Chillin'Competition

Many of you have approached us in the past few months asking whether we had considered launching a podcast. Since it is a great idea, we thought we would give it a tentative go. Alfonso will be coming over to LSE Law School on 27st June (Thursday of next week). We will be starting the live podcast at 16.00 London time/17.00 Brussels time. The recording will be made available later.

Make sure you save the date! For this first live podcast, we will build our discussion around a forthcoming paper of mine, which deals with the notion of restriction by object (entitled ‘Restrictions by object under Article 101(1) TFEU: from dark art to administrable framework‘).

We have been talking about restrictions by object for the best part of two decades, and the time feels right to present, in a structured manner, the contributions made by the Court, including the clarifications provided in recent rulings like Superleague (if you were wondering, the paper concludes that the case law provides the basis for an analytical framework that is both administrable and predictable).

If you would like to join (online) the live Zoom seminar, feel free to register here. Once you register, you will receive an email that will allow you to access the livestream on the 27th.

I will be sharing the article in the coming days, so we can have a proper discussion during the Q&A. Do not hesitate to get in touch with any questions, comments or suggestions. We look forward to meeting many of you on the day (albeit virtually)!

Professor Heike Schweitzer, one of Europe’s most prominent and influential competition law scholars, passed away earlier this week. She has left an indelible mark in law and policy discussions as a mentor to generations of students and a frequent adviser to agencies and governments.

Those of us who were fortunate enough to work with, and learn from, her will miss Heike dearly. At the same time, she will very much remain a presence in our lives.

I would frequently share my thoughts with Heike (I recently wrote that every conversation with her is memorable). Even when I did not, her critical eye was the benchmark against which I assessed the quality of my work. ‘What would Heike think?’ has been a guide since we first met back in 2006. I do not see how this will ever change.

The qualities for which she will be remembered are obvious to anyone who spent more than five minutes with her. The first thing that comes to mind is the natural authority she displayed, unassumingly, in any conversation. It came from her in-depth knowledge and her ability to spot the crucial issue in any discussion (all of that peppered, as I learnt over time, with her sense of humour and quick wit).

Heike’s intellect and clarity of thought allowed her to engage meaningfully with scholars and professionals from a wide variety of persuasions. Her convictions and ideas never stood in the way of a respectful exchange of views. Those of us who were fortunate enough to study under her supervision benefitted immensely from these virtues: we always felt we would get to write our own thesis, not somebody else’s.

Any portrait of Heike would be incomplete without mentioning her generosity. Many will point out how hard-working she was. She was precisely because of how much she gave back to the community.

Her appointment as a Special Adviser to Commissioner Vestager on digital competition policy or her crucial contribution to Germany’s foremost competition law treatise are just two of many examples. As an academic at heart, however, Heike’s students always were the primary beneficiaries of her generous spirit.

May she rest in peace.

Last week, the Commission announced that it has fined Mondelez for engaging in a series of practices aimed at restricting intra-EU trade. There is nothing new or special about Mondelez’s conduct.

The decision comprises bread-and-butter cross-border limitations (which have always been sanctioned as restrictive by their very nature under Article 101 TFEU) and unilateral conduct with the very same object. The latter included the refusal to sale a product to a broker and the decision to cease supplies. Both have been found to amount to an abuse of a dominant position.

The above does not mean that the decision is uninteresting. It is, but for a different reason. We have seen much talk, in the context of the ongoing review of Article 102 TFEU enforcement, about ‘by object’ abuses and, more generally, about whether it is necessary to show anticompetitive effects in relation to every potentially abusive practice.

The Mondelez case provides, against this background, two examples of practices that are deemed abusive without the need to establish their restrictive impact in the relevant economic and legal context. As is clear from the press release, this is so because their very object is to restrict intra-EU trade (and as such inherently anticompetitive in the EU legal order).

As explained earlier this year, the Court of Justice demands that Articles 101 and 102 TFEU be interpreted consistently. If restrictions to intra-EU trade are, in principle, restrictive by object under the former, it is only logical that they are treated in the same way under Article 102 TFEU. I, for one, look forward to reading the decision and finding out how the Commission goes about the question.

Mondelez is interesting for another reason. It reveals that the Intel doctrine (whereby dominant the firms have the chance to show that a practice is incapable of restricting competition) will sometimes prove plain ineffective from the perspective of a dominant firm. By the same token, there will be instances where any claims about the lack of effects can be summarily dismissed by an authority.

It would be wrong to assume, in other words, that Intel requires an authority to engage in analysis of effects in every instance. For the same reason, it would be wrong to present the doctrine as an obstacle to the administrability of Article 102 TFEU. The more egregious the infringement, the more limited the relevance of Intel and the less likely the need to engage in an analysis of effects.

