The Antitrust Hotch Potch

New GCLC Working Paper on Econometrics and EC Competition Law

Please find here a link to a new paper on Econometrics and EC Competition Law, which I wrote with my Assistant, Ermano Fegatilli. The paper seeks to explain how econometrics can be useful to antitrust lawyers - officials and practitioners. We have tried to be as little technical as possible. As usual, comments are most welcome.

Nicolas

PS: we welcome submissions for the GCLC WP series.

The Tragedy of the Anticommons in a Nutshell

James Surowiecki briefly explains here the tragedy of the anti-commons - straightforward, easy reading.

Nicolas

Picture source: http://www.birkelandinnovasjon.no/

Antitrust Saga

A Michelin III case? More here and here for a press article in French.

Have been doing a lot of work on abuse of dominance, rebates and other commercial incentives lately. Again, what struck me in reading the above press reports is the implicit assumption that Michelin holds a dominant position on a relevant market geographically defined as France (this time, the French NCA may be prone to jump directly to the abuse, and only make a cursory assessment of dominance and relevant market, relying on the EC precedents). However, this issue deserves a thorough investigation, if only because the competitive dynamics on the tyres market(s) are also those of a non-pacific oligopoly with intense region (if not world)-wide rivalry .

Nicolas

Pricing Abuses by Essential Patent Holders in a Standard-Setting Context: A View from Europe

I just posted a new paper entitled "Pricing Abuses by Essential Patent Holders in a Standard-Setting Context: A View from Europe" on SSRN.

Damien

Abstract:  "Intellectual property rights (hereafter, "IPR") are legitimate exclusive rights, which confer upon their owners two basic prerogatives: the right to prevent any third party from applying or using the subject-matter of the IPR and, correlatively, the right to set the conditions of a licence in consideration for use of the IPR and as a reward for the innovative contribution contained therein. These exclusive rights are recognized in all patent laws as well as in the TRIPS agreement. Relying on the EC Treaty rule on abuse of a dominant position (Article 82 EC), the European Court of Justice (hereafter, the "ECJ") indicated in Magill and IMS that in certain exceptional circumstances IPR holders may be forced to grant a licence to other firms. The European Commission (hereafter, the "Commission") relied on this line of case law to mandate Microsoft in its March 2004 Decision to license its interoperability information to its competitors on the downstream market for work-group servers. This decision of the Commission was recently confirmed by the Court of First Instance of the EC (hereafter, the "CFI"), hence signaling that the first prerogative attached to the holding of an IPR, i.e. the right to exclude, could be subject to limitations under EC competition rules. More recently, the European Commission has taken an interest in the level of royalties that are charged by IP holders. The Commission adopted in February 2008 a decision imposing a fine of 899 million euros on Microsoft for non-compliance with its obligation to licence its downstream competitors under its March 2004 Decision. This decision required Microsoft to licence its interoperability information on reasonable and non-discriminatory terms. This aspect of the decision effectively placed limits on the second prerogative attached to the possession of an IPR, i.e. the right to set the conditions attached to the granting of a licence. The bone of contention between the Commission and Microsoft related to the royalties Microsoft wanted to charge its competitors for the licence in question. The Commission rejected Microsoft's initial demand of a royalty rate of 3.87% of a licensee's product revenues for a patent licence and of 2.98% for a licence giving access to the secret interoperability information. Under the pressure of periodic penalty payments for non-compliance, Microsoft eventually agreed to provide a licence giving access to the interoperability information for a flat fee of 10,000 euros and an optional worldwide patent licence for a reduced royalty rate of 0.4% of licensees' product revenues.

