Professor Richard Whish Helsinki

11 October 2018

OUTLINE OF PRESENTATION

� VERTICAL AGREEMENTS ¡ THE COMMISSION’S E-COMMERCE SECTOR

INQUIRY ¡ RECENT CASES ON VERTICAL AGREEMENTS IN

THE EU � EXCESSIVE PRICING

¡  IS THIS AN ANTITRUST CONCERN? ¡ RECENT CASES ON EXCESSIVE PRICING IN THE

EU

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THE COMMISSION’S SECTOR INQUIRY � PRIOR TO THE COMMISSION’S SECTOR

INQUIRY IT HAD NOT ADOPTED AN INFRINGEMENT DECISION IN AN ARTICLE 101 CASE ON VERTICAL AGREEMENTS SINCE PEUGEOT, 5 OCTOBER 2005

� THE RULES ON VERTICAL AGREEMENTS ARE WELL-KNOWN AND RELATIVELY STABLE ¡ BLOCK EXEMPTIONS 2790/99, 330/2010 ¡ VERTICAL GUIDELINES, 1999, 2010

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THE COMMISSION’S SECTOR INQUIRY � HOWEVER THERE HAS BEEN PLENTY OF

ENFORCEMENT AT NCA LEVEL SINCE REGULATION 1/2003 ENTERED INTO FORCE IN 2004 ¡  IN 2017 THE ECN WAS INFORMED OF 151

INVESTIGATIONS (OF ALL KINDS) ¡  29 EUROPEAN COMMISSION; 122 NCAS; 80

PROCEEDING TO A DECISION ¡  55% ARTICLE 101; 10% ARTICLES 101 AND 102;

35% ARTICLE 102

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THE COMMISSION’S SECTOR INQUIRY � AND THERE HAVE BEEN SEVERAL

IMPORTANT ARTICLE 267 REFERENCES ON VERTICAL AGREEMENTS SINCE 2004, EG ¡  CASE C-439/09 PIERRE FABRE, JUDGMENT OF 13

OCTOBER 2011 ¡  CASE C-345/14 SIA ‘MAXIMA LATVIJA’,

JUDGMENT OF 26 NOVEMBER 2015 ¡  CASE C-547/16 GASORBA SL, JUDGMENT OF 23

NOVEMBER 2017 ¡  CASE C-230/16 COTY GERMANY GMBH V

PARFÜMERIE AKZENTE GMBH, JUDGMENT OF 6 DECEMBER 2017

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THE COMMISSION’S SECTOR INQUIRY � THE DIGITAL AGE MEANS THAT THE

PATTERNS OF DISTRIBUTION AROUND WHICH THE EU COMPETITION RULES DEVELOPED ARE DIFFERENT

� THE STATISTICS REVEAL THAT HUGE NUMBERS OF CONSUMERS PURCHASE, OR SEARCH, ONLINE

� AND QUITE APART FROM MANUFACTURERS AND RETAILERS HAVING THEIR OWN WEBSITES, THERE ARE ALSO ONLINE MARKETPLACES AND PRICE COMPARISON TOOLS

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THE COMMISSION’S SECTOR INQUIRY � THE REPORT CONTAINS A GREAT DEAL OF

INFORMATION ABOUT HOW PRODUCTS ARE DISTRIBUTED ONLINE AND ABOUT THE KIND OF RESTRICTIONS THAT ARE TO BE FOUND

� MANUFACTURERS TEND TO REGARD MATTERS SUCH AS BRAND IMAGE AND THE QUALITY OF PRE- AND POST-SALES SERVICES AS MORE IMPORTANT THAN PRICE COMPETITION

� RETAILERS ATTACH MORE IMPORTANCE TO PRICE COMPETITION

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THE COMMISSION’S SECTOR INQUIRY � THE REPORT DESCRIBES THE VARIOUS, AND

NUMEROUS, RESTRICTIONS THAT ARE FOUND IN ONLINE COMMERCE

� THESE INCLUDE ¡ CROSS-BORDER RESTRICTIONS ¡ RESTRICTIONS ON THE USE OF MARKETPLACES ¡ PRICE RESTRICTIONS ¡  EXCLUSIVITY RESTRICTIONS ¡ PARITY PROVISIONS

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RECENT CASES ON VERTICAL AGREEMENTS � CROSS-BORDER RESTRICTIONS

¡  ARTICLE 4(B) OF REGULATION 330/2010 AND THE VERTICAL GUIDELINES DISCUSS THIS ISSUE IN RELATION TO ONLINE COMMERCE

¡  SEEMS TO HAVE WORKED WELL IN PRACTICE ¡  NOTE THE COMMISSION’S CURRENT CASES

¢  SKY/HOLLYWOOD STUDIOS ¢  GEOBLOCKING ¢  GUESS, 6 JUNE 2017 ¢  NIKE, SANRIO, UNIVERSAL STUDIOS (14 JUNE 2017)

