Archive for the ‘Case-Law’ Category
ECJ’s Judgment in Case C-457/10 P Astra Zeneca
[There are too many things going on this week on which we would like to comment (not least yesterday’s record fine in the CRT cartel) and we hear that next week may be even more interesting… We had another post planned for today, but current news rule, and we wanted to provide you with the first comment of today’s Judgment in AstraZeneca. So, here’s a subjective and hastily written summary + comments. It might be a living-post, meaning that it might be updated as further thoughts come to mind. Anyone who might want to use this to draft client alerts: please consider this as a Sint Nicholas gift 😉 ]
It could make sense to hold a ménage à trois discussion on this Judgment; candidates are welcome…
Today the European Court of Justice (“ECJ”) issued its long-awaited Judgment in the AstraZeneca (“AZ”) case. The ECJ has upheld the 2010 Judgment from the General Court, which in turn had endorsed the Commission’s 2005 infringement decision.
Background
As most of you know, the Commission had found that AZ abused its dominant position by (a) making misleading representations to patent offices of several Member States with a view to extending the period of patent protection for its product Losec (an omeprazole-based medicinal product used in the treatment of gastrointestinal conditions); and (b) requestintg the deregistration of market authorisations for Losec capsules in Denmark, Norway and Sweden. These conducts were ultimately aimed at keeping manufacturers of generic products at bay, as well as at preventing parallel trade.
In 2010 the General Court dismissed most of AZ’s arguments, but reduced the fine from € 40.25 million to € 12.25 million on the grounds that the Commission had not proved that AZ’s conduct had prevented parallel imports of Losec in Norway and Denmark. AZ appealed this Judgment, and in doing so brought before the ECJ some issues which are of crucial relevance to the very notion of abusive conduct.
Today’s Judgment
– Market definition is discussed in paras. 31-60. I had started to summarize it, but it would take too long. Unless you represent AZ you can skip (lots of factual stuff, there’s nothing that will rock your world)
– The first abuse
The logic in the GC’s Judgment was that AZ deliberate (intention plays a key role here) submission of misleading information to public authorities with a view to obtaining the grant of an exclusive right to which it was not entitled falls outside the scope of competition on the merits, and therefore within the category of abusive conduct.
AZ and EFPIA argued that AZ had simply failed to disclose to patent offices its bona fides and allegedly reasonable interpretation of the patent rules, and that this could not be equated with “objective misleading”. In their view, even if AZ’s interpretation ultimately proved wrong, it was not aimed at misleading. The applicants claimed that pursuant to the GC’s standard, dominant companies would have to be infallible in their dealings with regulatory authorities, which, in turn, would impede and delay patent applications in the EU. [i.e. the basic trick of trying to scare the Court alleging that hell will break loose; as if it had since the Decision was issued in 2005….]
The ECJ’s Judgment -like the GC’s- is solidly grounded on Hoffman la Roche’s rather unhelpful definition of abuse as conduct different from “competition on the merits”. It does not require the abusive conduct to flow directly from the exercise of the undertaking’s dominanat position; on the contrary, it assumes that the presence of a dominant company already implies that the degree of competition in a market is hindered (the clearest formulation of this idea appears in para. 150, with respect to another ground of appeal), and that therefore it has a special responsibility to ensure that competition is nor further undermined.
The ECJ does a good job in setting out the objective reasons why AZ’s conduct was consciously motivated by the desire to mislead public authorities in order to maintain its dominant position (see paras. 79-93). The Court notes in paras. 94-100 that if AZ’s interpretation had been reasonable (as AZ claimed), then it should have disclosed the relevant information informing its interpretation (the Judgment doesn’t put it this way, but the idea seems to be that the intentional failure to disclose that info provides a valuable indication of the merits that AZ seemed to attribute to its own reasoning). Para 98 makes it clear that even if you have a “legally defensible interpretation” this is not excuse resorting to highly misleading representations with the aim of leading public authorities into error.
In para 99 the Court responds to the “hell will break loose argument” (see my second word crossing above) stating that the GC did not require infallibility in patent applications (“it thus cannot be inferred from that Judgment that any patent application made by such an undertaking which is rejected on the grounds that it does not satisfy the patentability criteria automatically gives rise to liability under Article 102“), and that the Judgment is confined to the specific circumstances of the case. There’s a difference between requiring infalibility and reprehending someone who obviously and intentionally fails to act right.
