competition law

BIG5 of the Week 〔FEB 19-25〕

  • Elizabeth Warren’s ‘Big Fight’ Against Monopolies

    Warren
    Twitter Elizabeth Warren: ‘There’s this belief, when it comes to tech companies, that when people don’t pay up front, there’s no antitrust concern. But that’s a myth. Data is power.’ http://bit.ly/2HL1XLF

  • Insight on the recent Roche/Novartis decision of the Court of Justice of the EU

    CJEU_Logo.pngTwitter An agreement between pharmaceutical companies to spread misleading information about the effects of a drug can be a violation of competition law because it can affect the prescriptions given by doctors. http://bit.ly/2ChEWjZ

     

  • The Case Against Google 

    NYT Article.pngTwitter NYT: If you love Google, you should hope for antitrust investigations. There is no better method for keeping the marketplace creative than a legal system that intervenes whenever a company, no matter how beloved, grows so large as to blot out the sun. http://nyti.ms/2BDUsWs

     

  • Trump Antitrust Cop Splits With EU Over Probes of Big Tech

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    Twitter DOJ antitrust chief: The EU stance towards digital platforms ‘might stifle the very innovation that has created dynamic competition for the benefit of consumers’. https://bloom.bg/2GyRykU

     

  • European Commission fines maritime car carriers and car parts suppliers for collusion

    EC Logo.png
    Twitter European Commission fines multiple companies (including Bosch and Continental) for participating in a cartel while supplying car parts. http://bit.ly/2EI4PaB

     


Updates from The Antitrust

  • Whatever happened to ‘View Image’?

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    Twitter 
    Google
    settled with Getty Images to save itself from another potential fine from the European Commission. http://bit.ly/2otOjUo

     


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〔FEB 19-25〕

Whatever happened to ‘View Image’?

Noticed any changes while navigating Google the past few days? If not, maybe you’re not a Google Images fanatic. Google made a massive alteration to its image search service. It removed the ‘view image’ button that enabled users to skip having to visit individual websites to get access to a picture. This was part of a compromise made with Getty Images to drop its case against them at the European Commission – the top antitrust enforcer of the EU.

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In 2016, Getty filed a complaint to the Commission against Google’s ‘scraping’ practices. Scraping is the practice of collecting, copying and presenting content from competing websites. Every Google search inquiry involves some scraping activity. If Gardening Tips.pngyou search for gardening tips, Google reads a vast number of websites and presents the most relevant information to you. Google developed its search engine as to enable itself to present the information that you need without leaving the Google Search website. This has a negative effect on websites that lose web visitors and, therefore, advertising revenue.

 

The complaint made by Getty was concerned with the way in which Google conducted its image searches. Prior to 2013, Google presented its image results in low resolution. For this reason, an end-user who wanted a high-resolution image had to visit the source site of the image to get it. After a change in its service in January 2013, Google started presenting image search results in high resolution. Pirate.pngThat, in combination with the ‘view image’ button that enabled users to skip host websites and to view downloadable images in a single click, facilitated copyright piracy and negatively impacted the ability of artists and photographers to monetize their endeavours.

 

To combat the practice, Getty complained to the European Commission, arguing that Google’s practices were anticompetitive. News Corp, the parent company of the Wall Street Journal and the New York Post, joined-in the complaint. The Commission took note of the scraping allegations and Competition Commissioner Vestager didn’t rule out the possibility of taking action against it in the future. To appease the concerns of these companies, Google concluded a settlement with Getty. According to the agreement, Google would remove the ‘view image’ button from its image search service. This would require internet users to visit image-hosting websites to download pictures in return for payment or copyright attribution.

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While the agreement might appear to be a victory for artists in the digital era, the changes have only made image piracy more difficult, not impossible. Using a different search engine or downloading an image through the code explorer of an internet browser (for the more tech-savvy) is still an option. The only guaranteed assurance against online image piracy still remains the unappealing picture watermark.

