European Antitrust Policy 1957-2004: An Analysis of Commission Decisions

25 July, 2008

This is hopefully really going to be interesting: MARTIN CARREE, et al., European Antitrust Policy 1957-2004: An Analysis of Commission Decisions (SSRN 2008).
“This paper provides a survey of European antitrust law enforcement since its foundation in the Treaty of Rome of 1957. We present a complete overview and statistical analysis of all 538 formal Commission decisions adopted up to 2004 under Articles 81, 82 and 86 of the European Community Treaty. We report a range of summary statistics concerning report route, investigation duration, length of the decision, decision type, imposed fines, number of parties, sector classification, and Commissioner and Director General responsible. The statistics are linked to changes in legislation and administrative implementation, thereby providing a historical overview that summarizes the Commission’s work in the area of antitrust. Against 166 of 538 decisions one or more appeals were lodged. We estimate the determinants of probability that a finding of an infringement is appealed against with the Court of First Instance and/or the European Court of Justice.”


Global Antitrust Review

19 July, 2008

ICC published the first piece of a new initiative: Global Antitrust Review. The articles include for example a piece by Bo Vesterdorf on Microsoft. See more on the website.

Hungarian perspetive: White Paper on Damages Actions for Breach of the EC antitrust rules

17 July, 2008

The Competition Law Research Centre (Hungary) submitted comments on the White Paper on Damages Actions for Breach of the EC antitrust rules. You can read them here.

Long-term supply agreements

17 July, 2008

Giuseppe Bellantuono (University of Trento) has an interesting entry on EU Energy Policy Blog.

I do not want to repeat what is said there, just wanted to mention two paragraphs:

“For a European observer, it is interesting to note that the same issues debated in the Morgan Stanley case surface in the antitrust proceedings of the European Commission and national competition authorities against long-term contracts. Does the different legal framework produce divergent outcomes ? Art. 81 EC Treaty allows competition authorities to shape contract terms like duration, volumes and termination rights so as to avoid market foreclosure. However, according to art. 81(3) negative effects can be assessed against efficiency benefits. Much the same role is played by art. 82 EC Treaty on abuse of dominance. However, it is very difficult to use this provision against unfair and excessive energy prices. From the point of view of black letter rules, there seems to be no reason to believe that American and European regulators should reach a different balance between freedom of contract and pro-competitive measures.
But the real difference lies in the range of competences available to the FERC and the Commission. The former has the power to regulate wholesale markets and can influence the behaviour of market players in several different ways. Therefore, it can foster competition without imposing rigid restrictions on long-term contracts. The latter can regulate wholesale markets to a very limited extent and relies on antitrust enforcement as the most powerful tool to build the Internal Energy Market. Hence, there is a serious risk that in European antitrust proceedings on long-term contracts considerations related to investment incentives will be downplayed. Moreover, inconsistent approaches could arise because of the decentred application of European antitrust rules. The different distribution of powers in the two multi-level regulatory systems could widen the gap with the American approach.” And many more interesting thoughts in the entry there…

Amendment of the Hungarian Competition Act before the Constitutional Court

17 July, 2008

The President of Hungary sent the amendment of the competition act to The Constitutional Court of the Republic Hungary for a so-called preventive review of unconstitutionality. The issue was the following:

The amendment to the competition act prescribed a new sanction for specific infringements (basically hard-core cartels). The sanction would be basically something you would call under UK law ‘director disqualification’ and would last for two years. The precondition for the application of the rule is twofold: 1) you must have a binding decision of the competition authority or a court on the competition law infringement; 2) the authority than adopts an injunction (order) that can be appealed.

