Antitrust in Poland

David Fischer on The Antitrust Review:

Yesterday, the House of Representatives passed HR 6074 which, in part, would amend the Sherman Antitrust Act.

Short title of this act tells us much about sponsors’ intentions: Sec. 1. This Act may be cited as the `No Oil Producing and Exporting Cartels Act of 2007′ or `NOPEC’. Analyst quoted by Fischer doubts that NOPEC will have any positive effect for American gas consumers in the long run, but I want to comment on different aspect of this bill.

Ivo Cerckel in his comment on Antitrust Review suggested that NOPEC will establish Rule of Reason for price fixing agreements (which are illegal per se under § 1 of Sherman Antitrust Act):

§ 1. Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is declared to be illegal. …

And NOPEC states:

Sec. 7A. (a) It shall be illegal and a violation of this Act … when such action, combination, or collective action has a direct, substantial, and reasonably foreseeable effect on the market, supply, price, or distribution of oil, natural gas, or other petroleum product in the United States.

This is clearly not a per se approach. It may be a step towards achieving more rationality in antitrust, provided that it will have any impact on domestic regulations (purpose of NOPEC is to prosecute foreign cartels). However, I would not go as far as to say that it is a step towards repeal of antitrust (I don’t think it’s plausible claim, especially knowing that NOPEC extends scope of antitrust). Anyway, I will surely watch development of this bill.

On May 7 – 9 the Office of Competition and Consumer Protection (UOKiK) carried out a search of headquarters of several polish flour producers: VK Mühlen, Gdańskie Młyny i Spichlerze dr Cordesmeyer, Dolnośląskie Młyny and Cargill (grain trader). The search is a part of procedure to determine whether there exist illicit vertical agreement in restraint of competition in flour production market.

Similar actions were conducted by German Bundeskartellamt (54 firms controlled, including VK Mühlen) and Dutch Competition Authority – NMa (16 firms controlled).

Press release (in Polish).

• May 14: Yet another text devoted to recent antitrust rulings of the US Supreme Court – The State of Antitrust in 2008 by FTC Commissioner, Tom Rosch.
• May 15: Polish Office of Competition and Consumer Protection (UOKiK) presented a report on mortgage loans market, revealing that all but a few of contract terms were unfavorable for customers.
• May 16: Global Competition Law Centre (College of Europe) is organizing its Fourth Annual Conference in Brussels on 19-20 June. Among other distinguished guests, prof. Stanisław Sołtysiński (Sołtysiński Kawecki & Szlęzak) will take the chair during “Other specific issues” session.

Polish Office of Competition and Consumer Protection has published a report entitled “Realization of Competition Policy 2006-2007″. Report concludes that most of the Actions specified in “Competition Policy 2006-2007″ action plan were successfully put into effect. Only Priorities 1 and 3 in Area II (competition in radio and television market, competition in railroads market) were not realized due to political decisions.

Area I “Competition Protection” set several tasks for antitrust authority (OCCP), namely: improving effectiveness in cartel prosecution, protection of liberalized sectors, introducing changes in competition law, improving state aid supervision system and competition protection on local markets.

Area II was devoted to “creation of competition” on regulated markets and, with exception for energy distribution, it is clear that Priorities specified for this Area were not achieved.

Area III “Supporting Competition” specified promotional and educational endeavors in order to raise level of awareness among market participants.

• May 6: Professor Josh Wright (GMU Law) continues his outstanding series about present and future of Law and Economics movement and scholarship.
• May 8: Professor Thom Lambert (MU Law) discusses FTC’s opinion in case of Nine West in which Commission seems to belittle as much as possible Supreme Court’s decision in the Leegin case.
  In Leegin Supreme Court held that resale price maintenance is to be treated under the Rule of Reason (thus overruling the 1911 Dr. Miles decision). According to FTC, RoR means that each instance of RPM should be considered illegal unless accused firm proves the opposite!
  Lambert points out very important fact about RPM – it’s really hard to use RPM to accomplish anti-competitive ends. I’m just wondering how it’s possible that so well educated folks at FTC are unable to follow not only logic of the Supreme Court’s decisions, but also – basic economics?
• May 9: Microsoft endeavors to avoid paying 899 million euro fine imposed by the EU Commission.
• May 11: Global Competition Review published results of 2008 “40 under 40″ survey. Congratulations for all winners! Competition was strong (over 1,000 nominees) as always among competition lawyers…
• May 11: Steve Hannaford, in his post First a merger, then a demerger, is discussing whether synergy and market power are always product of a merger. As an example of ArvinMeritor shows us, it’s not really so. But, as for official executive statements: In other words, whatever I say is right when I say it.

AFP reports that on Friday, May 9, Microsoft lodged an appeal at a European court against a record 899 million euro (1.39 billion dollar) fine imposed on it by the EU Commission for defying a landmark anti-trust ruling.

Personally, I believe that such cases are the best justified ones in whole antitrust spectrum. As prof. D. T. Armentano once said:

Employing antitrust against legal barriers to entry enacted
by state and local governments may create incentives
to dismantle those barriers.
[Antitrust: The Case for Repeal (Auburn, AL; 1999): 62]

What are the legal barriers to entry enacted by state in this case? Intellectual Property, of course.

Recently, I came across a speech given by Thomas O. Barnett (Assistant Attorney General, Antitrust Division, U.S. Department of Justice) entitled Antitrust Update: Supreme Court Decisions, Global Developments, and Recent Enforcement (link). I’d like to point out some highlights of this lecture:

• Supreme Court is nearly unanimous in its recent antitrust rulings (77 votes for majority decisions and 9 dissents – those are stats for last 10 cases). Barnett concludes that dissents were based on grounds not connected directly with antitrust (like stare decisis).
• In Leegin Creative Leather Products, Inc. v. PSKS, Inc. (2007), Supreme Court agreed to use rule of reason instead of per se illegality in case of vertical resale price maintenance (RPM), thus overruling its 1911 decision which deemed such agreements as illegal per se.
• In Weyerhaeuser Co. v. Ross-Simmons Hardwood Lumber Co. (2007), Supreme Court extended presumption of legality to below-cost predatory buying (it was a step further from 1993 Brooke Group case in which such presumption was applied to above-cost predatory pricing).
• In F. Hoffman-La Roche Ltd. v. Empagran S. A. (2004) Supreme Court reversed D.C. District Court decision allowing foreign plaintiffs injured by actions illegal under Sherman Act to sue in the U.S.
• Barnett rejects the opinion that DOJ is not fighting vigorously with anti-consumer conduct. To prove the opposite, he presents following data referring to AD’s criminal cartel enforcement: