Chillin'Competition

Relaxing whilst doing Competition Law is not an Oxymoron

Archive for the ‘Hotch Potch’ Category

Samsung offers commitments to appease DG Comp

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The most important (antitrust-related) news last week was the European Commission’s announcement that it will market test a commitment proposal submitted by Samsung regarding the enforcement of its SEPs (Standard Essential Patents) related to mobile communications.

As you know, the Commission considered in its December 2012 Statement of Objections that the seeking of court injunctions by Samsung in relation to SEPs which it had committed to license on FRAND terms, or that third parties (i.e. Apple) were apparently willing to agree to license on FRAND terms, could amount to an abuse of dominance, because “access to patents which are standard-essential is a precondition for any company to sell interoperable products in the market” (press release dixit; we’ll come back to this phrase at the very end of the post). The theory goes that the challenged enforcement of SEPs could allow Samsung to obtain licensing terms that the licensee wouldn’t have agreed to absent the threat, and that this “undue distortion of licensing negotiations” would harm consumers in a number of different ways.

[Query 1: is this an exclusionary abuse? an exploitative one? both?; Query 2: Would an alleged abuse of this sort lend itself to the application of the Guidance paper?; Query 3: If the answer to query 2 is “no”, then what are the criteria to undertake a legality assessment of a situation like this? Query 4: How does one assess the likelihood of anticompetitive effects in a situation like this?; Query 5: can you distinguish a willing licensee from a non-willing one without taking a view on what’s FRAND? (I guess the proposed solution arguably gives an answer to this 5th question; if someone’s willing to accept the proposed framework… ); Query 6: Was Apple -the de facto complainant- a willing licensee in this case?].

Samsung (which just before receiving the SO had unilaterally withdrawn all its European SEP-based injunction claims) has now offered to refrain from seeking injunctions for past, present and future mobile (smatphone and tablet) SEPs for a period of five years againts any company adhering to a given licensing framework. As explained by the Commission itself (and here I’m “scraping” its Press release) “the licensing framework consists of: (i) a negotiation period of up to 12 months and (ii) if no agreement is reached, a third party determination of FRAND terms by either a court or an arbitrator, as agreed by the parties. If the parties cannot agree on either submitting to court or arbitration, the parties will have to submit to arbitration“.

The Commission has also published a Q&A document. The full version of the proposal is available here.

Some well known commentators in the patent blogosphere swiftly commented on the proposal in a critical manner (see “EU Commission market-tests totally insufficient FRAND commitments offered by Samsung“). My preliminary take is that, even if some issues may (inevitably?) be left open, this proposal would shed some welcome light on a much contentious subject.

We’d be happy to host a discussion in Chillin’Competition, and welcome the views that any of you might have with regard to both the case and the commitments proposal.

Let me get the ball rolling:

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Written by Alfonso Lamadrid

23 October 2013 at 10:19 am

Must reads

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I’ve been rather inactive here in the past few days due to work-related obligations, and my sense of guilt has been increased by the merits of other competition law bloggers:

– In the past few days the main media outlets in Spain have echoed a controversy related to creation of the new competition authority (see here and here for my take on the reform; btw, the new competition watchdog is operative since yesterday) that has unfortunately culminated in the stepping down of a very able Director of Investigation. A voice that has resonated very specially has been that of a fellow-blogger (and frequent commentator on this blog), Jesús Alfaro. You may or may not agree with everything or anything of what Jesús says, but you certainly won’t read anything as bold and fearless as his blog post and his article on the subject (in Spanish though). Only for that it deserves that we bring it to your attention. See here and here.

– On another front, one of the most worthy people I’ve come to meet thanks to this blog has started his own: http://www.twentyfirstcenturycompetition.com/  (not saying the authors’ name to force you to satisfy your curiosity by clicking the link…). Congrats to him (and compliments to DG Comp for having authorized him to do it). We’ll try to maximize cross-fertilization of ideas (and possibly charge an interchange fee, given that, according to basic economics, the ideas in Chillin’Competition -needless in a haystack- should be more valuable due to their scarcity) 🙂

Written by Alfonso Lamadrid

8 October 2013 at 5:44 pm

A true Belgian story

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When did the new Belgian competition Act enter into force?

