A global survey of 38 competition authorities was published in June by a London based journal, the Global Competition Review. The survey is an evaluation of the 'performance of the world’s leading competition authorities in 2006.' The survey is based on an extensive questionnaire sent to competition agencies in March every year, excluding agencies that do not possess any enforcement powers. Agencies are rated against criteria including: policy work and advocacy, leadership/management quality, merger control, cartel enforcement and investigation of anti-competitive activity. The survey revealed that the elite authorities continued to be the European Commission Directorate-General for Competition, the United Kingdom Competition Commission and the United States Federal Trade Commission, closely followed by the United States Department of Justice. The Australian Competition and Consumer Competition also rated highly, being awarded four stars out of a possible five and ranking fifth in the list based upon effective merger control and cartel enforcement regimes and a process-oriented approach.
United States of America
FTC blocks Whole Foods acquisition of Wild Oats
The Federal Trade Commission (FTC) recently issued an administrative complaint blocking the proposed A$781million merger between Whole Foods and Wild Oats, which would have created the largest organic grocery chain in the United States. The FTC based its complaint upon claims that Whole Foods’ acquisition would potentially increase prices and reduce quality and services in a number of geographic markets across the United States, asserting that the nature of premium natural and organic supermarkets 'offer a distinct set of products and services' and are in effect a 'lifestyle retailer'. Proponents of the merger have suggested that competition is preserved by traditional supermarket chains, such as Walmart, Kroger and Safeway, seeking to integrate organic produce and natural foods into their product lines and renovating shopfronts in similar styles to those of Whole Foods markets. Whole Foods and Wild Oats have indicated that they will challenge the FTC’s opposition in the Federal Court. The matter remains unresolved pending the outcome of a Federal Court hearing in September and the removal of a temporary restraining order that is currently preventing the merger from proceeding, set to expire in August 2007.
United States of America
Google challenges Microsoft over Windows Vista
Google lodged a claim with the United States Department of Justice (DoJ) alleging that Microsoft’s new operating system, Windows Vista, had anti-competitive aspects as its desktop search application rendered other search engines obsolete. Google complained that consumers were forced to use the Microsoft software ‘desktop search’ as the installation of non-Microsoft search engines in the toolbar (such as Google Desktop Search) caused users’ computers to perform sluggishly. Microsoft denied that its product was designed to be anti-competitive. The DoJ required Microsoft to modify its desktop search software to accommodate its competitors and, subject to the terms of this agreement, Microsoft will release an update to Windows Vista later in the year permitting users to select rival programs as search engines. Google subsequently filed an amicus brief stating that Microsoft’s compromise agreement did not sufficiently address competition concerns. In the latest development, a Federal Court judge rejected Google’s appeal and request for ongoing federal supervision of Microsoft beyond November 2007 arguing that the matter lay in the hands of the DoJ.
United States of America
Supreme Court strikes down resale price maintenance
In a landmark decision (Leegin v. Psks), the United States Supreme Court, on 28 June 2007, overturned a 96-year old antitrust ruling prohibiting resale price maintenance. The reversal of this ruling essentially allows vertical price restraints to be judged by the ‘rule of reason’ or on a case-by-case basis whereby previously all instances of resale price maintenance per se were unlawful. The court’s ruling accords with the philosophy of the Bush administration and the Chicago School economists, who argue that the prohibition of resale price maintenance is outdated and counterproductive to effective competition. The decision will give producers more power to dictate retail prices and restrict the flexibility of retailers to discount goods. This decision has been interpreted to be significantly beneficial to business and corporations in terms of reducing their exposure to litigation and scrutiny from United States competition regulators, the Department of Justice and and the Federal Trade Commission.
European Union
50 Years of EC competition law
The European Competition Commissioner Neelie Kroes recently stated that the fundamentals of competition policy established under the Treaty of Rome have not significantly altered but that increased vigilance is required. Kroes identified three changes to the environment: the reality of the global market place with anti-competitive practices having effects worldwide; internal markets becoming more integrated with increasing cross-border mergers; and the growing complexity of internal markets with larger economies of scale, more specialised products and 'diverse, individualised services, such as telecommunications.' Kroes also recently noted that the increase in mergers demonstrates that European companies are adapting efficiently to global competition.
Meanwhile, the new European Union constitution treaty (EUCT) is currently generating controversy in Britain, Poland and other member states on questions of transfer of sovereignty to Brussels in a number of areas, including competition, international law and foreign policy. EC Commissioner Wallstrom has summarised the treaty as 'essentially the same old proposal as the old constitution.' The EUCT is scheduled to be ratified before the end of the year and it will result in significant power shifts to the centre of the European community in Brussels. It is anticipated that the EUCT will come into force in mid-2009.
United Kingdom
OFT study of online shopping reveals inadequacies
The Office of Fair Trading (OFT) has released a comprehensive report on the nature of internet shopping in the United Kingdom. The report’s findings included that businesses remained unaware of their obligations under distance selling regulations (DSRs) and that consumers were ignorant of many of their rights and means of protecting themselves when shopping online. The report recommended that businesses seek to address consumer’s ongoing concerns with privacy and security. The OFT noted that complaints about online traders were rising in proportion to the growth of the market which represented in excess of A$50.4 billion with over 20 million people in the UK choosing to purchase online.
