On Friday, August 8, 2014, the Southern District of New York denied motions for summary judgment filed by the National Hockey League, Major League Baseball, Comcast Corp. and DirecTV LLC in suits alleging that these organizations and television providers conspired to hinder competition in television and internet sports broadcasting. In two class action suits brought by consumers of broadcast sports, plaintiffs claimed that the leagues and television providers agreed to “black out” games so that regional sports networks faced limited competition to broadcast live events. This purportedly anti-competitive agreement forced plaintiffs to buy “out of market” packages offered by defendants, such as MLB Extra Innings, to watch live games on television or the internet if they did not live within the regional provider’s viewing territory. Laumann, et al. v. National Hockey League, et al., case number 1:12-cv-01817; Lerner v. Office of the Commissioner of Baseball, et al., case number 1:12-cv-03704. District Judge Shira Scheindlin determined that the questions of whether plaintiffs have provided evidence of collusion among the leagues and providers and evidence of a tacit agreement between the providers should be decided at trial by a fact finder. In addition, Judge Scheindlin refused to apply the rule established in Federal Baseball Club of Baltimore v. National League of Professional Baseball Clubs, 259 U.S. 200, 208 (1922), that exempted Major League Baseball from the antitrust laws. She explained that Major League Baseball’s exemption did not extend to the league’s contracts for television broadcast services. A trial date has not been set.
On Friday, August 8, 2014, the Northern District of California determined that the National Collegiate Athletic Association’s (NCAA’s) rules banning student-athletes for being compensated for the use of their names, images and likenesses violated antitrust laws. In re Student-Athlete Name & Likeness Licensing Litigation, case number 4:90-cv-01967. During the three week-long bench trial in June 2014, the student athletes argued that the NCAA and its member schools and conferences conspired to fix compensation for the use of athletes’ likenesses at zero. The NCAA countered by contending that not paying athletes stopped some schools from being able to compensate students more than others, that athletes received benefits, such as an education and room and board, for playing college sports, that the rule protected these students’ amateur status, that paying athletes would cause tension with non-athlete classmates, and that fans would not watch college sports if athletes were paid. District Judge Wilken was unpersuaded by the NCAA’s arguments. In her ruling, Judge Wilken stated that the NCAA did not provide credible evidence that fans would abandon supporting their teams if athletes were paid. Moreover, because schools compete for recruits with impressive facilities and highly-paid coaches, the NCAA undercut its argument that not compensating student-athletes leveled the competitive playing field between colleges. Instead, Judge Wilken determined that without these rules, Division I basketball and Football Bowl Subdivision schools would compete for recruits’ athletic talents and licensing rights as well as compete to offer athletic and educational opportunities for students.
In entering an injunction against the NCAA, Judge Wilken suggested that NCAA member schools should increase the stipends paid to students to cover the full cost of attending college, and she also recommended that schools hold money collected from the use of students’ likenesses in a trust for the students until they graduate. At the same time, however, she refused to allow student athletes to receive money from product endorsements. On Monday, August 11, 2014, the NCAA asked Judge Wilken to clarify the application of her order, which stated that the injunction prohibiting the NCAA’s ban on compensating players would begin with athletes who enroll after July 1, 2016. The NCAA requested that Judge Wilken explain whether the injunction applied to current student athletes beginning in July 2016 or whether it only applied to recruits who start college after that date.
This case originated in 2009 when two former NCAA student-athletes filed class action suits against the NCAA, Electronic Arts Inc. and Collegiate Licensing Co., alleging that these organizations profited from student-athlete likenesses on television, in video games and on merchandise while prohibiting the athletes from receiving payment. The NCAA previously settled with plaintiffs for $20 million over the use of students’ likenesses in video games, and Electronic Arts and Collegiate Licensing also reached a settlement with both plaintiff groups for $40 million. Both settlements received preliminary approval from Judge Wilken in July 2014.