The Court then deals with the argument that AZ’s conduct (its apliccation for SPCs) was labelled as abusive regardless of its lack of effects. It states that the “examination by the General Court is not in any way based on the assumption that the practice in question constitutes an abuse in itself regardless of anticompetitive effects” (para. 106). The ECJ confirms that AZs misleading interpretations were liable to lead the public authorities to grant it a right to which it was not entitled, and that this in fact happened in several Member States (paras. 107 and 108). In para. 110 the Court makes it clear that even if the effects of the abuse were also felt at a period in which AZ was not dominant anymore, this is irrelevant for the assessment of the legallity of a practice carried out while AZ was dominant. The Court also upholds the GC’s conclusion that AZ did not achieve its goal in some Member States its conduct was “very likely to result in the unlawful SPCs” (para. 111).
The ECJ makes it cleat that in Art 102 cases there is no “requirement that current and certain anticompetitive effects be shown“. Citing para. 64 of TeliaSonera the ECJ states that “although the practice of an undertaking in a dominant position cannot be characterised as abusive in the absence of any anti-competitive effects on the market, such an effect does not necessarily have to be concrete, and it is sufficient to demonstrate that there is a potential anti-competitive effect” (para. 112) (unlike in TeliaSonera, there is no reference to the exclusion of “as efficient competitors”, but this is probably due to the different factual settings in the two cases).
Ménage à trois (part II; José Luis Buendía): Case T-169/08 PPC v Commission (… and Jules v Jim)
For this second part of our first ménage à trois discussion we are proud to present you with José Luis Buendía’s view of the Greek Lignite Judgment in response to Marixenia Davilla’s earlier post. Aside from being the head of Garrigues’ Brussels office -where I happen to work-, José Luis is widely regarded as “Mr Article 106”. He also masters the art of illustrating all hiw views with metaphores and parables. Continue reading and you’ll see what we mean….
[For a contrarian view of José Luis’ arguments check our Makis Komninos post (which we will publish here tomorrow)].
It is a real pleasure to be invited to contribute to this blog. This is even more the case given the topic, the format, and the identity of my nice and learned counterparts – Marixenia and Assimakis. Even if I don’t share their enthusiasm about this judgment, it is clear that they have done an excellent job as lawyers. So, congratulations to them and to their colleagues who worked om the case.
Contrary to them, despite having been in the past an EC official, I have not had any involvement in this particular case. I am nevertheless very interested in it, since I am working on a new edition of my book on Article 106. Moreover as I have explained in a recent article, unfortunately there are not so many Article 106 cases to comment. So I am glad to have this opportunity.
This case made me think of François Truffaut’s film Jules et Jim about a genuine ménage à trois. The Catherine of the movie (Jeanne Moureau) had – simultaneously – a husband and a lover. As Marixenia rightly implies in her interesting comment, Article 106 also has simultaneous links with State aid on the one hand and with antitrust on the other hand. In my view the problem with the judgment is to assume that Article 106 is only married with antitrust and faithful to it. It is not. Article 106 is about State measures and is therefore essentially different from antitrust.
It is for this reason that, in my opinion, this judgment is not really consistent with the previous case law that it claims to be following. Indeed, previous judgments, like RTT, considered that the mere granting of an exclusive right to a public undertaking previously enjoying a dominant position was in itself contrary to Article 106 combined with Article 102 TFEU. This conclusion was based on the effects of the State measure creating the extension of a dominant position from one market to another one (effects that were similar to those of an abuse). The said conclusion did not require any actual abusive behavior.
In today’s judgment the General Court reads the previous case law in a different manner and finds that it does require the existence of an abusive behavior, at least a potential one. Since the EC decision did allegedly not established the abuse but relied only on the effects, it was according to the Court in breach of the Treaty. This reasoning seems to me clearly contradictory with the case law.
This reasoning seems also a little bit abstract. Indeed, the judgment itself concedes that the mere possibility of a future potential abuse would have been enough to satisfy the legal test. However, since according with the judgment, the decision did not explore this issue in an explicit manner, it had to annul it. It seems however obvious to me that a State measure extending the dominant position from one market to a neighbor one has, at the very least, the potential to lead to abusive behaviors. So, the Court seems to say that it is only the lack of an explicit reference to this obvious consequence that leads to the annulment.
I assume that the Commission may appeal the judgment before the Court of Justice in order to clarify the application of Article 106 with regard to special or exclusive rights. I also think that in the future the Commission should be more active and more coherent in the application of this provision.
In any event, I also know that my Greek friends would have a view different from mine, so I really look forward to the continuation of the debate.
