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Monday, 28 October 2013

Competition Summit 2013


The Competition Summit is going to be held in Belgium and organized by Premier Cercle. The conference will be expecting more than 100 highly educated speakers and 350+ delegates will quarrel about the new strategies to take over anticipated evolution which is related to the various topics such as the costs and effectiveness of compliance programs, remedies packages in merger control, antitrust in the BRICS, the proportionality of fines, selective distribution, fair use and abuse of patents, the future guidelines for technology transfer BER, cartels and leniency, dawn raids and much more. Visitors will get attracted and entertained through plenary sessions and workshops.

Visit the website for more information and registration:


Friday, 19 July 2013

Competition policy as a cattle market

As part of a package of consultation documents relating to the new Competition and Markets Authority (CAM), BIS has published its view of the strategic priorities that should inform the work of the CMA, which it refers to as the "Strategic Steer" or "Steer" for short ( . This is non-statutory, high level guidance to the CMA which is meant to last for a period of three years; in this case 2014-17 and a first version of it is presented.

The consultation document points out that providing competition authorities with more independence has been a key part of reform in the UK and elsewhere and that stakeholders regard independence as a key element to an effective regime. The provision of a Steer must, however, lesson the independence of the CMA because they are intended to have regard to this guidance (as well as being subject to various reporting requirements). As Julia Black put it in a different context, "Politics is often a key driver of what the regulator does."

The Steer asks the CMA to do four things:

  • Identify markets where competition is not working well
  • Enforce antitrust rules robustly
  • Play a key role in challenging government where it is inadvertently creating barriers to competition
  • Work with and through partner agencies to deliver positive competition outcomes

The most notable omission from the Steer is that it has nothing to say about merger policy (enforcement does not include merger control). This is not, in itself, an unreasonable position to have, although it is surprising that there are no comments in relation to process, given the dissatisfaction that has been expressed with the speed of UK merger control, most recently in relation to hospital mergers.

In relation to the first task, the CMA should identify emerging competition problems early and increase the number and speed of cases for the benefit of consumers and the wider economy. In deciding whether or not markets are working well the CMA should take into account consumer behaviour, especially where there are information problems or asymmetries of information. The government considers that consumer behavioural issues should be central to the CMA's analysis of whether markets are working well. The CMA should also take into account dynamic competition through innovation and the development of new business models. As part of this, the CMA should be willing to consider potential competition concerns in business to business markets; including the differences in power between firms in the supply chains (is this a reference to supermarkets?). Finally, the CMA should assess specific sectors where enhanced competition could contribute to faster growth. The examples given are knowledge intensive sectors, financial services and infrastructure industries.

As regards anti-trust enforcement, it is suggested that the CMA should have an appropriate mix of complex and simpler enforcement cases in order to maximise its impact. This is perhaps a suggestion that the CMA ought to take up more localised and smaller cases than, arguably, the OFT has done in the past. So we will perhaps see more cases like the one relating to Mercedes Benz commercial vehicles in the north of England, parts of Wales and Scotland.

As its third task, the CMA is to play a key role in challenging government where it inadvertently creates competition problems. The government's view is that it commits to accepting the CMA's views on how to promote competition. What this actually means is that there will be a presumption that all recommendations will be accepted "unless there are strong policy reasons not to do so." So, for example, the outcome of the HBOS/Lloyds TSB takeover would presumably remain the same under this policy.

Finally, the CMA is supposed to work with and through partner agencies to deliver positive competition outcomes. This means it should engage in a broad strategic dialogue with regulators and look for opportunities to encourage effective competition either by carrying out its own work or supporting the regulators' work. It should also work with the sector regulators, specifically including the Financial Conduct Authority, to build up its sector capabilities and to share competition expertise including through joint enforcement work, training and research. The CMA should also maintain and enhance its international leadership position.

The tone of the Steer is striking. The CMA is treated as an arm of the state, or perhaps government, which has a role to perform in changing the way the economy works. It does not simply have a policing role but it is supposed to identify areas of the economy where there are competition problems, albeit not breaches of competition law, and provide solutions to these problems. Two areas in particular seem to be singled out for attention: financial services and those other industries which are subject to sector regulation. Knowledge intensive industries is an interesting, although uncertain, idea, which might include pharmaceuticals and the health services, to give just two examples. Furthermore, it is clear that the government wants to see more enforcement activity than has taken place in the past, as well as greater numbers of market studies and investigations.

The three year timespan for the Steer is problematic. Since this is a non-statutory document, there would be nothing to stop a new government in 2015 from revising it and this could be done in time for October 2015, following the timetable of this consultation. Even if the Steer ran its full three years, given the timescale of most activities by the competition authorities in the UK, any review will probably only encompass one round of decisions. For market investigations, in its consultation document on reform of the competition law regime, BIS estimated that the average time for a market investigation was three years. Although the aim of the new legislation was to speed up this process, it is unlikely to make a big difference and, in particular, it is going to be unlikely that a proper assessment of the effectiveness of any remedies stemming from a market investigation, starting at the beginning of a review period, can be done.

