Antitrust & Competition Policy Blog

The Antitrust Activism of the European Commission in the Telecommunications Sector

Alexandre De Streel, University of Namur describes The Antitrust Activism of the European Commission in the Telecommunications Sector.

ABSTRACT: This paper analyses the role of the European Commission in taking cases of abuse of dominance in the telecommunications sector since its liberalisation in 1998. The argument is that the Commission has played a very active antitrust role, in particular at the beginning of the liberalisation, and that its activism was blessed by the EU Courts. Indeed, the Courts see competition law as a complement, and not a substitute, to regulation. They have set a relatively low threshold for proving margin squeeze, the most common form of abuse in telecommunications; and they have allowed wide discretion to the Commission to deal with the inaction or failures of national regulatory authorities (NRAs).
It is further submitted that such activism was justified in the early days of liberalisation when the telecommunications markets were still very concentrated, and when the NRAs were in their infancy and sometimes captured. However, this activism is less justified today because, on the one hand, competition in the sector has increased, and on the other hand most anticompetitive practices can be, and should be, addressed by the NRAs. Today, the Commission should instead concentrate on consolidating the expertise and the independence of the NRAs, and it should rely on its extensive oversight of NRA decisions to prevent violations of the competition law.  
The paper is divided into five sections. The first section reviews the main EU cases of abuse of dominance in the various telecoms segments. The next three sections deal with the main substantive and institutional issues raised by those cases. The second section describes the approaches of the Commission and the EU Courts on the relationship between competition law and sector-specific regulation. The third section analyses the tests established by EU Courts to control margin squeeze and refusal to deal in post-liberalised markets. It also compares them with the tests proposed by the Commission in its Guidance Paper on exclusionary abuses. The fourth section analyses the different uses made by the Commission of its antitrust powers in the telecoms sector, and their institutional implications. The fifth section concludes the paper.

The LCD Cartel: Impacts and Implications for The Competition Policy of Taiwan

Andy C.M. Chen, Chung Yuan Christian University has written on The LCD Cartel: Impacts and Implications for The Competition Policy of Taiwan.

ABSTRACT: This paper is a discussion on the impacts and implications from the LCD cartel case on the competition policy of Taiwan. We review this case before presenting an analysis of the relevant legal and economic issues. The purpose of this paper is to first demonstrate how the differences in substantive and procedural requirements for investigating cartels have led the competition enforcement agencies of Taiwan, the United States, and the European Union to arrive at different legal conclusions for the same case. Based on this observation, this paper then examines the impacts and implications this case might have on competition law and policy in Taiwan. This case accelerated the amendments to the Taiwan Fair Trade Act (“TFTA”), the competition law of Taiwan, to incorporate the leniency program into law and to facilitate cartel reporting and investigations. However, this case also revealed certain unsettling legal issues in the prosecution of international cartels. In addition, this case also provides an opportunity to re-examine the discussion related to the role market-scale differences and cultural variances play in the antitrust analysis of cartels. We offer initial thoughts on issues that might be useful for future competition policy reform in Taiwan.

Standard Essential Patents, Trolls and the Smartphone Wars: Triangulating the End Game

Daryl Lim, John Marshall has written on Standard Essential Patents, Trolls and the Smartphone Wars: Triangulating the End Game.

ABSTRACT: Few legal issues in recent years have captured the public’s attention more powerfully than litigation over standard essential patents (“SEPs”). This Article explains how SEP litigation overlaps with two other major centers of patent litigation – litigation involving smartphones and patent assertion entities (“PAEs”). It offers a reasoned analysis of key developments and offers predictions on the end game.  

The Article observes that attempting to pre-empt patent hold-ups by imposing blanket ex ante disclosure obligations and royalty caps on standard setting organizations (“SSOs”) is misdirected and counterproductive. Instead, the solution lies in clear and balanced rules to determine “fair, reasonable and non-discriminatory” (FRAND) royalties and injunctive relief. This solution will help parties make more realistic assessments of their options and help adjudicators resolve SEP disputes.