Conduct aimed at limiting intra-EU trade (the quintessential example of egregious conduct, alongside cartels) is only incapable of restricting competition in very limited instances, namely (i) where the absence of cross-border trade is attributable to the regulatory context, not to the practice; and (ii) where allowing such trade would empty an intellectual property right of its substance (as in Erauw-Jacquery).

The extent to which arguments of this kind have limited traction when intra-EU trade is at stake became apparent in the Valve case, discussed here. That case related to the application of Article 101 TFEU, but the insights would be relevant, almost word for word, in the context of Article 102 TFEU.

As I say, one decision to look forward to reading.

AG Szpunar Opinion in FIFA v BZ was delivered yesterday. The opinion is remarkable, from the perspective of an EU competition lawyer, for several reasons.

It stands out, first, because of how categorical the Advocate General is when interpeting the law. It is unusual that, in the context of a preliminary reference, an Opinion states unambiguously that a practice amounts to a restriction of competition by object and that, in addition, it does not meet the conditions set out in Article 101(3) TFEU.

In principle, it is for the referring court (which has all the necessary information) to apply EU law to the facts of the case.

The Opinion is also remarkable because of how it approaches the question of whether the rules at stake have, as their object, the restriction of competition. Anyone familiar with the relevant case law will realise that the methodology chosen by AG Szpunar departs from the principles laid down in Cartes Bancaires and the judgments that followed.

The preliminary reference submitted by the Cour d’appel de Mons concerned some aspects of FIFA’s Regulations on the Status and Transfer of Players (‘RSTP’). These rules foresaw a system of sanctions (in addition to compensation) applicable to the clubs that sign players that have terminated the contract without just cause.

In essence, the regulations seek to disincentivise the signing of players that are in breach of their contractual duties and they also seek to disincentive some aggressive practices by clubs (the latter may feel tempted to induce players to terminate their contracts abruptly).

Do these rules have, as their object, the restriction of competition? The abovementioned case law makes it clear than an answer to this question must consider the content of the rules, their aim and the economic and legal context of which they are a part.

According to the Opinion, the European Commission had taken the view, in its submission, that the relevant provisions of the RSTP were not anticompetitive by their very nature. It is not difficult to see how the Commission might have reached this conclusion.

One could plausibly argue that the purpose of the system of sanctions at stake in the case is to prevent the sort of buccaneering conduct that could negatively affect the integrity of competitions and could easily escalate (and would typically benefit wealthier clubs). If that is the case, the object of the regulations would not be the restriction of competition, but a different one.

It is imperative to bear in mind, in this regard, that clubs taking part in organised sports are not mere competitors (and thus not competitors in the usual sense). They cooperate as much as they compete, and cooperation involves, by necessity, restricting their freedom of action at least to some extent so that their common objectives can be attained.

AG Szpunar did not take into account these factors, which are key to make sense of the relevant economic and legal context. Instead of relying on the criteria laid down in the case law, the Opinion focuses on the impact of the rules.

More precisely (para 53), the Advocate General sees the ‘consequences’ of a termination without cause as ‘draconian’. In the same vein, he argues that the rules are designed to have a ‘deterrent effect’.

By focusing on the consequences of a breach, the Opinion infers an anticompetitive object from the effects of the rules. In other words, AG Szpunar relies on their impact to conclude that they are restrictive by their very nature.

By blurring the line between object and effect, the Opinion embraces a methodological approach that departs from the one laid down in the case law.

Under the methodology consistently followed by the Court, the question is not whether the relevant regulations have a deterrent effect (which they undeniably do). The question, instead, is what the object of this deterrent is.

If it turns out that the disincentive pursues an aim that is not anticompetitive, then it is not prohibited as a restriction by object (but could well have, as the European Commission argued in this case, restrictive effects).

And the experience of decades shows that, in the context of cooperative joint ventures (such as organised football), these disincentives often do not have an inherently restrictive object, but one that ensures the adequate functioning of the co-opetitive arrangement (Cartes Bancaires is an example that comes to mind again; Gøttrup-Klim is another one).

The reference to cooperative joint ventures takes me to the third reason why the Opinion is remarkable. By adopting an expansive interpretation of the notion of ‘by object’ infringement, Advocate General Szpunar sees competition law as a discipline that has a frequent and proactive role to play in the regulation of such ventures.

This position would have involve a major departure from the position that the Court has taken so far. After all, Wouters was an acknowledgement that Article 101 TFEU is ill-suited to second-guess the decisions taken by governance bodies on co-opetitive structures and thus will only intervene in exceptional circumstances.