The publication of the Steer should be welcomed because, if the government is going to have general view about the direction of travel of the CMA, it is right that this should be published. It does represent a different approach to the competition authorities than has prevailed in the last decade. It will be interesting to see if the CMA can deliver in terms of greater enforcement activity and, if it does so, whether or not this will be welcomed by government and business. As the old saying has it, "Be careful what you wish for …"

Wednesday, 17 July 2013

Re thinking the de minimis rules

In the light of Case C-226/11 Expedia, judgment of 13 December 2012, the European Commission is consulting on a revision of the de minimis Notice ( This is a sensible idea, particularly as there is some tension between the current version of the Notice and the case law of the EU courts. The Expedia case opens up the opportunity to align the Notice with the case law. There is to be no change in the market share thresholds beneath which agreements which may have the effect of restricting competition will be considered not to have an appreciable effect on competition and thus are outside of Article 101(1) TFEU. The major change is found in para, 12 where the Commission says that the market share thresholds:

"… do not apply to agreements which have as their object the prevention, restriction or distortion of competition within the internal market. For instance, as regards agreements between competitors, this means that the Commission will not apply this Notice to, in particular, agreements containing restrictions which, directly or indirectly, have as their object: a) the fixing of prices when selling products to third parties; b) the limitation of output or sales; or c) the allocation of markets or customers. Likewise, the Commission will not apply these market shares thresholds to agreements containing any of the restrictions that are defined or listed as hardcore restrictions in any current or future Commission block exemption regulation, which are considered by the Commission to generally constitute restrictions by object."


This statement is on the one hand in line with the Court's case law as it follows the Expedia case in taking the view that agreements with the object of restricting competition must always have an appreciable effect on competition. On the other hand, there is a problem because, as Advocate General Mazák pointed out in Case C-439/09 Pierre Fabre, the concept of an agreement with the object of restricting competition is different from that of a hardcore restriction and that just because an agreement, or a clause within it, does not meet the criteria for a block exemption, it does not follow that it is necessarily in breach of Article 101(1) TFEU. The word "generally" does not provide the Commission with a get-out, since the burden of proof under Regulation 1/2003 is on the authority alleging breach of the competition rules.


There are a number of responses to this document. The Expedia case has been criticised for being a backwards step insofar as a more economic approach to competition law is concerned (for one example see Pinar Akman at: ). The Commission's proposed new Notice will thus simply exacerbate the problem. This criticism can be overstated as all competition law regimes are a compromise between administrability and principles. It is not unreasonable to say that there are certain agreements which have no redeeming characteristics and, because of this, there is no point in having a discussion about their effects – they may not have any negative effects because of the parties' weak market position, but they have no redeeming characteristics and so no loophole should be allowed.


Leaving this point aside, there are potential problems with the Commission's approach. In order for this approach to work effectively, there should be a clear, and arguably limited, list of agreements which are considered to have the object of restricting competition. This is not the case, especially as some national competition authorities have taken an expansive approach to this category of agreements. In Expedia the contract at issue could have been characterised as single branding while in Case C-32/11 Allianz Hungaria at stake were contracts which offered incentives for selling other products. The issue approach is further muddied by the Commission's assertion that, as far as it is concerned hardcore restrictions, present or future, are to be considered the equivalent of agreements with the object of restricting competition. While this is true of some of the hardcore restraints, it will not necessarily be true for all of them. This is potentially an acute problem, as it seems unlikely that the Commission will spend its time and resources on small agreements with limited significance at EU level. Enforcement will therefore be in the hands of the national competition authorities who may have differing interpretations of what constitutes an object agreement.


This combination of approaches between the Court, the Commission and NCAs suggests that more, relatively smaller, agreements will be caught by Article 101(1) TFEU and the enforcement process. Given as well the decision in Case C-681/11 Schenker, where the Court was very unsympathetic to an argument that there should be no liability for clear anti-competitive activity which the undertakings thought, on the basis of legal advice, technically escaped the prohibition, there should be a strong incentive on undertakings to review any agreements which could arguably fall within EU competition law.


Tuesday, 4 June 2013

Delay in competition cases

It is well known in the competition law community that the General Court of the EU has a significant backlog of cases and that it takes around four years on average for it to hear a competition case. The next question that follows from this is, at what point do such drawn out proceedings constitute undue delay which would breach the requirements of Article 6 ECHR and Article 47 of the Charter of Fundamental Rights? The issue has recently been tackled again by Advocate General Sharpston in her opinion on the appeals in the industrial bags cartel case (Case C-58/12 P Groupe Gascogne SA v Commission, 30 May 2013). The bare facts of the case are that the Commission took its prohibition decision at the end of November 2005. Gascogne lodged its appeal in February 2006 and the written procedure ended in July 2007. In September 2010, the Registry told Gascogne that the case had been allocated to the Fourth Chamber of the GC and the case was heard in February 2011 and judgment was delivered in November 2011. Critically, there seems to have been a period of three years when nothing happened. Gascogne argued that the length of the proceedings was excessive and that the judgment of the GC should be quashed or the fine should be reduced as a consequence of the financial burden imposed on it by the excessive duration of the proceedings.

