Competition Law Journal Rankings Revisited

The ARC 2010 journal rankings are now out.  Once again our research has been re-classified retrospectively.  Once again, competition law journals fair poorly.  We have two more competition law journals classified as ‘A’, journals’, but both are foreign, with the result that there are now five foreign competition/business law journals with an A ranking and no local journals.  No competition law journals anywhere reach the A+ ranking.  Some have completely disappeared from the list.  For last year’s list see my earlier blog.  Here are the current rankings with changes noted.  (Australian journals appear in green; the list of business journals is not comprehensive):

A+

Nope, nothing here …

A

American Business Law Journal

Antitrust Law Journal

European Competition Law Review (up from a B last year)

Journal Of Business Law

World Competition: Law and Economics Review (up from a B last year)

B

Australian Business Law Review

Competition and Consumer Law Journal

International Review of Intellectual Property and Competition Law

Journal of Competition Law and Economics

C

(the vast majority of all journals are here)

Antitrust Bulletin

Business Law Review

Business Lawyer

Competition Law Journal

European Business Law Review

European Competition Journal

International Business Lawyer

No ranking

These ones seem to have dropped off the list – I can’t find them anyway!

Antitrust

Antitrust Law and Economics Review

Australian and New Zealand Trade Practices Law Bulletin

Competition Law Review

Global Competition Review

International Business Law Journal

Trade Practices Law Journal (this must be a mistake – I am exploring further!)

————–

Re-ranking is both necessary and problematic.  As researchers, our immediate status as ‘research active’ or not is determined by the ranking system and our research  ’quality’ is also now judged by the quality ranking assigned to the journals in which we publish.  There are many problems with this – esp where the rankings are not static and the discipline areas not fairly represented – in particular, there is a very odd emphasis on publishing in foreign journals (which often means publishing about foreign law rather than concentrating research on our own; this is more of a problem in law which has many jurisdiction-specific quirks than many other areas). I previously written about my feelings regarding the current ranking system.  They have not changed (at least not for the better) following this re-ranking.

FYI, the generalist law journals rankings I’ve previously mentioned remain essentially the same, save that the Australian Law Journal has moved from C to B ranking and the Griffith Law Review has had a miraculous jump from a B ranking to an A+ ranking.

For me, I will start focusing more on comparative law with emphasis on US and European jurisdictions rather than focusing on some of the real problems we have with our own domestic competition laws …

Creeping Acquisition Amendments Revisited

I have previously discussed the Government’s proposed changes to the definition of market, for purposes of mergers – essentially their plan to remove the word ’substantial’, so that a merger would be prohibited where it substantially lessened competition in any local, regional or national market, whether or not that was considered a ’substantial’ market.

The problem with the reform (or at least it’s effectiveness in achieving the government’s objective of curbing ‘creeping acquisitions’) is that the word ’substantial” rarely, if ever, has any impact on the ACCC’s determination of the ‘relevant’ market for assessing likely competitive impact.  I’ve previously referred to comments by former chair of the ACCC’s Merger Review Committee, Prof Stephen King has made this observation in this respect:

Markets are based on substitution. If properly defined, an economic market for merger analysis captures the relevant level of competition. A market might be nationwide or even international. Or it may simply cover a single town or even part of a town … The key issues are – what is the nature of competition and what will the merger or acquisition do to this competition. If the merger substantially lessens competition in a properly defined economic market then it will harm consumers and the economy. The merger should be opposed. Requiring that the market is also ’substantial’ is redundant. So if Durie’s speculation is correct, the government will be getting rid of a redundant but confusing adjective!