On July 30, 2014, the U.S. District Court for the District of Maryland denied Aegis Mobile LLC’s motion to quash a Federal Trade Commission (FTC) subpoena seeking information related to an investigation by the Competition Bureau of Canada (Competition Bureau). Aegis, based in Columbia, Maryland, contracted with the Canadian Wireless Telecommunications Association (CWTA) to collect and analyze the advertising used to promote the CWTA’s digital content. The Competition Bureau, alleging the advertising was false and misleading, asked the FTC to seek information from Aegis Mobile about its work for the CWTA. The FTC issued a subpoena for documents relating to the project using its power under the SAFE WEB Act.
The SAFE WEB Act enhances the FTC’s investigative and enforcement functions in information sharing, investigative assistance, cross-border jurisdictional authority and enforcement relationships. The FTC advocated the reauthorization of the Act by Congress in 2012, pointing to over 100 investigations with international components that the FTC had already performed. The FTC also pointed to figures suggesting cross-border fraud problems, including over 100,000 U.S. consumer complaints against foreign business in 2011.
One of the provisions of the SAFE WEB Act, 15 U.S.C. § 46(j), gives the FTC the authority to assist foreign authorities in investigating fraudulent and deceptive commercial practices, with certain exceptions. The FTC employed the SAFE WEB Act here, and in response Aegis Mobile, sought to quash the FTC’s subpoena on the grounds that Aegis Mobile was a “common carrier,” and would therefore be exempted from the subpoena. The court held that Aegis Mobile was not a common carrier and was subject to the FTC’s investigation.
Addressing for the first time whether a patent holder under a contractual duty to deal is also subject to an antitrust duty to deal, the U. S. Court of Appeals for the Second Circuit upheld dismissal of a putative antitrust class action challenge to a drug manufacturer’s refusal to fully supply competitors’ requested quantities under patent settlement agreements. In re Adderall XR® Antitrust Litigation, Case No. 13-1232 (2d Cir., June 9, 2014) (Sack, J.).
The defendants, Shire, hold patents covering Adderall XR. Previously, Shire sued generic drug manufacturers Teva and Impax for patent infringement after those manufacturers—seeking U.S. Food and Drug Administration (FDA) approval to produce generic Adderall XR—argued that Shire’s patents were “invalid or will not be infringed.” Shire settled with Teva and Impax in 2006 with variants of the traditional reverse-payment agreement. In these settlement agreements, Teva and Impax agreed to stay out of the Adderall XR market for three years (even if FDA approval came earlier), but unlike a traditional reverse-payment agreement (where the patent holder pays money to the potential entrant), Shire agreed to grant licenses starting in 2009 for making and selling the drug and, if FDA approval had not yet occurred, to supply Teva and Impax’s requirements of unbranded Adderall XR for resale. The 2d Circuit summarized the arrangement as follows: “Shire undertook to give its competitors both the rights and the supplies necessary to participate in the market for [Adderall XR].” By the time Shire’s contractual exclusivity expired, the FDA had not approved either Teva or Impax’s applications, so Teva and Impax began purchasing from Shire. Shortly thereafter, both companies alleged that Shire breached the settlement agreement obligations by refusing to fully fulfil their requirement orders. However, both companies eventually settled with Shire.
In the present case, drug wholesaler and plaintiff Louisiana Wholesale Drug Company (LWD) brought a putative class action against Shire. It alleged antitrust violations stemming from the effect of the supply shortfall on the prices the proposed class of drug wholesalers paid. LWD argued that Shire’s “ordinary breach of contract” became “an unlawful act of monopolization” because, by entering into the agreements, Shire “relinquish[ed] its monopoly control over” Adderall XR vis-à-vis Teva and Impax and thereby created a “duty to deal” with its competitors under the Supreme Court’s 1985 Aspen Skiing decision. Specifically, LWD alleged that Shire artificially inflated prices by holding back some of its supply from generic manufacturers/patent licensees Teva and Impax, from whom LWD purchased Adderall XR. After the district court dismissed the complaint on a R. 12(b)(6) motion to dismiss, LWD appealed.