The first question, therefore, was how to determine whether or not the period was excessive? The starting point was the criteria set down in Case C185/95 P Baustahlgewebe v Commission [1998] ECR I8417 which are: importance of the case to the applicant, the complexity of the case, the applicant's conduct and the conduct of the competent authorities. Rather than focusing on the overall length of time taken, AG Sharpston took the view that she should look at what the GC does, the constraints under which it functions and what periods should be subjected to greater scrutiny. Importantly, she decided that the period from the submission of the application to the end of the written stage of the proceedings should be disregarded because of the problems of translating documents into the working language of the court. Some months should also be added for obtaining a translation of the last pleadings and any time spend by the court in active case management should be ignored. Difficulties caused by case overload, no matter how real, should be ignored. As a general approach she thought that "once more than two years have elapsed since the end of the written procedure, with no active case management and no convocation of the parties to a hearing, I would be minded to regard the delay as excessive and would require persuading otherwise." This is, however, in the context of her having said that there are no magic figures and that matters do have to be decided on a case by case basis. Looking at this particular case, she thought that it had taken about eighteen months too long, largely because of the three year period when nothing seemed to have happened.

If this was the case, then what was the remedy? In some previous cases, for example, Baustahlgewebe, the European courts have taken the view that there should be a reduction of the fine, largely on pragmatic grounds and praying in aid the unlimited jurisdiction to review fines contained in Regulation 1/2003. Advocate General Sharpston was uneasy with this approach, both on conceptual and legal grounds, and proposed an alternative. She recommended taking the approach followed in Case C385/07 Der Grüne Punkt [2009] ECR I6155 that a separate action for damages should be lodged before the GC which would examine whether the claimant has suffered injury or loss, whether there is a causal link between the injury and the failure to adjudicate within a reasonable time and to quantify any damage. In her mind, there were two obvious objections to such an approach. First, the extra amount of time such a process would take and, secondly, the fact that the GC would be the party against who the breach was alleged while at the same time deciding upon it. She dismissed the first object easily, simply saying that she was sure that the GC would hear such a case "expeditiously". In response to the second objection, she thought there were five reasons to think that the GC would be sufficiently impartial. First, it was not responsible for paying any monetary penalty, secondly, the damages claim would have to be heard by a different chamber from the one that heard the substantive case, thirdly, the decision that there had been undue delay would have been that of the CJEU, not the GC, which would simply be quantifying the damage, fourthly the Commission would be responsible for defending the EU interest before the GC and, finally, there was always the possibility of appealing the GC decision.

There are a number of aspects to this opinion. There is a clear view that a number of the problems faced by the GC stem from the lack of action by the Member States. An approach which effectively disregards the time spent on the written procedure does seem very generous to the GC. The idea that nothing substantive can be done with the case while the written process is continuing is disturbing. As regards the choice of remedy, which she identifies as a choice between two imperfect options, one obvious response is that the cure makes disease worse. If part of the problem is judicial overload, providing another means of access to the GC, no matter how small the line of cases, is simply going to exacerbate the issue. It would certainly be neater if a way could be found for the damages claim to be assessed by the CJEU, rather than requiring a new process to be started. Furthermore, the arguments about impartiality are not that convincing. To use a less elevated literary reference than AG Sharpston, she seems to be expecting the GC to behave like Dobby the house elf in Harry Potter, who punished himself for disobeying his masters.

Friday, 3 May 2013

Time and EU competition law

As it has been a relatively slow week for activities on the competition law front, although the Enterprise and Regulatory Reform Act has now hit the statute book, I thought it was worth reflecting on two pieces of information: the publication of the 2012 annual report of the Court of Justice of the European Union and the publication of the final version of the draft accession agreement of the European Union to the European Convention on Human Rights.

Taking the Court of Justice's annual report first, this reveals that in 2012 the General Court had 34 new competition cases and 36 new state aid ones (down from 67 in 2011). It completed 61 competition cases and 63 state aid cases. It took 48.4 months to complete competition cases and 31.5 months for a state aid case. The Court of Justice, for its part, dealt with 30 competition cases and 28 state aid cases in 2012. Appeals took 15.3 months to hear, while preliminary references took 15.7 months. The record of the General Court in competition cases is very poor and does not look to be improving.

When the European Union accedes to the ECHR, this will allow parties to bring allegations that the procedures by which EU competition law are enforced are not compatible with the ECHR to the European Court of Human Rights. It is clear from various commentaries that there is a substantial amount of dissatisfaction with the procedures used by the European Commission and the role of the EU courts in reviewing those decisions. So, once the Accession Treaty is signed, we can expect that there will be some cases taken to the Court of Human Rights in order to test out these arguments. Given the principle of exhaustion of remedies, these cases will have to be argued before the General Court and the Court of Justice so taking some five years to get to the Court of Human Rights. It will take the Court of Human Rights some time to hear such a case. Unlike the Court of Justice, the Court of Human Rights does not publish information on how long cases take, but we do know that there is a significant backlog. Menarini, for example, took just over three years, although the first equivalent case argued against the European Commission might be given a higher priority. So, let us say maybe seven years before the issue is addressed by the Court of Human Rights.

