Examination of Witness (Questions 160-170)
DR WILLIAM
BISHOP
6 DECEMBER 2006
Q160 Lord Clinton-Davis: Thinking back,
it might have been taken at a point by the Commission.
Dr Bishop: Yes.
Q161 Lord Clinton-Davis: So formerly
the Commissioners would have approved or rejected the idea, but
essentially it is done by the civil servants.
Dr Bishop: Yes, I think that is right, that
in effect it is the civil servants. Commissioner Monti was careful
to maintain an interest in difficult cases so that he would not
get caught up in the feeling, "Oh, it's gone too far. I don't
agree with this, but I've got to do it because I need to back
my staff". He was very good, I think, at that. The earlier
one, it was Carel Van Miert who was the Commissioner in the earlier
incident to do with seamless stainless steel tubes.
Q162 Lord Burnett: Delay is one of the
major problems in this matter. You were, in your report, more
anxious to say that you favour a more adversarial system. Taking
up the point which Baroness Kingsmill made when she said, "What
about the investigative role with strict time limits?", you
gave other reasons why you thought that the adversarial role was
better, in other words, the investigator and the confusion between
his role not quite as judge, but in that role. Would you just
like to elaborate a little bit further on that and say which system
you would favour and whether you think that that would find favour
with the Commission.
Dr Bishop: No, the Commission would hate it.
The Commission loves the power that is inherent in mergers and
also people tend to be quite committed to the European project
and they see competition law as the greatest success story of
the European Union, that there is this body of law which is applied
all over Europe and which is copied in the Member States, a tremendous
success story. They do not want to see a world in which the Commission
becomes less important. I know again it is a legal question, but
I understand that it would require a Treaty amendment to change
the Commission from the decider who is reviewed by the courts
to the accuser/proposer who then hears what the courts decide,
whether in his favour or not, which is what I was imagining. I
defer to the very distinguished legal experts who have given evidence
to you on what is practically possible legally. I wrote out my
little bit of evidence to you going by the light of nature—and
I deliberately did not consult the questions of what might or
might not be legally possible under the Treaty and institutionally
possible with the courts. I am aware, as everyone is, that in
practice there may be insuperable obstacles to what otherwise
look like sensible changes.
Q163 Chairman: In non-merger competition
cases, according to Temple Lang and Mr O'Donoghue, the Commission
is extremely slow, and it is the Commission, not the CFI, which
needs reorganisation. Is that again something you would subscribe
to?
Dr Bishop: Yes, that is still true. It is not
as bad as it used to be, but it is still true. Remember, some
of these are not of great importance, and let us take a typical
case. The Commission has inquired in several different ways into
the operation of Visa and Mastercard and other patent card systems.
Now, this is a major matter of public interest, we are talking
about billions and billions every year, and it is a complicated
question as to whether there is anything anti-competitive going
on or not and I do not see that there is any imperative in speed.
I do not see that it matters at all. I think the right answer
matters much more than getting a quick answer. It is quite unlike
mergers. Now, there is only one area I can think of where it actually
matters a bit and that is where a company is accused of behaving
anti-competitively, a dominant company has been accused of behaving
anti-competitively, and there are smaller rivals who truly are
entitled to better treatment from this dominant company. There,
justice delayed is justice denied, that old saying is perhaps
as true as it is in mergers, but it is hard, however, to sort
those particular cases out. For example, in the Microsoft wars,
and I should declare an interest in that I worked against Microsoft
on various matters for five or six years, it is the Commission's
case that, if Microsoft had honoured legal obligations, companies
such as Real Networks, who make a media player, it is called,
for playing music on your computer, might have been able to avoid
the near destruction which they have suffered as Microsoft has
come to dominate the media player market. Now, Microsoft hotly
denies all this, and I am not saying the Commission is correct,
but that is the type of case in which time may matter in a way
where it is somewhat analogous to the way it does in mergers,
but there is no doubt that, generally speaking, it simply does
not matter very much.
Q164 Chairman: We might come back to
that, but can we go back to questions, on which you can offer
us unique help, of composition. What qualifications should competition
judges have and, in particular, do they need to be lawyers if
the court's jurisdiction is limited, as at present, to reviewing
the decision? Are lawyers the right people or, otherwise, who
are?
Dr Bishop: Well, the obvious ones are economists,
but then perhaps I would say that, would I not? There are others,
business strategy analysts of one sort or another or financial
analysts, in particular, would have a relevant skill and people
do need to understand accounts, so accountants are certainly relevant
too. The principal one is economists and that is actually for
an objective reason, not just what I do, but, if you look at the
history of anti-trust internationally, you will find that in all
the leading jurisdictions of the world, in fact in all the jurisdictions
of the world, the trend over the last 40 years has been for more
and more economics to come into it and for reforms to be made
to what were rather formalistic legal systems in the direction
of more economically thought-out ideas. That is reflected if you
just take a look at the UK institutions. We have got John Fingleton,
the operational head of the OFT today, he is an economist by training
and his predecessor was John Vickers and, when Baroness Kingsmill
was at the Commission, I think for most of your time there, it
would have been another economist.
Q165 Baroness Kingsmill: Yes, I was the
only lawyer.
