreement than its ‘precise purpose’ (para 140). If such an interpretation of the ‘counterfactual scenario’ were embraced, the divide between object and effect would become blurred (ibid).

The above seems uncontroversial and fully in line with the case law. The point of the counterfactual at the ‘by object’ stage is not to assess the impact of the agreement, but its object. It is already well-established case law that the counterfactual can be relevant, at the ‘by object’ stage, in the following scenarios:

  • To show that there are ‘insurmountable barriers to entry’ and therefore that the generic producer is not a potential competitor (see in this sense Generics). In such circumstances, the agreement would not restrict competition, whether by object or effect.
  • To show that the agreement is capable of having pro-competitive (or at least ambivalent) effects and therefore its object is not the restriction of competition (see in this sense Generics and Budapest Bank).
  • To show, more generally, that the agreement is not liable to restrict competition in the economic and legal context of which it is a part (see in this sense Murphy).

Nothing in Lundbeck challenges the above aspects of the case law. Accordingly, these are factors to consider when evaluating whether an agreement is restrictive by object. Whether these steps are labelled counterfactual or otherwise, seems immaterial. As we have said many times here, fortunately competition law places substance above form.

I very much look forward to your comments. And please stay tuned for a more in-depth analysis of some aspects of the judgments.

Written by Pablo Ibanez Colomo

25 March 2021 at 2:09 pm

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Want to join LSE Law (@LSELaw) as a 2-year post-doc in competition and/or technology law?

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LSE Law is looking for two post-docs (the formal title is LSE Fellow) for the upcoming academic year. All the information on how to apply can be found here (the deadline for applying is 16 April).

Please note that this year LSE Law particularly welcomes applications in the areas of competition and/or technology law. You would be joining a team that includes my amazing colleague Niamh Dunne as well as other leading academics in technology-related fields, including data protection, intellectual property and, more generally, IT Law.

These 2-year posts are specifically designed to allow junior scholars to flourish. You will have the chance to teach (but the load will be light) and you will not have any administrative duties. It really is a wonderful way to start an academic career.

In case you were wondering, former LSE Fellows include Michèle Finck (now a tenured researcher at the Max Planck Institute for Innovation and Competition and an authority in all things platforms and blockchain); and Andriani Kalintiri, who needs no introduction in the competition law community.

Do not hesitate to contact me with any questions about these posts. And if you have just finished (or are about to finish) a doctoral degree in Competition Law, do apply!

Written by Pablo Ibanez Colomo

24 March 2021 at 1:19 pm

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LSE Short Course on Advanced EU Competition Law (June 2021)

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Last August, I was awarded a Jean Monnet Chair in Competition and Regulation by the European Commission. The primary purpose of the project was to expand teaching activities at the London School of Economics. It was a wonderful occasion to broaden our regular LLM offer and to introduce innovative short courses intended for professionals.

Often, when presenting at conferences, I get the impression that many in the competition law community have an appetite for examining matters in a more systematic, in-depth way, to get a sense of the overall picture and how the different pieces fit together.

With this audience in mind, I have designed a Short Course on Advanced EU Competition Law. All the information about it can be found here. For further queries, including registration and fees, please contact my colleague Amanda Tinnams at A.Tinnams@lse.ac.uk.

The idea is to meet online (via Zoom) over four Fridays in June (4th, 11th, 18th and 25th) To maximise interaction, the short course will be capped at 25 participants.

The goal of the Short Course is to discuss some fundamental matters at length and well beyond the basics. I intend to cover points of principle and the most recent developments. The meetings would run from 2pm-6pm (London time) and would be structured as follows:

  • Day 1 (4th June): Advanced Issues on Agreements.
  • Day 2 (11th June): Advanced Issues on Abusive practices.
  • Day 3 (18th June): Focus on Digital Markets.
  • Day 4: (25th June): Advanced Issues on Merger control.

A certificate will be available on completion, along with CPD points for practitioners. It would be wonderful to get to meet some of you for the occasion!

Please note: another Short Course on State Aid (identical 16-hour format) will be going live in July.

Written by Pablo Ibanez Colomo

18 March 2021 at 10:07 am

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A Challenge for the Competition Community (1 Week Left to Support Kickcancer)

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We are thrilled and very grateful for your reaction to this challenge. We truly appreciate your individual efforts, as well as the support of the various competition authorities and companies that have decided to collectively support this initiative. Thank you!

There is still 1 week left to buy some of the winning competition meme mugs and support Kickcancer‘s efforts to fight child cancer. Orders will close on 19 March, so hurry up!

To incentivize purchases in these last days, we have decided to add two additional all-time-favorite meme-mug models (see below)

You can BUY THEM HERE.

