Interim Commissioner of the Canadian Competition Commission, John Pecman, was appointed Commissioner of Competition on June 12, 2013 for a five-year term. Mr. Pecman is an economist who has worked at the Competition Bureau as an investigator, manager and executive for more than 29 years. He is also a member of the ICN Steering Group.

The 3rd BRICS International Competition Conference 2013 will take place in New Delhi during November 20-22, 2013.

The Italian Competition Authority re-launches its “Temi e Problemi” working paper series, which host contributions from the Authority staff on antitrust and consumer protection matters. In this issue, the economist Notaro applies a number of empirical methods to the pasta cartel, uncovered by the Italian Competition Authority in 2007. The paper contributes to the on-going debate on the quantification of the damages caused by anticompetitive conduct, the “optimal” level of fines and the benefits to society of a proper antitrust enforcement. Notaro’s empirical analysis shows that the estimated benefits of the cartel detection and cease, following the intervention of the Italian Competition Authority, amount to roughly 7 times the Authority’s annual budget.

Link to the paper.

On 12 April 2013, the Swedish Market Court (the Market Court) ordered the Swedish telecom operator Telia Sonera Sverige AB (Telia Sonera) to pay an administrative fine amounting to SEK 35 000 000 (approximately € 4 000 000) for having abused its dominant position in the broadband market, ADSL, through a margin squeeze. In doing so, the Market Court upholds the decision of the Stockholm City Court (the City Court) finding the abuse but reduces the fine.

In 2004, the Swedish Competition Authority (SCA) filed proceedings before the City Court against Telia Sonera. The SCA claimed that it had abused its dominant position in the market for access to fixed access networks via resale services for ADSL connections during the period from 2000 to 2003. During this period, the transfer from dial-up Internet connections (via a modem) to broadband connections was in full progress.

In 2009, the City Court requested a preliminary ruling from the European Court of Justice (ECJ) asking a series of questions on the interpretation of Article 102 TFEU. In its preliminary ruling of 17 February 2011, the ECJ confirmed, inter alia, that margin squeeze is a standalone abuse and that it can be an abuse even if the dominant undertaking has no legal obligation to supply its downstream competitors.

After the main hearings, the City Court concluded that Telia Sonera had squeezed its margin on several occasions during the period from 2000 to 2003 and ordered Telia Sonera in December 2011 to pay fines amounting to SEK 144 000 000 (approximately € 15 000 000). The judgment was appealed by Telia Sonera to the Market Court, which is the court of final instance in competition cases.

Like the City Court, the Market Court found that Telia Sonera had abused its dominant position by offering wholesale and end user services for broadband connections at prices where the margin between the wholesale price and the price to households was insufficient to cover Telia Sonera’s own costs for offering broadband to households (Telia Sonera charged its competitors a higher price than it charged households). The Market Court thus concluded that the margin squeeze constituted a serious infringement of the competition rules.

However, the Market Court found that the fine which had been imposed by the City Court should be reduced to SEK 35 000 000, partly because the margin squeeze took place more than ten years ago, and partly because the margin squeeze had taken place during a limited time period (between eight and nineteen months) and on a limited part of the market.

The decision of the Market Court in Swedish is available here:
http://www.marknadsdomstolen.se/Filer/Avgöranden/Dom2013-5.pdf

On 8 March 2013, the results of the Inquiry entitled “Enhanced Effectiveness of Competition Law Enforcement” were presented to the Swedish Government. This follows the launch by the Swedish Government of an inquiry into certain aspects of the Swedish legislation governing the enforcement powers of the Swedish Competition Authority (SCA) on 26 April 2012. The remit of the inquiry was to review part of the legislation that applies to the activities of the SCA with the purpose of making enforcement in the area of competition law more effective.  (the word ‘inquiry’ means investigation and does not relate to the group of people actually carrying out the inquiry)

The results and proposals of the inquiry are as follows:

*The SCA should be able to order a suspension of its merger investigations. This could be applied when notifying parties have not complied with a request to provide information requested by the Authority to conduct the relevant analysis. It is therefore proposed to introduce a provision in the Competition Act enabling the SCA to “stop the clock” during merger investigations.

*A marker system should be introduced in the Swedish leniency program. A marker system gives undertakings time to collect evidence and complete an application without risking that another undertaking would complete its application first. It is envisaged that the introduction of a marker system would lead to higher quality applications, which would facilitate further investigation by the SCA.

