Transcript Universitetet i Oslo 2006

An effects-based competition policy
– legal perspectives
Professor dr. juris Erling Hjelmeng
University of Oslo, Department of Private Law
Issues
• Substantive law
– Legal rules and their application
• Prioritization
– Effects-based prioritization of enforcement resources
• Remedies
– Ensuring compliance or something more?
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Professor Dr. juris Erling Hjelmeng
Article 101(1) – Anti-competitive
Object
• Point of departure: The legal test for anti-competitive object:
• ECJ in T-Mobil (C-8/08)
–
"The distinction between ‘infringements by object’ and ‘infringements by effect’ arises
from the fact that certain forms of collusion between undertakings can be regarded, by
their very nature, as being injurious to the proper functioning of normal competition."
• Definition of object in STM (56/65):
–
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”first …to consider the precise purpose of the agreement, in the economic context in
which it is to be applied. … Where, however, an analysis of the said clauses does not
reveal the effect on competition to be sufficiently deleterious, the consequences of the
agreement should then be considered…”
Professor Dr. juris Erling Hjelmeng
Article 101(1) – Anti-competitive
Object con't
• Forms of restrictions by object (or hard-core restraints):
– Price-fixing (horizontal and vertical)
– Market sharing, quotas
– Absolute territorial protection
• Will agreements within these categories always have an
anticompetitive object?
– GlaxoSmithKline
– The context may rebut a presumption of object, cf. AG Trstenjak in
Beef Industry (C-209/07 para 59).
• Relevance of economic context: Defence?
– No per se rule but a (cursory) concrete assessment, i.e. whether anticompetitive effects are contradicted by market characteristics
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Professor Dr. juris Erling Hjelmeng
Article 101(1) – other aspects
• Actual vs. potential effect
• Presumptions (shifting the burden of proof)
• Several legal techniques making effects-analysis
less important
– But an ECJ which recognizes the need for case-by-case analysis
• Ancillary restraints
– Restrictive clauses may escape the prohibition
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Professor Dr. juris Erling Hjelmeng
Article 101(3)
• Burden of proof: Reg No 1 Article 2:
–
“The undertaking …claiming the benefit of Article [101](3) of the Treaty shall bear the
burden of proving that the conditions of that paragraph are fulfilled”
• Building on earlier case-law
–
“it is in the first place for the undertakings concerned to present to the commission the
evidence intended to establish the economic justification for an exemption.” (42/84
Remia p. 45)
• Policy-making by BER
–
Clear shift towards a more economic approach in most areas
–
Guidelines
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Professor Dr. juris Erling Hjelmeng
Article 101(3) - presumptions?
• Taking the hard-core category into Article 101(3)
• Vertical Guidelines para 46 on hard-core restraints (RPM &
absolute territorial protection):
– ”Individual exemption of vertical agreements containing such hardcore
restrictions is … unlikely.”
• General Court:
– ”the Court considers that, in principle, no anti-competitive practice can exist
which, whatever the extent of its effects on a given market, cannot be
exempted, provided that all the conditions laid down in Article 85(3) of the
Treaty are satisfied” (T-17/93 Matra Hachette, para 85)
– C-501/06 Glaxo services
• No irrebuttable presumption
• Is there a connection between the classification as ”hard-core”
and lack of efficiency?
– Is the requisite standard of proof higher?
• RPM as a test case
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Professor Dr. juris Erling Hjelmeng
RPM 1
• US Supreme Court in Leegin: RPM to be analyzed
under the rule of reason
– ”The Court has abandoned the rule of per se illegality for other
vertical restraints a manufacturer imposes on its distributors.
Respected economic analysts, furthermore, conclude that vertical
price restraints can have procompetitive effects. We now hold that
Dr. Miles should be overruled and that vertical price restraints are
to be judged by the rule of reason.”
• Assessment of RPM under Article 101(1) – truly
hard-core?
– 243/83 BINON, rejected arguments pertaining to the
characteristics of the market and pointed to (3)
– Exemption is possible
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Professor Dr. juris Erling Hjelmeng
RPM 2
•
•
•
•
No automatic-exemption
General rule: No presumption of illegality outside BER
Applies to RPM?
Is the presumption advocated by the Commission, but
poorly founded, the problematic issue
– Law in books vs law in action
– Commission policy hard to overcome
– Article 267-references from national courts
• How bad is it?
– Defences are available to companies
– The alternative: Should RPM be per se lawful?
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Professor Dr. juris Erling Hjelmeng
Conclusions on Article 101
• No per ser standard embedded in the legal rules
• A ”limited rule-of-reason” standard “modified rule-ofreason”/structured
– Object
– Presumptions
– Article 101(3) presumptions?
• Burden of proof
• “De facto” per se?
• Is it that bad – would't companies be best placed to
justify their commercial practices?
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Professor Dr. juris Erling Hjelmeng
Article 102
• No categorization in the wording; “abuse”
• More leeway for the ECJ to establish its own categories
and to provide a definition of abuse
– More like Sherman Act where per se vs. rule-of.-reason has been
developed in case-law
• Basic test (Hoffmann-La Roche)
– “eliminating a competitor and thereby strengthening its position by
using methods other than those which come within the scope of
competition on the merits” (85/76, para 354, emp. added)
• Categorization through case-law
– Form-based tests (e.g. exclusive agreements/loyalty rebates)
– Intent-based tests (e.g. below-cost pricing)
– Effect-based tests (e.g. refusals to deal)
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Professor Dr. juris Erling Hjelmeng
Article 102 con’t
• Is a form-based approach tantamount to per se?