Written by Alfonso Lamadrid

12 March 2021 at 2:30 pm

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The prohibition of double jeopardy. Case law in need of a revamp (by Rafael Allendesalazar)

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[This is a guest post by our friend Rafael Allendesalazar (MLAB) discussing the EU case law on the ne bis in idem principle in the wake of the Slovak Telecom Judgment and of Amazon’s appeal against the Commission’s decision to carve Italy out of its BuyBox investigation. A very interesting take on an important and timely topic]

The principle of ne bis in idem, also known as the prohibition of “double jeopardy”, “undoubtedly constitutes one of the cornerstones of any legal system based on the rule of law” and its “rationale lies in ensuring legal certainty and equality”, as reminded by the then AG Wahl in his Opinion in the Powszechny Zakład Ubezpieczeń na Życie Case C-617/17.  The ECJ has repeatedly acknowledged that it is a fundamental principle of EU law, that has been enshrined in Article 50 of the Charter and Article 4 of Protocol 7 to the ECHR as regards criminal proceedings and penalties, but that must also be observed in proceedings that may lead to the imposition of fines under competition law. It precludes an undertaking from being found liable of proceedings being brought against it afresh on the grounds of anticompetitive conduct for which it has been penalised or declared not liable by an earlier decision that can no longer be challenged. The principle is subject to a twofold condition: that there is a prior definitive decision (the ‘bis’ condition), and that the prior decision and the subsequent proceedings or decisions concern the same person and the same offence (the ‘idem’ condition).

As to the ‘idem’ condition, the same offence could be defined by reference to the facts, to their legal classification or to the legal interest protected. Regarding criminal proceedings, the ECJ has opted for the first criterion and has explicitly rejected the other two (Case C-436/04, Van Esbroeck). “Same offence” is defined as the “identity of the material facts, understood as the existence of a set of concrete circumstances which are inextricably linked together, and which resulted in the final acquittal or conviction of the person concerned” (Case C-537/16, Garlsson). It does not require the facts to be identical, as it suffices that the offences “have the same essential elements” (Judgment of the ECHR of 07.12.2006, Application 37301/03, Hauser-Sporn); for instance, exporting and importing the same illegal goods from different States are considered the same offence. Furthermore, even where the imposition of a criminal penalty depends on an additional subjective constituent element in relation to the administrative fine of a criminal nature, this does not call into question the identity of the material facts at issue (Case Garlsson).

When applying the ne bis in idem principle to competition law cases, the ECJ has interpreted it narrowly and has required, not only an identity of offender and of facts (which includes the same territory and the same period) but also an additional third identity: the legal interest protected in both cases must be the same. This divergence in the scope of the ne bis in idem principle in criminal law and in competition law cases was strongly criticized by AG Kokott in her Opinion in Toshiba: “to interpret and apply the ne bis in idem principle so differently depending on the area of law concerned is detrimental to the unity of the EU legal order. The crucial importance of the ne bis in idem principle as a founding principle of EU law which enjoys the status of a fundamental right means that its content must not be substantially different depending on which area of law is concerned. For the purposes of determining the scope of the guarantee provided by the ne bis in idem principle, as now codified in Article 50 of the Charter of Fundamental Rights, the same criteria should apply in all areas of EU law”. AG Kokott concluded that retaining the criterion of the unity of legal interest protected would not be compatible with the requirement of homogeneity as enshrined in the third subparagraph of Article 6(1) TEU and the first sentence of Article 52(3) of the Charter. More recently, in his above-mentioned Opinion in Case C-617/17, the then AG Wahl also rejected the application of the three-fold criterion in competition law cases and concluded that “on the basis of the two-fold criterion based on the identity of the facts and offender, the principle of ne bis in idem can ensure effective prosecution of anticompetitive conduct in the European Union. It also ensures more legal certainty for undertakings”. AG Wahl recalled that the origin of the ECJ’s case-law requiring the identity of legal interest can be traced back to the Walt Wilhem judgment of 1969, at times where the risk of cumulative application of national and EU competition law was limited and such legislations were often designed to safeguard different legal interest; furthermore, neither the Charter nor Protocol 7 to the ECHR were then in force. More than fifty years later, and following the adoption of Regulation 1/2003, the risk of cumulative application is now inherent to the decentralised system of competition law enforcement it has set up, despite Regulation 1/2003 containing some rules seeking to avoid parallel prosecution, particularly in Articles 11 and 13. That is why —Wahl concludes— the application of these rules and of the principle of ne bis in idem should not be made “subject to overly cumbersome criteria”.

The Slovak Telekom judgment and its consequences

Notwithstanding these opinions, the ECJ has reiterated that the ne bis in idem principle requires the identity of legal interest and has defined rigorous formal identity requirements to apply Article 11(6) of Regulation 1/2003. In its recent judgment of 25.02.2021 in the Slovak Telekom Case C-857/19, the ECJ has reaffirmed its strict interpretation.

