Competition Law Infringements Research Articles

Competition law enforcement in Hong Kong SAR and in Ireland: similar and atypical

Purpose This paper aims to understand the emergence, operation and evolution of judge-centred models for the enforcement of competition law in Ireland and in Hong Kong SAR. The public enforcement model in Hong Kong chimes with the Irish regime where competence to adjudicate on competition law violations and to impose sanctions is intentionally reserved exclusively to judges. This design choice renders the Irish and Hong Kong regimes both similar to each other and atypical on the global stage, where in many jurisdictions an administrative competition agency investigates suspected infringements, makes determinations of infringements and may penalise infringers. Design/methodology/approach This paper starts by detailing the current competition law architecture in each jurisdiction. Then, it examines closely the discourse (expressed in consultations, experts’ reports and Parliamentary documents) in the lengthy period preceding their introduction. This approach aims, firstly, to understand why judicial models were chosen over more familiar administrative ones and, secondly, to unearth any similar concerns which had a bearing on the choice of atypical design. Next, it analyses some implications of the judicial model in operation for, firstly, parties; secondly, the administrative competition agencies; and, thirdly, the evolution of competition law. Findings It finds the existence of similar concerns surrounding due process/separation of power arose in each jurisdiction. Other similar strands include a sluggish political appetite which delayed reform. Each jurisdiction actively sought to inform itself about international experience but did not feel obliged to copy the enforcement dimension even where substantive prohibitions were persuasive. Research limitations/implications It shines a light on the independent response by two small Common Law jurisdictions, which does not converge with popular administrative international models of competition law enforcement. Practical implications It is hoped that the decades-long experience in Ireland may interest those involved in Hong Kong competition law, which is at a comparatively fledgling stage of development. Originality/value This is an original research and appears to be the first paper exploring the atypical approaches taken in Hong Kong SAR and Ireland to designing locally suited regimes for the enforcement of competition law.

Digital Advertising and Purchasing: Fun or a New Type of Deception?

To illustrate the larger issues involved in regulating the digital economy, this paper uses the example of “drip pricing” as it applies in the digital world. Drip pricing is an advertising technique in which firms frontally advertise only part of a product’s price, and later reveal other charges as the customer navigates the buying process. Drip pricing often impacts consumer decisions so that they spend more money than they had originally budgeted or anticipated. In the case of a person of low income, this extra spend may take money away from the budget for items such as books and school supplies for children or more nutritious food. This scenario is an aggravating factor which should be the subject of separate treatment. Given the challenge of adopting old law to new digital platforms, I propose four general principles as an approach to regulate the digital economy. These four principles are developed through an analysis of online drip pricing and its relationship with consumer protection. First, the “first internet screen” viewed by a consumer must accurately set out total pricing per unit, with disclosure of all fees, to the extent that technology will permit. Second, the interactive digital process must accurately portray the quality of the good or service. Third, the interactive digital process should facilitate consumer reversal of choices to the extent that technology will permit. Finally, where there is a finding that a digital process constitutes a violation of competition law, an aggravating factor in the assessment of penalty should be whether the least advantaged are impacted in their ability to satisfy basic needs.

Optimal Deterrence, the Illegality Defence, and Corporate Attribution

Companies are often penalised for violating regulatory requirements of various kinds, including those under competition law. Some of the relevant statutes only impose liability on the company, but not its directors or employees, whose wrongdoing must nonetheless be attributed to the company to render it liable. Where a company infringes competition law or another regulatory statute and seeks to recover the penalty by suing its delinquent insiders for breach of duties, should courts allow or prevent the company’s recovery? This article examines this complex issue—which straddles competition/regulatory law, company law, agency law, and private law (in particular the illegality defence)—from a theoretical perspective, and makes two key contributions. First, it advances a refined concept of optimal deterrence, and argues that courts should not deprive the company of its well-established right to sue under company and agency law by interpreting the deterrence policy under competition law or another regulatory statute in light of this concept and recognising the limits of judicial law-making. Second, this article demonstrates for the first time how courts should analyse private law claims arising from corporate regulatory infringements under the ‘range of factors’ approach to the illegality defence, using competition law infringements as an illustration. Under our proposal, courts need not proceed to the stage of balancing competing and incommensurable factors to arrive at the conclusion that companies should not be precluded by the illegality defence from recovering against their delinquent insiders.

