A quoi sert la concurrence ?

Martine Behar-Touchais, Nicolas Charbit, Rafael Amaro

See the "avant-propos" of Laurence Idot, Frédéric Jenny et Nicolas Charbit
the Foreword of Martine Béhar-Touchais
The full list of contributors and the Table of Contents

100 contributions for the 10th anniversary of the Concurrences Review. The cream of the crop of experts among law professors, lawyers, magistrates, heads of independent administrative authorities, but also economists, politicians, industrialists and even presidents of the Republic have been asked to answer this fundamental question: what is the purpose of competition? Declined through a triple questioning on the object of study (what is competition?), its benefit (for whom?) and its usefulness (how far? why?), this analysis succeeds in the mad ambition to gain height of view by the intelligent juxtaposition of brief analyses which, on each of their subjects, touch on the essential.

It is first of all with curiosity that one considers the object: a beautiful white work of more than seven hundred pages titled in black and red of a question that sounds almost like a provocation: what is the point of competition? Where we already understand that by questioning the usefulness of a concept, by offering ourselves the option of doubt, or even the risk of a negative answer, the precursors of the book - Martine Béhar-Touchais, Nicolas Charbit and Rafael Amaro - have chosen audacity. Far from proposing a simple anthology of the good leaves of the journal Concurrence to celebrate its ten years of existence, they preferred to seize the opportunity of this anniversary to put the very object of the study in question and bring together no less than one hundred personalities to propose answers.

This was a risky gamble because, beyond the undeniable prestige of the experts from all sides who were solicited - the cream of the crop - one could fear that the number of contributions and the diversity of approaches (legal, economic, industrial, political) would produce only an attractive but ultimately anecdotal result. Let us reassure ourselves immediately, this is not the case, and reviewing this work is not limited to a "name dropping" exercise. On the contrary, it is the great success of the company to have brought together powerful individual reflections, while orchestrating a true coherence of the whole. Although it does not always take the form of a classic academic work, the book nevertheless has all the finery, with the remarkable specificity, unfortunately so rare, of offering a transdisciplinary approach. Law professors, lawyers, magistrates, heads of independent administrative authorities, but also economists, politicians, historians, churchmen, industrialists, and even presidents of the Republic; they all endeavour to answer the question posed by mobilising their scientific training, their practical experience, and their ethical, strategic or political vision.

This approach is certainly valuable, but above all it is indispensable, as competition is so difficult to grasp from the sole prism of a discipline. Lawyers and economists respectively claim primacy of analysis, while the very history of competition shows that the concept needs two legs to "walk" and is based as much on law as on economics. Would we do without the industrial or political perspective or the ethical questioning, that we would again miss the target: for if competition is to serve a purpose, it is up to politicians to define its aims, to set up "the rules of the game" within which competition has a vocation to intervene; it is up to industrialists to identify the needs and to consumers, individuals and citizens to remember that, in Europe at least, the objective of competition can only be external to itself. As Martine Béhar-Touchais points out in the remarkable synthesis of contributions that prefaces the book, it is necessary to integrate non-competitive values into competitive reasoning, because competition is a means and not an end (What is the use of competition, p. 34; Neelie Kroes, La libre concurrence n’est pas une fin en soi..., p. 187).

The diversity of perspectives, far from being an exercise in style, is therefore a necessary key to a better understanding of the phenomenon and its issues. Thus, to the first question "What is competition? "It is with the help of economic (Emmanuel Combe; Dominique Roux and Sandrine Peney), anthropological (Dominique Desjeux), legal (Claude Lucas de Leyssac, Pierre Servan-Schreiber, Laurent Vidal), philosophical and religious (Marcela Iacub, Haïm Korsia, Etienne Perrot) analysis that the authors attempt to provide answers. We discover competition where it is not always expected: of course, it combines the notions of market, supply, price and efficiency, but also freedom, rivalry, tensions, collaboration, justice, etc. The authors try to provide answers.

