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Article 82 and Structural Remedies After Microsoft International Competition Forum St Gallen 22-23 May, 2008 PowerPoint Presentation
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Article 82 and Structural Remedies After Microsoft International Competition Forum St Gallen 22-23 May, 2008. Dr Philip Marsden Director and Senior Research Fellow Competition Law Forum. What structural remedies?. Unbundling? Disclosure? Fine? Neelie Kroes: April 2007

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Article 82 and Structural Remedies After Microsoft International Competition Forum St Gallen 22-23 May, 2008


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Article 82 and Structural Remedies After MicrosoftInternational Competition ForumSt Gallen22-23 May, 2008

Dr Philip Marsden

Director and Senior Research Fellow

Competition Law Forum

what structural remedies
What structural remedies?
  • Unbundling?
  • Disclosure?
  • Fine?

Neelie Kroes: April 2007

"It could be reasonable to draw the conclusion

that behavioral remedies are ineffective

and that a structural remedy is warranted”.

remedy or punishment
Remedy or Punishment?
  • Fines punish
  • Remedies restore competition
  • Case finished
  • Remedies complied with
  • Interoperability principles added
  • Still a concern with structure?
that paragraph 664
“That paragraph” (664)
  • “Article 82 EC covers not only practices which may prejudice consumers directly but also those which indirectly prejudice them by impairing an effective competitive structure.
  • In this case, Microsoft impaired the effective competitive structure on the work group server operating systems market by acquiring a significant market share on that market.”
is acquiring market share now an abuse
Is acquiring market share now an abuse?
  • Traditional ordoliberal concerns
  • Historical concerns with structure
  • 82 DP: new economic approach?
  • But new legal approach too! CFI:
    • focus on market share
    • ‘risk’ of impairing competitive structure
    • dominant firms must ensure rivals remain ‘viable’
kroes s interpretation on judgment day
Kroes’s interpretation on judgment day
  • “one producer has 95% of the market, we are talking about a monopoly …and that is not acceptable, you cannot expect that a competitor can be interested in entering into such a market, and that is really what we have seen. And we have complaints from those competitors
  • so how can you measure whether things are working better. Well, a market share of much less than 95% would be a way of measuring success. Now you cannot draw a line and say, well, exactly 50 is correct, but a significant drop in market share is what we would like to see.”
increased threat of structural remedies
Increased threat of structural remedies
  • Energy unbundling
  • E.On divestiture offer
  • Access remedies - linking networks
  • Are they structural?
  • Giving up IP - is this structural?

How effective are structural remedies anyway?

structural remedies in us 1890 1996
Structural remedies in US (1890-1996)
  • Crandall research on 423 monopolisation cases
  • Remedies: 172 behavioural (51.2%)・69 compulsory licensing (20.5%)・95 divestment (28.3%)…Alcoa, Standard Oil, AT&T
  • Lessons - structural remedies rarely work:
    • Market moved on
    • Sacrifice efficiencies
    • Can be price raising
    • Can operate as a cartel
policy issues
Policy issues
  • Not problematic in principle
  • Issue is in practice
  • When structural remedies work best:
    • Defendant in distinct business units
    • Robust demand
    • Create new competitors not just smaller monopolies
    • Don’t require monitoring
remaining concerns
Remaining concerns
  • Chilling innovation
  • Safeguards

Remedy must be

    • Effective
    • Necessary
    • Proportionate
final issue
Final issue
  • Access and Information
  • Prime areas for 82 remedies
  • Behavioural or Structural?
  • Does it matter?
it does matter
It does matter
  • Affects burden of proof
  • Behavioural remedies: conduct (prevent or provide); ongoing; monitoring
  • Structural remedies: change to market structure; transfer assets; irrevocable; no ongoing monitoring
result
Result
  • Mandated access: conduct, ongoing, monitoring - thus, behavioural remedy, thus lower burden of proof more common
  • Information sharing: irrevocable, property, one-off: structural remedy- thus very high burden of proof, rare

Disclosure IS divesture

a final word
A final word
  • Do no harm
  • Abuse must harm consumers/competition
  • Remedy must solve that, without harming consumers/competition
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Article 82 and Structural Remedies After MicrosoftInternational Competition ForumSt Gallen22-23 May, 2008

Dr Philip Marsden

Director and Senior Research Fellow

Competition Law Forum