Paris

Demain la concurrence 2019

Conférence annuelle de la Revue Concurrences organisée au Ministère de l’Économie et des Finances avec le soutien d’Analysis Group, Compass Lexecon, CRA International, Dechert, Gide Loyrette Nouel, Jones Day, Qualcomm, RBB Economics, White & Case (Panel Sponsors), Cleary Gottlieb, ELIG Gürkaynak Attorneys-at-Law, Orrick (Social Event Sponsors), and MLex, PaRR (Media Sponsors).

Program

Frédéric Jenny  : Three main periods can be identified with respect to competition law and policy in the past quarter-century.

In the 90s, competition laws were adopted in many jurisdictions in a context of commercial liberalization. International negotiations were carried out to remove governmenta barriers to transnational trade and investment flows ; concerns raised over competition issues in global markets. Also, bilateral and multilateral agreements including provisions for the protection of competition were signed.

At the beginning of the 21st century, the globalization of markets resulted in economic integration but also legal fragmentation. It raised issues of convergence between legal regimes and systems as well as issues of cooperation between the authorities acting in different jurisdictions. Convergence has resulted especially from the increasing use of economics for the purpose of interpreting and applying competition law. However, convergence has not been fully achieved. Differences remains with respect to the scope of competition law (e.g. whether competition law should include state aids, deal with excessive pricing, etc. and whether public interests should be considered in competition assessment). Regarding cooperation, the authorities increasingly work together on multijurisdictional cases and coordinate their actions with respect to remedies.

Since the 2008 financial crisis, doubts and criticism have emerged, as the functioning of markets revealed irrationalities and inefficiencies. The premises underlying competition assessment and related economic theories have been called into question and two issues came to the fore in the aftermath of the financial crisis : is competition sufficient to ensure the optimal functioning of markets ? ; does competition occasionally result in inefficiencies ? Following the financial crisis regulation and competition were regarded as complementary in the financial sector. This led to a change of perspective on regulation. Regulation is not dismissed anymore, as it had been in the 1990s on the grounds that it impeded efficiency. Rather it is now considered that it can be a necessary complement competition law enforcement in a number of areas (for example the digital economy).

As a consequence of the financial crisis and subsequent decrease in economic growth, governments attempted to implement policies to revive economic growth and adopted protectionist measures to avoid that these policies benefit mainly foreign exporters to the country. Issues regarding the lack of a level playing field in global competition also came to the fore in this increasingly protectionist environment. The trade liberalization of the 1990s was seen to have promoted an unfair competition among firms facing different regulatory environments in their home countries. Finally, research has been carried out on the distributional impact of domestic and international competition, an area of research which had been largely ignored previously.

We currently face three challenges : a theoretical challenge ; a political challenge ; and a technological challenge.

First, the Chicago school’s approach to competition does not seem to be relevant anymore to deal with the social and political considerations that are now in the foreground. Further, the more economic approach to competition law enforcement has resulted in the proliferation of economic models which pretend to justify any possible firm behavior and do not always usefully inform competition authorities and courts. Some feel that competition law enforcement would be better served by empirical studies rather than by an excessive reliance on theoretical models.

Second, the protection of consumer welfare as the main objective of competition law and policy has been called into question. It is widely acknowledged, on the one hand, that other interests than those of consumers must be taken into account in decision-making and, on the other hand, that consumer welfare may be more complex than consumer surplus. What is perceived as an excessive focus on the price dimension of competition law enforcement is being criticized.

Finally, digitalization requires us to rethink numerous notions used in antitrust analysis ( such as the notions of undertaking or of relevant market) and to adapt our tools of analysis ( for example to adapt the tools we use to establish market power). Other issues relate to how to treat, from the competition angle, the handling of data by digital platforms.

It is against this background that the panels will focus on the following topical issues : competition law goals and the question as to whether they should be revised ; the role of courts with regard to that of competition authorities ; restrictive practices or the restriction of free trade to ensure that interests at stake are better balanced and thus advance towards achieving equality goals ; and issues relating to personal data.

Panel 1. Beyond Alstom-Siemens : Is there a need to revise competition law goals ?

Frédéric Jenny  : The agitation around whether merger control rules should be changed predates the Alstom / Siemens decision, although it has taken a new dimension. Before the Alstom / Siemens decision, Europeans leaders had already expressed concerns over merger control as it is currently enforced by competition authorities. In Germany, a rewriting of merger control rules has been proposed, together with the adoption of additional industrial policy measures to facilitate the emergence of European champions. This agitation came to a climax with the Alstom / Siemens decision. In the aftermath, the French and German Ministers—Mr. Le Maire and Mr. Altmaier—stated that greater consideration of state control and subsidies is necessary to understand how competition works in international markets ; that greater emphasis should be placed on potential and future competition at the international level and that a longer time frame should thus be adopted for the purpose of reviewing transactions ; that the European Council should be allowed, for policy reasons, to review and possibly overturn the European Commission’s’ decisions ; and that state aid rules should be amended to facilitate aids in research and development to promote industrial development.

