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Two recent victories for Google in the United States

By Nicole Daniel

On 20 February 2015 a federal judge in California dismissed an antitrust lawsuit against Google alleging that it violated antitrust laws by requiring makers of Android tablets and smartphones to designate Google as the default search engine on the aforementioned devices.

The plaintiffs alleged that the Sherman Act, the Clayton Act and California’s Cartwright Act were violated by Google by requiring manufacturers such as Samsung, HTC and LG Electronics to sign Mobile Application Distribution Agreements (MADAs) to make Google the default search engine on their devices.

In her ruling US District Judge Beth Labson Freeman held that the plaintiffs had not proven sufficiently enough that they had suffered an antitrust injury under neither federal nor state laws. Also they did not allege enough evidence to prove that Google’s conduct prevented mobile device users from choosing freely which search products they want or that competitors were prevented from innovating due to Google’s conduct.

Furthermore Judge Labson Freeman wrote that the allegations of hypothetical loss of consumer choice and innovation were “too conclusory and speculative”. The plaintiffs mistakenly tried to tie the effects of the alleged anticompetitive MADAs to the relevant alleged markets, i.e. handheld search and general Internet search, thereby trying to show that the MADAs hurt competition in these markets. However no relationship between the two markets and the MADAs was shown by the plaintiffs.

Judge Labson Freemann stated that this was “a close call”, but “the court must insist on greater specificity in pleading”.

Additionally, the plaintiffs tried to enforce California law even though they do not live on California but in Iowa and Kentucky respectively. The judge allowed the lawyers for the plaintiffs to amend their state claims to add a plaintiff from California.

The second recent success for Google is the state of Ohio’s termination of its antitrust investigation into Google’s business practice.

The state of Ohio had begun its investigation in May 2011 and notified Google in November 2014 that it has closed the investigation. Together with Texas and Mississippi, Ohio had continued its investigation even after the FTC closed its own probe in January 2013 by finding that there was insufficient evidence that search results were manipulated by Google. In the meantime Texas had also ended its investigation in 2014; Mississippi is therefore left being the only US state with an active antitrust inquiry into Google’s business practice.

However, outside of the US, Google is under investigation in Europe, Canada, South America and Asia.

The Department of Justice will not challenge a Proposal to update Patent Policy by a Standards-Setting Organization

By Nicole Daniel

On 2 February 2015 the Department of Justice (DOJ) published a business review letter stating that it will not challenge the update of the patent policy by the Institute of Electrical and Electronics Engineers Standards Association (IEEE-SA).

The Institute of Electrical and Electronics Engineers, Inc. (IEEE) is a non-profit professional technology association and the IEEE-SA is an operating unit within the former that is responsible for developing technical industry standards. The patent policy at issue governs the incorporation in IEEE standards of patented technology and also clarifies the terms under which essential patent holders to IEEE standards can commit to make available licences for use in implementing the IEEE standards.

The IEEE requested from the DOJ’s Antitrust Division a business review letter expressing its enforcement intentions with regards to a proposed update of the IEEE-SA’s patent policy. Essentially the update revises the provisions on commitments from those parties that hold patent claims which are essential to IEEE-SA standards to license these claims on RAND terms. The update is directed at four areas, namely the definition of a reasonable licensing rate, the production levels to which the commitment applies, the availability of injunctive relief and the permissible requests for reciprocal licensing.

In its business review letter the DOJ stated that it will not challenge the IEEE’s adoption of changes to its patent policy. In a related press release the DOJ further stated that the U.S. government does not dictate patent policy choices to private standards settings organisation. Also the DOJ does not believe that the proposed update of the IEEE’s patent policy is likely to result in harm to competition.

Nevertheless the DOJ reserved the right to challenge the proposed action under the antitrust rules if anticompetitive effects follow from the update.

Louisiana’s Attorney General sues GlaxoSmithKline over delay of generic nasal spray

By Nicole Daniel

In December 2014 Louisiana’s attorney general (AG) filed a complaint against GlaxoSmithKline (GSK) alleging that GSK engaged in an anticompetitive scheme to delay the entry of a generic version of its Flonase nasal spray.

This is the third time since 2011 that AG James D. “Buddy” Caldwell has filed suit against GSK.

The lawsuit alleges that the state’s antitrust and unfair competition laws were violated by GSK by inter alia filing baseless citizen petitions to the US Food and Drug Administration (FDA) in 2004 and 2005 to delay Roxane Laboratories from receiving the necessary regulatory approval to offer a generic version of Flonase nasal spray. In his lawsuit AG Caldwell states that the citizen petitions were filed as part of a “brand maturation strategy” intended to extend GSK’s monopoly and not because of legitimate concerns regarding the safety of the generic nasal spray.

The so-called “brand maturation strategy” included four tactics, i.e. improperly influencing the bioequivalence guidance process of the FDA, the filing of the aforementioned citizen petitions, drafting a fluticasone propionate monograph to submit to the US Pharmacopeia, which lists the test procedures and acceptance criteria to set the standards for quality, purity, strength and consistency of pharmaceutical ingredients in an approved drug and finally supplementing its original New Drug Application to delay the FDA from approving the Abbreviated New Drug Applications before approving GSK’s supplemented original New Drug Application.

