Transcript Kein Folientitel - University of East Anglia

Max-Planck-Institute
for Research on Collective Goods
The deep roots of legal uncertainty
Doctrinal sources of legal uncertainty in both Art. 82 EC and
Sec. 2 ShA
Alexander Morell
MPI Bonn
Intro
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The Stereotypes:
– Application of Antitrust law: US economics based, EU
conduct based
– More economic approach => legal uncertainty
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I would like to suggest (very much work in progress) :
– It‘s not only the application
– More economic approach => exchanges source of
persisting legal uncertainty
Max Planck Institute for Research on Collective Goods
Outline
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Fundamental Texts
Definitions
Implementation of Definitions
Things to be astonished about
Conclusions
Max Planck Institute for Research on Collective Goods
I. The fundamental texts
Sec 2 ShA
Every person who shall monopolize,
or attempt to monopolize, or
combine or conspire with any
other person or persons, to
monopolize any part of the trade
or commerce among the several
States, or with foreign nations,
shall be deemed guilty of a
felony, and, on conviction
thereof, shall be punished by fine
not exceeding $10,000,000 if a
corporation, or, if any other
person, $350,000, or by
imprisonment not exceeding
three years, or by both said
punishments, in the discretion of
the court.
Art. 82 EC
Any abuse by one or more undertakings of a
dominant position within the common
market or in a substantial part of it shall be
prohibited as incompatible with the common
market in so far as it may affect trade
between Member States.
Such abuse may, in particular, consist in:
(a) directly or indirectly imposing unfair purchase
or selling prices or other unfair trading
conditions;
(b) limiting production, markets or technical
development to the prejudice of consumers;
(c) applying dissimilar conditions to equivalent
transactions with other trading parties,
thereby placing them at a competitive
disadvantage;
(d) making the conclusion of contracts subject to
acceptance by the other parties of
supplementary obligations which, by their
nature or according to commercial usage,
have no connection with the subject of such
contracts.
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II. Definitions: monopolization and abuse
US: Definition of
monopolization
 Monopolization
– ShA protect competition
– Stifle competition and harm
social welfare
– Spur competition as reward for
success
 Tradeoff when prohibiting
achievement of monopoly
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EU: Definition of abuse
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Monopolization
– Reward for competition
– Can’t be forbidden
 regulate monopolies: abuse
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Definition competition by
goal of comp.
– Make consumers better off
– Monopolization = market
power increases => consumers
worse off.
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Definition of abuse:
– By goal of competition?
Abundance of goals (Freedom of
action, prevent exploitation,
distribution of income in
accordance to performance,
optimal allocation of resources,
technical progress, adaptive
flexibility)
– By structure or process?
Nobody can define competition
– De facto ad hoc definitions
II. Definitions: monopolization and
abuse
Social goals in the US
We have been speaking only of the economic reasons
which forbid monopoly; but, as we have already
implied, there are others, based upon the belief
that great industrial consolidations are
inherently undesirable, regardless of their
economic results. In the debates in Congress
Senator Sherman himself in the passage quoted
in the margin showed that among the purposes
of Congress in 1890 was a desire to put an end
to great aggregations of capital because of the
helplessness of the individual before them…
Throughout the history of these statutes it has
been constantly assumed that one of their
purposes was to perpetuate and preserve, for
its own sake and in spite of possible cost, an
organization of industry in small units which
can effectively compete with each other. We
hold that "Alcoa's“ monopoly of ingot was of the
kind covered by § 2 (Learned Hand, UNITED
STATES V. ALUMINUM CO. OF AMERICA
148 F.2d 416 (2d Cir. 1945).)
What goals in EU?
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(About regulation 17) : That is because the
Commission’s power (…) to impose fines on
undertakings which have, intentionally or
negligently, infringed Article 81(1) EC or
Article 82 EC, not only includes the duty to
investigate and punish individual
infringements, but also encompasses the duty
to pursue a general policy designed to apply,
in competition matters, the principles laid
down by the Treaty and to guide the conduct
of undertakings in the light of those
principles. Opinion AG Verika, (2008) C510/06
so we don‘t know what principles are guiding
the interpretation, we only know there are
many.
II. Definitions: monopolization and
abuse
Early importance of
Economic goals in US
A single producer may be the
survivor out of a group of active
competitors, merely by virtue of his
superior skill, foresight and industry.
In such cases a strong argument can be
made that, although the result may
expose the public to the evils of
monopoly, the Act does not mean to
condemn the resultant of those very
forces which it is its prime object to
foster: finis opus coronat. The
successful competitor, having been
urged to compete, must not be turned
upon when he wins. (Learned Hand,
UNITED STATES V. ALUMINUM CO.
