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ISSN: 1011-4548
ID: WOCO2004001

The article contends that the case for the beneficial effects and rationale of the on-going trade policy expansion into the competition realm has already been proven and, apart from political aspects, exhausted. The authors take the reverse angle to approach the interface between trade and competition in a new and more challenging perspective. Could competition policy benefit from the trade policy contamination?

Could modern competition policy improve its rigour and internal coherence as a result of an international convergence that will naturally try to shift and broaden the present competition legal paradigm? How would competition policy assess controversial anti-trust practices such as export cartels and certain vertical restraints under a new virtual global welfare standard?

The authors use economic models to hint at a number of legal answers. The article is intended to trigger an innovative follow-up debate.

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ISSN: 1011-4548
ID: WOCO2004002

The right of individuals who have suffered loss from infringements of competition rules to bring private damages claims, long a mainstay of antitrust enforcement in the United States, is increasing in viability in the European Union as a result of judgments of the European Court of Justice, new legislation such as Regulation 1/2003, and numerous policy statements by the Commission and the European Parliament. Further remedies legislation may be forthcoming at EU or Member State level. However, some feel that private antitrust cases are undesirable from an economic and policy perspective and should be discouraged even as supplemental enforcement. This article argues that private enforcement has great value as a supplement to public enforcement and as the primary means of compensating victims of infringements whose interests are to be protected by national courts. Academic arguments against private enforcement based on misapplication of economic theory do not justify elimination or discouragement of private actions. The theoretical economic arguments presented in favour of such elimination or discouragement are weak, insufficient, and lack an observable basis in the real world.

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ISSN: 1011-4548
ID: WOCO2004003

This article examines the Community ``cap and trade'' system for greenhouse gas emissions allowance trading established under Directive 2003/87/EC from the perspective of the EC State aid rules. The scheme, which commences in 2005, will cover only CO2 emissions and initially, is limited to certain sectors. Each Member State must draw up a National Allocation Plan (NAP) to be notified to the European Commission, indicating how it proposes to allocate allowances to individual operators. It is foreseeable that Member States will have difficulties determining what constitutes aid and what are consistent and inconsistent forms of aid when drafting NAPs. It will be particularly difficult to assess whether an advantage is granted which favours certain undertakings or activities using State resources. The article points out pitfalls for Member States to avoid if NAPs are not to fall within the scope of Article 87(1) EC Treaty and eventual derogations under Article 87(3). It examines the impact of the scheme from the standpoint of companies and the choices open to them: limit output, invest in environmentally friendly technology capable of reducing emissions, purchase the allowances on the market or pay the penalty for not reducing emissions.

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ISSN: 1011-4548
ID: WOCO2004004

On 24 July 2003, the Court of Justice of the European Communities (``the Court of Justice'') rendered its eagerly awaited judgment in the Altmark case, ending the controversy surrounding the application of the EC State Aid control regime to compensation granted to undertakings in consideration for public service obligations imposed on them, which had divided the Court of Justice and the Court of First Instance of the European Communities, and sparked a wide debate between four of the Court of Justice's Advocates General.

The Court held that State compensation for public service obligations does not confer an advantage on the undertakings concerned, and hence does not constitute State Aid within the meaning of the EC Treaty (``EC''), provided four stringent conditions are satisfied, which will serve as safeguards to make sure that its ruling is not used by Member States to favour certain undertakings under the guise of compensating them for the costs incurred in discharging public service obligations.

This judgment is meant to enable Member States to organise public services without having to submit their financing mechanisms to prior European Commission scrutiny under the State Aid control rules. However, the conditions determined by the Court of Justice will ensure that only the most clear-cut cases will benefit from the generous treatment provided for by the Altmark ruling. A number of issues remain unresolved and it is to be hoped that the Commission will now act quickly to provide Member States with the necessary guidance in this important field.

