Bar & Bench recently published an Article of mine expressing my views on the T.R.A.I. “Consultation Paper On Regulatory Framework for Over-the-top (OTT) services” which was released on 27th March, 2015 for comments from the general public.
You can read the full article here.
Also, in other news, while Telecom Operators have had to back off on their demands in India, they may finally get their way in Europe.
The European Union has launched a fresh salvo against Google, this time charging Google with abusing its dominance in Internet searches and opened a probe into its Android mobile system.
The E.U. Executive Commission has stated that it has found that Google “gives systematic favourable treatment” to its Google Shopping at the expense of others in its general search results.
Am pretty sure by the time the Google anti-trust investigation ends, one will be able to write an entire book on the company and its competition law troubles.
In all the chaotic hullabaloo which arose on Airtel’s VoIP Data charges issue (detailed article on the issue currently in progress), another protest which drew comparatively little attention (probably due to the substantially lesser individuals/entities it affected) was the protest by International Long distance(I.L.D.) Operators against the Company’s practice of advertising it’s own VoIP Application Airtel Talk over long distance calls. Specifically, a few seconds before connecting the call.
I am a total outsider to the precise details of the case, and the facts are also disputed (I.L.D. Operators claim the advertisement was run selectively only on those networks with whom Airtel had not entered into collaboration agreements. Airtel denies this and claims that the advertisement was played on all networks equally without any discrimination.) But it did get me thinking on the issue of Advertising in Competition Law.
Prima-facie, one would consider advertising and competition law as congruous to each other. After all, advertising is an essential part of the competitive process in any economy. If a consumer is not aware as to what goods and services are on offer and at what price they are on offer, he or she will be unable to choose between the suppliers of the goods or services, and therefore, competition between suppliers may get diminished. But in this imperfect and admittedly anti-competitive world that we live in, it never is that simple. There are two different scenarios which need to be considered while addressing the issue of advertising and competition law.:
Individual Advertising
Individual Advertising is what I referred to above, i.e., an individual entity choosing to advertise it’s products with the aim to grab market share from competitors in the same sector. This would generally not be subject to perceived anti-competitive harm. Misleading and false advertising, including comparative advertising, may be concerns, but in India they would dealt before other fora. There is however some literature which suggests that advertising paradoxically carries with it an inherent anti-competitive effect as advertising costs act as a serious barrier to the entry of new entities wishing to enter a market which is already dominated by a few relatively large competitors, especially in markets which inherently require enormous amounts to be spent in building up a brand name for the product/company. In fact, Bork has even gone so far as to state that it should be considered as a Barrier to trade !! (See Robert H. Bork, The Antitrust Paradox.)
Horizontal Agreements on Advertising
This refers to agreements among competitors in a market, and needless to say, these are a bit problematic. Any agreement among entities which restricts advertising would generally be considered as an anti-competitive agreement.
However, the reaction of the European Commission (E.C.) has been mixed depending upon the facts and circumstances of each case. While in the case of Belgian Roofing Felt, OJ [1986] L 232/15 (later upheld on Appeal in Belasco v. Commission, [1989] ECR 2117) the Commission ruled against joint advertising which led to a uniform image of products in a market wherein individual advertising would have facilitated differentiation, and consequently competition, on the other hand, in Re CECIMO, OJ [1969] L 69/13 and UNIDI, OJ [1984] L 322/10 (later upheld on Appeal in ANCIDES v. Commission, [1987] ECR 3131), it was accepted that it is sometimes desirable to rationalise and coordinate advertising efforts while imposing certain conditions on such coordination.
Post Script: The Advertising Market
As a post script, other than the above, an important area where competition needs to be maintained is the advertising market itself. It is important that the advertising media itself should function in a competitive manner free from any anti-competitive practices, including (but not limited to) any practice which might lead to reduction of advertising space in the market. This has been affirmed in the U.S. as far back as 1951 in Lorain Journal Co. v. United States, 342 US 143 (1951). One such allegation has already arisen before the C.C.I. is the case of Advertising Agencies Guild v. Indian Broadcasting Foundation, Case No. 35 of 2013. Though that particular Information was closed, the currently running Google Investigation before the C.C.I. involves similar issues (among others) and one will have to wait and watch for further competition law developments in this area.