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BIG5 of the Week〔Feb 12-18〕

  • The Competition Authority of Germany – its case against Facebook:

    UntitledTwitter Competition law may prohibit the merging of data from WhatsApp and Instagram with Facebook profiles. The data merging potentially gives Facebook an unfair competitive advantage in attracting advertisers that violates antitrust rules. http://bit.ly/2ojcXaa   

  • [Opinion] Break Up the Tech Giants intelligence² debate:

    Untitled 2Twitter Prof. Pinar Akman: To decide to break up the GAFAM tech giants, we must be convinced that the market is not competitive, that the tech giants engaged in harmful conduct and that breaking them up is necessary and proportionate. There is no evidence to support this. http://bit.ly/2Fdniga

  • Price-fixing penalty imposed on Samsung upheld in Japan:

    samsung


    Twitter Supreme Court rules that competition law can apply to price-fixing of products supplied to customers outside Japan. http://bit.ly/2o9kRnA

 

  • MediaPro case closed in Spain:

    CNMCTwitter The CNMC terminated its case against MediaPro - the dominant broadcaster of Champions League and La Liga football leagues. MediaPro committed to license its content to competing broadcasting platforms on fair and non-discriminatory terms. http://bit.ly/2nZ4f1Q

  • Getty Images settles with Google:

    Getty.png
    Twitter Getty Images drops EU scraping complaint after concluding a licensing agreement with Google. http://bit.ly/2EDucyf

 

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〔Feb 12-18〕

How much are you willing to give up for Facebook?

NetworkThe Federal Cartel Office (‘FCO’) of Germany has preliminarily found that Facebook’s Terms of Service are violating competition law. The Office is concerned about the amount of personal data that internet users are expected to give up, just to be on the social media platform.

Let’s be honest. You probably didn’t read Facebook’s Terms of Service when you signed up for the platform. And why should you? As a consumer, you expect that if a company doesn’t behave according to what’s acceptable, a rival will eat them alive. That’s certainly true in most cases, but social media platforms are a bit special. The peculiarity of social media stems from the fact that users can become locked into using them because other people use them too. If you’re not happy with the Facebook Terms of Service, you can’t just simply jump ship. What about all your friends?! For this reason, the German Office examined whether Facebook abused its dominant position through that ‘I agree with the Terms of Service’ checkbox.

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Protecting competition on the internet is complex. That’s because online services like Facebook are rarely offered in return for cash. Data is the internet’s preferred payment method. To get Facebook, you have to give up information about you so that ads that appear on your screen can pay for your Facebook ‘subscription’. So the ads for postgraduate degrees on your feed shouldn’t really surprise you a week after you postedDATA-Money.png a picture of you throwing that hat up in the air. Why, then, is the FCO worried about the fact that Facebook is collecting your data? Well, they don’t really mind about all that data that you’re willingly giving on the Facebook website itself. They worry about all the data that is being collected when you visit other websites that have Facebook add-ons.

When you visit a website, any website, that uses Facebook add-ons like the ‘Facebook like’ button or the ‘Login with Facebook’ button, Facebook collects data about your actions on that website. They then take that data and merge it with your Facebook profile. That’s why Facebook knows much more about you than what you occasionally post on your wall. Ever wonder why Facebook knows you’ve been looking for a new backpack a minute ago? The website you’ve been scrolling through might be using Facebook Analytics. Facebook doesn’t have to ask for your consent to take that data from you. You gave them that consent when you ‘read’ those Terms of Service!

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The German Cartel Office thinks that this data collection goes too far. The Office worries that, because accepting the Terms of Service of Facebook is a condition for creating an account and because Facebook has become such a dominant platform online, consumers have no real power to consent to the amount of data that they allow to be taken. As a result, Facebook offers a take-it-or-leave-it deal with no real option to leave. Put simply, in the eyes of the Federal Cartel Office, if data is the currency of the internet, Facebook is charging too much.

Facebook now has the opportunity to offer proposals that address the concerns of the FCO. For more information visit the website of the Bundeskartellamt.

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Luxury brands are… special

EU’s highest court decided that prestigious brands like Calvin Klein can refuse to have their products sold on online platforms like Amazon in order to preserve their ‘aura of luxury’.

