German-Austrian draft Guidance on transaction value thresholds for pre-merger notification

On 14 May 2018, Germany’s and Austria’s competition authorities published a draft guidance paper on the transaction value-based merger control thresholds which had been introduced last year. Under these new thresholds, a transaction has to be notified if the value of the consideration exceeds EUR 400 million in Germany / EUR 200 million in Austria, and the target has a significant domestic activity. The rule was designed to catch mergers that have a substantial impact on competition but do not meet the classic turnover thresholds. It may affect in particular start-ups, the digital sector where undertakings offer free – but highly successful – services to their users, or R&D-related transactions (e.g. a pharmaceutical company acquiring a still small market player with a promising pipeline product).

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Covington Artificial Intelligence Update: European Commission Publishes Communication on Artificial Intelligence for Europe

On April 25, 2018, the European Commission (EC) published its “Artificial Intelligence for Europe” communication (the Communication), in which it sets out a roadmap for its AI initiatives. Having acknowledged the crucial need for a boost of AI in the EU, the EC commits to supporting investment, (re)considering legislation and soft law initiatives, and coordinating Member States’ efforts. This blog post highlights some of the EC’s initiatives. Continue Reading

Covington Artificial Intelligence Update: House of Lords Select Committee publishes report on the future of AI in the UK

Reflecting evidence from 280 witnesses from the government, academia and industry, and nine months of investigation, the UK House of Lords Select Committee on Artificial Intelligence published its report “AI in the UK: ready, willing and able?” on April 16, 2018 (the Report). The Report considers the future of AI in the UK, from perceived opportunities to risks and challenges. In addition to scoping the legal and regulatory landscape, the Report considers the role of AI in a social and economic context, and proposes a set of ethical guidelines. This blog post sets out those ethical guidelines and summarises some of the key features of the Report. Continue Reading

EU Court’s Analysis of “Competitive Disadvantage” in Rare Price Discrimination Case

On 19 April 2018, the Court of Justice of the EU (CJEU) issued its judgment in MEO vs Autoridade da Concorrência, providing guidance as to what amounts to “competitive disadvantage”, an important element required to show abusive price discrimination under Article 102 of the Treaty on the Functioning of the EU (TFEU).  The CJEU found that there is no need for proof of “actual, quantifiable deterioration in the competitive situation” of the customer, if an analysis of the relevant circumstances demonstrates that discrimination distorts competition.

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The UK Government Seeks Views on the Regulation of Digital Markets for a Post-Brexit Great Britain

The UK Government’s Department for Business, Energy and Industrial Strategy has just released a 75-page Green Paper on Modernising Consumer Markets, setting out the Government’s main priorities for the digital economy in a post-Brexit Britain. The Green Paper reflects on the current state of consumer markets and regulation, and lays down the key challenges and opportunities which will be the focus of the UK’s regulatory and competitive framework going forward. This poses consultation questions to stakeholders on hot topics in digital markets, including questions on: the adequacy of the current competition rules and privacy protections, supporting consumer-friendly innovation, use of and access to big data, whether personalised pricing should be regulated, sufficiently protecting customers without stifling innovation, and alternative dispute resolution solutions.

It also includes various proposals to ensure new technology and data are used to benefit customers, strengthen national enforcement of consumer rights, modernise the approach taken by regulators, and improve consumers’ access to alternative dispute resolution services. In this Covington blog post, we explore some of the key messages and questions posed by the Green Paper.

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German Bundeskartellamt’s Decision against Online Sales Restrictions by ASICS Ultimately Confirmed

In its decision of 12 December 2017, the German Federal Supreme Court (Bundesgerichtshof – BGH) dismissed ASICS’ application to appeal the 2017 judgment of the Düsseldorf Higher Regional Court (OLG) on alleged online sales restrictions.  The BGH confirmed that prohibiting the use of price comparison websites by retailers constitutes a hardcore restriction under EU competition law.

In 2015, the Federal Cartel Office (Bundeskartellamt – BKartA) found that ASICS’ selective ‘retail system 1.0’ (the system was launched as “Vertriebssystem 1.0”) contained hardcore restrictions  under Article 4(c) of the Vertical Block Exemption Regulation (VBER).  By introducing retail system 1.0, ASICS had allegedly requested approximately 2,000 retailers to refrain from advertising ASICS’ products via price comparison websites and prohibited the use of its brand names on third party websites redirecting customers to retailers’ online shops.

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Update: EDEKA “Wedding Rebates” – German Federal Supreme Court Answers Key Questions on Abuse of Relative Market Power

Germany’s Federal Supreme Court (Bundesgerichtshof – BGH) has now published its full judgment in EDEKA – wedding rebates (case KVR 3/17) on allegedly anti-competitive requests for preferential rebates and conditions by food retailers.

For background on the preceding decisions of the Federal Cartel Office (Bundeskartellamt – BKartA) and Higher Regional Court of Düsseldorf (OLG Düsseldorf) please see our previous post.

The BGH’s judgment clarifies a number of issues regarding the application of Germany’s rules on abuse of relative market power.

The concept of relative market power does not exist at EU level which covers only abuse of market power by dominant undertakings.  In Germany, relative market power exists in vertical relationships (i.e. supplier/customer relationship) if one undertaking is “dependent” upon the other.  An undertaking is dependent if it has no possible and practicable alternatives available to switch business partners.

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Hoffmann-La Roche – Some Broader Implications

On 29 January, Covington hosted its webinar on the ECJ’s Hoffmann-La Roche vs Autorità Garante della Concurrenza e del Mercato judgment.  Miranda Cole discussed the potential implications of this judgment for market definition, field of use licences and indication-based pricing.  The full presentation can be found here.

The Italian Council of State referred five questions to the ECJ in March 2016 in the context of the appeal against the Italian Competition Authority’s decision that Roche and Novartis reached an illegal market-sharing agreement in the market for ophthalmic drugs for serious vascular eyesight conditions.  In September 2017, Advocate General Saugmandsgaard Øe took the position that licensed and unlicensed pharmaceutical products used for the same indication may fall within the same relevant product market.

EDEKA “wedding rebates” – German Federal Supreme Court removes roadblock to antitrust enforcement in food retail sector

On 23 January 2018, Germany’s Federal Supreme Court (Bundesgerichtshof – BGH) handed down its judgment on alleged anti-competitive requests for preferential rebates and conditions by food retailers (case KVR 3/17 – not yet published).  This is an important judgment as it removes a major roadblock to antitrust enforcement in the food retail sector in Germany, and maps a route for antitrust enforcement in a sector in which regulators have historically struggled to make much headway.

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The EU Commission Communication on SEPs: a workable resolution to patent wars in the EU, or more competition litigation battles ahead?

The European Commission published its highly anticipated Communication Setting out the EU approach to Standard Essential Patents at the end of 2017, as part of a package to protect Europe’s know-how and innovation leadership (see Commission Press Release Intellectual property: Protecting Europe’s know-how and innovation leadership).

The first section proposes concrete measures to improve the transparency of standard essential patents (SEPs) exposure.  Whether or not the proposed measures are useful, it is not clear what impact they will have on the market as there is no legislative force behind them.

The second section, eagerly awaited by competition SEP specialists, deals with the interaction of SEP holders and licensees, and in particular the persistently hot topic of FRAND licensing and SEP enforcement. This section may be disappointing for those who were hoping for guidance on some of the more difficult aspects of SEP licensing terms.  While widely debated and lobbied between patent holders and users in the run up to its release, the Communication is silent on two key issues – “use-based licensing” and “licensing to all”.

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