A Quarter Pounder tying with Cheese

I would like to refer you to a very interesting (i.e. entertaining) class action – which you can find here. In short, the claim is that McDonald’s Quarter Pounder and Double Quarter Pounder with Cheese constitutes an unlawful tying of Quarter Pounders and … cheese. While a customer may still obtain (single or double) Quarter Pounders without cheese, this is not a listed product in stores and a customer who enters into a physical store in the US will still be forced to pay the price of the (single or double) Quarter Pounder with cheese. This leads to an overcharge of 30 to 90 cents, reflecting the price McDonalds charges for the additional slices of cheese which customers ‘do not want, order, or receive’. I would point out that this requires evidence that McDonald has market power in the market for… fast food? Burgers? Fast-food burgers? Coronary-disease inducers? You may feel that this is a silly class action. But one…

Damien Geradin and Katarzyna Sadrak‘The EU Competition Law Fining System: A Quantitative Review of the Commission Decisions between 2000 and 2017

This paper – which can be found here – takes a quantitative approach to analysing the factors considered by the Commission when establishing the amount of fines imposed on infringing undertakings in 110 cartel decisions, as well as on 11 abuse of dominance decisions adopted between January 2000 and March 2017. The analysis shows that the Commission has made significant use of the aggravating and mitigating circumstances listed in the Fining Guidelines to adjust the basic amount of the fine. The article is structured as follows: Part II examines the methodology applied by the Commission when determining fine amounts. Article 23(2) of Regulation 1/2003 is the sole legal basis for the imposition of fines by the Commission for anti-competitive conduct. This Article provides that “the fine shall not exceed 10% of [the undertaking’s] total turnover in the preceding business year’. To make its method for setting fines clearer and more transparent, the Commission had published Fining Guidelines in 1998, which were…

Anne C. Witt ‘The Enforcement of Article 101 TFEU: What has happened to the Effects Analysis’ (2018) Common Market Law Review (55) 417

This paper – which You can find here – focuses on the role that priority setting and institutional dynamics can have on public competition enforcement. It argues that, while the Commission has developed an impressive theoretical framework for assessing the effects of agreements on competition, there has in fact been very little effects analysis in the Commission’s decisional practice since 2005. Instead, most cases have been decided as ‘object restrictions’. The paper is structured as follows: A first section briefly retraces how the Commission came to endorse a more effects-based approach to EU competition law generally, and to Article 101 TFEU in particular. By the late 1990s, commentators had been long criticising the Commission for relying too heavily on form-based presumptions of legality and illegality in its assessments under Articles 101 and 102 TFEU. Commentators pressed the Commission to scale back the use of form-based presumptions in favour of more individual assessments in line with contemporary US antitrust law. The Commission…

Markus Reisinger ‘Asics vs Coty: Competitive effects of selective distribution systems in light of diverging court decisions’

Selective distribution systems are usually put in place in place to ensure that authorized distributors fulfil a certain quality standard, thereby avoiding losses in consumers’ brand valuation. Selective distribution systems often include clauses that allow manufactures to achieve better channel coordination in terms of prices, advertising, services, etc. A common way to do so is to restrict their selective retailers in advertising or pricing practices (e.g. to ensure that advertising campaigns or sales are coordinated). The paper – which can be found here – looks at recent German and EU cases on selective distribution systems, and tries to understand the differences between them. In the Asics case, the German Bundeskartellamt (BKartA) ruled that a selective distribution system by sport shoe manufacturer Asics, which included restrictions regarding online advertisement and price search engines, infringed competition law. By contrast, in the Coty case the European Court of Justice ruled that relatively similar clauses in the selective distribution system of a beauty products manufacturer were…

Maria José Schmidt-Kessen ‘Selective Distribution Systems in EU Competition and EU Trademark Law: Resolving the Tension’ (2018) Journal of European Competition Law & Practice 9(5) 304

The basic argument of this paper – which can be found here – is that the ECJ in Coty reversed its earlier judgment in Pierre Fabre as regards luxury products, in order to ensure that the treatment of selective distribution systems under EU trademark and competition law was aligned. A first section provides an overview of the treatment of online selling restrictions under European competition law. Some luxury brands fear that retailers might damage their valuable brands’ reputation by offering branded goods in an inadequate online environment, e.g. without adequate costumer service; and that allowing online sales by retailers could lead to an increase in trade of counterfeited goods over the internet. As such, they have imposed on their retailers considerable restrictions on the possibility of using the internet as a selling channel, often in the context of selective distribution systems. These restrictions have led to competition law cases being brought against manufacturers who impose them. These cases build on…

