Huawei may not be the end of the story

On 11 September  2015 the Antitrust Commissioner Margrethe Vestager announced in a speech at the 19th IBA Conference in Florence that certain companies are potentially circumventing the rules established by the Court of Justice in the recent Huawei v ZTE judgment (see our blog posts here, here and here and here).
 
In that judgment, the Court of Justice held that in certain circumstances a holder of a standard essential patent which has committed to licensing it on fair, reasonable and non-discriminatory (FRAND) terms would be abusing its dominant position if it seeks an injunction against an implementer (typically a manufacturer) which is willing to licence on FRAND terms.  However, some companies are now seeking injunctions not against manufacturers, but against other parties further down the distribution chain (for example telecoms operators selling phones), which are exercising the same patent right. 

Of course, this isn’t a breach of patent law, which countenances the possibility of “infringing acts” at many different levels of the supply chain.  In her Florence speech, however, Vestager made clear that the Commission will consider it an abuse of dominance to impose an injunction on any party exercising the same patent right even if they are not the actual product manufacturer.  

Vestager also suggested a broadening of the debate, referring elliptically to “new questions arising in patent enforcement that have a competition law dimension”.  Which exact aspect of the exercise of a right-holder’s patent she had in mind is not clear, given there have been a number of types of conduct in this area that have caused DG Competition consternation.  Given the Huawei ruling’s endorsement of patentees’ right to seek damages, it is to be presumed that Vestager has claims for injunctive relief primarily in mind.  

Vestager also suggested that, as with copyright law, competition law may not always be the solution and that a re-design of certain patent laws and practice may be required.  Those involved in the negotiations to reach agreement on the UPC will no doubt wish the Commissioner “good luck” with that particular enterprise…

No rest for the Commission

You could be forgiven for thinking that after a busy year DG Competition would take a break over the summer period.  In fact, it continues to focus on the e-commerce sector inquiry which it launched in May (see our previous commentary here and here). 

Over the past few weeks DG Comp has continued to send information requests to numerous stakeholders in the digital market throughout the EU. This includes suppliers, wholesalers, online platforms and online retailers. The currently proposed timetable for the inquiry is as follows:
Earlier this summer the Commission also made a number of other significant moves in the e-commerce sector. First, it opened an investigation into Amazon’s e-book distribution agreements and in particular its ‘most-favoured-nation’ clauses. Second, it approved under the EU Merger Regulation the proposed creation of a joint venture for multi-territorial online music licensing and copyright administration services by three music collecting societies (we will be writing a post on this shortly). Third, it sent a Statement of Objections to MasterCard in relation to the MasterCard’s inter-regional inter-change fees and its rules on cross-border acquiring. It is alleged that these rules prevent arbitrage on interchange fees in different Member States thereby artificially raising costs for consumers using the card.

National authorities also remain active: the German Bundeskartellamt recently concluded its investigation into the selective distribution system of Asics which prohibited dealers from: (i) using online marketplaces such as eBay and Amazon; (ii) supporting price comparison engines; and (iii) using its trade mark on third party sites, even to guide customers to the site of an authorised dealer.  The regulator found that each prohibition was itself a hardcore restriction, and taken together essentially amounted to a de facto ban on internet distribution, causing serious restraints to competition.  The Commission is bound to be following such outcomes with great attention.  

With so much activity in the area it is clear that the Commission, as well as the national authorities, are scrutinising closely the behaviour of those working in the e-commerce sector.  We will be sure to keep readers updated as developments in the area unfold...

Interested in competition law developments in the pharma sector…?

If you are interested in competition law developments in the pharma sector, it’s still not too late to register for a seminar that a couple of us will be giving on Wednesday 30 September.  We will be looking in some detail at the latest patent settlement cases, with a view to trying to find some much-needed legal certainty.  We will also be talking about how the Commission’s conclusions in its Lundbeck and Servier decisions may apply to other areas such as licensing transactions, as well as considering the impact of the competition authorities’ increasingly narrow approach to market definition.

Registration is via Bristows’ main website – here.

A podcast of the seminar, together with the slides, will be available after the event

Pat Treacy and Sophie Lawrance