Although competition law cases are complicated, this does not seem to be an acceptable position, particularly if you add in the time it takes for the European Commission to reach a decision. The initial complaint in Intel, which may be an unusual case, was lodged back in 2000, the Commission's decision came in 2009 and the General Court's judgment on the appeal is still awaited. It is not surprising in these circumstances that the European Commission is showing an increasing preference for dealing with Article 102 TFEU cases via commitment decisions and that undertakings are prepared to cooperate with this approach. Although there are reforms which could improve the position, this does not seem high up anyone's agenda, so perhaps it is best just to leave the last word with T. S. Eliot:

Time for you and time for me,


And time yet for a hundred indecisions,


And for a hundred visions and revisions,


Before the taking of a toast and tea.


Friday, 26 April 2013

First thoughts on the Competition and Markets Authority

I attended the Competition Law Association's annual Burrell lecture a couple of days ago. The lecture was given by Alex Chisholm, the chief executive designate of the Competition and Markets Authority (CMA) and will be published on the CLA's website in due course. In advance of that, it is worth giving some brief impressions. The first was that this was a cautious start. I was going to say like a typical civil servant, but typical UK civil servants don't have an MBA from INSEAD, senior level business experience and running the Irish communications regulator on their cvs. A cautious approach is not a bad thing, especially when you have only been in post for a few weeks. Secondly, he seemed to say that there would be a step up in the application of competition in regulated sectors of the economy, for example, energy. This would require effective coordination between the CMA and the sector regulators. Quite how this is reconciled with the CMA's role as an appeal body for price control issues is a good question. Thirdly, there was much more discussion of the role of the CMA in enforcing consumer law than I had expected, which may be just my own misunderstanding of the CMA's role going forward, but it highlighted the continuing issue of coordinating competition and consumer policy. Fourthly, he seemed happy with the OFT's recent procedural innovations and hinted, intriguingly, that the CMA would consider whether there was a role for its panellists in enforcement decisions after a statement of objections was issued. The final point was that there was a lot of work to be done to get the CMA fully functional for April 2014 and the plan was that consultations on CMA procedures would start sometime in July – just early enough to ruin someone's holiday!

Friday, 19 April 2013

Hospital mergers

The proposed merger between Royal Bournemouth NHS Foundation Trust and Poole NHS Foundation Trust is the first such merger to have been considered by the Competition Commission. The process seems to have run into some difficulties, as the CC has issued s. 109 notices to the parties requiring them to provide information and documents. It has followed that up with an extension to the reference period of the inquiry until the information is provided to the satisfaction of the CC. See:
It is unusual for the CC to issue in s. 109 notices and extend an inquiry because of a failure to comply with them. In two previous cases where this was done, Sports Direct/JJB and BBC Worldwide/Channel 4/ITV, in the former the parties were unable to comply because they had been subject to investigations by the OFT in a separate cartel investigation while in the latter negotiations between the parties were still continuing. In both these cases, the CC was prepared to accept that these circumstances made the failure to comply with the s. 109 notice reasonable. No such statement has been made in this notice. This is mysterious, particularly because this notice comes into force just before submissions were supposed to be received in advance of the provisional findings (originally due in late April). It is not normally in the parties' interest to delay a merger decision (market investigations are perhaps a different matter) particularly when it is argued that one of the parties is failing financially. Reading between the lines, the parties may be having difficulties in explaining what the benefits of the merger are going to be, an issue on which Monitor gave the merger a mixed report.

Sunday, 14 April 2013

Can advice from lawyers excuse a cartel?

Case C-681/11 Schenker and Co AG and others, opinion of AG Kokott of 28 February 2013, revolves centrally around the question of when an undertaking can rely on legal advice to protect it from being found guilty of infringements of competition law, something of great practical importance. The case involved an Austrian freight forwarding cartel which had agreed on prices between its members. The cartel was in existence before Austria joined the EEA in 1994 and the EU in 2004. To avoid the problems created by EU competition law on joining the EEA, the cartel members had restricted its operations to the territory of Austria. They also applied to the Austrian Cartel Court for approval of the cartel. The matter was referred to a Joint Committee for Cartel Matters, which provisionally thought that the cartel did not affect inter-state trade but ultimately ruled that the cartel was not suitable for registration because it was not justified from the perspective of the national economy. A subsequent application to the Cartel Court to get the cartel registered as a minor cartel was, however, successful. When a new Austrian law on cartels was due to come into force in 2005, legal advice was taken on the cartel which was to the effect that it was still a minor cartel if its market share was under 5%. Then in 2007, the European Commission took action against cartels in international freight forwarding and the Austrian cartel dissolved itself. This was not the end of the story because the Austrian competition authority took action against the cartel, arguing that it had been operating unlawfully between 1994 and 2007. The cartel members defended themselves on the grounds that they had sought legal advice and had been approved as a minor cartel.

