Italian Competition Authority finds that Sky Italia did not abuse of its dominant position

On 23 April 2013 the Italian Competition Authority (“AGCM”) decided (the decision is only available in Italian) to close the proceedings against Sky Italia S.r.l. (“Sky Italia”) of The News Corporation Ltd. Group, finding that Sky Italia’s acquisition of exclusive pay-tv rights to broadcast the FIFA World Cup of 2010 and 2014 on all pay-tv platforms (satellite, digital terrestrial television/DTT and internet) did not amount to an abuse of dominant position under Article 102 of the Treaty on the Functioning of the European Union (“TFEU”).

The investigation was prompted by RTI, a company of the Mediaset Group, based on the complaint that Sky Italia’s acquisition of exclusive pay-tv rights to broadcast the FIFA World Cup on pay-tv and refusal to resell the DTT rights was a breach of the commitments it undertook to the European Commission in 2003, when the Commission authorized, subject to conditions, a merger by News Corporation of two Italian pay-tv companies to create Sky Italia. In August 2011 the scope of the AGCM investigation was expanded to include Sky Italia’s acquisition of certain rights to UEFA’s Champions League 2012-2015 seasons.

In 2010, ahead of the FIFA World Cup, RTI initiated arbitration proceedings before the ICC International Court of Arbitration (“ICC tribunal”). In an award dated 20 February, 2012, the ICC tribunal rejected RTI’s claims and confirmed the legitimacy of Sky Italia’s behaviour. In particular, the ICC tribunal held that the broadcasting rights of the FIFA World Cup did not fall within the commitments since the FIFA World Cup was beyond the remit of “world-wide sports rights.” The ICC tribunal further found that the FIFA World Cup was not essential for the competitiveness of a competing pay-TV television operator since it occurred only once every four years.

The AGCM essentially followed the same reasoning of the ICC tribunal, although it made its own further findings as regards the number of new subscribers that the FIFA World Cup would account for, i.e. in order to confirm whether holding such sport rights confers a particular advantage. The AGCM found that it did not, also noting that the main world cup matches are broadcasted on the free to air TV under the Television without borders Directive.

The AGCM further ruled that Sky Italia’s acquisition of rights to the UEFA’s Champions League 2012-2015 seasons did not constitute an abuse, having found, inter alia, that such sport rights have been assigned following an open bidding procedure which allows for the sub-licensing of such rights, and the fact that Sky Italia actually sub-licensed 2 out of the 3 seasons to RTI, noting that the last season may still be sub-licensed to RTI. The AGCM thus concluded that, at this stage, holding exclusive rights for one season may not necessarily lead to a finding of an abuse by Sky Italia. [Gabriele Accardo]

Italian Council of State reinstates abuse fine on Bayer Cropscience Srl and Bayer Cropscience AG

Last 29 January 2013, the Italian Council of State published its ruling that quashed the Regional Administrative Court of Lazio’s judgment of 16 May 2012 in the Bayer Cropscience case.  The TAR Lazio annulled the Italian Competition Authority’s decision that fined Bayer Cropscience Srl and Bayer Cropscience AG (together “Bayer”) Euro 5,124 million for abuse of dominant position in the market for the production and commercialization of fosetyl-based fungicides in breach of Article 102 of the Treaty on the Functioning of the European Union (see Newsletter 3/2012 p. 10 and Newsletter 4-5/2011, p. 11 for additional background). As a result the Council of State reinstated the fine imposed on Bayer.

Roche and Novartis investigated for an alleged cartel in Italy

On 6 February 2013 the Italian Competition Authority opened proceedings against the Roche Group and the Novartis Group in relation to an alleged anticompetitive agreement for excluding the ophthalmic use of Roche’s Avastin in order to advantage the sales in Italy of Lucentis, which was distributed by Novartis, in breach of Article 101 of the Treaty on the Functioning of the European Union. The Authority visited the Italian premises of Roche and Novartis on 14 February 2013.

Italian competition authority’s decision against Pfizer quashed by court

Last 3 September 2012, the Italian administrative court (“TAR”) quashed (the TAR ruling is available only in Italian) a decision of the Italian Competition Authority (“ICA”) which fined pharmaceutical company Pfizer EURO 10,6 million for an abuse of its dominant position to artificially extend the patent protection of its anti-glaucoma drug Xalatan and keep generic rivals out of the market in breach of Article 102 of the Treaty on the Functioning of the European Union (“TFEU”). The TAR held that Pfizer’s conduct was legitimate.