– ”aimed at..”, “such as to…”, “likely to..”, “tends to…”, “capable of…”
etc.
• Two-pronged test:
– Specific features of the conduct (e.g. a rebate likely to induce
loyalty)
– Anti-competitive effects presumed
• Anti-competitive object
• Objective justification
– Burden on the undertakings
– In line with Article 101(3)
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Professor Dr. juris Erling Hjelmeng
Article 102 – loyalty rebates
• General conception: Loyalty rebates are per se
prohibited
– And such rule has been heavily critizised
• Is it so? What is the real scope of the per se-rule?
– Rebates conditional upon exclusive (or almost exclusive) purchase
(Hoffmann-La Roche)
– Individualized target rebates (Tomra, Michelin I, BA)
• Does a per se rule apply to retroactive rebates in
general?
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Professor Dr. juris Erling Hjelmeng
Article 102 – loyalty rebates con't
•
Test pronounced in BA:
–
•
“it first has to be determined whether those discounts or bonuses can produce an
exclusionary effect, that is to say whether they are capable, first, of making market entry
very difficult or impossible for competitors of the undertaking in a dominant position and,
secondly, of making it more difficult or impossible for its co-contractors to choose between
various sources of supply or commercial partners.” (C-95/04 para. 68)
Tomra:
–
–
–
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“a rebate system in which the rate of the discount increases according to the volume
purchased will not infringe Article [102 TFEU] unless the criteria and rules for granting the
rebate reveal that the system is not based on an economically justified countervailing
advantage but tends, following the example of a loyalty and target rebate, to prevent
customers from obtaining their supplies from competitors” (T-155/06 para. 213)
”In determining whether a quantity rebate system is abusive, it will be necessary to consider
all the circumstances, particularly the criteria and rules governing the grant of the rebate,
and to investigate whether, in providing an advantage not based on any economic service
justifying it, the rebates tend to remove or restrict the buyer’s freedom to choose his sources
of supply, to bar competitors from access to the market, to apply dissimilar conditions to
equivalent transactions with other trading parties or to strengthen the dominant position by
distorting competition”
Appeal pending, case C-549/10 P
Professor Dr. juris Erling Hjelmeng
Article 102 – loyalty rebates con't
• Elements
– ”Fidelity-building effect”, i.e. the immediate effect on the trading
partner
– Based on an economically justified consideration?
– Restrictive effect presumed (irrebuttable according to the General
Court in BA , T-219/99 para 297)
• Focus: Immediate effects on trading partner
– Parallell with ”object” under Article 101
– Rebuttable presumption
• What will be the definite position of the ECJ if called
upon in an Article 267 ruling?
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Professor Dr. juris Erling Hjelmeng
Developments
• “New” forms of abuse:
– Submission of misleading information to public authorities
– Case T-321/05 Astra Zeneca:
“the submission to the public authorities of misleading information
liable to lead them into error and therefore to make possible the
grant of an exclusive right to which an undertaking is not entitled,
or to which it is entitled for a shorter period, constitutes a practice
falling outside the scope of competition on the merits which may
be particularly restrictive of competition” (para 355, emph. added)
• Focus on the immediate effect on the trading partner
– A repeated mistake – “economic freedom” and Article 85 (now
101)
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Professor Dr. juris Erling Hjelmeng
Prioritization
• Article 102: Guidance on enforcement priorities
– The initial idea of reforming the substantive rules transformed into
a policy document with an unclear status: “This document is not
intended to constitute a statement of the law…” (para 3.)
• Developing a new set of parameters for the
prioritization of cases
– A coherent set of parameters
– Effects-based ”beyond law”?
– Double standards?
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Professor Dr. juris Erling Hjelmeng
Prioritization con't
• Enforcement pluralism – different standards?
• NCAs
– will prioritize along the same lines as the Commission?
• Private plaintiffs
– form-based rules facilitating vexatious litigation?
• Implementing compliance policy
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Professor Dr. juris Erling Hjelmeng
Remedies
• Traditional remedies focus on
– bringing infringements to an end
– to avoid future infringements
– To compensate victims
•
Private enforcement – efficient remedy for inefficient rules?
– Compensation costs vs. deterrent effect
• Effects-based public remedies?
– Traditionally little focus on the effects of remedies (except for deterrent effetc of
fines)
• Positive vs. negative intervention
• Cease-and-desist orders (Article 7):
– Bringing the infringement to an end
– Strict proportionality test
– The Commission may not ”impose upon the parties its own choice from among
all the various potential courses of action which are in conformity with the
Treaty” (T-24/90 p. 52)
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Professor Dr. juris Erling Hjelmeng
Remedies 2
• Commitment decisions (Article 9)
– No need to establish infringement
– Settlement meeting ”the concerns” of the Commission
• A drive towards decisions facilitating competition in
the future
– E.g. Microsoft
• Compare Windows N with ”Browser-choice screen”
– Football broadcasting rights
– TPA in downstream natural gas markets
• Remedies ”beyond law”?
– Remedies of a regulatory nature
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Professor Dr. juris Erling Hjelmeng
Overall conclusions
• Substantive law:
– Flexible legal instruments in the Treaty
– Narrowed down by policy & case-law
• But does the case-law rule out a flexible approach?
– Problematic use of presumptions
• Prioritization
– Partly a more flexible approach, but
• Development of “double standards”
• Over-inclusiveness not eliminated
• Remedies
– Article 9 has paved the way for more flexible remedies aimed at
restoring and facilitating competition
– Need for more research on the overall impact
• Is the focus on per se vs. rule of reason appropriate?
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Professor Dr. juris Erling Hjelmeng