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ISSN: 1011-4548
ID: WOCO2004005

In 2002, the European Commission adopted a new Leniency Notice that sought to address certain of the shortcomings identified under the pre-existing Leniency Programme and achieve a substantial degree of convergence with the US Leniency Program. The 2002 Notice is widely considered to have led to a significant increase in the number of cartel infringement decisions. It has also transformed legal practice in this area, in particular by sensitising EU companies to the complex strategic considerations that shape the decision whether or not to seek leniency. Although papers and speeches delivered by Commission officials have improved understanding of the Commission's practice, several important procedural and practical issues remain unresolved. Among other things, there would be considerable benefits to formalising in a set of Guidelines important recent changes in the Commission's administrative practice in respect of leniency that are capable of having material legal effects. Further, the Modernisation Programme, which comes into force in May 2004, has created a pressing need for the Commission and national competition authorities to consider the potential implications of multiple proceedings at EU and national level, including where there is a risk of individual criminal sanctions for cartel behaviour under national law. This article suggests various ways in which these uncertainties might be resolved.

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ISSN: 1011-4548
ID: WOCO2004006

The United States Department of Justice (``DOJ'') continues its aggressive pursuit of International Cartels. In addition to obtaining record levels of fines for corporations convicted of price fixing, the DOJ continues to seek more jail time for individual defendants found guilty of these crimes. The DOJ supports legislation now before Congress that would significantly increase penalties for both corporations and individuals convicted of antitrust violations. Increasingly, many of the individuals serving time in US prisons for antitrust crimes are foreign nationals not just US citizens. The threat of extradition to the United States on the basis of cartel behaviour looms ever larger. Recently, the DOJ has been aggressively placing foreign nationals that have been indicted in the United States on price fixing charges on Interpol's ``Red Notice'' list, subjecting them to possible arrest and detention by local officials as they enter or exit countries outside the United States. The DOJ has been using this procedure even where extradition to the United States on the basis of an antitrust offense would appear unattainable for lack of treaty support. Apparently in an increased spirit of cooperation with US cartel enforcement efforts, some countries have thus far acceded to this procedure nonetheless, providing substantial harassment impact. Whether this cooperation will continue or not remains to be seen.

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ISSN: 1011-4548
ID: WOCO2004007

This article discusses the competition regime as it applies to shipping or liner conferences and consortia under European Community law. The Commission is currently considering changing this regime. There are five sections to this article. Section I is a factual introduction to shipping conferences and consortia, what they are, and how they operate. Section II deals with the competition law regime as it applies to certain shipping cartels, briefly highlighting the background, as well as the substance, of the relevant legislation and jurisprudence. Section III discusses the economic effects of these rules, as well as considering their effect on developing countries; it also examines whether or not these rules achieve their underlying objectives. Section IV takes the conclusions of Section III and asks whether, and where appropriate how, these should impact upon the substantive content of the rules, as discussed in Section II. Section V concludes.

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ISSN: 1011-4548
ID: WOCO2004008

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ID: WOCO2004009

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ISSN: 1011-4548
ID: WOCO2004010

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ISSN: 1011-4548
ID: WOCO2004011

In this article the author describes and discusses some aspects of the European merger control reform. The article first briefly outlines the main legislative and non-legislative measures integrating the merger control reform package. It then analyses the major changes introduced by this reform in three fields: jurisdiction, substance and procedure. As regards jurisdiction, the author focuses mostly on the newly introduced system of ``streamlined referrals''. The article gives an overview of the new system of referrals and analyses whether this system will bring about the results it is expected to achieve. As regards substance, the article first briefly discusses the background to the change in the substantive test to be applied by the European Commission in its assessment of mergers. It then analyses whether the substantive test as adopted in the New EC Merger Regulation will bring about a fundamental lowering in the level of intervention in merger cases. The author further identifies some of the hurdles associated with a more systematic use of efficiency-related arguments in merger analysis. As regards procedure, the article first briefly explains the background to the changes and gives an overview of its most relevant features. The author then gives his views on these procedural changes and considers whether they constitute an appropriate answer to the criticisms levelled against the Commission's prior practice in this area.