The ACCC’s Merger Guidelines (updated in November 2008) also express the view that a ’small’ market can be a ’substantial market’ and that ’substantial’ is not necessarily determined by geographic size. Although the Guidelines have no force in law, so a Court might interpret the meaning of ’substantial’ differently in this context, the fate of mergers in Australia is, in practice, determined by the ACCC (there has been only one challenge to the ACCC’s decision not to informally approve a merger since the current test came into operation), so that its Guidelines reflect the current application of the law.  Consequently, although removal of the word ’substantial’ may remove a ‘redundant’ term, it is unlikely to impact on the number or type of mergers approved by the ACCC.  It is clearly unlikely to have any impact on the ‘creeping acquisitions’ about which the Government seems so concerned.

This appears to be the consensus of opinion, as reported by Sam McKeith on page 11 of today’s Fin Review.  However, also reported in that item are commends by Assoc Prof Frank Zumbo and Queensland Consumers Association spokesman Ian Jarrett, that need to be challenged.  Zumbo claims that the ‘anti-merger law [first, it's not an 'anti-merger' law, but I'll let that one go] has dangerous gaps and needs a major overhaul.  This fiddling will not fill the dangerous gaps in the existing anti-merger law’.  It appears he also considers creeping acquisitions to be a ‘rapidly growing threat to competition and consumers’.  None of these claims appear justified.  It’s not clear what the ‘dangerous gaps’ are.  Our merger laws are broadly consistent with those in other OECD countries, which do not specifically or separately address ‘creeping acquisitions’, so that although in theory there is a gap in the law not addressing potentially anti-competitive impact of a series of small mergers, there is little evidence that this is currently a problem in practice (even the ACCC in its Grocery Report could not identify a problem associated with creeping acquisition in the grocery sector, despite having every incentive to do so: ‘The ACCC does not consider that acquisitions by Coles and Woolworths of smaller competitors over time are a significant current concern in the grocery retail sector’ (p xxi).  It’s also not clear what ‘major overhaul’ would be required to correct any perceived gap.

Ian Jarrett made a different but related claim, that ‘the high proportion of unopposed mergers indicated the ACCC needed more power to stop creeping acquisitions’.  This conclusion simply does not follow.  Most mergers are cleared because most mergers are not anti-competitive and the same holds true in most jurisdictions in which notification of mergers meeting certain thresholds is required; for example, the US challenges less than 5% of mergers notified to its competition agencies.

A law removing the word ’substantial’ from the definition of market is to be welcomed because it is a redundant term which (it is clear) is capable of causing confusion.  But let’s not pretend it’s something that it is not and let’s not overstate the problem (if there is one) of ‘creeping acquisitions’ in this county.

New Zealand: New discussion paper on criminal cartels

On 27 January the NZ Minister of Commerce, Simon Power, released a discussion document on the introduction of criminal penalties for cartels.

• View Simon Power Press Release
• View  summary of the discussion paper by DLA Phillips Fox.
• View NZ Herald Editorial: Why Corporate Cheats Need Threat of Jail

See also article by Caron Beaton-Wells and Brent Fisse (Uni of Melbourne Legal Studies Research Paper No 413, June 2009), ‘The Australian Criminal Cartel Regime: A Model for New Zealand’.

Submissions close on 31 March 2010.

Google Book Settlement Conference, Brussels Feb 12

The Institute for European Legal Studies (IEJE, University of Liège, Belgium) is running a half-day conference on the Google Book Settlement in Brussels, on February 12th 2010: ‘The Challenge of Building a Digital Library that Benefits All‘.

The programme reflects the breadth of opinions on the complex issue this matter raises regarding IP and competition law and speakers include European Commission officials, high level scholars, in-house counsels and practitioners.  I wish I could go … if you’re in a more fortunate position than me and can get to Brussels on Feb 12th, you can view a copy of the programme and registration details here.   Welcoming remarks by co-director of the IEJE and ‘chillingcompetition’ blogger, Professor Nicolas Petit.

No need for ’substantial’ markets for mergers?

Out of the blue, the Government today announced it proposed to change the definition of market for purposes of merger review. The current definition of market refers to a ’substantial market for goods or services’ and the proposal involves removal of the word ’substantial’.