Read the rest of this entry »

Written by Alfonso Lamadrid

11 March 2021 at 10:43 am

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The Role of Competition Policy in Hi-Tech Markets (26 February)

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Following the success of the first webinar organized within the framework of the IEB’s annual course on competiiton law, below is the program for this year’s second webinar, which will take place on Friday (26 February). Once again, we will be fortunate to hear from phenomenal speakers.

This webinar will take place via Teams and under Chatham House Rules. For further information and registrations, please contact competencia@ieb.es

16:30- 17:45 CET: Competition law in high tech markets in the EU and Spain
Nicholas Banasevic. Head of Unit, DG COMP, European Commission
José María Jiménez Laiglesia. Partner, Latham & Watkins
Ainhoa Veiga. Partner, Araoz y Rueda
Moderator: Milan Kristof. Référendaire, Court of Justice of the European Union

18:00-19:15 CET: The proposed EU Digital Markets Act and recent developments in the US
Nicholas Banasevic. Head of Unit, DG COMP, European Commission
Oliver Bethell, Director. Competition EMA, Google
Renata Hesse. Partner, Sullivan & Cromwell
Moderator: Lewis Crofts. Editor In Chief, MLex

Written by Alfonso Lamadrid

24 February 2021 at 3:02 pm

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NEW PAPER | The Draft Digital Markets Act: a legal and institutional analysis

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Image result for new paper

I have just uploaded on ssrn (see here), a paper devoted to the Draft Digital Markets Act. I thought it was the most effective way to share my thoughts on it (including with my students) and to start a conversation about regulatory reform. Needless to say, your comments would be most welcome.

The first goal of the paper is to provide an overview of the Draft DMA and to compare it with EU competition law. A cursory overview of the proposal shows that it is different in several respects from Articles 101 and 102 TFEU. The case-by-case, context-specific evaluation that is characteristic of EU competition law would be replaced by a regime setting out a number of obligations imposed on firms categorised as gatekeepers. The Draft DMA places gatekeepers in a position that is comparable to that in which undertakings are following a finding of infringement under EU competition law.

I thought it would also be a good idea to compare the Draft DMA and the EU telecoms regime, if only because the latter is less well-known. I note in the paper that they are more different than they seem. The EU telecoms regime was conceived as a temporary instrument that would create the conditions in which electronic communications markets would be subject to competition law alone. What is more, it is expressly biased against intervention: national authorities would have to show that intervention would be necessary to promote effective competition in a market that is structurally unsuited for it.

The Draft DMA, by contrast, is not conceived as a temporary tool. It is not biased, either, against intervention. The most crucial difference between the two regimes, in any event, is the allocation of the burden of intervention. In the EU telecoms regime, it is for authorities to show that intervention is necessary and proportionate; the Draft DMA, on the other hand, places the burden upon the firm, which has to define the way in which it intends to comply with the obligations set out in Article 5 and (in particular) 6.

Several consequences follow from these choices. First, the Commission would enjoy substantial leeway to define the scope of the regime and the obligations to which firms are subject. The Draft DMA is based on the premise that the legal concepts used in it are autonomous from those developed in competition law over the years. As a result, it is not immediately obvious to see how administrative action would be effectively constrained and, if so, where the constraints would originate. Suffice it to take a look at the definition of gatekeeper under Article 3(1) of the proposed regime.

The final question relates to judicial review. In principle, there should be little doubt that the categorisation of a firm as a gatekeeper or the definition of the proactive obligations set out in Article 6 would be subject to scrutiny by the EU courts. This said, the design of the Draft DMA raises three fascinating issues. In the first place, the proposed legislation appears to be crafted in a way that disincentivises litigation, thereby suggesting that challenges would be less frequent than under EU competition law or the EU telecoms regime. In the second place, one could argue that meaningful constraints to administrative action follow from the right to effective judicial review. An additional (no less fascinating) issue is whether, as a matter of law, the objectives of fairness and contestability can be defined independently of primary law (and the system of undistorted competition that is a part thereof).

There is much to discuss about this major landmark and, as I said above, your input would be much appreciated. Hopefully we will find ways to share ideas about this and other major developments.

Written by Pablo Ibanez Colomo

23 February 2021 at 7:26 pm

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A CHALLENGE FOR THE COMPETITION COMMUNITY

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No, more investigations
(Click on the link below to find out what’s on the other side of these mugs…)

We tried to put an end to the 2020 nightmare with a bit of humor, and with an award in memory of someone we lost. Chillin’Competition now wants to follow up with a bit of hope, and with a challenge.

We have often claimed that the competition community is special, and that the people in it are special too (mostly in a good way ;-)). We would now like to prove this. When we ran our meme contest, Isabelle de Silva (President of the French Competition Authority) suggested that we should again use the best memes to produce mugs. This gave us the idea to refocus a light hearted contest – and actually to leverage whatever reach this blog may have – towards supporting other much more serious, important and worthy initiatives, like KickCancer.