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ISSN: 1011-4548
ID: WOCO2004012

In the current system of EC antitrust enforcement, the European Commission combines the investigative and prosecutorial function with the adjudicative or decision-making function. The purpose of this article is to analyse the advantages and disadvantages of this system, in comparison with a system in which the adjudicative function is separated from the investigative and prosecutorial function, such as the US system in which the Department of Justice or the Federal Trade Commission (under the pre-merger notification programme) investigates and prosecutes before a federal court. The first chapter of the article contains a description of the current EC system, a comparative description of the US system, an overview of the legal debate on the compatibility of the current EC system with Article 6 ECHR and on the scope for change under the current EC Treaty, and an introduction to the wider policy debate. The second chapter deals with accuracy, in particular the question whether there is a risk of prosecutorial bias in a system in which the investigative and prosecutorial function is combined with the adjudicative function. The third chapter deals with administrative cost, in particular the question whether a system in which the European Commission would prosecute before the Community Courts would be more expensive or slower than the current system. The fourth and last chapter contains a summary and conclusion.

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ID: WOCO2004013

The European Commission's investigation of Microsoft's tying of Windows Media Player has generated new interest in the application of EC law to tying abuses. In the context of this case, some commentators have suggested that EC competition law is too rigid when dealing with tying practices by dominant companies. This article discusses the conditions that the Commission and the Court of Justice have applied for findings of abuse under Article 82 EC in tying cases.

An analysis of the case law of the Commission and the Court of Justice shows that a five pronged test applies to the assessment of tying abuses under EC law. To establish an infringement of Article 82 EC to following elements need to be met:

(i) dominance of the seller in the market for the ``tying product'';

(ii) existence of a ``tied product'' that is separate from the ``tying product'';

(iii) coercion, i.e. conduct forcing customers to buy the tied product together with the tying product;

(iv) a restrictive effect on competition for the ``tied product''; and

(v) absence of an objective and proportionate justification for the coercion.

The five-pronged test represents a well-balanced approach to identify those tying practices that warrant intervention under Article 82 EC. The different elements necessary for a finding of abuse all serve to distinguish harmful from innocuous practices. Applied properly, the five-pronged-test will lead to much more refined and economically reasonable results than any per se rule – be it per se illegality or per se legality – could hope to achieve. This approach is also consistent with the assessment of tying abuses under US law. The Commission's Microsoft decision is a good example for a thorough and comprehensive investigation of an abusive tying practice that has far reaching implications for competition and innovation.

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ISSN: 1011-4548
ID: WOCO2004014

Fifteen years ago, when economic reformers were writing and enacting competition laws in the transition economies of Central and Eastern Europe, some critics warned that such laws, or too stringent enforcement of such laws, carried the danger of discouraging competitive behaviour and the development of markets. An examination of the enforcement experience with the abuse-of-dominance provisions of the laws of eleven countries over two separate time periods suggests that the feared evils have not materialized. Two patterns stand out in this enforcement experience: first, the number of findings of abuse of dominance has been very small in countries other than Poland, and second, a large and growing proportion of these findings of abuse have been in sectors that would in developed market economies be subject to economic regulation.

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ISSN: 1011-4548
ID: WOCO2004015

In the last few years, the role of efficiencies in merger review has become a topic of great interest within the antitrust community, particularly in light of the recent U.S. Heinz/Beechnut babyfood decision, the European Union GE/Honeywell decision and the Canadian Superior Propane decision (perhaps the most comprehensive review of efficiencies in the context of the creation of an otherwise “anti-competitive” merger). Using the Canadian Superior Propane case as a springboard, the authors examine many of the legal, policy and evidentiary issues that may arise when the parties to a merger seek to argue the pro-competitive and efficiency-enhancing elements of their transaction before a competition authority. In particular, the authors present a comparative review and analysis of the role of merger efficiencies in each of Canada, the United States and the European Union, including the types of efficiencies that may or may not be considered by competition authorities in merger review, the different methods that may be adopted in balancing efficiencies against the anti-competitive effects of a merger, and some of the practical and evidentiary issues faced by merging parties when claiming efficiencies.

