Chillin'Competition

Relaxing whilst doing Competition Law is not an Oxymoron

Archive for April 2010

Telco

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I was invited today at the International Institute of Communications (“ICC”) – Telecommunications and Media Forum in Brussels. For wholly unexpected reasons, I eventually could not make it.

I still wanted to share here the speaking notes that I had prepared. One of the topics of the forum was the demarcation line between ex ante regulation and ex post competition enforcement. In this respect, I have made a few comments on AG MAZAAK’s (see picture above) opinion in the Deutsche Telekom case, which will be decided by the Court of Justice in the coming months.

Speaking notes – IIC Forum, 29 April 2010 – N PETIT

PS: Thanks to E. Provost for her assistance in preparing this document.

Written by Nicolas Petit

29 April 2010 at 7:48 pm

Posted in Events

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I proved most of my colleagues wrong. I have been working for 10 days on a Mac, as a temporary replacement for my good old PC.  Contrary to what they predicted, I did not fall in love with the Apple ecosystem. While using Apple’s OS and, more generally, this computer, I felt  like playing with a toy.  In addition, the protocols to launch apps and softwares are really counterintuitive.

So a piece of – personal – advice for lawyers in general, whose primary occupation is emailing and drafting documents: if you don’t care for design, but primarily for price, then don’t  succumb to this irrational, politically correct, Apple frenzy.

And now two questions to competition lawyers. Here in Belgium, most retailers charge similar prices for Apple products. Is the situation the same in other Member States? If so, may the source of this price rigidity hinge on some sort of RPM-like system?

Finally, check this out: DG COMP’s blockbuster on competition policy and the consumer. The computer brand used in the movie is a most unfortunate coincidence. Borrowing to the semantics of the movie industry, I’d be tempted to talk here of a Commission “exhibition” bias (thanks to Pierre Sabbadini for the pointer)…

PS: Thanks to Julie Clarke for the kind words on the computer crash.

PS2: I found the above picture just hilarious, and could not resist posting it.

PS3: The bias is a favourable one. In its past decisional activities, the Commission has seemed particularly friendly to Apple and particularly unfriendly to other software/computer developpers. Full disclosure: in my previous life as a practitioner, I have done a bit of work for a rival software developper.

Written by Nicolas Petit

27 April 2010 at 4:00 pm

Posted in Uncategorized

Best LL.M in Competition and IP Law (2.0)

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Amongst my various University activities (and besides research), the one I prefer is to manage the ULg’s bilingual LLM in EU Competition and IP law (created, back in the day, in 2004, by my predecessor Prof. Damien Geradin). 

This LL.M has been increasingly successful in the past years, attracting students from everywhere in Europe and outside (Peru, China, etc.). I trust the many conferences we organize in Brussels, the bilingual format of the programme (English-French) and the opportunities for publication in e-competitions are interesting for prospective students.

Since my appointment a few years ago, I have nonetheless had the feeling that the programme could be improved, in particular by increasing its focus on core IP and competition law subjects.

To this end, I have recently undertaken, with the help of some colleagues – I shall here thank in particular Prof. Alain Strowel and my assistant Norman Neyrinck – to bring improvements to the LL.M.

Following weeks of ruminations and discussions, I am proud to disclose the 2.0 version of the bilingual LLM in competition and IP law of the University of Liege. The new programme, which can be found below, will enter into force in the next academic year 2010-2011. A brochure is in the pipeline, and will be out shortly.

The challenge now: how to best disseminate this without being ripped off having to pay thousands of euros to commercial advertising websites? If you have any clue, or feel like helping, please drop me a line. If you know people who could send our programme to students, please also contact me.

  

Compulsory Courses:

– Droit européen de la concurrence 60h – Nicolas Petit (ULg)

– Patents (exercises included) 30h – Geertrui Van Overwalle (KUL)

– Droit d’auteur et nouvelles technologies 45h – Alain Strowel (Covington & Burling, FUSL, ULg)

– Trade related aspects of intellectual property rights in the EU and the WTO 30h – Daniel Gervais (Vanderbilt University) et Norman Neyrinck (ULg)

– Droit européen des marques 30h – Jean-Jo Evrard (Nautha Duthil)

– Intellectual Property and Competition Law  30h – David Hull (Covington & Burling) et Alain Strowel

– Questions spéciales en droit européen de la concurrence 15h – Jean-Yves Art (Microsoft) et Jean-François Bellis (Van Bael & Bellis)