The 2d Circuit affirmed the district court’s dismissal for failure to state a claim, concluding that LWD’s “allegations amount to the self-defeating claim that Shire monopolized the market by ceding its monopoly” and that “the complaint does little more than attach antitrust ‘labels and conclusions’ to what is, at most, an ordinary contract dispute to which the plaintiffs are not even parties.” The court reasoned that “‘the sole exception to the broad right of a firm to refuse to deal with its competitors’ comes into play only ‘when a monopolist seeks to terminate a prior (voluntary) course of dealing with a competitor’” (emphasis added), and that unlike Aspen Skiing, “the agreements here were explicitly unprofitable—they introduced price competition into a market where none would otherwise have existed” (emphasis in original). As such, the 2d Circuit concluded that “[t]he mere existence of a contractual duty to supply goods does not by itself give rise to an antitrust ‘duty to deal.’”
Practice Note: Last year (while the Adderall case was on appeal), the Supreme Court in F.T.C. v. Actavis found that reverse-payment settlements are not immune from antitrust scrutiny merely because they may “fall within the scope of the exclusionary potential of the patent” at issue and that such agreements are subject to the antitrust law rule of reason. Patent holders should note, therefore, that the 2d Circuit’s holding in Adderall, while it appears to be on firm jurisprudential ground, does not immunize them from all antitrust claims relating to reverse-payment settlement agreements—or, for that matter, from breach of contract claims. In fact, Shire faced (and settled) breach of contract suits from both Teva and Impax. The 2d Circuit expressly based its decision only on “the plaintiff’s theory of the case” (i.e., the alleged existence and violation of an antitrust “duty to deal”) and stressed that it expressed no view regarding “the potentially anticompetitive effects, if any,” of the Shire/Teva/Impax settlement agreements.
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On July 24, 2014, the district court in Animal Sci. Prod., Inc. et al. v. China Nat’l Metals & Minerals Imp. and Exp. Corp. et al., Case No. 2:05-cv-04376 (D.N.J.), dismissed direct purchaser plaintiff’s Amended Complaint without prejudice in favor of magnesite producers accused of engaging in a price fixing scheme for magnesite and magnesite products sold in the United States. The court found that the direct purchaser plaintiff, Resco, did not plausibly plead facts to establish antitrust standing as a direct purchaser. The analysis was complicated by the fact that Resco inherited its claim from an assignor, Possehl (US), and the Amended Complaint contained no facts supporting the allegation that Possehl made direct purchases from the defendants. The court recommended amending the complaint to identify specific transactions and the governing agreements for those purchases.
The dismissal is another setback for the plaintiffs, who filed suit in 2005 against 17 foreign companies, 16 of which are located in China. None of the Chinese defendants responded to the complaint and in 2007, and plaintiffs filed a motion for a default judgment. Seven of the companies responded in 2008 with a motion to compel arbitration. However, before any of the motions were resolved, the case was administratively closed while the Third Circuit determined the appropriate standard for analyzing whether the district court had jurisdiction to hear the case under the Foreign Trade Antitrust Improvements Act. The case was reopened in April 2012 and the district court asked for briefing on antitrust standing issues, which resulted in the dismissal of the Amended Complaint.
On July 16, 2014, Andrew Gavil, Director of the Office of Policy Planning at the Federal Trade Commission (FTC), testified on the subject of “Competition and the Potential Costs and Benefits of Professional Licensure” before the House Committee on Small Business. Gavil explained the FTC’s rationale for evaluating the competitive effects of different licensing regimes and described its strategy of promoting competition among professionals through a combination of advocacy and enforcement.
