In the European rail industry, to enable competition in the market, entrants should be granted access to a large set of complementary services, beyond access to the tracks. For an efficient and effective entry, temporary access to quasi-essential complementary assets like rolling stock, mechanical maintenance workshops, data, schedules, etc. is also required. In the liberalized rail sector, several observed anticompetitive practices involve distorted access to these quasi-essential facilities. Therefore, competition agencies must deal with litigation between the incumbent and new entrants. Most cases have been settled, resulting in commitments from the incumbent. We argue that such transitory and case-by-case remedies fail to produce favorable conditions for a secure and efficient entry. Thus, we propose to systematize such remedies through asymmetric and enduring ex-ante regulation.
Over the period 2015-2017, the five giant technologically leading firms, Google, Amazon, Facebook, Apple and Microsoft (GAFAM) acquired 175 companies, from small startups to billion dollar deals. In this paper, we provide detailed information and statistics on the merger activity of the GAFAM and on the characteristics of the firms they acquire. One of the most intriguing features of these acquisitions is that, in the majority of cases, the product of the target is discontinued under its original brand name post acquisition and this is especially true for the youngest firms. There are three reasons to discontinue a product post acquisition: the product is not as successful as expected, the acquisition was not motivated by the product itself but by the target's assets or R\&D effort, or by the elimination of a potential competitive threat. While our data does not enable us to screen between these explanations, the present analysis shows that most of the startups are killed in their infancy. This important phenomenon calls for tighter intervention by competition authorities in merger cases involving big techs.
This paper presents a simulation-based methodology for assessing the impact of employing different distribution system operator’s remuneration strategies on the economic sustainability of electrical distribution systems. The proposed methodology accounts for the uncertainties posed by the integration of distributed electricity generation resources, and the roll out of smart-meters. The different remuneration strategies analysed in this paper include notably new distribution tariffs based on individual peak power consumption and time-dependent rates that are contingent on the time of energy consumption, both requiring smart-meters to work. The distributed electricity generation resources are modelled through an optimisation framework and an investment decision process that gradually deploys household photovoltaic installations depending on their profitability and the electricity charges, including the distribution rates. The impact of the distribution system operator’s remuneration strategy is measured by an accurate modelling of the remuneration mechanism of this entity, which can adapt to various distribution tariff designs. We analyse this impact over a discrete time horizon. Our methodology is illustrated with several examples of distribution tariffs including old –based on energy consumption or on per-connection fees– as well as new –based on power consumption or time-of use fees– designs. Finally, we provide a comprehensive sensitivity analysis of the proposed simulation environment to the main parameters of the methodology.
Energy consumers can invest in photovoltaic (PV) panels and become prosumers. The benefit of such an investment depends on the regulatory framework. We consider a population of heterogenous consumers, with respect to both the cost of decentralized production and their degree of self-consumption.it is efficient to have investment by low-cost and high self-consumption profiles. We determine the optimal tariff in the presence of heterogenous prosumers. Net metering fails to screen consumers on the self-consumption dimension. Net purchasing can lead to the efficient investment if the tariffs are non-Coasian that is fixed fees exceed the grid operator's fixed costs.
In Wallonia, Belgium's southern region, the distribution component of the overall electricity retail tariff is essentially volumetric, i.e. based on the users' energy consumption (in €/kWh). Residential prosumers, moreover, are connected to the grid via a net-metering system. In this paper, we rely on a sophisticated multi-agent tariff simulator – developed in Manuel de Villena et al. (2019, 2020) – calibrated to this specific regional context to model the integration of prosumers into the distribution grid. This simulator enables us to highlight how the emergence of prosumers impacts the distribution network tariff, and to evaluate several tariff reforms currently under discussion: the introduction of a prosumer fee, the introduction of a capacity component and a switch to net-purchasing. Without a change in the metering system, short run reforms can only change the structure of the tariff paid, either to all consumers or to prosumers only. In the long run, especially thanks to smart meters, we consider both the introduction of a net-purchasing system and of a tariff with a capacity component. Our analysis highlights one key added value of smart meters: they allow network tariffs that are fairer and sustainable.
The deployment of decentralized productions units (DPU) like rooftop solar panels is a major challenge for a transition towards greener energy sources. Under a net metering system where the meter runs backward when there is excessive PV production, the electricity produced by a solar panel is valued at the retail price. Higher retail prices thus encourage the deployment of DPU. To identify this relationship, we use data from Wallonia where tariffs are paid on a mostly volumetric base and where there are 13 different tariff zones. Using various specifications, our results suggest that in a municipality where the distribution tariff is one eurocent per kWh higher, the investment in solar PV is, all else equal, around 8% higher.
This paper analyzes two business practices on the mobile internet market, paid prioritization and zero-rating. These practices allow the internet service provider to discriminate different content types. With prioritization, the ISP delivers content at different speeds; with zero-rating, the ISP charges different prices. In recent years these practices have attracted considerable media attention and regulatory interest. When the asymmetry between content providers is limited, in particular with regard to their ability to attract traffic or to monetize it, we first show that the ISP can extract more surplus from consumers by privileging the relatively weaker content and restoring symmetry between content providers. Next, we show that the ISP chooses prioritization when traffic is highly valuable for content providers and congestion is severe, and zero-rating in all other cases. Finally, we find that a policy banning prioritization can lead to zero-rating and a reduction in consumer surplus.
La Wallonie a mis en place en 2003 un mécanisme de certificats verts échangeables pour promouvoir le développement des énergies issues de sources renouvelables. Le marché des CV s’est trouvé dès 2007 en déséquilibre avec une offre excédentaire de certificats du fait notamment du soutien différencié et généreux à la filière solaire photovoltaïque. Ce déséquilibre persistant a fait chuter le prix des CV à un prix proche du prix de rachat garanti de 65 €. Dans les faits, le mécanisme des
certificats verts s’est transformé en une prime de rachat garantie qu’il est aujourd’hui nécessaire de modifier.
En présence d’externalités de réseau, l’utilisation d’une norme technique commune augmente la compatibilité entre biens et de ce fait le bénéfice pour les utilisateurs. Ces dernières années, les technologies de communication se sont développées sur la base de normes standardisées. Ces normes ont été définies par le secteur au sein d’organismes de standardisation (on parle de norme de jure). Le standard est composé de brevets dits « essentiels au standard » pour lesquels les utilisateurs de la technologie doivent obtenir une licence. L’existence de brevets essentiels crée un goulot d’étranglement, et confère un pouvoir de marché a priori important aux détenteurs de ces brevets. Se pose dès lors la question du lien entre standardisation et concurrence et l’opportunité d’une intervention régulatrice est débattue. Ce bref article discute les conséquences du processus de standardisation sur la concurrence, tant en amont qu’en aval du marché, en utilisant les technologies mobiles comme illustration.
La transition énergétique modifie la manière de produire, consommer, stocker et échanger l’énergie. Dans cette transition, les prix doivent orienter les choix et donner des signaux corrects aux consommateurs. Dans ce numéro de Regards économiques, nous analysons le comportement des prosumers, les ménages qui sont à la fois producteurs et consommateurs d’énergie. Nous montrons que les tarifs en place ne donnent pas de bons signaux et qu’il faut les faire évoluer
In the context of increasing decentralised electricity generation, this paper evaluates the effect of different regulatory frameworks on the evolution of distribution networks. This problem is addressed by means of agent based modelling in which the interactions between the agents of a distribution network, and an environment are described. The consumers and the distribution system operator are the agents, which act in an environment that is composed by a set of rules. For a given environment, we can simulate the evolution of the distribution network by computing the actions of the agents at every time step of a discrete time dynamical system. We assume the electricity consumers are rational agents that may deploy distributed energy installations. The deployment of such installations may alter the remuneration mechanism of the distribution system operator. By modelling this mechanism, we may compute the evolution of the electricity distribution tariff in response to the deployment of distributed generation.