-Legal Writing Seminary 15h – Andrew Fine

– Aspects économiques du droit et de la concurrence 30h – Nicolas Petit

– Droit des aides de l’Etat 30h – Jacques Derenne (Lovells)

Options  – Competition law (one course to be chosen amongst the two following subjects)

  • EU Competition Procedure and Institutions Nicolas Petit
  • Case Studies in EU Competition Law Luc Gyselen (Arnold & Porter)

Options – IP Law (Two courses to be chosen amongst the three following subjects)

  • The Legal Protection of Designs and Models 10h Charles-Henry Massa (ULg)
  • Droit des médias 10h François Jongen (UCL)
  • IP Enforcement 10h Christof Karl (Pagenberg)

Compulsory Seminars for 2009-2011

  • The law of geographical indications, quality labelling and certification – E. De Gryse (Simon Braun)
  • Unfair Competition Law – A Kamperman Sanders (University of Maastricht)
  • IP protection for biotechnologies and other technologies – S. Bostijn (University of Amsterdam)
  • Related rights – F. Brison (Howrey and KUB)
  • Introduction to Belgian Competition Law – C. Verdonck (Altius)
  • Intellectual property and innovation technologies management – JF Serrier (Solvay)
  • The Regulation of counterfeited goods – R. Munoz (European Commission and ULg)
  • Introduction to US Antitrust Law – D. Hull
  • Selected questions of private international law in relation to intellectual property rights – P. Wautelet (ULg)
  • Pharmaceutical industry – O. Lemaire (Glaxo) 
  • WTO Law – Intellectual Property and Competition Issues – D. Luff (Luff and Appleton)

 

Written by Nicolas Petit

23 April 2010 at 8:34 am

Posted in Uncategorized

Some recent news

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The European Commission published yesterday the new Block Exemption Regulation for vertical agreements. New guidelines will follow soon.

Also yesterday, the DOJ and the FTC started circulating their new draft horizontal merger guidelines.

One more thing: at this time of the year some of our readers will be looking for a job. You might be interested in knowing that a prestigious anonymous law firm is hiring new associates. The ideal profiles they are looking for are outlined here.

Written by Alfonso Lamadrid

22 April 2010 at 1:14 am

Competition Law and Sport (III)-Sale of Football TV Rights: One size fits all?

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The Spanish NCA adopted last week its long-awaited decision with regards to the sale of television rights for the national football championship. The essence of its decision is simple: agreements concluded between football clubs and television operators for a period exceeding three years are anticompetitive. In this regard, the Spanish NCA simply follows the rule of thumb, later to become a dogma, introduced by the European Commission in the UEFA Champions League case.
Why should a three-year ceiling for exclusivity agreements be always justified? it would seem that the new entrants challenging the position of incumbents may need a longer exclusivity period. In this sense, the three-year rule may paradoxically contribute to dominant positions of incumbent pay-TV operators becoming entrenched. A case-by-case analysis of the context surrounding the agreement would seem more appropriate to avoid false positives.

The rise of the three-year rule to dogma status may be explained by the “complex economic assessments” involved in establishing rigorously the anticompetitive effects of agreements on a case-by-case basis…

PS. Thanks go to Pablo Ibañez for very valuable discussions on this issue.

Written by Alfonso Lamadrid

21 April 2010 at 12:24 am

Reminder: Half-Day Conference on the New Electronic Communications Conference

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A reminder: The Institute for European Legal Studies (IEJE) of the University of Liege will hold in Brussels on 30 April a half day conference on the new EU Regulatory Framework for Electronic Communications. My good friend Laurent de Muyter (ULg and Jones Day) has helped me bring this conference to birth. I attach the latest programme below.

IEJE Conference What comes Next in Electronic Communications A Review of the New EU Framework – 30 04 10

Written by Nicolas Petit

20 April 2010 at 3:30 pm

Posted in Events

HLS Seminar discussion on “Pay-for-delay settlements”

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We start the series of posts from Harvard Law students with a great introduction to the antitrust issues that arise in connection with “pay-for-delay settlements”/”reverse payments” in the pharma industry The post is authored by Paul B, and builds on the relevant readings in the syllabus. We have also included other students’ reactions in the “comments section”.

For those short on time and already familiar with the topic, go ahead and click on the link below to skip to “Questions for discussion”.

