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Well, here's a relevant case. It concerns a sporting goods manufacturer that objected to revised football specifications required by FIFA in order to receive an official license.turbof1 wrote:I disagree...
FIFA (Case COMP/35266) Technical specifications of footballs wrote: [...]
2. Article 82
I first recall that action under Article 82 implies that quite different requirements are fulfilled.
Firstly, the Commission must identify an economic market on which it can be shown that the
undertaking enjoys a dominant position; and secondly, proof must be provided that the
undertaking's behaviour amounts to abuse of that dominant position.
You indicate in your letter of 7 July that producers are obliged to comply with various
requirements under the system: these requirements have been set out in your letter dated 7 July.
The fundamental problem, however, remains that no undertaking can be shown to have abused a
dominant position unless a market can be defined on which that undertaking enjoys a dominant
position: this was the tenor of the letter to yourself dated 3 June. The conclusion reached by the
Directorate-General for Competition was, as stated in that letter, that no relevant market on which
FIFA enjoyed a dominant position could be identified, despite repeated efforts following appeals
for assistance to yourself.
I remind you that careful consideration was given to the various activities of FIFA and to the
effects those activities might have. It was clear from the outset that the FIFA system had an effect
on the market for footballs. It was, however, also clear that FIFA did not itself operate on that
market, which meant that it was necessary to determine, as explained above, whether FIFA did
operate and enjoy a dominant position on any particular market.
You identify a market for quality certification. The Commission agrees, but FIFA is not present
on this market and can thus a fortiori not hold a dominant position on it, since it is simply, for the
purposes of the FIFA system, the customer of an independent body carrying out such tests, the
Swiss organisation EMPA.
As for your observations concerning trade-mark rights, I would simply observe that there seems
to be no possible objection to FIFA requiring a fee for use of its trade mark, subject only to third
parties' rights to contest the validity of such trade mark in the usual way. Manufacturers remain
free to subscribe to the FIFA system or not, according to their own commercial judgment. Certain
manufacturers indeed achieve commercial success while remaining outside the system.
You consider there exists a linkage between rulemaking and economic activities within sport.
You adduce as authority for that statement the Commission Decision concerning the 1990 World
Cup7. Allow me to point out that in that case FIFA's activity was examined as organiser of a
sporting event on an economic basis, no reference to the rulemaking activities of FIFA being
made. In the present case, while it is true that the rules of the game were changed, introducing a
text to allow for the FIFA system, there is no general requirement to subscribe to that system,
whether as organiser of competitions or as manufacturer or supplier of equipment, as explained in
the previous paragraph of this letter. The rulemaking activities of FIFA are accordingly not
relevant for the purposes of market analysis under Article 82.
Where no dominant position can be established on a relevant market, no abuse can take place
and, accordingly, there can be no infringement of Article 82.
[...]
But has no power at all to make any changes to them. It's either accept or deny. Not really quite black and white when it comes down who is the regulatory force. Nor I even believe anywhere near relevant, since the issue at hand entitles unfair distribution of the price money, which has nothing even to do with the WMSC.Remember: the F1 Commission only proposes the rules; it's the World Motorsport Council that actually implements them.
The issue Sauber and Force India have, is not even with the FIA, but with the FOG/FOM, which can be seen as an economic market due it entitles economic activities, where as the characteristics of a football does not (strictly speaking; it excludes potentional manufacturers based on technical criteria, but that's not quantifiable). Entirely different case. Just because it's another sport does not mean it acts as a precedence. The issue at hand is with the commercial rights holder, let's make that clear! And the commercial rights holder is not by definition the organizer of the sport, but the exploitant.I first recall that action under Article 82 implies that quite different requirements are fulfilled.
Firstly, the Commission must identify an economic market on which it can be shown that the
undertaking enjoys a dominant position; and secondly, proof must be provided that the
undertaking's behaviour amounts to abuse of that dominant position.
)
I still fail to see how they expect to win anything. They signed a contract to provide a service to a customer, and now they are pissed, because they found out other suppliers have special bonuses, because the other suppliers are deemed to be more important to the customer. This seems a lot more like an attempt at public/legal blackmail than actually trying to win anything through the legal system.turbof1 wrote: The issue Sauber and Force India have, is not even with the FIA, but with the FOG/FOM, which can be seen as an economic market due it entitles economic activities, where as the characteristics of a football does not (strictly speaking; it excludes potentional manufacturers based on technical criteria, but that's not quantifiable). Entirely different case. Just because it's another sport does not mean it acts as a precedence. The issue at hand is with the commercial rights holder, let's make that clear! And the commercial rights holder is not by definition the organizer of the sport, but the exploitant.