This paper studies the decision to synchronize household electricity consumption and production. While this behavior is beneficial for the energy system as a whole, it is not encouraged by a net-metering system. Relying on a large-scale survey conducted among households with solar PV in Wallonia, we investigate the factors impacting their decision to self-consume. As many as forty percent of our respondents declare to do so, notwithstanding the lack of incentives. The multivariate regression analysis shows that female and older residents, who tend to spend more time at home during daytime, are more likely to adapt their electricity usage by displacing their load. Prosumers with high environmental motives tend to synchronize more no matter the size of their installation. We conclude that prosumers will be further encouraged to self-consume by (1) setting monetary incentives to make consumption at the time of production more attractive, by (2) providing information to prosumers relative to their consumption/production profile and (3) by encouraging the adoption of smart devices that facilitate load shifting. These policies would lead to a higher degree of synchronization that would be beneficial for the energy system.
The smallest salable patent pricing unit (SSPPU) is a valuation method used as a preliminary step toward the calculation of fair, reasonable, and nondiscriminatory royalties for licenses over standard-essential patents (SEPs). Under SSPPU, royalties should reflect the value added to the smallest salable component implementing the patented invention. In this paper, we discuss policy-making proposals to convert SSPPU into a pricing rule that not only assists the assessment of SEPs’ added value but also forces the specification of royalties terms as a share of component costs in SEP licensing negotiations. We call this new rule SSPPU+ and we show that it distorts the distribution of surplus between SEP owners and implementers by laying down a revenue cap on standardized technologies. Therefore, a change in the royalty basis is not neutral and $1 is not $1. Furthermore, SSPPU+ imposes uniform pricing of SEPs across different industries and does not allow SEP owners to take advantage of complementarities between technologies. This pleads against a generalization of SSPPU+ at early standardization and negotiation stages.
The main goal of this paper is to provide an integrated survey of the literature devoted to identifying the drivers of structural change, broadly defined as the process of reallocation of economic activity across the three broad sectors agriculture, manufacturing and services. Using the GGDC 10-Sector Database, this paper first presents the empirical facts associated with structural change in different regions of the world – i.e. Europe and the USA, Asia, Latin America, and Africa – then reviews four determinants of structural change: (i) changes in income, (ii) changes in relative (sectoral) prices, (iii) changes in input-output linkages and (iv) changes in comparative advantage(s) via globalization and trade.
De grandes idées tournent autour du phénomène des données massives (Big Data). Dans cet article, nous analysons trois éléments potentiellement fallacieux : les données sont le nouvel or noir (1), les données ayant une valeur marchande, les individus devraient pouvoir les vendre (2) et les réglementations protégeant les données personnelles (RGDP) favorisent les monopoles (3).
A strand of empirical research on deindustrialization seeks to quantify the relative importance of the economic forces behind deindustrialization, and especially of the internal and external factors, i.e. those linked to globalization and trade. The results of this literature are highly fragile, arguably because the commonly used indicators of trade are not well defined to capture the contribution of globalization to deindustrialization. While this empirical study does not necessarily contradict the widespread belief that the internal factors are quantitatively more important in accounting for deindustrialization in the OECD taken as a whole, our empirical results – based on panel data for 15 OECD advanced countries from 1970 to 2006 – nevertheless show that global exchanges have the potential to affect significantly and substantially a country’s sectoral patterns of employment. They also suggest that the contribution of globalization, and especially of growing North-South integration, to deindustrialization in advanced countries may be revised upwards when resorting to better-suited indicators of trade.
Prosumers are households that are both producers and consumers of electricity. A prosumer has a grid-connected decentralized production unit (DPU) and makes two types of exchanges with the grid: energy imports when the local production is insufficient to match the local consumption and energy exports when local production exceeds it. There exists two systems to measure the exchanges : a net metering system that uses a single meter to measure the balance between exports and imports and a net purchasing system that uses two meters to measure separately power exports and imports. Both systems are currently used for residential consumption. We build a model to compare the two metering systems. Under net metering, the price of exports paid to prosumers is implicitly set at the price of the electricity that they import. We show that net metering leads to (1) too many prosumers, (2) a decrease in the bills of prosumers, compensated via a higher bill for traditional consumers, and (3) a lack of incentives to synchronize local production and consumption.
The introduction of a commitments procedure in EU antitrust policy
(Article 9 of Council Regulation 1/2003) has entitled the the European Commission
to extensively settle cases of alleged anticompetitive conduct. In this paper, we use a
formal model of law enforcement to identify the optimal procedure to remedy cases
in a context of partial legal uncertainty (Katsoulacos and Ulph in Eur J Law Econ
41(2):255–282, 2016). We discuss in particular the merits of a policy of selective
commitments where firms either take strong commitments or are investigated under
the standard infringement procedure.
On observe une multitude d’initiatives, qu’elles soient citoyennes ou commerciales, pour partager les ressources entre particuliers. Aujourd’hui il existe des sites pour partager ou échanger à peu près tout : voitures, trajets, appartements, outils, services, objets de seconde main, etc. Cette nouvelle tendance, que l’on range sous le vocable d’économie collaborative, fascine autant qu’elle inquiète. D’un coté, le partage de ressources sous-utilisées a de nombreux avantages, parmi ceux-ci une mutualisation des coûts pour les utilisateurs et une baisse de la pression sur l’environnement. D’un autre coté, les craintes sont nombreuses, notamment vis-à-vis des nouvelles formes de travail qui se développent, précaires, sous-payés et ultra-flexibles. Ce chapitre écrit par un économiste a pour objectif de présenter quelques concepts économiques qui permettent de mieux comprendre le phénomène d’économie collaborative.
Le principe de neutralité du net gouverne la gestion du trafic de données sur le réseau par les fournisseurs d’accès à internet (FAI) en leur imposant de traiter toutes les données de manière équivalente. Une des conséquences principales de la neutralité du net pour les FAI est la difficulté d’exiger des paiements de la part des fournisseurs de contenu. Les FAI se plaignent alors d’avoir à supporter seuls tout le poids des investissements dans l’infrastructure du réseau. Même si les analyses économiques ne donnent pas nécessairement droit à cette revendication, force est de constater que le principe de neutralité du net pose des problèmes en termes d’incitations à développer l’infrastructure. Ceci explique que l’on discute de plus en plus de l’opportunité d’accommoder la règle, par exemple en tolérant certaines pratiques récentes des FAI (comme l’exclusion d’applications, le ‘zero rating’ ou l’établissement de ‘voies prioritaires’). En Belgique, les FAI s’écartent relativement peu du principe de neutralité du réseau et que le réseau est, pour l’instant, correctement développé. Il n’en reste pas moins que des investissements conséquents devront rapidement être consentis pour continuer à améliorer l’infrastructure, ce qui, à entendre les FAI, pourrait nécessiter une
n this paper, wee propose a model for regulatory capture that is based on information transmission and asymmetric information. In a three-tier model, a regulator is charged by a political principal to provide a signal for the type of a regulated firm. Only the firm can observe his type and the production of a correlated signal with a given accuracy is costly for the regulator. The firm can costlessly provide an alternative signal of lower accuracy that is presented to the regulator. In a self-enforcing equilibrium, the regulator transmits the firm-produced signal, internalizes its own savings in information cost and the firm enjoys higher information rents. The main feature of soft capture is that it is not based on a reciprocity of favors but on a congruence of interests between the firm and the regulator.
We analyze the incentives of internet service providers (ISPs) to break net neutrality by excluding competing one-way essential complements, i.e. internet applications competing with their own products. A typical example is the exclusion of VoIP applications by telecom companies offering internet and voice services. A monopoly ISP may want to exclude a competing internet app if it is of inferior quality and the ISP cannot ask for a surcharge for its use. Competition between ISPs never leads to full app exclusion but it may lead to a fragmented internet where only one ISP offers the application. We show that, both in monopoly and duopoly, prohibiting the exclusion of the app and surcharges for its use does not always improve welfare.
