Alberto Mingardi's
2005 Blog Archive
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	Neelie's Little Conflicts	17 MAY 2005
	Another Point for the Commission	31 MAR 2005
	Microsoft: Will it Ever be Over?	25 MAR 2005
	Neelie and why banks need to compete	15 FEB 2005
	Go, Neelie, Go!	27 JAN 2005
	Apple: Forbidden Fruit of Invention?	25 JAN 2005
	More on Microsoft	14 JAN 2005

Neelie's Little Conflicts
17 MAY 2005 - The readers of his blog know well how hopeful was the present blogger on "Nickel Neelie", when she took over as Competition Commissioner. I thought that rumors about conflicts of interests were merely instrumental, as to disqualify someone that was friendlier towards business than her predecessor. However, now a legitimate suspicion raises as far as dealing with the situation of Abn Amro and the Italian bank Antonveneta is concerned. For a deeper analysis of the landscape of banks in Italy and Europe, I recommend INSEAD Professor Xavier Vives's analysis for the Wall Street Journal Europe [subscription required].

But as far as Mrs. Kroes is concerned, the rumor of a conflict of interest, though officially denied, acquires weight insofar as we examine her record as a Commissioner. In these first months of her mandate, she did nothing to show she has a better understanding of competition than her predecessor. She gave interesting interviews, fair enough, but talk is cheap. For a classical liberal, surely it is the market and not bureaucrats that should have the last word as far as takeovers are concerned.

But how come that Mrs. Kroes (as well as Mr. McCreevy) spent so much time criticizing (often with good arguments, to be sure) Mr. Fazio, governor of Italy's central bank? Banks are of course at the root of our economy. However, they are far to be the only businesses that need to be injected a sound dose of competition, in Europe. It is not Neelie's speeches but, on the other hand, her silence on so many issues, that makes the suspicion of a conflict of interest a legitimate one.
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Another Point for the Commission
31 MAR 2005 - The Commission scores another point in the meaningless fight it has been wrestling with Microsoft since last year. This time, the EU and the American software house reached an agreement on the label under which the new, media-handicapped edition of the world most famous operative system should be sold. It will be: Windows XP Home Edition N. Such a historical agreement was found after ten previous proposals of Bill Gates's company were turned down. Originally, Microsoft wanted the new edition of Windows to be called for what it is: a "Reduced Media Edition", establishing by so, also in front of the consumers, the correct causal link. It is not that the software giant decided, for a market strategy, to change the contents of its product. It was compelled to do so by European bureaucrats - who evidently do not want to get proper recognition for their genius. The process of appeal is long and we can still hope that a jury will restore dignity and sanity in European competition policy. But there is something inherently perverse in the fact that the EU is not just imposing to a private company how its software should look like, but also what name it should bear. To be sure, it is certainly consistent: after losing the right to produce what you wish, you lose the right to name whatever your product is. Statism, once in a while, can be coherent too.
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Microsoft: Will it Ever be Over?
25 MAR 2005 - Associated Press reports that the European Union is assessing more complaints about Microsoft Corp.'s compliance with last year's ruling, "saying it was checking whether the Windows version the company was forced to produce without Media Player was technically up to standard".

Read the following carefully: "An EU official, speaking on condition of anonymity, said rivals of Microsoft had charged that the Windows version without the audio and video service might not work as well with other software. The EU antitrust office, however, said tests were still ongoing".

Now, after having inflicted an unjustifiable mutilation over the world's most famous operating system, the Commission gets worried that perhaps the new version doesn't work as well as the older one. Cut off a man's left hand, and tell me if he will be as capable and able as he was before. Obviously not.

Microsoft spokesman Jim Desler said that the company had to remove certain technology to comply with the European Commission's order, and did not do so to intentionally stop competing products from working as well. "We removed the code that the commission requires us to remove," Desler said.

Isn't that enough for the EU? Should Microsoft have produced a new software, lacking some of the characteristics of the older one, but that works better as if it has actually more? How could a handicapped operative system work better than a full functioning one? Give me a break.
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Neelie and why banks need to compete
15 FEB 2005 - Recently the Corriere della Sera published a long interview [link in Italian] with Neelie Kroes, EU's antitrust Commissioner, just before she met with her predecessor, Mario Monti, for a public conference at Bocconi University in Milan. (Details of her visit are also available here in English.)

