Dawn Raids by Competition Authorities most likely on Tuesdays

From Mondaq 27/01/14:

The rules governing dawn raids by competition authorities in the EU are complex. Powers vary depending on whether the raiding authority is the European Commission or a national competition authority; the suspected infringement; and the legal basis for the decision to investigate and the execution of the investigation. In the heat of the moment, companies can compromise themselves if they do not ask the right questions or do the right things.

Yep, the days of calling through the front door that you “aren’t decent” while your business partner burns papers and takes a hammer to your hard drive without arousing suspicion are long gone.

Shame.

We have analysed a random sample of 20 (relatively recent) EU cartel investigations to identify when the dawn raid that generally kickstarts these investigations took place.  

Fifteen of the twenty raids first took place on a Tuesday, with the remaining five starting either on a Wednesday or Thursday. In our sample, there were no raids that started on a Monday or on a Friday.

Competition authorities are well known for liking to start the weekend early, and ease themselves into the next week gracefully. Getting up early to conduct a dawn raid really isn't a fun way to spend a Monday morning.

As regards the time of year, it is notable that none of the raids in the sample started in August or December. The Commission is effectively closed for the entire month of August so […] the statistics reflect annual holiday patterns. As regards December, it may be that the intervention of the Christmas break (and the prevalence of Christmas parties) militates against initiating a raid, with forensic evidence-gathering, at the year end.

Yep.  During the Christmas party season, everyone at the Commission is far too trollied to even contemplate undertaking a dawn raid.   Ahem.

Companies that consider themselves potentially to be at risk of an unannounced visit from EU inspectors should ensure that key executives trained to manage dawn raids are readier on Tuesdays than on other days of the week. Holidays should be encouraged during August and December.

Yep. You might want to ensure that your lawyer is on speed dial and generally available (particularly early in the morning) on Tuesdays to Thursdays.

 

Exploiting aftermarkets – the curse of printer ink

 

From Fool.com 16/03/12: 

At today's prices, HP represents a solid value, driven in part by the value of HP's printing business. Printing is a cash cow, and according to my estimates, its milk accounts for 40% of the value of the company.

No kidding. It’s a bitch of a cow (and my udders are sore!!).

HP is No. 1 in the printing market with 42% market share, which is more than the next two competitors combined. HP uses a razor blade business model: printers are sold at low cost, encouraging frequent upgrades to a wide array of printers with non-standard ink cartridge or toner fittings. HP then generates a recurring stream of revenue from cartridge sales. The economics of HP's printing business are phenomenal. To put it in perspective, printer ink costs more than blood by volume and more than caviar by weight.

I’d far rather fill empty ink cartridges up with blood than pay the odious printer suppliers ridiculous prices. 

The cost of printer ink has always wound me up. Bring back the dot matrix, I say.

Talking of dot matrixes, weren’t they just great? My Citizen Swift 90c (bought sometime in the mid-nineties) used to work like a dream before I sold it and bought an inkjet. Ok, it used to scream like a banshee in use, but printing has never been so cheap. I remember feeling a bit embarrassed submitting GCSE coursework printed on a dot matrix (I wasn’t avant garde enough to go for an inkjet until 6^th form) but it was cheap and printed in colour too.

My first inkjet was an Epson and like most Epson products (in my experience) it was a pile of junk out of the box. It lasted 18 months before it was launched out of a 2nd floor window. The next chapter of my printing adventure came courtesy of an HP Deskjet something-or-other. The build quality was superb (read “heavy”) but it was extremely ink-thirsty and wound up throwing endless hissy fits after just 4 years of moderate use. Heck, it really was a reptile of a thing.

After my foray studying abroad in Sweden, I plumbed for a cheap Canon (a Pixma iP1500) in 2005 to take care of my printing needs while I finished my degree.  Little did I know at the time, I landed myself an absolute gem. Not only was it robust (ok, the build quality was a touch plasticky – but its reliability was as solid as rock), it was quiet in use, lightweight and as cheap as chips to run.

I quickly discovered I could buy compatible ink cartridges at £1 a pop via eBay which worked like a charm and used to last for ages. Combined with Inksaver 2.0, and Tesco value paper, my LLM degree saw me printing anything and everything while still costing me next to nothing. I hate to think of the cost that fellow law students used to pay for ink supplies. Sadly, my faithful old Canon started to cease up and generally wear out in late 2010 when I made the painful decision to decommission it.

In the interim, I’d bought a Canon multifunction machine in 2008 when Amazon had an offer on and Canon were offering a voucher rebate. It ended up costing me 15 quid and I used the ink -- the cartridges are m’chipped and it won’t accept compatibles – until it ran dry and it’s been my scanner ever since. It’s still in regular use (as a scanner) today.

In December 2010, I bought a Samsung Laser (a ML-2525W if anyone’s interested) which turned out to be a superb choice.

The toner cartridge it came with lasted me almost 12 months and I’m hoping to get at least double out of the larger capacity cartridge I fitted subsequently. I’d never have another inkjet again.

Anyhoo, I you enjoyed reading about my printer odyssey, (riveting, wasn’t it?). I guess my point is that printers are cheap and I’ve been through a lot of them in my time.  It seems to be an accepted practice for manufacturers to use printers as the loss leader, stacking ‘em high and selling ‘em cheap, while they claw it all back on the lucrative aftermarket of over-priced ink supplies.

And that really gets my panties in a bunch.

Windows 7 ‘E’ Edition – Pre-emptive action or two-fingers to the EU?