Correctly framed, implementers bear the burden of proving the breach of a FRAND commitment. FRAND royalties should, in the absence of comparable licenses, focus on apportioning the profits based on the relative importance of the patented technology in the covered product. Royalties should be measured at the time the standard is set but generally should not be discounted for the possibility of invalidity and non-infringement. Discriminatory licenses can be hard to detect, but targeted initiatives and improved transparency would make the task easier. Injunctions should be granted based the wording and intent of the relevant FRAND commitment, conduct of the parties, and proof that the technology drove the sales of the component or product on which the relief is sought. More broadly, courts must understand both the limits and opportunities of the antitrust and patent laws.  While useful in arresting ex ante misconduct and attempts of elide FRAND commitments through patent assignments, antitrust is largely irrelevant to SEP litigation in addressing patent hold-ups; patent law has a role in both improving patent quality and deterring vexatious litigation.

Extending the Scope of Antitrust Legislation Over the Area of Exclusive IP-Rights Exercise: Evidence from Russia

Mikhail Zhuravlev National Research University Higher School of Economics discusses Extending the Scope of Antitrust Legislation Over the Area of Exclusive IP-Rights Exercise: Evidence from Russia.

ABSTRACT: This paper deals with the issues of competition law and IP law interaction. Current Russian legislation provides absolute immunity from extending the antitrust prohibitions over the exercise of exclusive IP-rights. The idea of the article is that this approach needs to be revised. Russian court practice, legal doctrine and economic theory necessitate more flexible antitrust regulation in the area of IP. The analysis of US, EU, and Japanese models of legal regulation has revealed different approaches to the issues of antitrust policy in this field of social relations. Therefore, this paper suggests a different concept of regulation – keep the general immunity from the application of antitrust prohibitions to rightholders, but make it conditional. At the same time, in order to ensure the optimal balance between private and public interests and to maintain the incentives for innovative activity, antitrust legislation should provide a system of guarantees for rightholders.

Salop on Potential Competitive Effects of Vertical Mergers: A How-To Guide for Practitioners

Guest post by Steve Salop

It is now the 30^th anniversary of the 1984 edition of the U.S. Vertical Merger Guidelines.  They have not been revised and they are sorely out of date today. They do not reflect current economic thinking, or current agency practice, or the approach taken in the 2010 Horizontal Merger Guidelines.  Both the Antitrust Modernization Commission and the ABA’s 2012 Presidential Transition Report recommended that the Guidelines be revised, but there have been no efforts to date.  Right now practitioners have only the EU Non-Horizontal Merger Guidelines and what can be extracted from various consent decrees.

Dan Culley and I have written a short “How To Guide” to help fill the gap. It summarizes the potential harms and benefits from vertical mergers and suggests the types of factual and economic analysis that practitioners and agency staff would analyze, and information they might obtain, in order to predict the likely competitive effects of vertical mergers during the HSR review process.  The article also identifies several legal and policy issues that might examined by the agencies and the parties during the review process.    

One of the arguments sometime raised against revising the Guidelines is that it would be too much work, given the relatively small number of vertical mergers and the myriad concerns raised by vertical mergers.  If so, our article might help to jump-start the process. The 2010 revision to the Horizontal Merger Guidelines were completed in less than 2 years.  So, these revised Guidelines in principle could be completed before the end of 2016. 

Potential Competitive Effects of Vertical Mergers: A How-To Guide for Practitioners

Steven C. Salop, Georgetown University Law Center and Daniel P Culley, Cleary Gottlieb Steen & Hamilton LLP have a new paper on Potential Competitive Effects of Vertical Mergers: A How-To Guide for Practitioners.

Worth downloading!