The trio of judgments issued last December did not fundamentally change this balance. As I explained here, these judgments only interfere at the margins with governing bodies.

This long-standing position would change fundamentally if the scope for the application of the Wouters doctrine were significantly reduced (as would be the case if the notion of restriction by object where interpreted in the way suggested by AG Szpunar).

(As ever, I have nothing to disclose).

I am delighted to announce that the Comisión Nacional de los Mercados y la Competencia will host an event around The New EU Competition Law on 28th May (the reception will start at around 3.30pm and the event as such, at 4.30pm).

You can register for it here.

Presenting the book in my hometown, and at the competition authority, will be a highlight of the book tour. I am really grateful to the staff at the CNMC for making it happen. I am also grateful to the speakers who have managed to make some time for the occasion:

Cani Fernández, President of the CNMC, will deliver the opening address at 4.30pm.

Her speech will be followed by a round table discussion with Beatriz de Guindos (AECID), Javier García-Verdugo (CNMC) and Alfonso Lamadrid (Garrigues and, to be sure, Chillin’).

Marisa Tierno, Director for Competition at the CNMC, will share some thoughts at the end.

If you happen to be in Madrid on the day, please pass by!

The Journal of European Competition Law & Practice (of which I am the Joint General Editor with Gianni De Stefano) is proud to announce that it will be publishing, later this year, a Special Issue devoted to EU merger control (and the changes it is undergoing).

Major developments are taking place on every front, from the jurisdictional to the substantive. We would be delighted to consider proposals on any major topic, including, but not limited to, the following:

• Market definition, and the impact of the recent Commission notice on the field.
• The application of Article 102 TFEU to merger control following the Towercast judgment.
• The meaning and scope of Article 22 of the EU Merger Regulation.
• Ecosystem theories of harm in the wake of Booking/eTraveli.
• Remedies in EU merger control.
• 20 years of the ‘oligopoly gap‘: where do we stand after the appeal in CK Telecoms?
• Judicial review in EU merger control.
• Interaction between EU merger control and other systems.

If you have an idea for a paper, please email Gianni (Gianni.De-Stefano@ec.europa.eu) and/or myself (P.Ibanez-Colomo@lse.ac.uk) by Friday of next week (3 May) with your proposal.

This proposal should take the form of an abstract of max. 250 words in which you outline:

• The issue you would like to address;
• The angle you intend to take;
• The contribution your piece is expected to make; and
• Whether you have any actual or potential conflicts of interest.

If your abstract is accepted (we will let you know immediately), we expect the final article (of around 7,000-10,000 words) to be submitted by mid-June at the latest.

We will select abstracts to maximise diversity and balance in the Special Issue. We are, as ever, keen to give a voice to new authors and different approaches. If there was any doubt: we welcome legal and economic perspectives (and, to be sure, papers that combine both).

In the meantime, do not hesitate to get in touch with any questions or suggestions!

Super Bock was one of the major developments of the past year. It is not immediately obvious to draw this conclusion. On its face, the judgment is brief and an Advocate General Opinion was not even deemed necessary.

The substance of the ruling is not any more auspicious: the Court does little more than reiterate the consistent line of case law since Cartes Bancaires (and subsequently refined, inter alia, in cases like Maxima Latvija, Generics and Budapest Bank).

Alas, the significance of Super Bock has to do precisely with the fact that the Court held, unceremoniously, that resale price maintenance is examined in accordance with the orthodox methodology that applies to the rest of agreements.

One should bear in mind that, before Super Bock, vertical price-fixing was deemed restrictive of competition always and everywhere (that is, irrespective of the economic and legal context and irrespective of the aims of the agreement at hand).

Such was the position taken by the Court in Binon. One of the consequences of this sui generis line of case law was that the pro-competitive benefits resulting from the agreement could only be considered under Article 101(3) TFEU.

In this regard, Binon was at odds with contemporary case law, where the pro-competitive potential of an agreement is crucial in the analysis. It is, in fact, the single most relevant factor allowing the Court to identify agreements with a restrictive object.

For instance, the fact that the contentious restraints sought to address free-riding concerns was central in Cartes Bancaires. In Budapest Bank, the Court went further, in the sense that it held that evidence that the agreement is capable of improving the conditions of competition means that its object is not anticompetitive.

If anything, the ECJ was more explicit in Generics, where it held that the parties may rely on the pro-competitive effects of a practice to cast a ‘reasonable doubt’ on its object. Such effects must be ‘demonstrated, relevant and specifically related to the agreement concerned‘.