AG Kokott took the view that everything turned on the question whether the undertakings participating in the cartel could assume, in good faith, that their price agreements did not affect trade between Member States and thus fell solely within the scope of Austrian national antitrust law, and not also within the scope of European competition law.

She starts her discussion by considering the general principles that ought to be applied in this area. She begins by emphasising the similarities in this context between competition law and criminal law and that, in criminal law, there is a general principle of no crime without culpability or fault (nulle poena sine culpa). Her interpretation of the case law is that this principle holds in EU law and is a fundamental right which is common to the constitutional traditions of the Member States and is implicit in Article 48(1) of the Charter of Fundamental Rights and Article 6(2) ECHR. According to this principle, you can only be convicted of a breach of competition law if, as well as meeting the objective conditions, the matter can be attributed to you subjectively, that is, there must be some form of fault or culpability. This means that there may be circumstances, although these will occur only very rarely, where it must be recognised that that an error of law committed by an undertaking, in evaluating the legality of its behaviour, must be considered to be excusable or unobjectionable. Not, apparently, an argument that would be recognised in English criminal law.

One of the questions in the present case was whether or not the legal advice that the undertaking had received ought to be taken into account when considering its culpability. There was fierce disagreement between the parties, with the undertakings arguing "yes" and the Commission, the Member States and the NCAs arguing the opposite. In relation to this argument, AG Kokott drew a distinction between the system pre 2004, when a notification system was in place, and post 2004 when notification of agreements was no longer available. Under the current system, undertakings are expected to make their own assessment of the legality of their behaviour. In that context, she said:

 "It is not acceptable, on the one hand, to encourage undertakings to obtain expert legal advice but, on the other, to attach absolutely no importance to that advice in assessing their fault in respect of an infringement of EU antitrust law. If an undertaking relies, in good faith, on – ultimately incorrect – advice provided by its legal adviser, this must have a bearing in cartel proceedings for the imposition of fines."

This was, however, not a free pass because AG Kokott laid down six minimum conditions that had to be met before an undertaking could rely on legal advice to protect it against liability:

  1. The advice must always be obtained from an independent external lawyer.
  2. The advice must be given by a specialist competition lawyer who regularly works for clients in this field.
  3. The legal advice must have been provided on the basis of a full and accurate description of the facts by the undertaking concerned.
  4. The opinion must deal comprehensively with the European Commission's administrative and decision making practice and with the case law of the EU courts.
  5. The legal advice must not be manifestly incorrect (a role for the in-house lawyer here). More diligence is expected of larger undertakings. In any event, every undertaking must be aware that certain anti-competitive practices are, by their nature, prohibited, and in particular that no one is permitted to participate in 'hardcore restrictions', for example in price agreements or in agreements or measures to share or partition markets.
  6. The undertaking acts at its own risk if the opinion shows that the law is unclear.

In order to rely on the decision of a national competition authority or court, there were five minimum conditions:

  1. The decision must be taken by an NCA with the powers to apply EU law or by a national court. So, for example, a decision of the Competition Commission would not meet this condition. The case does not need to have been referred to the CJEU for a preliminary ruling; a decision of a national court may generate a legitimate expectation.
  2. It is necessary that the undertaking concerned has previously informed the national authority comprehensively and truthfully of all relevant circumstances if it was already participating in the original administrative or judicial procedure.
  3. The administrative or judicial decision must concern exactly the same matters of fact and law in respect of which the undertaking concerned invokes an error of law precluding liability. This is not necessarily a straightforward issue, as experience with follow-on actions demonstrates.
  4. The decision of the NCA or the national court must not be manifestly incorrect. She emphasises, again, that undertakings are expected to be aware that certain anti-competitive practices are prohibited by their very nature.
  5. An undertaking's expectations created by an administrative or judicial decision are legitimate only if that undertaking acts in good faith.

As regards the application of these principles to the case in hand, AG Kokott was quite dismissive to the undertakings' arguments. Given that the cartel started under the old procedural system, the members of the cartel had the opportunity to apply to the Commission seeking an individual exemption, which they had not done. In addition, the legal advice on which the undertakings had relied was incomplete and did not deal with the substantive issue of the application of Article 101 TFEU. As regards the decision of the Cartel Court, this was based on Austrian, not EU law. Critically, the Cartel Court did not comment on the compatibility of the cartel with EU law.

There are a number of very interesting aspects to this opinion. AG Kokott very confidently draws a parallel between competition law and criminal law, something which would have been unlikely a number of years ago and is still contrary to the express statement of Article 23(5) of Regulation 1/2003 in relation to fines. From this parallel, she derives the application of a general principle that there is no liability without culpability, meaning fault. Although this can be taken as a general principle of criminal law it should not be pushed too far given the increasing reliance, at least in the UK, on crimes of strict liability. Furthermore, the Enterprise and Regulatory Reform Bill clause 47 amends the cartel offence in s. 188 Enterprise Act 2002 to remove the requirement of dishonesty. The new s. 188A provides circumstances when the cartel offence will not be committed, broadly when customers are told or the arrangements are published. In a formal sense this is not removing the idea of culpability, but it does reduce its content, from one focusing on the substance of the offence to one which focuses on procedural matters.