Ménage à trois: The General Court’s judgment in Case T-169/08 PPC v Commission
A few posts ago we decided to follow the Commission’s example and launched a reform aimed at working less. Our plan is to do so by opening this blog to comments on recent Judgments on the part of three experts: one writes a “standard post” on the Judgment, and two others comment on it. As anticipated, our first ménage à trois deals with the Greek Lignite case (concerning the inteface between Arts. 106 and 102 TFUE). Our three inaugural guests are three good friends of this blog: two of them (Marixenia Davilla -Shearman&Sterling- and Makis Komninos -White&Case- and were actually involved in the case (on the winning side) and the third (José Luis Buendía -Garrigues-) is the author of the bible on Article 106 (of which a new edition is on the pipeline). Marixenia has written an excellent post to get the ball rolling. Comments will follow soon. Enjoy!
***
First things first…Many thanks to Chillin’ Competition for ambushing giving me the opportunity to participate in my first ever platonic ménage a trois. This is so exciting that I am contemplating making an addendum to my curriculum. I am certain it will boost my chances of being promoted before I turn 50.
Let’s move on to the juicy stuff now, namely, the PPC judgment rendered by the General Court on 20 September 2012. Having worked on this case whilst at Howrey (RIP), I am particularly pleased to see PPC winning a very difficult battle.
This case concerns Article 106 TFEU, a provision that cannot be implemented on its own, but must be combined with another EU law provision, in this case Article 102 TFEU. Article 106 can also be described as a sort of transgender hybrid enforcement tool, existing in limbo somewhere between antitrust and state aid law, without really being any of the two. Commission decisions under Articles 106/102 are addressed to member states, but are not state aid decisions. They make findings regarding actual or potential abuse of dominance, yet the level of analysis required in such cases to prove an infringement is notably lower compared to that required for establishing a “pure” abuse of dominance under Article 102. Pursuant to Article 106(1)/102 case law, the Commission is not required to show that the company in question abused its dominance, but that it can be led to committing an abuse merely by exercising the state measure in question. In other words, Article 106 is not a bird, is not a plane, but does (still) fly, and has been a pretty handy weapon for the Commission, particularly in cases concerning network industries.
But the fun does not end there. The case law developed in relation to Articles 106(1)/102 predominantly comprises preliminary rulings by the Court of Justice, which are neither consistent with each other, nor that easy to categorise. That said, a broad categorisation is possible, and in PPC’s case the Commission relied upon the so-called “inequality of opportunity” case law (Raso and Others, France v Commission, GB-Inno-BM, and Connect Austria). According to the Commission, based on that case law, there is no need to identify a specific type of abuse; suffice to show that the state measure in question leads to an inequality of opportunity between market operators. Haha, piece of cake! Prove that, dear Commission official, and you’re done, you can close the shop and go on holiday!
This interpretation is somewhat unsatisfactory. In its appeal against the contested decision of March 2008 PPC invited the General Court to clarify this issue, and the latter bravely took on that challenge.
Case T-111/08, Mastercard. A priceless Art. 101(3) assessment
A while ago we wrote a post on The Slow Death of Article 101(3) TFEU, where we said that in recent European Commission, practice, only once the challenged agreeement was not deemed to be a restriction by “object”, and that only in that case the Commission had carried out a serious Article 101(3) assessment. This was the Mastercard Interchange fees case, and last May the General Court rendered its Judgment on it (btw, we have no interest whatsoever on this case).
Over time we have realized that the longer and more serious a post is, the less you guys read it (and this one will be quite lenghty). So, of the many complex and interesting issues raised by this case, we will only comment on a general point regarding the Court’s assessment of the interchange fee arrangements under Art. 101(3). Given that almost no Decision or Judgment delves into 101(3) analyses these days, the General Court’s assessment is priceless for anyone interested in exploring how this key provision is to be interpreted. In this sense, it’s surprising that the Judgment hasn’t received more attention.
I confess that I undertook the reading of the Judgment with a clear confirmation bias: I was looking for evidence that would support my point that it’s incredibly difficult to successfully argue that a given agreement can benefit from the legal exemption provided by 101(3). To my (positive) surprise, I found out that despite applying the “manifest error of assessment” standard of review, the General Court actually did carry out an assessment of the evidence put forward by Mastercard which is well more detailed than what I expected (see paragraphs 207-237). Right or wrong, it was acceptably thorough, specific, and even revealed that the Court had managed to understand the so-called Baxter model put forward by the applicants.