Crucially, this aspect of the case law was reiterated in Super Bock.

In fact, Generics is particularly important in relation to resale price maintenance. Unlike cartels, which lack any redeeming virtues, vertical price-fixing is known to be potentially pro-competitive. As a result, it is at least possible for the parties to an agreement to argue that, in the relevant economic and legal context, it leads to pro-competitive gains.

An example of what such evidence may look like in practice was provided by a paper by Rhys J. Williams and recently published in the Journal of Competition Law & Economics (available in Open Access here). The study, initially conducted on behalf of DG Comp, finds that regulation fixing the price of books leads to increased sales (without having a noticeable impact on price levels).

Where evidence in this sense is produced in a given case, it would be sufficient to cast doubts about the object of the agreement. As a result, an authority would only be able to establish an infringement within the meaning of Article 101(1) TFEU by considering its actual or potential effects in the relevant market.

One must remember that, if the agreement is capable of improving the conditions of competition, it is (at the very least) questionable that it pursues an anticompetitive object (for how can its objective purpose be restrictive, if it improves the competitive process?).

To sum up, the significance of Super Bock is twofold. It departs from prior case law in that the Court held that resale price maintenance is not necessarily, or not always, restrictive by object. Second, the pro-competitive effects of the practice may lead to the conclusion that, in a particular economic and legal context, its object is not restrictive.

In Superleague, the Court held that ‘Articles 101 and 102 TFEU must be interpreted consistently’. It is difficult to claim that this statement is novel or groundbreaking. After all, both provisions are parts of a ‘system ensuring that competition is not distorted’.

It is therefore only natural that the various components of the legal order are construed in the same way: if they were not, there would not even be a system worthy of the name. In this sense, the EU treaties require the consistent interpretation of Articles 101 and 102 TFEU.

This idea may well be evident, but its implications are not discussed particularly often in EU competition law circles. Fortunately, it was addressed at the beginning of the month during the annual conference of the Global Competition Law Centre.

One of the implications that was discussed in Bruges is one that has been touched upon relatively regularly on this blog, which is the fact that some practices are abusive by object under Article 102 TFEU.

This conclusion is apparent not only when one considers the reality of the case law, but as a matter of consistency. If, in a given economic and legal context, a practice is found to restrict competition by its very nature under Article 101(1) TFEU, it would make little (or no) sense to require an analysis of its effects under Article 102 TFEU.

A second implication of the consistent application of Articles 101 and 102 TFEU follows from the first one. ‘By object’ conduct is presumed to be capable of having restrictive effects.

This presumption can be rebutted. This point was made explicit in Murphy (as far as Article 101(1) TFEU is concerned) and Intel (and then Servizio Elettrico Nazionale and Unilever; as far as Article 102 TFEU is concerned).

A third implication relates to the methodology to assess anticompetitive effects. Again, it would make little sense to follow a different approach (or to rely on different benchnmarks) to evaluate the impact of a practice.

In the context of Article 101 TFEU, it is well established that the effects of an agreement must be assessed by reference to the relevant counterfactual (the Court’s judgment in Generics addressed this requirement at some length).

It would be difficult to justify the application of a different methodology under Article 102 TFEU. There are, after all, practices that can be assessed under either Article 101 or 102 TFEU and (as Generics itself shows), in some instances, both provisions can apply together to the same set of facts.

This is a point that was addressed by Advocate General Kokott in her Opinion in Google Shopping. The Opinion identified an erroneous interpretation of Article 102 TFEU in the first-instance judgment (see para 172).

The General Court, Advocate General Kokott explained, incorrectly conflated the temporal dimension of the analysis (actual vs potential effects) and the issue of the counterfactual. This is so insofar as the first-instance judgment claimed that assessing anticompetitive effects against the counterfactual is tantamount to requiring evidence of actual effects.

Advocate General Kokott, by contrast, did not question, generally speaking, the relevance of the counterfactual when assessing effects under Article 102 TFEU.

She simply noted (wholly uncontroversially) that Google’s argument artificially focused on one aspect of the analysis and was therefore incapable of substantiating the claim that the General Court had erred in law.

A fourth implication has to do with the very meaning of the notion of effect. Landmark Article 101 TFEU rulings such as Delimitis make it clear that a restrictive effect is more than a competitive disadvantage and more than a limitation of a firm’s freedom of action.

As already suggested, it would be very difficult to justify construing the notion of effect differently under Article 102 TFEU (by arguing, for instance, that a mere competitive disadvantage is sufficient to trigger the prohibition).

A fifth implication is one that captures well the central idea behind this entry. The Court has repeatedly held that, in an Article 102 TFEU case, a dominant firm can show that the efficiency gains resulting from a practice outweigh any actual or potential anticompetitive effects.