As it may be recalled (see Newsletter 1/2012 p. 9, Newsletter 3/2011 p. 7 and Newsletter 6/2010 p. 8 for background information), according to the ICA, Pfizer’s conduct to prolong patent protection for its active ingredient latanaprost in order to obstruct or delay the introduction of generic drugs competing with Xalatan, Pfizer’s branded product for the treatment of visual glaucoma, constituted an abuse of its dominant position by blocking or delaying market access to generics. The ICA concluded that Pfizer abused the administrative procedure by obtaining an extension to patent protection in Italy until July 2011, and again until January 2012, in order to align the duration of the patent protection for its product Xalatan with the rest of Europe. The ICA rejected Pfizer’s proposed commitments, because they were considered manifestly incapable of removing the anticompetitive effects of Pfizer’s conduct.

Contrary to the ICA’s findings, the TAR held that Pfizer’s proposed commitments were sound particularly in addressing ICA’s main concern of allowing market entry by generics to whom Pfizer would have granted a non-exclusive, royalty free license in Italy. The set of Pfizer’s commitments, according to the TAR, was likely to diminish the legal uncertainty created by Pfizer’s strategy, following the termination of certain litigation matters.

The TAR did not side with the ICA in respect to the theory of harm either. In essence, the TAR held that Pfizer had done nothing more than exercising its rights, stressing that in order to be regarded as anticompetitive, the practices under scrutiny had to be accompanied by a clear exclusionary intent and an additional anti-competitive element is necessary that goes beyond the existence of a simple set of legitimate actions carried out and brought before the competent administrative and jurisdictional authorities. In other words, the TAR required a clear exclusionary intent and other additional elements for an abuse of dominance to be established. [Gabriele Accardo]

Administrative Court annuls Italian competition authority’s decision against Bayer Cropscience

Last 16 May 2012, the Italian administrative court (“TAR Lazio”) published its ruling (available only in Italian) that annulled the decision of the Italian Competition Authority that fined Bayer Cropscience Srl and Bayer Cropscience AG (together “Bayer”) Euro 5,124 million for abuse of dominant position in the market for the production and commercialization of fosetyl-based fungicides in breach of Article 102 of the Treaty on the Functioning of the European Union (see Newsletter 4-5/2011, p. 11, for additional background).

Italian Competition Authority fines Pfizer for abuse of dominance relating to visual glaucoma drugs

On 11 January 2012 the Italian Competition Authority (“ICA”) issued a decision fining Pfizer Euro 10.6 million for abusing its dominant position in the market for products for that treat visual glaucoma under Article 102 of the Treaty for the Functioning of the EU  (see Newsletter 3/2011 p. 7 and  Newsletter 6/2010 p. 8 for background information).  Last October 2011, the ICA stated that it had rejected Pfizer’s proposed commitments, because they were considered manifestly incapable of removing the anticompetitive effects of Pfizer’s conduct.

In particular, the investigation confirmed that Pfizer’s conduct to prolong patent protection for its active ingredient latanaprost in order to obstruct or delay the introduction of generic drugs competing with Xalatan, Pfizer’s branded product for the treatment of visual glaucoma, constituted an abuse of its dominant position by blocking or delaying market access to generics. The investigation was prompted by a complaint lodged by Ratiopharm, a generics producer.

In essence, Pfizer abused the administrative procedure by obtaining an extension to patent protection in Italy until July 2011, and again until January 2012, in order to align the duration of the patent protection for its product Xalatan with the rest of Europe. Pfizer did so by obtaining a divisional patent (a type of patent application containing matter from a previously filed application, known as the parent application) as well as a Complementary Patent Certificate, but never launched a new product as a result.  The European Patent Office in Munich declared the divisional patent invalid.  Thus, the unduly obtained extension of patent protection in Italy impaired investments made by generics companies in light of the possibility to enter the Italian market. Pfizer further increased legal uncertainty by undertaking civil and administrative actions based on counterfeit claims.  The ICA found internal documents showing that Pfizer was fully aware that its strategy to foreclose competitors could raise competition issues. [Gabriele Accardo]

Italian Court rejects Samsung’s request for injunction against Apple in Italy

On 5 January 2012 an Italian Court rejected Samsung’s request for an injunction against Apple in relation to the sale of the iPhone 4S in Italy.  Samsung alleges that Apple is violating a number of its patents, which Samsung claims are essential to implement the 3G/UMTS standard used in smartphones like the iPhone 4S.