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ISSN: 1011-4548
ID: WOCO2004016

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ID: WOCO2004017

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ISSN: 1011-4548
ID: WOCO2004018

<p>With the entering into application of Regulation 1/2003, national courts are thrown into the arena of EC competition law enforcement. The Commission seems to firmly believe that they have an essential role to play in applying competition rules in order to complement the enforcement activities of the public authorities. This article analyses the role of national courts under the new decentralised system with due regard for the concerns generally expressed at their ability to handle complex antitrust cases and at the consistency of judicial interpretation of Articles 81 and 82 EC throughout the Union. The Community Courts will also be affected by Regulation 1&sol;2003 even if no specific arrangement has been made to help them face a likely increase in workload. It is argued however that their traditional tools, i.e. preliminary ruling and control of legality, remain suitable to support national courts and to ensure a proper application of EC competition law by the Commission. Finally the article tries to draw some lessons from the long experience of judicial enforcement of the antitrust laws in the United States and offers some thoughts on the role of counsel in the success of the decentralisation venture.</p>

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ISSN: 1011-4548
ID: WOCO2004019

<p>This article discusses the most important changes introduced at the final stage of the Commission’s review of the technology transfer block exemption regulation (``TTBER’’), and examines the benefits and the challenges of the new regulatory framework for technology licensing.</p><p>The new TTBER represents a significant improvement over the Commission’s draft TTBER, published in October 2003. Most importantly, the Commission agreed to revise the list of hardcore restrictions between competitors, which was over-inclusive and had the potential to seriously hinder technology licensing in horizontal agreements. In addition, the list of hardcore restrictions between non-competitors and the interpretation of ``know-how’’ (and thus the scope of the TTBER) were adjusted to reflect the comments submitted during the consultation period preceding the publication of the final TTBER. Significant changes were also made to the Guidelines, for instance, with respect to cross-licence agreements between competitors. Some difficulties remain in the final TTBER, mainly concerning the introduction of market share ceilings. However, on balance, the new TTBER can be considered to represent a desirable regulatory change. The final regulation promotes dynamic competition through innovation and contains a number of provisions that contribute towards a more liberal, flexible and economic oriented regulation of technology transfer agreements.</p>

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ISSN: 1011-4548
ID: WOCO2004020

<p>This article reviews the application of the European Community’s State aid rules to tax measures. It updates and extends a previous review published in this Journal in 2001 and evaluates critically recent policy trends.</p><p>Although there is no doubt that State aid rules apply to national tax measures even where there are no specific Community fiscal provisions, during the past couple of years the Commission has widened the scope of application of State aid rules. The Commission has recently found a number of national measures to be incompatible with State aid rules on the grounds that they indirectly favour certain enterprises by assessing their tax liability using special methods of calculating their relevant costs. This article examines how tax measures can be caught in this way by State aid rules.</p><p>The article also evaluates a case where regional tax measures were found to be a form of State aid because they deviated from national measures. This is the most worrisome policy development because it appears to restrict the fiscal autonomy of local and regional authorities and to contradict the principle of subsidiarity. Using economic analysis, the article finds that when regions have fiscal autonomy there is no a priori reason to expect that their tax rates will remain uniform. It concludes that in this respect the Commission has stretched the meaning of State aid too far.</p>

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ISSN: 1011-4548
ID: WOCO2004021