KickCancer is a public interest foundation devoted to combatting childhood cancer. KickCancer finances these innovative research projects aimed at understanding and curing paediatric cancer. Their cause could not be more important, or more fitting given the various extraordinary colleagues we sadly lost to cancer this past year. KickCancer is also an organization that is doing its best to turn an adverse event into a force for change (which in a way symbolizes what we want to get out of this pandemic too). It is an organization that finances projects with a European scope. It is an organization that approaches the most serious possible cause with humour. And since no organization is perfect, this one is largely run by lawyers 😉 

Chillin’Competition has partnered with KickCancer to sell customized mugs featuring the winners of our meme contest, as selected by our devoted jurors (Foo Yun-Chee, Lewis Crofts, Javier Espinoza, Thibault Larger and Aoife White).

YOU CAN NOW BUY THE WINNING MEME MUGS HERE

All funds will go directly to KickCancer, and the (evident) overprice will be devoted to financing paediatric cancer research.

We would encourage you buy mugs for your colleagues, employees, clients, students, friends or for yourselves. It will cost you little, and it would help a lot. To facilitate logistics, we would also encourage you to collude, make a joint purchase and set a single delivery point for various mugs (shipping costs are free if you buy more than 10). You will be able to buy these mugs until 19 March.

The mugs are obviously nothing but an excuse. You can contribute to KickCancer in any way you can, also through direct donations (which will get you a tax deduction instead of a mug). You can do that in less time than it would take you to read one of our posts, for less than the cost of a takeaway meal (or for a very small fraction of a billable hour), and it will have a much more positive impact than either of those 😉

It would be nice to demonstrate that the competition community can beat all others not only in numbers of conferences, webinars and awards per capita, but also at joining forces in support of something that truly matters.

Written by Alfonso Lamadrid

18 February 2021 at 7:55 pm

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NEW PAPER | Territorial restrictions in EU competition law: from Consten-Grundig to Ping and Pay-TV

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Image result for hello kitty plays golf

I have just uploaded on ssrn (see here) a paper on Territorial restrictions in EU competition law. I am particularly proud that the piece will be coming out in the proceedings of last year’s GCLC conference, devoted to vertical restraints, and edited by Adina Claici and Denis Waelbroeck.

I wrote on vertical restraints and market integration a few years ago. This paper was an excellent opportunity to revisit some themes in light of the growing case law and administrative practice. One of the themes was inspired by the Ping case (which explains a part of the pic above).

When market integration is at stake, the analysis of restrictions changes. It shifts from the ‘precise purpose‘ of the practice to focus on the means through which the aims are achieved. As a result, conduct that would otherwise be unproblematic is deemed prima facie unlawful insofar as it goes against the market integration objective.

The Ping case shows that courts and authorities may struggle with this methodological shift. In the case, the CMA, the CAT and the Court of Appeal all reached the right outcome: the online sales ban was restrictive by object. However, they all struggled to justify why, and they also struggled to reconcile the outcome with cases such as Cartes Bancaires or Budapest Bank. All those difficulties could have been easily avoided by simply pointing to market integration, and the fact that online sales bans hinder cross-border trade and are problematic for that very reason.

It is also clear since Murphy that the parties to an agreement that is in principle restrictive by object can provide evidence showing that it is incapable of having anticompetitive effects in a specific economic and legal context. However, there is precious little guidance about the application of this principle.

One can reasonably conclude, in light of Generics, that agreements limiting cross-border trade are incapable of restricting competition where there are ‘insurmountable barriers’ to such cross-border trade. This could be the case, in particular, where there are intellectual property rights involved. If a right holder or a licensee can validly invoke a right to prevent the flow of goods or services across borders, it is difficult to see how there could be a restriction.

The Commission seems to take a different view. I have read with particular interest the (relatively recent) Character Merchandise decision (which explains the other half of the pic above). Intriguingly, the Commission argues that agreements that limit cross-border trade are restrictive by object irrespective of whether the intellectual property rights are exhausted. It is not clear to me how this position can be squared with a long saga of cases, including Generics, Micro Leader and Coditel II. I would very much welcome your thoughts on it.

This Character Merchandise case is also interesting for another reason. The case involved non-exclusive distribution rights. The Commission argued that, in that context, active sales restrictions are restrictive by object (implying that they are only acceptable in the context of an exclusive distribution agreement). The decision does not refer to any judgment in support for this position. In fact, my understanding of both Societe Technique Miniere and Nungesser has always been that active sales restrictions are not restrictive by object. Again, it would be wonderful to hear your thoughts on this point, too.

I look forward to your comments!

Written by Pablo Ibanez Colomo

10 February 2021 at 3:41 pm

Posted in Uncategorized