The Antitrust Hotch Potch

ECJ - Kanal 5 Ltd and TV 4 AB v (STIM) upa

My ruminations over an interesting ECJ ruling of 11 December 2008, which might open new perspectives in the area of exploitative abuses:

In Kanal 5 Ltd, TV 4 AB v (STIM) upa, C-52/07, the ECJ had to determine whether (i) the royalties charged by the swedish collecting society to broadcast companies were excessively high, hence abusive under Article 82 (a) EC ; and (ii) whether the different fee formula applicable on the one hand, to a public broadcast company and, on the other hand, to two commercial broadcast companies, was discriminatory, hence abusive under Article 82 (c) EC.

Whilst, on the first question, the Court recalled its much chastised Hoffman La Roche case-law on excessive pricing, it nonetheless whispered that, with a view to establish that a price is unreasonable under Article 82(a) EC, the purpose of the royalty could be taken into account: here, the financing of music creation, through the protection of an adequate remuneration for composers (§§30-31). With a bit of speculation, the Court seems to draw - implicitly - a link between the price of a service on the market and the ex ante incentives of service providers to innovate. This reasoning could apply, by parity of reasoning, to many other sectors (i.e. pharmaceuticals, etc.). This is further confirmed by the fact that the Court explictly indicates that a balance must be struck between the interests of the broadcasters and the incentives of composers to produce novel musical work.

But that is not all. On the second question, the Court suggests that the mere proof of different conditions for similar transactions is insufficient to trigger the application of Article 82(c). One must prove the existence of a competitive disadvantage and, to do this, establish first that the dominant firm's customers are rivals on a same relevant market (§§45-46). As Damien and I wrote in a previous paper, most price discrimination decisions to date have failed to properly analyse the downstream market. Let's hope this judgment will induce agencies and courts to investigate properly the effects of the alleged discrimination on the downstream market.

In sum, a welcome ruling, albeit too short (because an Article 234 EC ruling).

Nicolas

First Natolin Conference of the GCLC - 13 March 2009

As some of you may know, there's one College of Europe, but two campuses, Bruges and Natolin (Warsaw, Poland).

Because the GCLC is global, and because competition law is decentralized, the GCLC next conference will take place on 13 march 2009 in Natolin. The conference, which will be chaired by Massimo Merola, is entitled "Competition law – New tendencies, new tools and new enforcement methods from an EC and Polish perspective".

The programme and registration form can be downloaded below.

Nicolas

Download Programme GCLC Conference - 13 march 2009 - ENGLISH FINAL VERSION

New Blog on EU Telecoms Law

My colleague and friend, Laurent de Muyter has recently launched a blog on EU Telecoms Law. Well-worth having a look. It is well-documented, often updated and, more importantly, providing critical views on EU telecommunications law. Laurent is a lawyer at Jones Day Brussels and a research fellow of the Institute for European Legal Studies in Liege.

Nicolas

Excessive Pricing on the Judgments Reprints Market?

In Belgium, not all judgments are published and those published are often released a long time after their adoption. Obviously, this makes the job of legal scholars very painful. To remedy this issue, the registrars of the Courts offer reprints of judgments upon payment of a pre-established price/page.

I am currently looking for a copy of a ruling of the Brussels court of appeal, handed down on 2 February 2009, in cases 2005/MR3 and 2005/MR/4. I called the Brussels court of appeal registrar this morning. I am told that the ruling, is 36 pages long, and that the price/page is..... 10€, so it will cost me no least than 360€ (!) to get a copy of the ruling. Of course, I am told that it will soon - i.e. read a few months - be published on the website of the website of the Belgian Competition Council...

Frankly disappointing, and akin to excessive pricing for a service that mainly involves paper reprinting costs.

Nicolas

Picture: http://www.ebru.be/

Slides of GCLC Lunch Talk on Financial Crisis and State Aid

The slides of Blanca Rodriguez and Jacques Derenne can be downloaded below.

Nicolas

Download Lunchtalk-BL-RODRIGUEZ

Download BRULIB01-#143925-v1-GCL_Jacques_Derenne_presentation_State_aid_and_the_financial_crisis

Slides - Recent Developments in EC and Belgian Competition Law

I attach the slides of a most interesting conference that took place on 12 February in Brussels. Thanks to Jean-François BELLIS and Miguel TRONCOSO FERRER for giving me the opportunity to talk at this event. A book comprising the proceedings of the conference will be published shortly by Larcier.

Nicolas

Download DE JUVIGNY

Download DE MEESE

Download PETIT

Download RAES

Download SCHREIBER

Download IGARTUA ARREGUI

Download TRONCOSO FERRER

Download WAELBROECK

Download SLATER

Cut-Throat Competition on the Brussels Lunch Talks Market?

 

On exactly the same day as the next GCLC lunch talk on the financial crisis, the revue Concurrences organizes a lunch seminar in Brussels. Here's the question: are the two lunch talks on the same relevant market and, if so, do they compete face to face? My take: No. 

Anyway, the topic of the Concurrences lunch sounds promising: Lobbying and EC competition law. I have, myself, invited A. Stanescu (Qualcomm Governmental Affairs) to talk on this issue on 3 March 2009 in Liege.

Below is the programme of the concurrences lunch talk.

