Competition and corona crisis in Spain

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 by María Pilar Canedo Arrillaga, Professor of Law, University of Deusto

1. Spain is one of the countries that has been more seriously affected by the COVID19. In order to protect the health of citizens, the Spanish Government adopted some rules that radically limit the social and economic activity in Spain imposing the obligation to stay at home for citizens for a long period and ordering what has been called “the hibernation of the economic activity” for 15 days in all the non essential sectors (mostly health services, security and food)[i]. Those rules are having a dramatic effect in the economy especially in the labour market. This has implied the most relevant rise in the unemployment figures in Spain since the arrival of democracy in 1978[ii]. Also, they are having huge implications in the protection of legal certainty and social and personal rights of the citizens. Those consequences have a more relevant impact in the weaker actors in society both from the social and economic perspective and therefore the Government has decided to take measures with the aim of reducing the impact of the crisis in economy in general and, in particular to help those more harmed by the situation[iii].

2. It is evident that the most relevant overriding reason of general interest, which is human life, needs protection. That implies limits in the rights of the people that we could not foresee some months ago and those radical changes in social and economic behaviours will have impact in our business and industrial economy not only in the short term.

In these circumstances we can hear more radical voices claiming for a change in our economic model towards one in which the public sector controls different aspects of society, including company’s ownership[iv]. Others claim for public control of economic activity and/or business behaviour[v]. Others claim for higher protection to the companies so they can contribute to lower the destruction of employment[vi].

Also, we can witness some (infrequent) business behaviours that profit the situation of need and legal exception and maximize their benefits in abusive ways that fall under different prohibitions of the law. Some of them, with criminal implications, others, with labour, tax, social security or competition law[vii].

Dealing with the latter, there is an increasingly relevant movement that asks for a more lenient application of the competition law rules and principles in reference both with the administrative and legislative measures adopted to tackle with this situation and its application and with the enforcement activities conducted by the competition authorities.
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Dumping in the internal market

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 by Maria Isabel Silva, Judge at the Administrative and Fiscal Court of Braga, Portugal


The term d
umping is associated with competition law and trade policy of the European Union (EU). It takes place when an exporter in a third country sells a particular product into the Union market at a price below its own market price provoking damages to the EU’s industry, which is demonstrated through an investigation procedure currently governed by Regulation (EU) No 2016/1036 of the European Parliament and of the Council.

Dumping is the result of the globalization of international markets, of predatory pricing by exporters that contaminate the internal market and the EU industry, therefore claiming action by the European institutions, Member States and entities such as OLAF (European Anti-Fraud Office), culminating in provisional or definitive anti-dumping duties as a means of counteracting this unfair commercial practice and protecting the interests of the EU industry in relation to the same or similar product. It is in this context that anti-dumping measures on such imports arise within the European Customs Area thus addressing the adverse effects of Dumping to which Regulation No 2016/1036 concerns.
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Online Legal Platforms – The beginning of the 4.0 Law Practice?

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 by Pedro Petiz, Master's student in Law and Informatics at UMinho

The 4.0 revolution has reached the legal services sector. New online platforms are emerging to connect clients and lawyers, while also providing new and innovative legal services. Nonetheless, several questions arise regarding these new businesses: Are they allowed under Portuguese law? And how are Bar Associations dealing with this new reality?

There are mainly two types of online legal platforms:

– Two-sided Platforms, where an intermediary selects the lawyers who appear on the website, defining the order in which they appear, or referring them to potential clients.[i]

– And websites providing legal services, which are provided directly or indirectly, not necessarily by lawyers.[ii] This category includes question and answer websites (https://answers.justia.com), legal chatbots (www.donotpay.com) and sites where legal documents are automatically drafted (https://lawhelpinteractive.org,[iii] http://www.a2jauthor.org[iv] or the Brazilian http://www.yousolveonline.com ).

Regarding the first type of platform, the Portuguese Bar Association has imposed a total prohibition on its use, on the grounds that they constitute “client solicitation”.[v] In my opinion, this prohibition is disproportionate and constitutes a breach of Article 101 of the TFEU.[vi]

As stated by the European Commission, professional rules “must be objectively necessary to attain a clearly articulated and legitimate public interest objective and they must be the mechanism least restrictive of competition to achieve that objective”.[vii]
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Google (again) and advertising on the web. Comment on the European Commission Decision of 20th March 2019

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 by Pedro Madeira Froufe, Editor

Much of the creation of wealth through the digital economy (individualized advertising, anticipation of reactions from consumers to new products, etc.) depends on the knowledge of our tastes and ways of life, knowledge of our profiles and even the knowledge of how our brain reacts to advertising messages (that’s what “neuromarketing” is about) [1]. And of course, the scale counts! There is a kind of return of “economies of scale” in the field of advertising services. That is, there is a large / global business communication that is simultaneously individualized, as, as a result of the knowledge and algorithmic use of personal data of each of us, can adapt and address each group (increasingly small) of consumers, with messages tendentially personalized.
Individualized advertising, enhanced by the use of algorithms, is one of the activities that has grown the most and has created the propulsion of wealth (directly and indirectly) in the digital era.