The analogy with criminal law should not be pushed too far. Competition law is not only about simply enforcing prohibitions. It is also about trying to ensure that markets function well. This is, after all, the entire point of the market investigation provisions of the Enterprise Act 2002 and the point is made explicitly by the Competition Commission in its new guidelines on market investigations. Sector investigations in EU law serve a similar function and subsequent enforcement actions by the European Commission have been presented as following up the findings of that enquiry: see . The increasing use of more informal procedures, such as settlements and commitment decisions, can be seen as the European Commission moving away from a classical view of competition law as a version of criminal enforcement towards a looser, more regulatory, approach. The closer competition law gets to criminal law, with the associated procedural protections, the stronger will be the incentive on the European Commission to try and escape these procedural protections.

The minimum conditions set out by AG Kokott for reliance on legal opinions seem sensible and reasonable. They are a bit like UEFA's financial fair play rules in that they will probably entrench the position of the leading specialist competition lawyers and partnerships given the emphasis on advice being given by an external specialist who deals comprehensively with the law and practice in the area.

A final point is the emphasis that AG Kokott places on how undertakings must be taken to be aware that certain agreements have, as their nature, the object of restricting competition. The implication, which is consistent with her views in previous cases, is that these sorts of agreements are very bad, with no redeeming characteristics. There is, however, an interesting ambiguity in the opinion because she says that no one is permitted to participate in "hardcore" restrictions. Although she refers to price fixing and market sharing within the text of Article 101 but directs readers to the European Commission's de minimis Notice in order to understand the idea of a hardcore restriction. The Notice of course has a more extensive definition of hardcore restraints which extends beyond what might be called obvious restrictions on competition to a variety of hardcore restrictions in relation to distribution agreements. The other problem is that this blurs the distinction between agreements with the object of restricting competition and hardcore restraints which is insisted upon by AG Mazak in Case C-430/09 Pierre Fabre Dermo-Cosmetique and Advocate General Cruz Villalon in Case C-32/11 Allianz Hungaria.

All of this would seem to undermine the idea that undertakings should know there are certain agreements which have as their nature the object of restricting competition given that there is no certain list of such agreements. Given the context of this case, it is perhaps understandable why the de minimis Guidelines are singled out, but does this mean that in other contexts, other Regulations and Guidelines are equally relevant? The pragmatic answer for an undertaking is, if you are uncertain about the status of an agreement, to seek legal advice from an expert competition law practitioner – which is good news for those lawyers who fall within that category!

Monday, 8 April 2013

Illegality and object agreements

Case C-68/12 Protimonopolny urad Slovenskej republiky, judgment of 7 February 2013 (CJEU), is a case coming from the Slovakian Supreme Court. Here three Slovakian banks had agreed not to deal with a Czech competitor of theirs in the field of cashless foreign exchange services. The Slovak competition authority had fined them for breach of Article 101 TFEU and the corresponding Slovak law. The banks defended themselves in front of the Slovak courts arguing, among other things, the activities of their competitor were illegal under Slovak law and so this meant that there was no breach of Article 101 TFEU.

The CJEU dismissed this argument quite briefly, without needing an opinion from the Advocate General. This was an agreement with the object of restricting competition and the banks had never raised the illegality point before the competition law investigation. Moreover, it was for the public authorities to ensure compliance with the law. In this case the issue was not straightforward, because the Czech and Slovak authorities had disagreed over the question of the need for a licence.

This is an easy case. Even if the illegality point is accepted, the appropriate response from a bank would be to either report the issue to the appropriate authorities or to cease trading with the allegedly offending undertaking. The one thing that should not be done is to agree collective action with your competitors to, in effect, remove another competitor from the market!

Friday, 5 April 2013

State aid and the de minimis regulation

The European Commission is consulting on a new version of the de minimis Regulation on state aid. It is proposed that the basic de minimis threshold of €200,000 for any one undertaking is to remain. As well as attempting to clarify and simplify the rules, a significant change is that Member States will be required to set up their own registers of de minimis aid which should be fully active from January 2016. For full details see: The consultation closes on 15th May.

Thursday, 21 March 2013

How to decide when an agreement has the object of restricting competition

In Case C-32/11 Allianz Hungária Biztosító Zrt, v Gazdasági Versenyhivatal, judgment of 14 March 2013, the CJEU appears to have suggested a very different approach to determining when agreements have the object of restricting competition. This case was a preliminary reference from the Hungarian Supreme Court in relation to a dispute between the Hungarian competition authority and two insurance companies and the Hungarian association of authorised car dealers (GÉMOSZ) who also act as repair shops. The two major insurance companies had entered into contracts with the dealers whereby the rate of payment that the dealers received for repairs was linked to the amount of insurance that they sold. The question was whether or not these, vertical, agreements had as their object the restriction of competition? Although there are a number of issues in the case, this note just focuses on one of them.