The Court’s application of the first condition of Article 101(3) nonetheless raises some interesting and debatable issues that relate to the fundamentals of Art.101(3), which are partly discussed below. I take responsibility for the opinions below, but I have taken a free ride benefitted from educative discussions with two of my favorite legal minds: Luis Ortiz (who has authored the best study on how Art. 101(3) is to be applied) and Eric Gippini (whose great Friday Slot interview is available here) (to make sure, they don’t necessarily agree with the views developed below)
Click here if you’re interested in reading more (spoiler alter: dense stuff ahead)
News from the Court
This was an unusual week at the European Courts. First, as we anticipated some time ago, the ECJ was partially renovated. The Member States have reappointed Judges Arabadjiev, Arestis, Berger, Bonichot, Fernlund, Jarasiunas, Levits, Malenovsky, Prechal and Von Danwitz as well as Advocate Generals Bot and Mengozzi.
The new faces at the ECJ will be Judge Da Cruz Villaça (replacing Cunha Rodrigues), Judge Vadja(replacing Schiemann), and AG Wathelet (replacing Masák). Nils Wahl (one of the good competition experts in Luxembourg) will have to remain at the General Court for a short period before swearing in as Advocate General (apparently the candidate proposed by Sweden to replace Judge Wahl was vetoed by the ‘Art. 255 Committee’).
The ECJ also held elections for President (Judge Skouris was re-elected), Vice President(Judge Lenaerts will be the first VicePresident in the history of the Court) and Presidents of Chambers (winners are: Tizzano; Silva de Lapuerta, Ilešič, Bay Larsen, and von Danwitz),
Here’s a video of the speeches pronounced that day at the Court (if you watch it, that means you’ve plenty of free time; we’re just saying 😉 ] Our highlight (as if we had watched the whole thing..) is Judge Schiemann’s great and very funny farewell speech (starting in minute 31.20).
By the way, our next Friday Slot interview will feature a member of the General Court. We’re sure you’ll love that one.
Have a great weekend!
Never mind! (Case T-119/09, Protégé v Commission)
In December 2010 we wrote a post on the General Court’s Judgment in Case T-427/08, CEAHR v Commission. Our post interpreted the Judgment as effectively limiting the Commission’s discretion to reject complaints.
That post concluded with the following opinion: “this is a most welcome judgment. Indeed, whereas previous case law imposed upon the Commission the burden of “considering attentively all the matters of fact and of law which the appliccant brought to its attention”, the General Court has, by virtue of its in-depth review, turned those words -until now a mere formality- into a real, practical, obligation”.
But now we’ve read last Thursday’s Judgment in Case T-119/09, Protégé v Commission (concerning an appeal against a decision rejecting an abuse of dominace -sham litigation- complaint against Pernod Ricard) (available here, but only in French) (how wouldn’t we read a competition Judgment in which the relevant market is the one for Irish whiskey?) and I’ve realized that perhaps we were wrong.
The Protégé Judgment makes it clear that the strict analysis of the Commission’s exercise of its discretionary powers carried out in CEAHR was an exception. Certainly Protégés theory of harm doesn’t appear to be a particularly solid one to say the least (in this sense, the contested Decision and the Judgment are quite understandable). What is surprising is not the outcome of the case, not even the GC’s reasoning; what strikes me is that the Judgment does not make a single reference to the former precedent in CEAHR. In our view, by completely ignoring CEHAR the GC might have effectively overruled it.
The overruling becomes more explicit with regard to one particular point. You may recall the suggestion in paras. 155 and 174 of CEAHR that when an alleged infringement affects several Member States there could be a sort of presumption of “EU” (why do we still say “Community” when we talk about this topic?) interest. In Protégé the GC makes it very clear that this is not the case.
In sum, we are still governed by Automec. The Commission can very much decide what’s interesting and what’s not provided that it doesn’t mess up big time incur in a manifest error of appraisal in dealing with the factual elements that it may put forward to justify a rejection.
By the way, we have heard through the gravepine that the upcoming hearings on the De Beers distribution case may feature some interesting discussions on the notion of Community EU interest. We’ll stay alert.
So, to those who read our post on CEAHR: never mind. To the Commission: false alarm.
Microsoft v Commission (T-167/08) – The Magill-IMS Health Re-Animator?
I was about to fall asleep reading the Microsoft judgment of last week (T-167/08), when I stumbled into paragraph 139.
This paragraph implicitly reverses the CFI’s Microsoft I ruling on the legal standard of abusive refusal to supply (CFI, Case T-201/04, Microsoft Corp. v Commission, ECR [2007] II-3601).
Remember, in this judgment the CFI had departed from the IMS Health and Magill “new product” condition.
It had held that:
“§647. the circumstance relating to the appearance of a new product, as envisaged in Magill and IMS Health . . . cannot be the only parameter which determines whether a refusal to license an intellectual property right is capable of causing prejudice to consumers within the meaning of [Article 102(b) TFEU]”.