It is in this context that we should place the last “Google decision” of the European Commission, dated March 20, 2019, regarding the use of the Google / AdSense for Search platform to raise and broker advertising associated with online surveys. The Commission has, in effect, decided to impose a financial penalty on Google and Alphabet Inc. (the parent company of Google LLC, formerly Google Inc.) amounting to EUR 1,490,000 for abuse of a dominant position (infringement of Article 102 of the TFEU).
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The “VAR” annuls the goal of the European Commission to FC Barcelona and the Spanish teams win. Commentary on the Judgment of the General Court (Fourth Chamber) of 26 February 2019 Fútbol Club Barcelona v European Commission Case T-865/16

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by Javier Porras Belarra, Professor and researcher at the Faculty of Law, CEU San Pablo University (Madrid)

Today (almost) no one doubts that football not only is the star sport in Europe (without detracting from all the rest) but also has become an industry that generates millions of euros around sports clubs[i]. This circumstance increased throughout the 20th century but it became especially marked in the 90s and the beginning of the 21st century when the income of sports clubs in this field increased the most. There have been many actions that have contributed to this phenomenon (the professionalization of the major leagues, the updating and improvement of European competitions by UEFA[ii] or the consequences of the freedom of movement of workers athletes within the European Union with independence of his nationality thanks to the famous Bosman case[iii]).

In this sense, shortly after the accession of Spain to the then European Communities, a new sports law was passed in this country[iv]. Through this law the figure of the SAD (Sports Public Limited Companies) was created as a variant of the typical corporations of commercial law. Under the praiseworthy purpose of providing greater control and transparency to the structures of professional football, the Law established a kind of punishment or sanction for “indebted” clubs, forcing them to adopt the legal form of SAD, which theoretically guaranteed a better and clearer future performance while allowing the “healthy” entities to continue competing under the legal associative form of the sports clubs.
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Algorithm-driven collusion

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 by Virgílio Pereira, collaborating member of CEDU

It has been said that digital markets are new and different.[i]  Indeed, competition enforcement reforms have already begun their journey, tackling the unorthodox dynamic of digital markets. Examples include the reforms taking place in Germany.[ii] They have entailed, among others, the possibility of setting up a digital agency, responsible for the supervision of digital markets, whose tasks would include dispute resolution in competition issues.[iii] Becoming vigilant and gathering know-how is certainly a valuable starting point.

Recently, the Council adopted the Commission’s proposal intended to empower Member States’ competition authorities to be more effective enforcers.[iv] It includes reinforcing competition authorities’ investigative powers, including their power to collect digital evidence. Discussion on the unorthodoxy of digital markets and challenges arising from them should take place within the context of the implementation of the Directive, or more generally, within the context of the European Competition Network.
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Transposition of the Damages Directive in Portugal

 

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 by Maria Barros Silva, Trainee Lawyer at SRS Advogados

Directive 2014/104/EU was finally transposed into the Portuguese legal system by Law No. 23/2018 of 5 June, which regulates the right to compensation for victims of infringements to competition law. The Damages Directive was published on 26 November 2014, having a deadline for transposition on 27 December 2016. Portugal was the last Member State to transpose the Directive, almost a year and a half after the deadline, following a call from the Commission to take the necessary steps to ensure its full implementation. Hopefully, this will avoid an infringement procedure from the Commission and any possible fines.

In essence, the content of the Law corresponds to the text of the Directive, although it does go beyond it in certain aspects, with some innovative solutions.