The panelists will deal with the absence of regulatory global level-playing field and the notion that European companies operate at a massive disadvantage vis-à-vis foreign competitors ; the Ministers’ proposal ; and alternative solutions.

Simon Evenett  : There will not be a regulatory global level-playing field any time soon. There is plenty of evidence of trade distortions been implemented around the world, especially over the past ten years. However, not all may require action, in particular in absence of spillovers or harm against European interests. There is little evidence to support intervention. Also, the lack of a serious theory of harm raises concerns.

Furthermore, looking at the evidence, it may not be true that European firms are a massive disadvantage vis-à-vis foreign firms. Foreign firms competing in the European Union operate at a disadvantage vis-à-vis European firms due to subsidies given by European public bodies.

Finally, there is a clash between systems based on social market capitalism and forms of state-driven capitalism. Before answering the question as to whether our competition laws should be revised, one should draw conclusions from the trade policy experience. At the WTO, clashes between systems have been managed through exceptions, i.e. allowing trade defense mechanisms (anti-dumping, anti-subsidy). Interestingly, in the European Union, the implementation of trade defense instruments has been surgical in an attempt to fix specific, defined issues.

Jorge Padilla  : Evidence shows that many European companies are very competitive in foreign markets and suggests that a large size is not be a necessary condition for competing abroad successfully. The main issue European companies face both domestically and abroad is lack of resources to finance investment, which may not be a consequence of the companies’ size or barriers to accessing capital markets but rather the lack of “patient capital” in Europe and the limited size of their home markets due to internal restrictions within the European market. Tight competition rules do not place companies at a disadvantage but create a competitive advantage ; companies forced to act fierce competitors domestically will develop the strengthens and skills needed to compete in foreign markets.

Sir Christopher Bellamy QC  : There are some political questions underlying the Alstom / Siemens decision that one should face up to. With the financial crisis and the dominance of tech giants, globalization and the rise of China, have decision-makers and the public still faith in competition law ? The question as to whether politics can be taken out of competition law has returned. Public interest tests are still applied to a limited extent in some jurisdictions, such as in France where the Minister has the power to override a decision by the competition authority on the grounds of international competitiveness. Also, one should note that the Treaty of Lisbon downgraded the principle of effective competition from Article 3 to Protocol 27, signaling that it may be less important politically than other objectives. The core question is political. Moreover, the global playing field may become more fragmented, thus making more difficult for competition authorities to maintain close cooperation internationally in a context of trade wars.

Isabelle de Silva  : The rise of national champions is a recurring topic in competition policy. The Alstom / Siemens transaction raised several concerns, including the idea that European competition policy is too severe with respect to mergers compared with other jurisdictions (especially China), resulting in a disadvantage for European companies, and the idea that the European Union markets openness to international trade is not reciprocal. The Alstom / Siemens case thus reveals that the benefits of the European competition policy are not well understood and that some past trade policy choices, e.g. not taking subsidies into consideration, are being called into question. Competition policy cannot fix every issue having arisen out of international trade policy. One of the main strengths of the European competition policy is its neutrality towards the companies’ nationality. The respect that competition policy attracts would be jeopardized if this were to change. Furthermore, the very notion of a national or European ‘champion’ remains unclear.

Cecilio Madero  : The European Commission has taken the propositions put forward by the French and German Ministers into careful consideration. It consistently and continuously examines whether available competition tools and processes remain fit for purpose or should be revised. European firms face a number of challenges in the global economy as third countries often play by different rules, relying on protectionism and state ownership. Stronger foreign direct investment control should be enforced within the European Union, through coherent implementation of defined mechanisms by all Member States, within the framework for the screening of such investments adopted by the EU. Reciprocity vis-a-vis public procurement should also be ensured. WTO rules should be enforced in a more ambitious, decisive way. However, the Commission, whose action is driven by the rule of law, fairness and consumer welfare, should not have to degrade the way it implements competition rules. European competition enforcement standards are strictly based on the merits of transactions and not on the nationality of companies.

Bernard Amory  : It is unlikely that the Alstom / Siemens decision will offer innovative theories for merger control, considering the significance of the market share overlap. The decision has sparked much outrage. The idea that European companies are at a massive disadvantage is an inappropriate generalization, as it is not true in all sectors, especially in the railway, rolling stock, signaling sectors. European markets are characterized by barriers (local production, specification, homologation, public procurement, etc.) preventing foreign companies to enter. This may not be true for other markets, in which European companies, for scale reasons, may be at a disadvantage.

