European Antitrust Authorities Research Articles

Влияние интеллектуальной собственности на вопросы согласования сделок экономической концентрации на примере России и ЕС

The article reveals the problems of controlling economic concentration in commodity markets related to the use of intellectual rights that appear in connection with the transformation of the global economy. The article analyzes the approval by the Russian and European antitrust authorities of one of the largest global transactions between Bayer and Monsanto, and examines the main trends related to the economic concentration in the commodity markets related to the use of intellectual property rights, using the example of a number of transactions agreed by the European Commission.

The Interaction of EU Competition, Consumer, and Data Protection Law in the Digital Economy: The Regulatory Dilemma in the Facebook Odyssey

This article analyzes the interaction of EU competition, consumer and data protection law in the digital economy. We compare the objectives, rules and enforcement structures of these legal regimes, and we discuss market failures that justify regulatory intervention in digital markets. In particular, the Facebook investigations in Germany and Italy are selected as a case study. The Bundeskartellamt’s investigations are remarkable, being the first in which an exploitative abuse of dominance involving a digital platform has been decided under competition law. These we compare with their Italian counterpart, where the AGCM has recently sanctioned Facebook for behavior similar to that investigated in Germany. Yet, the Italian case has been decided under consumer, rather than competition law. This shows the regulatory dilemma faced by European antitrust authorities, which are currently struggling to find a solution to the market failures arising in digital markets.

The Interaction of EU Competition, Consumer, and Data Protection Law in the Digital Economy: The Regulatory Dilemma in the Facebook Odyssey*

This article analyzes the interaction of EU competition, consumer and data protection law in the digital economy. We compare the objectives, rules and enforcement structures of these legal regimes, and we discuss market failures that justify regulatory intervention in digital markets. In particular, the Facebook investigations in Germany and Italy are selected as a case study. The Bundeskartellamt’s investigations are remarkable, being the first in which an exploitative abuse of dominance involving a digital platform has been decided under competition law. These we compare with their Italian counterpart, where the AGCM has recently sanctioned Facebook for behavior similar to that investigated in Germany. Yet, the Italian case has been decided under consumer, rather than competition law. This shows the regulatory dilemma faced by European antitrust authorities, which are currently struggling to find a solution to the market failures arising in digital markets.

Competition Policy in the Wine Industry in Europe

AbstractIn recent years, several European antitrust authorities intervened in the wine sector to authorize mergers and acquisitions, provide opinions to governments, and ascertain anticompetitive agreements. This article analyzes these interventions in the context of an evolving regulatory framework. I draw conclusions about the direction of competition policy, in particular in relation to possible co-operations among various players in the wine industry. (JEL Classifications: K21, L40, L51)

ASSESSING ANTICOMPETITIVE PRACTICES IN TWO-SIDED MARKETS: THE BOOKING.COM CASES

This paper aims to shed light on the economic tools, as well as the legal-economic reasoning, which are used by different European antitrust authorities to assess the allegedly anticompetitive practices of a platform operating in a two-sided market (2SM). First of all, we show that despite the flourishing literature on 2SM economics, antitrust authorities are still facing major challenges when taking decisions concerning two-sided platforms (2SPs). Secondly, we perform a cross-country, comparative study of recent competition proceedings towards the 2SP Booking.com and highlight conceptual and practical divergences among antitrust authorities which are bound by and applying a common European legislation. By concretely and thoroughly showing where the differences lie, our study contributes to identifying the issues to tackle in order to ensure a better harmonized implementation of measures towards 2SPs at the EU level. Finally, building on the results of our work, we propose some alternative approaches which could benefit future antitrust analyses in 2SMs.

