Best Conference on Antitrust Damages to Date
Antitrust Damages in EU Law and Policy
Brussels, 7 and 8 November 2013
Join the GCLC for its 9th annual conference and get first-hand guidance on the interests at stake at a crucial moment of the decision-making process before the European Parliament and the Council.
Vice-President Almunia, academics, DG COMP and Legal Service officials, national civil servants, national and EU judges, business people and competition specialists will debate, comment on their expectations and how they hope to overcome the final hurdles.
Location:
Residence Palace
Rue de la Loi, 155
Latest ECJ features a bunch of very good papers
EUROPEAN COMPETITION JOURNAL
Volume 9 . Number 2 . August 2013
ONLINE ACCESS
To access this issue online and purchase individual papers please click here
SUBSCRIPTIONS
To subscribe please click here
CONTENTS
Vertical Antitrust Enforcement: Transatlantic Perspectives on Restrictions of Online Distribution under EU and US Competition Laws
Gabriele Accardo
Abstract: This article looks at how EU and US competition laws deal with restrictions of online sales in distribution agreements, respectively. The growing importance of online commerce highlights how vertical competition law enforcement is still an important building block of competition law policies, both in the US and in Europe. Businesses who are either engaged in online activities or deal with online intermediaries in the US and EU should be aware of the rules of the game, since vertical antitrust issues are generally subject to different principles on the two sides of the Atlantic. The European Commission recently adopted new competition rules that specifically target restrictions of online sales in distribution agreements, acknowledging the importance of e-commerce for consumers and its instrumental role in achieving the paramount goal of a single internal market in Europe. Conversely, unlike in the EU, several factors, such as the existence of a developed online market, the absence of single market considerations, the paramount importance of freedom to contract and the role of inter-brand competition under US antitrust law, arguably explain why US antitrust doctrine is less concerned about the need to adopt specific rules applicable to restrictions of online sales.
Alternative Approaches to Sentencing in Cartel Cases: The European Union, Ireland and the United States
Paul K Gorecki and Sarah Maxwell
Abstract: The paper examines the approach used in sentencing in hard core cartel cases in the European Union, Ireland and the United States. These approaches are not considered in a vacuum, but rather use the facts of the successful prosecution of the Citroen cartel in Ireland. While the EU and the US both use sentencing guidelines, the US guidelines are more evidence based and transparent. In contrast, the judiciary in Ireland has yet to develop a systematic clear policy for determining sentences in cartel cases. Applying the EU and the US sentencing guidelines to the facts of the Citroen cartel suggests that, in any event, the sentences imposed in cartel cases Ireland are too low. Some suggestions for rectifying the situation are discussed.
Sad but true
I love commitments decisions because they are a quick read.
But I also hate dislike them because they leave the reader angry hungry for more.
Some evidence: in the E-Books case, the effect on trade condition was deemed fulfilled under the simplest possible sort of analysis:
(91) The Commission’s preliminary view was that the effect on trade of the concerted practice was appreciable given that the conversion to the agency model by the Four Publishers and Apple formed part of a global strategy that was intended to be,andwas,implemented in the EEA.(92) In particular,given the nature of the product in question, the position and importance of the undertakings concerned and the scope of the agency agreements entered into between each of the Four Publishers and Apple in the United Kingdom, France and Germany, the pattern of trade was potentially affected by the concerted practice which covered a substantial part of the EEA.
With this kind of reasoning, everything may affect trade between Member States (though I understand Alfonso has a dissonant view on this).
The reference to the “nature of the product” is in particular inconsistent with previous findings that geographic markets for books are national or subnational (see Case No COMP/M.2978 LAGARDERE/NATEXIS/VUP, §296).
But there’s other fish in the sea: the E-Books decision is fascinating in that it exemplifies how, with parties’ consent, agencies manage to bypass the most basic evidentiary hurdles required for antitrust intervention.