Which it is. However, they would not be the first desperate entity to blackmail. They know how long the Commission usually takes. They might have left the sport by the time the Commission comes near anything conclusive, so they'll definitely be hoping for a better deal in the meanwhile.dans79 wrote:This seems a lot more like an attempt at public/legal blackmail than actually trying to win anything through the legal system.turbof1 wrote: The issue Sauber and Force India have, is not even with the FIA, but with the FOG/FOM, which can be seen as an economic market due it entitles economic activities, where as the characteristics of a football does not (strictly speaking; it excludes potentional manufacturers based on technical criteria, but that's not quantifiable). Entirely different case. Just because it's another sport does not mean it acts as a precedence. The issue at hand is with the commercial rights holder, let's make that clear! And the commercial rights holder is not by definition the organizer of the sport, but the exploitant.
I'm not trying to tempt you into anything. But, you are mistaken here.turbof1 wrote:(Why did I reply! Bhall, don't tempt me into doing this bro
Where and how the rules originate is irrelevant. They're published by the FIA upon approval by the World Motorsport Council. There's no other mechanism in which rules can be enacted.racer.com wrote:Earlier this month the EU agreed to look into a complaint made by Force India and Sauber over what the teams claim to be an "unfair and unlawful" division of F1's revenues and setting of the rules.
I'll put it this way, though: I'd much rather be on Ecclestone's side here, because it seems his opponents will need to move mountains in order to win....the approach followed to date, at least outside the sports sector, confirms that one must determine whether an entity acts as an "undertaking" in a particular case in light of the particular activity at issue in that case.
The FOM does not need to be a competitor. It has to be market player, either customer or supplier. They don't compete on the same market, but they act on the same market. That's all that counts. (EDIT: well, I have to make a small correction on this: market 'agents' who are not customer or supplier, but still have any effect on the market -like for instance governments- can all be accounted for. So it's not just limited to customer or supplier.)And the marketplace business model we discussed earlier largely inoculates FOM from charges of abuse, because FOM and the teams don't compete within the same market. The former sells the sport's various licensing products, while the latter essentially sells appearances. (Each team has one main contractual obligation: show up for every race.)
I'll agree here and now they'll not win anything concerning the setting of the rules, however let's not stay blind and look at the word "and" and what's written before that: "division of revenues". The revenue part is at the FOM, the regulatory part at the FIA/WMSC. Let's make sure to understand that they are adressing both of them, perhaps even completely separately.Earlier this month the EU agreed to look into a complaint made by Force India and Sauber over what the teams claim to be an "unfair and unlawful" division of F1's revenues and setting of the rules.
I think you may have been a bit too hasty when you dismissed this earlier.turbof1 wrote:The FOM does not need to be a competitor. It has to be market player, either customer or supplier. They don't compete on the same market, but they act on the same market. That's all that counts. (EDIT: well, I have to make a small correction on this: market 'agents' who are not customer or supplier, but still have any effect on the market -like for instance governments- can all be accounted for. So it's not just limited to customer or supplier.)
Despite the crystal clear impact it has on the relevant market, FOM does not directly benefit from a revenue disbursement scheme that favors some over others, because total payout is the same regardless of how it's allocated.I remind you that careful consideration was given to the various activities of FIFA and to the
effects those activities might have. It was clear from the outset that the FIFA system had an effect
on the market for footballs. It was, however, also clear that FIFA did not itself operate on that
market, which meant that it was necessary to determine, as explained above, whether FIFA did
operate and enjoy a dominant position on any particular market.
You identify a market for quality certification. The Commission agrees, but FIFA is not present
on this market and can thus a fortiori not hold a dominant position on it, since it is simply, for the
purposes of the FIFA system, the customer of an independent body carrying out such tests, the
Swiss organisation EMPA.
[...]
Where no dominant position can be established on a relevant market, no abuse can take place
and, accordingly, there can be no infringement of Article 82.
In that regard, no team is obligated to accept FOM's terms (or the FIA's rules, for that matter), because Formula One is not the only racing series in the world, as at least one of the complainants is well aware...As for your observations concerning trade-mark rights, I would simply observe that there seems
to be no possible objection to FIFA requiring a fee for use of its trade mark, subject only to third
parties' rights to contest the validity of such trade mark in the usual way. Manufacturers remain
free to subscribe to the FIFA system or not, according to their own commercial judgment. Certain
manufacturers indeed achieve commercial success while remaining outside the system.
If so, this could get indescribably ugly.grandprix.com wrote:"If everything goes well," explained Force India deputy Bob Fernley, "we could get an answer by Christmas.
