Antitrust, Regulation and the Neutrality Trap: A plea for a smart, evidence-based internet policy. CEPS Special Report No. 104/April 2015

When they look at Internet policy, EU policymakers seem mesmerised, if not bewitched, by the word ‘neutrality’. Originally confined to the infrastructure layer, today the neutrality rhetoric is being expanded to multi-sided platforms such as search engines and more generally online intermediaries. Policies for search neutrality and platform neutrality are invoked to pursue a variety of policy objectives, encompassing competition, consumer protection, privacy and media pluralism. This paper analyses this emerging debate and comes to a number of conclusions. First, mandating net neutrality at the infrastructure layer might have some merit, but it certainly would not make the Internet neutral. Second, since most of the objectives initially associated with network neutrality cannot be realistically achieved by such a rule, the case for network neutrality legislation would have to stand on different grounds. Third, the fact that the Internet is not neutral is mostly a good thing for end users, who benefit from intermediaries that provide them with a selection of the over-abundant information available on the Web. Fourth, search neutrality and platform neutrality are fundamentally flawed principles that contradict the economics of the Internet. Fifth, neutrality is a very poor and ineffective recipe for media pluralism, and as such should not be invoked as the basis of future media policy. All these conclusions have important consequences for the debate on the future EU policy for the Digital Single Market.

Antitrust on the ‘G string’: What’s behind the Commission’s investigations of Google and Gazprom? CEPS Commentary, 15 June 2015

The past few weeks have marked a shift of gear in EU antitrust enforcement. First, the new European Commissioner for Competition Margarethe Vestager announced on April 15th that the Commission had sent a Statement of Objections to Google, arguing that the giant IT company abused its dominant position in the “general Internet search” market and also in the market for mobile operating systems, apps and services. Exactly one week later, she also sent a Statement of Objections to Gazprom for having created artificial barriers to trade between certain EU countries, preventing gas flows and competition across national borders and charging unfair prices in five Central and Eastern European countries. It is indeed hard to recall any other time in which two investigations of this size – both potentially leading to billions of euros of fines – have been launched almost simultaneously.

Antitrust, regulatory capture and economic integration. Bruegel Policy Contribution ISSUE 2015/11, JULY 2015

There is growing worldwide concern about bias in the enforcement of competition law in favour of domestic firms. Even seemingly neutral antitrust laws can lead discrimination if they are enforced selectively. - Authors investigate the distortions that national competition authorities generate when they pursue non-competition goals in favour of domestic firms, and discuss ways to address this negative policy development in a globalised world. - The distortions identified in the paper would dissipate if governments agreed that the sole objective of competition law ought to be the protection of consumer welfare that competition-law institutions ought to be protected against capture. - A realistic and effective way to prompt international convergence towards independent enforcement of competition laws is through the inclusion of competition clauses in bilateral trade agreements and the development of dispute-resolution mechanisms.

Searching for harm or harming search? A look at the European Commission’s antitrust investigation against Google. CEPS Special Report No. 118/September 2015

As the European Commission’s antitrust investigation against Google approaches its final stages, its contours and likely outcome remain obscure and blurred by a plethora of nonantitrust-related arguments. At the same time, the initial focus on search neutrality as an antitrust principle seems to have been abandoned by the European Commission, in favour of a more standard allegation of ‘exclusionary abuse’, likely to generate anticompetitive foreclosure of Google’s rivals. This paper discusses search neutrality as an antitrust principle, and then comments on the current investigation based on publicly available information. The paper provides a critical assessment of the likely tests that will be used for the definition of the relevant product market, the criteria for the finding of dominance, the anticompetitive foreclosure test and the possible remedies that the European Commission might choose. Overall, and regardless of the outcome of the Google case, the paper argues that the current treatment of exclusionary abuses in Internet markets is in urgent need of a number of important clarifications, and has been in this condition for more than a decade. The hope is that the European Commission will resist the temptation to imbue the antitrust case with an emphasis and meaning that have nothing to do with antitrust (from industrial policy motives to privacy, copyright or media law arguments) and that, on the contrary, the Commission will devote its efforts to sharpening its understanding of dynamic competition in cyberspace, and the tools that should be applied in the analysis of these peculiar, fast-changing and often elusive settings.

The EU essential facilities doctrine. Research Papers in Law, 6/2006

Introduction. The essential facilities doctrine may be seen as the ‘extra weight’ which is put onto the balance, in order to give precedence to the maintenance of competition over the complete contractual freedom of undertakings controlling an important and unique facility. The main purpose of the doctrine is to impose upon such ‘dominant’ undertakings the duty to negotiate and/or give access to the facility, against a reasonable fee, to other undertakings, which cannot pursue their own activity (and therefore will perish) without access to such a facility. This very simple description of the content of the doctrine underlines its limitations: through the imposition of a duty to negotiate or contractual obligations, the rule tends to compensate for the weaknesses of the competitive structure of a market, which are due to the existence of some essential facility. In other words, the doctrine does not by itself provide a definitive solution to the lack of competition, but tends to contractually maintain or even create some competition.1 The doctrine of essential facilities originates in the US antitrust case law of the Circuit and District Courts, but has never been officially acknowledged by the Supreme Court. It has been further developed and hotly debated by scholars in the US, both from a legal and from an economic viewpoint. In the EU, the essential facilities doctrine was openly introduced by the Commission during the early 1990s, but has received only limited and indirect support by the Court of First Instance (the CFI) and the European Court of Justice (the ECJ). It also indirectly inspired the legislation concerning the deregulation of traditional ‘natural’ monopolies. The judicial origin of the doctrine, combined with the hesitant application by the appeal courts, both in the US and the EU, cast uncertainty not only on the precise scope of the doctrine, but also on the issue of its very existence. These questions receive a particular light within the EU context, where the doctrine is called upon to play a different role from its US counterpart. In order to address the above issues, we will first pretend that an EU essential facility doctrine does indeed exist and we shall try to identify the scope and content thereof, through its main applications (Section 1). Subsequently, we will try to answer the question whether such a doctrine should exist at all in the EU (Section 2).

