The IBA Annual Competition Conference held in Florence, Italy on 14-15 September 2012 gathered more than 160 participants from all corners of the globe. The panelists and the audience were comprised of lawyers and economists from law enforcement authorities, law firms, and consultancies, as well as from major corporates subject to regulators’ scrutiny, such as Google and Apple. Topics included: information exchange among competitors, anti-trust enforcement in CIS States, recent developments in merger control, damage claims in Europe and competition in on-line space. There was also a memorable interview with William E. Kovacic, former FTC Commissioner, currently a professor of law at George Washington University, who offered humorous insight into the jungle of US regulatory authorities dealing with competition issues.
Pro-enforcement «bias» The main impression is that both legal practitioners and regulators have an appetite for more aggressive enforcement of competition laws. In this context, complaints were voiced that the European Commission is not availing itself of interim injunctions against suspected infringers and that the regulators «should take more risks». Some of the corporates present at the conference were more conservative. One can sympathize with this since the cost of the regulator getting it wrong befalls on the targeted undertaking and not on the risk taker. It was interesting to hear that the Russian competition authority has the power to issue what could be described as cease and desist letters to suspected infringers in cases involving abusive contract terms and refusals to deal. In those cases, the regulator cannot initiate a probe against the suspected infringer if it had not previously issued such a cease and desist letter. Compliance with the «cease and desist» order ensures immunity. An impressive 74% compliance rate was reported.
Exchange of information The most important thing to take home from the panel on exchange of information is that careful management of horizontal merger cases is essential for reducing exposure to collusion allegations. If there is a due diligence which does not end up with a deal but the competitor had been granted access to the data room containing sensitive business information on the target, regulators may interpret such occurrences as a disguised collusion, rather than a genuine attempt to merge. Due diligence has to be therefore carefully managed to blind the most sensitive data or at least to ring-fence them from the competitor’s commercial people. Another mine field lies in the covenants concerning parties’ behavior between signing and closing, which provide for co-operation between the parties to the sale and purchase agreement in the interim period while merger approval is pending. The covenants should be artfully negotiated and drafted to fall short of the purchaser’s operational control over the target company and collusion during the waiting period. It goes without saying that information exchange requires careful thinking and planning in a non-merger context as well.
The line between permissible information exchange and prohibited collusion is thin and the side which the market player will end up depends on many factors, such as the nature of information, whether the information pertains to past, current or future activity, whether information is exchanged bilaterally, disseminated unilaterally or provided to a third party, whether information is specific or aggregate, etc.
Competition in on-line space The most interesting panel was the one on competition in on-line space. While the toolbox for isolating and assessing antitrust issues in on-line space is essentially the same as for the traditional, off-line space, on-line space has its many idiosyncrasies, primarily resulting from its fast-changing and no-boundaries nature. Furthermore, since consumer services in on-line space are mainly rendered free of charge, the dominant focus of antitrust assessment is not on prices, or even quality of service (since the experience seems to show that quality is constantly enhanced), but on privacy. An exciting debate exists around the question how to assess competition effects of open-source software and also whether closed systems are inherently anti-competitive. An equally interesting issue in the on-line paradigm is whether data collection can be viewed as an essential facility, warranting a mandatory injunction on the data collection owner to provide access to competitors (and if yes, at what price, since no market for such data exists). Finally, while the panelists expressed different views on the soundness of long-term remedies in on-line competition infringement cases, they all agreed that due to the fast-changing nature of on-line markets, the opportunity for regular review and amendment of remedies should be available.
