by Kevin Coates | Feb 20, 2012 | Antitrust, Competition, Featured, Fines
My third column for the E!Sharp website has been published. It looks at the arguments for and against rewarding corporate compliance programmes by granting a reduction in competition fines if the companies are nevertheless caught breaking the competition rules: If a company stays out of just one cartel because of the compliance programme, the fine that it avoids will pay for the programme many times over. If you think compliance programmes are expensive, try non-compliance. And if that is not a sufficient incentive, a reduction of a fine where they have engaged in a cartel will make no difference at all. UPDATE: The article is no longer available on the ESharp website, so I’m reposting it here: Complicity and Compliance “Does the defence have anything to say in mitigation before I pass sentence?” “Yes, my lord. If it please the court, before robbing the bank in question, my client walked past three other banks. As he did so, he repeated to himself a mantra, ‘I must not rob banks, I must not rob banks.’ He had taught himself this mantra as a way to avoid falling into the temptation of criminal activity. However, he finally succumbed to that temptation and robbed the fourth bank. My client would like his sentence for robbing the fourth bank reduced on account of his not having robbed the first three.” “Really, counsel?” “Yes, my lord.” This is absurd, but it is very similar to a campaign by some multi-national corporations to reduce their – potential future – fines for breaking competition rules. The analogy isn’t perfect, but it’s closer than they would like....
by Kevin Coates | Jun 26, 2011 | Antitrust, Competition Law and Regulation of Technology Markets, Featured, Telecoms
A margin squeeze occurs if the difference between the retail prices charged by a dominant company and the wholesale prices it charges its competitors for comparable products is negative, or insufficient to cover the costs to the dominant company of providing its own retail products on the downstream market. These issues are discussed in Chapter Four of Competition Law and Regulation of Technology Markets. Since the book went to press, the Court of Justice has given a preliminary ruling in the TeliaSonera case (Case C-52/09, Judgment of the Court (First Chamber) of 17 February 2011, Konkurrensverket v TeliaSonera Sverige AB, ECR reports 2011 Page 00000), and the European Commission has issued a prohibition decision against Telekomunikacja Polska, the Polish telecoms operator, fining it € 127 million for a margin squeeze. (Press release here.) Case C-52/09 TeliaSonera TeliaSonera is the Swedish fixed telephone network operator, owning the local telecoms infrastructure – the local loop. TeliaSonera offered its retail competitors unbundled access to the local loop in line with its obligations under Regulation (EC) No 2887/2000 of the European Parliament and of the Council of 18 December 2000 on unbundled access to the local loop (OJ 2000 L 336, p. 4). It also offered an ADSL product intended for wholesale users, enabling those operators to supply retail broadband services to end users, but it did so voluntarily, without regulatory obligation. At the same time, TeliaSonera offered retail broadband connection services directly to end users, in competition with the companies to whom it supplied wholesale services. Further to national court proceedings alleging a margin squeeze, the court referred the following questions to...
by Kevin Coates | Apr 11, 2011 | Antitrust, Google
This article titled “Google wins approval for ITA travel search deal – but antitrust case looms” was written by Jemima Kiss, for guardian.co.uk on Monday 11th April 2011 12.36 UTC Google has been given approval for its takeover of travel search and recommendation service ITA by the US Justice Department, albeit with some fairly heavy strings attached that are designed to prevent the search giant taking advantage of its market position – and lining up a likely broader antitrust investigation. Nine months after Google announced its intended acquisition of ITA, the settlement reached with the Justice Department requires Google to maintain ITA’s software licence with rival flight search sites for five years, as well as its research and development funding. Google will also need to stablish internal firewalls to protect information about ITA’s customers and the Justice Department will be monitoring all of these requirements. Photo by HarshLight on Flickr. Some rights reserved Rival travel search firms – including Expedia, TripAdvisor and Kayak (which all some of whom use ITA’s software) – had lobbied hard in opposition to the 0m takeover. A coalition that also included consolidated airfare service Sabre Holdings and called itself Fairsearch.org seemed satisfied with the restrictions placed on Google, saying in a statement that the Justice Department’s settlement would ensure “that consumers will continue to benefit from vibrant competition and innovation in travel search”. Google had initially said it did not intend to launch a ticket sales service, though the Justice Department’s restrictions would not stop that happening. In an official blog post, Google’s senior vice president of commerce and local, Jeff Huber, said that...
by Kevin Coates | Feb 16, 2010 | Antitrust
Christine Varney’s speeches as the Assistant Attorney General, such as that in Fordham last year, and yesterday’s speech in Paris (Co-ordinated Remedies: Convergence, Co-operation and the Role of Transparency) have struck a very constructive and conciliatory tone on the issue of convergence. Convergence between antitrust authorities, and having a coherent global system is clearly important to her, and she rightly points out that consistency will benefit both agencies and businesses. She also appreciates the limits to convergence, noting that any agency action has to be taken in the context of their own legal systems, and with a view to protect the consumers within that agency’s geographic area. In merger control, convergence works extremely well, particularly when parties time their notifications to the different agencies so that the agencies can move forward on a case together, discussing their thinking, and co-ordinating their information gathering. There are still some disagreements, but complete convergence is almost certainly an unattainable goal – given a complex set of facts, reasonable people can disagree on the appropriate analysis. In recent years, more concern has been expressed about (the lack of) convergence in respect of unilateral conduct. Given the DOJ’s section 2 report published last year, disavowed by several FTC Commissioners, then disavowed by Christine Varney, and withdrawn by the DOJ this year, transatlantic convergence is not the only problem to be addressed. There are profound differences of view within the US legal system and legal community as to the appropriate section 2 liability standards. And these are divisions within one single legal system. When you look at reducing divisions across different legal systems, the problem...
by Kevin Coates | Jan 20, 2010 | Antitrust, Intellectual Property
The IPKat weblog is a superb resource on a whole range of intellectual property issues, and it is well worth a regular read if you are interested in anything to do with IP in Europe or the US. I took issue at an aside made by the Kat on the subject of IP, monopoly and economists, and the Kat generously invited me to publish a guest post on the weblog. The problem I wanted to highlight is that antitrust law and intellectual property law both refer to “monopolies”, but that – contrary to what some IP lawyers and, to be fair, some caselaw from the early 20th century suggest – the term is used to mean two different things in the different legal disciplines. My guest post is...
by Kevin Coates | Oct 27, 2009 | Antitrust, Apple, Microsoft
Scoble has a great piece on why he thinks Apple’s iPhone isn’t going to be pushed aside anytime soon: 85,000 reasons why Apple’s iPhone isn’t going to be disrupted. The availability of large numbers of applications valued by users is one of the arguments that was used to support the finding that Microsoft had market power in the US and EU antitrust cases. In the US, the District Court’s findings of fact discusses the applications barrier to entry starting at para. 37: Consumer interest in a PC operating system derives primarily from the ability of that system to run applications. The consumer wants an operating system that runs not only types of applications that he knows he will want to use, but also those types in which he might develop an interest later. Also, the consumer knows that if he chooses an operating system with enough demand to support multiple applications in each product category, he will be less likely to find himself straitened later by having to use an application whose features disappoint him. Finally, the average user knows that, generally speaking, applications improve through successive versions. He thus wants an operating system for which successive generations of his favorite applications will be released — promptly at that. The fact that a vastly larger number of applications are written for Windows than for other PC operating systems attracts consumers to Windows, because it reassures them that their interests will be met as long as they use Microsoft’s product. For the EU, see the confirmation in the CFI’s Microsoft judgment of September 2007 (at para. 1088) upholding the Commission 2004 Microsoft...