Frédéric Jenny  : It appears that, at the microeconomic level only, in some specific sectors, European companies may face an issue of competitive disadvantage. The French and German Ministers have put forward three proposals previously mentioned. The idea of entitling the European Council to overturn a decision rendered by the European Commission stems from the concern that the competition analysis carried out by the Commission only reflects narrow and static competition consideration and that other more dynamic elements of market competition ( such as dynamic efficiencies or industrial policy considerations) need to be integrated in the decision-making process. Is this a valid criticism and would the European Council be in a better position than competition authorities to have a dynamic approach to merger control ?

Sir Christopher Bellamy QC  : Leaving aside state aids, the two other proposals are questionable. However, these proposals reflect unease about whether competition authorities have adequate tools to address public concerns, such as European competitiveness, the environment or data privacy. But in the current European framework, there is no case for allowing political control of merger processes. Creating a domestic monopoly or a national champion would be too high a price to pay for an alleged advantage in some export markets. In particular, it is important to note that the increase in concentration has also resulted in a squeeze on labor force pay, a greater share of the cake being allocated to shareholders. The impact of concentration on labor markets has been largely overlooked. We will be better off in the long run using an objective test (with greater flexibility in its application) and focusing on substantial anticompetitive effects. With respect to the time frame used when reviewing transactions and assessing their effects, the longer-term is as relevant to merger analysis as the short-term.

Cecilio Madero  : Foreign direct investment control in the EU is not motivated by protectionist purposes, but by the goal of ensuring that state-owned enterprises and other third country firms operating in the European Union abide by the principles and the rules that are applicable and, notably, by the objective of protecting our strategic interests on the grounds of security and public order. Regarding the proposed droit d’évocation based on more or less legitimate industrial policy considerations, it inexorably raises a number of fundamental questions. In particular : wouldn’t it inevitably involve trade-offs in favor of specific large companies with costs incurred by consumers and employees ? It remains to be determined whether the possibility of revoking the merger decisions of the Commission would only be allowed in exceptional circumstances and applied under very strict conditions, and, if so, what these circumstances and conditions would be. This mechanism also raises concerns as to whether the process of reviewing what the Commission has already decided based on competition considerations, evidence and merits would be sufficiently objective and transparent, and arguably carries the risk of undermining the credibility and legal certainty of the European Union merger control system. Furthermore, couldn’t it entail that large Member States would be able to impose their will on other Member States with smaller economies in which very innovative small businesses still need to be protected ? It may also lead third parties consider retaliating against the European Union. Finally, regarding the proposal which advocates a reversal of the burden of proof in the assessment of transactions in the digital sector, which, according to a participant, would result in obviating merger control since companies would not be able to submit relevant evidence : it is worth noting that this idea has been put forward by different people but, at this stage, the Commission does not have a firm view in that respect.

Jorge Padilla  : A national champion can be defined as a company that has significant market power in domestic markets and that may leverage that power to improve its competitive position in foreign markets. A cost-benefit analysis suggests that merger control should not be reformed to promote the creation of national champions. However, merger control should be amended to foster the creation of international champions by encouraging investment and innovation. For example, considering the potential impact of merger control on innovation, we should place greater emphasis on long-term effects (not necessarily reduce intervention) and rethink how to deal with and assess efficiencies. Authorities should assess efficiencies at an early stage, focusing on the business rationale, regardless of the efficiency defense that could be raised afterwards. Facilitating the emergence of international champions would also require adopting an appropriate industrial policy and considering pan-European aids and investment projects. Soft-power could be used to extract concessions from trading partners so that European companies can compete on a level-playing field in their markets.

Isabelle de Silva  : The quality of the analysis underlying the report issued by the French Inspection générale des finances must be remarked. As for the suggestion that the Council be granted the authority to review the Commission’s decisions, it raises legal and institutional challenges. A risk is that it could entail a politicization of competition law enforcement within the European Union. With respect to the idea of creating of a specific committee within the DG Comp, it is worth noting that it does not work in isolation from other Directorates General. Debates are carried out across the College of commissioners. The most promising proposals are the update of the Commission’s guidelines, and possibly of regulation 139/2004, regarding the period taken into account when reviewing transactions and the issue of potential entry, especially with respect to the digital sector ; as for the idea of behavioral remedies being held off and triggered only on the basis of actual harm, it may seem appealing to some but would be extremely complex to implement.

Simon Evenett  : Concerning the proposal of taking into greater consideration state control and subsidies of undertakings engaging in mergers, it is worth mentioning that the text refers to state control and thus includes vague notions such as state linkages, rather than state ownership. We should be careful what we wish for, as there are also some large state-owned shareholdings in European companies. As to government procurement, very few public contracts are awarded to companies from other European Member States let alone non-EU firms. Finally, regarding foreign direct investment screening, if the policy concern is that it results in innovation drain, then a policy alternative to banning foreign mergers is taxation of asset acquisition.