In liberalized network industries, competitors can either compete for service using the existing infrastructure (access) or deploy their own capacity (bypass). We revisit this make-or-buy problem making two contributions to the literature. First we analyze both the profit maximizing behavior of an incumbent and the welfare maximizing behavior when the entrant chooses between access and bypass. Second, we extend the baseline model studied in the literature by allowing for fixed costs of network installation. By analogy to the literature on strategic entry deterrence, we distinguish three regimes of blockaded bypass, deterred bypass and accommodated bypass depending on the entrant's unit cost. We show that the make-or-buy decision of the entrant is not necessarily technologically efficient: when bypass is chosen, it is always the cheapest option but access may be chosen when it is not cost effective.
The Opinion delivered by Advocate General Wahl in Intel v Commission (“the Opinion”) invites the Court of Justice of the EU (“CJEU”) to “refine its case-law relating to the abuse of a dominant position” under Article 102 of the Treaty on the Functioning of the EU (“TFEU”). In essence, the Opinion invites the CJEU to return to first principles and inject common sense into the law of Article 102 TFEU, in the wake of the evolution started by Post Danmark I and Post Danmark II. This can be understood through eight key points, the common thread of which is a concern to ensure legal coherence and economic reason in the application of Article 102 TFEU. This brief commentary highlights those eight points, and suggests that some should be taken even further than AG Wahl proposes.
In European legal scholarship, many articles discuss the equilibrium reached in the case-law of the Court of Justice of the European Union (“CJEU”) when the EU antitrust prohibitions apply to, and restrain, the free and ordinary use of intellectual property rights (“IPRs”). We call this the antitrust-IP intersection. The most interesting feature of this literature is perhaps the common assumption that a unifying substantive perspective, vision or theory on IPR underpins the intersection point reached by the antitrust case-law. Whilst the theory of “absolutism” can be quickly disposed of, several other theories like inherency, exceptionalism or complementarity have been described as the lynchpin of the antitrust-IP intersection. Our paper offers a different reading of the case-law. It submits that the antitrust-IP intersection does not rest on any unitary theory which, in turn, bespeaks the Court’s vision of the social function of IPRs. Instead, the main feature of the CJEU case-law is that a specific methodology is applied to antitrust cases with IPR ramifications. The CJEU deals with most of such cases under a rule-based approach, instead of a standard-based approach. By rule-based approach, we refer to the ex ante setting of structured tests of liability, by opposition to ex post case-by-case resolution on grounds of a pre-determined, general standard (e.g., reasonableness, competition on the merits, efficiency, fairness, equity, etc.). As will be seen below, this approach has many virtues, not least in terms of legal certainty. But it also has a major qualification. Whilst the Court has consistently formulated rules of liability and justifiability at the antitrust and IP intersection, it has at the same time often embedded abstract standards within those rules. The implications of this mixed approach are unclear.
This paper describes the degree of obligation created by a FRAND commitment on the holders of a Standard Essential Patent (“SEP”) from an EU competition law perspective. It shows that the EU courts case-law does not seem supportive of the reading of FRAND as a distributional, pricing commitment. Instead, it views FRAND as a soft commitment device, designed to promote cooperation and exchange amongst independent firms. This is apparent in the Huawei v ZTE judgment, which conveys an invitation on both SEP holders and unlicensed implementers to follow basic procedural requirements in licensing talks. In addition, the paper contributes to the debate on the legal applicability of Article 102 TFEU to SEP holders other than practicing entities. Last, the paper discusses if Standard Setting Organizations (“SSOs”) ex ante specifications of FRAND terms can constrain the conduct of SEP holders under EU competition law.
La SNCB n’a pas su s’adapter à la libéralisation du fret ferroviaire faute de rentabilité. Dans la perspective d’une libéralisation du transport de passagers annoncée pour 2023, nous évaluons les performances de l’entreprise. Notre étude met en avant un déficit de productivité et une contribution faible des passagers aux coûts par rapport à d’autres opérateurs européens.
The IEEE-SA updated patent policy and the Business Review Letter issued by the US DoJ have caused much discussion in the US (Sidak, 2015). The purpose of this paper is to assess whether a similarly lenient antitrust approach to Standard Setting Organizations’ (“SSOs”) rate setting policies would prevail under the European Union (“EU”) competition rules. Recent EU competition case-law has promoted a very hard line in the area of coordinated conduct. Cases such as Dole Food Company, T-Mobile or Expedia have expanded the scope of the per se prohibition rule found in Article 101 TFEU to forms of horizontal coordination with less than obvious anticompetitive potential, such as “cheap-talk” pre-pricing communication (Dole Food Company), episodic collusion (T-Mobile) and horizontal agreements with limited market coverage (Expedia). Those judgments, and others, share a common rationale: that of deterring any coordinated interference with the price system. In the EU courts’ view, joint interference by competitors with the price system seems to be a sin in itself, regardless of actual or potential market effects. Horizontal coordination is thus increasingly prohibited on its face, and punished as a means to set an example. From an enforcement standpoint, this trend in the case-law trend has pros (lower enforcement costs) and cons (deters pro-competitive coordination). But perhaps more importantly, it has a major normative implication, which is that it raises the antitrust risk for all forms of coordination, including arrangements of the type found in the IEEE-SA updated patent policy. This paper explains that the antitrust risk generated by SSOs rate setting policies is presumably higher in the EU than in the US, where the case-law on horizontal coordination is less stringent. From a methodological standpoint, the paper choses to discuss this issue on the sole basis of the case-law of the EU courts, instead of focusing on Commission Guidelines and other soft law instruments, whose binding value on parties other than the Commission itself has been considerably degraded in recent judgments.
In this paper, we develop a fully-fledged postal market model to assess the extent of competition in the mail market in a context of declining mail volumes due to e-substitution. Our focus will be on the Belgian market situation that is interesting for at least two reasons. First, the homogenous nature of the country implies that the extent of the entrant's market coverage will be either limited to the few very densely populated areas or large covering the whole country at the exception of the few very sparely populated areas. Second, because strong licensing requirements -including coverage constraints- are imposed on competing postal operators and they may constitute barrier to entry. Our model allows us to estimate the extent of entry, the cost of meeting the licensing requirements for potential entrants and the impact of entry on the cost of the universal service.
This contribution is an attempt to provide a comprehensive list of the rights of defendants in infringement procedures before the European Commission. We gather eparse prerogatives that have been defined by the case law and propose ten rights, of which we track back the origin, define the substance and undertline the sanction in case of violation.
This paper sheds light on the existence of a differential deterrence regime in EU law, depending on whether the State or the firm is the addressee of a legal obligation. To that end, we review two areas of EU law – environmental law and competition law. Both disciplines employ fines to deter the State and the firm respectively from violating their specific duties under the Treaty: the ‘duty to transpose’ with regard to State obligation under environmental law, and the ‘duty to compete’ in relation to firms under competition law. We show how the deterrence regime is softer on the State in at least three ways: functionally (purpose ascribed to the penalties), operationally (method followed to set and liquidate the penalty), and procedurally (requiring prior judicial approval as opposed to having immediate applicability). These findings are significant for two reasons: they suggest a State versus firm discrepancy in the EU’s deterrence regime, and serve to initiate a debate on the desirability of such a divide.
In 2003, the Walloon region has installed a tradable green certificate mechanism to support the production of ‘green’ electricity. In this paper, we estimate that the total cost of the mechanism amounts to 1,871 billion € for the period 2003-2012, corresponding to a support of 107 €/MWh produced, with important differences between production technologies, the solar photovoltaic receiving up to 588 €/MWh. International comparisons indicate that the Walloon mechanism is particularly generous. We also show that the induced carbon savings are extremely costly with an implicit price of avoided CO2 of 425 € per ton.
The distribution tariff is for historical reasons connected to the consumption level. Maintaining a tariff per KWh is in our view problematic for two reasons. First, it induces inefficient consumption or production choices by consumers. Second, because of scale economies, a decrease in energy consumption leads to both a cost and a revenue decline with the latter being stronger than the former, thereby necessitating an increase in the tariff to compensate for the revenue losses and reinforcing the first effect. The distribution tariff should therefore be re-designed and de-connected, at least partially, from the consumption level.