ABSTRACT: The purpose of this short article is to aid practitioners in analyzing the competitive effects of vertical and complementary product mergers. The U.S. Vertical Merger Guidelines released in 1984 are out of date and do not reflect current enforcement or economic thinking about the potential competitive effects of vertical mergers. Nor do they provide the tools needed to carry out a modern competitive effects analysis. This article is intended to partially fill the gap by summarizing the various potential competitive harms and benefits that can occur in vertical mergers and the types of economic and factual analysis of competitive effects that can be applied to those mergers during the HSR review process. The article also identifies several legal and policy issues that the agencies would consider when they undertake the process of revising the Vertical Merger Guidelines.

Using Remedies In Russian Merger Control

Anastasiya Redkina, National Research University Higher School of Economics is Using Remedies In Russian Merger Control.

ABSTRACT: This article is motivated by a growing interest in the problem of merger control quality assessment. Remedies are one of the instruments of merger control and have a significant influence on the results of it. This paper aims to build and empirically evaluate a discrete choice model of merger remedies implementation in Russian merger control. The database consists of 443 merger cases accepted by the Russian antimonopoly agency between 2008 and 2011. We analyse the agency’s decisions to find which characteristics of merging firms and markets lead the Federal Antimonopoly Service to decide whether to allow conditional acceptance. We find that variables related to high market power lead more frequently to a remedy outcome. Such industries as the energy sector, communications and insurance positively affect the probability of a structural remedy. We do not find significant effects of “non-structural” variables, such as the world leader and the nationality of the firm-buyer.

Correlation and Concordance between the CR4 Index and the Herfindahl-Hirschman Index

Maurizio Naldi, University of Rome II and Marta Flamini, Universita Telematica Internazionale (UNINETTUNO) have written on Correlation and Concordance between the CR4 Index and the Herfindahl-Hirschman Index

ABSTRACT: The Herfindahl-Hirschman Index (HHI) and the Four-firm concentration ratio (CR4) are the leading indicators for market concentration. In order to examine if the latter can be taken as a proxy for the former, we perform a correlation analysis employing the Pearson, Spearman, and Kendall correlation coefficient, and introduce a new metric, the probability of order preservation, that measures how often the two indicators move in the same direction, thereby showing both an increase or a decrease in market concentration. We employ a group of 24 datasets pertaining to a wide selection of industries and geographical areas. We find that, though the correlation indices may be quite high, the two indicators lead to opposite conclusions in as many as 41% of the cases, so that the CR4 cannot be deemed a valid replacement for the HHI.

AAI Announces New President

AAI Announces New Leadership To Continue Pioneering Work In Competition Advocacy Diana Moss Named President/CEO and Founder Bert Foer to Focus on International Advocacy

WASHINGTON D.C., November 10, 2014 – The American Antitrust Institute (AAI) today announced that Vice President Diana Moss will succeed founder Albert Foer as President and CEO of the leading competition advocacy group. The handoff is expected to be effective January 2015.

“I speak for the entire AAI Board of Directors in enthusiastically welcoming Diana as our new President and CEO as of this coming January. She is ideally positioned to build on Bert’s powerful 17-year legacy and to take the AAI in new directions over the years ahead,” said Robert Skitol, Chairman of the AAI Board of Directors.

Dr. Moss was selected from a pool of prestigious candidates after a national search. "I am honored, and grateful to the AAI Board for the opportunity to lead this really exceptional organization,” said Moss. “We’re moving into the next AAI “generation” with a talented staff and valuable, respected advisors that have helped us promote a unique and successful advocacy, research, and education agenda,” she added.

Succeeding an organization’s founder is often no small task. Moss looks forward to creating a smooth internal handoff, at the same time the AAI continues to stake out major new initiatives in the pioneering competition advocacy work that the organization is known for. Outgoing President and CEO Bert Foer said of the transition and leadership handoff, “Diana has been my trusted right hand for 14 years. She is a skilled competition advocate with strong connections in the antitrust and regulatory communities and has been instrumental in helping build the AAI into a leading, progressive competition advocacy organization.”