In his press release, competition minister Craig Emerson claims that this change is intended to fulfill the Government’s election promise to deal with ‘creeping acquisitions’.  It is tough to see how it will do this.  Former chair of the ACCC’s Merger Review Committee, Prof Stephen King has made this observation in relation to the proposed change:

Markets are based on substitution. If properly defined, an economic market for merger analysis captures the relevant level of competition. A market might be nationwide or even international. Or it may simply cover a single town or even part of a town … The key issues are – what is the nature of competition and what will the merger or acquisition do to this competition. If the merger substantially lessens competition in a properly defined economic market then it will harm consumers and the economy. The merger should be opposed. Requiring that the market is also ’substantial’ is redundant. So if Durie’s speculation is correct, the government will be getting rid of a redundant but confusing adjective!

It is also unclear how this proposal fits with other proposals directed toward creeping acquisitions, including the Government’s own Creeping Acquisition Discussion Paper No 2 (for which submissions closed on 10 July 2009 and the proposed ‘Richmond Amendment‘, currently under review in the Senate.  The press release is light on detail in this respect.

The Conduct Code Agreement 1995 now requires the Government to consult with state and territory governments in relation to the proposed amendments (full details of which are not yet available) before their implementation.  Hopefully more details will emerge in the coming weeks.

The papers

News of the proposal was reported in the following papers this morning:

• David Crowe, ‘ACCC gets tough on creeping giants’ Australian Fin Review, p 5.
• John Durie, ‘Competition Minister takes aim at creep for control’, The Australian
• John Durie, ‘Craig Emerson plans changes to the law to stop creeping takeovers’, The Australian
  Some notes on this item: it claims that ‘markets such as the US and the EC rely more on turnover tests than market share in determining whether a deal should be stopped.’ Actually, no they don’t.  The US and EU (we’re not allowed to call it the European Community anymore, post Lisbon Treaty) rely on turnover tests to determine whether parties MUST notify their mergers to relevant authorities; they impose a mandatory pre-merger notification obligation on mergers meeting certain threshold and jurisdictional tests.  Turnover itself is not part of the competition assessment in any of those jurisdictions.  In addition, the change to notification thresholds in the US from approx $65m to $63m (referred to in the article as evidence of the US ‘widening its net’) reflects an annual adjustment designed to account for changing levels of gross national product – it is designed to keep the ‘net’ steady, rather than to increase or reduce it.

ICN Makeover

The International Competition Network web site has just had a makeover.  Looks nicer, but on the downside, the first link I selected was dead.  Hopefully they’ll work through the glitches quickly, because the new site looks promising.  The old one looked tired and was not at all user-friendly.  This one looks like it has potential and is considerably easier to navigate and find what you are after – at least when the links work.  It’s not perfect, but it’s a vast improvement on the original site.

The ICN Bulletin Board and Blog now also seem to be fully up and running (although it seems like more of a pure bulletin board than blog – if you want to post something you need to send it via an FTC email address (icn@ftc.gov) – it would be fun to try something controversial, like recommending the removal merger authority from the FTC and consolidating it into a single agency, the DOJ(AD), and see whether it was posted.  My guess is I wouldn’t have much luck with that …).  Despite the restrictions, the Bulletin Board looks like a useful initiative.

C7 … again

Channel Seven believe that a number of media companies conspired to kill it’s pay-TV arm, C7, in contravention of sections 45 and 46 of the TPA.  In 2007 Justice Sackville delivered judgment against Seven, rejecting their conspiracy theory and observing that “Seven was the author of its own misfortune.”  Seven appealed the decision and last week the Full Federal Court delivered judgment rejecting that appeal.  It appears they have decided against further appealing the matter to the High Court, although officially it is still considering its options.

In dismissing the appeal, the majority of the Full Court (Justices Dowsett and Lander) disagreed with the primary judge, Justice Sackville, on two important points.  Both related to the requirement of ‘purpose’.