GOVERNMENT-OWNED ENTERPRISES (GOEs) IN INDONESIA’S COMPETITION LAW AND PRACTICE

<p>In the competition law discourse, one of the controversial issues is the position of Government-Owned Enterprises (GOEs). There are basically two main views regarding the status of GOEs in the competition law. First, GOEs should be granted privileges, even excluded from the scope of business competition law. Secondly, since GOEs are basically businesses and competitors to private enterprises, GOEs must also be subject to competition law. This paper discusses the status of GOEs in Indonesia’s competition law, both in the context of normative framework and in the implementation of competition law provisions. For this purpose, this paper examine the rules of competition law governing the GOEs and analyze some cases of alleged violations of competition law examined by the KPPU as the Indonesian competition authority. This study found that basically Indonesia’s competition law follows the so-called “competitive neutrality” principle in which the law treat both GOEs and private enterprises in equal manner. However, at the practical domain, the cases studied indicates that monopolistic or dominant position held by GOEs may be abused to favor subsidiaries which are in direct, head to head competition, with private enterprises.</p><p><strong><br /></strong></p><p align="center"> </p>

Monetary Fines in EU Mergers: In Need for More Regulation

Monetary fines represent an important instrument to address violations of Competition Law. The European Commission (EC) and the EU Courts have been primarily engaged in imposing fines in cases of breach of the first pillar, and have rarely dealt with cases of abuse based on the fining guidelines issued in accordance with Article 23(2) of Regulation 1/2003. Compared to the first two pillars, mergers have not received similar scholarly attention.1 2 Since 2017, the EC has expressed a growing interest in investigating and imposing significant fines to mergers and acquisitions in breach of procedural matters. Therefore this article addresses the application of Article 14 of the European Union Merger Regulation (EUMR) in imposing fines to mergers with European Union (EU) dimension. The EC decisions and EU Courts’ judgments related to fines on mergers in breach of procedural matters are discussed in four specific sections. The first section analyses article 14(1) of the EUMR, which empowers the EC to impose a fine of up to 1% of the total turnover in the preceding business year on undertakings for breach of procedural matters, including, among others, for providing incorrect or misleading information. This section will address the case of Facebook as the first case in which the EC imposed fines based on the new EUMR. In this case, although the undertakings mislead the EC, based on the offered cooperation, the Authority decided to reduce the fine. In addition, it is also important to address the legal basis applied by the EC in accepting the offered cooperation as a mitigating factor and whether this may develop into a guiding “precedent” in the future. The second section deals with five cases of violations of articles 4(1) and 7(1) EUMR related to fines prescribed in article 14(2) EUMR. With regards to four of them, judgments of EU Courts and decisions of the EC and National Competition Authority (NCA) are analysed. The fifth case, the one on Ernst and Young, provides for the first preliminary ruling on the notion of “gun-jumping”. The third section deals with Article 14(3) and the fining methods on mergers. By reviewing each of these five cases, it is important to address factors taken into consideration when imposing fines. An obvious deficiency is the absence of a legal basis, regardless of whether manifested in hard or soft law. Here it is relevant to inquire in what manner the EC imposes fines and why it occasionally mirrors the fining guidelines applicable to other pillars of EU Competition Law. The last point to be addressed is the one of policy and the need to balance EC discretional powers and relevant legal principles such as legal certainty, equal treatment, transparency, and consistency.3 The fourth section provides for concluding remarks.

Danish Court: Consortium Agreement and Joint Bidding Permissible under Competition Law

The legality of consortium agreements and joint bidding for public contracts under competition law has been a widely debated subject over the past couple of years. On 27 August 2018, the Danish Maritime and Commercial High Court rendered a much anticipated judgment on this subject. The judgment is now under appeal to the Danish Supreme Court. In its judgment, the Court repealed the Danish competition authorities’ decisions in a case regarding a consortium agreement between two companies relating to their joint bid on a public tender for road marking works in Denmark. According to the competition authorities’ decisions, the consortium agreement and the joint bid was a by object infringement of competition law. However, the Danish Maritime and Commercial High Court disagreed and held that the agreement did not infringe competition law. This article sets out the background to the proceedings, summarises the key findings of the court and comments on the legality of consortium agreements and joint bidding for public contracts under competition law.