Giuseppe Colangelo and Valerio Torti, looks at ‘Selective Distribution and Online Marketplace Restrictions under EU Competition Rules after Coty Prestige’ (2018) European Competition Journal 14 (1) 81

This paper – which can be found here – looks at the Coty decision, and it structured as follows: Section 2 provides an overview of how EU competition law dealt with selective distribution systems pre-Coty. It begins by looking at the Metro decisions. In Metro I, the CJEU decided that the maintenance of a certain price level for specialist retailers and wholesalers was a legitimate goal. In this decision, the CJEU recognised that that selective distribution agreements are compatible with competition rules if they fulfil three cumulative conditions: (i) the characteristics of the product in question necessitate such a distribution scheme in order to preserve its quality or to ensure its proper use; (ii) resellers are chosen on the basis of objective criteria of a qualitative nature relating to the technical qualifications of the reseller and his staff and the suitability of his trading premises, laid down uniformly for all potential resellers and not applied in a discriminatory fashion; (iii) the…

Kai-Uwe Kuhn and Miroslava Marinova ‘The Role of the As-Efficient-Competitor After the CJEU judgment in Intel’ (2018) Competition Law and Policy Debate 4(2) 63

Before I begin my review, a disclaimer is in order: one of the authors was my student – the one who was not until recently the Chief Economist of the European Commission’s DGComp –, and this paper builds on her PhD. The paper – which can be found here – focuses on the relevance of the AEC test for the identification of abuses of a dominant position. It reads the Intel decision as creating a rebuttable presumption of illegality of exclusivity rebates, and as requiring the Commission to examine Intel’s arguments on whether the loyalty rebates could exclude an equally efficient competitor from the market. It also considers that the CJEU confirmed that the AEC test is the relevant benchmark to assess such a rebuttal. At the same type, the authors consider that the judgment raises a number of issues: (i) whether the AEC is an appropriate conceptual benchmark to identify anticompetitive conduct; (ii) in the light of the previous…

Pablo Ibáñez Colomo ‘The Future of Article 102 TFEU after Intel’ (2018) Journal of European Competition Law & Practice 9(5) 293

The author identifies two main takeaways from the Intel decision: (i) as a matter of principle, Article 102 TFEU is only concerned with the exclusion of rivals that are as efficient as the dominant firm. The departure from the market of rivals that are less attractive in terms of, inter alia, price, quality or innovation is deemed to be a natural outcome of the competitive process and as such unproblematic; (ii) practices are only caught by Article 102 TFEU insofar as they are capable of having anticompetitive effects. By the same token, it should always be possible for a dominant firm to provide evidence showing that, in the context in which it is implemented, the practice is incapable of having such effects. The article – which can be found here – seeks to explore these elements in more detail. It is structured as follows: Section II reviews the case and its background. I am not going to do that here (again), but it…

Pascale Déchamps and Gunnar Niels  ‘The One Billion Euro Question for Intel: Moore’s Law or Murphy’s Law?’ (2018) Journal of European Competition Law & Practice 9(2) 124

This paper – which can be found here – is structured as follows: It begins by recalling the context of the Intel case.  In the past, EU case law tended to follow a form-based approach: first determine dominance; then assess the form of the conduct. Once a company was found to be dominant, its ‘special responsibility’ not to impair competition meant that it could not engage in certain forms of behaviour, such as offering loyalty rebates. Little consideration was given to the likely effects of these practices on competition and consumer welfare in a given case. The Intel case, however, came after the Commission started promoting effects-based analysis in abuse of dominance cases. The idea was that practices that have the same effect on the market should be treated in the same way, regardless of their form. This took the form of a Guidance Paper, which was followed by a series of Commission cases and EU court judgments that ranged…

Mark Friend ‘Loyalty Rebates and Abuse of Dominance’ (2018) The Cambridge Law Journal 77(1) 25

This paper – which can be found here – argues that the Intel decision should be given a cautious welcome for signalling a move to a more economics-based approach in the assessment of loyalty rebates. On the other hand, the author thinks that the decision also represents a missed opportunity to provide a comprehensive analytical framework for one of the more unsatisfactory areas of EU competition law. The author begins by describing the EU case law on rebates. In line with AG Wahl’s Opinion, the author identifies two main strands in the case law: Since Michelin II, it has been clear that quantity rebates or discounts – linked solely to volumes purchased from the dominant undertaking – are generally considered not to give rise to foreclosure effects and are presumptively lawful. On the other hand, loyalty rebates have consistently been condemned ever since Hoffmann-La Roche. This case held that a dominant company will be guilty of an abuse whenever that…