Beyond the effect on trade condition, the decision adduces only light proof of the alleged horizontal “concerted practice” amongst publishers. I doubt this is Woodpulp or CISAC’s proof. As the Court recalled in those cases, heavy evidentiary thresholds apply in concerted practice cases.
More importantly, the Commission’s theory of harm is incomplete. In particular, the Commission does not explain if, and how, the publishers could have boycotted Amazon – their biggest client – under a collective refusal to supply (in Bronner sense) and reserved E-Books to Apple. And this is important, because absent this, the MFN scheme could not possibly have the anticompetitive effect foreseen in the decision.
Last but not least, the decision is a good example of antitrust sorcellery, in that it it turns the adoption of agency agreements, i.e. practices that are per se lawful practices by 101 TFEU standards, into a theory of anticompetitive harm.
To the Commission, article 9 decisions sound like Hetfield’s epic lyrics:
“I’m your truth, telling lies
I’m your reason alibis”
Competition v IP
I attach a presentation I gave yesterday at the University CEU San Pablo in Madrid.
The presentation adresses wether competition policy contributes to investment in innovation.
I slightly reframed it though, to envision it under the competition v IP angle.
The picture above says it all of my views on this issue.
Comments welcome.
Interesting statements
The past few days have left us some interesting statements on the competition front. Here’s a personal selection. Happy to add any others any of you might have.
A) The French Industry Minister said last week that EU’s competition rules are “stupid and counter-productive“. I can understand part of the point, but the view that ”Europe organized the balkanization of its companies by chasing down state aid” is peculiar, given that the State aid control regime seeks precisely to eliminate barriers to inter-State trade. As put by José Luis Buendía in another often quoted statement, “State aid ‘DNA’ shares more chromosomes with internal market rules than with antitrust rules“.
This disrespect towards misunderstanding of competition law seems to be a non-partisan feature of French politics. Many of you might remember Sarkozy’s comments about endive producers not being Apple or Microsoft (see here) (the statement was not without consequences: it led our friend Mark English to stop wrapping his iPhone in ham).
B) Slow, ignorant’ lawyers charge by the hour to inflate bills, says President of British Supreme Court. A statement that adds up to a controversy we’ve often echoed regarding billable hours (see our previous post “Is associate lawyer the unhappiest job?“)
C) Have law blogs surpassed law reviews? That’s not really a statement, but rather an interesting (and interested) read.
D) The tone of the comments regarding Google’s proposed commitments has increased and reached new heights. A few days ago, an “anonymous” (no wonder!) lawyer representing one of the complainants said: “All we have to go on at the moment is what Almunia has said and it is absolutely not encouraging. Putting lipstick on a pig does not mean it is not a pig (…). “It’s starting to look like he just wants to get a deal before his term as Commissioner is up next year.”
Game Changer: Wathelet’s Opinion in Telefonica
And today, the best of the CJEU’s recent output: AG Wathelet’s Opinion in Telefonica v. Commission, C‑295/12 P (in French):
24. Un argument est souvent soulevé à l’encontre de l’approche préconisée dans les présentes conclusions, à savoir que Tribunal ne doit ou ne peut pas «s’immiscer» dans la fixation de l’amende, et de ce fait dans la politique de la concurrence, qui relève de la seule responsabilité de la Commission. Je ne partage pas ce raisonnement dès lors que le Tribunal ne se prononce que sur une affaire particulière. La Commission garde donc toutes ses compétences pour définir et appliquer sa politique générale dans d’autres dossiers.
125. Je déduis de ce qui précède et plus particulièrement sur la base des points 62 de l’arrêt Chalkor/Commission, précité, et 129 de l’arrêt KME Germany e.a./Commission, précité, que, à mon sens, lors de son contrôle, le Tribunal ne saurait s’appuyer sur la marge d’appréciation dont dispose la Commission ou la seule erreur manifeste d’appréciation qu’elle aurait commise en ce qui concerne le choix des éléments pris en considération lors de l’application des critères mentionnés dans les lignes directrices de 1998 ou l’évaluation de ces éléments, pour renoncer à exercer un contrôle approfondi tant de droit que de fait ou ne pas exiger que la Commission explique le changement de sa politique d’amende dans une affaire spécifique.