Moss, an economist, joined the AAI shortly after its creation, bringing with her public- and private-sector experience in antitrust and regulation. At the AAI, Moss has effectively developed and expanded advocacy channels and strategies, and strengthened communications with enforcers, Congress, other advocacy groups, and the media. As Vice President since 2002, Moss has also extended the AAI’s competency in a number of industries that are a major antitrust focus, including energy, transportation, agriculture, telecommunications, and healthcare.

With the transition to new leadership, Foer, who turned 70 this year, will step into a new half-time role with a focus on international competition advocacy and competition culture. Chairman Skitol added, “We are delighted that Bert has committed to remain a key member of our Management Committee to support Diana and the AAI in advancing our ambitious agenda for 2015 and thereafter.”

Media Contacts: Diana Moss (720) 233-5971 [email protected]

Bert Foer 202-276-6002 [email protected]

Downloads: Diana Moss photo available for download here. Press release available for download here.

About the American Antitrust Institute The AAI is an independent and non-profit education, research, and advocacy organization devoted to advancing the role of competition in the economy, protecting consumers, and sustaining the vitality of the antitrust laws. For more information go to About AAI.

Exclusive Dealing and Vertical Integration in Interlocking Relationships

Volker Nocke, University of Mannheim and Rey Patrick, Toulouse School of Economics have an interesting paper on Exclusive Dealing and Vertical Integration in Interlocking Relationships.

ABSTRACT: We develop a model of interlocking bilateral relationships between upstream firms (manufacturers) that produce differentiated goods and downstream firms (retailers) that compete imperfectly for consumers. Contract offers and acceptance decisions are private information to the contracting parties. We show that both exclusive dealing and vertical integration between a manufacturer and a retailer lead to vertical foreclosure, to the detriment of consumers and society. Finally, we show that firms have indeed an incentive to sign such contracts or to integrate vertically.

Penalizing Cartels: The Case for Basing Penalties on Price Overcharge

Yannis Katsoulacos, Athens University of Economics and Business, Evgenia Motchenkova, VU University Amsterdam - Department of Economics; TILEC, and David Ulph, University of Saint Andrews describe Penalizing Cartels: The Case for Basing Penalties on Price Overcharge.

ABSTRACT: In this paper we set out the welfare economics based case for imposing cartel penalties on the cartel overcharge rather than on the more conventional bases of revenue or profits (illegal gains). To do this we undertake a systematic comparison of a penalty based on the cartel overcharge with three other penalty regimes: fixed penalties; penalties based on revenue, and penalties based on profits. Our analysis is the first to compare these regimes in terms of their impact on both (i) the prices charged by those cartels that do form; and (ii) the number of stable cartels that form (deterrence). We show that the class of penalties based on profits is identical to the class of fixed penalties in all welfare-relevant respects. For the other three types of penalty we show that, for those cartels that do form, penalties based on the overcharge produce lower prices than those based on profit) while penalties based on revenue produce the highest prices. Further, in conjunction with the above result, our analysis of cartel stability (and thus deterrence), shows that penalties based on the overcharge out-perform those based on profits, which in turn out-perform those based on revenue in terms of their impact on each of the following welfare criteria: (a) average overcharge; (b) average consumer surplus; (c) average total welfare.

Comcast/Time Warner Cable merger bad for consumers

On Friday, The Hill published an op-ed I wrote - Comcast/Time Warner Cable merger bad for consumers.  The op-ed summarized the arguments from the law professor letter to the FCC that I organized (37 professors of law and economics in all) to block the merger.  Hopefully the FCC and DOJ Antitrust are listening.

 

 

 

Note: I was compensated for my work in this transaction by parties opposed to the merger.

 

Optimal Leniency Programs When Firms Have Cumulative and Asymmetric Evidence

Marc Blatter, University of Bern, Winand Emons, University of Bern - Department of Economics; Centre for Economic Policy Research (CEPR), and Silvio Sticher, University of Bern conceptualize Optimal Leniency Programs When Firms Have Cumulative and Asymmetric Evidence.