With the proceedings before the Brussels Court, the Commission emphasized its growing need to promote claims for damages for infringements of EU Competition law. Ahead of the implementation of the Damages Directive, and with its own infringement decision in hand, this claim seemed to be an easy exercise for the Commission to recoup the allegedly surplus paid for the maintenance contracts.
This contribution to the Re-thinking of Belgium attempts to share our position on the current and future regulation of utilities in our country. We deliberately opt not to offer an exhaustive list of regulatory challenges based on thorough economic analysis. Our main goal is to participate in a welcomed open reform debate. The main messages are that we need (i) more stable and thought- through policy visions resulting from sound economics, clearer roles for all actors involved, more coordination between regulators and (ii) less dependent regulators, less regulatory creep and fewer unnecessary low-powered incentive schemes.
The net neutrality debate is at its peak. On January 27, the Dutch Authority for Competition and Markets (DACM) fined KPN and Vodafone for the first violation of the Dutch net neutrality law ever.i On February 26, the Federal Communications Commission (FCC) approved new regulations for broadband internet, preserving the net neutrality.ii In brief, the net neutrality proponents seem to be winning the debate. In a recent economic paper, Sébastien Broos and Axel Gautier analyze whether this toughened stance of regulatory authorities is the best way forward.
The postal sector has undergone dramatic changes over the recent
years under the double effect of ongoing liberalization and
increased competition with alternative communication channels
(e-substitution). As a result, the mail volume handled by the
historical operator has declined sharply while the latter's
ability to match the same standard of universal service may be
under threat. Thus, a reform of the postal universal service is on
the agenda. This paper examines possible reforming options ranging
from keeping universal service within the postal sector to
redefining universal service as spanning postal and electronic
The legal regime of selective distribution agreements consists basically of four conditions enshrined in Article 175 of the Guidelines of the European Commission on Vertical Restraints. As such, any selective distribution scheme must comply with these four conditions to be exempted from the application of Article 101 TFEU. In our opinion, the interpretation generally accepted of the second condition, which touches upon the selection of the distributors on the basis of objective criteria, refers to a unilateral conduct, and not to an agreement between undertakings. In practice, this means that the scope of application of Article 101 TFEU has been artificially broadened and encompasses conducts which in fact constitute unilateral decisions of the undertakings.
This paper argues that the judgment of the Court of Justice of the EU in Huaweï v ZTE is of conservative craft. Huaweï v ZTE only extends by a razor-thin margin the zone of antitrust liability for patent owners. The Court appears reluctant to relax its traditional case-law that affirms antitrust liability on patent owners only in “exceptional circumstances.” To be sure, the Court admits that SEPs covered by a FRAND pledge generate “particular circumstances,” which justify an extension of antitrust liability. But on careful read, the Court only expands antitrust liability in relation to a slice of cases of injunctions on FRAND-pledged SEPs that lead to exclusionary leveraging. This, in turn, relieves a number of upstream licensing entities from antitrust liability.
Shift-share analysis is a decomposition technique widely used in regional studies to quantify an industry-mix eﬀect and a competitive eﬀect on the growth of regional employment (or any other relevant variable) relative to the national average. This technique has always been subject to criticism for its lack of theoretical basis. This paper presents a critical assessment of the methods suggested by Dunn (1960) and by Esteban-Marquillas (1972) and proposes a new shift-share method, which separates out the two eﬀects unambiguously. By way of illustration, we provide an application to manufacturing employment in the Belgian provinces between 1995 and 2007.
In recent years, the Credit Rating Agencies (“CRAs”) have been in the eye of the storm. Some argue that CRA rating errors—symptomatized by rating inflation or deflation—originate in excessive competition. This paper argues that the low level of competition in credit rating is a better explanation for rating this phenomenon.
En Wallonie, la collecte des déchets est fréquemment déléguée par les communes à une intercommunale ou à un collecteur privé.
Par ailleurs, de plus en plus de communes utilisent des conteneurs à puce.
Cet article compare les performances en termes de coûts de ces différentes alternatives.
This paper offers a complete overview of the oligopoly problem in competition law and economics, with a specific focus on European Union (EU) law. A related purpose of the paper is to challenge the dominant view that merger control is the ultimate preventive remedy against tacit collusion. On close analysis, the merger-only enforcement paradigm against tacit collusion generates a systemic risk of type II errors. Part of this enforcement gap may, however, be alleviated through a more muscular enforcement of the rules on coordinated conduct (i.e. Article 101 TFEU) and on unilateral conduct (i.e. Article 102 TFEU). In this later respect, the paper formulates a possible theory of harm that would entitle agencies and courts to apply Article 102 TFEU to specific types of conduct by oligopolists.
The concept of abuse of collective dominance may in particular be applied to the artificial tactics which oligopolists adopt to protect an observed collusive equilibrium from the natural, disruptive effect caused by an external shock (entry, natural disaster, change in tax rate, etc.). In this sense, the paper is different from other scholarly proposals that recommend applying rules on unilateral conduct to excessive oligopoly prices and/or facilitating practices.
The quality of electricity distribution is being more and more scrutinized by regulatory authorities, with explicit reward and penalty schemes based on quality targets having been introduced in many countries (France, Germany, Italy, UK,...). It is then of prime importance to know the cost of improving the quality for a distribution system operator. In this paper, we focus on one dimension of quality, the continuity of supply, and we estimated the cost of preventing power outages. For that, we make use of the parametric distance function approach, assuming that outages enter in the firm production set as an input, an imperfect substitute for maintenance activities and capital investment. This allows us to identify the sources of technical inefficiency and the underlying trade-‐off faced by operators between quality and other inputs and costs. For this purpose, we use panel data on 92 electricity distribution units operated by ERDF (Electricité de France - Réseau Distribution) in the 2003–2005 financial years. Assuming a multi-output multi-input translog technology, we estimate that the cost of preventing one interruption varies substantily among the distribution units from 2.7 € to 15.7 €. Furthermore, as one would expect, marginal quality improvements tend to be more expensive as quality itself improves.
Access to finance has become a major policy issue under the term Financial Inclusion. In this paper, we focus on the role of postal operators in financial inclusion policies. In developing countries, postal firms typically manage a dense network of counters with a unique coverage of rural areas where the banking sector is totally absent. We use a formal location model for postal counters and bank agencies to show that in rural areas a post-bank partnership can be a vector of financial inclusion and that this can be done profitably.
In the French urban public transport industry, operations are often delegated and periodically put out for tender. Thus, operators’ incentives to reduce costs come from both profit maximization during the current contract and from the perspective of contract renewal. We construct a dynamic incentive regulation model that captures these features and we show that both the level of cost-reducing effort and its repartition during the contracting period depend on the contract type (cost-plus, gross cost or net cost contract). We then estimate a cost frontier model for an eight-year panel of French bus companies (664 company-year observations) to test our predictions.
The debate over the compatibility of EU competition enforcement with Article 6 ECHR is far from over. Whilst there has been a great - some would say excessive - deal of papers on due process issues, less, if none attention has been paid to the rules and remedies that govern conflicts of interests amongst lawyers, civil servants, legal secretaries and Members of the Court. This short paper seeks to open the discussion on this issue.
The debate over the compatibility of EU competition
enforcement with art.6 ECHR is far from over. Whilst
there have been a great—some would say excessive—deal
of papers on due process issues, less, or even no attention
has been paid to the rules and remedies that govern
conflicts of interests amongst lawyers, civil servants, legal
secretaries and Members of the Court. This short paper
seeks to open the discussion on this issue.
This paper seeks to examine whether the legal standards underpinning the application of Article 102 of the Treaty on the Functioning of the European Union (TFEU) need to be revisited in light of the alleged specificities of “technology-enabled” markets. To this end, the paper is divided in seven parts. Following this short introduction (A), the paper offers first a definition of the very notion of “technology-enabled” markets (B). Then, it questions whether competition agencies should depart from conventional enforcement techniques when reviewing conduct in fast-moving, technology-enabled markets, and follow new, expedited enforcement procedures as proposed recently by several high-ranking officials (C). After this, the paper turns to substantive issues. It begins by reviewing the intricacies of market definition and dominance in technology-enabled markets (D). It then offers some general thoughts on whether a new, general legal standard for a determination of unlawful abuse is needed in technology enabled markets (E). Finally, the paper considers six categories of abusive conduct in the high-tech sector and shows that, faced with a variety of applicable legal standards for each of them, competition agencies, courts and plaintiffs have – understandably – almost always invoked and applied the loosest possible test in support of their allegations or findings. We suggest, in turn, that under existing case-law stricter standards could and should be applied, and that this is particularly important in the context of technology-enabled markets for the simple reason that it is in these markets that the most common pitfalls and shortcomings of the EU law on abuse of a dominant position are magnified (F).