Yet, Microsoft has not been the only high-technology firm targeted by Commission investigations. In August 2007, the European Commission sent a Statement of Objections to Rambus on the ground that it infringed Article 82 EC by claiming unreasonable royalties for the licensing of certain patents for "Dynamic Random Access Memory" chips (DRAMs) subsequent to a so-called "patent ambush". In October 2007, the European Commission also decided to open formal antitrust proceedings against Qualcomm following complaints lodged by Ericsson, Nokia, Texas Instruments, Broadcom, NEC and Panasonic, alleging that Qualcomm's licensing terms and conditions are not Fair, Reasonable and Non-Discriminatory ("FRAND") and, therefore, may breach EC competition rules. These last cases are particularly important as they are linked to the way in which firms seek to fund their research and development ("R&D") efforts and, in particular, to the funding of innovation through technology licensing. In the last two decades, the reliance upon "licensing" strategies as a source of revenue for IPR holders has seen a dramatic increase. Put simply, in return for an adequate remuneration (typically a royalty, but there may be other forms of consideration), innovators (licensors) grant to other firms (licensees) the right to use their proprietary technology to manufacture products for sale in downstream markets. IPR licensing strategies are not only pursued by organizations without manufacturing capabilities (e.g., university research centers). IPR holders active in downstream product markets (hereafter, "vertically-integrated firms") may be licensing their technologies to reap additional profits from their R&D expenditures, but also to obtain access to other firms' technologies through cross-licensing agreements.

Settlements Paper - Mehta and Tierno Centella

Please find below a paper by two Commission officials (Kirtikumar Mehta and María Luisa Tierno Centella) on the new EC settlement  procedure. Thanks to Adrian for forwarding the paper. I copy, in full, the abstract and acknowledgment:

On 1 July 2008, the Commission's settlement package entered into force. This article by two Commission officials, Director Kirtikumar Mehta and Deputy-Head of unit Tierno Centella, was recently published in Competition Law International, the IBA's journal dedicated to competition law and policy. The article gives some background about the Commission's thinking.

This article was first published in Competition Law International, and is reproduced by kind permission of the International Bar Association, London, UK. © International Bar Association 2008.

Nicolas

Download settlements_paper_mehta_and_tierno_centella.pdf

SSRN Papers and a personal - language-related - thought

I have posted several of my old papers on the ssrn website. See here for a paper on Commission's liability for erroneous merger decisions and here for a paper on the proliferation of regulatory agencies and the risks of jurisdictional conflicts.

Now, a personal note: most of my recent publications are in French and I cannot share them with many people. There is no such thing as a french ssrn, and I still do not understand why.  The overall consequences of the absence of such network are clearly negative: French legal science remains insulated from cross-fertilization dynamics (little input/comments from other scholars) and keeps moving slow (for someone's idea to become a real legal source, one needs to wait for journal publication).

Don't get me wrong: I am not a language maniac as others have been lately in Belgium (with Dutch) and in my country of origin (with French). But I see only benefits to a French speaking system of networked scholarship. To ensure interoperability, abstracts translations in English would be made available to readers.

Nicolas

Prof D. Sokol's Survey on Antitrust Compliance

Professor - and fellow AT blogger - D. Sokol is currently conducing a survey on the compliance effects of the antitrust laws. Private practitioners and in-house counsels are invited to answer a set of questions which, undeniably, have "important policy implications".

On a personal note, I am very much in favour of the introduction of empirical techniques in antitrust law and economics (i.e. through surveys, for instance). The numerous consultations processes launched under the impetus of the Commission are nothing but empirical methods. Yet, the Commission's questions are often so vague and open-ended, that many addressees will be discouraged from inputting (the recent consultation process on the ex post assessment of Regulation 1/2003 is a case in point). Transaction costs matters to potential respondents. Failing to understand that inevitably leads to low participation and, in turn, poor feedback. In simply requiring 8-12 minutes to fill, Prof Sokol's survey avoids this shortcoming.

Nicolas

Conference Announcement - 5-6 September

On 5 and 6 september, the Institute of Competition Law and Policy Studies (IMEDIPA , Athens) the University College London and Ístanbul Bilgi University Faculty of Law will hold a conference entitled "Which competition policy for regulated industries? Governance and sector-specific perspectives". The programme is really impressive (for download hereafter).

Download conference_istanbul_programme.pdf

Nicolas

New Paper on SSRN

Damien, David Henry and Marc Reysen have put together a new paper on extraterritoriality, comity and cooperation in EC competition enforcement. The paper can be downloaded on ssrn.

Abstract

The EC competition law regime, with the European Commission ("the Commission") at the apex of its enforcement structure, has steadily evolved to become one of the most mature regimes in the world. Its core provisions, namely Articles 81 and 82 EC, do not, however, explicitly indicate whether they find extraterritorial application or not. Based on the principles of nationality and territoriality, the extraterritorial application of Articles 81 and 82 EC is therefore ensured through the use of three legal constructs, namely the "economic entity" doctrine, the "implementation" doctrine and the "effects doctrine".