Tag: E.U.

And Here We Go Again….

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The European Union has launched a fresh salvo against Google, this time charging Google with abusing its dominance in Internet searches and opened a probe into its Android mobile system.

 

The E.U. Executive Commission has stated that it has found that Google “gives systematic favourable treatment” to its Google Shopping at the expense of others in its general search results.

 

Am pretty sure by the time the Google anti-trust investigation ends, one will be able to write an entire book on the company and its competition law troubles.

Gabriele Accardo, Vertical Antitrust Enforcement: Transatlantic Perspectives on Restrictions of Online Distribution under E.U. and U.S. Competition Laws.

As a follow up to my previous post,  I recently read a very nice Working Paper by Gabriele Accardo, titled “Vertical Antitrust Enforcement: Transatlantic Perspectives on Restrictions of Online Distribution under E.U. and U.S. Competition Laws.” 

 

The paper lucidly discusses the growth, economics, advantages and disadvantages of the E-Commerce Sector and looks at how E.U. and U.S. competition laws deal with restrictions of online sales in distribution agreements. It discusses how “…The growing importance of online commerce highlights how vertical competition law enforcement is still an important building block of competition law policies, both in the U.S. and in Europe”. While discussing the difference in approach between the two jurisdictions, the paper highlights the new competition law rules adopted by the E.U. specifically targeting restrictions of online sales in distribution agreements and explains why the U.S. antitrust doctrine is less concerned about the need to adopt specific rules applicable to restrictions of online sales.

E.C. Policy Brief On Commitments

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The European Commission recently released a Competition Policy Brief on it’s Commitment Decisions.

“In a nutshell The Commission retains a margin of discretion in the choice of opting for an Article 7 prohibition decision or an Article 9 commitments decision. The choice depends on the main objectives pursued and the specific features of the case. In practice, commitment decisions are not appropriate in cases calling mainly for imposing high fines for past behaviour, or where no effective, clear and precise remedy is identifiable. They are only possible when companies are willing to offer appropriate commitments.”

The topic isn’t particularly relevant for India as of today, since the Competition Act as of now does not allow the C.C.I. to “settle/compromise” cases or investigations. But the transparency adopted by the E.C. is definitely encouraging. For example, one would definitely like the C.C.I. to release guidelines on the determination of penalty as a start.

Lundbeck et. al. (COMP/39226) – European Commission

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If Ranbaxy’s trouble with the F.D.A. in the U.S.A. and in India wearnt enough, it has now beeen slapped with the fine of  10.3 million Euros by the European Commission for anti-competitive practices  in delaying the entry of the  generic drug Citalopram into the markets European Economic Area (E.E.A.).

According to the Press Release by the Commission,

 

“The European Commission has imposed a fine of € 93,8 million on Danish pharmaceutical company Lundbeck and fines totalling € 52,2 million on several producers of generic medicines. In 2002, Lundbeck agreed with each of these companies to delay the market entry of cheaper generic versions of Lundbeck’s branded citalopram, a blockbuster antidepressant. These agreements violated EU antitrust rules that prohibit anticompetitive agreements (Article 101 of the Treaty on the Functioning of the European Union – TFEU). These generic companies were notably Alpharma (now part of Zoetis), Merck KGaA/Generics UK (Generics UK is now part of Mylan), Arrow (now part of Actavis), and Ranbaxy. (Emphasis added)

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Citalopram is a blockbuster antidepressant medicine and was Lundbeck’s best-selling product at the time. After Lundbeck’s basic patent for the citalopram molecule had expired, it only held a number of related process patents which provided a more limited protection. Producers of cheaper, generic versions of citalopram therefore had the possibility to enter the market. Indeed, one of them had actually started selling its own generic version of citalopram and several other producers had made serious preparations to do so.

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But instead of competing, the generic producers agreed with Lundbeck in 2002 not to enter the market in return for substantial payments and other inducements from Lundbeck amounting to tens of millions of euros….”

 

Ranbaxy plans to appeal against the decision and fine.

 

P.S.: Not sure if this is the correct citation for unreported Commission Orders. Please do correct me if am wrong.

 

Why the CCI Google Investigation faces Difficulty.

A recent Economic Times Article states that the “probe by Indian authorities to examine if Google abused its dominant position in the Internet search engine market is progressing at a sluggish pace, mainly due to a lack of understanding on Internet-related issues.” Furthermore, it also stated that “India (presumably through the C.C.I.) has sought the FTC’s help in this matter.”

While the reason stated above is probably true, I feel another important reason the investigation faces difficulty is becaue of the direction the D. G. Office seems to be taking to reach its goal. This is evident from the second line quoted above, where the article states that the C.C.I. is looking for aid from the F.T.C. There is no harm in asking for aid from others, but in this case, the Commission may be asking for aid from the wrong people. One needs to understand that the F.T.C. and the European Commission have SETTLED their cases with Google on the basis of certain commitments they received from the company. (See here for the F.T.C. commitments and here for the E.U. commitments). It is more than evident from their respective press release and the commitments received from Google that both the competition authorities never approached the investigation with an intention to prosecute. Their primary intention was merely to ensure competitiveness without disrupting the market (being the internet search engine market and online advertisement market) to the best possible extent. The merits of such an approach are of course debatable, but are presently outside the scope of this post. What is important is that settlements require a mediative approach (far different from an adjudicatory approach) and this is not the approach the C.C.I. wishes to follow. Even if it wishes to, it as of now can’t, as explained in a previous post.

It is better if the Commission looks eastwards to the Australian Competition and Consumer Commission (A.C.C.C.) for help. The judgement of the Federal Court of Australia is the only case which Google has lost on allegations against its Adwords programme, which is the primary subject of investigation even in India.Google-confused