The President of Hungary decided to refer the act to the Constitutional Court due to the following reasons:
The Hungarian Constitution guarantees the right to access to courts in criminal and civil cases in conformity with the European Convention of Human Rights. An other important right guaranteed by the constitution is the presumption of innocence. This is valid for preventive-repressive sanctions. The amendment to the competition act prescribes a sanction that is very similar to a sanction prescribed in the Criminal Code (suspension of licence/from profession). Although the sanction in the amendment is not criminal in a technical sense, but from a basic constitutional point of view it can be treated by analogy as a criminal like sanction. So the amendment is unconstitutional because it infringes the right to fair procedure/trial due to the fact that the order of the competition authority can be appealed only in an out-of-court proceeding (with no possibility for oral defence; only written submissions are allowed). This in itself infringes the principle of right to fair trial and the principle of equality of arms, since witness statements might have a very important role in such proceedings. Moreover, the amendment also infringes the constitutionally protected presumption of innocence due to the fact that there is no investigation by the competition authority whether a specific director was directly involved in the adoption of an unlawful practice, but the authority will automatically order an injunction against every director (executive officer) in the registry of companies. So the executive officer of the company has to prove his/her innocence by proving that he/she was not involved in adopting the unlawful act.

Comments: The problem with the reference to the Constitutional Court is that it delays the entry into force of other important provisions of the amendment. The preparation works lasted for more than a year and there have also been comments previous to the adoption of the amendment about the possible unconstitutionality. Whatever the outcome of the possibly long procedure is, several important streamlining provisions have been delayed.

Commission v Spain (E.On, Endesa, Acciona, Enel)

17 July, 2008

The ECJ handed down its judgement on the “national champions” case C-207/07, Commission v Spain. Unfortunately for people who do not read French and Spanish, there is only a press release. (Since I only do speak three languages and none of them is any of the two, I have to rely on the press release.)

Probably everybody heard about the ongoing struggel of national governments to shelter national champions from foreign takover. This is true for founding MSs (the present case, BSCH/Champalimaud; Holderbank/Secil/Cimpor; E-On/Endesa – Acciona/Enel Endesa; Autostrade/Abertis; Italian Banks, Pepsi/Danone; Suez/GdF; Mittal/Arcelor; Sacyr/Eiffage) and new MSs also (Unicredito/BHV, lex MOL).

This process led the Competition Commissioner to harshly criticise national governments (e.g. here and here) and even argued joining the suggestions that the 2/3 rule should be abolished from the Merger Regulation (see e.g. Scott Andrew: National Champions and the Two-Thirds Rule in EC Merger Control. in CCP Working Paper. 2006/6.)

One of the important judgements in this relation is the judgement of today. The ECJ explained in its press release: “First, the Court considers that Spain’s new system of prior authorisation limits both these fundamental freedoms. The system constitutes a restriction on the free movement of capital inasmuch as it is capable of deterring investors established in other Member States other than Spain from acquiring shareholdings in Spanish undertakings operating in the energy sector and is therefore liable to prevent or limit the acquisition of shareholdings in those undertakings. Furthermore, this new system entails a restriction on the freedom of establishment.” The usual justifications might be available, but in the present case public safety could not be relied on: “the Court states that public safety may be relied on only if there is a genuine and sufficiently serious threat to a fundamental interest of society. In principle, the mere acquisition of shareholdings in undertakings which carry on regulated activities in the energy sector and the acquisition of assets necessary to carry on those activities cannot in themselves be regarded as a genuine and sufficiently serious threat to security of energy supply. On the other hand, the system of prior authorisation which has been established cannot ensure security of energy supply in every case if a genuine and sufficiently serious threat to that supply arises after authorisation of the transaction in question has been granted. The Court therefore concludes that Spain has not shown that the system of prior authorisation which has been established is a measure that is suitable for securing the attainment of the objective sought by the Spanish legislature, that is, security of energy supply.”

The system was moreover not proportionate for several reasons.

It will be interesting to read the judgement itself. It seems like that not only the European Commission dislikes protectionist measures but the ECJ gave also a signal for the Commission to go on. This is especially interesting in the dawn for unbundling measures, where the competences of the Community are called into question by several academics. (e.g. STEFAN STORR, ‘Die Vörschläge der EU-Kommission zur Verschärfung der Unbundling-Vorschriften im Energiesektor‘, (2007) 10 Europäische Zeitschrift für Wirtschaftsrecht; or JÜRGEN F. BAUR, et al., ‘”Ownership Unbundling” von Energienetzen und der europäische Schutz des Eigentums’, (2008) 123 Deutsches Verwaltungsblatt; or JENS EBBINGHAUS, ‘Auf dem Weg zum echten Energiebinnenmarkt: Konsens im Ziel, Dissens über die Methoden – Zur Fachtagung des Instituts für Berg- und Energierecht der Ruhr-Universität Bochum am 21. 2. 2008’, (2008) 11 Europäische Zeitschrift für Wirtschaftsrecht.)