This is admittedly super cool and super useful !! The Global Competition Review (G.C.R.) has an amazing “Know-How” Compilation on “Immunity, Sanctions & Settlements” across all major competition jurisdictions. So if you want an answer to a query related to sanctions and immunity’s across various jurisdictions or even for a particular jurisdiction, simply tick mark the relevant boxes and the answers come right on. 🙂 Even important F.A.Q.’s have been compiled for ease of access and the answers have also been compiled by authoritative practitioners in he field in the relevant jurisdictions. On a cursory glance, I’ve found almost all basic questions covered within them and in some even more.
There are similar compilations for “Private Litigation” and “I.P. & Antitrust”.
By far one of the coolest initiatives in competition law jurisprudence. (Ya I know I sound like a total nerd. :D)
As a follow up to my previous post, I recently read a very nice Working Paper by Gabriele Accardo, titled “Vertical Antitrust Enforcement: Transatlantic Perspectives on Restrictions of Online Distribution under E.U. and U.S. Competition Laws.”
The paper lucidly discusses the growth, economics, advantages and disadvantages of the E-Commerce Sector and looks at how E.U. and U.S. competition laws deal with restrictions of online sales in distribution agreements. It discusses how “…The growing importance of online commerce highlights how vertical competition law enforcement is still an important building block of competition law policies, both in the U.S. and in Europe”. While discussing the difference in approach between the two jurisdictions, the paper highlights the new competition law rules adopted by the E.U. specifically targeting restrictions of online sales in distribution agreements and explains why the U.S. antitrust doctrine is less concerned about the need to adopt specific rules applicable to restrictions of online sales.
The European Commission recently released a Competition Policy Brief on it’s Commitment Decisions.
“In a nutshell The Commission retains a margin of discretion in the choice of opting for an Article 7 prohibition decision or an Article 9 commitments decision. The choice depends on the main objectives pursued and the specific features of the case. In practice, commitment decisions are not appropriate in cases calling mainly for imposing high fines for past behaviour, or where no effective, clear and precise remedy is identifiable. They are only possible when companies are willing to offer appropriate commitments.”
The topic isn’t particularly relevant for India as of today, since the Competition Act as of now does not allow the C.C.I. to “settle/compromise” cases or investigations. But the transparency adopted by the E.C. is definitely encouraging. For example, one would definitely like the C.C.I. to release guidelines on the determination of penalty as a start.
I recently wrote a post on recently launched E.U. Commission investigation into State Aids provided to Spanish Football Clubs.
I have been falling behind in case law readings in recent weeks, which is why a number of posts are presently saved as half finished drafts on the Dashboard of the Blog. Nevertheless, while trying to finish the backlog, I recently had the opportunity to sift through the recent Orders of the Commission. Two of them stand out and thus deserve a special mention.:
The first is that of Mr. Larry Lee Mccallister v. M/s Pangea3 Legal Database Systems Pvt. Ltd., mostly for the reason that as far as can be recalled, this is the first time the Commission has dealt with Non-Compete clauses under the Competition Act. The reasoning seems to be sound on the facts and circumstances of the case as the matter was more about the personal grievances of a particular individual rather than that of anti-competitive or consumer harm. Personally, am waiting for the day when the C.C.I. has to deal with a Telefonica like situation in the context of cooperative joint ventures or M & A transactions.
For those who are not aware about the above mentioned case, in 2010, Telefonica acquired sole control of the Brazilian mobile operator, Vivo, which was previously jointly owned by Telefonica and Portugal Telecom. In the context of this transaction, the parties inserted a clause in the purchase agreement indicating that Telefonica and Portugal Telecom would not compete with each other in Spain and Portugal as between the end of September 2010 and the end of 2011. The European Commission opened an investigation in January 2011, and the parties terminated the non-compete agreement in early February 2011. The European Commission held that, by virtue of the non-compete agreement, Telefonica and Portugal Telecom had deliberately agreed to stay out of each other’s home market. The European Commission considered that this preserved the status quo in Spain and Portugal, which hindered the integration process of the E.U. telecom sector and prevented the parties from competing with each other for offering clients the most advantageous conditions. Despite the short duration of the infringement, which was only 4 months, the European Commission fined Telefonica €66,894,000 and Portugal Telecom €12,290,000.
The second one is Shubham Srivastava v. Department of Industrial Policy & Promotion (D.I.P.P.)/Supplementary Order , which deserves to be added in the growing list of Orders of the Commission on determining the scope of the definition of the term “Enterprise” under Section 2(h) of the Act. In the Order, while dismissing the Information, the C.C.I. has held that D.I.P.P., under the Ministry of Commerce and Industry, would fall under the definition of “Enterprise” under the Act.
Hope this satisfies readers for now. More (finally) finished posts to follow in the next few days. 🙂
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