This conjunction between competition policy and the construction of a European Union is also beautifully illustrated in the book by the testimony of several European commissioners in charge of competition (Joaquin Almunia, Mario Monti, Neelie Kroes) who share the experience acquired by the Commission as a regulator. The role played by the institutions in competition policy is also highlighted several times in the book in the section devoted to competition policy and in the section devoted to the aims and culture of competition. The President of the Bundeskartellamt (Andréas Mundt p. 212) expresses the conviction that "only the consistent preservation and promotion of competition can ensure that Europe’s international competitiveness is sustainable. "This conviction is shared by the President of the Belgian Competition Authority, Jacques Steenbergen, who nevertheless considers it necessary to introduce "evaluation methods to measure the useful effect" (p. 727). As for Bruno Lasserre, president of the French competition authority, he insists on the need to develop tools to put competition at the service of consumers who, "better informed of their rights, will seize the new means of enforcing them that will be conferred on them by collective action for compensation" (p. 717).

The benefit of competition for consumers is also at the heart of a wide-ranging reflection contained in a section entitled "Competition for whom? Forgive the commentator for not detailing all the developments in this chapter, which is otherwise devoted to businesses, workers and taxpayers, but the task is huge and we must limit ourselves here to a few selected pieces. However, the relationship between competition law and consumer law is probably one of the most complex and most promising. Carole Aubert de Vincelles demonstrates that competition has an influence on consumer law but that "the search for a high level of consumer protection is therefore only a means to an end and not an end" (p. 273), a porosity that is reflected in particular in the appeal to the concept of responsible competition in consumer law (Carole Delga, p. 277). Influence which is not a domination of one discipline over the other because the ends are common (Le droit de la consommation saisi par la concurrence, G. Parléani, p. 295), mutual influence, inasmuch as consumer welfare (and not consumer protection) is, according to Phillip Evans, now at the heart of the concerns of competition law, so that a phenomenon of convergence can be observed (p. 284). Etienne Pfister stresses that the benefits of competition for the consumer can be assessed through a triple prism. Obviously, competition exerts downward pressure on prices (...), it also improves the quality of products (...), lastly, the consumer is also frequently an employee, sensitive to the effects of competition on employment and working conditions (p. 305). However, this observation is qualified by Monique Goyens, Director General of BEUC, who deplores the insufficient consideration of consumer interests in competition cases and considers that the means of collective action are still globally lacking (p. 292) or by Natacha Sauphanor-Brouillaud, who stresses that competition is a neglected tool for comparing consumer contracts (p. 313). All in all, although competition law and consumer law have the figure of the consumer in common, they still take different paths to contribute to the improvement of consumer welfare.

Lastly, the book devotes a large part to a sector-based approach entitled "How competitive is competition? It deals with distribution, banking and insurance, energy, transport, Internet and media, regulated professions, sports and games, public services and finally the teacher proving, if need be, the invasiveness of competition. It is beyond the scope of this review to cover all of these issues, but also beyond the competence of its author, which is why we will limit ourselves - for reasons of taste as well as ability - to reporting on contributions relating to the Internet.

A preliminary remark to underline the choice to deal with the Internet on the one hand and the media on the other, under two separate paragraphs rather than bringing them together under the same banner. The editorial choice is amply justified by the current organisation of the law which corresponds to this compartmentalisation: media regulation is governed by special rules which are not applicable to the Internet. However, it is precisely the relevance of compartmentalisation that questions the relevance of convergence. How is it that the rules aimed at organising media pluralism have not yet permeated the Internet? Probably because the abundance of supply and the lack of scarcity of resources have long masked the powerful phenomena of concentration of "infomediaries" which expose Internet users to the risk of drying up their sources of information. Why are the rules which require the major audiovisual media to devote a part of their audience to local production and to regulate certain content not applicable on the Internet even though individuals no longer dissociate in their use the modalities of access to content, depending on whether they are in front of a connected television, a digital tablet or a mobile phone? Is it not time for competition to go beyond the historical sector-based approach to media regulation by transmission vectors (television, radio, press) in order to understand this convergence of uses more effectively?