Bernard Amory  : Granting the Council a droit d’évocation would add a political dimension to merger control that would encroach upon legal certainty to the detriment of businesses. The most promising remedy to politicization consists in preserving the rule of law. Also, one tends to oppose industrial policy and competition policy. Competition policy is actually a tool for industrial policy since the strength of the European Union internal market depends on competition policy.

Panel 2. Competition authorities : Which judicial review ?

Laurence Idot  : For some years, the topic of judicial review has spurred a continuing debate which is easy to explain. The European Union judicial review system is a long-established system that dates back to the adoption of the Treaty of Rome, and whose founders have been inspired by the appeal mechanism for annulment on ultra vires grounds (recours en excès de pouvoir) in French administrative law. However, since 1957, there has been significant changes in competition law. Although article 263 of the Treaty has been amended, it has not had any impact on competition law. Issues were thus bound to arise. Various factors, both external and internal, have contributed to their intensification. With respect to external factors, one must note the rise of fundamental rights, enshrined in the Charter, which has revived the debate over the compatibility of the European Union system. Regarding internal factors, one must first take modernization into account, in both substantial and procedural aspects (substantial with the development of a more economic approach ; procedural with the increasing role of competition national authorities subject to their own judicial review, thus resulting in a variety of approaches). A new source of tensions is to be found in the development of bargained procedures (procédures négociées), especially settlements.

To deal with these questions, the panelists will reflect on the scope of judicial review, but also its future.

Wouter Wils  : The system underlying review by EU courts is a 60-year old system which has remained unchanged as to its legal basis, currently set in Articles 263 (legality review) and 261 (unlimited jurisdiction on the amount of fines) of the Treaty on the Functioning of the European Union. Over the last fifteen years, the implementation of this system with respect to competition matters has evolved. Even for complex economic assessments, following the Tetra Laval judgment (2005), the General Court is required to assess whether the evidence relied on is factually accurate, reliable and consistent ; contains all the information which must be taken into account ; and is capable of substantiating the conclusions drawn from it. Later, in the Chalkor judgment (2011), the Court of Justice clarified that, when reviewing the legality of the Commission’s actions, the General Court must conduct an in-depth review of all matters of law and of fact. Also, following the Knauf Gips judgment (2010), it is now possible to raise before the General Court matters of fact or law that have not been raised during the administrative proceedings. The Commission has internal checks and balances to avoid taking decisions that would not withstand the Court’s intense scrutiny, including the Chief Economist, the Legal Service, which is fully separate from the Directorate-General for Competition and the Competition Commissioner, with the functions of reviewing draft decisions and defending the Commission’s decision before the Court of Justice ; and the Hearing Officer, similarly independent, who mainly focus on procedural aspects, but also advises on substance. Finally, the EU fundamental right of effective review, enshrined in Articles 47 and 51(1) of the Charter, also applies to national competition authorities when applying Articles 101 and 102.

Alvaro Ramos  : The scope of effective judicial review is critically important given the powers of the Commission, which is a not an independent court. In the Intel case, the Commission adopted a more economic approach to unilateral conduct, in line with the Guidance Paper. The Commission contended that the Court should not review the economic analysis and that an illegality presumption would apply to exclusivity discounts. In first instance the General Court agreed with the Commission but on appeal the Court of Justice annulled the GC decision and resent the case back to the GC while providing guidance on how to assess exclusivity discounts (in line with the Guidance Paper). It is positive that the Court undertakes a review of the economic analysis conducted by the Commission, to determine whether it is soundness. More recent case law emphasizes the requirement that the Commission gathers all relevant evidence, hence reducing the Commission’s ability to resort to presumptions of illegality which effectively constitute evidentiary shortcut. Agencies and companies should welcome the recent Court case law in that it ensures that an independent court exercises effective judicial control of antitrust decisions.

On a separate topic, recent Commission decisions that do not precisely define the remedy that is actually imposed on the defendant may risk undermining the company’s ability to seek a stay, this is the case since effectively it is incumbent upon the defendant to actually propose a remedy.

Ian Forrester  : The basic structure of European public enforcement of competition law has followed the model established by the Treaty of Rome and the 1962 Regulation n°17, which have been adapted but the core substance has not changed. The criticisms over the fundamental structure have fairly consistently been rejected. Regarding the standard of review, one may note that, in several recent cases, the Commission’s findings were reversed by the Court. Looking at the standard of review and the test applied, the definition of the relevance standard varied widely over the past years, from interventionism to mere observation of the existence of a legal basis underlying the Commission’s decision. The Commission worries manifestly about judicial review conducted at Luxembourg. Judicial intervention is beneficial to the extent that it produces coherent explanation for the Commission’s decisions, by articulating legal principles.

Furthermore, leniency and settlement decisions have been a great success. Consequently, in most of cases, the substance of cartel accusations are not discussed and there is no judicial review. We should hope for the emergence of a mechanism whereby the Court of the Justice gets further involved in the shaping of new legal principles.