Competition law proceedings before the European Commission and the right to a fair trial: no need for reform? Research Papers in Law, 5/2008

From the Introduction. This paper will thus show that, given the rapid "criminalisation" of competition law proceedings, sanctions should in principle be imposed at first instance I. Sanctions imposed by the Commission in competition proceedings are "criminal charges" within the meaning of Article 6 ECHR by an independent and impartial tribunal fulfilling all the conditions of Article 6 ECHR (part I). Or at the very least, these sanctions should be subject to full jurisdictional review by an independent and impartial tribunal in order to comply with Article 6 ECHR and to cure the defects of the administrative procedure (part II). It is doubtful however whether such a full jurisdictional review, as it is understood by the ECtHR, is available at Community-level in antitrust cases.

Patenting Strategies of the EU Pharmaceutical Industry -Crossroad between Patent Law and Competition Policy. Research Papers in Law, 1/2011

From the Introduction. The pharmaceutical sector inquiry carried out by the European Commission in 2008 provides a useful framework for assessing the relationship between the patent system on the one hand and competition policy and law on the other hand. The pharmaceutical market is not only specifically regulated. It is also influenced by the special characteristics of the patent system which enables pharmaceutical companies engaged in research activities to enter into additional arrangements to cope with the competitive pressures of early patent application and the delays in drug approval. Patents appear difficult to reconcile with the need for sufficient and adequate access to medicines, which is why competition expectations imposed on the pharmaceutical sector are very high. The patent system and competition law are interacting components of the market, into which they must both be integrated. This can result in competition law taking a very strict view on the pharmaceutical industry by establishing strict functional performance standards for the reliance on intellectual property rights protection granted by patent law. This is in particular because in this sector the potential welfare losses are not likely to be of only monetary nature. In brief, the more inefficiencies the patent system produces, the greater the risk of an expansive application of competition law in this field. The aim of the present study is to offer a critical and objective view on the use or abuse of patents and defensive strategies in the pharmaceutical industry. It shall also seek to establish whether patents as presently regulated offer an appropriate degree of protection of intellectual property held by the economic operators in the pharmaceutical sector and whether there is a need or, for that matter, scope for improvement. A useful starting point for the present study is provided by the pharmaceutical sector competition inquiry (hereafter “the sector inquiry”) carried out by the European Commission during the first half of 2008. On 8 July 2008, the Commission adopted its Final Report pursuant to Article 17 of Regulation 1/2003 EC, revealing a series of “antitrust shortcomings” that would require further investigation1.

The Dragon awakes: Is Chinese competition policy a cause for concern? Bruegel Policy Contribution 2013/14, 22 October 2013

China’s Anti-Monopoly Law, adopted in 2007, is largely compatible with antitrust law in the European Union, the United States and other jurisdictions. Enforcement activity by the Chinese authorities is also approaching the level seen in the EU. The Chinese law, however, leaves significant room for the use of competition policy to further industrial policy objectives. The data presented in this Policy Contribution indicates that Chinese merger control might have asymmetrically targeted foreign companies, while favouring domestic companies. However, there are no indications that antitrust control has been used to favour domestic players. A strategy to achieve convergence in global antitrust enforcement should include support for Chinese competition authorities to develop the institutional tools they already have, and to improve merger control by promoting the adoption of a consumer-oriented test and enforcing M&A notification rules.

Multilateral Interchange Fees: Competition and regulation in light of recent legislative developments. ECRI Research Report No. 14, 31 January 2014

Two-sided payment card markets generate costs that have to be distributed among the participating actors. For this purpose, payment card networks set an interchange fee, which is the fee paid by the merchant’s bank to the cardholder’s bank per transaction. While in recent years many antitrust authorities all over the world - including the European Commission - have opened proceedings against card brands in order to verify whether agreements to collectively establish the level of interchange fees are anticompetitive, the Reserve Bank of Australia – as a regulator - has directly tried to address market failures by lowering the level of interchange fees and changing some network rules. The US has followed with new legislation on financial consumer protection, which also intervenes on interchange fees. This has opened a strong debate not only on legitimacy of interchange fees, but also on the appropriateness of different public tools to address such issues. Drawing from economic and legal theories and a comparative analysis of recent case law in the EU and other jurisdictions, this work investigates whether a regulation rather than a purely competition policy approach would be more appropriate in this field, considering in particular, at EU level, all of the competition and regulatory concerns that have arisen from the operation of SEPA with multilateral interchange fees. The paper concludes that a wider regulation approach could address some of the shortcomings of a purely antitrust approach, proving to be highly beneficial to the development of an efficient European single payments area.