ABSTRACT: An antitrust authority deters collusion using fines and a leniency program. Unlike in most of the earlier literature, our firms have imperfect cumulative evidence of the collusion. That is, cartel conviction is not automatic if one firm reports: reporting makes conviction only more likely, the more so, the more firms report. Furthermore, the evidence is distributed asymmetrically among firms. Asymmetry of the evidence can increase the cost of deterrence if the high-evidence firm chooses to remain silent. Minimum-evidence standards may counteract this effect. Under a marker system only one firm reports; this may increase the cost of deterrence.

Multilateralism of Competition Policy: An Unassailable Pedestal for a World of Free Trade

Saloni Khanderia-Yadav National Law University, Delhi explores Multilateralism of Competition Policy: An Unassailable Pedestal for a World of Free Trade.

ABSTRACT: The article delves to gain an insight into the relationship between trade and competition policy. With the failure of various attempts been made by various Ministerial Declarations in Singapore, Seattle, Doha and Cancun, and Organizations like the UNCTAD and OECD; a need is now felt to negotiate a multilateral agreement on an international competition policy. Considering the effects of anti-competitive measures crossing the borders, the article analyses the benefits of multilateralism as an unassailable pedestrian to an international competition policy. Though various Agreements such as the TRIPS, GATS, TRIMS and the Agreements on Safeguards; and provisions across the GATT-WTO, namely: Articles II: 4, III, X, XI, XVII, XX(d), XXIII(1)(b) and (c); have acknowledged the effect of anti-trust policies on trade across the border, it does not suffice; and the utility of multilateralism under the auspices of the WTO is now being felt. The aim of both the WTO and competition policy being to provide market access to all sans barriers, marked the birth of the Working Group on the Interaction between Trade and Competition Policy (WGTCP) established in the Singapore Ministerial Declaration in 1996, made its first attempt under the auspices of the WTO. It is recognized that globalization cannot merely be achieved by checking the governmental measures in the form of tariff and non tariff barriers; anti-competitive behavior by various private enterprises is what now constitutes a hurdle to liberalization to trade. Primarily, anti-competitive behavior in the form of horizontal and vertical restraints, abuse of dominant position/monopolization and mergers for the thrust of targeted actions must be banned. Hence, multilateralism will incorporate the best practices of the WTO such as the National Treatment, Most Favored Nation Treatment and the Transparency provisions may form the base of the negotiations. A truly international forum of dispute settlement is also predicted to be more trusted as a dispute resolver. It will make clear the practices that are considered anti-competitive and the market players that are subject to jurisdiction apart from exemptions, if any.

The Unified Patent Court (UPC), Compulsory Licensing and Competition Law

Clement Salung Petersen, University of Copenhagen, Centre for Enterprise Liability, Thomas Riis, University of Copenhagen and Jens Schovsbo, University of Copenhagen Centre for Information and Innovation Law analyze The Unified Patent Court (UPC), Compulsory Licensing and Competition Law.

ABSTRACT: Competition law and rules on compulsory licensing are considered as indispensable instruments to balance patent rights. In this article, we examine the room for using such balancing instruments in the context of the UPC. We analyse whether the balancing instruments will remain applicable to European patents (with or without unitary effect) and to what extent the UPC will have competence to use these balancing instruments in cases brought before it. Our analysis shows that the UPC to some extent will have competence to use the balancing instruments mentioned, but also that there is a risk that the UPC is likely to be less inclined to use them. To redress that problem we suggest that the UPC acknowledges the institutional biases of the court and looks for ways to include other values and interests than the proprietary values and interests of patent law.

Screening instruments for monitoring market power in wholesale electricity markets: Lessons from applications in Germany

Marc Bataille, Alexander Steinmetz, and Susanne Thorwarth (all Monopolies Commission, Bonn, Germany) research Screening instruments for monitoring market power in wholesale electricity markets: Lessons from applications in Germany.