126. En tout état de cause, selon la jurisprudence de la Cour – même si le Tribunal peut à la limite, le cas échéant, se référer «au ‘pouvoir d’appréciation’, à la ‘marge d’appréciation substantielle’ ou à la ‘large marge d’appréciation’ de la Commission [ce que selon moi il ne devrait plus faire], de telles mentions [ne peuvent] pas empêch[er] le Tribunal d’exercer le contrôle plein et entier, en droit et en fait, auquel il est tenu» (63) (c’est moi qui souligne).
127. Au point 78 de son arrêt Chalkor/Commission, précité, la Cour juge que «le Tribunal ne s’est pas limité à ce contrôle de conformité aux lignes directrices, mais a contrôlé lui-même, au point 145 de l’arrêt attaqué, l’adéquation de la sanction».
128. La Cour a aussi rappelé dans l’arrêt SCA Holding/Commission (64) que «le Tribunal est compétent pour apprécier, dans le cadre du pouvoir de pleine juridiction qui lui est reconnu par les articles 172 du traité CE [désormais article 261 TFUE] et 17 du règlement n° 17 [article 31 du règlement n° 1/2003], le caractère approprié du montant des amendes. Cette dernière appréciation peut justifier la production et la prise en considération d’éléments complémentaires d’information dont la mention dans la décision n’est pas comme telle requise en vertu de l’obligation de motivation prévue à l’article 190 du traité [désormais article 296 TFUE]» (c’est moi qui souligne).
129. Le Tribunal doit donc estimer par lui-même si l’amende est adéquate et proportionnée et est obligé de constater par lui-même que tous les éléments pertinents aux fins du calcul de l’amende ont été effectivement pris en considération par la Commission, étant entendu que le Tribunal doit également être à ce titre en mesure de revenir aux faits et aux circonstances avancés par les requérants devant lui (65).
Flatline
I recently had the opportunity to sift through the recent case-law of the Court.
The CJEU ruling in Allianz Hungary, C-32/11 stands out.
Our Lords again blurred the object/effect distinction.
The Court held that “object” restrictions can be established by proof of anticompetitive effects:
“§34. Accordingly, where the anti-competitive object of the agreement is established it is not necessary to examine its effects on competition. Where, however, the analysis of the content of the agreement does not reveal a sufficient degree of harm to competition, the effects of the agreement should then be considered and, for it to be caught by the prohibition, it is necessary to find that factors are present which show that competition has in fact been prevented, restricted or distorted to an appreciable extent […]
§36. In order to determine whether an agreement involves a restriction of competition ‘by object’, regard must be had to the content of its provisions, its objectives and the economic and legal context of which it forms a part […]. When determining that context, it is also appropriate to take into consideration the nature of the goods or services affected, as well as the real conditions of the functioning and structure of the market or markets in question […]“
Of course, my positivist friends will not fail to remind me that the Court had already said this in previous cases.
But let’s call a spade a spade: the Court’s insistence on reaffirming bad precedent reveals that the virus of legal non-sense is deep ingrained.
The upshot of Allianz Hungary is to unduly expand the “object” box, meanwhile creating much legal uncertainty.
In a recent speech, A. Italianer implicitly confirmed this, by saying that restrictions by object are serious, but “not necessarily obvious“.
In practice, parties lose the ability to articulate “effects-based” (and other) defenses, and face a considerably tougher task under 101(3) TFEU.
But the most bizarre statement is elsewhere. At §44, the Court held:
“With regard to determining the object of the agreements at issue in the main proceedings with respect to the car insurance market, it should be noted that, by such agreements, insurance companies such as Allianz and Generali aim to maintain or increase their market shares“
You read well: for the Court it is unlawful to cast agreements with purchasers with a view to maintain or increase market shares.