The interview is quite far reaching, and Mrs. Kroes basically confirms her take in the recent FT interview she gave. She seems determined to cut subsidies to fat ducks (even though she, perhaps diplomatically, refuses to apply such a label to Alitalia). But what is most relevant in the interview signed by Giuseppe Sarcina is the fact that the new Commissioner pronounces the EU ready to contrast a recent, informal deal between Italian PM Silvio Berlusconi and the Governor of Italy's Central Bank, Antonio Fazio. The allegedly free marketer Berlusconi agreed with Fazio that the Italian banking market should be hermetically closed, for the time being, meaning that foreign players would have to ask the kind permission of the Governor before jumping in. The justification was the standard one for protectionism: the credit sector is such a delicate one, that we need to preserve the "Italianness" of the banks. The Italian financial sector is indeed very weak, but this is precisely why we need more competition. Also, the idea that since the savings are Italian so the save has to be is, forgive me, plainly ludicrous. The save has to be a good one - and that can emerge just from a competitive process. That Commissioner Kroes is ready to impede the Italian government to go ahead with such a protectionist insanity is very good news to all Italian savers.
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Go, Neelie, Go!
27 JAN 2005 - New Competition Commissioner Neelie Kroes has given an interview to the Financial Times, which aptly endorsed her call for "less and better aid". If Mario Monti Mario updated mergers and anti-trust procedures, as the FT reminds us he really "never got around to overhauling the European Union's rules on state aids" as much.

In the FT interview, Mrs. Kroes announces war on the "fat ducks", clarifies that it is not for making new friends that she was sent over to Brussels, and went as far as to label "things of the past" the dangerous ideology of national champions. "Down with national champions" is a good starting point for a Competition commissioner. I understand that Mrs. Kroes had to speak about "better aid" in order to butter the uneasy cut of subsidizes.

Fair enough, the important thing is for them to be cut. Restoring true entrepreneurship (that means, private entrepreneurship) should be the number 1 priority for the new Commissioner. Surely, corporatist lobbies are going to give her a very bad time. But tough times call for tough action. Mrs. Kroes can prove to be the Iron Lady that Europe needs. God knows how much we need that.
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Apple: Forbidden Fruit of Invention?
25 JAN 2005 - The world of antitrust does it best to keep itself "far far away" from the real world where I and you live. The latest piece of insanity comes from California, where an iPod user sued Apple for having turned an open standard into a restricted one.

Apple is accused of having abused of its dominant position in the market, having "bundled" together its MP3 walkman (well, this is surely a banalization, being iPod the greatest invention ever since the wheel, but please pardon it to me for the sake of simplicity) and its, splendid service to buy and download music, iTunes. As Solveig Singleton from Progress and Freedom Foundation notes, many reasons come to mind because this suit is "deeply misguided". Let me give you just one: the iPod/iTunes is a great entrepreneurial idea, developed by some private entrepreneur that managed to achieve success in a very relevant way. It changed our attitude towards the distribution of contents over the Internet. It made us happy to pay for music instead of bartering it with peer-to-peer devices. It gave us the wonderful possibility of bringing our music with us everywhere. Once we were traveling with 12 songs CDs. Now I have over 5,000 songs on my iPod. Picture yourself traveling with your complete library all over the time, in a space as big as cigarette box. Private entrepreneurs do what they please with what they invented. Adam Smith argue that division of labor is a way of putting together in a common pool the different talents of the different men, so that each and any of us benefit from others' talents as a result of a natural instinct to trade. Right. But this doesn't entitle us to dictate to our fellow men, even just to the most entrepreneurial of them, what they should or shouldn't do with their talents and ideas.
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More on Microsoft
14 JAN 2005 - In a commentary for the Wall Street Journal [subscription required], Alec Burnside has rightly argued that that the European Commission's victory over Microsoft is "costly".

Mr. Burnside presents us with an interesting scenario: "The body of EU case law is unduly legalistic, not yet suffused with the respect for economics that has become the standard in other areas of competition law, and the position taken by the court in the field of abuse of dominance has not always been as economics-oriented as competition authorities in Europe nowadays advocate. The question may fairly be asked whether the EU's best interests lie in leaving future policy with the court; or whether the incoming commissioner would be better advised to settle with Microsoft, cut short the appeal process and set to work bringing some clarity to this unsatisfactory area of law and practice".

If Mr. Burnside's considerations are note-worthy, still we shouldn't forget that what we need now is more, and not less, jurisprudence at this particular stage. Right, the view expressed by the court in the field of abuse of dominance "has not always been as economics-oriented as competition authorities nowadays advocate". The court has often been wiser: of five appeals presented against Commissioner Monti's decisions over mergers, one is still pending, four were lost for the Commission.

I agree that this jurisprudential path implies excessive costs for businesses, that are forced to wait years before being given the green light the Commission didn't give them. It is a tremendous loss of entrepreneurial opportunities. But it not a matter of being more "economics-oriented". The Commission is not oriented to "economics", but rather to a certain, perverse, neoclassical mystification of what economics ought to be. Competition is a discovery process, not a quantity. And the Court is right in bringing back intellectual sanity, even if this costs time. A settlement between Microsoft and the Commission could be good for both of them and the consumers. But in the long term European citizens need the Court to dismantle the sort of mistaken prejudices that made competition policy what it is. I would like also to point out an excellent comment on Microsoft, written by Carlo Lottieri, Head of Academic Affairs at Istituto Bruno Leoni. In the last EU Reporter, Lottieri examines two "visions of competition". He distinguishes sharply from what a true free market is, and the caricatural approach endorsed by competition authorities all over the world. Lottieri's article is a must read.
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