The present contribution provides an overview of various issues susceptible to arise in the international management of intellectual property right. Chapter I deals with patents and describes, on the one hand, a variety of legal options (novelty, exhaustivity, mandatory licensing, ...) that States can take to influence the management of patent portfolios abroad and, on the other hand, the forum shopping strategies that multinationals may implement to take advantage from the rules that favor them most. Chapter II deals with traditional knowledge issues and lists the various methods of protection – whether defensive or offensive – that States may implement to prevent free exploitation of traditional knowledge abroad. Sui generis regimes, trade secrecy, unjust enrichment and extra contractual liability are discussed. Various examples are given.
The settlement procedure – which can be defined as the offer made to an undertaking liable for infringement of competition law to acknowledge its wrongdoings in exchange of a reduction of the amount of the sanction – has flourished in numerous jurisdictions.
In Belgium, the limited amount of resources of the Competition Authority and the length of the procedures are notorious. Hence, it is no surprise that the services of the Ministry for Economy offer to introduce a settlement procedure. The present contribution provides an overview of the settlement procedure and examines the settlement procedure proposal supported by the Ministry of Economy. We discuss the institutional and practical issues that this proposal raises and make several legal recommendations.
Conventional capture models rely on the idea that regulator is induced to lenient behavior by the regulated firm through offers of monetary transfers, the bribery model, or future employment, the revolving doors model. To avoid socially costly capture, the political principal should then either implement collusion-proof mechanisms through the delegation of welfare gains, or severely restrict the career paths of regulatory staff. The paradox of capture is that neither the two modes of capture, nor the remedy are commonly found in practice. This paper proposes to rethink capture based on the widespread use of industry-commissioned consultants, experts and lobbyists that produce information for regulatory and policy use. A small model (Agrell and Gautier, 2010) introduces a 'soft capture' concept based on a self-enforced collusion between the firm and regulator, linked to the role of the regulator as information-processing intermediate for the political principal. The firm puts processed but biased information at the free disposal of the regulator, 'no strings attached', who can then either use the submitted information or produce a more accurate information by a costly process. Under a set of mild conditions, the equilibrium involves soft capture and the regulator uses the submitted information, leading to some distortions in welfare. A case study of the Occupational Safety and Health Administration (OSHA) in USA serves to motivate and illustrate the model. As shown by the case, the soft capture model may have a stronger positive potential than the conventional models, also implying that policy advice based on it may be valuable.
Universal service obligations impose specific costs on the universal service provider and the latter may call for an appropriate compensation. Most often, a two-step procedure is put forward to finance the universal service in a competitive environment. Firstly, the cost of the universal service is assessed; secondly, the provider must be compensated for this cost. We argue that this procedure is problematic because the implementation of a compensation scheme affects the behavior of market participants and leads to an overcompensation of the universal service provider. We put forward an alternative approach to this problem that fully acknowledges the distortions that result from the compensation mechanism.
This book is about the European rules governing distribution agreements, adopted in April 2010. Providing an exhaustive analysis of both EU regulation 330/2010 and the guidelines on vertical restraints, it also contains valuable contributions by eminent lawyers and economists.
Since the adoption of the Guidance Communication in 2009, the Commission has kept exploitative abuses—
and in particular excessive pricing cases—in a state of artificial hibernation, and focused on exclusionary
cases as a matter of enforcement priority. The Commission’s small antitrust policy against exploitative abuses
is predicated on ‘Tea Party’ competition economics: in the long term, high prices are presumed to deliver efficient
outcomes, and competition enforcers risk doing more harm than good in trying to improve market outcomes
En se fondant sur une lecture littéralement et téléologiquement discutable du Règlement 1/2003 pour conclure que seule la Commission, à l'exclusion des autorités nationales de concurrence, est compétente pour constater l'absence d'une pratique abusive, la Cour omet de tenir compte des implications pratiques de la limitation qu'elle impose aux compétences des ANC.
This article aims at providing an overview of the national case law on collective dominance in Europe. We observe that overall, most domestic decisions have manifestly integrated the EU case law and followed the shift from a structural approach towards a more behavioral approach. We higlight several protruding cases on the definition of the notion of abuse and the most creative remedies devised by national competition authorities so far.
Le bilan que l’on peut dresser concernant la libéralisation et le nouveau mode de régulation des industries de réseau en Belgique est assez mitigé. En particulier, les bénéfices issus de la libéralisation tardent à être transférés vers les utilisateurs finaux et le financement des investissements nécessaires aux gains d’efficacité dynamiques n’est parfois pas assez facilité par l’action des régulateurs.
Dans cet article, nous analysons tout d’abord d’un point de vue général, les enjeux et les difficultés auxquels les autorités de régulation sont confrontés et ensuite nous identifions quelques éléments critiques, spécifiques à trois industries : l’électricité, les télécommunications, et le transport de fret ferroviaire. En conclusion nous insistons sur la nécessité d’une indépendance accrue des régulateurs, un énoncé plus clair de leurs orientations stratégiques et une simplification institutionnelle. Ces trois conditions nous semblent indispensables pour assurer la sécurité juridique nécessaire à la réalisation optimale des investissements nécessaires dans les infrastructures. Par ailleurs, dans certains cas, une intégration européenne plus poussée est justifiée.
In the postal sector, the financial burden of the universal service depends on its content, the postal market characteristics and the country’s geographical configuration. These three groups of factors affect both the direct cost of providing the service and the extent of competition on the market. In this paper, we consider countries with different geographical characteristics and we show that the choice of an appropriate mechanism to share the burden of universal service between market participants depends on the country configuration. Thus, for universal service financing, one size does not fit all.
Interestingly, while all the evidence points to the existence of a competition problem in the rating industry, almost nothing has been written on whether the CRAs could be amenable to antitrust scrutiny. This paper aims at identifying competition law tools that could be used to redress the functioning of the market for credit rating services.
Universal service obligations are usually not competitively neutral as they modify the way firms compete in the market. In this paper, we consider a continuum of local markets in a dynamic setting with a stochastically growing demand. The incumbent must serve all markets (ubiquity) possibly at a uniform price and an entrant decides on its market coverage before firms compete in prices. Connecting a market involves a sunk cost. We show that the imposition of a uniform price constraint modifies the timing of entry: for low connection cost markets, entry occurs earlier while for high connection cost markets, entry occurs later.
This paper seeks to uncover an inconvenient truth. The Microsoft decisions are not tying cases. Rather, the two decisions taken by the EU Commission against Microsoft – i.e. the Windows Media Player (“WMP”) case of 2004 and the Internet Explorer (“IE”) case of 2009 – mark departures from conventional tying analysis (I). First, they deviate from standard tying law in that in the Microsoft cases, a key component of abusive tying, namely coercion, is missing (II). Second, the Microsoft decisions share many analogies with “essential facility” cases. One may thus question to what extent the Commission has not pursued disguised refusal to supply cases (III).
Competition law aims at securing the existence of an efficient competition on the market. However, if adequately used, that competition law can also offer a relevant advantage to companies facing a powerful competitor. In France, Bouygues Telecom’s behavior when the value added tax raised in 2011 for cell phone activities is a good example of this tendency towards the strategic use of competition law by weak parties.
This paper explore whether, and to what extent, firms can instrumentalize the competition rules to free ride on others’ efforts. We come to the conclusion that attempts to free ride through Article 101 TFEU allegations are likely to fail. In contrast, Article 102 TFEU offers a more promising legal avenue to wanna-be free riders.