This possibility is not supported by the letter of Article 102 TFEU, but makes perfect sense if one considers that it mirrors Article 101(3) TFEU, thereby suggesting, in line with the above, the idea that both provisions, which are part of the same system, must be interpreted consistently.

LSE Law School is looking for a two-year post-doc (LSE Fellow) in the field of competition law. Further particulars can be found here (you have until 14th April to apply).

You would be joining a growing team of competition law specialists, which includes Niamh Dunne, Ayse Gizem Yasar and yours truly. You would also be a full-fledged member of a most inspiring and dynamic institution.

The LSE Fellows scheme is designed to create the perfect conditions for you to flourish as an academic. The teaching load is light and you would have no administrative responsibilities.

It really is a great opportunity for early-career scholars. Some of the academics who started out as fellows and who went on to achieve great things include Michèle Finck, Andriani Kalintiri and Stavros Makris.

I would be more than happy to answer any questions you might have. Just let me know.

I took stock of the recent case law on the relationship between EU competition law and sports at the Institut d’études européennes (ULB) earlier this week, in the context of the illustrious mardis du droit de la concurrence.

The presentation can be accessed here. It focuses on the three judgments delivered by the Court of Justice in December of last year (ISU, Royal Antwerp and Superleague).

The fundamental point made in the presentation is that these rulings are best understood as a corrective mechanism, at the margins, of the relationship between governance bodies and participants in sports competitions (that is, teams or athletes).

Economic and non-economic dynamics favour the emergence of pyramid structures in professional sports. As a result, governing bodies may have, de facto, quasi-regulatory functions. In the same vein, may enjoy a very substantial degree of market power vis-a-vis participants and other actors in the system.

The Court signals that the quasi-regulatory functions of these bodies must be exercised in a manner that reflects the degree of market power they enjoy. Accordingly, the discretionary use of these powers, or their exercise in a manner that is not objective, transparent and non-discriminatory will amount to a breach of Articles 101 and 102 TFEU.

On the other hand, the Court does not question, in and of itself, the governing bodies’ ability to introduce rules concerning the prior approval of (and/or eligilibity in) sports competitions (this is the key issue addressed in Superleague and ISU) or concerning the use of ‘home-grown’ players (at stake in Royal Antwerp).

The three judgments, in fact, expressly acknowledge that the organisation of sporting activities demands, by definition, the limitation of participants’ freedom of action in several respects (including those mentioned above). In the same vein, the Court did not enter into the legality of some practices. It just ruled on the exercise by governing bodies of their quasi-regulatory functions.

To mention a clear example, the Court did not challenge the lawfulness of joint licensing of media rights as such (which does not necessarily restrict competition and may escape Article 101(1) TFEU altogether). It merely questioned how the issue was regulated by governing bodies in the specific factual scenario at stake in Superleague.

The rulings are also valuable in that they clarified a number of issues concerning the interpretation of Articles 101(1) TFEU and 102 TFEU.

First, the Court confirmed how important the evaluation of the economic and legal context is when assessing whether an agreement restricts competition by object under Article 101(1) TFEU. In this sense, it made it clear that the degree of market power (in particular when it is very substantial) is a key factor in this assessment.

Second, it held that the Wouters–Meca Medina doctrine does not apply to ‘by object’ infringements. This interpretation of the doctrine is consistent with its original understanding. It is also consistent with other aspects of the case law, such as the fact that the ‘by object’ category is to be interpreted restrictively.

This Court’s position is only natural: where a restraint escapes Article 101(1) TFEU pursuant to the Wouters–Meca Medina doctrine, it also means that it does not restrict competition by object. Since the regulatory aim to which it relates is legitimate, the object of the said restraint must also be legitimate (that is, it does not fall within the scope of Article 101(1) TFEU by its very nature).

The Court leaves us with three important lessons for the future of the relationship between EU competition law and sports.

One of these lessons is that context is everything in EU competition law. The aim of a particular restraint (achieving competitive balance, addressing free-riding, preserving the integrity of the competition) can only be figured out if the relevant economic and legal context context is considered.

A second lesson, which follows logically from the first one, is that the formal features of an agreement are a very poor guide of its object. The experience of decades shows (and some recent judgments confirm) that a price-fixing or market sharing arrangement is not necessarily restrictive of competition (let alone by its very nature).

A third lesson is that the fact that a particular parameter of competition is affected by a restraint does not mean that the said restraint amounts to a restriction of competiton, whether by object or effect. As the analysis in the three judgments shows, a whole range of other factors must be considered.