The CFI further added that it was sufficient for the Commission to prove that the refusal to supply interoperability information gave rise to a “limitation […] of technical development”.
This new concept was (and still is) rightly criticized by scholars and practitioners as a loose, elusive and murky legal standard. Many expressed regrets over the disappearance of the simple three-pronged Magill-IMS Health test. Others argued that the CFI’s “technical development” standard was wholly inapplicable, and advised to rely on the Magill and IMS Health judgments of the upper ECJ. Finally, some practitioners (amongst others, D. Waelbroeck) talked of a lex specialis Microsoft.
Interestingly, the latest Microsoft judgment no longer talks of the “limitation of technical development“.
Rather, in what reads like an obiter dictum, the GC explicitly refers to the “new product” condition, and quotes IMS Health as the sole source of precedent on refusals to supply involving IPRs.
“§139. In that regard, it should be recalled that, in order for the refusal by an undertaking which owns a copyright to give access to a product or service indispensable for carrying on a particular business to be regarded as abuse, it is sufficient that three cumulative conditions be satisfied, namely that that refusal is preventing the emergence of a new product for which there is a potential consumer demand, that it is unjustified and that it is such as to exclude any competition on a secondary market“
Of course, the Court would not acknowledge that it applied a wrong legal standard in 2007.
It thus goes on to state at §140 that those three conditions were met in the Microsoft I case (they were not).
That said, paragraph 139 marks a welcome evolution of the case-law on abuse.
Case C-128/11 UsedSoft v Oracle
Note by Alfonso: The Court of Justice has published yesterday its long-awaited decision in UsedSoft v. Oracle. Even though the matters are issue are mainly IP-related (they concern the application of the so-called “exhaustion doctrine” to computer programs), they have important competition law implications. Marcos Araujo (a friend of ours and a partner at Garrigues) has followed closely this case as well all others concerning the intersection of IP and competition law. We’ve asked him to provide us with his first views on this very fresh Judgment. Here they are:
In a Grand Chamber judgment, the ECJ has taken a determined stance in favour of THE free movement of goods and the exhaustion doctrine. Today’s Judgment has dismissed not only Oracle’s arguments, but also those raised by the Commission and by the various intervening Member States, and has affirmed vigorously the right of licence holders to “resell” their rights of use of computer programs, supporting intermediaries and end customers in the way.
The case had attracted much attention given the contradictions in this area of European Law, which on the one hand declares that the sale of computer programs exhausts the rights of the owner (art. 4.2 of Directive 2009/24) and therefore that the program can freely be re-sold, and, on the other hand, states that the provision of services over the Internet does not cause exhaustion of rights (Recital 29, Directive 2001/29). In this situation, software companies which license (and arguably do not “sell”) software over the internet may claim that their IP rights should not be deemed to become “exhausted”, as they would be providing a service rather than selling a product.
Intel Hearing at the General Court today
The Court hearing in the Intel case started today in Luxembourg.
Aoife White from Bloomberg has written a piece on it in which she quotes my view that, following the Tomra Judgment, Intel’s chances of having the fine annulled or reduced appear to lie more on procedural than on substantive grounds.
Thanks to a a very kind Luxembourg-based reader of this blog we can make the Court’s report for the hearing available to you: Intel Report Hearing
Case T-167/08, Microsoft v European Commission
I’ve just returned to Brussels after spending a great day of immersion into Korean culture in Frankfurt. The Korean Fair Trade Commission invited me to speak about international cartels to approximately 100 Korean executives of Korean companies operating in Europe within the framework of an Anti-Cartel Workshop [check out the program: Anti-cartel workshop :)] I had a great time in our very unorthodox and fun session as well as in the different social events with which they treated me afterwards. To all of them: 감사합니다 !! We have more things to tell you about this event and about recent trends in cartel case-law, but, first, let’s deal with today’s big news:
This morning the General Court issued its judgment with regard to the periodic penalty payment of 899 million euros that the Commission imposed on Microsoft for not complying adequately with the Commission’s 2004 infringement decision and, in particular, with the obligation to provide interoperability information under reasonable and non-discriminatory conditions. (Click here to read the Judgment).
We believe this post is the first hastily written analysis of the Judgment. Apologies for the long post, but this time we think we have something interesting to say.
[btw, you might recall that in previous posts we talked about the Hearing in this case (here), and even provided you with the report for the hearing (see here)].
I have only had time to skim through the Judgment, but here’s how I think its main points can be interpreted: Read the rest of this entry »
Chillin'Competition 