The FTC’s approach in this area is to evaluate the pros and cons of specific licensure regulations on a case-by-case basis. In a nutshell, the agency recognizes that, “although licensure may be designed to provide consumers with minimum quality assurances, licensure provisions do not always increase service quality,” and indeed “may . . . discourage innovation and entrepreneurship” and “impede the flow of labor or services.” Advocacy is an important component of the FTC’s strategy because state and local licensing regimes are often not actionable under the federal antitrust laws. Instead, the agency utilizes tools such as comments, testimony, workshops, reports and amicus briefs to encourage policymakers to consider the likely competitive effects of proposed regulations. Gavil noted a recent example in which, at the request of Chicago Alderman Brendan Reilly, FTC staff provided a comment assessing the potential competitive effects of a proposed Chicago ordinance creating a licensing scheme to regulate mobile ride-sharing apps. The comment, available here, details how certain provisions of the ordinance might “unnecessarily impede competition in these services without providing any apparent consumer protection benefits,” for example, by placing licensees at a competitive disadvantage to traditional transportation services or by restricting innovative pricing models.
The FTC also keeps an eye out for opportunities to flex its enforcement muscle and discourage anticompetitive conduct by independent regulatory boards that are not protected by the state action doctrine. For example, the Fourth Circuit last year sided with the FTC in a suit challenging the North Carolina Board of Dental Examiners’ practice of issuing cease-and-desist letters to non-dentist providers of teeth-whitening services. See N.C. State Bd. of Dental Examiners v. FTC, 717 F.3d 359 (4th Cir. 2013), cert. granted, No. 13-564, 5014 WL 801099 (U.S. Mar. 3, 2014). In particular, state agencies comprised mostly of industry participants who are chosen by other industry participants must take special precautions to avoid violating the antitrust laws. Many of the examples of enforcement actions Gavil provided in his testimony concerned the healthcare arena, which is consistent with the FTC’s ongoing commitment to promote competition in that sector.
The text of the Commission’s prepared statement is available here.
On July 11, 2014, the Northern District of California dismissed one of two federal antitrust claims brought against Chrysler Group LLC under the Robinson-Patman Act, 15 U.S. C. § 13, as well as several state statutory and common law claims. Matthew Enterprise, Inc. v. Chrysler Group LLC, No. 13-cv-04236-BLF (N.D. Cal. July 11, 2014). The plaintiff, a franchise car dealer and direct customer of the defendant, alleged that Chrysler committed anticompetitive price discrimination by offering volume discounts to new dealers on more favorable terms than those offered to established dealers like the plaintiff and by selectively offering the plaintiff’s competitors disguised price discounts in the form of below-market rent. The court allowed the former claim to go forward but dismissed the latter for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6).
The court began by recounting the purposes behind the Robinson-Patman Act, as described by the Supreme Court in FTC v. Sun Oil Co., 371 U.S. 505, 520 (1963): “to curb the use by financially powerful corporations of localized price-cutting tactics which had gravely impaired the competitive position of other sellers . . . and to ensure that businessmen at the same functional level . . . start out on equal competitive footing so far as price is concerned.” Matthew Enterprise, slip op. at 6 (internal quotation marks omitted). It explained that in order to state a “secondary-line case” involving competition among customers of a common seller, a plaintiff must plead facts showing that “(1) the relevant sales were made in interstate commerce; (2) the products were of like grade and quality; (3) the seller discriminated in price between the Plaintiff and another purchaser of the same products; and (4) that the effect of that price discrimination was to injure, destroy, or prevent competition to the advantage of a favored purchaser.” Id., slip op. at 7.
The plaintiff in Matthew Enterprise alleged that Chrysler offered volume discounts to established car dealers based on a formula that took into account the dealer’s prior year sales. Because new dealers, by definition, did not have prior year sales, Chrysler used different criteria to determine the volume at which new dealers would receive a discount, which the plaintiff alleged was substantially lower than the volume the plaintiff needed to sell in order to qualify for the discount. For example, the plaintiff alleged that “this inequality of treatment led to [one new competitor] receiving vehicle subsidies during July 2012, despite selling only sixty vehicles, while Plaintiff failed to receive incentives, despite selling 130 vehicles.” Id., slip op. at 8. These allegations, taken as true for purposes of the motion to dismiss, allowed the court ultimately to conclude “that Chrysler ha[d] set up its newly opened dealers as a class of ‘favored purchasers’” in violation of the Robinson-Patman Act. Id., slip op. at 9.