Company Liability and Competition Law: Exposure of Company to Risk of Undesirable Behaviour of Directors

In order to protect the objectives of competition policy, companies as undertakings are primarily targeted for the competition law infringements based on the mixed approach of compliance and deterrence theories relying on the view that company directors are incentivised to comply with the rules of competition law by the internal compliance programmes and corporate fines are the consequences of incompliance. This enforcement strategy gives rise to a tension between corporate governance, company law and competition law, as the former two focus on the behaviour of individuals within the corporate structure, while the latter concerns the impact of the company’s behaviour in the market. The question that arises in this tension is whether or to what extent competition law actually considers the way in which the company is run internally while it seeks to promote these primary objectives. This article analyses the deterrent effectiveness of primary enforcement strategy employed in the UK competition law regime and argues that competition law does not tend to localise the source of conduct or particular decisions and does not aim to correct the right wrongdoer. Despite that lack of effectiveness of public enforcement strategy to deter further anti-competitive behaviour has led individual sanctions to be introduced by the Enterprise Act 2002 and the Enterprise and Regulatory Reform Act 2013 in the UK, companies are still primarily targeted by corporate fines even though directors have intentionally breached the rules of competition law and this strategy is unlikely to deter directors from engaging with undesirable behaviour which exposes the company to risk of liability and loss.

Commercial Divisions of Public Entities and the Limits of EU Competition Law

Competitive behaviour by public entities is generally approached in the literature as concerning the traditional State-owned enterprises pursuing public interest objectives. However, increasingly we see examples of commercial divisions of public entities aiming to generate revenue per-se. Because these commercial divisions can enjoy competitive advantages over their private competitors, their behaviour may distort competition. This phenomenon has become prevalent throughout the EU, and member states tend to approach its anticompetitive effects through various competition law(-related) frameworks. This article points out, however, that a competition law framework may be ill-suited to address anticompetitive effects of commercial divisions of public entities. First, commercial divisions may not qualify as ‘undertakings’ under competition law to begin with. Second, competition authorities may face procedural and institutional challenges when enforcing against commercial divisions of public entities. With an ill-functioning and diverging legal framework across the EU, anticompetitive effects of commercial divisions of public entities lead to an uneven playing field between public and private firms with adverse effects on the internal market. Conduct that can be considered an infringement of competition law by a private firm may escape competition law scrutiny when perpetrated by a commercial subsidiary of a public entity. Before resorting to remedies, however, more research is necessary to appreciate and quantify the possible distortion of competition by commercial divisions of public entities, compile best-practice regulatory responses and further study effects on matters related to the rule of law.

Private Enforcement of EU State Aid Law Through Damages Claims

A new enabling framework for damages claims based on competition law infringements has arisen in light of the European Damages Directive coming into force and its implementation across EU Member States. Hitherto, one of the reasons why damages awards derived from State aid infringements have been rare is the absence of EU cause of action in claims against the aid beneficiary and on the standards of proof in causality analysis. These obstacles can be surpassed by amplifying the scope of the Damages Directive and through a broader interpretation of the goals of Articles 107 and 108 TFEU with further instruments such as compensation. Aligned with the expectation of initiatives at the EU level, five steps are suggested: amplifying the scope of the Damages Directive to State aid infringements; joint and several liability between Member States and aid recipients; presumption of harm to reduce causal uncertainty; counterfactuals for quantifying damages; and a right of recourse from contractual liability by the aid recipient. A more economic approach in line with the overarching principle of effectiveness will enable an active role by competitors, promoting equivalence between antitrust and State aid harm redress, while also functioning as a complementary deterrence mechanism of enforcement by strengthening the recovery procedure. Keywords: Damages; Enforcement; Framework Equivalence; Effective Redress.

Protection against competition law violations: Opportunities for compensation for damages in the Eurasian Economic Union and the European Union

The article analyzes current legal regulations in the Eurasian Economic Union (EAEU) and European Union (EU) governing protection against integrated entities’ violations of their respective competition laws. The issues of the policies implemented in this area in accordance with EAEU law, the correlation of national and supranational regulation and their application (including the principle of non bis in idem), and the delimitation of the competence of national and EAEU bodies in this area are clarified in light of the provisions of the Treaty on the Eurasian Economic Union (EEC) of May 29, 2014 and advisory opinions of the Court of the Eurasian Economic Union (of April 4, 2017; of December 17, 2018; of June 18, 2019). The absence of a legal ground for “private enforcement” of the EAEU competition laws, including its most important element — compensation for losses — is noted. In this regard, the authors analyze the experience of the European Union in this sphere, which is reflected in the Directive 2014/104/EU of the European Parliament and of the Council of November 26, 2014 on certain rules governing actions for damages under national law for infringements of the competition law provisions of the member states and of the European Union. Its key provisions are considered in sufficient detail. Based on the results of the research undertaken, it is concluded that it is necessary to empower the Eurasian Economic Commission in the EAEU Treaty to calculate the damages caused by the infringements of the EAEU Treaty competition rules that have or may have a negative effect on competition in cross-border markets in the territories of two or more EAEU member states. In order to implement this, it is also proposed to vest the EEC with the competence to approve the procedure of recovery and methodology of calculating these damages. According to the authors, the development of such a procedure requires the study, inter alia, of the mentioned EU experience.