Dr Bishop: That is paralleled in systems all
over the world, more and more economists all the time. Now, it
remains a system embedded in a legal structure. One way of looking
at it is to look at the expenditure of private parties on professional
services in preparing cases and fighting cases. There are no exact
figures, but whenever I have sat down with friends and tried to
quantify this, we come up with about the same answer, that in
the United States and in Britain plus Brussels, not necessarily
the Member States of the European Union, nowadays they spend about
85 to 90 per cent or so of what they spend on legal services and
10 to 15 per cent on economic services, some of which may be provided
by accounting firms, but it is basically doing economics. Whichever
way you look at it, it is just more economics everywhere and everything
in Europe, starting in 1997 with the Market Definition Notice,
then through the changes on vertical practices and the horizontal
merger guidelines, all of that has been heavily economics-influenced,
so it is actually natural to have economists on these things.
I think I mentioned Fred Jenny in my written evidence. Actually,
just as a suggestion, I am sure Fred would be delighted to come
along and he is in a unique position. He was a member for many
years of the Conseil de la Concurrence, the rough equivalent of
the Competition Commission here, and he was then Vice President
of the Conseil de la Concurrence and he is now a member of the
French Supreme Court, an economist with no legal training. I am
sure he would be delighted to come to London to give you evidence.
Alternatively, Anne Perrot, who was a professor of economics in
Paris at the Sorbonne, she is a member of the Conseil de la Concurrence
at the moment, but she would not have the length of perspective
that Fred has.
Q166 Chairman: We had thought of that,
but do you understand that it would need a Treaty change to be
able to put on to a judicial panel a non-lawyer?
Dr Bishop: They do not seem to have any trouble
in Paris.
Q167 Chairman: I do not know whether
they have the same rules. I simply do not know whether this matter
has ever been considered or decided, but I just notice that, certainly
under Article 225A which provides for the creation of judicial
panels, on the face of it, it looks as if it requires lawyers.
Dr Bishop: That may be. I have just one comment.
I was not very impressed by some of the arguments that other people
put to you, saying, "Oh well, the judges can always call
expert witnesses". That is a different role and it is quite
different. I remember a conversation with Frederic Jenny in which
he said, and this was some years ago now, maybe even 10 years
ago, "My role is a sort of a continuing education role here.
I am constantly talking to my fellow members of the Conseil, all
of them lawyers, about what they might read on this or that or
the economics, whether it is verticals or cartels or mergers or
whatever", and it is really quite different having someone
come in simply for one case and disappear again, quite different
from having someone at the table with an office down the corridor,
day after day, week after week, year after year. It is quite different.
Q168 Chairman: Would it be a sort of
halfway house to have assistant rapporteurs or some
appointment of that character?
Dr Bishop: Yes, that could work. I think it
is always better if the person concerned has a vote and has to
be accommodated. In human institutions, the formal power matters,
I think.
Q169 Chairman: The question, as we put
it, is: if the jurisdiction is limited, as at present, to reviewing
the decision, and it depends perhaps how tight a review process
that is and to what extent it is permissible to reopen or review
the facts, to what extent are facts reviewed and to what extent
is there really live scope for the views of an economist as a
judge rather than a lawyer?
Dr Bishop: It is not really on the facts that
he would make a contribution, no, it is about how you think about
these things, how you think about the claim that a certain bundling
of the offer of a supply of a firm is anti-competitive for whatever
reason. An economist will tend to have, and should have, well-developed
views about the theory and perhaps the evidence too, but mainly
the theory of how you think about that problem. As for the more
general question of review of the facts by the court, we are still
in this uncertain world and formally what goes on at the CFI is
judicial review. Anyone who lived through the Airtours
case and the Tetra Laval case, and I and my colleagues
went through those, would not see any difference between a court
that has, as the Germans courts theoretically have, plenary power
and are not simply reviewers and what happens at the CFI, and
that was then confirmed when the Tetra Laval case went
to the European Court of Justice and the Vesterdorf approach was
in fact confirmed. That involved very close analysis of the facts
so that this idea that it is only a review certainly does not
describe what really happened in that case. Still, the theory
is that it is only a review and some future court could spring
up and they could say, "Well, there is not much evidence
here, but the Commission has a margin of appreciation, so we will
not interfere with what they have decided". If the court
wanted to have a quieter period, it could find ways of doing so.
Chairman: Dr Bishop, I think, alas, we seem to
have run out of your time and we have another witness, as you
know, we are going to hear from today, Sir Christopher Bellamy,
so unless any member of the Committee has a question they feel
impelled to ask you or you have something perhaps arising out
of the other questions you were asked to consider in advance which
you feel we frankly ought not to leave this committee room without,
is there anything on either of those bases?
Q170 Baroness Kingsmill: I just wondered,
Dr Bishop, how many lawyers you come across who understand economics
and vice versa?
Dr Bishop: It is a minority and it is also true
the other way round. If you take a simple word like the word "contract",
to anyone with legal training, that conjures up a large, complex
world. To an economist, it is like the man on the Clapham omnibus
with no legal training, he thinks it is a piece of paper; he has
no complex views of it. Nevertheless, where competition cases
are concerned, the formal legal structure in the interesting,
difficult cases is not very informative and is not really decisive.
There are a large number of routine cases which look at the procedures,
but the more difficult the case, the more economics comes into
it and then it becomes decisive. It is that, I think, that tribunals
would be lacking if they did not have important economics support
and I think that is basically the public policy here in the UK,
and rightly so, in the staffing of our institutions over the last
decade.
Chairman: It remains then, Dr Bishop,
for me to thank you again for coming. You have been an enormous
help to us and we really are most grateful.
|