Regarding the second price discrimination claim, the court noted that it was not aware of any Ninth Circuit case law holding that the Robinson-Patman Act applies to real estate transactions. The plaintiff tried to salvage its claim by arguing that the rental agreement was actually a disguised price discount. But “in order for the Court to find sufficient its ‘disguised discount’ claims,” the court stated that the “Plaintiff would need to plead facts that permit the Court to infer that the rental agreement is in some way tied to the volume of cars sold,” which it failed to do. Id., slip op. at 13-14. The court therefore dismissed the plaintiff’s Robinson-Patman Act claim under this theory of liability.
It is a general tenet that competition serves customers well, enabling them to acquire better products at lower prices. Of course, this premise underlies the antitrust laws. In the aerospace and defense industry, the customers are often government agencies that are monopsonists with significant purchasing leverage. Government customers often have contracting mechanisms that are not generally available in the commercial marketplace, such as the ability to receive certified cost and pricing data from contractors. From time to time, contractors have attempted to rely on arguments that the government’s buyer power and contracting rights ensure that contractors cannot impose unreasonable pricing on the government, even if there is no or limited competition. The antitrust regulators and the U.S. Department of Defense (DoD) have long rejected that notion, stressing that regulation is not a substitute for competition. A recent DoD study supports that general proposition, and provides data the DoD interprets as showing that the presence of competition improves contracting outcomes for the government. See DoD 2014 Annual Report on the Performance of the Defense Acquisition System. This report provides some interesting thoughts and data that may impact future antitrust agency reviews.
On 9 July 2014, the EU Commission (Commission) published a White Paper (White Paper) entitled Towards more effective EU merger control. The White Paper sets out the Commission’s current thinking on the application of merger control rules to the acquisition of non-controlling minority shareholdings. The Commission’s proposals concerning the application of merger controls to the acquisition of non-controlling minority shareholdings are, however, problematic and may lead to a dampening of investments in Europe. Interested parties, which include companies, industry associations and national competition authorities, have until 3 October 2014 to comment on the White Paper.
Under the current Council Regulation (EC) No 139/2004 (the Merger Regulation), the Commission is only able to review transactions that lead to a change of control. The Commission also has the power to review existing minority shareholdings held by the parties to a notifiable transaction, i.e., one resulting in a change of control. Acquisitions of non-controlling minority shareholdings (also referred to as structural links) by themselves, however, can only be carried out retrospectively under Articles 101 or 102 of the Treaty on the Functioning of the European Union (TFEU). In other words, under the Merger Regulation, acquisitions of non-controlling minority shareholdings are not subject to prior review by the Commission unless they result in a change of control, and are only subject to after-the-fact enforcement under Articles 101 and/or 102 TFEU. This leads to what the Commission perceives as an “enforcement gap” at EU level, which results in the Merger Regulation not being applied to non-controlling minority shareholdings that have the potential to harm competition, as exemplified by the recent Ryanair/Aer Lingus case.
In contrast, some EU Member States, such as Germany, and some major non-European jurisdictions (including the United States and Japan) are empowered to review some non-controlling minority shareholdings under their national merger control rules. In these jurisdictions, the Commission would contend that no enforcement gap exists, since non-controlling minority shareholdings can be subjected to prior review.