If you run a Google search most results (notably a few dozen law firm’s newsletters saying exactly the same things) will tell you that it did on September 1st, 2013.

Wrong answer.

You can’t blame them, though. On August 30th The Belgian official journal (Moniteur Belge) published a Royal decree providing that the new Act would enter into force on the first working day following the said publication (that is, on September 1st).

However, it seems that the Royal decree wasn’t really Royal, because no one realized that the King had not yet signed it (apparently he was on holidays, elephant hunting, or doing whatever it is that Belgian Kings do), and that therefore it was devoid of legal effects.

That’s why on September 4th a new Royal decree was published on the official journal stating that the publication of the previous Royal decree (actually there were two of them) shall be considered null and void (“il y a lieu de considérer la publication des deux arrêtés royaux susmentionnés comme nulle et non avenue. Ces arrêtés ont été retirés avant leur signature”).

And then, on September 6th, yet another Royal decree was published providing that the Act would enter into force on that very same day.

So, between September 1st and September 4th people thought that the Act had entered into force, when in reality that wasn’t the case.

We hear there were hearings held in those days in which lawyers were pleading on the basis of the new Act, but were told that they were misinformed.

True story.

Written by Alfonso Lamadrid

12 September 2013 at 11:58 am

Posted in Hotch Potch, Jokes

April Fools Day hoax triggers a DG Comp request for information (no kidding)

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On April 1st 2013 a Belgian website (Pagtour.net) published the news that there was a project to expand Charleroi’s airport with a second runway (see here).

The piece explained that secret plans to expand the airport had been found in a secret chest, and that they had been drawn up by a secret Commission whose members only drank Spa water and met at restaurants specialized in fish and zinc. It was -some would say obviously- an April’s fools day hoax (or, as they’re called here, a “poisson d’avril” (April’s fish).

However, as reported in a bunch of Belgian news outlets (see l’Echole Soir, la RTBFmsn actualité 7sur7, la DH, le Morgen, RTL, La libre,) DG COMP apparently swallowed the fish whole (!!)

Belgian authotities are reported to have received a request for information dated on 31 July (just like April’s fools hoaxes are done on April 1, the EC’s jokes information requests in the EU are sent out on 31 July to spoil some poor lawyers’ and company employees’ vacations..) asking about the reported plans , and referring to the hoax piece at issue as a source  🙂

The Commission is reported to have stated today that information requests are supposed to be of a confidential nature.

Many of you may not know that there’s actually (or, rather, there was until 2011; pity) an established tradition of antitrust-related April Fools Day jokes published by the American Antitrust Institute. They’re all available here, my favorite ones being:

Antitrust Controlled by Jerks, Says New Evolutionary Biology Report  (I bought that one; thought it made a lot of sense..)

and

As US Attorney General Gonzales Confidentially Reports, There’s Nothing Funny About Antitrust

By the way, what has happened with the joke on Charlerois is not a first; some journalists in the States also picked up the AAI hoax on President Bush’s proposal to merge antitrust agencies with the Department for Homeland Security..

Written by Alfonso Lamadrid

19 August 2013 at 7:36 pm

A handy copyright infringement

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Capture

(Warning: this is a fairly uninteresting post with no legal content whatsoever, so feel free to skip it. The reason why I’m posting it comes at the last paragraph)

I’d anticipated another post on reverse payments today, but it will have to wait until Monday. With only one week to go before the holidays I’m swamped at work and accumulating significant delays on a bunch of non-work stuff (several articles, book reviews, paper grading, etc.) which, for some reason, I had committed to do before the holidays.

It makes you reflect. This is one of the peculiar features of private practice; you try to do your best in work-related matters and you end up doing all other stuff hastily and sometimes badly. It’s never bothered me that much, but it probably bothers others (the ones you pay less attention to, or the ones that suffer your delays). I don’t know to what extent this is inherent to the profession or to my irrational tendency to embark in all sorts of projects (or most likely both), but it clearly is an area in need of improvement, at least in my case. Tips welcome!