The first point related to who must have the requisite purpose to establish a contravention. Justice Sackville held that all parties responsible for including the provision must share the requisite anti-competitive purpose.  Justices Dowsett and Lander held that there was no such requirement for a shared purpose – it will suffice if any party to the agreement, responsible for including the provision, had the requisite purpose.

The second point of difference related to the effect of a purpose being ‘impossible to achieve’.  Justice Sackville concluded that for a breach to occur the purpose must be capable of being achieved.  The majority disagreed, holding that the ‘purpose’ element could be established even if that purpose could not, in fact, be achieved.

The c7 case has been a litigator’s dream.  Proceedings commenced in 2002 and trial judgment was delivered in 2007.  The trial lasted 120 days (one of the longest in Australian history), produced 85,654 documents comprising 589,392 pages (only 12849 of which were admitted into evidence), produced 1,028 pages of pleadings, 1,613 statements from lay witnesses, 2,041 pages of expert reports (plus appendices), 2,368 pages of written closing submissions by Seven and 2,594 pages of written closing submission from the Respondents (naturally supplemented by outlines, notes and summaries), a trial transcript running to 9,530 pages and resulted in a 1,200+ page judgment at a cost of more than $200m in legal fees (about the same amount as the claimed damages).  This was all described by Justice Sackville as “extraordinarily wasteful” and “bordering on the scandalous” and led him to caution against appealing the decision (see summary of trial judgment).  During the course of the trial it also led Justice Sackville to worry about the implications of his own mortality – the following passage from day 104 of the trial, is one of the most amusing I’ve seen yet (reproduced in LawyersWeekly):

Noel Hutley for News Ltd had said: “The worst thing that can happen in this case is that the timetable breaks down.”

His Honour: “The worst thing that can happen in this case is that the judge breaks down.”

Hutley: “Your Honour looks in glowing health. We check every morning.”

His Honour: “On January 1, 2006, Mr Hutley, when the temperature was 45 degrees, I climbed up on a ladder in order to clear the garage of our holiday home from leaves.”

Hutley: “You should have told us, your Honour, we would have done it.”

His Honour: “The bushfires were raging four or five kilometres away, so I did what every sensible home owner does, get up in the heat; and I fell and knocked myself unconscious and spent an evening in Gosford Hospital. I was unconscious for about 20 minutes and, when I came to my senses, the very first thought that crossed my mind was, ‘can I remember anything about the C7 case?’

“Unfortunately the answer was yes. It only goes to show, Mr Hutley the fragility of human existence.”

Seven did not heed Sackville’s warnings against appealing to its own detriment – more legal fees, more animosity between the parties and another long (about 350 pages) judgment to read.  The only winners were the lawyers.

I confess to having some interest in seeing the matter appealed to the High Court – the issue of the meaning of ‘purpose’ in the Trade Practices Act continues to fester and it would be useful to have some further clarity on the issue – particularly in light of the introduction of the new cartel laws.  But it is hard to imagine what Seven would gain from the litigation; I await their formal decision with interest.

Creeping acquisitions … the journey continues …

Yesterday the  Senate referred the Trade Practices Amendment (Material Lessening of Competition—Richmond Amendment) Bill 2009 (introduced into the Senate last Thursday) to the Senate Economics Committee for an inquiry and report.  This is a private member’s bill, rather than a Government bill, sponsored by Nick Xenophon.

The Bill proposes to amend the TPA in relation to creeping acquisitions.  The proposal involves ‘preventing corporations from directly or indirectly merging, or acquiring an asset, which would result in ‘material’ lessening of competition in the relevant market.  The word ‘material’ refers to a pronounced or  noticeably adverse effect on competition’, a lower threshold than the current test.   It would also prevent any corporation with substantial market share acquiring shares or assets if the acquisition would have the effect or likely effect of lessening competition (no material effect necessary).