*It often takes several weeks to search through digital material copied during an inspection. The SCA has therefore in many cases chosen to make forensic copies of the material and then conduct indexing and searching of the material at its premises. This procedure has previously not been specifically regulated in the Competition Act. It is thus proposed to expressly regulate the SCA’s working procedure by allowing it to bring the material to its own premises.

*The Inquiry was also aimed at ascertaining whether the need for companies to cooperate with the SCA in the context of inspections is adequately provided for by the current legislation. The inquiry concluded that even though the Competition Act does not contain any explicit requirement for undertakings to cooperate, the obligation can be considered to be implicit in the Act.

The results of the inquiry are published in Swedish (including an English summary) on the Swedish Government Offices webpage:   http://www.regeringen.se/sb/d/108/a/211081

“10 plenary sessions, over 30 working groups’ meetings – these are results of the three-day International Competition Network Conference (ICN) hosted by UOKiK and concerning, inter alia, the cooperation of antimonopoly authorities with courts, establishing and forming the competition protection authorities in Eastern Europe, and the effective cartel detection. Next year the Network meeting will be held in Marocco

Every year heads and experts of antimonopoly authorities worldwide meet at the International Competition Network conference (ICN). In 2013 the event took place in Warsaw (24-26 April) and was hosted by the Office of Competition and Consumer Protection. The President of the Republic of Poland made an official welcome to the conference.

The conference gives opportunity to its attendees to familiarize with operating of foreign authorities, exchange of best practice and experiences. This year’s meeting concerned five following issues: enforcing and promoting competition policy, cartels, merger control and the abuse of a dominant position. 10 plenary sessions and more than 30 meetings of working groups were held within the three days.

Competition – the condition of economic growth

Representatives of international organisations – World Trade Organization, European Commission, World Bank and International Chamber of Commerce – met at the conference opening session.They stressed the significance of competition protection which guarantees the economic growth. Joaquin Almunia, European Commission Vice-President, Harsha Singh, Deputy Director General, World Trade Organization and  Prof. Witold Orłowski, Chief Economic Advisor, PricewaterhouseCoopers Polska, former Chief Economist to the President of the Republic of Poland were amongst the panel speakers.

Authorities and courts

The cooperation of antimonopoly authorities with judges and efficient decision presentation in the courtroom was another issue raised on the first conference day. The specially drafted report by UOKiK was the starting point for discussions. It considered the relation between competition protection authorities and courts of 45 ICN members. The meetings were devoted to the report results and discussions over its essential remarks. The conference participants expressed various approaches towards e.g. using outsourced expert-economists’ opinion by judges, the scope of applying such analyses, grounds for forming high-profile courts handling competition cases as well as the notion of cooperation between the authorities and judges. Amongst the postulates raised during the discussions, the concept of drawing up the code of good practice, which would specify the way antimonopoly authorties could train the persons adjudicating in antimonopoly cases, is definitely worth noting.

Furthermore, participants to the conference pointed it is necessary to draft decisions in a clear way. For example, in New Zealand it is emphasised that plain language should be used in judgements and the structure of decisions should facilitate following them (e.g. a brief of decision content at the beginning of each section).

Supporting competition

Among the topics discussed on the second conference day was supporting authorities of these states where the effective antimonopoly law is created. Since the year 1990, the competition protection law has been implemented in over 100 countries, including Poland, who is currently sharing its experiences with other states, also under the „Eastern Partnership” programme. The Office of Competition and Consumer Protection is supporting the law and structural reform within competition protection in Georgia.

Conference speakers from the Ukraine, where the authorities implemented the competition development programme, and among the prime objectives is the change of structure of the now strongly monopolized market, were talking over their experiences during the conference. Moreover, representatives of developing countries and international organizations (including the OECD, the World Bank and the UNCTAD), who support the development of competition in other states, also stated their views on the topic. During the discussions, it was stressed that the effective creation and amending the antimonopoly law should constitute a part of broad economic reforms, in particular in these countries, where the legislation has not got long traditions. Furthermore, the positive aspects of promoting competition among authorities of particular states, were emphasized.

Cooperation in cartel detection

The last day of conference was devoted, inter alia, to the effective detection and elimination of cartels. A lot of attention was drawn to the international cooperation in this area, which is of great significance at the time of globalization. The conference attendees pointed that the exchange of information allows for identifying these prohibited practices on the domestic market which appeared in other states as well as applying methods and analyses used by foreign authorities when handling similar cases. Main challenges of cooperation were identified, such as various definitions of secret and confidential data, as well as different legal regimes. It was stressed that both the formal and informal methods of cooperation are of equal consideration, including the exchange of cooperation within the ICN.