Pay-for-delay (PFD, “reverse payments”)

The issue is tricky because it lies at the intersection of patent, food/drug and antitrust (AT) law, and its unclear to which of these we should look to address abuses that arise from the US generic drug regime.  In short, when a pharmaceutical company develops a new (branded) drug, it first seeks a patent.  The initial problem is that the PTO grants patents fairly generously, in a largely non-adversarial process, so in many cases the branded drug will be patented even though it is arguably not novel, non-obvious, etc.  The drug then goes through a lengthy and expensive testing and Federal Drug Agency approval process (a New Drug Application, or NDA), which may eat up a sizable share of the patent protection period.

Once the drug is FDA approved and hits the market, the Hatch-Waxman amendments to the Food, Drug and Cosmetics Act kick in.  Consistent with the themes we’ve discussed throughout the term, Hatch-Waxman attempts to balance the fostering of innovation (by protecting the patent-granted monopoly for truly innovative new drugs) against the desire to foster competition by allowing low-cost generics on the market as soon as possible.  For a normal (i.e., non-pharma) patent, the way to challenge a disputed patent would be for an alleged infringer to place his product on the market, and for the patent holder to sue for infringement damages and an injunction against future sales.  If the parties settle, the infringer might pay the patent holder part of the alleged damages (a higher share the more likely they are to get an adverse verdict, based on the probability that a court will find that the disputed patent was both valid and infringed by the defendant)  and/or there may be some sort of licensing or contract manufacturing agreement.  Such agreements typically do not raise serious AT concerns.

In the case of pharmaceuticals, by contrast, Congress decided in Hatch-Waxman for various reasons to set up a regime in which the legal challenge comes before the infringement.  So a company which develops a generic version of a branded (and patented) drug begins by filing an abbreviated new drug application (ANDA), which is much easier to approve than an NDA (the company must only show that the drug is bioequivalent to the branded drug).  As part of the ANDA, the generic company informs the branded drug manufacturer that it intends to challenge the legitimacy of its patent.  Assuming the branded company wishes to defend its patent and challenge the ANDA, a 30-month delay is automatically imposed before the generic can go to market, during which the companies may litigate the claim.  If (as happens surprisingly often) the generic wins, it is granted a 6-month exclusivity period to market its generic version (creating a market duopoly) before other generics may enter the market.  During that period, the generic will typically price its drug below the price point of the branded drug (which has been charging the monopoly price) but well above the competitive market price which will obtain once other generics enter the market (roughly 15% of the monopoly price, on average).  This system (1) rewards the first firm to challenge potentially weak patents which are wrongly imposing monopoly pricing on consumers (2) allows the issue to be resolved prior to costly commercialization of a potentially infringing product, (3) preserves and expedites the patent monopoly of truly innovative drugs, and (4) ensures that market pricing is achieved within 4 years of the filing of a legitimate pharma patent challenge.

UNLESS, the parties settle.  Here, because no infringement has yet occurred, proper settlement damages will in theory be “reverse”; that is, if there is a 50% likelihood that the generic has been kept off the market by an invalid patent, the branded drug holder may offer to pay the generic 50% of what it could have made by marketing the drug during that period (rather than the normal process of the infringer paying the patent-holder 50% or some other share of what it actually did earn from infringing).  The concern here is that both parties have an incentive for this payment to reflect more than just their  best estimates of patent validity, damages or litigation costs (all legitimate considerations in a settlement), but rather to split up the monopoly profits.  That is, if there are 6 years remaining on the branded drug’s patent, and the parties agree it is 50% likely that the patent is invalid, they could agree to a settlement that the generic would just wait 3 years to enter the market.  When the branded company instead pays the generic “reverse damages” in return for an agreement to stay off the market for the full 6 years, there is a concern that the firms are essentially maintaining a bogus monopoly at the expense of consumers.  If, say, BrandX sells for $100 per pill, and the market price under full competition is $20, brand and generic may agree to a pay-for-delay settlement in which brand pays generic $30 for each unit of BrandX sold for the remainder of the patent life.  This allows them to split monopoly rents:  brand makes $70 per pill, still well above the market price, for a drug that arguably should not have patent protection, and generic earns $30 per pill for doing nothing, much better than it could have done at market.  This same sort of agreement can be done with generic performing some contract manufacturing for brand, also at those prices.

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Written by Alfonso Lamadrid

16 April 2010 at 5:18 pm