This differs significantly from the two government issues papers on creeping acquisitions released last year and earlier this year.

I have much to say on the proposal but, as the Senate has requested withholding submissions until released by the Committee, I will refrain from expressing my views until a later date.  [Note: my submission has now been released by the Committee and can be viewed online] At this stage it is hard to know if this is a serious proposal (leaving aside content, as a private member’s bill it is almost certainly doomed to failure) or is designed to provoke the Government into releasing its own creeping acquisition legislation – something it originally promised to do by mid-this year.

One thing is certain: Economists will have fun with this one. So will I. Submissions are due by 18 December.  Reporting date is 18 March 2010.

View all submissions.

RPM – On everyone’s agenda but ours

Resale Price Maintenance (RPM) law seems open to debate everywhere – except in Australia of course.  RPM has not been a serious policy issue here since the enactment of the TPA.  The 1993 Hilmer report recommended extending it to services (it was restricted to goods) and s 96A achieved this (although in a slightly dodgy way).  Authorisation was also made possible in the ’90’s, but otherwise we’ve stuck with our per se approach to minimum RPM without any real political push for change.  It didn’t really rate a mention in the Dawson Report (it had a chapter on per se provisions, in which the Committee listed RPM as one of the forms of conduct prohibited per se, but it reted no further mention).

The courts have been a little more keen to express their view; in Jurlique, Justice Spender held that Jurlique had contravened the RPM provisions of the TPA, but expressed some reservations about the per se classification of RPM (after setting out what he considered to be some of the benefits of RPM he stated: “In the present proceedings, the difficulty is that … I am bound by the law … It is therefore somewhat of an indulgence to consider whether the law ought to be different from what it is presently is”).

This did not, however, prompt any political action (the focus has been cartels, meaning of understanding, predatory pricing, misuse of market power, access, mergers (creeping acquisitions) – pretty much everything competition law related except RPM).  This is not terribly surprising; nobody’s really pushing hard for a change and it’s not likely to find much public support.  I am not suggesting change either, but am following the debate elsewhere in the world with great interest.

The RPM research and policy revision currently taking place in north America and Europe has largely been prompted by the US Supreme Court decision in Leegin.  This split decision overturned the near-century old precedent in Dr Miles which classified both maximum and minimum RPM as a per se offence.  The per se prohibition on maximum RPM was replaced with a rule of reason test a number of years ago (State Oil v. Khan (1997)), but until Leegin minimum RPM remained a per se breach of the Sherman Act.  The US (at least at a federal level; a number of state laws still impose a per se ban) now subjects all RPM conduct to a rule of reason analysis.  This has prompted much debate, including the introduction of a bill into the Senate seeking to restore the Dr Miles position, supported by 41 US Attorneys General.  Some of the recent news items, articles and reports are listed below.

US Dr Miles related activity

• Sheppard Mullin – Debate on RPM Heats Up (discussing DOJ’s Christine Varney’s views on RPM under state law)
• Sheppard Mullin – “Per Se” or Not “Per Se” – An Historical “Quick Look” at Minimum RPM Under California Law
• Michael Lindsay, State Resale Price Maintenance Laws after Leegin, The Antitrust Source, 2009
• Roger Blair – The Demise of Dr Miles: Some troubling consequences (2008) 53 The Antitrust Bulletin 133
• Thomas Arthur – The Core of Antitrust and the Slow Death of Dr Miles (2009)  SMU Law Review
• Thomas A Lambert (2008) “Dr. Miles Is Dead. Now What?: Structuring a Rule of Reason for Evaluating Minimum Resale Price Maintenance”
• Fair Trade Commission Workshop on RPM in May 2009
• US Committee on the Judiciary Hearing on “Bye By Bargains? Retail Price Fixing, the Leegin Decision, and its Impact on Consumer Prices’ in April
• The American Antitrust Institute has been desperately trying to have Leegin overturned or thwarted by legislation – see, for example, AAI Urges Court of Appeals to Adopt Presumption of Illegality for Resale Price Maintenance Agreements.
• Paper by Marina Lao at the ASCOLA Conference in Washington in June: ‘RPM: A Reassessment of its Competitive Harms and Benefits’