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RECENT CASES ON VERTICAL AGREEMENTS � R E S T R I C T I O N S O N T H E U S E O F

MARKETPLACES ¡  PIERRE FABRE (2011)

¢  BAN ON INTERNET SALES A HARDCORE RESTRICTION UNLESS IT COULD BE OBJECTIVELY JUSTIFIED

¢  NOT BLOCK EXEMPTED UNDER REGULATION 330/2010 ¢  UNLIKELY TO SATISFY ARTICLE 101(3) ON AN INDIVIDUAL

BASIS ¡  COTY (2017)

¢  ONLINE SALES PERMITTED BY RETAILERS; BAN ON USE OF THIRD PARTY MARKETPLACES PERMITTED. OBERLANSGERICHT GAVE JUDGMENT IN FAVOUR OF COTY 8 JULY 2018

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RECENT CASES ON VERTICAL AGREEMENTS � HOW WIDE IS THE COTY JUDGMENT?

LIMITED TO LUXURY GOODS? � SEE THE BKA, OCTOBER 2018

¡  ‘COMPETITION RESTRAINTS IN ONLINE SALES AFTER COTY AND ASICS – WHAT’S NEXT?’

� NOTE ALSO THE COMMISSION’S INITIATION OF AN INVESTIGATION INTO AMAZON’S DUAL ROLE AS A PLATFORM FOR MERCHANTS AND A SELLER IN ITS OWN RIGHT

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RECENT CASES ON VERTICAL AGREEMENTS � R E S T R I C T I O N S O N T H E U S E O F

MARKETPLACES ¡  PING EUROPE (UK COMPETITION APPEAL

TRIBUNAL, SEPTEMBER 2018) ¢  OUTRIGHT BAN ON ONLINE SALE OF GOLF CLUBS

RESTRICTIVE OF COMPETITION BY OBJECT; NOT OBJECTIVELY NECESSARY

¢  FINE OF £1.45 MILLION REDUCED TO £1.25 MILLION ON APPEAL

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RECENT CASES ON VERTICAL AGREEMENTS � PRICE RESTRICTIONS

¡  ARTICLE 4(A) OF REGULATION 330/2010 ¡  NOTE THE COMMISSION’S FOUR DECISIONS OF

JULY 2018 ¢  ASUS, DENON & MANANTZ, PHILIPS AND PIONEER ¢  FINES OF €110 MILLION ¢  NB SETTLEMENTS!

¡  SEVERAL CASES ON THIS HAVE BEEN BROUGHT BY THE CMA IN THE UK: PRIDE MOBILITY; ROMA; ULTRA FINISHING; ITW LTD; POOLE LIGHTING

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RECENT CASES ON VERTICAL AGREEMENTS � PRICE PARITY PROVISIONS: APPLE/E-

BOOKS (2012 AND 2013) ¡  AN ‘UPSIDE DOWN’ HUB AND SPOKE CASE ¡  PRICE PARALELLISM BETWEEN THE E-

PUBLISHERS � PRICE AND NON-PRICE PARITY PROVISIONS:

AMAZON/E-BOOKS (2017) ¡  AN ‘ABUSE OF DOMINANCE’ CASE WHERE

AMAZON IS MAKING IT HARDER FOR OTHER PLATFORMS TO COMPETE WITH IT IN THE MARKET FOR THE E-TAILING OF E-BOOKS; COMMITMENTS TO DROP THE PROVISIONS, MAY 2017

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RECENT CASES ON VERTICAL AGREEMENTS � PRICE PARITY PROVISIONS: PRIVATE

MOTOR IN SURANCE , UK MARKET INVESTIGATION ¡  PROHIBITION OF PROVISION PREVENTING

INSURERS FROM MAKING THEIR PRODUCTS AVAILABLE MORE CHEAPLY ON OTHER ONLINE PLATFORMS

� PRICE PARITY PROVISIONS: HOTEL ONLINE BOOKING ¡  !!!

