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“Coming To Our Senses:” Object And Verticals

“Coming To Our Senses:” Object And Verticals. Chillin ’ Competition, 20 November 2018 Robert O’Donoghue QC. The law on object as applied to verticals is: Antediluvian At odds with mov e to effects analysis At odds with economics

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“Coming To Our Senses:” Object And Verticals

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  1. “Coming To Our Senses:” Object And Verticals Chillin’ Competition, 20 November 2018 Robert O’Donoghue QC brickcourt.co.uk +44 (0)20 7379 3550

  2. The law on object as applied to verticals is: Antediluvian At odds with move to effects analysis At odds with economics Unduly hard to apply for NCAs/courts – leading to haphazard application Therefore over-inclusive Minor premise: these issues, if left unresolved, will become acute in digital era Core Thesis

  3. Paradoxical that in era of effects most Art 101 cases are object: object category is growing! Insight that vertical restraints matter when inter-brand competition harmed largely forgotten EU Courts rule in “mantra” offering no guidance outside easy cases (BIDS, SIA Maxima). National courts can’t figure out logic of case law: “counterintuitive that the internet ban, adopted…with the intention of ensuring that customers purchase correctly fitted clubs…should be found to have [anticompetitive] object…resulting in the imposition of a quasi-criminal fine” (Ping v CMA, para 147) Issues (1)

  4. Dirty secret that object won’t be exempted (REIMS II, CECED) airbrushed, leading to false comfort on risks of more object Political objective of market integration contaminates competition law principles Unsatisfactory case law allows NCAs to crusade – hard for companies to have EU-wide policies short of low common denominator (overreliance on Block Exemptions for safety) Case law developed in pre-modernisation era leads to law being unmoored post-modernisation Issues (2)

  5. Back to basics: object reserved for cases where harm to competition is a no-brainer (“obvious”, “plausibly competitive” etc.) Economics 101: most verticals restrain intra-brand conduct to improve inter-brand competition so effects needed (Delimitis) Don’t forget the quantitative element of object: harm “so likely”/“sufficiently deleterious”: “capable”, “potential” effect a cop-out absent this quantitative filter (particularly for verticals) – object meaningless Modest solutions (1)

  6. Verticals are different to horizontals: ContrastCJEU Maxima para 21 with Allianz Hungaria para 43. E-commerce pointers: Consumers “get” the Internet; major ecommerce platforms don’t need more help Don’t forget competition on quality – price isn’t everything (AEG Telefunken) Recognise greater difficulties of aligning incentives under ecommerce and free-rider problems Modest solutions (2)

  7. E-commerce pointers (cont): Be cautious about treating novel clauses as object and develop “experience” first – plausible efficiency in vertical context should be strong contraindication of object Be honest when applying political objectives (single market) and not applying competition law Modest solutions (3)

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