What happened:

COTY, the company behind reputable brands like Chloé, Calvin Klein and Marc Jacobs, distributes its beauty products in Europe through regional distributors. One of its distributors in Germany – Parfümerie Akzente (‘Akzente’) – decided to sell COTY’s products through the German Amazon site (amazon.de). This was not permitted under the contract that COTY signed with Akzente. Their contract allowed Akzente to sell only on websites that preserved the luxury character of COTY’s products. Essentially, what companies like COTY are trying to do with such contracts, is to make sure that online shoppers still get the ‘luxury aura’ that their brands are known for when customers shop through an online shop. The presentation of a brand’s logo, font and colours are some of the details that these brands look out for on websites that sell their products. The effect of this provision in the contract meant that Akzente couldn’t sell COTY’s products on Amazon. This was because the Amazon website could not – according to COTY – preserve the luxury image of their brands.No_Amazon.png

The legal issue:

The question for the Court was whether contracts like the one signed by COTY and Akzente violated competition law. Contracts that restrict the freedom of a party can be very problematic for competition. Imagine a situation where a very successful company agrees with shops to sell only their product. If most of your country’s shops sold exclusively Microsoft tablets because of such agreements, competitors like Apple would find it very hard to reach customers and persuade them to buy their iPads. The contract between COTY and Akzente can be bad for competition in a similar way. By requiring that their products are sold on specific websites, COTY can tightly control competition online by refusing to sell to giants like Amazon and Ebay. This can result to high prices and lack of choice for consumers.

COTY+AkzenteThe decision:


Luxury2.pngThe Court of Justice decided that contracts like the one signed between COTY and 
Akzente can be allowed when they are intended to preserve the luxury image of a brand. According to the court, luxury brands are special because their quality is not only measured according to their material characteristics. Their ‘aura of luxury’ additionally ads to their quality. Consequently, agreements that are made to preserve this quality do not violate the rules of competition. So, in a situation where a luxury company makes agreements that dictate who qualifies to be their seller, if these agreements are designed to preserve its image and as long as these agreements are proportionate, uniformly laid down and non-discriminatorily applied; they are good to go.

 

How this impacts you:

The decision means that luxury brands can pull out their products from third-party online sellers like Amazon and Ebay. So, if you’re trying to treat yourself with a Marc Jacobs perfume for the holidays, you might need to rush for that ‘Proceed to Checkout’ button. Otherwise you might have to do your holiday shopping on the brand’s official website.
Note: The effect of the case might be obvious on brands that unmistakably have an ‘aura of luxury’. But it might be difficult to draw the boundaries of the luxury category in the future. Is NIKE a luxury brand? 

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Have you been overpaying for beer?

AB-InBev
The European Commission (@EU_Competition) is investigating AB InBev (the company behind Budwiser, Corona and Stella Artois) for a potential abuse of dominance. According to the EU competition enforcer, the beer giant designed a strategy to prevent supermarkets from selling their beers to supermarkets in other EU member states.

 

EU-tradeEuropean competition laws try to make sure companies compete fairly in the European Union. Being one of the main provisions of the ‘constitution’ of the EU, these laws clearly seek to ensure that the Union’s core project – the creation of a single, unified market – is facilitated by these competition provisions. For this reason, EU competition law prohibits practices that can hinder the operation of the European single market. The clearest example of such practice is blocking parallel importing.

The EU single market cannot be magically created. Companies need to expand to neighbouring Member States and trade must freely flow between countries. A common practice by companies that sell in different countries is to make use of domestic distributors. Take AB InBev for example. They export their beer in your country, then a distributor deals with the stock, transports it to supermarkets and there it is sold to you. During this process, the producer (AB InBev in this occasion) sets an export price, the distributor sets a higher price, and the supermarket sets an even higher price. So, for example, the price of a Corona might be €1 when it arrives in your country but €4 when it’s sold in your local shop.