In para. 36 of the judgment the court said:
"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 …" The court went on to say that the agreements would amount to a restriction of competition by object in the event that the referring court found that it is likely that, having regard to the economic context, competition on that market would be eliminated or seriously weakened following the conclusion of those agreements. In order to determine the likelihood of such a result, that court should in particular take into consideration the structure of that market, the existence of alternative distribution channels and their respective importance and the market power of the companies concerned. This would seem to licence a much broader inquiry into the factual circumstances then has been common in the past. Once a court, or competition authority, needs to examine market structure, or market power, it must make some attempt to define the market, something which may well be controversial and time consuming. In order to consider issues of market power, it is necessary not only to consider the market as it exists, but also question of how the market might develop, that is, what are the possibilities of entry? If the court has to understand alternative distribution channels, it must consider what they are and their effectiveness.


If this does represent a change in approach, it raises some difficult questions. Will it require a re-evaluation of previous case-law? Would the agreements in Consten & Grundig, for example, fall foul of this new test? Alternatively, this test is not meant to disrupt previous case law but should only be applied to agreements which seem problematic but do not fall within the established categories of object agreements, such as absolute territorial protection. What type of agreements would fall to be treated thus could be a difficult question. As the Advocate General noted, the agreements in question were not ones that, in the absence of a dominant position, competition law had previously established as being obviously problematic. On a technical level, the second sentence of para. 36 is not supported by the case cited (Case C-226/11 Expedia).


The decision suggests that there are some disagreements within the Court of Justice on how to approach object agreements and it increases the uncertainties in this area. Since there seem to be a steady stream of these cases at the moment, it is unlikely to be the last word.


Competition Law and UK retail banking

I have just finished a draft of this paper, which I will be presenting at the Socio-Legal Studies Association conference in York next week: or as much of it as can be done in twenty to thirty minutes. The full version is available on SSRN:

Friday, 15 March 2013

Cartel enforcement

Just before Christmas, Ali Nikpay, the OFT's senior director of the Cartels and Criminal Enforcement Group gave a very interesting talk to the Law Society Anti-trust section which can be found here: Although this is somewhat belated, I thought I would mention it because it is an excellent overview of the work of the OFT in relation to criminal enforcement, along with some thoughts about what the future might bring. The focus of this group is on criminal cartels, narrowly defined and criminal consumer law enforcement (a function which will presumably disappear following the creation of a Competition and Markets Authority). The whole speech is worth a read, particularly if you are interested in the OFT's current consultations on leniency and recently announced fining guidance.

The aim of the OFT is to develop a more proactive approach in this field, using the investigative powers that it has, including covert surveillance powers. There is also a warning that more director disqualification cases will be pursued.

As regards the criminal cartel offence, Ali Nikpay takes the view that the well-known enforcement problems are because of the requirement of dishonesty. He puts forward a strong case that reform was necessary and that the changes will not widen the offence unduly. On the former point, he argues that the requirement of dishonesty causes problems because "white-collar" crimes lack obvious indicators of dishonesty which means that likelihood of persuading a jury of the dishonesty of the conduct in a cartel case is far lower than many commentators assume and has been a major factor in the OFT's decision, in consultation with leading counsel, to close most of the criminal cartel cases they have launched so far. In addition, this has allowed defendants to create "dishonesty based defences", such as, "I was trying to protect jobs", "I was only following orders" etc. Despite these obstacles, he predicts one cartel case in the next year and another one to two in the next two to four years.

He makes the very god point that the criminal cartel offence is defined narrowly and does not catch, for example, vertical agreements and concerted practices. It is aimed at a small set of activities. He has confidence in the proposed publication exclusion because of its limited scope: only those customers directly affected by the offence need to be notified, only detail necessary to identify the existence of the conduct need be published and it only has to be published when the agreement is implemented. The example he gives is of a research and development joint venture and he emphasises that there would be no need to publish confidential information.

He is also confident that the new defences introduced into the offence will be effective. These are:

  • the individual did not intend to conceal the arrangements from customers


  • the individual did not intend that the arrangements would be concealed from the CMA


  • before entering into the agreement, the individual took reasonable steps to ensure that the arrangements would be disclosed to a professional legal adviser for the purpose of obtaining advice about them before they were made or implemented (the 'professional advice defence').


Although the boat has sailed on this, I am still uncomfortable at the thought of sending people to prison, even if they have not acted dishonestly. I also think that the argument that dishonesty makes the offence very difficult to prove would be stronger if there were some actual examples of failing to prove this, although it's easier to write this than be responsible for a policy which would involve going against counsel's advice and bringing failed prosecutions (not a recipe for a successful career).

Public interest mergers

I have recently completed a draft, emphasis on draft, paper on public interest mergers which looks at, among other things, HBOS/Lloyds and News International/BSkyB. Having just worked out this new-fangled SSRN thing, you can find it here: Any comments are very welcome.