Europe kills one chemical deal, allows another

Celanese and the private equity firm Blackstone have abandoned plans to merge their cellulose acetate businesses after they were unable to agree to terms with European antitrust authorities. The companies had announced plans to merge the businesses, which produce material for cigarette filters, in June 2017. Blackstone owns the former Rhodia acetate business, having bought it from Solvay in 2017 for $1.1 billion. Celanese, which runs a similar business, was set to own 70% of the combination, which would have had annual sales of about $1.3 billion and 2,400 employees. Celanese contends that regulators required excessive divestitures that would have eliminated the benefits of the transaction. “We worked hard and offered serious remedies to the European Commission and believed we had solved all competition issues identified,” CEO Mark Rohr says. Approval, without any divestitures, was granted in Mexico, Turkey, China, and Russia, Celanese says. Rohr plans to have a new

Antitrust Risks and Big Data

The explosive growth in companies’ exploitation of big data is drawing intense scrutiny from European antitrust authorities. EU Competition Commissioner Margrethe Vestager has promised to “keep a close eye on how companies use data” and a number of European antitrust authorities have conducted full-blown studies on big data issues, including an especially comprehensive May 2016 Franco/German study on “Competition Law and data”. Antitrust authorities fear that big data can create barriers to entry and market power, especially where companies hold unique datasets that cannot be replicated by competitors. However, a closer look at big data-related theories of harm suggests that the focus on uniqueness may be misplaced. Many companies collect voluminous datasets that are unique and non-replicable, as well as, being valuable and competitively significant, without raising exclusionary concerns of the types highlighted by antitrust authorities. The perception that limited access to big data may create barriers to entry and stifle the growth of the digital economy risks provoking an overbroad legislative reaction. In January 2017, the EU Commission consulted on a wide range of data-related issues, proposing among other things that companies be required to share non-personal, machine-generated data with third parties, including competitors, whether or not the data-holder holds a dominant position or engages in abusive conduct. As such, it would go far beyond any access remedy recognized in the antitrust context. This article discusses European antitrust authorities’ concerns about the foreclosure risks of big data from the perspective of the different types and uses of big data. This approach reveals that exclusionary concerns arise in a relatively small segment of big data uses, and those situations can be assessed using traditional antitrust tools. Some important big data issues not addressed in this article include the mirror image of these exclusionary concerns – i.e., that ubiquitous big data can make markets so transparent that competition may be impaired by competitors using pricing algorithms – the role of big data in merger review, and the relationship between antitrust enforcement and data protection. Big data are a big topic, and a complex one.

Ex-Ante and Ex-Post Control of Buyer Power

This paper considers the effects of buyer power under the antitrust laws. It focuses on EU antitrust law, namely Article 102 TFEU and the EU Merger Control Regulation, while taking into account the stance of US antitrust law. Recent investigations of several European antitrust authorities in the grocery sector have expressed concerns that concentration on the demand side can result in market foreclosure or anticompetitive exploitation of market participants. Also, in the US there is an ongoing debate about the anticompetitive and procompetitive effects of buyer power, which is inter alia reflected in the landmark decision of the US Supreme Court in Weyerhaeuser and in the merger control policies of the DOJ and the FTC. Against this background, the present paper starts with the definition of buyer power. It underscores the necessity to distinguish between single price monopsony on the one hand and individual bargaining power on the other hand, since the economic effects of these two types of buyer power deviate significantly. In subsequent steps, the paper analyses different theories of harm that can be raised with respect to buyer power. It discusses the effects of buyer power on allocative efficiency, dynamic efficiency as well as consumer welfare and draws conclusions from that for the enforcement of the antitrust laws.