Europe

• Frederic Van Doorn, Resale Price Maintenance in EC Competition Law: The Need for a Standardised Approach (2009)
• Alison Jones, ‘Resale Price Maintenance: a debate about competition policy in Europe?’ (August 2009) European Competition Journal

Canada

• Susan Hutton, Canada, US, Loosen Rules on RPM, 13 November 2009 – Lawyers Weekly

OECD

• OECD Policy Roundtable on Resale Price Maintenance (2008)

Warren Pengilley also recently published on the topic in the Competition and Consumer Law Journal, comparing the Australian/US experienced: ‘Resale price maintenance: An overview of the per se ban in light of recent court observations’ (2008) 16 Competition and Consumer Law Journal 1-45 (it includes a nice discussion of the history of RPM in this country).

Personally, I’ve always been a bit miffed that maximum RPM gets such a free ride in this country.  Not only does it escape per se prohibition as RPM under s 48 of the Act (which is fair enough – I’m not suggesting it should be per se prohibited) but even if it can be proven that a maximum RPM arrangement substantially lessens competition it is safe, courtesy of some strangely worded anti-overlap provisions).  This seems somewhat nonsensical to me, but it’s not worth making a huge fuss about; there don’t appear to have been any such cases to prompt Parliament to remedy this anomaly.

The debate raging in US and Europe over the appropriate mechanism for prohibiting RPM is interesting and worth following – but as far as Australia is concerned the current per se ban is appropriate.  While there might be some RPM that doesn’t cause much harm, demonstrable consumer benefit from RPM conduct is more difficult to demonstrate.  Consequently, the benefits associated with banning RPM for the bulk of cases in which consumers would be worse off outweigh the harm (if any) caused to those companies whose RPM conduct might not cause consumer harm; if there is a demonstrable public benefit in engaging in RPM the option for authorisation remains (imperfect though it may be).

Senate report slams GROCERYchoice

Yesterday the Senate Economics Committee released its report on the GroceryChoice website.  The Report concludes that ‘the Government’s GROCERYchoice initiative was characterised by waste and mismanagement’ and that it was ‘designed to fulfil a hollow election promise to put downward pressure on grocery prices.’   It was clear, the Report concluded, that ‘the aims of the website were not going to be achievable’ through the ‘poorly-designed ACCC website’.  This was not all the ACCC’s fault though – the ‘time pressure that the Government placed on the ACCC to launch the website’ which they describe as  ‘arbitrary and politically motivated’, ‘clearly led to hasty decision-making and little consideration of the potential saving to the taxpayer of $2.7 million’.  This cost, they conclude, ‘could have been saved if the Government had been more flexible and kept its eye on the ball.’

The report further recommends (Recommendation 4) ‘that the Government note the unfair manner in which its contractual arrangements with CHOICE were prematurely terminated by the Minister for Competition Policy and Consumer Affair s, the Hon. Dr Craig Emerson MP, without affording CHOICE a right of reply, and ensure that such
unprofessional and discourteous conduct does not occur again’.  Ouch.

There are many other scathing recommendations, the final one being that ‘the Government learn from this episode of waste and mismanagement and ensure that such inappropriate and careless spending does not occur again in the future, noting that now, more than ever, value for money for the taxpayer should be a top priority.’

Naturally the Labor Senators strongly dissented from this Report …

Ultimately the Report appears simply another waste of time.  It allowed a few mainly self-interested parties to vent about the issue (and about the grocery industry generally) in their submissions, but the report was always going to be hijacked by political opportunism; reviews of this nature are therefore of little value unless conducted by independent agencies.