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Competition Law and Market Regulation – Standards to Avoid Antitrust Overstepping

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Abstract

When antitrust provisions regarding coordinated and unilateral conduct are enforced in markets where such behavior is already covered by specific ex-ante or ex-post regulation, risks associated with overstepping arise: non bis in idem concerns, duplication of efforts, infringement of rule of law and separation of powers principles, and error costs due to lack of technical expertise in a specific market, among others. The present contribution presents cases in which these risks arise and attempts to propose standards that allow to balance them against the effective protection of competition taking into account the advantages and disadvantages of competition advocacy as an alternative. The contribution uses a normative approach based on the political economy literature, which introduces into the discussion an aspect that is neglected in previous work on the relationship between antitrust and regulation that is an important determinant of market dynamics: the mutual feedback between market power and political activism of firms seeking to shape regulation and its implementation to their benefit. Finally, although a prominent part of this paper covers EU law, it also considers developments in other jurisdictions in order to take advantage of the rich experience and lessons that can be gained by widening the geographic horizon.

Dr. Francisco E. Beneke Ávila, Senior Research Fellow at the Max Planck Institute for Innovation and Competition, Munich

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Notes

  1. 1.

    A recent example in the EU is the creation of press publishers’ rights in the Copyright in the Digital Single Market Directive, which was conceived as a measure to counterbalance the power of intermediary platforms such as Facebook and Google. For a critical assessment of this neighboring right see Hilty, Moscon (2017), pp. 79–88, and Kathuria, Lai (2020).

  2. 2.

    See Larouche (2000) on the telecommunications industry and Hellwig (2009) on network industries in general, Franck (2023) on the payments and banking system.

  3. 3.

    Viscusi et al. (2018); Monti (2008); Dunne (2015);Dunne (2021).

  4. 4.

    See Hilty (2012), p. 8.

  5. 5.

    For an analysis on the interaction between the DA, DMA and competition law in the EU see Schweitzer, Metzger (2023).

  6. 6.

    540 U.S. 398 (2004).

  7. 7.

    Id., at 412–413.

  8. 8.

    Id., at 412.

  9. 9.

    Deutsche Telekom v. Commission, Case C-280/08 P, [2010] E.C.R. I ___ (delivered October 14, 2010).

  10. 10.

    Commission Decision in case COMP/38.784 (Wanadoo España/Telefónica) (July 4, 2007), upheld, Telefónica and Telefónica de España v. Commission, Case T-336/07, [2012] E.C.R. II ___, par. 126 (delivered March 29, 2012) appeal dismissed, Telefónica and Telefónica de España v. Commission, Case C-295/12, [2014] E.C.R. I ___ (delivered July 10, 2014).

  11. 11.

    Deutsche Telekom, Case C-280/08 P, para. 2.

  12. 12.

    Id., para 82.

  13. 13.

    Wanadoo España/Telefónica, paras. 135–144.

  14. 14.

    In a similar case, the Commission even subtracted the fines paid by the defendant to the telecommunications regulator in Poland. See Commission Decision in case COMP/39.525 – (Telekomunikacja Polska) (June 22, 2011), para. 920, upheld, Orange Polska S.A., formerly Telekomunikacja Polska S.A. v European Commission, Case T-486/11, [2015] E.C.R II ___, (delivered December 17, 2015) appeal dismissed, Orange Polska SA v European Commission, Case C-123/16, [2018], E.C.R. I ___, (delivered July 25, 2018).

  15. 15.

    Decision SC-024-D/PI/R-2019/RES.:07/10/2019, p. 48.

  16. 16.

    Id., pp. 27 and 41. The authority has not shied away from intervening in cases where the evidence showed the ineffectiveness of market-specific regulation. For an overview of cases see Beneke (2021) Chapter 8.

  17. 17.

    Trinko, 540 U.S. 398, at 413 (2004).

  18. 18.

    Bundeskartellamt, February 6, 2019, B6-22/16 – Facebook, paras. 573 ff. The Regional Court of Düsseldorf had expressed its serious doubts on the legality of this basis for a finding of anticompetitive behavior. OLG Düsseldorf, August 26, 2019, VI-Kart 1/19 (V) – Facebook (interim decision), para. 28.

  19. 19.

    German Federal Supreme Court, June 23, 2020, KVR 69/19 – Facebook (interim decision), para. 105. For an English version of the judgment, see GRUR International 70(6), pp. 603–614, available at https://doi.org/10.1093/grurint/ikab046. Accessed March 24, 2023.

  20. 20.

    Id., para. 99.

  21. 21.

    Id., para. 106.

  22. 22.

    Bpost v. Autorité belge de la concurrence, Case C-117/20, [2022], E.C.R. I ___, (delivered March 22, 2022), para. 43.

  23. 23.

    Id., paras. 44–47.

  24. 24.

    SIC resolution number 1347 of 2019.

  25. 25.

    FTC v. Actavis, Inc., 570 U.S. 136, 133 S. Ct. 2223, at 2236 (2013). Quite a graphic analogy, which is not unprecedented in antitrust cases involving IP rights: see U.S. v. Microsoft Corp., 253 F.3d 34 (D.C. Cir. 2001) (“[Microsoft] claims an absolute and unfettered right to use its intellectual property as it wishes . . . That is no more correct than the proposition that use of one‘s personal property, such as a baseball bat, cannot give rise to tort liability”).

  26. 26.

    Actavis, 570 U.S. 136, 133 S. Ct. 2223, at 2236–2237.

  27. 27.

    See Generics (UK) Ltd and others v. Competition Markets Authority Case C- C-307/18, [2020], E.C.R. I ___, (delivered January 30, 2020), para. 50, and Lundbeck v. Commission Case C-591/16 P, [2021], E.C.R. I ___, (delivered March 25, 2021), para 50.

