On 10 May 2017, the European Commission published its final report on the e-commerce sector inquiry. The report is divided into two sections, covering e-commerce issues in relation to consumer goods and digital content. It also identifies business practices that might restrict competition and limit consumer choice. It would be advisable for e-commerce businesses to review their commercial practices and revise them as necessary in light of the Commission’s stated aim of targeting e-commerce business practices that may negatively impact the functioning of the Digital Single Market.
On 10 March 2017, France finally implemented into French law the EU Directive 2014/104 of 26 November 2014 on antitrust damages actions. The implementation provisions faithfully transpose the Directive, but some concepts still, however, need to be clarified by courts at the EU and French levels.
This article, published in Getting the Deal Through, reviews the legislation that creates the pharmaceutical regulation framework in Italy, particularly with regard to mergers and acquisitions, anticompetitive conduct, product development and licensing agreements, and marketing agreements.
On 7 July 2016, the Court of Justice of the European Union (CJEU) handed down a judgment on whether Article 101 of the Treaty on the Functioning of the European Union (TFEU) must be interpreted as precluding effect being given to a licence agreement requiring the licensee to pay royalties for the use of a patent which has been revoked (Sanofi-Aventis v. Genentech, Case C-567/14).
In 1992, Hoechst granted a licence to Genentech for a human cytomegalovirus enhancer. The licensed technology was subject to one European patent and two patents issued in the United States. In 1999, the European Patent Office revoked the European patent.
Under the licence agreement with Hoechst, Genentech was obliged to pay a one-off fee, a fixed annual research fee and a running royalty based on sales of finished products. Genentech never paid the running royalty, however, and in 2008 it notified Hoechst and Sanofi-Aventis (Hoechst’s parent company) that it was terminating the licence. Hoechst and Sanofi-Aventis believed that Genentech had used the enhancer to manufacture its blockbuster drug Rituxan and was therefore liable to pay the running royalty on its sales of that drug.
Sanofi-Aventis initiated two separate actions. In the United States, it brought an action alleging that Genentech infringed the two US patents. The US courts ultimately decided that there was no infringement of the patents in question. Sanofi-Aventis also submitted an application for arbitration against Genentech before the International Court of Arbitration to recover the royalties.
In the arbitral award, the sole arbitrator held that Genentech had manufactured Rituxan using the enhancer and that the company was therefore required under the licence to pay Sanofi-Aventis the running royalties. According to the arbitrator, the commercial purpose of the licence was to avert all litigation on validity. Thus, payments already made under the licence could not be reclaimed, and payments due had to be made regardless of whether the patent had been revoked or was not infringed.
Genentech brought an action before the Paris Court of Appeal seeking annulment of the arbitral award. The company relied on public policy arguments, claiming that a requirement to pay for the use of technology that Genentech’s competitors could use without charge put Genentech at a competitive disadvantage and contravened Article 101 TFEU. The Paris Court of Appeal stayed the proceedings and made a preliminary reference to the CJEU.
The CJEU explained that royalties reflect the parties’ assessment of the value that is attributable to the possibility of exploiting licensed technology, and that this assessment may still apply after expiry of the period of validity of the patent. The court referred to established case law (Case 320/87 Ottung) and held that, where the licensee is free to terminate the licence agreement by giving reasonable notice, an obligation to pay a royalty throughout the validity of the agreement (i.e., not the validity of the IP rights) does not fall within the purview of the Article 101(1) TFEU prohibition.
The CJEU argued that Article 101(1) TFEU does [...]
A recent request by the Supreme Court of Norway for an advisory opinion from the European Free Trade Association Court may define the legal test for determining whether or not an agreement between competitors restricts competition “by object.”
Dutch Competition Authority Fines Cold-Storage Companies for Exchange of Information in the Context of Merger Talks
On 23 March 2016, the Netherlands Authority for Consumers and Markets (ACM) announced that it had fined four cold-storage firms for having put in place anticompetitive arrangements while in extended merger talks with one another. (case number: 13.0698.31|15.0710.31|15.0327.31|15.0328.31). In addition, ACM fined five individuals for their personal involvement in these anticompetitive arrangements. The case at hand serves as a reminder that gun jumping, which is seen as an infringement of the merger control rules, is not the only antitrust risk associated with an M&A transaction.
While in discussions about a possible merger between them, the cold-storage firms frequently exchanged commercially sensitive information such as the price for food storage, current utilization rates of their storage facilities and whether or not they were looking for work. This information exchange, which took place between 2006 and 2009, sometimes resulted in price fixing, customer allocation or bid rigging. (more…)
The European Union’s court of first instance, the General Court, has confirmed the Commission’s decision in Intel and upheld a record fine of €1.06 billion. In so doing, it condemned a number of Intel’s business practices, including loyalty rebates. The General Court’s approach suggests that it views exclusionary business practices by a company in a position of dominance as anti-competitive by their very nature. On this basis, it is likely that the courts will continue to assess allegations of antitrust infringements by dominant companies without taking into account their effects on the market, and might condemn conduct that may not, in fact, be harmful.
European Commission Uses EU State Aid Rules Against Aggressive Tax Planning by Multinational Companies
The European Commission (Commission) took the first concrete action towards using EU State aid rules against aggressive tax planning by multinational companies by opening formal investigations against Ireland (Apple), Luxembourg (Fiat Finance and Trade) and the Netherlands (Starbucks). The Commission has concerns that these companies may have benefited from a selective advantage in the form of tax rulings by tax authorities that confer on them a preferential calculation of the taxable basis. The Commission has already announced that it investigates further cases of alleged State aid in the form of tax rulings in at least six EU Member States (including France and the UK) in the upcoming months.
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Revised GBER Reduces Need For Commission Prior Approval of State Aid But Some Conditions Stricter Than Before
The European Commission (Commission) has adopted new rules that exempt public support given to companies by EU Member States, including regional and local authorities, from the requirement of prior notification to, and approval by, the Commission. These new rules, which revise the General Block Exemption Regulation (GBER) significantly extend the scope of support that can be granted by Member States without the Commission’s involvement. Some substantive conditions for exemption will, however, be stricter than before. Public authorities and aid beneficiaries are well advised to take the new opportunities and challenges introduced by the revised GBER into account when designing their aid measures.
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The Case of Ophthalmic Drugs in Italy and France: A Lesson to Learn – Parallel Antitrust Investigations and Cooperation Between National Competition Authorities
The recent investigations into two pharmaceutical companies active in the ophthalmic drugs market in Italy and France serve as a reminder of the cooperation that takes place between national competition authorities. International groups should therefore take into account all the jurisdictions where they have a presence or do business when developing their antitrust audit and compliance programmes.