ABSTRACT: While liberalization in energy markets has been a widely successful process all over the world, incumbents often still hold a dominant position. Thus, electricity wholesale markets are subject to market surveillance. Nevertheless, consolidated findings on abusive practices of market power and their cause and effect in wholesale electricity markets are scarce and non-controversial market monitoring practices fail to exist. Our application of the established measure of market concentration RSI shows that it serves as a decent indicator for the rents that can be gained in the market but also reveals considerable weaknesses of the RSI. Therefore, we propose and apply the "Return on Withholding Capacity Index" (RWC) representing a measure of the firms' incentive of withholding capacity as a complementary index to the RSI. --

The FTC at 100: Centennial Commemorations and Proposals for Progress - Saturday, November 8, 2014

Friday, November 7, 2014

6 PM: Welcome Event: Conversation Between Justice Stephen G. Breyer of the United States Supreme Court and Dean Alan Morrison of The George Washington University Law School (Invitation-only event)

Saturday, November 8, 2014

9 AM: Registration

9:30 AM: Opening Remarks

• Edith Ramirez, Chairwoman, Federal Trade Commission

10:00 AM: Panel 1 – The FTC and Administrative Law

• Moderator: Tim Wu, Isidor and Seville Sulzbacher Professor of Law, Columbia Law School
• Discussant: Jeffrey S. Lubbers, Professor of Practice in Administrative Law, American University, Washington College of Law
• Richard J. Pierce, Jr., Lyle T. Alverson Professor of Law, The George Washington University Law School
• Daniel A. Crane, Associate Dean for Faculty and Research and Frederick Paul Furth, Sr. Professor of Law, University of Michigan
• David A. Hyman, H. Ross & Helen Workman Chair in Law and Professor of Medicine, University of Illinois College of Law

11:15 AM: Morning Coffee Break

11:30 AM: Panel 2 – The FTC and Competition Law

• Moderator: Joshua D. Wright, George Mason Law School and FTC Commissioner
• Discussant: Jonathan B. Baker, Professor of Law, American University, Washington College of Law
• Andrew Gavil   , FTC Director of the Office of Policy Planning and Professor of Law, Howard University Law School
• Hillary Greene, Professor of Law, University of Connecticut School of Law and Richard Gilbert   , Emeritus Professor of Economics and Professor of the Graduate School.
• D. Daniel Sokol, Professor of Law, University of Florida, Levin College of Law
• Ilene Knable Gotts, Partner, Wachtell, Lipton, Rozen & Katz

1:00 PM: Banquet Lunch and Keynote by the Honorable Douglas H. Ginsburg of the Court of Appeals for the District of Columbia Circuit (Invitation-only event)

2:30 PM: Panel 3 – The FTC as a Consumer Protection and Privacy Agency

• Moderator: Maureen K. Ohlhausen, FTC Commissioner
• Discussant: Lydia Parnes   , Partner, Wilson Sonsini, Goodrich & Rosati
• Daniel J. Solove, John Marshall Harlan Research Professor of Law, The George Washington University Law School and Woodrow N. Hartzog, Associate Professor, Samford University, Cumberland School of Law
• J. Howard Beales, III, Professor of Strategic Management and Public Policy, The George Washington University School of Business and Timothy J. Muris, University Foundation Professor of Law, George Mason University Law School
• David Vladeck, Georgetown University Law Center

3:45 PM: Panel 4 – The Future of the FTC Roundtable

• Moderator: William E. Kovacic, Global Competition Professor of Law and Policy, The George Washington University Law School
• Bill Blumenthal   , Partner, Sidley Austin and Former General Counsel of the FTC
• Eleanor M. Fox, Walter J. Derenberg Professor of Trade Regulation, New York University School of Law
• Thomas Krattenmaker, Former Professor of Law, Georgetown University Law Center and Former Dean, William & Mary Law School
• Stephen Calkins, Professor of Law, Wayne State University Law School and Competition Authority of Ireland

5:00: Evening Reception

*Subject to revision. All events to be held at the George Washington University Law School.  For more information, please contact Mr. Kolya Glick, Law Review Senior Projects Editor, at [email protected].