As far as the Internet is concerned, the various contributions deal with the vices and virtues of competition regulation. It is with interest that we will read the texts of Jean-Yves Art, associate legal director of Microsoft and Fabien Curto Millet, senior economist at Google, two companies whose market power has rightly placed them in the sights of the competition authorities. While the two authors acknowledge in theory the merits of competition regulation, without surprise, they nevertheless mark its limits, for example by highlighting the need for special attention to "the length of enforcement procedures and (the) risks of using competition rules for protectionist purposes" (Art, p. 477). On Google’s side, the so-called pro-competitive structure of the digital market, a vector of innovation, is praised (Curto Millet, p. 480). One will not necessarily share the debonair optimism of this analysis, particularly when its author states that it is necessary to "correct a misconception that the accumulation of data presents an insurmountable obstacle to the entry of new operators. The argument is that the vast treasuries of data held by established firms isolate them from the competition. "On the contrary, we agree with Josef Drexl (p. 489) that the need to have a considerable amount of data in order to refine the relevance of a tool, such as a search engine, is precisely an obstacle to the emergence of new entrants, which is demonstrated in particular by the almost total absence of competition on the generalist search engine market in Europe. This situation is a timely reflection of Father Perrot’s contribution mentioned above, according to which economic freedom does not necessarily guarantee competition.

This issue of data processing is all the more critical in the new digital environment as it also involves personal data, as Isabelle Falque-Pierrotin points out very well. Indeed, from the point of view of the CNIL, of which she is president, regulation should both push companies to incorporate data protection policy as a competitive factor (p. 496) but it must also ensure that it does not dissuade European operators from investing in the big data market because of too great a rigidity in the rules of protection, not shared by American operators (p. 498). In other words, the project is huge and the optimum balance has yet to be found.

We will end this overview with the question of the interface between competition law and intellectual property law, which was first dealt with in a masterly manner by Josef Drexl, Director of the Max Planck Institute for Innovation and Competition. The author summarises in a few pages the significant developments in the phenomenon, which has moved in ten years from a focus on sanctioning refusal to license, illustrated in particular by the thunderous Microsoft decision, to other issues such as protecting consumers against excessive prices and maintaining incentives for innovation. "The major issue today is no longer refusal to license, but essential patents that restrict access to technological standards and undermine innovation in downstream markets" (p. 487), as illustrated by the Huawei case, currently pending before the ECJ. The shifting of the problem by the greater use of business secrecy, which is at the heart of the Community’s concerns, is further highlighted. Here the need is to avoid the freezing of innovation through an abusive use of intellectual property. Serge Soudoplatoff agrees with Josef Drexl’s reflections on the need to avoid blocking essential communication infrastructures through excessive use of patents and goes even further when he recommends that communication protocols be open and shared (p. 506).

Josef Drexl as well as Florence Thépot, Matthieu Mélin and Arthur Merle-Beral finally underline the essential development of competition issues on the Internet characterised by network effects and two-sided markets (Drexl, p. 487). The triad of authors reveals what they call the new "territories" of the interaction between intellectual property and competition law through the illustration of digital distribution platforms which "exert an increasing influence on the exercise of their rights by intellectual property right holders, and in particular on selling prices and distribution models" (p. 509). Although they point out that some powerful rightholders have a bargaining power that puts them in a position of interlocutor with certain platforms (see the Deezer / Universal case), they nevertheless highlight the paradoxical situation of rightholders faced with the power of platforms which, by controlling distribution through technical protection measures, prevent the portability of content and control the existence or absence of secondary resale markets, and thus undermine the control of rightholders over the market for the distribution of their works (p. 511). These movements, they say, "illustrate the need for an in-depth reflection of these dynamics on intellectual property and cultural innovation. "One cannot better express the imperative need to think about the usefulness of intellectual property in the digital age and the concentration of players in online distribution.

Reflect, again and again, without respite, in order to adapt the analysis to the evolution of the world, and even propose orientations towards what would be desirable and good for all. This is undoubtedly the best lesson of this book, which shows to what extent the networking of thinking heads, the competition of ideas, the rivalry of wise men are eternal vectors of innovative thinking and offer possible horizons of progress.


Viviane de Beaufort :

Prologue

Prologue

"What is the point of competition? "This is the question asked to 100 authors, a question that the editorial team of the Institute of Competition Law may still be asking itself, 10 years after launching their beautiful review "Concurrences".

In fact, competition is a polymorphous and complex concept, whose conceptions, rules and application evolve over time, space and sectors... Yet its variations and evolutions do not prevent the concept of competition from remaining fundamentally, intrinsically, we shall say, immutable as the basic economic concept of a liberal economy, a concept that some of us will immediately link to innovation, progress, lower prices, improved quality. Adopting a more technical approach, we will gladly speak of the so-called Pareto optimum, fair prices, creative destruction processes, etc. But the notion of competition, and this is its "dark side", is also assimilated by others to the war between economic actors, a war which can have devastating effects on more fragile populations: employees (relocations), small entrepreneurs undermined by the large groups, subcontractors dominated by the principals, or even on a macro scale, developing states facing the powers that be, etc. In short, parodying Plautus, we will then say that "Man is a wolf for man" and that competition between them is a manifestation of these rivalries.