"Otherwise, I think it will be no later than the 2016 pre-season before we know" if there will be an investigation, he added.
Fernley said that if the Commission simply rules that an investigation is justified, Force India and Sauber will be halfway to ending the alleged injustices governing F1 today -- perhaps by Ecclestone electing to broker a compromise.
"Experience shows us that people like to avoid a lengthy investigation," he said, "because it interferes with business."
And the pot of gold for the struggling midfield teams would be if the so-called 'privileged teams' are forced to pay back the disputed bonus payments, triggering a redistribution to the tune of many millions of euros.
Fernley argues: "Whatever is wrong now and in the future was also wrong in the past."
I have not. I have made a remark on that inbetween brackets in one of my earlier posts and I still see it as irrelevant. I have my good reasons to do so, but I find myself battling the itch to reply on something that neither of us can definitely prove or disprove. We'll have to wait and see (which again can take years, since the promise towards investigation does not mean any promise to solutionI think you may have been a bit too hasty when you dismissed this earlier.
) Which I complete backbhall II wrote:It should go without saying that nothing said here is definitive one way or the other. So, treat my comments as though the word "arguably" precedes every action verb within statements related to jurisdiction and process.
.This makes me believe you still see FOM and Sauber/FI having to be competitors as a requirement (please correct me if I see that wrong). They don't have to be. Being an economic agent on the market is enough. A supplier usually cannot be a customer and vice versa. interchangeability is not a requirement. Infact the only requirement out there is market manipulation. I like to reiterate: force india and sauber are suppliers, FOM is customer being a monopsonist. In my eyes it's adequately obvious the FOM operates on the market, even if it's just a front for CVC and the FOM does not benefit from it. Does not matter: it manipulates the market and a direct agent on the market as monopsonist. It only makes the case more difficult to disentangle to figure out how the money streams flow, as you said. However, the Commission has shown to be able to do this in the past (albeit on a slow pace).There's also the issue of interchangeability. Force India and Sauber can't perform FOM's role any more than FOM can perform Force India and Sauber's roles, which suggests they don't operate within the same relevant market.
That'll depend on how the Commission interprets things. One could argue Formula One is the only racing series Sauber and Force India have the compatibility to race on, with other racing series having too different requirements in material, machinery and know-how. In simple terms: you can't ask an apple producer to switch to pears since the both are fruits. If that gets accepted is another. Again, the Commission is fickle and unpredictable in these things.In that regard, no team is obligated to accept FOM's terms (or the FIA's rules, for that matter), because Formula One is not the only racing series in the world, as at least one of the complainants is well aware...
Despite the FIA's position as the sole authority with an ability to grant entry to the FIA Formula One World Championship, the text I italicized above would seem to be the complainants' best chance for a favorable outcome. Otherwise, given the underlined text, they don't seem to have much of a case.Abuse of a dominant position in the light of legal provisions and case law of the European Communities wrote:1.1 Definition of the relevant market for the purposes of article 82
of the EC Treaty
The application of article 82 of the EC Treaty requires the Commission to
prove that an entrepreneur or entrepreneurs accused of illegal practices
occupy the dominant position. However, due to the lack of any formalistic
definition of dominance, its ascertainment always requires detailed economic
analyses to be conducted.
Firstly, an economic analysis of the market has to be conducted in order to
define the relevant market, in which a given entrepreneur or entrepreneurs
operate. Three elements are important for such an analysis: product market,
geographical market and the time factor. An entrepreneur can have market
power only in the context of the supply of particular goods or services.
Because of this, the product market has to be defined first.
1.1.1 The product market
In principle, the approach of the Commission and European courts to the
definition of the product market has focused upon interchangeability: the
extent to which one product can be replaced in the market by another because
of its features, application or usefulness for a specified purpose. This issue
should be examined from the point of view of supply and demand. From the
demand side the idea of interchangeability requires some investigation of
cross-elasticity of the product in question. Cross-elasticity is high if the
increase in the price of a product, e.g. beef, will lead to a situation in which the
majority of customers decide to replace it with a cheaper product, e.g. pork or
mutton. High flexibility indicates that examined products are part of the same
market. If it is difficult to obtain reliable data the Commission bases the
analysis on other factors to state whether products are really interchangeable.
Among other things, prices and physical features of products are taken into
account. The degree of interchangeability can also be influenced by supply
factors. Even if entrepreneurs conduct businesses that are not identical, each
is able to adapt his production lines to manufacture a competitor’s products
relatively easily. In such a situation, both products can be considered as part
of the same market.
[...]