The Cost of Antitrust Law to Malaysia's Financial Services Sector

Bryane Michael, University of Hong Kong Faculty of Law; University of Oxford; Columbia Law School - Centre for the Advancement of Public Integrity, Mark Williams, Hong Kong Polytechnic University, and Susila Munisamy, University of Malaya address The Cost of Antitrust Law to Malaysia's Financial Services Sector.

ABSTRACT: Judging by only economic incentives, Malaysian financial institutions (particularly banks) should completely ignore the Competition Act. The data show that Malaysian banks probably benefit from anti-competitive behaviour. Political and family connections likely facilitate such behaviour. Given that the Malaysian Competition Commission will likely lack the resources to investigate and sanction anti-competitive behaviour in Malaysia’s banking industry – the banks’ best response to the Act probably consists of ignoring it. Maximum fines of 10 million ringgit and revenue-tied penalties of only 10% of worldwide revenue mean that banks still have strong incentives to engage in anti-competitive behaviour and to pay any low fine that might be levied. The best compliance programme for banks in Malaysia likely consists of actions that avoid detection rather than detecting and preventing anti-competitive behaviour. Private rights of action are unlikely to provide any stronger economic incentives for Malaysian banks to adopt strong antitrust compliance programmes and internal audit programmes. By staying the course, Malaysian banks can continue to earn about 15 billion ringgits (approximately US $4.6 billion in anti-competitive rents).

Staggered Contracts, Market Power, and Welfare

Luis M. B. Cabral, NYU has a paper on Staggered Contracts, Market Power, and Welfare.

ABSTRACT: I show that exclusive, staggered supply contracts can decrease industry competition when there are economies of scale: buyers pay a higher price to the incumbent seller and the expected value received by an entrant seller is lower when contracts are staggered. Moreover, under staggered contracts there may exist equilibria where an inefficient firm forecloses a more efficient one. Given that contracts are staggered, contract length further increases market power; however, increasing contract length may also eliminate the inefficient foreclosure equilibrium. Finally, I show that, allowing firms to choose contract structure endogenously, the resulting equilibrium path features staggered contracts.

New De Minimis Communication: ‘De Minimis’ and ‘By Object’ Restrictions of Competition Law

Andreas Scordamaglia-Tousis explores New De Minimis Communication: ‘De Minimis’ and ‘By Object’ Restrictions of Competition Law.

ABSTRACT: Article 101(1) TFEU prohibits all agreements that may affect trade between Member States and that have as their object or effect the restriction of competition within the internal market. According to the EU Courts' consistent case law, this prohibition is not applicable where the impact of an agreement on competition is ‘not appreciable’ (Case C-226/11 Expedia Inc. v Autorité de la concurrence [2012] paras 16 and 17). For EU competition law to apply an agreement must ‘appreciably’ restrict competition. Following the Court's first pronouncement of this appreciability requirement (Case 5/69 Völk [1969]), the European Commission (‘Commission’)—inspired by the de minimis rules found in national legal traditions—has issued a series of Notices—in 1970 (OJ C 64/70), 1986 (OJ C 231), 1997 (OJ C 372/13), and 2001 (OJ C 368)—providing guidance on the circumstances determining whether a restriction has a non-appreciable effect on competition. The latest so-called De Minimis Notice,1 adopted on 25 June 2014 following public consultation, was prompted initially by the need to revise the rules to ensure consistency with other antitrust legislation adopted after 2001 and later on to appropriately reflect the latest developments of EU case law. The Notice was accompanied by a Commission Staff Working Document offering guidance on the notion of restrictions of competition ‘by object’.