Just back from Aix-en-Provence, where the very fundamental eternital questions of antitrust law were discussed, Rupprecht Podszun finds himself again in exciting day-to-day business. Shortly before summer break – as is so often the case at this time of year – everything is running hot. We sort the most important and the most beautiful for you – here are the SSNIPpets, small but significant news, information and pleasantries – our pet project!
The three Ministers: Proposals for EU Antitrust Law
The Weimar Triangle met in Poznan in the shadow of the EU chair grabbing exercise. The Weimar Triangle is not Goethe – Schiller – Wieland, let alone Gropius – Feininger – Klee, but Altmaier – LeMaire – Emilewicz. The three ministers from Germany, France and Poland presented a paper on modernising EU competition law. (We actually thought that Germany wanted to wait for the results of the Commission on “Wettbewerbsrecht4.0” for reform proposals at EU level, but waiting is an art that not many people master).
At first glance, the three-page programme with proposals for reform of EU competition law is likely to send a cold shiver down the spine of more traditional competition lovers. But that is deceptive. First news: The introduction of a European ministerial authorisation is off the table, and one can probably take that as a success of the fierce opposition to this proposal (as documented in our blog, too). Germany seems to have pushed that from the table, and actually the German Ministry of Economics never seemed too enthusiastic about such a tool on the European level anyway.
Instead of a European ministerial approval
The Weimarers in Poznan came up with a different proposal: increasing the influence of the Advisory Committee. This is a forum where the representatives of the Member States meet to comment on EU competition enforcement. To my modest knowledge, the Advisory Committee has so far been largely meaningless: the Commission presents its draft decisions, 27 Member States rubberstamp them, Germany complains a bit, then the Commission does what it thinks is right. In the future, more should be done, but pay attention to the wording:
“The role of the Advisory Committee in merger control should be reinforced and upgraded to allow for broader competition policy discussions with the Member States. It could conduct independent assessments of efficiency gains linked to mergers and of the economic relevance of remedies in order to strengthen the Commission’s decision in this field. The role of the Ministries in charge of competition policy in Member States should be reinforced, such as in the meetings of the Directors-General for Competition.”
“Broader competition policy discussions” – these are certainly not the discussions of individual cases. “Independent assessments” is also pretty vague – an occasional working group will do which then writes a paper, which then disappears in the drawers of DG Competition.
Good and less good
Somewhat surprising is the proposal of Germany/France/Poland to strengthen behavioural remedies. Official in the agencies will flinch, well aware that there is only one thing that is more unpleasant than imposing behavioural remedies, and that is: controlling them. Of course, behavioural remedies are not just a practical issue. They always imply the presumption that officials in the competition agencies know best how to work the markets.
The paper contains some very reasonable or at least noteworthy ideas. These include a tougher approach to state-owned enterprises or highly subsidised enterprises (although it is questionable why this should only apply to those from third countries). Proposals to tame big tech giants are very bold and far-reaching. Individual companies are to be classified as “systemic actors” who are subject to special scrutiny. Wow! The efficiency defence should be easier for undertakings to raise (a demand that my doctoral student Marius Leber dealt with in his PhD thesis). Companies need more certainty for cooperations, that too – granted.
Unfortunately, with so much exciting input, there are also sentences like this:
“The European Commission should evaluate and modernise current guidelines on the assessment of horizontal mergers and on the definition of relevant market in order to introduce more flexibility, better take into account competition at global level and protect strategic common European interest.”
Flexibility is a double-edged sword in the application of law. And “strategic common European interest” is something that I do not like to see in the wording of merger control, either now or in the future.
Germany is also in the midst of reform fever for its national competition law. It is hardly bearable to wait for the draft bill, which is due in July: Taming the digital giants! The fall of the de minimis clause in merger control! New merger control thresholds! A correction to the disclosure requirement! Easier interim measures! Powers for the office in consumer law! A codified leniency programme! And much more. I will set the hurdle particularly high for the ladies and gentlemen in the Federal Ministry of Economics so that we can criticise something afterwards. What we are hearing so far still sounds far too reasonable.
By the way, the 10th amendment of the German competition act (GWB) still needs a good name, and even though we have already received some great suggestions (but there is also a great prize, a D’Kart-T-shirt!), we would like to remind you once again of the competition: Just like the “Gute Kita-Gesetz” (“Good Childcare Law”) or the “Starke Familien-Gesetz” (“Strong Families-Act”), the 10th GWB amendment should also be suitable for marketing. Antitrust law goes evening news! Our jury, specialised on names for laws, will choose and to win there is a D’Kart-T-shirt in your size! Since you want to have clarity whether you are the winner or not soon, we set 9 July 2019 as the deadline for this competition. Please step forward with your suggestions by mail or by commenting under this article.
