Marco Botta and Klaus Wiedemann ‘EU Competition Law Enforcement vis-à-vis Exploitative Conducts in the Data Economy’ Max Planck Institute for Innovation & Competition Research Paper No. 18-08

This long paper (90 pages), which can be found here, seeks to understand how traditional principles of EU law – particularly those related to exploitative abuses and respective remedies – apply to new business models that mainly rely on processing large amounts of users’ data. The analysis does not extend to the US because, following Trinko, the authors consider that antitrust law there does not extend to exploitative practices, even if the FTC has powers under the Sherman Act to pursue such practices under consumer and unfair practices law. I am afraid the review is rather long, because this paper’s contents are the equivalent of multiple articles. The paper is structured as follows: Section 2 provides an overview of European case law vis-à-vis exploitative abuses. Art. 102 TFEU lists a number of exploitative abuses. Nevertheless, the European Commission has long focused on investigating exclusionary, rather than exploitative abuses. While this has led to limited case law on exploitative abuses, the authors identify…

Jorge Padilla and John Davies ‘Another look at the economics of the UK CMA’s Phenytoin case’ in Excessive Pricing and Competition Law Enforcement (ed. Yannis Katsoulacos and Frédéric Jenny, 2018, Springer)

In this book chapter, the authors criticise the CMA for relying on the same evidence of a gap between prices and costs in its assessment of each of market definition, dominance and abuse. When coupled with the absence of analysis of comparator prices – which, the authors argue, the CMA replaced with a failed search for justifications for a price-cost gap when finding that the price was ‘unfair in itself’ – this could serve as a precedent for a fragile and unreliable approach to assessing excessive pricing. The paper is structured as follows: Section 2 describes the framework for assessing excessive pricing under European law (and its British equivalent). The paper builds on United Brands‘ two-step test, and particularly the requirement that am excessive price must exceed the “economic value” of the product to such an extent that the price bears “no reasonable relation” with that value. The legal test set out by the ECJ is as follows. First, the test…

Robert O’Donoghue ‘The Political Economy of Excessive Pricing in the Pharmaceutical Sector in the EU: A Question of Democracy?’ (2018) CPI Antitrust Chronicle

This paper, which can be found here, argues that antitrust enforcement against excessive pricing by medicines runs against democratic choices reflected in the dense and intricate regulatory network that applies to the pharmaceutical sector. The paper is structured as follows: The paper begins with a quick overview of excessive pricing cases in the EU. There have only been a handful of excessive pricing cases in the EU. The rare cases that have been brought have fallen into rather specific categories: (i) cases involving copyright management societies in the EU, with de jure or de facto unregulated monopoly positions in each national territory; (ii) parallel trade or market integration cases, where the excessive price was a tool to discourage or prevent parallel trade; and (iii) cases where the main issue was exclusionary conduct, and the further concerns about pricing were really the corollary of other abusive practices. In fact, under EU law there has never been a truly standalone finding of excessive…

Margherita Colangelo and Claudia Desogus ‘Antitrust Scrutiny of Excessive Prices in the Pharmaceutical Sector: A Comparative Study of the Italian and UK Experiences’ (2018) World Competition 41(2) 225

This article, which can be found here,  pursues a comparative analysis of the recent case law on excessive pricing in the pharmaceutical sector, examining in particular the Italian and UK experience. The paper is structured as follows: Section 2 begins with a brief review of the existing literature on excessive prices in the EU. This section reviews the arguments for and against competition authorities intervening when prices are too high. On the one hand, it is argued that high prices should not be the subject of competition law intervention because such intervention may affect innovation incentives and dynamic efficiency; because high prices will attract competitors and, hence, will tend to self-correct; because there are high probabilities and costs of mistaken intervention; and because this is a task that should be left to specialised regulators. On the other hand, it is argued that correcting high prices directly increases consumer welfare, which is the goal of competition law; that high prices are not…

Harry First ‘Excessive Drug Pricing as an Antitrust Violation’ (forthcoming on the Antitrust Law Journal)

In the US, there have been antitrust enforcement efforts against various pharmaceutical practices that elevate price above the competitive level, such as reverse payments (or pay-for-delay), product hopping, and collusion among generic drug manufacturers. However, the conventional wisdom is that U.S. antitrust laws do not forbid high prices simpliciter. This paper argues that the conventional wisdom may be mistaken: Section 1 engages in a general discussion of the problem of high prices and provides two examples of a non-antitrust approach to this problem. The standard antitrust/welfare economics paradigm condemns high prices at least on the grounds of resource misallocation and deadweight welfare loss. Many scholars go beyond deadweight welfare loss concerns, condemning monopoly pricing because of the redistribution of the consumer surplus from consumers to producers, but some are indifferent to this redistribution. There is an additional argument that can be made against high prices, but it is one to which antitrust is often indifferent: high prices can be seen…