The present contribution comments the undertaking decision of the European Commission in the Rambus case. We put the case into context and introduce the economic notions needed to understand patent ambush issues. We then explain how such strategies may harm the economy. Second, we present the various legal tools which may be invoked to fight patent ambushes, with a specific emphasis on competition law tools. Third, we discuss whether such tools provide an efficient answer to the patent ambush issue. If the intervention of the Commission seems legally possible, by offering commitments, Rambus gets the Commission out of a difficult situation.
In industries like telecom, postal services or energy provision, universal service obligations (uniform price and universal coverage) are often imposed on one market participant. Universal service obligations are likely to alter firms' strategic behavior in such competitive markets. In this paper we show that, depending on the entrant's market coverage and the degree of product differentiation, the Nash equilibrium in prices involves either pure or mixed strategies. We show that the pure strategy market sharing equilibrium, as identified by Valletti et al. (2002) defines a lower bound on the level of equilibrium prices.
The Belgian Competition Council issues an infringement decision for the imposition of minimum prices by the Belgian professional association of real estate agents and orders the publication of its decision (Beroepsinstituut van Vastgoedmakelaars)
This paper aims at analysing the importance of local determinants to foreign direct investment (FDI) in three European regional case studies. The originality of the approach lies in the use of disaggregated data by sector and by region. The results are threefold. First, regional demand and productivity are fundamental FDI determinants, confirming most studies with national data. Second, regional FDI inflows are more dependent on regional than national determinants. Finally, the effect of market potential measured with absolute GDP on regional FDI diminishes linearly with distance and does not when measured with GDP per capita.
This Special OGEL issue on "Antitrust in the energy sector" is devoted to the
challenges arising from the implementation of the antitrust laws across various
energy sectors. While this Special spans a range of countries, its primary focus
is on the European Union ("EU") and the United States ("US").
The purpose of this study is to assess whether competition agencies (“CAs”) do, and in turn should, enjoy an unfettered discretionary power in the context of the investigation of competition law infringements or whether their margin of discretion should be subject to certain limits. To this end, it focuses on four successive areas where CAs may be entitled to make choices, i.e. detection of infringements, selection of enforcement targets, initiation of infringement proceedings
and outcome of the case. Thanks to reports received from 21 national experts in response to a questionnaire covering 18 jurisdictions, the present study formulates a number of public policy proposals.
Over the past two decades, the European Commission (“the Commission”) has adopted a stance whereby the implementation of ex ante, structural merger rules is deemed more appropriate when seeking to challenge tacit collusion than ex post, behavioural instruments (e.g. on the basis of Article 102 of the Treaty on the Functioning of the EU (“TFEU”). As a result, the EU merger regulation (“EUMR”) is the preferred, if not sole, legal instrument deployed by the Commission in order to avert any potential risk of tacit collusion. Since the entry into force of the EUMR, the number of Commission decisions in which the future emergence of risks of collective dominance was examined lies in the region of 130. In stark contrast, and despite pronouncements of the General Court (“GC”, or the Court) that Article 102 TFEU may apply to tacit collusion, the Commission has not yet taken a single decision enforcing Article 102 TFEU against tacitly collusive oligopolies. Similarly, the stillness of the 2009 Guidance Communication on Enforcement Priorities in applying Article 102 TFEU in this context implicitly confirms the Commission’s reluctance to use the abuse of dominance rules in order to address the phenomenon of tacit collusion.
Overall, within the realm of EU competition law, the provisions of the EUMR de facto enjoy a jurisdictional monopoly over issues pertaining to collective dominance. The present article challenges the conventional view that tacit collusion should be exclusively addressed through the use of the EUMR. To this end, it examines and seeks to set straight five widespread misconceptions on which such view is based.
Behavioral economics has become a popular field of study. With the reconsideration of the homo economicus paradigm, psychology and sociology have infiltrated economic theory. More recently, several commentators have argued in favor of an incorporation of behavioral economics within antitrust law. This paper argues, however, that EU competition law already integrates the findings of behavioral economics. A review of the Article 102 TFUE case-law reveals that contrary to the more conservative approach adopted by US agencies and courts, EU competition authorities already acknowledge the boundaries and biases of economic agents, and take into account the limits of the rationality assumption whilst drafting their decisions.
Enième avatar de la bataille juridique opposant les opérateurs alternatifs de communications électroniques à l’ancien monopole public Belgacom1, la décision commentée constitue
une première pour Conseil de la concurrence (« le Conseil ») à plus d’un titre : première condamnation de l’opérateur historique, première caractérisation d’un ciseau tarifaire abusif, première décision infligeant une amende aussi élevée en Belgique. Après des années de carence dans l’application des règles de concurrence au secteur des communications électroniques
le Conseil parait vouloir renverser la vapeur. Sonne peut-être – comme nous l’avons écrit précédemment – la « fin de la récréation pour l’opérateur historique ». Il faut sans
doute s’en féliciter, la Belgique figurant depuis longtemps parmi les mauvais élèves de l’ouverture à la concurrence des industries de réseaux.
This paper examines the agency cost of winner-picking in multidivision firms and uses explicit incentive contracts to analyze the interaction between corporate headquarters' investment and incentive policies. Winner-picking, i.e. the efficient reallocation of scarce resources in an internal capital market, adds an extra layer of noise to the moral hazard problem of incentivizing division managers to produce the resources that can then be redistributed. In particular, division managers with strong future investment opportunities anticipate that headquarters will bail them out should they fail to produce enough resources themselves. This reduces incentives to create the resources in the first place with possible consequences for the optimal investment policy.
The Belgian competition Council’s College of Prosecutors dismiss multiple complaints against the incumbent telecom operator for abuse of a dominant position on the international transit services for call termination in Belgium
The purpose of this brief article is to introduce the reader to the national case-law on abusive margin squeezes that was commented in the e-competitions bulletin over the period 2003-2009.To this end, it seeks, to the extent possible, to analyze the 23 e-competitions case notes in relation to six items which are generally reviewed in margin squeeze cases, i.e., existence of an upstream input and a downstream product/service (1); indispensability of the upstream input (2); dominance in the upstream market and vertical integration (3); particularly aggressive downstream pricing policy (4); anticompetitive effects (5); absence of objective justifications (6). In addition, the present article reviews a seventh issue, namely sanctions and remedies (7), where national enforcement practices may again diverge/converge.
In a repeated interaction between a principal and two agents with inter-agents externalities and asymmetric
information, we show that optimal decentralization within the organization is limited to the first period and across agents.
The article seeks to assess the degree of judicial scrutiny performed by French courts when reviewing decisions of national competition authority and national regulatory authorities in the aftermath of the seminal ruling handed down by the European Court of Justice in Commission v. Tetra Laval
The present paper reviews in a plain language and with only limited statistical formalization, the virtues of econometrics in the field of competition law. Following a brief introduction to the origins of econometrics, we explain first that econometrics provides assistance to decision-making in a variety of fields (merger control, abuse of dominance, etc.). Second, we show that econometrics also constitute a decision-reading instrument, which may assist competition agencies, courts, firms and their counsels in understanding the content of the law. The econometric models discussed in the paper are illustrated by examples coming from well-known legal cases. Our conclusion is that in light of the novel sophisticated issues arising in antitrust enforcement (damages estimation, etc.), the nascent "econometrics of competition law" exhibit promising features.
The new settlement procedure introduced by the Commission in July 2008 brings about significant changes in conventional antitrust procedure. To cast light on theses changes and their practical implications, the present article and table provide a snapshot of the settlement procedure.
A l'heure de l'alourdissement des risques générés par le non-respect du droit de la concurrence, il est crucial que les fédérations sachent distinguer l'échange d'informations licite de l'échange illicite et puissent remédier en temps utile à tout risque de violation du droit. Pour les y aider, la présente étude tente de définir une méthode permettant de trier les bons et mauvais accords d'échange d'informations.