The reason why we have high expectations is, of course, also due to the fact that the people in the Ministry now have all the time of the world, again: Heidelberger Druck has decided not to apply for a ministerial approval following the prohibition of its merger with MBO. In the case of Miba/Zollern, Minister Peter Altmaier has taken a two-month extension. It is not quite clear to me what kind of progress is expected during this time. However, it is also possible that a solution will be sought to the problem that we have already described here in the blog as the “exit option ministerial approval”.
In fact, any company that receives a ban from the Federal Cartel Office (Bundeskartellamt) can now apply for ministerial approval relatively free of risks. Competitors no longer have the right to challenge the Minister’s decision, there is no real opponent in the proceedings, the Federal Cartel Office is out, you can rely on a very airy-fairy substantive criterion, the costs are manageable. In comparison to a complaint before the Düsseldorf Higher Regional Court, this is the easy way out. With the Court one must fight again heavily, try to beat the Bundeskartellamt, and all this before the senate of Jürgen Kühnen, which knows very exactly how to dissect arguments and opinions. I would advise clients after earning the Bundeskartellamt’s prohibition decision: Let’s move on to the Minister! This applies at least to German companies, a Chinese or even a Spanish investor probably do not need to try this, which shows once again that a ministerial authorisation is a tool that may favour discrimination.
All these problems would be saved if we would simply abolish the possibility for a Minister to overrule the Bundeskartellamt on public policy grounds. If this is too radical, one may at least consider an automatic judicial control of the Minister’s decision at the Düsseldorf Court.
Studienvereinigung in Düsseldorf
The 10th amendment to the GWB was also a topic at the Düsseldorf workshop of the Studienvereinigung Kartellrecht, the German version of the Antitrust chapter of the American Bar Association. I happened to sit on a panel with economics professors Achim Wambach (head of the Monopolies Commission and the Commission “Wettbewerbsrecht 4.0”) and Justus Haucap, my Düsseldorf colleague, moderated by Linklaters’ Daniela Seeliger, to discuss the amendment. We tried hard, but we did not even come close to the entertainment value of the last meeting of the association in December when there was now legendary electoral thriller in the Studienvereinigung. (Please read this again here.)
Rule of Law and Rules of Economics
With the two top economists on the panel, I was given the thankless role of contributing with legal knowledge. Wambach and Haucap are not exactly suspects of over-regulating interventionists. Both, however, gave me the impression that they were more afraid of under-enforcement than of over-enforcement. Grey areas in the legislative text, vague wording – that does not seem to frighten them, that is just necessary flexibility. But when we do stretch the traditional limits of antitrust law, it is quite clear to me that we must not abandon one principle at any rate – the principle of rule of law, i.e. judicial review. Court proceedings may be cumbersome, lengthy and nerve-wrecking (and there are certainly some adjusting screws to improve them), but they are indispensable. And the rarer they become (because of commitments, settlements, ministerial authorisations or cost-benefit considerations), the more we lose the rule-of-law in competition.
And again: Facebook
The Facebook case was also discussed in Düsseldorf. Marc Besen moderated a panel with economist Mette Alfter and lawyer Michael Bergmann. Good discussion. Horst Satzky contributed exact page finds from an early book by former Tübingen professor Wernhard Möschel, whose successor at that University, Stefan Thomas, turned out to have counselled for Facebook.
I think that people in discussions of the Facebook case often overlook one aspect when criticising that there is no causal link or no abuse or no link to antitrust. I find that there simply is no comparable market that we can take as a yardstick for Facebook. Facebook has created and shaped the market and still does so. Other companies are oriented towards Facebook. But the standards established by the dominant company can’t be our benchmark for competition: What is an abuse and what is not does not depend on the customary practices established in the market by the first and pretty much only market participant. Those who believe that Facebook behaves no different from other data-hungry companies fails to recognize this. It’s exactly the other way round.
By the way, here I see one aspect (of many) why companies like Uber, Youtube or Facebook have been able to escalate that quickly: when having an idea, they do not stop first to sort out all the potential issues with it. They don’t care – this is my impression – about the concerns of their (non-existent) German compliance team and thus simply take ideas to the market. Compliance-wise they prefer to fight the battle. This, first, requires an opponent to stand up, which is rare enough. If Youtube had considered as much as a law-abiding German company would have done whether it is right or wrong from a German perspective to play videos that may violate copyright, we would not have had a single video online. For example, one like that (The video linked here is a hint to the fact that in German outdoor swimming pools do not only sport a controversial culture of debate, but also a splashing competition culture!).