OF AMERICA 148 F.2d 416 (2d Cir.
1945).)
The only „clear“ goal in EU
is Art. 3 I g) EC „undistorted
competition“.
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EuGH “British Airways“, Rs, C95/04 P, Rn. 62;
Opinion GA Verica, 15 May 2008,
C-510/06 P, Rn. 229;
Bechtold Bosch et al. Art. 82 Rn.
27
Lenz/Grill Art. 81-86 no. 2
Wish, Competition Law, 28
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II. Definitions: monopolization and
abuse
Conceptual effects of USdefinition
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The (partial) efficiency
goal delivers systematic
that can structure the law
Clear definition of
competition: Competition is
Conceptual effects of EUdefinition
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market integration, distributive, fairness,
protectionist, …)
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Increases predictability
Builds solid ground to
built arguments upon
Amplification by systematic
interpretation of treaty (Art 2
EG: create common market, ECJ “Metro I”
26/76 no. 20, and other social and economic
goals)
what makes consumers better
off.
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Open definition =>
incorporate many policies (EU
 Shifts power from legislator
to ECJ (and Commission);
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Ad hoc approach
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 makes ECJ less predictable
II. Definitions: monopolization and
abuse
Examples for legal uncertainty in EU: loyalty rebates
• Michelin test (totally over-inclusive)
 Roll back rebate
 Market share considerably larger than those of competitors
 Reference period relatively long
• British Airways
 Rebate illegal with reference period of ONE month!!! (relatively long !?)
 Add to test: rebate threshold close to total demand or (!) individually negotiated
• “Excuse”:
“It is necessary to consider all the circumstances…and to investigate whether …the discount tends to (1) restrict the buyers’
freedom to choose his sources of supply, to (2) bar competitors from access to the market, (3) to apply dissimilar conditions to
equivalent transactions with other parties or (4) to strengthen the dominant position by distorting competition.” (Michelin I.
No. 73)
 pretends effects based approach
 either test is inadequate for finding effects
 or effects are inadequate for being found.
 legal certainty?
• Reason: Don’t know what to protect => no systematic framework
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III. Implementation/application of
the definitions
Effects based US-law
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central topos “making
consumers better off”
 care for effects
 care about false negatives as
much as about false positives
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Conduct based EU-law
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integrate various policy goals
into one article
 major difficulty: constructing
the rule
 loads of per se rules
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Although you look for effects
they are hard to see
 Difficult factual questions
 Decrease predictability
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Guidance in deciding cases?
 You will always find at least
one helpful principle
 No need to look into the
details/facts
 Increases predictability
 Detachment from reality
III. Implementation/application of
the definitions
US: Standards of proof become
decisive
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Good example: Concord
Boat
model was insufficiently
rooted in data of the case
 illegality of single product
rebates rejected
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Usually plaintiff bears
burden of proof
EU: Rules tend to seem
economically odd
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Importance of length of
rebate reference periods
(Michelin); (Maybe that’s
why it was abandoned in
BA)
Per se illegality of targeted
rebates (Michelin + BA)
 less enforcement
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IV. Weird: Why wasn’t it the other
way around?
US legal system actually tuned to per
se rules and simple fact finding?
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The more general statute
Often a circuit judge takes the
decision
– DoJ cannot bindingly deem
illegal a monopolization
– (FTC can, though)
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Jury trials possible in antitrust
issues (LePage vs. 3M)
Can lead to problematic rules
too:
EU enforcement system actually
tuned to combining legal and
economic knowledge?
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 AVC-test in single product rebate
cases (concord boat)
 Separation of tied rebates and
single product rebates (3M)
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The more precisely framed
statute
Commission has expertise on
both legal and economic side
and can bindingly decide
No jury trails
economic advice easily
available to courts
(Discussion paper could initiate
some sensitivity to false
positives)
V. Conclusion
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The differences are deeply rooted in legal
thinking and principles
It‘s not just a matter of how to apply very similar norms, it
is a matter of deeply rooted doctrinal thought.
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Both system have a predictability problem:
The EU triggered by conceptual issues, the US by factual
issues. You can only trade the one against the other.
Max Planck Institute for Research on Collective Goods
Thank you!
Most important sources that are not case law:
Bechtold/ Bosch/ Brinker/ Hirsbrunner, EG Kartellrecht – Kommentar, 2005
Lenz, EG-Vertrag – Kommentar, 2003
Eilmansberger, CMLR 2005, 129-177
Fox, Antitrust Law Journal 70, (2002-03), 371-411.
Kolasky, Antitrust Bulletin 49 (2004), 29-53.
Wesseling, The Modernization of EC Antitrust Law, 2000
Whish, Competition Law, 2003
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