Mélanie Thill-Tayara  : With respect to judicial review of the French competition authority’s decisions by the Paris Court of appeal, the Cour de cassation confirmed that if the Court annuls a decision then it must decide again on the case, except in case of a decision rejecting a complaint for lack of evidence or if there is no sufficient factual basis for the Court to decide. This devoir d’évocation raises procedural issues, especially when all proceedings following the statement of objections are annulled (see the Brenntag judgment of the Paris Court of appeal dated 2 February 2017). The Court conducts an increasingly thorough judicial review. At the beginning of the 21st century, judicial review mainly consisted in legality review. In 2015, Valérie Michel Amsellem was appointed to chair the relevant chamber at the Court and new resources were allocated to the Court, which started to conduct a more thorough review.

Regarding the development of judicial review, the fact that an increasing number of cases leads to commitment decisions is problematic. Those decisions suggest that some conducts raise competition issues, even though they are reached irrespective of any in-depth analysis and related defense. We should ensure that the scope of those decisions remains limited to the companies they relate to and that those decisions do not set any precedent.

Emmanuel Frot  : Another approach focuses on the impact of the mere existence of judicial review on the decision-making by competition authorities. Competition authorities aim at enhancing the quality of their decisions, all the more so due to reputational incentives. Authorities strive to minimize the likelihood of their decisions being annulled by including elements that will lead the reviewing courts to uphold them. Conducting economic analysis contributes to reduce the likelihood of error but brings complexity in decision-making and thus spawns uncertainty over the appeal process. Consequently, authorities have tended to avoid relying heavily on economic analyses and, using its margin of discretion, to put emphasis on the facts that support existing case law. Various solutions can be considered : the judicial review should focus on economic analysis and evidence ; experts should be involved in the judicial review process.

Panel 3 : Restrictive trade practices in the food and retail sector : Is the end near, truly ?

Daniel Fasquelle  : Unfair commercial practices in the context of business relations between distributors and retailers are well known in France. Historically, the fight against unfair commercial practices was aimed at protecting distributors, but then things gradually turned the other way. Recently, the EGALIM law (Loi 2018/938 pour l’équilibre des relations commerciales dans le secteur agricole et une alimentation saine et durable) has strengthened the substance of Title 4 of the French Commercial code, in particular by putting emphasis on the prohibition of resale at a loss. EU law has long been indifferent to restrictive practices. It then became hostile through a judgment dated 7 March 2013 in which it was considered that Belgian law prohibiting resale at a loss was not in compliance with European legislation. This solution is not applicable to French law insofar as French law does not impose a general prohibition on resale at a loss and does not relate to consumers directly but rather relations between companies. The adoption of Directive 2019/633 marks a remarkable turnaround in principle but not in substance, due to its limited scope. The text only touches upon small and medium enterprises and food products. It remains to be seen whether this directive will be an odd text or whether its scope will be extended. However, it is worth noting that it has been adopted at a time of discussions on the necessity to adapt competition law to agricultural activities. It will be interesting to observe the impact of this new directive on competition law in France and its efficiency. The complementarity with cartel and merger laws must be seek to rebalance bargaining power between producers and distributors.

Paul Csiszar  : Should we consider political and wider policy objectives in antitrust law ? This is an important debate, because many policy goals are quite legitimate, so the question is whether the use of tools other than competition law (e.g., sector specific regulation, trade instruments) would not be more effective and transparent.

There is confusion between two concepts : substantial market power (possibly leading to abuse of a dominant position), on the one hand, and unequal balance of bargaining power between two commercial partners, on the other hand. A company that does not enjoy substantial market power and thus does not have a dominant position on the market may nevertheless enjoy a favorable balance of bargaining power towards its trading partners. Accordingly, in 2016, the Council of Ministers and the European Parliament requested from the Commission a proposed legal text to address the possible abuse of unequal bargaining power in the commercial relationship of small agri producers. The Directorate-General for Agriculture was in charge of the file to take action, but the Directorate-General for Competition has actively cooperated with their colleagues in DG Agri and provided significant input to drafting the Directive. Moreover, the Chief Economist of DG Comp has also contributed an important paper to the Impact Assessment of the new Directive (which is publicly available for all those who wish to study the subject in depth). The final text of the Directive may be regarded as a good compromise which further the fight against unfair trading practices that are inefficient business practices and implemented at the disadvantage of small producers.

The new Directive on Unfair Trading Practices has established a list of practices that are deemed unfair per se (black list), including for example late payments for perishable goods and some unilateral amendments to agricultural product supply agreements. A grey list of practices that are illegal when they are imposed on producers without transparent ex ante discussion and clear agreement in advance by the smaller contracting party. It includes, for example, returns of unsold goods, request to contribute to marketing campaign, and when buyers asks suppliers to bear all or part of the costs associated with discounts on products.