Firstly, the scope of the Law. It applies not only to actions for damages for infringements of European Union competition law (Articles 101 and 102 TFEU, with or without parallel application of equivalent national rules), as laid down in the Directive; but also to actions for damages based on purely national infringements, with no cross-border effects (Articles 9, 11 and 12 of the Competition Law – Law no. 19/2012, of 8 May) or corresponding legal norms in other Member States. Secondly, the law applies not only to actions for damages, but also to other claims based on infringements of competition law.
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MEO – Serviços de Comunicações e Multimedia S.A. v. Competition Authority (C-525/16) case

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 by Nuno Calaim Lourenço, Managing Associate at SRS Advogados

On 19 April 2018, the European Court of Justice (ECJ) delivered its judgment in the MEO – Serviços de Comunicações e Multimedia S.A. v. Competition Authority (C-525/16) case. The judgment provides important criteria of analysis with regard to the constituent elements of an abuse of a dominant position by discrimination, under the regime of Article 102 (c) of the Treaty on the Functioning of the European Union (TFEU) and advances the proposition that such conduct is not subject to a per se prohibition rule. The judgment clarifies, in particular, that in the case of second-degree price discrimination (directed at customers in a downstream market with whom the dominant undertaking does not compete) an infringement of competition rules only occurs if the discrimination entails actual or potential anti-competitive effects that may distort competition between downstream operators. In other words, it is the effective competitive disadvantage that results from discrimination, which must be demonstrated by reference to the actual circumstances of the case, including the impact on the costs, income and profitability structures of the affected party – rather than the practice of discrimination considered in abstract – which constitutes the criterion for the existence of an abuse. Although it does not create any ‘safe harbours’, this important clarification allows dominant companies greater flexibility in adapting their pricing policies to different market realities and does not coerce them into applying uniform tariffs.
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The concept of undertaking strikes back – the activity of religious orders and congregations

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by Ana Filipa Afonseca, member of CEDU

The Court of Justice, final interpreter of the Treaties, has dealt with a broad spectrum of concepts of undertaking, making certain decisions somewhat perplexing to lawyers unsuspicious of the particularity of the concept of undertaking in the context of competition rules. These decisions are still the living proof that competition is at the heart of legal (and political) modeling process of European integration.

On the other hand, regarding the field of state aids, in the Congregación de Escuelas Pisa’s ruling, Case C-74/16, 27th June 2017, the Court of Justice had the important and difficult task of deciding whether the activities carried out by Spanish religious establishments were of economic nature. With this assumption, the Congregación de Escuelas Pías had received an illegal fiscal exemption and this measure is a forbidden state aid in the terms of the Article 107(1).

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Competition, coin mining and plastic memories: why the EU should watch the Web Summit carefully

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by Tiago Cabral, member of CEDU

After the overall success of the 2016 edition – with a few exceptions like the failing Wi-Fi[i]– Lisbon hosted for the second time “the largest tech conference in the world”. We are obviously referring to this year’s edition of Web Summit which brought about 60.000 attendees from more than 170 countries to the Portuguese capital. This event is obviously significant to the Portuguese economy with an investment of about 1.3 Million Euros originating an expected return of about 300 Million. But there is more to Web Summit than the number of attendees or its effect on the Portuguese economy (even if both are relevant), it offers a look into the future and the future brings a plethora of complicated legal and political challenges. Some of these challenges demand a supranational response and the EU should watch very carefully the trends coming out of Lisbon. In the following paragraphs, we shall highlight a few topics to illustrate.

1. “The Digital Single Market has become a new political and constitutional calling for the EU” and it cannot work in the absence of healthy competition. The European Commissioner for Competition’s “clearing the path for innovation” speech[ii] (7th November) – even if its content or delivery certainly did not impress us – made clear how seriously the Commission is taking this issue. American Tech Giants dominate the EU’s market and without proper competition enforcement, European companies may fall prey to anti-competitive behaviour before they have the chance to get a foothold. The speech also made a few interesting points about the growing importance of big data in competition and about trust in competition. However, it had a rather uncomfortable “Google paranoia” emanating from it. The 2.42€ billion fine against Google for breaching EU antitrust rules was historic – whether or not we agree with it –, but so were, for example, Microsoft v. Commission (2007) and the 561€ million fine against Microsoft (2013) for non-compliance with browser choice commitments. Yet, by name the Commissioner only referred to Google. There was a reference to the issue of special tax treatment, which immediately brings the controversies with Apple and Amazon[iii] to mind, but the companies were not named. Since there was no time to properly explain the details of the referred antitrust proceeding – or of the other two ongoing antitrust proceedings against Google, regarding AdSense and Android – the speech did nothing to further inform the audience on this issue and only left the feeling that there is a fixation on Google in the Commission. Interestingly, the 6th November intervention by the Commissioner where she was interviewed by Kara Swisher suffers no such issues. The interviewer asked the right questions, what companies are breaking the rules, what is the Commission’s reaction and what are the consequences. There was no singling out of a company with references to Google, Amazon, Apple and Facebook, no attempts to explain the complicated reasoning behind the proceedings in a few short minutes, the comparisons to the US also added value to the interview.

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