Cumulative Enforcement of European and National Competition Law and the Ne Bis In Idem Principle Case Comment to the Judgement of EU Court of Justice of 3 April 2019 Powszechny Zakład Ubezpieczeń na Życie S.A. v Prezes Urzędu Ochrony Konkurencji i Konsumentów (Case C-617/17)

The judgement of EU Court of Justice in response to the request for a preliminary ruling by the Polish Supreme Court confirms that the principle of ne bis in idem, enshrined in Article 50 of the Charter of Fundamental Rights of the European Union, must be interpreted as not precluding a national competition authority from fining an undertaking in a single decision for an infringement of national competition law and for an infringement of Article 82 EC (now Article 102 TFEU). In that regard it can be concluded that the judgement does not have anything new and is just a confirmation of settled case-law. Unfortunately, this case represents a lost opportunity to review the ‘double barrier’ doctrine and to clarify if the relationship between European and national competition law is one of ‘bilateral specialty’ or not.

Collective Proceedings for Damages in UK Competition Law Case Comment to the Judgment Merricks v Mastercard [2019] EWCA Civ 674

Merricks v Mastercard [2019] is the first action under the newly developed ‘opt-out’ collective proceedings regime for aggregate damages under UK competition law to be considered by the UK Court of Appeal. It is significant for both the level of damages (£14 billion (€16 billion)) and the clarification of the legal test at the certification stage for the suitability for an aggregate award: the method for calculation of the aggregate damages and the sufficiency of evidence. The Court’s lowering of these thresholds importantly opens the door to future class actions and reasserts the importance of collective proceedings as a valuable means of redress for competition law infringements. The decision has now been appealed to the UK Supreme Court where these issues may be further clarified and resolved.

The Pechstein Case: International Sports Arbitration Versus Competition Law. How the German Federal Supreme Court Set Standards for Arbitration

The German Federal Supreme Court in 2016 decided a case brought by athlete Claudia Pechstein against the International Skating Union on a doping matter. The question at issue was whether the arbitration clause in the athlete’s contract for participating in the World Championships, entered into with the only ice skating association, was actually amounting to an illegal abuse of dominance under competition law. A lower court had – sensationally – held that the underlying arbitration clause was a violation of competition law. The Federal Supreme Court, however, upheld the doping ban handed down by the sports institutions. Yet, in this interesting opinion the Federal Supreme Court sets standards for international arbitration. This paper is a comment on this decision. In the first part of the paper, I set out what was at stake in the Pechstein case. In part II, I turn to the results for individual athletes vis-a-vis their sports associations. In part III, I try to define the standards set by the Court for arbitration. In part IV, I look at the antitrust angle of the case. In the concluding part (V), I sketch the importance of the decision for international arbitration.

Cartel Damages: Liability and Settlement

This paper relates civil joint and several liability of members of a cartel, contribution claims, liability allocation, as well as the anatomy and effects of settlements with less than all parties. Because the substantive rules of Directive 2014/104/EU (the Directive) do not apply to damages that occurred prior to its implementation, the pre-Directive legal framework will continue to be relevant for years. This work therefore analyses both the old and the new sets of rules and how the changing regimes influence incentives. Under pre-Directive law, victims of competition law infringements can claim their entire damages from any of the cartelists. Under some pre-Directive national laws, cartelists sued by the claimant might not be able to take effective recourse against members of the cartel that the claimant did not sue. The effect of a partial settlement in terms of claim reduction and liability of the settling cartelist varies depending on the jurisdictions involved and the wording chosen. Under the Directive, cartelists are also jointly liable for the entire damage caused; however, there are exceptions for the immunity recipient and small and medium enterprises that modify this basic rule. Cartelists do have effective recourse against each other. The effect of a partial settlement is uniform throughout the EU: It always reduces the plaintiff’s claim by the settling cartelist’s share of the harm, and the remaining cartelists can no longer bring contribution claims against the settling cartelist. This facilitates the conclusion of incentive-compatible settlement agreements to cooperate in pursuing the remaining cartelists for damages. This work discusses a multitude of criteria for liability apportionment amongst cartelists, leading into an assessment of two proposals that have been advanced to make the liability apportionment amongst cartelists more predictable: (A) using the ratio of the cartelists’ relative sales and (B) calculating Shapley values of the cartelists’ contributions to the cartel’s effects. I find that relative sales are a suitable starting heuristic for most cases, but there are constellations in which this method leads to absurd results. Shapley values theoretically provide the perfect metric to measure relative responsibility for the harm but require input that is usually exceedingly difficult to obtain. The final part briefly contrasts these results to the situation under US federal law and finds that the combination of no contribution rights amongst cartelists, the trebling of damages and pro tanto claim reduction create stronger incentives to settle than in Europe.