More than half of the Member States have already adopted legislation with respect to unfair practices. By this new Directive, the Commission has set a minimum standards, which all Member States have to adhere to, and it has allowed the Member States to add additional specific trading practices that they deem to be unfair.

In addition to the new Directive, to fight against unfair practices, the Commission also uses competition law enforcement. In 2017, for example, dawn raids were carried out against distributors in furtherance of suspicions of abuse of power and abuse of rights in the creation of central buying alliances. In 2012, the Commission has also adopted guidelines, particularly on joint purchases agreements, which give extensive guidelines on the permitted joint procurement of agricultural products.

Virginie Beaumeunier  : The DGCCRF has been working on the issue of unfair practices for a long time. France supported adoption of the Directive. The directive provides for minimum standards, which is already an important step forward for European suppliers. With respect to the transposition of the Directive, the DGCCRF could certainly have envisioned transposition through the Ordinance reforming Title 4 of the French Commercial Code ; however, the Directive was not fully adopted, and its transposition was outside the scope of the Ordinance.

The French approach is intended to be a simplified approach with the grouping of three offences that are broad enough to cover a large number of situations (significant imbalance, advantage without counterpart, sudden termination). Also, EU law provides with lists of practices. As a result, one option for the transposition could take the form of what had been done previously in consumer law : a principle and a list of examples. In any case, the Directive will not result in substantial change in French law, especially because France will keep its cross-sector approach applicable regardless of the size of companies. Another advantage of this directive is that the DGCCRF and European counterparts will have to cooperate.

Regarding the implementation of the Directive, judicial courts will retain jurisdiction over the characterization of practices. However, the DGCCRF will have an important role to play in receiving complaints from producers and ensuring anonymity to avoid reprisals. In that regard, the Paris Court of Appeal ruled on 12 June 2019 that the fact of the DGCCRF filing anonymised minutes is not a disproportionate infringement of the rights of defence. Furthermore, it is worth mentioning that there is a mediator specialized in commercial contracts in agriculture who is expected to continue intervening.

With respect to competition law, the EGALIM law has strengthened the powers of the French Competition Authority. For example, the law allows the Authority to take protective measures if the transaction is likely to result in a sufficiently serious breach of competition. Also, the Authority may carry out a competitive assessment of ongoing agreements and invite the parties to negotiate in order to reduce competition distortions that would have emerged.

Richard Panquiault  : The texts adopted over the past five years are steps in the right direction, but the framework is changing. The reform of Title 4 must be applauded since it has avoided inconsistency and redundancy. The Directive has the advantage of materializing the taking into account of restrictive practices at the European level. The European legislator’s approach is to draw up lists of illegal practices, while Title 4 offers sufficient margin to cover a large number of situations.

European thresholds raise issues ; it is difficult to understand them since a practice may be illegal in one case and not in another. However, limiting the scope of a text leads to negative effects. For example, the EGALIM law only applies to food products. Interestingly, at the same time, average promotional discounts in beauty care events are 3.6% up this year, whereas the market is slightly down.

It should be noted that there is a lack of dissuasive sanctions. From 2014 to 2016, 6.5 million fines and 154 million restitution of undue payments have been imposed. This reveals that distributors have continued engaging in illegal behaviors. Competition authorities must strengthen coordination at the European level in response to increasing cooperation among distributors. In addition, the Commission d’examen des pratiques commerciales has an interest in promoting soft law by instructing about good practices to be adopted.

Benoît Durand  : There are two main aspects to a commercial transaction : a cooperative aspect as the transaction creates an overall surplus that benefits the parties to the transaction and a conflicting aspect as the parties typically do not agree on how to share the surplus created. This is where there can be imbalances, notably between small and large players. A small supplier may have to lower its price against a powerful buyer. From an economic point of view, these imbalances are not necessarily negative.

The regulation on unfair trading practices takes into account other parameters than the price which is used to share the surplus. For instance, the more powerful party may transfer cost and risk on the weaker party to the transaction.

There are cases in which these transfers are justified. Indeed, these transfers may increase the surplus of the transaction. The small player may be more efficient to carry on some tasks ; hence it makes sense that it bears the costs for those. From an economic point of view, cost and risk transfers are not necessarily negative, even when they are borne by the weaker by the weaker party.

In economics, the key question is whether unfair trading practice will lead to inefficiencies. Some practices clearly lead to inefficiencies. For instance, late payments on perishable products, which typically harm farmers, bring uncertainty, and as a result, these have a negative impact on investments and by extension on returns in the agricultural sector.

In the agricultural sector, regulation to prohibit such practice appears justified for at least two reasons : there are very large imbalances between famers and processors/distributors and a high degree of uncertainty that affect the agricultural sector.