<p>This article is a follow-up on a previous article we published in the December 2003 issue of this review. It comments on the recent decision of the European Court of Justice in the IMS Health case. The case dealt with the refusal by IMS Health to licence its copyright structure to NDC. The factual background of the case is restated and a brief summary of the state of the case law before the decision is also given for a better understanding of the decision. The decision of the Court is then summarised. The comment shows that the decision is a triple victory. First, the Court clarifies its case law and thereby provides legal certainty. Second, it is a victory for copyright. The so-called essential facilities doctrine does not apply to copyright as such and only when the competitor wishes to introduce a new product on the market will a licence be imposed. As a result, this is a victory for IMS Health because NDC will have difficulty proving it wishes to market a new product. However, the decision leaves one important point unresolved: the Court does not define what it means by a ``new product’’. This can have a broad or narrow meaning therefore influencing the fulfilment of the condition and the corresponding imposition of a compulsory licence.</p>

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ISSN: 1011-4548
ID: WOCO2004022

<p>During the last two years, the Antitrust policy of the United States has been one that could be dubbed ``vigorous conservatism’’. The vigour has been evidenced by an increase in anti-cartel activity and punishments, by strict review of a substantial percentage of major horizontal mergers, and by the development of some new cases against abuses of patent rights. There has also been evidence of international vigour, such as in the rapid development of the International Competition Network and in day to day coordination in anti-cartel criminal matters.</p><p>Conservatism has been evident in efforts to delimit the territorial scope of the treble damage remedy and the possibility of forced dealing by a dominant firm controlling an alleged

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ISSN: 1011-4548
ID: WOCO2004023

<p>Is there still a chance for Europe’s initiative on a WTO Multilateral Framework Agreement on competition policy after the failure of the 2003 Ministerial Conference of Canc&uacute;n? Do developing countries that reject the initiative act against their own interests? Do we really need such an agreement in the light of alternative approaches to international competition law? This article tries to answer these questions and supports principles of a possible WTO competition law considerably different from those proposed by the European Community. These principles reject a concept of an international competition law as a market-access guaranteeing instrument of trade policy and would implement the protection of international competition in trans-border markets as the objective of WTO competition law. This kind of law reacts to today’s situation in which trade liberalisation and international protection of intellectual property rights enable undertakings to abuse their freedoms and their property rights in larger markets emerging as a consequence of WTO law after the Uruguay Round. In this sense the proposals of this article contribute to the solution of problems of globalisation.</p>

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ISSN: 1011-4548
ID: WOCO2004024

<p>Thailand’s competition regime was substantially overhauled in 1999 in the aftermath of the Asian Financial Crisis as part of a wide-ranging reform of economic regulation. The new law was recognisably pro-competition and had ambitions to enhance the competitive capacity of Thai industry so as to be better able to withstand the increased competitive pressures from international business that was obtaining greater access to the Thai economy as international trade regimes liberalised. This article seeks to place Thailand’s new competition regime within the context of international competition law developments, especially in relation to developing and transitional economies, analyse the structure and content of the new law and the institutions established to enforce the statute. The article then attempts to assess the success of the first five years of implementation of the new regime. The observed weak enforcement of the new law is explained in terms of the incapacity of the state to implement the law effectively that is compounded by the absence of political commitment by the current government to a pro-competition economic policy. This lack of political will is due to leading government ministers having chronic conflicts of interest, immature and fragile institutional structures and, at root, the absence of a ``functioning’’ democracy.</p>

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ISSN: 1011-4548
ID: WOCO2004025

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ISSN: 1011-4548
ID: WOCO2004026

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ISSN: 1011-4548
ID: WOCO2004027

The recent article by Maurits Dolmans and Thomas Graf summarises their views on the analytical framework adopted under EC tying law and applies this framework to the European Commission’s March 2004 decision in Microsoft. We appreciate the opportunity this article provides for engaging in a healthy debate about sound approaches towards tying practices and for examining the permissible limits of product design by dominant firms. Both have significant ramifications for the development of the Common Market.