Thus, the Revue Concurrences is celebrating its 10th anniversary with an impressive amount of contributions from experts from different horizons. Martine Behar-Touchais - Professor at the University of Paris I Panthéon-Sorbonne - Nicolas Charbit - Editorial Director of Concurrences - and Rafael Amaro - Senior Lecturer at the University of Paris V Descartes - have indeed tried and succeeded in coordinating the contributions of 100 authors, articulating them together in a logical order (which we will not respect) to try to answer this haunting question: What is the point of competition?

This book, which is a remarkable bible for our students, researchers and practitioners, but also, it is to be hoped, a source of inspiration for national and European authorities and judges, raises many essential questions: what are the links between competition, competitiveness and innovation, between competition and economic growth, between competition and progress in the broadest sense? Very quickly, we are tempted to supplement this questioning with a more precise question: what is the purpose of competition law? Who does it serve? How does it relate to other policies? Is it an end in itself or a means? How does it vary? What does it come up against?...

In order to avoid plagiarising the 800 pages of this book, which is carried by 100 remarkable authors, we will attempt a very personal presentation exercise based on a few major themes, with the reader being responsible for appropriating the texts and positions of the various authors.

Act 1 : Competition is virtuous

"Competition is an ingredient for growth, competitiveness and employment. Undistorted competition helps to protect consumers and drives economic growth" (Cecilio Madero).

This is the framework. In fact, our French and European framework is that of a market economy in which competition reigns by essence. This competition which means that companies are constantly trying to take over new markets with varying degrees of success and, in any case, a temporary success since they will in turn be competing against each other. "The bubbling of trial and error, of success, of creation and destruction, unpredictable in essence, characterises a market economy" (Bruno Deffains). However, this unpredictability can be disturbing, particularly in times of recession or crisis, because this wealth-creating system is also a producer of inequalities. Not everything is "rosy in Wonderland": competition creates conflicts linked to the sharing of risks at different levels: labour versus capital, worker versus worker in a low-cost country and, of course, consumer versus producer.

Act 2: Regulation is necessary

Then the law (the rules) intervene to regulate these potential conflicts. The law, and more broadly the competition policy of States, initiated by industrialised countries, but increasingly adopted by emerging countries in search of regulation. This set of rules and processes makes it possible to build an institutional framework that preserves this competition, deemed healthy and virtuous - at least a sufficient degree of workable competition. Rather than imposing a theoretical competition that is pure and perfect by nature, it is a question of finding a balance, which is essentially moving, between different objectives. This raises the question of public interventionism to limit the "ultra" effects of competition, its relevance and the degree of intensity of the competition. One will be tempted here to evoke the industrial policy understood in the broad sense (employment, innovation, etc.) which would be opposed to competition policy. In other words, laissez-faire or intervention in favour of companies or certain sectors? The balance has to be found, and this is the whole point of regulation between an all-market economy and a statist economy. Competition law is an instrument to guarantee the competitiveness of the economy. A crisis must not give way to the temptation of interventionism, past emergencies and very exceptional cases. Let us keep in mind the experience in the USA of laxity after the 1928 crisis: concerted practices or cartels were tolerated, we now know that this prolonged the devastating effects of the crisis suffered.

Act 3 Competition law is a dominant and adaptable law

It is a fact that the development of competition law over the last thirty years is impressive, it has become a dominant law, but competition, it should be remembered, is not an objective in itself, it is a means. A means, certainly, at whose service? It is often argued that competition is a tool at the service of consumers and by its very nature generates collateral damage for employees and companies. But after all, what effects is competition supposed to produce?

lower prices or keeping prices low, for consumers, but also for businesses (prices of supplies) enlargement of the market size a variety of products and services because competition encourages differentiation Competition is above all a constituent element of productivity: it is the spur that pushes companies to be more efficient. The positive link between economic growth and the intensity of competition has already been amply demonstrated: the entry of new players who will launch breakthrough innovations on the market leads to productivity gains. In other words, competition does not only lead to lower prices but also to higher quality products or services. You may say, but competition generates job losses. This myth of the negative link between the competitive situation and job losses must be broken: after adjustments, overall, the sectors open to competition are much more job creators than those where competition is hindered. Of course, competition creates job instability, it is a process of creative destruction. In other words, it is on insufficient mobility that we have to work (vocational training, incentives for mobility, fluidity in the property market).