Conclusions

- It was truly a great honour for UOKiK to host such distinguished speakers and guests, who have come from all over the world to share their knowledge and experience in the field of  competition protection – stated Magorzata Krasnodebska-Tomkiel, the President of UOKiK when closing the conference. The next ICN conference will be held in Marrakesh in 2014 and it will be hosted by the Marocco Competition Council.

The International Competition Network (ICN) was created in New York in 2001. It consists of 127 competition protection authorities from 111 states. The main task of the ICN is the exchange of information and experiences and working out common activities and concepts to protect competition. UOKiK has been the ICN member since the very beginning of the network.”

Follow developments on the ICN 2013 Cartel Workshop – hosted by the Competition Commission of South Africa, 15-18 October – on twitter: https://twitter.com/ICNcartelSA2013

“This was probably the first time we saw a President of a host country (Poland) inaugurating the Annual ICN Conference that itself reflects the significance of Competition/Antitrust in the modern regulatory architecture necessary for economic growth. UoKIK (Polish Competition Authority) hosted the conference to discuss the greatest challenges of antimonopoly law over three days of deliberations

As has been customary the Pre-ICN meetings informally start a day before the main ICN and this time the World Bank decided to do it.  Earlier, the IDRC had been doing it. In the pre-ICN World Bank event the day was spent on discussions about how we can make market work better for development and accelerate the competition reform process. The discussions mostly hovered around private sector development and how competition policy could facilitate reforms to foster more open, productive and competitive markets. There were interesting panel discussions on minimising distortive state aid and the role of EU competition policy framework. Though the highlight of the day was the session on agribusiness and air transport, where enlightening presentations on Kenya and sub-Saharan Africa in agribusiness value chains. On air transport, Morocco, Mexico and Pakistan shared their experiences

“…Competition is to serve consumers. Well-informed consumers are engine of economic changes, because their choices stimulate the economic growth and increase the innovation” ––said the Polish President, Bronis³aw Komorowski in his opening speech. Albeit, the issues and discussions at this antitrust hub do not per se focus on common consumer related competition concerns in developing countries but more on legal aspects and other provisions of competition enforcement among a galaxy of heads and experts from antimonopoly authorities

The main conference as usual covered all the subjects of the working groups from enforcing and promoting competition policy, cartels, merger control and the abuse of a dominant position. About 10 plenaries and more than 20 meetings of various working groups were held within three days. However, from a newcomer’s perspective it is a very unusual design of the conference where no interventions were allowed (by default) in the main plenary sessions and one could only listen to some of the best brains in the field. Nevertheless, one could speak and debate in the breakout sessions of various working groups. The other major activities on the sidelines at such conferences is networking in the lobbies and other smaller structured or unstructured side meetings, which are hugely valuable

Competition advocacy functions of agencies have always been debated in various international fora as complementary to effective enforcement, and being critical for achieving objectives of a competition law. CUTS always believe and practice through its various intervention projects that such advocacy efforts should include undertaking competition impact assessment of relevant policies and critical sectors; and building alliances with and raising awareness of a broad range of stakeholders, providing independent advices to policymakers (through formal and informal channels); so that merits of competitive markets in bringing about choice, quality, innovation and affordability are brought to the fore.

The final day was devoted to effective detection and elimination of cartels. A lot of attention was drawn to the international cooperation in this area. Here we would like to bring to the attention of the participants of the E-forum that CUTS has been running an International Campaign since 2009 for the adoption of World Competition Day on 5th December on theme of `Cartels and their harmful effects on the Poor’ and have been successful so far in obtaining support of competition agencies of many countries. In fact, we are happy to note that the United Nations Conference on Trade and Development (UNCTAD) has dedicated a specific session on this particular theme in the upcoming Intergovernmental Group of Experts (IGE) to be held in Geneva in the July, 2013.”

Vikash Batham, CUTS International

Last week, ICN Steering Group Chair, Eduardo Pérez Motta (President of the Mexican Federal Competition Commission) and Joaquín Almunia (Vice President of the European Commission and EU Commissioner) published an article on competition and its role in economic growth entitled “The Competition Factor.”

For more on last week’s 12th ICN annual conference, see the press releases from the terrific hosts of the conference: the Polish Office of Competition and Consumer Protection, aka UOKiK. See UOKiK news from last week here, here (includes information on the host’s special project), and here.