In view of concerns about the enforcement gap, in 2011, the Commission organised studies on the importance of minority shareholdings in the European Union. Subsequently, in June 2013, the Commission launched a public consultation (the consultation paper) on possible modifications to the Merger Regulation, including the expansion of merger controls to capture certain non-controlling minority shareholdings. The consultation paper also considered different models for reviewing non-controlling minority shareholdings. The responses to the consultation paper generally revealed a lack of consensus about the existence and extent of an enforcement gap. Equally, the responses demonstrated that the need to change the Merger Regulation to address a perceived enforcement gap remained a hotly disputed topic.
The 9 July White Paper contains the Commission’s proposed actions in response to the consultation paper. It covers the issue of minority shareholdings and also looks at other areas where the Commission sees the need for a revision of merger control rules, including mechanisms for referring cases between the Commission and the EU Member States. The White Paper was published together with the Commission Staff Working Document and the impact assessment conducted by the Commission on the contemplated reform.
Proposed Review of Acquisitions of Non-Controlling Minority Shareholdings With a “Competitively Significant Link”
In the 2011 consultation paper, the Commission envisaged three systems for the control of the acquisitions of non-controlling minority shareholdings: a notification system, a transparency system and a self-assessment system.
In the White Paper, the Commission proposes a “targeted” transparency system, which combines the self-assessment and transparency systems. According to the Commission, this would be the most suitable solution to address the three concerns it identified:
- Capturing most of the anti-competitive acquisitions
- Avoiding unnecessary and disproportionate administrative burdens on companies and competition authorities (including the Commission)
- Staying in line with the current merger control regime.
This targeted transparency system would apply to transactions that create a “competitively significant link”. According to the White Paper, such a link is created by acquisitions of a minority shareholding in a competitor or a vertically related company, where the acquired stake is
- Approximately 20 per cent or
- Between 5 per cent and approximately 20 per cent, if it is combined with “additional factors”, which include “rights that give the acquirer a de-facto blocking minority, a seat on the board of directors, or access to commercially sensitive information of the target”.
Proposed Control Procedure
Under the targeted transparency system, an undertaking that plans to acquire a non-controlling minority shareholding that meets the cumulative criteria of having a competitively significant link would have to submit an “information notice” to the Commission. This information notice should contain only “basic information”, i.e., information relating to the parties and their turnovers, a description of the transaction, the level of shareholding before and after the transaction, any rights attached to the minority shareholding and some limited market share information.
Based on the information provided in this notice, the Commission would then decide whether or not to investigate the case further and Member States will consider whether or not to request that the case be referred. The parties would only be required to submit a full notification if the Commission decided to initiate an investigation, at the end of which the Commission would have to issue a formal decision ruling on the compatibility of the transaction. On this basis, any parties wanting greater legal certainty could voluntarily submit a full notification.
The Commission also proposes introducing a waiting period of, e.g., 15 working days, during which the parties would not be able to close the transaction and the Member States could request a referral. Should the Commission not initiate an investigation during this waiting period, the parties could then close the transaction. The Commission would, however remain free to investigate a transaction, whether or not it had already been implemented, within a limited period of up to six months (prescription period) following the information notice and, if necessary, impose interim measures on transactions that were already implemented.
The Commission observed that the pre-notification referral laid out in Article 4(5) of the Merger Regulation is of little practical use. It therefore proposes to abolish this procedure so the parties would notify their transaction directly to the Commission, which will forward the notification to the Member States.
The Commission also proposes to amend the post-notification referral set out in Article 22 of the Merger Regulation. Once the Commission notifies the Member States, one or more Member State(s), that are competent under their national law to review a merger, may request that the case be referred to the Commission. Any other competent Member State can oppose the referral but, if none does so, the Commission has the discretion to accept or decline the request for referral. Its acceptance of the referral would give jurisdiction for the entire European Economic Area (EEA) to the Commission, without other Member States needing to join the request for a referral. This process would simplify requests for referrals to the Commission and extend its jurisdiction where there is no opposition to the referral.