Price

These cost differences create a window of opportunity for distributors and supermarkets. Let’s say that the price of Corona in the Netherlands is €2.50. If Corona is sold in Belgium for €3.50, Dutch supermarkets can just export their excess stock to Belgian supermarkets. This practice is called parallel trading and it can lower the prices of goods for the benefit of European citizens everywhere. What companies, like AB InBev, tend to do to make sure that they are in control of prices in each country, is to design strategies to make it difficult for supermarkets to do parallel trading. According to the Commission, AB InBev did exactly that.

Parallel-trade

The case concerned the trade of beers in France, Belgium and the Netherlands. French and Dutch supermarkets sold their beers to Belgian supermarkets. According to the
press release, AB InBev changed the labels of its beers – removing the Dutch text Translationfrom the beers sold in France and the French text from the beers sold in the Netherlands – to prevent the supermarkets from doing parallel trading. This (cleverly designed) strategy can prevent parallel trading because of the 
product-labelling requirements of Member States (especially in countries with more than one official language like Belgium). AB InBev also, allegedly, stopped selling or limited the quantity of their sales to Dutch retailers to reduce their stock.

The investigation is at the stage of issuing of a ‘statement of objections’. That means that AB InBev has not yet been found to have violated EU competition law. The statement simply notifies the company that some behaviour appears problematic. AB InBev has some time to offer propositions to change its behaviour to comply. If not, official proceedings can be commenced.

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The first recorded antitrust trial?

LysiasIf greed is as old as human existence, then antitrust must be as well. There are no records of antitrust laws on Neanderthal cave paintings (or any that we’ve interpreted as such, at least), but the earliest documentation of an antitrust trial is much older than what one would maybe guess. The first written example of an antitrust case is described by an ancient Greek orator named Lysias. The facts of the illegal activity are quite remote and not really relatable to anyone now, but the description of the trial is interesting in observing how antitrust has always had a political side.

Lysias describes the trial of the grain dealers of Athens. Grain was a vital import for the Athenians. The soil in and surrounding Athens was very poor so it wasn’t possible for the Athenians to grow it themselves. Since grain was a necessary ingredient to produce bread, its trade was heavily regulated by the authorities of Athens. Fearing a long winter or possible attacks by Sparta, one of the grain commissioners suggested to the dealers not to compete when buying grain from the docks. Seeing a window of opportunity to make profits on the backs of the Athenians, the grain dealers bought large amounts of grain at the same price and stored it.

Wheat

Since none of the dealers were offering a different purchase price to the merchants at the docks, they created a monopsony. In this way, they fixed the price for wholesale wheat. Wholesale price-fixing is not unheard of in modern times. In fact, fixing of the wholesale prices of medicines for the benefit of citizens is a common practice by modern governments. The price-fixing was not problematic in and of itself. In fact, Lysias admits that the actions of the dealers might have been to the benefit of the Athenians up until that point. This is because storing grain would have secured that Athens would have enough of it in a time of crisis. This explains why the grain commissioner advised the dealers to collude in the first place. The action became problematic when the dealers hoarded the grain and sold it at inflated prices. Through these actions, Lysias explains, the dealers created a disincentive for ships to trade with Athens and they cheated the Athenian public.

Hoarding

The case is interesting just as historical trivia, but it’s also interesting as a chance to witness the political side of antitrust. Lysias doesn’t document the verdict of the trial. But in his speech he accuses the dealers of being ‘resident aliens’ of the city. He appeals to the emotion of the Athenians by saying:

‘…[the grain dealers] are so delighted to see your disasters that they get news of them in advance […] or [they] fabricate […] rumour themselves […] And thus at times, although there is peace, we are besieged by these men’

The story of Lysias is therefore a reminder to be cautious when enforcing antitrust. Because, in the hands of a populist, antitrust can escape the sphere of the legal and enter the realm of the political. 

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Read more:

  1. Lambros E. Kotsiris, ‘An Antitrust Case in Ancient Greek Law’ (1988) 22 Int’l L. 451
  2. Wayne R. Dunham, ‘Cold Case Files: The Athenian Grain Merchants 386 B.C.’ (2007) Available at SSRN: https://ssrn.com/abstract=976028

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