Appunti di Competition Law

OR

the providing of the resource at unfair, or discriminatory, conditions

•

This is the essential facilities doctrine

“Indispensable” - “essential” means that the resource is no substitutable and there is no way to

duplicate them due to physical or technical reasons or due to legal reasons.

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Without a cause

material problems related to the firm which demand access to the essential resource (risk of

• insolvency or lack of professionality) provided that the refusal is a proportionate measure

technical problems related to the access to the essential resource (limits of capacity, safety, etc.)

•

In practice

• ECJ (1974) Commercial Solvents: refusal, by un undertaking which is dominant in the market of

a given raw material, to supply customers, which are manufacturers of derivatives of such a raw

material, due to the intention of the dominant firm to manufacture its own derivatives.

• GC (2007) Microsoft: refusal by Microsoft (almost monopolist in the market of operating system

for PC) to provide some competitors (which were active in the linked market of servers) with

information indispensable to make possible the interoperability between their servers and

Windows

Essential facilities doctrine and IP rights

IP Law VS Competition Law?

The principle is that refusing to grant licenses on IP right to third parties is not abusive

Some exceptions: a specification of essential facility doctrine

The refusal of the IP right holder is abusive if the firm which requested the license would go to offer

new products and services:

for which there is a potential consumer demand

• which belong to a market which is different from that where the IP right holder operates

• which may be produced only on the exploitation of IP right, so the usage itself is necessary

•

Lecture 14: Discriminatory practices and Tying contracts

D. Some contracts subject to other contracts

Two conditions

1. the tying practice must be coercive:

-refusal to sell/ to supply the two products separately

- discouraging the separate selling/ supplying by providing rebates or other benefits subject to

the joint sell/supply

2. The tying practice must have no justification by their nature or commercial usage

The non exhaustive nature of the list under Article 102 TFEU

Some cases not falling within the list of Article 102 TFEU

artificial extension of the duration of a patent, in order to prevent the potential competitors from

• entering into the relevant market

systematic challenging in court of the competitors’ patents, in order to raise their costs (so called

• “sham litigation”) 21

Agreements and abuses of dominance: some further remarks on undertakings

Restrictive Agreements & Abuses of Dominance: the common (broad) concept of undertaking (see

back)

Art. 106, $1, TFEU as a further confirmation: public undertakings holding special or exclusive rights

cannot take advantage from any measure in conflict with articles 101 and 102 TFEU.

Art. 106, $2, TFEU as an important exception to all the above principles: some undertakings are

“partially” subject to the rules of competition while some undertakings are “partially” exempted.

The (partially) exempted undertakings

Two types of (partially) exempted undertakings (Art. 106, $2, TFEU)

undertakings which are holders of a “revenue-producing monopoly”

• undertakings which are entrusted with the performance of “services of general economic interest”

•

The rationale of the exemption under Article 106, $2, TFEU

Revenue- producing monopoly as a remedy for a market failure:

the need for a “universal service” in a given economic sector

• the suspension of competition as the compensation of the costs of universal service

•

The risk of the exemption under Article 106, $2, TFEU concerned the exploitment of legal

monopoly in economic sectors where there is no need for a universal service.

Rationale and risk have some effects on the wording of Article 106, $2, Tfeu. The exemption is

worded as “conditional applicability” of competition law: CL is applicable to those undertakings “in

so far as it does not obstruct the performance, in law or in fact, of the particular tasks assigned to

them”

indispensability of the exemption

• proportionality of the exemption

•

Rationale and risk have some effects on the reading of Article 106,$2, TFEU

I. “revenue-producing monopoly”: today very few cases of legal monopoly (energy,

communications, etc. have been liberalized )

II. “services of general economic interest”:

- need for an act of public authority entrusting the undertaking of the service

- the concerned service must be able to satisfy directly essential interests of the people

- the act makes it a duty to provide those services to everybody

YES NO

banks

•

postal services post services of loading and unloading

• • airport handling

• restaurant and cafe on motorways

•

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Some further suggestions from Italian CL

A more specific regulation of business run by an undertaking which is holder of a legal monopoly

duty to establish (and to operate by means of) a separate entity

• duty to notify the establishment of the new entity (or the acquisition of the control on it) to the

• Italian Competition Authority

duty of non-discrimination between the separate entity and third parties

•

Lecture 15: The concept of concentration

A first, neither totally correct, definition of concentration:

Substitution of two (or more) independent undertakings with just one undertaking.