Picture of the week
Jonas Heger was able to gain nationwide prominence, which is not bad at all for a research assistant in an antitrust law firm. The reason for his 15 minutes of fame: Heger made a very serious impression in fitting attire on the loading area of a truck with a lot of paper, which he – so it looks – cuts out of the plastic packaging with a cutter. The very large amount of paper was 650,000 pages, which the Hausfeld law firm (where Heger works) had delivered to Gleiss Lutz, the law firm, in Stuttgart. The Frankfurter Allgemeine Zeitung documented this. If Hausfeld had chosen a paper with a fine grammage, as one would have expected from a lawyer’s post in the past, say: 100 grams with a watermark, then the delivery would have been around 4 tons. That would be – our truck cartel experts will know – impossible with the normal 7.5 tonne truck. Heger’s papers actually dealt with such stuff because of course it was a damages claim re the truck cartel, in which some lodge claims, while others need to read that stuff. Our props go out to all those support lawyers going through the files. The four tons of paper would have nealty fitted onto one USB stick, by the way.
Event of the week
The Düsseldorf Higher Regional Court send an invitation to a training course: “Antitrust law for journalists”. On 10 July, Judge Ulrich Egger and Public Prosecutor Sebastian Haßel will give a crash course on antitrust proceedings. I think it’s a good idea to establish some talking points with journalists, so that at least some of these mistakes no longer end up in the press.
But I wonder what others think about it. I already know what Richard Whish, this frequent traveller antitrust law pope, thinks about it, because he once said (in a different context): He would prefer someone who had no idea of antitrust law to someone who thinks he understood antitrust law after a five-hour introductory course. And what some lawyers think when the Higher Regional Court offers advanced training in antitrust law, I already suspect. Yours to form your opinion!
Meanwhile in Brussels…
This should remain a one-hit wonder during Mrs Vestager’s term of office (who, incidentally, has already posed with Mrs von der Leyen): the Commission has announced an interim measure. The European Commission had not tried this since IMS Health in 2001! Perhaps Vestager just wants to have the full flavour of everything before moving up the ladder to become Vice President of the European Commission. Or it was in in anticipation of the paper of the three Weimarans (see above) she wanted to show what we can already flex the muscles. Broadcom, a company that manufactures chips for TV set-top boxes and modems, will have to face an interim measure under Article 8 of Regulation 1/2003 if it does not give in and abolishes certain measures to ensure exclusivity. This confirms an old assumption: the threat of interim measures is above all a bargaining chip that competition authorities can use to push undertakings to commitments or settlements. This is welcome with a view to markets, but not so much in view of the possibilities for judicial control.
A flash in the pan?
A colleague recently sent me a whatsapp: “Have you seen it? Just received an alert…” He was alerted on a new paper by Lina Khan: 119 Colum. L. Rev. 973 (2019). Lina Khan! Has a new essay! No wonder that an alert popped up. Her pamphlet “The Amazon Antitrust Paradox” was simply seminal. Whether her new text (“The Separation of Platforms and Commerce”) is such a big hit again, or whether Lina Khan will be included in the list of One-Hit-Wonders, time will tell. On One-Hit-Wonders I instantly think of “Video killed the radio star” from the Buggles. Even fits somehow thematically. Tadadada tat ta tadadada / in my mind and in my car / we can’t rewind we’ve gone too far…
Service SNIP of the week
We still have one addendum, simple since it is way too good. If you are about to travel and your plane is late, don’t forget to bridge the waiting time according to your standing. You have a claim to this according to national norms and Art. 5 para. 1 lit. b), 9 para. 1 lit. a) and b) of the Air Passenger Rights Regulation 261/2004. The Local Court of Düsseldorf has now decided what exactly is “appropriate” for your personal entertainment that night. The question came up in a cancelled flight from Goteburg to Düsseldorf. The Court awarded damages for hotel accomodation (286.50€), food (157.33€), beer and wine (40.79€). But the judge is not stopping there:
“Furthermore also the costs for the Champagne cocktails and the dessert wine (44.97€) are refundable. It is generally known for the Amtsgericht Düsseldorf that a successful meal does not only need to include the consumption of accompanying beers and/or wines, but – beyond that – also the of Champagnee and dessert wines so that also these costs prove as appropriate“.
Catering wise, the workshop “Antitrust Law for Journalists” at the Higher Regional Court is quite promising now…
Have a nice weekend! And think again about a name for GWB10!