  28. 28.

    AstraZeneca v Aosaikang, Supreme People’s Court of the People’s Republic of China, decision of 17 December 2021 – (2021) Zui Gao Fa Zhi Min Zhong No. 388. For an English translation, see GRUR International 72(1), pp. 76–80, available at https://doi.org/10.1093/grurint/ikac131. Accessed May 15, 2023.

  29. 29.

    Id., p. 77.

  30. 30.

    Janssen-Cilag and Johnson & Johnson v the President of the Competition Authority and Others, Court of Cassation (Cour de cassation), decision of 1 June 2022 – 360 FS-B on appeal T 19-20.999. For an English translation see GRUR International 72(4), pp. 415–426, available at https://doi.org/10.1093/grurint/ikad016. Accessed on May 15, 2023.

  31. 31.

    Id., p. 418.

  32. 32.

    Dunne (2021), p. 305.

  33. 33.

    In the German Facebook case, an option would have been that the BKartA lobbied the Irish data protection authority to look into the terms and conditions that served as the basis of the theory of harm in the antitrust case.

  34. 34.

    Id., pp. 300 and 303.

  35. 35.

    For an empirical analysis of the determinants of success of lobbying efforts in the United States, see Baumgartner et al. (2009).

  36. 36.

    Among many other obstacles statistically associated with lower likelihood of success of lobbying efforts. See Baumgartner et al. (2009), Chapters 4 and 12.

  37. 37.

    In the US, the right to petition is enshrined in the First Amendment to the United States Constitution. The Noerr-Pennington doctrine extends antitrust immunity to firms that push for policies with anticompetitive effects. The doctrine was developed in Eastern Railroad Presidents Conference v. Noerr Motor Freight, Inc., 365 U.S. 127 (1961) and California Motor Transport Co. v. Trucking Unlimited, 404 U.S. 508 (1972). At the supranational level in the EU, the right to petition is established in Arts. 20 and 24 of the TFEU and 44 of the Charter of Fundamental Rights of the European Union.

  38. 38.

    That is, when undertakings can escape liability because their behavior is mandated by regulation.

  39. 39.

    Kerr et al. (2014) find that lobbying expenditures are correlated to firm size in a sample of stock exchange-listed companies in the United States; Akcigit et al. (2023) find in Italy that as firms become market leaders they increase their expenditures in lobbying; Claessens et al. (2008) find an association between campaign donations in Brazil and loans granted by state-owned banks; Boas et al. (2014), pp. 415–419 find a similar association with public contracts; Freille et al. (2019) finds in Argentina an association between lobbying expenditures and campaign donations, on the one hand, and the amount granted in public contracts.

  40. 40.

    Rules enacted to protect the interest of incumbent firms rather than the benefit of the general population at large.

  41. 41.

    Hovenkamp (2005), p. 230.

  42. 42.

    Colangelo and Maggiolino (2019).

  43. 43.

    Mackenrodt (2021), Buiten (2021), Wiedemann (2020).

  44. 44.

    German Federal Supreme Court, 23 June 2020, KVR 69/19 – Facebook (interim decision), para. 77. For an English version of the judgment, see GRUR International 70(6), pp. 603–614, available at https://doi.org/10.1093/grurint/ikab046. Accessed March 24, 2023.

  45. 45.

    A concern raised in Dunne (2021), p. 298.

  46. 46.

    Example taken from Dunne (2021), p. 298.

  47. 47.

    Harrison et al. (2022), p. 57.

  48. 48.

    Bpost, Case C-117/20, para. 51. As mentioned in section 2, this was an important consideration in setting the fine in the Commission decisions in COMP/38.784 (Wanadoo España/Telefónica) and COMP/39.525 – (Telekomunikacja Polska).

  49. 49.

    European Data Protection Board, Guidelines 04/2022 on the calculation of administrative fines under the GDPR, para. 52. Available at https://edpb.europa.eu/system/files/2022-05/edpb_guidelines_042022_calculationofadministrativefines_en.pdf. Accessed May 15, 2023.

  50. 50.

    AstraZeneca v Aosaikang, Supreme People’s Court of the People’s Republic of China, decision of 17 December 2021 – (2021) Zui Gao Fa Zhi Min Zhong No. 388. For an English translation, see GRUR International 72(1), pp. 76–80, 77 available at https://doi.org/10.1093/grurint/ikac131. Accessed May 15, 2023.

  51. 51.

    In practice the distinction would be irrelevant given that either of the two conclusions would give rise to antitrust liability.

  52. 52.

    Although the issue of focusing on the size of the reverse payment bypasses this problem, the approach is not without its difficulties. On the limitations of different benchmarks to assess the size of the payment, such as the avoided litigation costs, see Edlin et al. (2015).

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  1. Munich, Germany

    Francisco E. Beneke Ávila

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Correspondence to Francisco E. Beneke Ávila .

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  1. Rechtswissenschaftliche Fakultät, Universität Zürich, Zürich, Schweiz

    Florent Thouvenin

  2. Fachbereich Rechtswissenschaft, Goethe-Universität, Frankfurt am Main, Deutschland

    Alexander Peukert

  3. Institut für Europarecht, Internationales Recht und Rechtsvergleichung, Universität Wien, Wien, Österreich

    Thomas Jaeger

  4. Department of Law, Luiss University – Libera Università Internazionale degli Studi Sociali Guido Carli, Rom, Italy

    Christophe Geiger

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Beneke Ávila, F.E. (2024). Competition Law and Market Regulation – Standards to Avoid Antitrust Overstepping. In: Thouvenin, F., Peukert, A., Jaeger, T., Geiger, C. (eds) Kreation Innovation Märkte - Creation Innovation Markets. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-662-68599-0_70

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