Non-Problematic Transactions Currently Notifiable
The White Paper proposes to exclude from the scope of the Merger Regulation certain non-problematic transactions. These include the creation of joint ventures that will only operate outside the EEA and have no impact on the EU market.
It also envisages further reducing the notification requirements for other non-problematic cases currently reviewed under the “simplified” procedure, in order to diminish the administrative burden and cost where it is not strictly necessary. This could allow transactions that have no overlaps to be exempted from any notification requirement.
The Commission’s proposals concerning the application of merger controls to the acquisition of non-controlling minority shareholdings are problematic and may lead to a dampening of investments in Europe.
The absence of a clear and closed list of “additional factors”, and the potential application of merger control rules to non-controlling minority shareholdings of as little as 5 per cent would lead to legal uncertainty. This is because a large number of transactions could potentially fall under merger control rules, and past experience in Germany and the United Kingdom shows that is unclear whether or not “plus factors” are sufficient to lead to the application of merger control rules. The White Paper’s proposed limitation of the extension of merger control rules to transactions between competitors or vertically related companies does not provide for more legal certainty, in particular where market definitions are unclear. At the very least, a strict threshold, such as the acquisition of 25 per cent, would leave no question mark concerning whether or not merger control rules apply.
While the Commission anticipates that the proposed reforms would lead to the review of only a limited number of cases—between 20 and 30 per year—this does not take into account the number of cases that would require self-assessment by the parties and would lead to legal uncertainty with respect to i) the obligation to submit an information notice, ii) the obligation to respect a waiting period and iii) the possibility for the Commission to open a procedure even after the expiry of the waiting period. The problem is not the number of deals that will have to be reviewed under the proposed changes, but the number of deals where the parties have to waste time and effort in order to self-assess the applicability of merger control rules.
It is also questionable whether or not the limited market share information in the required information notice and the simplified procedure may still be very burdensome, particularly if the parties are required to provide (alternative) market definitions and market data.
The proposed waiting period, together with the possibility for the Commission to open an investigation after the expiry of that period, actually combines the worst of two worlds. Not only do the companies have to submit an information notice and make the expiration of the waiting period a condition for the closure of the deal, but they also do not even get legal certainty as a reward for their efforts. In addition, the parties would need to file a full notification if the Commission decides to investigate the case, which would significantly further delay the transaction or at least further delay the attainment of legal certainty.
It is also unclear how the Commission envisages the case referral request from Member States in those cases, which are currently the vast majority, where national law does not give national regulators the power to review the acquisition of minority shareholdings.
It is unlikely that the extra regulatory burden that would result from the implementation of the proposed reform with respect to non-controlling minority shareholdings would be as insignificant as the Commission expects it to be. It is likely that the burden will be disproportionate, given the very low number of non-controlling minority shareholdings able to raise significant concerns.
In contrast, the proposed steps for reviewing the referral system and alleviating the burden for the parties (and the Commission) in unproblematic cases are very much welcomed.
By outlining the Commission’s proposals for the reform of the Merger Regulation, the White Paper is testing the reaction of the Council to gauge whether or not it is timely and politically acceptable to make changes.
More generally, the Commission now seeks views from all interested parties by 3 October 2014. Once the consultation is closed, the Commission will review the comments and, probably, finalise its legislative proposal. The timing of this proposal is not, however, predictable. For example, in relation to antitrust damages actions, which also sparked significant debate, the Commission adopted a White Paper in 2008 and a proposal for a directive five years later. This was only adopted by the Parliament in April 2014 and is now waiting for the final approval of the Council of Ministers. Whatever the final changes to merger controls for minority shareholdings may be, they are unlikely to come into effect very soon.
McDermott has contributed to the Italian chapter of the 2014 edition of “Pharmaceutical Antitrust” published by Getting the Deal Through, a valuable work tool for legal practitioners dealing with antitrust rules in the pharmaceutical sector. The chapter addresses the most significant regulatory and antitrust issues affecting the marketing, authorization and pricing of pharmaceutical products in Italy.