Indeed, the agricultural sector is composed of 11 million farms and 300,000 processing companies. Only 7% of its farms cover more than 50 hectares and two thirds of food sales are made in supermarkets, hypermarkets and discounters. In this context, the fear factor, recognized by the commission, is particularly relevant because small producers do not go to court to assert their rights and is largely responsible for unfair practices in the agricultural sector.

Finally, the agricultural sector is full of uncertainties (perishable goods, weather conditions, seasonality etc.) So increased regulation in this sector is justified as long as it aims at reducing uncertainty and inefficiency.

Laurent Godfroid  : The various texts should complement each other : the Omnibus Regulation and the Egalim Law, which draw conclusions from the judgment of the Court of Justice in the Endive case, clarify the conditions under which producers can cooperate without infringing antitrust rules ; the Egalim Law also requires purchasing groups that intend to cooperate to inform the Competition Authority beforehand, in order to verify the impact on competition.

These are legislative developments that favor the concentration of producers while supervising the concentration of buyers. Other legislative measures, such as the new Directive and the Title IV, identify protective measures that are more immediate. Therefore, if the texts tend multiply, they are intended to complement each other, in order to try and rebalance the relations between suppliers and purchasers. Will it work ?

The analysis of the text of the Directive shows that everything has been thought so that the protection is effective. It is a minimum harmonization that allows Member States to impose stricter measures. The list of measures focuses on the most impactful. Complaints may be made anonymously and retaliation from buyers is prohibited. The competent authorities may investigate ex officio, organize dawn-raids, impose sanctions, etc. Will producers seize this opportunity ?

In this context, competition law will continue to be used. As mentioned, the Omnibus Community Regulation, as well as the Egalim Act, and the Authority’s opinion on the agricultural sector encourage producers to cooperate without infringing antitrust rules if certain conditions are met.

With regard to cooperation between purchasing groups, the Authority has opened investigations on the basis of the Egalim Law in respect of several agreements ; it is very likely that in reviewing them, the Authority will rely on its very detailed opinion of 2015 on the regrouping of purchasing entities.

And then there is the control of concentrations : in 2015, for instance, the project to bring together Auchan and Système U’s purchasing entities was considered a concentration. While the parties decided to abandon their transaction, the Authority had identified some competition issues in its decision to move to Phase 2.

Therefore, competition law is not powerless to analyze the concentration of purchasing entities. Both at Community and French level, there is now a will to tackle this type of cooperation. Ongoing cases will certainly provide an opportunity to have a detailed analysis on how to analyze their effects and efficiencies.

Panel 4. Business & Personal data : Should access be shares ? Should collection be confined ?

Nicolas Petit  : Several expert reports published in 2018 and 2019 have added substance to the debates over personal data. There has been progress in our collective understanding of the strategic importance of both big and nano data in relation to market structure and business conduct. Previous studies and decisions by the Commission and national agencies make clear that the holding of tremendous volumes of data is necessary to compete in some markets.

Policy-making requires facing difficult challenges and answering complex questions ; for example, is excessive data extraction an abuse of market power ? ; should antitrust law promotes data minimization in achieving its consumer welfare objective ? ; how to reconcile policy proposals for data sharing with competitors and other objectives such as privacy and cybersecurity ? ; what about public sector data ? ; etc.

The panel will focus on data-related harm and remedies from a market power perspective, the interactions between privacy and competition, and institutional reform and procedural innovation.

Cristina Caffarra  : There are two main reasons for worrying about data accumulation : privacy and market power, that is, exploitation of data in a way that enhances market power and results in outcomes adverse to consumer welfare. The two challenges cannot be addressed separately. Privacy is a competition issue, but it cannot be dealt with only through competition.

Although data accumulation allows economies of scale and scope, it does not result in network effects in and of itself. However, the combination of significant amounts of data and networks effects result in large competitive advantages ; this occurs as a result of mergers, foreclosing conducts, exploitative conducts, etc. Antitrust enforcement should be made more effective, and especially quicker, to deal with these issues.

Veronica Pinotti  : Much of the data-related debates has actually revolved around digital platforms. These are think search engines or social networks that connect users through access points they generated. Users join platform to enjoy free services as well as business retail/services and advertisers. More users on the same platform means more data therefore increased ability to improve the platform free services, algorithms and monetize the platform through the sale of advertising, product or services. This is called network effect which in antitrust may result in efficiencies and innovation beneficial to users or barriers to entry, Most of the technology innovation of the last decade is due to this network effect therefore big does not always means bad in particular as long as switching/not using the platform is free and easy. Data portability/interoperability make it even easier. Some however believe that these platforms should be used as utilities and thus regulated. Others instead think that authorities should not intervene since users have the ability to leave the platform or stay and contribute to innovation. Moreover, although privacy issues and antitrust issues should be addressed together, the regulatory framework remains fragmented and the relevant authorities do not cooperate enough. Cross-disciplinary expertise in privacy law, antitrust law and consumer law is required to move forward.