MARKET DELIMITATION ON THE EXAMPLE OF THE SUGAR SECTOR

This paper is aimed at: (1) discussion of the geographical market delimitation, considering the decision-making methods used by antitrust authorities; and (2) verification of the geographical range of the sugar market using the Elzinga-Hogarty test. This market is defined as domestic market in the decisions of the European Commission and Polish antitrust authorities. The comprehensive research (covering ca. 80 countries of the world supplying ca. 98% of the global sugar supply) showed that – in the light of the Elzinga-Hogarty method – most of the countries fail to meet the criteria of the LOFI/LIFO tests, which means that the geographical range of the sugar market is usually transnational. The findings comply – in the gen- eral dimension – with the mainstream of the criticism of the European antitrust authorities for too narrow definition of the markets and, in the detailed dimension – with the opinion of the representatives of the industry and scientists dealing with the sugar sector concerning the transnational range of the sugar market. This controversy points to the need for further research and discussions on the geographical market delimitation. Moreover, the issue should be covered with reference to other agri-food markets – using both the methodology developed with antitrust proceedings in mind, as well as the concepts stemming from strategic management.

Intellectual Property Rights, Interoperability and Compulsory Licensing: Merits and Limits of the European approach

The Essential Facilities Doctrine, albeit an American case-law creation, is also implemented in the European Union. While, since Trinko (2004), the US Supreme Court seems to challenge its implementation, European antitrust authorities tend to extend this doctrine to intangible assets. Focusing on European case-law, we observe several differences between American and European competition policies. This article highlights these dissimilarities - which are going much further than the sole implementation of the EFD - and underlines both the principles and the limits of the European approach. As a final purpose, this work tries to point up some of these differences' origins. In this way, we argue that, if the US and the EU antitrust authorities are consistent with their respective conceptions of competition, these policies are not neutral on the innovation incentives

Article 82, Sector-Specific Regulation, Microsoft and Telefonica: Really a New Economic Understanding of Abusive Practices Under EC Law?

Article 82 of EC Treaty prohibits any abuse by one or more undertakings of a dominant position; the examples contained of “abuse” reflect a variety of public policies that have led European antitrust authorities in several directions simultaneously, indicating also a highly regulatory policy of control of the adverse effects of market power in the EU. The lack of guidance in this field both for undertakings and enforcers led the European Commission to issue in 2005 the well known Discussion Paper on exclusionary abuses; although also announced, a further notice on the so-called exploitative abuses is still waited. Besides, a more economic approach to abusive practices is preached from virtually all the communitarian instances. However, two recent decisions - the fine imposed in July 2007 to Telefonica for practicing excessive prices in the form of margin squeeze in the broad band market in Spain, and the confirmation in September 2007 by the Court of First Instance of the fine imposed to Microsoft in 2004 for two allegedly anticompetitive practices (tying and refusal to supply) - suggest that this new economic understanding is either still forthcoming or not yet understood as such by everybody.In this paper we take all this considerations into account when analyzing two features of the current understanding of abusive practices under EC law. First, the evolution from early decisions finding excessive prices and refusals to deal - which were mostly vertical in nature - to the latest pronouncements show a shift to horizontal effects. In addition to it, the ex ante regulation of certain industries - e.g. telecommunications - has certainly altered the way in which antitrust ex post intervention is conducted. Both phenomena are illustrated respectively by the Telefonica and Microsoft cases, and need to be assessed under the new economic approach to Article 82 practices.

The European Union, the United States, and Microsoft: A Comparative Review of Antitrust Doctrine