1.3 Definition of abuse for the purposes of article 82 of the EC Treaty
1.3.1 General issues
An entrepreneur can be punished under article 82 of the EC Treaty only if it
has been proven that he has abused his dominant position. As mentioned
above, the very fact that someone has the dominant position is not prohibited
in the light of Commission practice and court judgments.
Because of this, it is vital to define precisely what should be understood as
‘abuse’. References concerning this issue indicate four problems which must be
taken into account when checking whether some behavior constitutes ‘abuse’.
Firstly, it has to be decided who is covered by the protection pursuant to
article 82 of the EC Treaty - whether they are consumers, competitors or both
groups. It has to be stressed here that the interests of these groups do not
always converge, what is more, the behavior of an entrepreneur occupying the
dominant position, harmful for his competitors, can be advantageous for
consumers in specific cases.
Secondly, it is assumed that, although having a dominant position is not illegal
as such, an entrepreneur occupying such a position has a special
responsibility for his behavior, which should not worsen competitive
conditions in the market. The differentiation adopted in the literature has to
be stressed here: it is acceptable for an entrepreneur occupying a dominant
position to take steps aimed at the protection of his interests if threatened by
activities initiated by competitors but the strengthening of the dominant
position is illegal and shall be considered an abuse. It is stressed that the
practical application of such a differentiation is difficult and should always
depend on the detailed analysis of the circumstances of a specific case.
Thirdly, the problem of ‘abuse’ always refers to specific market behavior. One
should be able to distinguish illegal actions from normal market strategy. It is
not correct to assume that normal and rational price policy of a dominant
entrepreneur is a symptom of abuse of the dominant position. Such an
assumption would mean the sanctioning of each activity of the entrepreneur
occupying the dominant position. On the other hand, classification of specific
behavior in the market which can constitute a symptom of abuse of the
dominant position is not sufficient, as such, to decide that such an abuse has
taken place. A complete analysis of specific types of behavior as well as
existing market conditions in which such behavior occurs is necessary.
Fourthly, one has to remember that the abuse of a dominant position in one
market can be sanctioned due to the effects of that abuse in other markets, in
particular, when the entrepreneur occupying the dominant position in
a particular market controls access to another market.
Finally, commentaries to the Treaty distinguish two types of situation, in
which the previsions of article 82 of the EC Treaty are applicable, i.e.
exploitation (behavior harmful to the interests of the consumer) and anticompetition
practices (behavior harmful to competitors). However, it has to be
stressed that this division should not be treated as separate because specific
behavior by the dominant entrepreneur can result in both types of effect
mentioned above.
[...]
To Abuse, or not to Abuse: Discrimination between Consumers wrote: The proposition that discrimination between consumers can constitute ‘abuse’ has not been argued before the Community Courts so far and the literature has mainly progressed on the premise that Article 82(c)EC applies to discrimination against downstream undertakings, as a result of which the disfavoured undertakings cannot effectively compete with the favoured ones.
Now we are getting to a mutual point! What you underlined in the quoted pieces of documents don't really have any relevance nor anything that excludes the case we have in front of us. While monopsonies exist, they are rare, and even more rare to be brought in front of the Commission (this is probably the first time). It'll allow the Commission to set precedences. 1.1.1. About Interchangeability is looked at in principle, but is not a requirement, rather a discription of demand elasticity of the products. This is not about determining market dominance, rather this is about determining the boundaries of the markets.On a related note, I think it's virtually guaranteed the Commission will decide to investigate, if for no other reason than to set a precedent or two where none currently exist.
Yes, I know. But, absent extenuating circumstances, Firm-A cannot be said to abuse a dominant position to the detriment of Firm-B if Firm-A and Firm-B do not compete in the same relevant market. Hence...turbof1 wrote:This is not about determining market dominance, rather this is about determining the boundaries of the markets.
I know you see FOM and the teams as being competitors within the broad framework of a single market. I do not, because their roles aren't interchangeable. See also: SSNIP testbhall II wrote:Abuse of a dominant position in the light of legal provisions and case law of the European Communities wrote:The application of article 82 of the EC Treaty requires the Commission to
prove that an entrepreneur or entrepreneurs accused of illegal practices
occupy the dominant position. However, due to the lack of any formalistic
definition of dominance, its ascertainment always requires detailed economic
analyses to be conducted.
Firstly, an economic analysis of the market has to be conducted in order to
define the relevant market, in which a given entrepreneur or entrepreneurs
operate. Three elements are important for such an analysis: product market,
geographical market and the time factor. An entrepreneur can have market
power only in the context of the supply of particular goods or services.
Because of this, the product market has to be defined first.