From Paul Thurrott’s Short-takes of June 15th 2009:

Like the specter from beyond the grave that it is, Opera has opined on Microsoft's Windows 7 "E" Editions proposal. Opera, you might recall, set off all this silliness when it complained about Windows/IE bundling to the EU. (Opera is also the only browser company that hasn't gained market share against IE in the past three years. Go figure*.) So how did Opera react to news that Microsoft would remove IE 8 from Windows 7 in Europe? With its usual grace, of course. "Microsoft is trying to set the remedy itself by stripping out IE," Opera CEO Jon von Tetzchner said. "They are trying to replicate the remedy [from] the media player case, which we all know didn't work." Really? Two things about that. One, that remedy was the EU's remedy, not Microsoft's remedy. And I'd argue that it did work—by pointing out that government-controlled product feature wrangling isn't a good idea. That is, EU consumers overwhelming [sic] chose the version of Windows that included all the features instead of the one that didn't. And speaking of consumer choice, Opera's share of the web browsing market is just .72 percent. Why are we even paying attention to these people anymore, especially when there are viable competitors (Firefox, Chrome, and Safari) that are doing just fine despite Microsoft's so-called abuses? This whole thing is ridiculous. I'd call for a boycott of Opera if anyone was actually using its desktop products.*

*My emphasis.

As Leo Laporte suggested in the Windows Weekly podcast last week, Microsoft’s action was “so obviously just an F.U. to the E.U”. Good one, Leo! And who hasn’t wanted to raise two fingers to the EU once in a while?

If Microsoft does, in fact, make available Windows 7 ‘E’ Edition it will ultimately be down to the European OEMs to decide whether to ship PCs with a version of Windows 7 without the IE or demand the regular version from Microsoft. Shipping an OS without any browser, of course, is hardly an option – as how are consumers expected to obtain a browser from the internet? The EU could, I suppose, require Microsoft to offer competing browsers via Microsoft Update or perhaps force OEMs to ship Windows with competing browsers. Quite how that would sit with the EU’s stance on ‘competition on the merits’ though, I’m not quite sure.

The truth, of course, is that the EC Commission has about as much trust for Microsoft as they would a coiled cobra. And logical though Paul’s arguments are in respect of the growing competition in the browser market in recent years – in which Internet Explorer is losing rather than gaining ground – I suspect they are of little consequence to the Commission or the courts should it get that far. The ECJ famously held in the British Airways case a few years ago that the fact Virgin Atlantic’s market share actually increased during the time of BA’s alleged abuses did not matter, as without those abuses their market share would have grown even further. That’s a tough one to bounce back from and given that it’s MS involved, I wouldn’t hesitate in guessing that a similar attitude would be adopted in condemning Microsoft’s conduct.

Pretty Damn Cold

Yes, God help us - another cold snap has descended on the UK. When I first heard about the second very cold spell of this (very cold) winter heading our way I was none too pleased. Now it’s arrived, my spirits have sunk even further. Despite being a timber-framed house and being by far the most modern I’ve lived in for the past few years, it’s also easily the coldest.

We’ve actually escaped quite lightly from the snow – so far, anyway. Still, there was enough for my girlfriend to give her customary shriek of delight this morning on seeing snow outside, though her mood dampened when she remembered she had to go to work. I’m meant to be in the city all day tomorrow for my dreaded ‘alternate Tuesday schedule’ – 3 seminars and a lecture, though with more snow predicted for tonight, I’m hoping I’m not going to have too much of a time of it trying to get in tomorrow morning.

In the meantime, I’ve barricaded myself in my office with enough layers of clothing on to challenge even the Michelin Man’s considerable girth while I try to absorb as much of the heat given off by my PC as possible. Having given my IT law preparation rather cursory attention, I now have my competition law textbook to wade through. Oh joy.

And just to compound my misery even further, Dyno-Rod have turned up to pump the drains across the street in a very noisy manner!

Allegations stack up against Intel

From the Financial Times 17/07/08:

Having carried out raids in 2005, the European Commission formally accused Intel last year of trying to do deals with PC makers to push AMD out of the central processing unit business.

Now, according to the regulator, Intel has been sent a supplementary charge sheet, alleging that it engaged in three additional elements of abusive conduct.

The first was to have provided “substantial rebates” to a leading European computer retailer, on the condition that it sold only Intel-based PCs. The second was that Intel made payments to induce a manufacturer to delay the planned launch of a product line using an AMD-based processor.

Thirdly, the Commission claimed, Intel had provided substantial rebates to the same manufacturer on the condition that it obtain all its laptop CPUs from Intel.

As a rooter for the underdog, I’ve always liked AMD and, if memory serves me correctly, have owned at least one computer with an AMD processor inside. Just one, mind, and that’s going back a few years; for a long time I haven’t recommended an AMD processor to anyone who has the option of going for an Intel Duo or Quad Core chip. After all, why the hell would you?

So while Intel are yet to be found guilty, there usually isn’t this much smoke without a substantial smouldering somewhere behind the scenes. If the allegations of foul play are justified, it makes it ironic that Intel went on to completely out-innovate their rivals, starting firstly with the Centrino line of chips and then the Core 2 Duo range which wiped the proverbial floor with their fledgling competitor. AMD, as it stands today, are nowhere in the processor market and the company is a complete mess; they’ve just got rid of their CEO for, as Paul Thurrott reported, “someone who hasn't (yet) botched the company's attempted comeback”.

So will Intel be (eventually) found guilty and slapped with a 10% global revenue fine? Probably.

Will that be enough to save the floundering AMD? Almost certainly not.