My practitioner friends often complain that it becomes impossible to advise on Article 102 TFEU. I guess that with such judgments, it is becoming equally complex to provide antitrust counseling under Article 101 TFEU.
Or is it the contrary? With such basic, formalistic reasoning, providing competition law advice under 101 and 102 TFEU is increasingly simple, since most inter-firms agreements and dominant firm conduct are unlawful as such.
Or the Court’s contribution to undermining the market for specialist competition law advice.
For more, see the excellent analysis of http://europeanlawblog.eu/?p=1664
Samsung offers commitments to appease DG Comp
The most important (antitrust-related) news last week was the European Commission’s announcement that it will market test a commitment proposal submitted by Samsung regarding the enforcement of its SEPs (Standard Essential Patents) related to mobile communications.
As you know, the Commission considered in its December 2012 Statement of Objections that the seeking of court injunctions by Samsung in relation to SEPs which it had committed to license on FRAND terms, or that third parties (i.e. Apple) were apparently willing to agree to license on FRAND terms, could amount to an abuse of dominance, because “access to patents which are standard-essential is a precondition for any company to sell interoperable products in the market” (press release dixit; we’ll come back to this phrase at the very end of the post). The theory goes that the challenged enforcement of SEPs could allow Samsung to obtain licensing terms that the licensee wouldn’t have agreed to absent the threat, and that this “undue distortion of licensing negotiations” would harm consumers in a number of different ways.
[Query 1: is this an exclusionary abuse? an exploitative one? both?; Query 2: Would an alleged abuse of this sort lend itself to the application of the Guidance paper?; Query 3: If the answer to query 2 is “no”, then what are the criteria to undertake a legality assessment of a situation like this? Query 4: How does one assess the likelihood of anticompetitive effects in a situation like this?; Query 5: can you distinguish a willing licensee from a non-willing one without taking a view on what’s FRAND? (I guess the proposed solution arguably gives an answer to this 5th question; if someone’s willing to accept the proposed framework… ); Query 6: Was Apple -the de facto complainant- a willing licensee in this case?].
Samsung (which just before receiving the SO had unilaterally withdrawn all its European SEP-based injunction claims) has now offered to refrain from seeking injunctions for past, present and future mobile (smatphone and tablet) SEPs for a period of five years againts any company adhering to a given licensing framework. As explained by the Commission itself (and here I’m “scraping” its Press release) “the licensing framework consists of: (i) a negotiation period of up to 12 months and (ii) if no agreement is reached, a third party determination of FRAND terms by either a court or an arbitrator, as agreed by the parties. If the parties cannot agree on either submitting to court or arbitration, the parties will have to submit to arbitration“.
The Commission has also published a Q&A document. The full version of the proposal is available here.
Some well known commentators in the patent blogosphere swiftly commented on the proposal in a critical manner (see “EU Commission market-tests totally insufficient FRAND commitments offered by Samsung“). My preliminary take is that, even if some issues may (inevitably?) be left open, this proposal would shed some welcome light on a much contentious subject.
We’d be happy to host a discussion in Chillin’Competition, and welcome the views that any of you might have with regard to both the case and the commitments proposal.
Let me get the ball rolling:
Antitrust Desk Cleaning
Lucky me, I am in London today invited to a conference entitled “C5 Managing Competition Risk and Compliance“:Conference – 612L14_Managing Competition Risk Compliance_S)
The topic is “Key EC reforms and the expected impact on regulatory enforcement“, or “what will be the focus of EC regulatory enforcement in the coming year“.
Unlucky me: I had to take a try at antitrust astrology.
Hereafter is the best I could come up with: Managing Competition Risk & Compliance – N PETIT
New Blog – Emulation/Innovation
My assistant Norman has just started a blog on competition and IP law (in French).
To all the readers of this blog who understand French: subscribe to his feed!
I am sure you’ll find it surprising and insightful.
Congrats to Norman for growing the competition blogging family.
Chillin'Competition 