An economic definition of “concentration”:

Strenghtening of an undertaking (not by natural grow up, but) by effect of acquisition of third

economies.

A more technical definition (art. 3 reg. 139/04):

Change of control on a lasting basis on two or more undertakings

Concentrations: an overview

There is no discipline in EEC Treaty. The first discipline comes with Reg. EC 4064/89 and now with

Reg. EC 139/04.

There is a delay because of the bivalent nature of concentrations

Negative effects Positive (non negative) effects

reduction of number of market players, so (often) economies of scale (more rationality and

• •

negative stable effects on market structure efficiency in productive and/or distributive

(regardless of any behavior of the players) processes)

(sometimes) pure will of expansion, without full trasparency of concentrations

• •

adequate thinking (and weighing) of the

effects of a merger, with subsequent

production of inefficiencies

And some effects of this bivalent nature on the relevant discipline:

not an ex post punishment of a behavior already had, but an ex ante evaluation of the effects of a

• future transaction

not every transaction which constitutes a concentration, but only those transactions which

• exceed some thresholds

not a rigid option between “giving authorization” and “denying authorization”: some other

• intermediate reactions are provided by the law

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The concept of concentration

Reg. 139/04, art. 3. There is one general description for which the focus is on the effects, that are

the change of control on a lasting basis. Then we have three types of transaction: merger,

acquisition of control and establishment of a common firm.

From a juridical point of view there is no common character among the three types of transaction.

In addiction, both “acquisition of control” and “establishement of a common firm” do not indicate

legally a specific transaction, and in fact the common character is economical/factual. What is

material is the change of control: the acquisition of the ownership of the productive factors.

The concept of control

Reg. 139/04, art.2: “rights, contracts or any other means which, either separately or in combination,

confer the possibility of exercising a decisive influence on an undertaking, in particular by:

A. ownership or the right to use all or part of these assets of an undertaking (business lease,

usufructs of business, etc.)

B. rights or contracts which confer decisive influence on the composition, voting or decision of the

organs of an undertaking (shareholding, shareholder’s agreement, interlocking directorates,

etc.)

The concept of “change of control”

Some cases/examples:

acquisition of a minority shareholding: if. due to the law or to the articles of association, the

• shareholding implies a veto-right about strategic decisions such as production, prices,

investments, use of profits, etc.

passage from a joint control to an exclusive control: so called qualitative change of control.

•

Lecture 16: The concept of concentration (2)

Some further notes about mergers

The condition of independence of the firms concerned. This is the case of intra group mergers.

Some further notes about acquisition of control

The wide notion tells that the acquisition, wheter by purchase of securities or assets, of direct or

indirect control of the whole or parts of one or more other undertakings.

There is a problem of interpretation of acquisition of assets and parts. In particular, how many

assets? How many parts? What are the minimum constructive elements of an undertaking? And

how many assists (and parts) are needed to have something that is functionally equivalent to those

constitutive elements?

The answer to it is the soft law that says: the acquisition of control over assets can only be

considered a “concentration” if those assets constitute the whole or a part of an undertaking, i.e. a

business with a market presence, to which a market turnover can be clearly attributed.

Some examples from the case law:

the transfer of client base (in so far as is sufficient to transfer a business with a market presence/

• turnover)

the transfer of IP rights (in so far as they constitute a business with a market presence/turnover)

• in no case the transfer of a non exclusive license on an IP right may be a business to which a

• market turnover is attached 24

Finally there are two remarks:

“market presence” (and so “market turnover”) must be assessed on actual results (provisional

• data are not considered)

“market presence” (and so “market turnover”) must be transferrable to the acquiring undertaking

• (not relevant if they depend on skills of the owner/ holder/ manager of the assets)

Some exceptions: transactions which fulfill the general description set out in Reg. 139/04, Article 3,

$1, but are not considered as concentrations.

One example: acquisition of securitis by credit institutions, insurance companies, financial firms,

provided that it is preformed:

with a view to reselling them within one year

• without exercising