According to the Court’s order (the Court issued a second order in relation to a different patent), the injunction to stop marketing of the iPhone 4S cannot be granted, mainly because Apple (albeit unsuccessfully) requested that Samsung grant a license for certain patents on FRAND terms.  Apple even set aside an amount in the event that Samsung was deemed to be entitled to royalties, notwithstanding the fact that Apple disputes Samsung’s entitlement to any royalty at all.

The Milan Court further noted that, as a result of an agreement between Samsung and Qualcomm that relates, inter alia, to the contested patents, Samsung agreed not to sue “Qualcomm’s customers.”  According to the Milan Court, Apple would appear to fall within such a definition to the extent that its iPhone 4S incorporates Qualcomm’s chips (using Samsung technology), even though the chips are actually bought by the intermediary that assembles the iPhone.

The Milan Court will address Apple’s claims on the merits, which state that Samsung abused its dominant position by setting the 3G/UMTS standard (“a patent ambush”) and by refusing to license its “essential” standards on FRAND terms. [Gabriele Accardo]

Italian Competition Authority fines Bayer Cropscience for refusing to provide access to studies required for market authorization of fungicides

On 5 July 2011 the Italian Competition Authority (“ICA”) issued a decision (the decision is only available in Italian, but ICA’s press release is also in English) that fined Bayer Cropscience Srl and Bayer Cropscience AG (together “Bayer”) Euro 5,124 million for abuse of dominant position in the market for the production and commercialization of fosetyl-based fungicides in breach of Article 102 of the Treaty on the Functioning of the European Union (“TFEU”).

Italian Competition Authority market tests Pfizer’s commitments to close investigation into alleged abuse of dominance case

On 16 May 2011, the Italian Competition Authority (“ICA”) published the proposed commitments offered by Pfizer to close the investigation into its alleged breach of Article 102 of the Treaty on the Functioning of the European Union (“TFEU”) relating to latanoprost, an active ingredient for treating visual glaucoma.

According to the ICA, Pfizer acted to prolong its patent protection for latanoprost by employing strategies to obstruct or delay the introduction of generic drugs competing with Xalatan, Pfizer’s branded product for the treatment of visual glaucoma, into the Italian market (see Newsletter 6/2010 p. 8 for background information).

In particular, depending on the comments received by third parties, the ICA will make the following commitments binding on Pfizer:

• Pfizer will commit to grant a royalty-free license concerning its divisional patent covering latanoprost in Italy and will also refrain from seeking further patent protection thereby allowing for the immediate opening/liberalization of the Italian market;
• Pfizer will drop any legal action against generics manufacturers; and
• Pfizer will publish on its website information regarding medicines containing the same active ingredient so that consumers and doctors will be able to choose among similar products.

The investigation was prompted by a complaint lodged by Ratiopharm, a German generics producer. [Gabriele Accardo]

Italian Competition Authority accepts Google’s commitments and closes investigation

On 17 January 2011 the Italian Competition Authority (“AGCM”) communicated that it accepted the commitments (available on the AGCM website only in Italian) offered by Google to close the investigation into Google News service under Article 102 of the TFEU  (see Newsletter 5/2009 p. 10, Newsletter 2/2010 p. 11, and Newsletter 3/2010 p. 10, for background information).

With its decision of 22 December 2010, the AGCM made the following commitments formally binding on Google:

• First, publishers will be able to decide whether to provide Google News with access to their own sites, to selectively exclude specific articles or images, and to display article titles without any text excerpts. This solution is now possible because Google has implemented a crawler (i.e. a computer program used by search engines to process and index web pages) for the Google News service which runs independently from the crawler of Google’s main search engine.

• Second, under the new terms of Google’s AdSense program, revenue sharing of proceeds from advertising sales will be more transparent. In brief, publishers will be able to check the economic terms and conditions that determine the amount of compensation they are entitled to receive. In future, publishers will have to be notified of prospective modifications prior to their implementation.

The AGCM also submitted a report (available only in Italian) to Government and Parliament requesting a review of copyright laws to address the issue of how to compensate businesses that produce the content which is later (economically) exploited by other parties on the internet. The AGCM points to the objective discrepancy between the value that the content contributes to the internet system as a whole and the actual proceeds received by online publishers for their contributions. According to the AGCM, antitrust inquiries are not the appropriate means to address those issues; instead, a national law would be needed to define a system of intellectual property rights that could promote virtuous forms of cooperation between the holders of exclusive rights and the providers of innovative internet services.

The AGCM encourages the Italian institutions to promote discussion on this issue in the appropriate international venues. [Gabriele Accardo]