The present paper discusses whether the market share threshold enshrined in Regulation 2790/1999 allows to draw correct inferences on the foreclosure risks arising from single branding and exclusive purchasing obligations in the context of vertical relationships. As far as the customer foreclosure risks arising from single branding are concerned, it comes to the conclusion that Regulation 2790/1999 wrongly focuses on the market share of the seller and should concentrate on the market share of the acquirer. Symetrically, in so far as the input foreclosure risks arising from exclusive purchasing are concerned, Regulation 2790/1999 should focus on the market share of the seller. In the context of the upcoming review of the rules applicable to vertical agreements, the European Commission should seek to address this problem.
Le Conseil belge de la concurrence a décidé de subordonner l'autorisation de la concentration entre Belgacom et Scarlet à la mise en oeuvre de diverses mesures correctives structurelles et comportementales.
The present article seeks to assess the degree of judicial scrutinity performed by French courts when reviewing decisions of National competition Authorities and National Regulatory Authorities in the aftermath of the seminal ruling handed down by the European Court of Justice in Commission v. Tetra Laval
A vertically integrated ﬁrm owns an essential input and operates on the downstream market. There is a potential entrant in the downstream market. Both ﬁrms use the same essential input. The regulator’s objectives are (i) to ensure ﬁnancing of the essential input and (ii) to generate competition in the downstream market. The regulatory mechanism grants non-discriminatory access of the essential facility to the entrant provided it pays a two-part tariff to the incumbent. The optimal mechanism generates inefﬁcient entry. The inefﬁcient entry captures the trade-off between market efﬁciency and infrastructure ﬁnancing resulting from incomplete information and non-discriminatory access.
This article lists the EC merger cases where noncompetition concerns were raised (industrial
policy, social concerns, personal data protection etc.). It summarizes the issues raised by non-competition concerns in the ECMR.
In a fully liberalized postal market, two business models will be possible for a new postal operator: (1) access: where the firm performs the upstream operations and uses the incumbent's network for final delivery and (2) bypass where the competing firm controls the entire supply chain and delivers mails with its own network. The choice between access and bypass depends on the entrant's delivery cost relative to the access price. In this paper, we derive welfare maximizing prices for the incumbent operator and we show how these prices should be re-balanced when the entry method is considered as endogenous.
En 2011, le marché postal sera entièrement libéralisé. Le service universel sera-t-il maintenu ? Comment sera-t-il financé ? Dans cet article, nous abordons la question du financement du service universel postal dans un environnement concurrentiel. La Commission européenne propose plusieurs pistes, les Etats Membres doivent maintenant choisir la solution la plus appropriée à leur marché.
Déjà entré au panthéon des grands arrêts du Tribunal de première instance des Communautés européennes, le jugement rendu dans l'affaire Microsoft le 17 septembre 2007 constitue l'épilogue d'une véritable "saga" du droit communautaire de la concurrence. A notre estime, l'arrêt Microsoft est critiquable. Tandis que le premier volet de l'arrêt propose une interprétation textualiste de l'article 82 CE qui supprime la sécurité juridique issue de la jurisprudences Magill et IMS Health, le deuxième volet du jugement illustre bien les imperfections de l'interprétation factuelle de l'abus de position dominante, par une application relativement subjective de l'article 82 ...
We study the possible implications of incentive schemes as a tool to promote efﬁciency in the
management of universities. In this paper, we show that by designing internal ﬁnancial rules which
create yardstick competition for research funds, a multi-department university may induce better
teaching quality and research, as compared to the performance of independent departments.
In this paper, we compare two types of access pricing: a two-part tariff where the ﬁxed part aims to cover (part of) the network’s ﬁxed cost while the variable part covers the network’s usage costs and a single tariff where both the usage and (part of ) the infrastructure costs are covered by a per-unit access charge. We compare how the regulator trades-off the degree of competition induced by the access charges and the network ﬁnancing. (JEL: L11, L51).
This paper analyzes, in a set-up where only the control over actions is contractible, the rationale for delegation. An organization must take two decisions. The payoffs are affected by a random parameter and only the agent knows its realization. If the principal delegates the control over the ﬁrst decision to the agent, his choice may indicate the information that he possesses. If the principal retains control over the second decision, discovering this information is valuable. Hence, this paper provides a new rationale for delegation: A transfer of control to the informed party can be used to discover the private information. (JEL: D23, D82, L22 , M41)
It has become conventional wisdom to view the rulings handed down by the CFI in Airtours, Schneider, Tetra Laval and Impala as unprecedented setbacks for the European Commission ("the Commission") that would usher in a new era of administrative accountability in the field of merger control. However, several commentators still consider that the Commission regretfully enjoys a de facto power of "life or death" over notified mergers, and that judgments striking down its decisions are unlikely to change much in practice. Parties to a blocked merger generally abandon their projects following the Commission's decision, irrespective of the outcome of the actions they may subsequently bring before the EC Courts (e.g. the Airtours/First Choice or Schneider/Legrand mergers). Third parties - competitors or consumers - to an illegally approved merger have little prospect of inducing the Commission to unscramble a consummated transaction (e.g. the Sony/BMG merger).
This unsatisfactory state of affairs has led practitioners to explore other legal avenues to hold the Commission accountable for its mistakes. One such possible means of redress is to resort to Article 288 EC which provides that the EC shall "make good any damage caused by its institutions". Where an EC institution such as the Commission is found liable for such damage, Article 235 EC grants the Community Courts jurisdiction to award compensation In light of the virulence of some of criticism directed at the Commission by the CFI in the Airtours and Schneider/Legrand judgments, the parties to those mergers initiated proceedings against the Commission, seeking compensation for the unlawful prohibition of their proposed mergers.
These actions drew enthusiastic reactions from certain EC competition law experts which, upon close examination, appear unjustified. The legal avenue provided for by Article 288 EC is most likely a procedural dead-end. First, from the applicants' perspective, the conditions under which the Commission's liability can give rise to a right to compensation in the field of merger control are set so high by existing case-law that most Article 288 EC claims are likely to be dismissed as unfounded. Second, from a public policy standpoint, Article 288 EC does not constitute an adequate instrument to improve the Commission's accountability for its unlawful decisions.
We consider the problem of regulating a monopolist with unknown
costs when the regulator has limited funds. The optimal regulatory mechanism sat-
isﬁes four properties. The ﬁrst property is bunching at the top, that is the more
efﬁcient types produce the same quantity irrespective of their costs. The second
property is separability of less efﬁcient types. The third property is full bunching of
types when the available fund is small enough. The fourth property of the mecha-
nism is that it is a third best one, that is, the output under this regulatory mechanism
is strictly lower than the second best output for any given type.
Price discrimination is one of the most complex areas of EC competition law. There are several reasons for this. First, the concept of price discrimination covers many different practices (discounts and rebates, tying, selective price cuts, discriminatory input prices set by vertically-integrated operators, etc.) whose objectives and effects on competition significantly differ. From the point of view of competition law analysis, it is thus not easy to classify these practices under a coherent analytical framework. Second, there is a consensus among economists that the welfare effects of the (various categories of) price discrimination are ambiguous. It is hard to say a priori whether a given form of price discrimination increases or decreases welfare. The response to this question may indeed depend on which type of welfare standard (total or consumer) is actually pursued. Moreover, even if one agrees on a given standard, the welfare effects of discriminatory prices generally depend on factual issues, such as whether it increases or decreases total output. Third, the exact scope of Article 82(c), the only Treaty provision dealing with discrimination, is not entirely clear. While the European Commission (hereafter, the Commission) and the Community courts have applied Article 82(c) to many different practices, there are good reasons to believe that this provision should be applied to a limited set of circumstances, most forms of discrimination being adequately covered by Article 82(b) or other provisions of the Treaty.