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ISSN: 1011-4548
ID: WOCO2004028

The recent decision issued by the European Commission against Microsoft raises legitimate concerns in many respects. Firstly, the way the Commission handled the proceeding highlighted the impasse that characterises antitrust authorities when dealing with complex cases from the high-tech world. Secondly, the Commission adopted an incorrect approach to interoperability, confusing it with perfect emulation of Microsoft’s copyrighted source code. Thirdly, the Commission showed little or no attention to the economics of technological leveraging in dealing with the media player market, and ended up awkwardly mimicking the rationale upheld by the US District Judge in the "browsers war". We conclude by calling for more sound economic analysis at the European Commission, and suggesting solutions which would significantly improve the level-playing-field in the server software and in the media player markets without hindering incentives to invest and consequently stifling innovation.

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ISSN: 1011-4548
ID: WOCO2004029

Developing the studies of economic authors on switching costs, I hypothesise that a dominant software incumbent abuses his market power if he prejudices consumers without justification. Consumers will suffer detriment when their switching costs (S) are higher than the maximum utility surplus brought to consumers by an entrant’s product (Max ?U), or when the incumbent intentionally raises switching costs without justification. To remedy this, the incumbent should grant the entrant a licence to access any interfaces or data formats which could reduce S. A refusal to grant a licence may result in an abuse, unless it is otherwise justified on the grounds of sunk costs and free riding.

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ISSN: 1011-4548
ID: WOCO2004030

The Danish Competition Authority (DCA) recently approved a merger between Denmark’s two largest electricity companies?Elsam and NESA. This article focuses on some topics of general interest that this merger raises. One such issue is that the merger happened in a market where the product characteristics and the capacity constraints give a dominant producer the opportunity to make use of its position to increase both prices and profits. The merger also illustrates some difficulties in calculating the effect on competition when a merger makes the merged entity a minority owner of an important competitor. Furthermore, a longer time horizon than usual was used for the investigation of the competition effects of the merger.

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ISSN: 1011-4548
ID: WOCO2004031

Predatory pricing policy in Europe is at a crossroads: while the European Court of First Instance ("CFI") is set to rule on the Wanadoo case, the European Commission is currently reflecting on its enforcement policy in the field of Article 82. This article starts by setting out the characteristics of predatory pricing -- including certain controversial aspects. In Part II, it will be argued that the proper cost standard should take account of the allocation of common costs among several product lines, which would lead to a unified theory of predatory pricing and cross-subsidisation. Part III deals with possible defences to below-cost pricing. Part IV summarises the debate on the role of recoupment in predation analysis and proposes a systematic critique of the dominant consensus in the United States, namely that successful recoupment is a necessary element of any predatory pricing claim. This article questions the major premises on which the current dominant approach is based and challenges its compatibility with sound economic theory. In particular, it will be shown that unprofitable predation (a) may be rational anyway; and (b) is not necessarily "a boon to consumers" (Brooke Group). Therefore the European courts would be well advised not to adopt the American approach as regards recoupment.

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ISSN: 1011-4548
ID: WOCO2004032

During 2003, the World Bank sent a needs assessment questionnaire to 48 competition agencies in transition and emerging countries in Africa, Asia, Europe and Latin America. Responses were classified according the World Bank’s analytical regional grouping and the evidence allows a cross-regional comparison of competition agencies’ workloads, personnel, priority sectors and training needs. The view of competition authorities as a homogenous group across countries and regions can be discarded strongly. The analysis of the needs assessment questionnaire shows there are significant heterogeneities among competition agencies’ mandates, exempted sectors, professional personnel endowment and capacity needs. Responses confirmed the growing importance of competition policy issues in infrastructure services (i.e. market foreclosure, access to essential facilities) and the need to foster coordination between sector regulators and competition agencies. An important lesson for the design of training courses is that competition agencies do not need introductory courses. There is a significant demand for training on substance, on how to solve day-to-day technically challenging cases in the areas of mergers and acquisitions and abuse of dominant position.

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ISSN: 1011-4548
ID: WOCO2004033

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ISSN: 1011-4548
ID: WOCO2004034