The lawsuit alleges that this “brand maturation strategy” resulted in GSK illegally maintaining its monopoly power in the market for fluticasone propionate in the US for a duration of at least 20 months and selling more than a $ 1 billion of Flonase nasal spray during that time. Also the price of Flonase nasal spray was maintained at supra-competitive levels and the state of Louisiana was overcharged by millions of dollars. The state of Louisiana was further deprived of the benefits unrestricted competition offers and of access to less expensive generic versions of Flonase.

The lawsuit seeks restitution and treble damages for an undisclosed amount.

GSK argues that the lawsuit should be moved as it involves a federal agency. This is so since the action centres on alleged conduct of GSK towards a federal agency as well as actions by a federal agency allegedly leading to a delay in approving a generic version of Flonase nasal spray.

European Commission clears acquisition of Belgian media company by Liberty Global subject to commitments

By Gabriele Accardo

Last 24 February the European Commission cleared Liberty Global’s acquisition of a controlling stake in the Belgian media company De Vijver Media NV (“De Vijver”), subject to commitments.

The Commission originally opened an in-depth investigation alleging that the transaction would create a close relationship between the largest TV retailer in Flanders, Liberty-controlled Telenet, and two of the region’s most popular free-to-air TV channels, Vier and Vijf. In essence, as a result of the transaction, the Commission had concerns that Telenet’s actual or potential competitors for selling TV services to consumers in Flanders could be shut out from accessing these channels. This could concern classical competitors as well as so-called ‘over-the-top’ TV service providers that provide end users access to TV channels via the Internet.

In fact, according to the Commission, TV distributors that compete with Telenet, such as Belgacom and TV Vlaanderen, must have Vier and Vijf in their offer to compete on equal footing with Telenet, while new players, such as Mobistar, would not be able to enter the market at all without Vier and Vijf.

On the other hand, the Commission concluded that Telenet would not have the incentive to remove the channels of Medialaan and VRT (two Flemish broadcasters that compete directly with De Vijver) from its cable platform, as it would make Telenet’s offer less attractive and lead to a loss of subscribers, which therefore would not be a profitable strategy. Moreover, Telenet is obliged to carry VRT’s channels by law. However, the investigation found that Telenet could disadvantage the channels and programs of Medialaan and VRT in more subtle ways, for instance by displaying their video-on-demand content less prominently than that of De Vijver.

Notwithstanding, during the investigation, De Vijver concluded agreements with some TV distributors to license Vier and Vijf and offered to prolong its agreements with others. Similarly, Telenet amended its agreement with VRT and Medialaan to ensure that their respective content would not be disadvantaged compared to that of De Vijver.

The commitments. To address the Commission’s remaining competition concerns, the parties committed –for seven years- to license De Vijver’s channels – Vier, Vijf and any other similar channel it may launch – to TV distributors in Belgium under fair, reasonable and non-discriminatory terms. In particular, the parties committed:

  • to license the channels Vier and Vijf;
  • to license any new basic pay TV channel that De Vijver may launch in the future;
  • De Vijver must also license to distributors-linked services such as catch-up TV and PVR (a service that allows users to record programs and view them at a later stage).

The Commission provided an infographic illustrating the commitments.

National Competition Authorities launch parallel market tests in online hotel booking sector

By Gabriele Accardo

Last 15 December 2014 the European Commission announced the launch of market tests by the French, Swedish and Italian competition authorities in the online hotel booking sector. The Commission is coordinating the national investigations but has not opened its own investigation.

The investigations concern the parity clauses in the contracts between Booking.com and hotels that oblige the hotel to offer Booking.com the same or better room prices that the hotel makes available on all other online and offline distribution channels.

The three national competition authorities have concerns that so-called “parity clauses” in contracts between online travel agent Booking.com and hotels may have anti-competitive effects, in breach of their respective national competition laws as well as Article 101 and/or Article 102 of the Treaty on the Functioning of the European Union (TFEU). In particular, they have concerns that they may restrict competition between Booking.com and other online travel agents (“OTAs”) and hinder new booking platforms from entering the market.

To alleviate these concerns, Booking.com has proposed to abandon the parity requirement in respect of prices which the hotel makes available to other OTAs. This would enable hotels to offer different room prices to different OTAs. However, the hotel would still have to offer the same or better room prices to Booking.com as are offered on the hotel’s own online and offline booking channels. The commitments (see commitments in France, Italy and Sweden) are intended to apply EEA-wide.

The French, Swedish and Italian competition authorities are continuing their investigations into the parity clauses of other OTAs.

Interested parties could submit comments to the relevant national competition authorities until last 31 January 2015.

As it may be recalled seven competition authorities in Europe (in France, Germany, Sweden, UK, Italy, Austria, Ireland) have opened cases concerning online booking platforms (see, e.g., Newsletter 3/2014, p.12 Newsletter 1/2014, p.15, Newsletter 5-6/2013, p.9 and 11, Newsletter No. 4-5/2012, p. 15, for additional background).

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