I won’t bore you with details on what keeps me busy and what I’m being unable to do (it actually was my initial plan, but I then I realized that with a too personal post I’d risk ending up appearing as another whining-while-at-the-same-time-bragging lawyer). Actually, even this actual post may be enough to convey that impression, but that’s not the intention. Anyway, let me give you an example of me doing non-work things at the last minute badly and how I resorted to Nico to fix it.

I spent this whole week travelling because of work (right now ,Friday at 16.20, I’m writing from the Court’s library in Luxembourg; by the way, the food was worse today…) and had to lecture yesterday at ERA (Academy of European Law) on the interface between Intellectual Property Article 101. It’s always a challenge to explain the Technology Transfer BER in a way that doesn’t induce people to suicide, but I think I succeeded: only two people tried, one by jumping out of the window, the other by attempting to read the actual guidelines on technology transfer (despite my warnings) 😉

As usual, preparations were done at the last minute. The problem, however, is that I was asked to deliver a fairly detailed ppt in advance (smart trick to force speakers to prepare in advance..). And that was a bit of challenge; so I resorted to Nico.

He has an excellent and incredibly detailed power point presentation on IP and competition law (I hate using power point, and not only because of its lack of interop with 3rd party applications… yes, cheap pun, but I couldn’t avoid it..) so I basically copy-pasted it in a Garrigues template ppt and used it (actually, I didn’t even do the copy-pasting myself; I’ve to thank Rocío de Troya for that).

It ended up being a good idea, as I explained to the students, my use of Nico’s materials was useful to illustrate several concepts that are very relevant to IP law, such as a copyright infringement, free-riding and follow-on innovation (btw, the term “based” that you see in the slide above -the 2nd in my (his) presentation was actually a euphemism).

You most likely don’t give a damn about this story, but put yourself in my shoes: I had to (i) thank Nico and acknowledge his authorship of the materials; (ii) write something quick and light for a summer Friday afternoon; and (iii) minimally and superficially  reflect on the absorbent (for good and for bad) aspects of the profession.. Have a good weekend!

Written by Alfonso Lamadrid

5 July 2013 at 4:39 pm

Cases that never will be (I) – Hynix (Case T-148/10)

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Last week one of the most knowledgeable people in the EU competition law world (Commission official whose name I can’t disclose) tipped me to a new series of blog posts:

His words were “someone should one day write on a blog the story of competition cases that could have had a significant impact on the law had they not been withdrawn”. Since the number of competition law bloggers is not that high (even though it’s rapidly increasing…), and since I was the addressee of the message, I sort of got the point.

Actually, I very much like the idea of writing about cases that never were or, rather, that never will be.

There are a few candidate cases to be discussed; a non-exhaustive tentative list of non-cases could include: Siderca, Chi Mei, Suez-Environment, Formula One, Oulmers, BIC Deutschland, Balog or Van der Weerd. [Additional suggestions would be welcome].

Today we’ll start with Hynix (Rambus), a case in which the hearing was scheduled for 2 July but that was withdrawn a few days ago following a settlement.

The Judgment that will never come to light in this case would have constituted a most important precedent in relation to some important general enforcement issues, as well as in relation to an eventual judicial review of the current investigations concerning Google or Samsung.

A bit of background:

In 2002 Hynix filed a complaint alleging that Rambus had engaged in deceptive conduct in a standard setting procedure in relation to DRAM chips by not disclosing the existence of the patents and patent applications which it later claimed were relevant to the adopted standard, and that it had later charged excessive royalties for the use of those patents (i.e. royalties higher than those that it would have been able to claim had it not engaged in deceptive conduct). This is what is generally referred to as “patent ambush”.

The case was interesting because the deceptive conduct at issue had made Rambus acquire dominance (it preceded dominance), and the charging of high royalties could be regarded as the natural consequence of such dominance. Given that EU law does not target “monopolization” practices (those use to achieve dominance), the Commission had attempted to close this enforcement gap by targeting exploitative pricing under Art. 102 under the argument that dominance had been unlawfully attained. This was a brave and controversial move on the part of the Commission.

On 27 July 2007 the Commission adopted a statement of objections setting out its concerns. Rambus responded to the SO and a hearing was held.

