2015 16 Certificate in Intellectual Property Law COMPETITION LAW

2015/16 Certificate in Intellectual Property Law COMPETITION LAW Alison Firth Visiting professor, CCLS Professor emeritus, Surrey a. m. [email protected] ac. uk

Quick quiz on intro/overview a. b. c. (a) _______ v Commission _____ v Vervacke Eurofix ______ v Commission CJEU ruled that the relevant market on which competition occurs has which 3 components? (a) Distribution agreement was held not to have an _____ effect on ______. (b) Involved abuses of dominance on markets for _____ & consumables.

Quick quiz, contd d. The Commission has fined _______ EUR 1. 06 m for hidden _____ & pay for delay; this was upheld by the _____ Court; d. ‘Block exemption regulations’ cover ______ of agreement under Art 101(3) TFEU.

Competition - Callman’s ‘rough definition’ ‘struggle according to game-like rules by means of constructive effort subject to the natural conditions of the market’. In this course we are looking at the ‘rules of the game’ that try to keep efforts ‘constructive’ and the market free from distortions.

Intro: Competition and market forces EU and UK • Do Governments wish to plan production, distribution, set prices, etc? • Alternative - ‘market forces’ in free competitive market • What happens if supply is greater than demand? • What happens if demand is greater than supply?

EU market integration • Idea that competition takes place on ‘single’, or ‘internal’ market (formerly ‘common market’) • Embedded in EU competition law as well as… • Rules on free movement of goods, services, etc

Impediments to competition • ______/cartels • ______ __ _____ where holder of a large market share crushes further comp • Mergers and _____, which affect competitive structure of market • Subsidies or ‘_____’, which can distort competition and subvert market integration. • What about IP? • EU vs UK

Reading Marco Colino, also Monti – EU policy Jones & Sufrin – EU only, excellent IP, vg accounts of cases Whish – EU and UK, brand new edition Updates http: //global. oup. com/uk/orc/law/competition/ Web material esp http: //ec. europa. eu/dgs/competition/index_en. htm https: //www. gov. uk/government/organisations/competitionand-markets-authority/about Law reports, Journals, Annual reports

Competition law sources • • TFEU, esp Arts 101 and 102 (ex 81, 82 EC) Arts 34 -36 free movement of goods Arts 106 -108 public undertakings and state aids Art 345 without prejudice to national property Secondary EU legislation, esp Reg 1/2003 Role of case-law? Competition Act 1998, Enterprise Act 2002, Enterprise & Regulatory Reform Act 2013 • Secondary UK legislation • Role of case-law? • Law reports, BAILII, journals, further reading

A. Underlying assumptions and principles 1. free competitive market a. Suppliers vie with each other to satisfy customer/consumer demand Q would the following interfere with this? How? • Agreements between competitors to fix prices? • Agreements between competitors to limit production? 2015 ECLR Examples - FR Wallpaper; Fresh milk IT Concrete; NL Bell peppers; US Treasury bonds

Underlying principles & assumptions Would the following affect supply/demand • Activity by a powerful firm to prevent other suppliers entering the market? 2015 ECLR Examples, abuse of dominance • EL Nappies • PL Coal • SE airports • SI natural gas

competition, as struggle to between market players making constructive efforts b. encourages suppliers to offer products that are • Cheaper • Better • More varied c. competition therefore • Encourages efficiency • Enhances consumer welfare

Questions • Does price competition tend to get privileged over other forms? If so, why? • How do consumers differentiate between the products of different suppliers? • How do suppliers offer better/different products?

Questions, contd • Should competitors be free to copy successful new products/ business models? • Yes, because… No, because… [Drexl, after Ulmer : imitative competition versus substitutive competition] • What are the utilitarian justifications for industrial or intellectual property? • To which of the above questions are utilitarian justifications most relevant?

• How do individual creators introduce their works/ideas into the market economy to ensure distribution and reward? • Are individual or collective transactions better for this?

Questions, contd • What other justifications are offered for protection of IP? • To which of the above are such justifications most relevant? • Do competition law and IP serve the same goals? • Or do they conflict?

What might need regulating • restrictive agreements/practices, Question – how might this principle clash with the enjoyment of intellectual property rights? • abuses of dominant position Question – how might this principle clash with the enjoyment of intellectual property rights?