Thomas Kramler  : Data-driven harm is difficult to assess. Different categories of data call for different competition analyses. Several theories of harm can be considered, such as traditional leveraging theories, essential facility doctrine. Competition law should not be the sole remedy to data access issues. Furthermore, data pooling is critically important for European companies to engage successfully in data-intensive activities ; one should not outlaw it. Guidance on data pooling can be found in the Guidelines on the applicability of Article 101 of the Treaty to horizontal co-operation agreements.

Sébastien Soriano  : Competition policies have failed. Digital markets should benefit from much greater diversity ; big techs are too big to trust. An ex ante approach is needed to bring more choice, as we did in the telecom sector 20 years ago. Would data sharing remedies allow to regain capacity to innovate ? For example, some data could be regarded as data of common interests. Several remedies seem mature enough to be imposed to big tech : open access to the platforms, non-discrimination, and separation rules (e.g., for accounting). Other interventions such as price regulation may not be mature enough at this stage.

Also, regarding the question as to what authority or authorities should take action with respect to challenges involving antitrust issues as well as privacy and consumer protection issues, one should remind that organization follows strategies. Challenges in terms of organization should be addressed in consideration of the objectives. To my view, the priority should be to bring more choice in the digital environment. A task force dedicated to big techs at DG Comp could be an option.

Christian D’Cunha  : Data protection cannot be thought about separately from market power ; similarly, the economic harm resulting from data collection cannot be assessed regardless of the harm on individuals. Privacy legislation and competition law should be regarded as complementary. They share common goals, for example that the imbalances between those who have market power or data power and those who are at the receiving end do not become unsustainable. There is increasing convergence with respect to concerns over companies having control of datasets and being able to dictate terms within the market on a vertical basis or in terms of content access.

Furthermore, regarding the question as to whether a competition agency is a competent authority to prohibit exploitative business terms regarding the collection of personal data, one should not forget that data protection does not distinguish between companies in terms of market power. So it makes sense for a competition authority to consider whether a dominant company is abusing its market power, by excessive or unfair data practices, which have the effect or exploiting consumers or excluding competitors with alternative, less problematic business models. This would not preclude any enforcement action by a data protection authority.

Arno Rasek  : From an economic point of view, an excessive data collection and processing by a dominant company imposes risk costs on the persons tracked. When Facebook tracks most of what people do online or on the mobile outside Facebook, this creates a huge and highly sensitive data set. At the same time it creates a risk that this information is leaked or used for purposes unwanted by the individual. Even if the probability of unwanted leaks or usages is rather low, the consequences an individual could face can be massive.

In principle, there can also be countervailing direct or indirect benefits for consumers associated to vast data collection. Such benefits may vary case by case. Regarding personalized “off-Facebook” tracking, Facebook did not explain in a comprehensible manner what the direct benefits for a consumer could be and how these benefits materialize. On indirect benefits, Facebook basically argued that it would enable Facebook to generate more revenue from advertisers. But Facebook did not explain why it would spend this additional income on improving the Facebook service rather than on other purposes such as acquisitions, other company services, or shareholder rents.

Which competition and industrial policies for Europe ?

Agnès Pannier-Runacher  : Competition law is an imperative to secure the economic public order and to ensure fair competition between companies. Competition is also crucial for innovation. The government believes in the level playing field, that is, a critically important principle for economic development. The implementation of European competition policy has led to the dismantlement of cartels and to the protection of EU markets, which are mainly less concentrated than U.S. markets, to the benefit of consumers. France has been supporting Margreth Vestager’s actions, especially regarding exclusionary conducts on digital platforms.

However, competition law rules must be amended in view of changing economic realities (e.g. investment in innovation, unfair competition). For European companies to remain competitive and take up the technological and industrial challenges, the European Union must take action towards encouraging and facilitating the emergence of European innovation-intensive firms.

The independence of national and European competition authorities must be commended, while the lack of independence of agencies in other jurisdiction must be taken into account in order not to put European companies at a disadvantage.

Competition policy is not the only tool to protect fair competition ; other public policy objectives must be taken into account. Policies must be defined and implemented in consideration of others to ensure consistency.

Merger control rules and other competition law rules should be modified to reflect global economic changes. It has been proposed to adopt a more dynamic analysis (i.e. to consider potential competition in the medium to long term) ; to take into account the most favorable conditions benefiting companies established in some foreign countries ; to better assess efficiencies resulting from mergers in terms of innovation ; and to adapt state aid policies in view of current industrial challenges.

Moreover, further initiatives should be undertaken to ensure fair competition in the digital economy ; platforms are constantly developing new strategies to retain consumers and the currently available tools do not allow to detect these practices rapidly enough, especially due to the timeframes. For example, the adoption of sector-specific regulatory tools and tax reforms should be considered to foster innovation.

Modernizing competition law has become a major challenge at the European and international levels.

Photos © Léo-Paul Ridet

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