Friday, 25 January 2013

Environmental concerns, non-economic objectives and washing machines

Having just marked a whole bunch of essays where students discussed the role, if any, of non-competition concerns in Article 101(3) TFEU analysis, which involved a discussion of the CECED decision by the Commission, I thought the following link was of interest: It tells the story of what happened when the US Department of Energy increased standards for washing machines in 2007. The short version is that sales of less efficient washers reduced, although their prices increased and sales of more efficient washing machines increased significantly. The big point, however, is that the prices of the more efficient washing machines fell sharply around the time of the policy change. To quote: "… the price declines of the efficient washers was larger the price increases of the less efficient washers. And while overall quality of washers increased, average prices declined. Thus, not counting public and private benefits from energy saving, it seems pretty clear that consumers gained substantially from the policy change."

This is interesting because the CECED decision is often discussed as a case where the environmental objectives, energy efficiency, overruled or were at least of equal importance to the economic benefits to consumers, which were said to be less energy consumption and therefore cheaper bills. The analysis of the US case suggests that actually, and unexpectedly, there was no necessity to discuss environmental benefits – there were concrete economic benefits for consumers. It is politically useful to show competition law marching in step with environmental policy, but that is another issue.

My thanks to the Twitterfeed of Mark Thoma: @MarkThoma

Monday, 21 January 2013

The singing Professor

Congratulations to Amelia Fletcher, who has been appointed Professor of Competition Policy at the Centre for Competition Policy, University of East Anglia. The CCP's take is here:

Professor Fletcher's side-line can be found here:
Any other competition law and policy practitioners with interesting alternative activities?

St Gallen Competition Conference

St.Gallen International Competition Law Forum ICF - April 4th and 5th 2013

The 20th St.Gallen International Competition Law Forum ICF will be held on April 4th and 5th 2013. Once more, it will feature a thrilling selection of hot topics in current competition law issues and some of the most distinguished speakers in the field, including Joaquín Almunia (Vice-President of the EU Commission and Commissioner for Competition), Andreas Mundt (President of the German Competition Authority) and William Kovacic (Former Commissioner of the U.S. Federal Trade Commission ). Taking place in one of Switzerland's most beautiful cities, the St.Gallen ICF gives you the opportunity to meet, discuss and mingle with fellow competition lawyers and leading competition law experts from all over the world. Further information including a detailed programme are available on the conference website:

Topics:                         Current issues and developments in competition law
Date:                         April 4th and 5th 2013
Location:                         St.Gallen, Switzerland
Registration:                 Registration is now open on our website (

Wednesday, 9 January 2013

Regulators and competition law enforcement

One of the slightly mysterious aspects of competition law enforcement in the UK is that, although a number of the independent regulators have concurrent competition powers alongside the OFT, they only use them rarely. The BIS consultation on the reform of competition law in the UK identified only two infringement decisions and there have not been any since the consultation paper. As one of the aims of the reforms has been to increase the number of enforcement decisions, the Enterprise and Regulatory Reform Bill included a number of changes to the legislation in order to encourage the regulators to use their competition law powers (contained in Clause 54 and Schedule 14).

Before Christmas, the government introduced a new clause into the Bill ( at column GC 509). This clause would allow the Secretary of State, using a statutory instrument, to amend the Competition Act and/or the Enterprise Act to remove the concurrent competition powers that the regulators currently have (with the exception of Monitor). There are certain consultation requirements and the affirmative resolution procedure would have to be followed. The Minister, Lord Marland, explained that this was a reserve power, to be used if the new concurrency arrangements do not work or if there was "abuse of the system". This is a strong signal to the regulators that they will have to do better.

It is easy to state this, but more difficult to work out what it means. Presumably the regulators will not only have to bring more cases, but these cases will have to be successful, because bringing lots of unsuccessful cases would show that you are not using the system properly. How many cases could be expected in particular sectors of the economy? Some of the regulators, Ofwat, the CAA and the Northern Ireland regulator, might well struggle to generate all but the occasional case, for perfectly understandable reasons. The focus will presumably be on the performance of Ofcom, Ofgem and the Rail Regulator. Ofcom in particular, may well be under the spotlight, given that the CMA is to be chaired by Lord Currie and the chief executive designate, Alex Chisholm, has come from the Irish communications regulator. More decisions would mean more appearances in front of the CAT, something Ofcom, in particular, will not relish.

Who knows what the target will be? Where will the Minister obtain the information to assess the regulators' performance? Government departments are not in close contact with the relevant industries, except perhaps in rail, and the specialist consumer bodies have been closed down. If the nuclear option is exercised, there will be great pressure on the CMA to bring a case or cases soon after this has been done.

This is a policy based on assumption, for which there does not seem to be any evidence, that there are a number of competition problems in these industries, which the regulators need to solve through using their competition law powers. As Lord Berkeley spotted in the debate on the clause, this is a government impinging on the independence of the regulators through a strong suggestion that there are a series of correct decisions to be made.