What might need regulating? • corporate mergers and acquisitions, known as ‘concentrations’ Question – how might intellectual property be relevant to mergers and acquisitions? • Attempts to hamper EU market integration – the creation of a single /internal /common market

other related forms of regulation, and a problem Sectoral regulation of privatised utilities, OFWAT, OFGEM, OFCOM, OFRAIL • Self-regulation in the advertising industry • Self-regulation by the professions, eg CIPA, ITMA • Regulation by individual EU Member States of the price of medicines • Regulation of the availability of medicines Reckitt Benkiser ‘Gaviscon’

Goals of EU competition law? • not spelled out in the treaties – (nb first Community was ECSC) • Consumer welfare • certainly, but not the only one: GSK Efficiency – Productive efficiency (Akman) – Economic efficiency more generally (Chirita) • Almuria “highly competitive… social market economy” &importance of innovation and (renewable) energy policy

What about fair competition? • Ongoing debate as to whether competition rules should serve this end • Unfair Commercial Practices Directive 2005/29/EC. • The Consumer Protection from Unfair Trading Regulations 2008, Statutory Instrument (SI No) 2008/1277 AND • The Business Protection from Misleading Marketing Regulations 2008 SI No. 1276

The single INTERNAL market of the European Union • maximise consumer choice and allow suppliers to make efficiency gains Free movement of goods, esp ‘parallel imports’ Question – how might this principle clash with the enjoyment of intellectual property rights? • Free movement of services • Free movement of workers • Free movement of capital

controlling state aids (national subsidies) • Eg Community framework for R&D objectives: – “to help Member States to channel a larger share of their total state aid budgets towards R&D and innovation and – to help Member States target R&D&I state aid on the best projects, on the basis of economic analysis, so that distortions of competition and trade are minimised and public spending efficiency is maximised. ” conditions: – the aid must address a well defined market failure; – the aid must be well targeted: state aid must be an appropriate instrument, the aid measure must have an incentive effect and must be proportionate to the problem tackled; – the distortions to competition and trade resulting from the aid measure must be limited enough so that, on balance, it can be declared compatible. ”

harmonising national laws, including IP Article 118 TFEU • Question – how might this principle clash with existing national intellectual property rights? Article 345 TFEU (ex 295 EC) • “This Treaty shall in no way prejudice the rules in Member States governing the system of property ownership. ” Art 262 TFEU (ex 229 AEC) powers to CJEU

protecting from distortion from outside the EU (‘Third Countries’) by EU wide measures • border measures • Unitary, EU-wide IP rights (Community Trade Mark, registered and unregistered Community Designs, Plant Variety Rights, database right) Focus. . . rules relating to economically active ‘undertakings’ in their capacity as IP producers, owners and users.

UK competition rules • Statute of Monopolies 1623 http: //www. legislation. gov. uk/aep/Ja 1/21/3/contents Questions • What kind of ‘monopolies’ were prohibited? • What ‘monopolies’ were allowed? • Are patents or registered designs ‘monopolies’? • Are forms of IP that give protection against copying ‘monopolies’?

UK competition rules • Competition Act 1998 – Importantly, largely follows EU • Enterprise Act 2002 – Criminal sanctions • Enterprise and Regulatory Reform Act 2013 • Common law

Competition institutions: UK • Competition and Markets Authority (merger of former Office of Fair Trading and Competition Commission • Competition Appeal Tribunal (including ‘followon’ claims) • Civil Courts, including judicial review of administrative action, ‘private enforcement’ • (note the possibility of referring questions of interpretation to the European Court of Justice) • Criminal courts (ditto)

Competition law in the European Union (formerly Community) • TFEU esp Art 34 -36, 101, 102, 345 • Reg 1/2003 - implementation of rules • Regulating agreements – de minimis Notice – horizontal co-operation • research and development agreements • Specialisation • vertical – Distribution/sales – technology transfer agreements

Institutions - Interpretation and enforcement of EU competition law • (European) Court of Justice (of the European Union (CJEU, formerly ECJ) • General Court (ex Court of First Instance) • European Commission Q: which are involved in legislation? • National courts and competition authorities • Devolution of enforcement • MS may seek help from Commission Visa

Where do competitors compete? • 1. • The ‘relevant market’ - product, geographical, temporal product Q– when considering an importer and distributor of bananas, what is the relevant product market? Hint – a key criterion is substitutability • Greengrocery (fruit and veg) • Fruit • Bananas • Small bananas, as opposed to medium or large bananas? Case: C-27/76 United Brands

Where do competitors compete? 2. geographical market Question – what is the relevant geographical market for…? • croissants • haggis • right hand drive cars • air services • taxi services Case example: COMP/M. 1672 Volvo/Scania Chemistree Homecare v Abbvie [2013]

Market share – why important? • Does the undertaking enjoy a dominant position which it might be abusing? • Can the undertaking’s transactions benefit from the ‘safe harbour’ under a block exemption regulation? • Are they covered by the ‘de minimis notice’? • Might a merger prove inimical to competition?

Past paper questions Do take advantage of opportunities to practise in the weeks to come • Feedback from AF • Peer assessment • Transferable skills!

PPQs A question which regularly comes up looks like this: “Discuss the legal significance of any THREE of the following cases a. Joined Cases 56 and 58/64 Consten & Grundig v Commission (1966) ECJ b. Case 5/69 Volk v Vervaecke (1969) ECJ c. …. ”

‘Before, during, after’ • Before – state of law before case was decided • During – key facts and findings, what in English law we’d call the ‘ratio decidendi’ • After – the impact of the case, eg was the law changed, did other cases flow from it? Proportions differ! Haven’t covered all issues; welcome to try