When a seller bundles together two products that have previously been sold separately, the arrangement is sometimes referred to as a tie. If the two products are bound together physically, it is often referred to as a technological tie. In the 1970s, IBM physically integrated so-called peripheral products, such as disk drives and printers which previously had been sold separately, into its central processing units. This integration was then attacked (largely unsuccessfully) by independent manufacturers of peripheral equipment as unlawful tying and as monopolization through tying. More recently, Microsoft has incorporated products, such as browsers and media players, into its operating system, behavior that again amounts to technological tying. It has also improved its server software by heightening the degree to which servers employing that software can interact. By raising the level of interaction among servers equipped with its software, Microsoft has so integrated work group servers as to enable groups of small servers to approach the capacities of mainframe computers. The European competition-law authorities see both matters as problematic. The integration of the media player has been condemned as tying; and the heightened server interaction has been faulted for failing to provide the interoperability that rival server software requires in order to participate on an equal footing with Microsoft server software in Windows work groups. Microsoft’s integration (at least in the view of the European antitrust authorities) also raises issues of essential facilities, and of the role of antitrust in achieving interoperability. Integration of these sorts - e.g., the hardware integrations of IBM and the software integrations of Microsoft - raise antitrust issues, as the extensive litigation in the United States and Europe over Microsoft’s behavior has revealed. We have now reached a moment in time in which both the American and European laws are sufficiently developed to warrant reflection and comparison. That is the task approached in this article. Part I, below, examines the European approach, exemplified in the decisions of the European Commission and the Court of First Instance about the interoperability of Microsoft’s server software. That part also examines the integration of the Windows Media Player into the Windows operating system. Part II reviews the U.S. decisions dealing with Microsoft’s integration of its Internet Explorer browser into its operating system. Since most readers will be familiar with the U.S. litigation at least in its main routlines, that review can be brief. Part III contains an initial comparison of the U.S. and European approaches to product integration. The conclusion in Part IV identifies the major differences and the doctrinal bases on which they rest.

Cartel Damages Claims and the Passing-On Defense

We develop a general economic framework for computing cartel damages claims by purchaser plaintiffs. We decompose the lost profits from the cartel in three parts: the direct cost effect (or anticompetitive price overcharge), the pass-on effect and the usually neglected output effect. The pass-on effect is the extent to which the plaintiff passes on the price overcharge by raising its own price, and the output effect is the lost business resulting from this passing-on. We subsequently introduce various models of imperfect competition for the plaintiffs industry. This enables us to evaluate the relative importance of the cost, pass-on and output effects. We show that an adjusted passing-on defense (i.e. accounting for the output effect) is justified under a wide variety of circumstances, provided that sufficiently many firms in the plaintiff's market are affected by the cartel. We derive exact discounts to the direct cost effect, which depend on relatively easy-to-observe variables, such as the pass-on rate, the number of firms, the number of firms affected by the cartel, and/or the market shares. We finally extend our framework to assess the cartel's total harm, further demonstrating the crucial importance of the output effect. Our results are particularly relevant in light of the recent developments by U.S. and European antitrust authorities to make cartel damages claims more in line with actually lost profits.

THE ATTEMPTED MERGER BETWEEN GENERAL ELECTRIC AND HONEYWELL: A CASE STUDY OF TRANSATLANTIC CONFLICT

The thwarted merger of General Electric and Honeywell stands out as, so far, the only merger between US companies to be derailed solely by the European anti-trust authorities, while being cleared by the US Department of Justice (DoJ) and 11 other jurisdictions. In this paper, the authors examine the European Commission’s decision, and the theories underlying it and compare the Commission’s approach with that followed by the DoJ. They observe that the Commission and the DoJ had a different assessment of broadly similar facts, and attempt to understand the source of the divergence. The authors find that (i) the horizontal effects identified by the European Commission rely on a particular perspective of market definition which is debatable (and leaves some questions unanswered). (ii) The anti-competitive effects in the bundling and Archimedean leveraging theories are not sufficiently robust so that they could be resumed. Accordingly, their likelihood should be supported by strong evidence but the evidence presented by the Commission was far from compelling. (iii) The deal may have involved significant efficiencies that were overlooked. These observations raise the suspicion that the Commission’s decision may have been affected by bureaucratic capture, such that civil servants did not follow the mandate that had been assigned to them. We find that the procedure enforced at the time was vulnerable to capture and that the Commission had an incorrect perception of the standard of review that the Court would apply to its decision in the context of an appeal. The accountability to which the Commission felt subject to was thus biased downwards and enlarged the scope for capture. In addition some (admittedly casual) evidence regarding the actual unfolding of the procedure, as well as subsequent reforms of process and procedure undertaken by the Commission, would support the view that significant problems arose in this area.