Frederick Abbott ‘Excessive Pharmaceutical Prices and Competition Law: Doctrinal Development to Protect Public Health’ (2016) UC Irvine Law Review 6 281

This paper can be found here. At the time it was written, competition law had rarely been used to address “excessive pricing” of pharmaceutical products. This was a worldwide phenomenon. In the United States, federal courts have refused to apply excessive pricing as an antitrust doctrine, either with respect to pharmaceutical products or more generally. Courts in some other countries have been more receptive to considering the doctrine, but application of the doctrine has been sporadic at best, including with respect to pharmaceuticals. Against this, the author argues that competition law and policy should develop robust doctrine to address excessive pricing in markets lacking adequate control mechanisms against exploitative behaviour. The article focuses specifically on the pharmaceutical sector because of its unique structure and social importance. This piece is divided into two parts. The first addresses competition policy and why it is appropriate to develop a doctrine of excessive pricing to address distortions in the pharmaceutical sector. The second part addresses…

When is a licence FRAND? The Court of Appeal judgment in Unwired Planet v Huawei

This judgment – which can be found here – is on appeal from Unwired Planet v Huawei judgment on the licensing of Standard Essential Patents (SEP) that I reviewed here. The Court of Appeal begins by explaining the link between the potential for anticompetitive abuse of SEPs and the imposition of FRAND licensing terms. After all: ‘the potential for anti-competitive behaviour is obvious. The owner of a SEP has the potential ability to “hold-up” users after the adoption and publication of the standard either by refusing to license the SEP or by extracting excessive royalty fees for its use, and in that way to prevent competitors from gaining effective access to the standard and the part of the telecommunications market to which it relates.’ It then moves on to review the factual background of the case and the High Court’s decision. In short, Unwired Planet acquired patents from Ericson that cover many of the foundational technologies that allow mobile devices…

Jose Luis da Cruz Vilaca on ‘The intensity of judicial review in complex economic matters – recent competition law judgments of the Court of Justice of the EU’ (2018) Journal of Antitrust Enforcement 6(2) 173–188

The author of this paper, available here, was for a long time the President of the Court of First Instance (now the ECJ’s General Court). More importantly for our purposes here, he was also the CJEU judge responsible for drafting the Intel judgment. The paper is structured as follows: A first section reviews how EU courts approach judicial review in complex matters, and how this approach has evolved over time. For a number of years, the Court of Justice (ECJ) has taken a careful approach to the scope and intensity of review of Commission decisions as regards complex economic matters. From the outset, the Court conceived its role in competition matters as being limited to reviewing legality, and not as involving unlimited jurisdiction or full merits review (except as regards the imposition of fines). Since Consten & Grunding in 1966, the ECJ has acknowledged that the Commission must engage in complex evaluations of economic matters. The judicial review of these evaluations…

Jurisdictional Clauses and Abuses of a Dominant Position – Case C‑595/17 Apple ECLI:EU:C:2018:854

This review concerns the judgment of 24 October by the CJEU on whether generally worded jurisdiction clauses cover claims of abuse of a dominant position brought by one party to a contract against the other (Case C‑595/17 Apple ECLI:EU:C:2018:854). The interpretation of generally worded jurisdiction clauses, and whether they extend to cartel claims, was the topic of a couple of articles that I reviewed a few weeks ago here and here. Facts The case concerns a distribution contract entered into between Apple and eBizcuss (the ‘authorised reseller’ or ‘distributor’) which contained a jurisdiction clause conferring jurisdiction on the Irish courts. The clause read as follows: ‘This Agreement and the corresponding relationship between the parties shall be governed by and construed in accordance with the laws of the Republic of Ireland and the parties shall submit to the jurisdiction of the courts of the Republic of Ireland.’ In 2012, the authorised reseller brought proceedings before the tribunal de commerce de Paris…

Kai-Uwe Kuhn and Miroslava Marinova ‘The Role of the As-Efficient-Competitor After the CJEU judgment in Intel’ (2018) Competition Law and Policy Debate 4(2) 63

Before I begin my review, a disclaimer is in order: one of the authors was my student – the one who was not until recently the Chief Economist of the European Commission’s DGComp –, and this paper builds on her PhD. The paper – which can be found here – focuses on the relevance of the AEC test for the identification of abuses of a dominant position. It reads the Intel decision as creating a rebuttable presumption of illegality of exclusivity rebates, and as requiring the Commission to examine Intel’s arguments on whether the loyalty rebates could exclude an equally efficient competitor from the market. It also considers that the CJEU confirmed that the AEC test is the relevant benchmark to assess such a rebuttal. At the same type, the authors consider that the judgment raises a number of issues: (i) whether the AEC is an appropriate conceptual benchmark to identify anticompetitive conduct; (ii) in the light of the previous…