Power to the people: enhancing competition law enforcement in Indonesia through private enforcement

ABSTRACTFor nearly two decades, public enforcement through the Indonesian Competition Authority has been the fulcrum of Indonesia’s competition law enforcement. However, they fail to provide effective judicial redress to victims of competition law infringement due to the absence of clear procedural rules. This article explores the desirability of enhancing Indonesia’s antitrust enforcement through private enforcement. It examines the role of public and private enforcement, and argues that, despite divergences, they complement each other in increasing the overall effectiveness of antitrust enforcement in Indonesia. Subsequently, this article engages in a comparative legal analysis with EU law to provide policy recommendations on how private enforcement can be regulated in Indonesia to enhance the enforcement of its competition regime.

The Proof on the Quantification of the Damage in Assumptions of Defense of Competition. (Spanish Law)

In the present work, we focus on the test on the quantification of damages in cases of private actions for infringements of competition law and on the adaptation of the Spanish regulations to the Damage Directive of 2014. In the first part, we analyze the quantification of damages and the burden of proof distinguishing the cases of evidentiary burden with respect to the infringement and evidentiary burden with respect to the quantification. From there, the ordinary assumptions of those that establish some type of exceptions are discriminated. In the second part, we focus on the test on quantification and the different aspects that the latter can offer us in terms of the existence of leniency programs, resolutions of other courts, direct purchases, indirect or third-party damages, etc. The objective is to determine the existence of differences in each of the sections that we point out and the judicial criteria that should preponderate in each of them.

Extempore Observations on Bid-Rigging in Public Procurement: Towards a Virtuous Circle of Detection, Punishment and Compliance

Bid-rigging in public procurement is a particularly serious infringement of competition law. New economic and algorithmic tools can effectively complement the existing enforcement mechanisms to ensure that a virtuous circle of detection, enforcement and compliance is triggered. This short paper sets out a few propositions for further reflection and research in this area.

Competition Law and Personal Data Crossing in Digital Markets

A number of issues arise with regard to competition law and data protection, in particular in the online services context. For one, the relationship between competition law and privacy is yet to be fully understood and we discuss below the aspects of this conundrum: first, we look into the issue of whether privacy risks arising in digital markets should be addressed within the competition law analysis; second, we try to identify cases where collecting personal data or depriving access to personal data could be anti-competitive and constitute a breach of competition law. The question of how competition authorities should intervene in cases of a competition law infringement in markets involving data aggregation is also an interesting debate. Our article attempts to provide an insight into these questions, by laying out the legislation, cases and antitrust discussions where in which these questions have been addressed so far.

‘A chain reaction’ or the necessity of collective actions for consumers in cartel cases

As a particularity of competition law, damage caused by a legal violation generally travels down the supply chain. An overcharge incurred by the direct purchaser is often at least partially passed on to the next level in the supply chain, and so on, ending with the final consumer. Damage is typically widespread once it reaches the consumer level. Thus, the consumer’s rational response is not to initiate an individual lawsuit. The classical solution is to improve the incentive structure with some form of collective redress. The principle of effectiveness as defined in Article 4 of the Antitrust Damages Directive requires an effective procedural remedy for each victim of a competition law infringement, but the Directive is silent regarding collective actions. Drawing on arguments on the rational apathy problem with consumer lawsuits, we analyse why this ‘silence’ upsets the European principle of effectiveness. We show why this omission is particularly harmful in the competition law case. We conclude that the time to introduce collective actions to ensure the effectiveness of European competition law has arrived. Such mechanisms do not have to be entirely harmonised across the European Union – different shapes in different Member States or even alternative solutions to the same effect are perfectly permissible.

A Practical Review of Methods to Estimate Overcharges Using Linear Regression

Arguably the most widely used techniques for estimating price overcharges from competition law infringements are the dummy variable and the forecasting approaches using linear regression analysis. While rarely used in practice, in this note we make use of the fully interacted dummy variable approach to review some basic properties of all three approaches. We show under which conditions and for which estimands of interest these approaches are equivalent and when they differ. We also note some interesting additional choices an interaction approach allows.