Competition law, at least its application, is a moving law. It is adaptable and evolves in line with economic reality. Periods of crisis or development, structure of competition on a market, consumer weight, B to B or B to C market, new or mature market, degree of intensity of the role of international competition are all factors to be considered. In the same way, the types of sectors and their different characteristics, particularly with regard to the product (strategic or not) or service (of general or commercial interest) are considered differently.

Act 4 The European competition framework remains major

Evoking the European dimension of Competition in connection with the construction of the Internal Market seems unavoidable here and, in fact, Europe is present in many lines of the work because the framework of European competition law structures the daily activities of the players in France. Competition is a fundamental element in the completion of the Internal Market, as underlined by Protocol 6 of the Treaty of Lisbon and Article 352 of the Treaty of Lisbon. Competition law is one of its main tools and its few legal bases (Articles 101 to 109 of the EU Treaty) are largely supplemented by secondary legislation, mainly in the form of Regulations. It is therefore applied through a large number of individual decisions that set precedents, but also through recommendations and policy statements, both to enlighten economic players and to guide national authorities. In other words, competition law leaves a large margin of appreciation to the authorities to develop a doctrine (and therefore a policy).

Competition is part of the philosophy of the free market and pursues two essential objectives: to protect the interests of European consumers but also to ensure the competitiveness of European companies on the world market. It faces intrinsic difficulties that can be understood from these few ideas:

Asymmetry of interests between large companies and consumers (concentrations and dominant players, cartels and restrictions of competition, integration of activities and vertical restrictions); A sometimes ambivalent behaviour of the States, stuck in the "national champion dilemma", which in Europe takes on particular importance because of the essential dimension of the construction of the internal market, of which the elimination of barriers to competition between players is a fundamental element (State aid and its potential restrictive effects on competition, negative effects on industrial structure, lack of competitiveness of protected players); Liberalisation of national monopoly sectors and the problems of public services or so-called services of general interest, which on a European scale are reflected in the concepts of Service of General Economic Interest and Social Service of General Interest; International competitiveness and the degree of protection of the national or European market. The competence of the European authorities is triggered when the behaviour of one or more economic actors has an effect on trade between Member States, even if the perpetrators are established outside the EU, but also when this behaviour affects trade on the territory of States identified as important, including France through the concept of substantial impairment of competition. This requires a fine articulation of the decisions taken at European and national level: a highly efficient cooperation mechanism has been developed for this purpose. Moreover, the classic rules of European law, including the primacy of European law over national law, are fully in play.

Unwinding

The link between the degree of competition (or its intensity) and the performance of a sector and more broadly of a country’s economy is sometimes still to be demonstrated, even in States where competition rules and competition policy are well established. Thus, in France, once again a country of paradoxes, where competition law is in place, where the players generally recognise the merits of competition; the interventionist and protectionist demons of the State regularly awaken with greater or lesser intensity depending on the dominant ideology but also beyond the political parties the economic state of the country. The ’culture of competition’, to quote my eminent colleague Frédéric Jenny, in the sense of its acceptance by the players - the State, companies, consumers, users, employees, etc. - is far from being established. Even if awareness of the benefits of competition seems to exist and to be shared, since the benefits of competition are neither immediate nor individual, the players may still be tempted to give the contract a few nibbles. These are then concerted agreements or cartels, price clauses in distribution networks, undue state aid, interventionism in sectors such as small business, active government involvement in corporate restructuring, etc. And if we do not take care of this, little by little, the competitive situation withers, the rents from the situation progress, the process of creative destruction at the very basis of any activity plays less of a role and in the end economic, and therefore social and societal development is handicapped.

It is indeed the merit and the great interest of this multi-hand book to approach in the most complete and objective way possible competition, its merits but also its risks, the framework and the rules related to it, the "downsides" to be integrated in connection with other imperatives, the good way to apply a competition policy adapted to the needs at a given moment. To be read and reread!

Authors

Publisher Concurrences

Date 30 September 2014

Number of pages 748

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