Almost two years later, however, Rambus submitted preliminary commitments, those were later market-tested, revised, and eventually made binding on December 2009 (in a nutshell, Rambus committed (i) not to charge royalties for the two standards adopted while Rambus engaged in the deceptive conduct; (ii) to set a maximum royalty of 1,5% for the later generation of standards and to offer thus maximum rate to all market participants). (Note that the commitments concerned only future payments, not those already made).

As you know, in a case like this (or in a case like Google’s), once the Commission accepts commitments it must (a) adopt an Article 9 decision making them binding; and (b) adopt a decision rejecting any complaints stating that there are no longer grounds for action.

Hynix appealed both of these decisions.

In essence, Hynix argued that the Commission violated Article 9 of Regulation 1/2003 by choosing the procedure envisaged in that article where its concerns related to a serious violation of Art. 102.

In its SO, the Commission had envisaged a finding that the charging by Rambus of capped royalties is incompatible with Article 102 (82 back then). However, the corollary of the commitment decision was to make royalty caps binding, thus endorsing their legality.

The Judgment that will never on this case would have shed light on some of the hottest current topics in EU competition law (abuse of dominance in high-tech sector, misuse of patents, the circumstances in which the Commission can or cannot adopt commitment decisions…).  In the past we have devoted lots of ink pixels to discussing these issues, and it’s a pity for the law that questions like the following will, for the time being, remain unaddressed:

 What constitutes an abusive practice with respect to standardization, in particular so far as concerns patent ambushing?

Were commitments in the form of future royalty caps sufficient to eradicate the competitive problems found by the Commission?

What guiding principles (beyond Alrosa) are to be taken into account when assessing the appropriateness and adequacy of commitments? 

Can the Commission address what it had perceived as a serious violation by means of a commitments decision? In that context, may the Commission adopt remedies which are only prospective in nature? Is the Commission entitled to have recourse to a commitment (Article 9) decision after having adopted a Statement of Objections? And in this case, can a Statement of Objections be considered as a valid “preliminary assessment” for the purposes of Art. 9 of Regulation 1/2003?

Written by Alfonso Lamadrid

21 June 2013 at 10:00 am

Back to blogging + post hearing thoughts

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 European-Court-2-620x250[1]

I’m back to blogging after my leave of absence from for work.

As some of you know, on Wednesday we had the oral hearing in case T-79/12, Cisco v Commission (Microsoft/Skype) . I will of course not write anything about the merits of the case, notably because (i) I shouldn’t –which is quite a good reason to start with-; and (ii) I’m deeply involved in the case, and therefore you should take anything I say with a huge grain of salt [however objective and accurate it would’ve been 😉 ]

But since this blog is about personal thoughts, I nevertheless figured that I could share some not substance related thoughts on the experience.

Regardless of what might happen, the hearing was intense, interesting and even fun. If you like competition law, litigation, technology and opponents who are challenging, it can’t get much better.

There’s always an intra-story behind every case, and here there are a few interesting coincidences I can safely tell you about:

1)      We had to go to Luxembourg to discuss about one of its “national champions” (they had home court advantage!). In case you didn’t know, Skype’s headquarters are located in Luxembourg, at 23-29 Rive de foreclausen (bad joke, but couldn´t resist it..)

2)      I’ve been a student of both my partners (Luis Ortiz Blanco and José Luis Buendía), of one of our client’s counsels (Alvaro Ramos) and of our opponent (Jean Yves Art was a truly good merger control professor in Bruges).

3)      The very issues dealt with were actually the subject of my LLM thesis and of my interrupted PhD research, which was convenient. I’ve to thank Pablo Ibañez for initially suggesting the topic;

4)      Another coincidence is that literally a few minutes after the hearing, while we were having lunch at the canteen (decent grill, actually), Microsoft announced and explained the activation of the Lync-Skype bridge of which we had been talking about all morning (no kiddin’; that’s what I call interesting timing…). I’m trying to set it up in my computer at work right now (even after 4 months of fights with our IT department we were never allowed to download Skype at work…)

After the hearing I made the joke that I should now find a new purpose in life. This earned me a couple of gentle reminders: one from my partners, who gently pointed out to the pile of pending stuff that I’ve waiting, and another from my girlfriend, who subtly reminded me that I’ve some wedding planning pending too…

Written by Alfonso Lamadrid

31 May 2013 at 3:10 pm