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IS THIS AN ANTITRUST CONCERN? �  ARTICLE 102(2)(A) GIVES AS AN EXAMPLE OF ABUSE ‘DIRECTLY IMPOSING UNFAIR PURCHASE OR SELLING PRICES’

�  COMPARE THIS WITH SECTION 2 OF THE SHERMAN ACT WHICH PROHIBITS ‘MONOPOLIZATION AND ATTEMPTS TO MONOPOLIZE’

�  SOME LAWS – EG SINGAPORE AND HONG KONG – DO NOT SPECIFY UNFAIR PRICES AS AN ABUSE

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IS THIS AN ANTITRUST CONCERN? �  THERE ARE GOOD REASONS WHY COMPETITION AUTHORITIES DO NOT PURSUE HIGH PRICES ¡  CAN THE MARKET ‘AUTO-CORRECT’? ¡  CAN THE PROBLEM BE CURED IN OTHER WAYS

(EG CONDEMN EXCLUSIONARY ABUSES; MARKET STUDIES TO IDENTIFY POOR REGULATION, PUBLIC RESTRICTIONS OF COMPETITION)

¡  CAN/SHOULD A COMPETITION AUTHORITY BECOME A PRICE REGULATOR?

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IS THIS AN ANTITRUST CONCERN? � REASONS FOR NON-INTERVENTION

¡ WHEN IS A PRICE EXCESSIVE? ¡ WHO SHOULD DECIDE WHAT A NON-EXCESSIVE

PRICE IS? � BUT NEVER SAY NEVER!

¡ WHAT IF ENTRY IS IMPOSSIBLE? THE MARKET CANNOT CORRECT ITSELF (AKKA)?

¡ AND WHAT ABOUT CASES OF REGULATORY FAILURE/GAPS (PFIZER AND FLYNN)

¡ POPULISM/HIPSTER ANTITRUST? Richard Whish 11 October 2018 18

RECENT CASES ON EXCESSIVE PRICING �  SEE ASPEN, DECISION OF THE ITALIAN COMPETITION AUTHORITY, 2016, UPHELD ON APPEAL TO THE TAR LAZIO, 13 JUNE 2017

�  AND NOW SEE THE COMMISSION’S INVESTIGATION OF ASPEN IN OTHER MS

�  IN THE UK SEE PFIZER AND FLYNN, CMA DECISION OF 2016, CAT JUDGMENT OF 2018

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RECENT CASES ON EXCESSIVE PRICING � THE CAT SAID THAT THE CMA HAD

MISAPPLIED THE UNITED BRANDS TEST ¡  IS THE PRICE EXCESSIVE WHEN COMPARED

WITH COST/ECONOMIC VALUE? ¡  IF SO IS THE PRICE UNFAIR IN ITSELF OR

WHEN COMPARED TO OTHER PRODUCTS? ¢  THE CAT SAID THAT THE CMA HAD MISAPPLIED BOTH

LIMBS OF THIS TEST

� THE CMA IS PURSUING OTHER CASES: CONCORDIA, ACTAVIS

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RECENT CASES ON EXCESSIVE PRICING �  NOTE ALSO GAZPROM: ARTICLE 9 COMMITMENTS ACCEPTED MAY 2018 IN RELATION BOTH TO EXCESSIVE PRICES AND CONTRACTUAL RESTRICTIONS OF CROSS-BORDER TRADE

� AKKA: JUDGMENT OF THE COURT OF JUSTICE IN 2017 ON HOW TO DETERMINE WHETHER THE PRICES OF A COPYRIGHT COLLECTING SOCIETY WITH A LEGAL MONOPOLY WERE EXCESSIVE

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RECENT CASES ON EXCESSIVE PRICING �  THE DUTCH ACM IS INVESTIGATING MEDICINE

PRICES – PARR INTERVIEW, 5 OCTOBER 2018 � A DANISH COURT CONCLUDED THAT A FINDING

THAT ELSAM WAS GUILTY OF EXCESSIVE PRICING WAS INCORRECT: 24 MAY 2018

� THE AUSTRIAN AUTHORITY IS INVESTIGATING POSSIBLE EXCESSIVE PRICING IN AIRFARES

� AND NOTE THE BKA’S FACEBOOK INVESTIGATION – EXCESSIVE PRICING?

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RECENT CASES ON EXCESSIVE PRICING �  THE FRENCH AUTORITÉ DE LA

CONNCURRENCE IMPOSED A FINE OF EUR 0.2 MILLION ON SANICORSE FOR EXCESSIVE PRICING IN CLINICAL WASTE MANAGEMENT, 20 SEPTEMBER 2018

�  THE DANISH COMPETITION AUTHORITY FOUND CD PHARMA GUILTY OF EXCESSIVE PRICES, 31 JANUARY 2018

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CONCLUSION � THERE ARE SOUND REASONS FOR

REFRAINING FROM BRINGING CASES ON EXCESSIVE PRICING

� BUT NEVER SAY NEVER! � THERE ARE NUMEROUS RECENT AND

CURRENT CASES

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THANK YOU FOR YOUR ATTENTION!

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