Against this background, the main objective of this paper is to throw some light on the compatibility of price discrimination with EC competition law. In order to do so, this paper does not seek to propose a grand unifying theory that would provide a single test offering a way to distinguish between practices compatible and incompatible with the EC Treaty. Instead, we offer an analytical framework which distinguishes between different categories of price discrimination depending on their effects on competition. Different tests may thus be needed to assess the compatibility of the practices belonging to these categories with EC competition law. Another objective of the paper is to show that Article 82(c) should only be applied to the limited circumstances where a non-vertically integrated dominant firm price discriminates between customers with the effect of placing one or several of them at a competitive disadvantage vis-a-vis other customers (secondary line price discrimination). In contrast, Article 82(c) should not be applied to pricing measures designed to harm the dominant firm's competitors (first line price discrimination) or to fragment the single market across national lines. As will be seen, relying on Article 82(c) to condemn such practices goes against the letter and the spirit of this provision and may also apply a wrong test to such practices. It is also not necessary since other Treaty provisions can be used to achieve this objective.
The first prong of Article 82 of the EC Treaty, which prohibits abuses of a dominant position, requires, prior to the identification of abusive behaviour, evidence that the firm under scrutiny enjoys a dominant position. Surprisingly, this issue seems to be sometimes overlooked. Enforcers, practitioners and scholars have recently paid greater attention to the concept of abuse than to the question of dominance when discussing Article 82 EC. This should not, however, be interpreted as a sign that the law of dominance is clear. Quite to the contrary, the concept of dominance raises a wide array of questions which are discussed in the sections that follow
In this paper, we raise the following two questions. (1) Do Belgian holding companies operate
an internal capital market to transfer ﬁnancial resources amongst their subsidiaries? And if yes, (2)
is the internal capital market efficient? To answer the ﬁrst question, we check if group cash ﬂow
is a determinant of the group members investment spending. The answer is positive if the holding
company’s subsidiary is affiliated to a coordination center and negative otherwise. To answer the
second question, we evaluate if internal transfers are driven by efficiency. From our estimations, we
cannot conclude that Belgian Holding companies have an efficient internal capital market.
This paper presents a new rationale for delegation. In a repeated relationship, when the principal gives up at time t the control over an action to the better informed agent, the decision taken by the agent signals his private information to the principal. The revelation of information is valuable to the principal only in a context of repeated relation where the principal can use the information at time t + 1 to take another decision. In this paper, we present an example where delegation occurs only if the relation lasts for more than one period. In a single period context, if the agent has a bias in favor of one project, he does not have incentives to select a project that is not his preferred one; hence he does not disclose his private information and delegation is not valuable. While in a repeated relationship, it becomes costly for the agent to keep the principal non-informed and this counterbalances the agent’s bias for one project. Shared-control (partial delegation) is then the preferred organizational structure when the interaction is repeated. Moreover, shared-control dominates an alternative mechanism where the principal centralizes all the decisions and the information is transferred through a message game.
Article 230 EC allows any natural or legal person to institute proceedings against a decision addressed to that person or against a decision which, although in the form of a regulation or a decision addressed to another person, is of direct and individual concern to the former . Private parties thus frequently rely on this provision to challenge acts adopted by the European Commission (hereafter the Commission ) in accordance with the powers granted to it in the field of competition law. While this particular subject has generated extensive scholarly analysis, the last decade of reforms of EC competition law often cited as the modernisation process makes it particularly necessary to re-examine this topic. Two major developments in the field of competition law give rise to novel and complex questions with regard to judicial review pursuant to Article 230 EC.
First, the reforms introduced by virtue of the modernisation of the implementation of EC competition rules have generated a proliferation of new acts whose legal character (and therefore by implication the possibility to challenge these new acts before the European Court of Justice hereafter, the ECJ and the Court of First Instance hereafter, the CFI ) is not necessarily clear. This is the case, for example, of the multitude of soft law instruments (notices, guidelines, etc.) which the Commission adopted with a view to clarifying its decisional practice, as well as new binding acts envisaged by Regulation 1/2003 such as findings of inapplicability and decisions to remove a case from a National Competition Authority.
Second, the increased emphasis on the use of economic analysis following the successive reforms of the rules pertaining to horizontal and vertical agreements and merger control has transformed competition law into a technically complex subject matter whereby economists are stealing a lead over lawyers. The corollary of this development could be to limit the scope of judicial review exercised by generalist EC and national courts. Indeed, faced with having to make complex evaluations involving the weighing up of anti-competitive restrictions and efficiency gains, the generalist judge could quickly find himself lost. Therefore, the more opaque and complex a particular case is, the wider the Commission s discretion in its decision making becomes. Certain recent judgments of the CFI concerning the annulment of Commission prohibition decisions in merger control, however, put this danger into perspective.
Apart from the above-mentioned developments, it is equally worth highlighting the proliferation of litigation running in parallel to annulment actions. Such litigation calls for, first and foremost, a re-examination and revision of the fines imposed by the Commission under Articles 81 and 82 EC. Subsequent to successful annulment actions, such litigation also encompasses actions for compensation of the losses incurred by the firm(s) subjected to unlawful Commission decisions. The recent case Holcim v. Commission or the request lodged by Mytravel after the Airtours judgment illustrate the development of such litigation in the field of competition law.
Against this background, the developments that follow intend to provide a critical analysis of annulment actions against Commission decisions in the field of competition law in the aftermath of the modernisation process. This study is made up of seven parts. Part II identifies those acts that can be the subject of an annulment action within the meaning of Article 230 EC. Part III reviews and analyses the rules laying down who is entitled to initiate an annulment action. Part IV recalls the modalities for an annulment action. Part V evokes the parallel actions (revision of fines) and subsequent actions for indemnity following an annulment action. Part VI evaluates the effectiveness of the Community annulment action procedure in the light of the principles laid down by the CFI and ECJ as regards judicial review. Part VII provides a brief conclusion.
In a two-region model, we formalize Kindlebergerrsquos idea that wealth breeds first more wealth, and then decline: when one region leads, its inhabitants develop consumption habits incompatible with the necessary investment in knowledge to remain the leader. This gives the other region a window of opportunity to gain economic primacy. The theory suggests that differences across regions that have similar characteristics may persist even if physical capital flows from rich to poor regions. We study patterns of overtaking, alternating primacy, irreversible decline, and monotonic convergence, according to the initial dispersion of knowledge and the strength of consumption habits. Even though exogenous factors may matter on some occasions, we show that they are not necessary to reverse economic leadership.
La Commission européenne vient de décider d’ouvrir d’ici
2010 l’ensemble du marché ferroviaire à la concurrence.
À l’avenir, la SNCB ne sera plus la seule compagnie à
transporter des passagers dans notre pays. Dans ce numéro de
Regards économiques, nous analysons au travers de l’expé-
rience de deux pays, l’Allemagne et l’Angleterre, les
conséquences de la libéralisation du secteur sur le rail belge.
In Europe, most of the urban public transport services are not operated on a commercial basis. The implication of local public authorities in the sector is important: they organize their local market, they finance services and, sometimes, they also act as producers. This paper analyzes the public transport system in four European cities: Lyon, Stockholm, Helsinki and Brussels and concentrates, in particular, on the introduction of regulated competition. Four different market mechanisms can be used in the public transport sector: (1) competitive tendering, (2) open access with on-track competition, (3) yardstick competition where the operator’s reward is based on a comparative evaluation of its performance and (4) the possibility of challenging the incumbent public operator. The pros and cons of different competitive mechanisms are presented and the article discusses the conditions under which a truly competitive market could be settled
This article studies a simple procurement problem (Laffont and Tirole, 1993) where the regulator faces a cash-in-advance constraint. The introduction of such a constraint not only reduces the amount of public good provided but also limits the instruments available to the regulator. The wealth constraint could change the optimal regulatory contract from a two-part tariff, where the quantities produced depend on the firm's cost, to a less efficient fixed fee where the firm produces the same quantity whatever its cost.
This paper seeks to provide a critical assessment of the efforts made by the EC to stimulate the development of competition laws in the Mediterranean countries with which it is engaged in partnership agreements. It reviews the content of the competition provisions of the association agreements, as well as their effectiveness. In then examines the regular calls for convergence on the EC competition law model to which Mediterranean countries are object. There is indeed room for debate regarding the opportunity, as well as the nature of such convergence. The paper concludes that a deep convergence approach, whereby the non-candidate Partner countries would transpose EC competition rules in their domestic legal order, would provide many benefits for both the EC and these countries.