Nicolas

Download Lunch talk Concurrences-Avisa 200209

GCLC Lunch Talk this Friday - Commission State Aid Policy and the Financial Crisis

It is still time to register for the next GCLC lunch talk, due this Friday, time and location as usual. Speakers are Blanca Rodriguez Galindo (DG COMP) and Jacques Derenne (Lovells). Please find below the registration form.

Nicolas

Download Registration Form - 39th lunch talk-The Commission's State Aid Policy and the Current Financial Crisis

Breaking news

First degree (perfect) price discrimination exists! See here and story below:

A NEW Singapore hotel is hailing itself as the world's first 'international economy hotel' by asking guests to pay what they want. The Ibis hotel is offering customers the chance of a budget holiday by letting them bid for rooms on the company's website Paywhatyouwant.

During designated sales periods, customers log in and name their price for available rooms ahead of the hotel opening on February 12.

Hiro Inoue, Ibis Singapore marketing director, said bids have gone as high as $100, but any price offered – even one dollar – would be accepted, subject to availability.

"Given the current economic turmoil people are seeking deals, which is adding to the appeal of the promotion. But regular travellers are also seeking value accommodation," Mr Inoue said.

Several thousand visitors have registered since the promotion began on Wednesday, and the first days' rooms were sold out in minutes with bookings coming from all over the world, he added.

An Ibis Singapore spokesman said the hotel is the first "international economy hotel" in the city-state.

Ibis is part of French hotel and business services group Accor, which has close to 80 hotels across six continents.

However, the company has no plans as yet to use the bidding system for its other hotels, Mr Inoue said.

The Ibis Singapore room offer comes in the same week a London restaurant offered diners the option to pay for what they think their meal was worth.

The Little Bay restaurant in central London will present diners with absolutely nothing when they ask for the cheque during February, leaving it up to them to decide what the meal was worth.

Nicolas

Dynamic Efficiencies

The article below suggest that dynamic efficiency arguments can be - are - taken seriously by certain antitrust agencies. Undoubtedly, other agencies around the world should draw inspiration from the FTC practice (above is Aghion's et al. inverted U curve).

FTC prefers dynamic efficiency defence
Ron Knox
Monday, 09 February 2009

A new report from the US Federal Trade Commission shows that its staff are more likely to accept claims of dynamic efficiencies when reviewing mergers than any other type of efficiencies claim.

The study also shows that, in general, the commission's bureau of economics has over the past decade been more willing to accept efficiency claims than the bureau of competition.

The findings, released on Friday, should offer some guidance to merging parties who believe, and plan to argue, that increased efficiency outweighs the potential anti-competitive impact of a deal - especially when arguing for dynamic efficiencies, which can improve cost, quality and product innovation on a continuing basis.

The report analysed the way the FTC viewed efficiencies arguments in 186 mergers that generated a second request between 1997 and 2007. The analysts designed the study to determine what kinds of efficiencies claims parties raised during the review, and how FTC staff treated those arguments.

The study compares bureau of competition and bureau of economics evaluations of parties' claims.

In examining bureau of competition analysis, the study looked at 115 merger matters that included efficiencies discussions. Those 115 matters averaged three efficiencies claims each - claims that fell into 12 different categories, including fixed-cost savings, variable-cost savings, dynamic efficiencies and generic efficiencies claims.

Of the 342 individual claims considered over the 10-year period, the bureau of competition only accepted 29; it either rejected the rest outright or declined to make a decision.

The study found that the bureau of competition was more likely to accept a dynamic efficiencies claim than any other type. Indeed, the bureau accepted dynamic efficiencies claims 23 per cent of the time - a rate the researchers called "almost significantly different" than the average acceptance rate of 7.5 per cent.

Similarly, the study found that certain types of claims were much more likely to be rejected. For example, claims that fell into the "generic efficiencies" category were rejected more than 50 per cent of the time, while those classified as "other" fixed-cost and variable-cost savings were rejected more than 40 per cent of the time.

Both rates were significantly higher than the average rejection rate of about 29 per cent.

Meanwhile, the bureau of economics accepted 84 of the 311 claims it analysed, the data shows. As with the bureau of competition, the economics bureau accepted claims of dynamic efficiencies more often than other claims - 43 per cent of the time, compared to the mean acceptance rate of 24 per cent.

The study called this difference "statistically significant".

While the study says the two bureaus have much in common in their approach to analysing efficiencies, they diverged in some notable ways. Perhaps most notably, the bureau of economics accepted a much higher percentage of efficiencies claims than the bureau of competition - 27 per cent to about 8.5 per cent. The authors of the report ventured that because economists tend to incorporate more advanced economic analysis tools into their reviews, they may be more willing to accept complex dynamic efficiencies claims.

The study, which arose out of a concern that the commission wasn't taking efficiencies arguments seriously, has been under construction for several years. While it was not looking for specific results, the commission sought to see whether parties were offering solid efficiencies arguments, and if so, how the commission analysed those arguments.

The paper draws few conclusions as to why the two bureaus are more likely to reach one conclusion than another. However, Andrew Heimert, an attorney in the Bureau of Competition and one of the paper's authors, says parties should take the analysis as evidence of the commission's willingness to incorporate efficiencies arguments into its review of mergers.

"The basic take away message is: If you are a party with good efficiency stories, tell those stories to the commission," Heimert says. "They will be taken seriously."

Nicolas