CISAC, collecting societies and competition law

16 July, 2008

Propably manyhave read the press releases on CISAC and the new plan of the European Commission to reform copyright protection , so I do not want to write about it. I just wanted to point out a link that might not be well known, but has valuable content:

MPI Book Project: Das Recht der Verwertungsgesellschaften in der Gemeinschaft

II.Bertelsmann and Sony Corporation of America v Impala

15 July, 2008

Right at the time when I started to write the second part of my entry on Bertelsmann and Sony Corporation of America v Impala, I found an overview by WilmerHale published yesterday. The auhtors suggest that ”

The ECJ’s judgment is significant in a number of respects. Most importantly, it emphasizes that the “Statement of Objections” (SO) is only a provisional procedural document in competition cases and does not carry any evidentiary weight of its own. The ECJ clarifies that the Commission abandoning its objections in light of the parties’ response should not be cause for increased judicial scrutiny, but rather is compatible with the SO’s very purpose of ensuring the rights of defense. These pronouncements not only restore the previous procedural dynamics to EC merger reviews, but also limit the potential for the misuse of SOs in other contexts, for example by plaintiff lawyers in private cartel follow-on actions.

In addition, the ECJ has for the first time endorsed in substance the CFI’s Airtours criteria for determining collective dominance, although it uses slightly different language and emphasizes the need to avoid mechanically applying the three factors in the Airtours test.

In institutional terms, the judgment is a rare example of the ECJ overruling the CFI in a competition case. Coupled with the ECJ not following Advocate General Kokott’s opinion recommending upholding the CFI’s judgment, this may signal that the ECJ has a greater willingness to take a more active role in competition cases at least when fundamental issues such as rights of defense are at stake.

If you want to get an idea about the judgement quickly just read the comment by WilmerHale.

Comparative overview of fine setting in plenty of jurisdictions

13 July, 2008

I know for many this might not be new, but I just came across it: It is an interesting reading I think.

Setting of fines for cartels in ICN jurisdictions. Report to the 7th ICN Annual Conference Kyoto April 2008. International Competition NetworkCartels Working Group Subgroup 1 – general framework.

I. Bertelsmann and Sony Corporation of America v Impala – C-413/06 P

12 July, 2008

Finally the ECJ seems to have settled the standard of proof issue in merger control cases: in the Bertelsmann and Sony Corporation of America v Impala case a few days ago. There was a considerable debate about the standard of proof in recent years. See for example the articles:

  • David Bailey: Standard of Proof in EC Merger Proceedings: A Common Law Perspective. in Common Market Law Review. 2003
  • Bo Vesterdorf: Standard of Proof in Merger Cases: Reflections in the Light of the Recent Case Law of Community Courts. in European Competition Journal. 2005/1.
  • Wright Kathryn: Perfect Symmetry? Impala v Commission and Standard of Proof in Mergers. in European Law Review. 2007/3.

The ECJ in the referred case argued that:

  • rules of evidence is a question of law (para. 44.)
  • there is no general presumption that a notified concentration is compatible with, or incompatible with the common market (para 48.)
  • Adelice 10 (6) is a specific expression of the need for speed and an exception to the general scheme (para. 49)
  • merger decisions must be supported by “sufficiently cogent and consistent body of evidence” (para. 50.)
  • there is no difference in burden of proof between the different típes of concentrations (horizontal, vertical, conglomerate), but the needed quality of evidence might differ (paras. 50-51.)
  • and finally: the burden of proof is balance of probabilities (“It follows that, where it has been notified of a proposed concentration pursuant to the Regulation, the Commission is, in principle, required to adopt a position, either in the sense of approving or of prohibiting the concentration, in accordance with its assessment of the economic outcome attributable to the concentration which is most likely to ensue.”) (para. 52.)

To be continued…