Plus ça change, plus c’est la même chose: Revised EU de minimis notice retains % thresholds, clarifies per se rule

Nothing new: the newly-revised de minimis Notice of the European Commission isn’t that novel

The revised Notice (after its 1997 and 2001 predecessors) retains the 10% and 15% market-share thresholds for agreements between horizontal and non-horizontal competitors, respectively, which create a safe harbor from EC prosecution for an Art. 101(1) violation.  The document merely adds formal color and substance to the issue of what types of agreements fall within its “safe harbor” and which fall outside that umbrella.

Unsurprisingly, the Staff Guidance paper accompanying the Notice explains the prohibited hallmark per se (or “by object”) category of agreements succinctly as follows, also adding minimum-RPM, bid rigging, collective boycotts and particularly injurious information-sharing arrangements:

The three classical “by object” restrictions in agreements between competitors are price fixing, output limitation and market sharing (sharing of geographical or product markets or customers).

Not binding on Member States

Importantly, as its predecessors, the Notice does NOT have binding effect on EU member states’ competition authorities, but ONLY on the EU Commission and its DG COMP.  As the European Court of Justice held in its Expedia judgment (case C-226/11):

27      It also follows from the objectives pursued by the de minimis notice, as mentioned in paragraph 4 thereof, that it is not intended to be binding on the competition authorities and the courts of the Member States.

28      It is apparent from that paragraph, first, that the purpose of that notice is to make transparent the manner in which the Commission, acting as the competition authority of the European Union, will itself apply Article 101 TFEU. Consequently, by the de minimis notice, the Commission imposes a limit on the exercise of its discretion and must not depart from the content of that notice without being in breach of the general principles of law, in particular the principles of equal treatment and the protection of legitimate expectations (see, to that effect, Joined Cases C‑189/02 P, C‑202/02 P, C‑205/02 P to C‑208/02 P and C‑213/02 P Dansk Rørindustri and Others v Commission [2005] ECR I‑5425, paragraph 211). Furthermore, it intends to give guidance to the courts and authorities of the Member States in their application of that article.

29      Consequently, and as the Court has already had occasion to point out, a Commission notice, such as the de minimis notice, is not binding in relation to the Member States (see, to that effect, Case C‑360/09 Pfleiderer [2011] ECR I‑0000, paragraph 21).

30      Accordingly, that notice was published in 2001 in the ‘C’ series of the Official Journal of the European Union, which, by contrast with the ‘L’ series of the Official Journal, is not intended for the publication of legally binding measures, but only of information, recommendations and opinions concerning the European Union (see, by analogy, Case C‑410/09 Polska Telefonia Cyfrowa [2011] ECR I‑0000, paragraph 35).

31      Consequently, in order to determine whether or not a restriction of competition is appreciable, the competition authority of a Member State may take into account the thresholds established in paragraph 7 of the de minimis notice but is not required to do so. Such thresholds are no more than factors among others that may enable that authority to determine whether or not a restriction is appreciable by reference to the actual circumstances of the agreement.



Almunia: EU Antitrust damages directive “most significant”

St. Gallen International Competition Law Forum Remarks Highlight Civil Competition-Law Enforcement & Cartel Victims’ Access to Evidence as Top-of-Agenda for Outgoing Commissioner

Joaquin ALMUNIA, Vice President of the European Commission responsible for Competition policy & enforcement, made the following (excerpted) remarks at the 2014 International Competition Law Forum held in St. Gallen.

From a practitioner’s perspective, the Commissioner’s emphasis on cartel victims’ access to evidence, his subtle reminder that the Directive merely sets a “minimum standard“, and the parallel observation that the upcoming collective redress Recommendation will be applicable across all policy (and legal) fields are important highlights of the prepared remarks.

I will start with the Directive on antitrust damages actions, which I regard as one of the most significant developments in the competition-policy domain in the current mandate.

Infringements of EU competition law are not only bad for the competitiveness of our economy. They also harm companies and consumers directly.

We recognise that every individual consumer and business has the right to be compensated for this damage. However, given the legal systems of EU countries, only a few victims obtain compensation in practice.

The time has come to translate our principles into actual practice.

Last year the Commission tabled a proposal to remove existing obstacles in national rules and make it easier for victims to obtain compensation across the EU through private enforcement.

The European Parliament and the Council have seized the opportunity and reached a political agreement with remarkable speed.

The Parliament voted the final text by an overwhelming majority, and the formal approval by the Council is expected before or shortly after the summer.

This outcome is a major success for a number of reasons.

First, from the perspective of victims, the Directive will make it easier for them to get hold of the evidence they need to prove the damage, because national courts will be empowered to order disclosure of relevant evidence.

The Directive also allows victims to rely on decisions taken by national competition authorities when these find an infringement.

Moreover, it introduces clear rules on several aspects of competition litigation, thus reducing the existing uncertainties, which have a cost for all parties.

From the perspective of the internal market, the Directive sets a minimum standard in all Member States, which means more legal certainty and a more level playing field throughout the EU.

Finally, from the perspective of competition authorities, the Directive fine-tunes the interaction between their work and the compensation claims by private parties. This is thanks to rules that preserve the incentives of companies to cooperate in antitrust investigations.

In parallel to the Directive, the Commission has also adopted a Recommendation inviting Member States to introduce collective redress mechanisms at national level by mid-2015.

The Recommendation includes basic principles that would ensure fair, timely and affordable procedures across the EU. The Recommendation is not limited to competition law but covers all policy fields.

Revamped Belgian Competition Authority: A more powerful national enforcer?

Whether or not this month’s revamping of the Belgian Competition Authority will create a more effective enforcer remains to be seen.

From personal experience, Belgian bureaucrats are neither the most efficient, nor the most diligent, as government employees go… And the national authority pales in comparison with the EU’s DG COMP, of course, which is housed only a few kilometers away in the European Quarter of Brussels, yet one of the leading antitrust enforcers worldwide…

Yet, the changes to the watchdog and its powers include several important structural elements that may herald a more streamlined process: for instance, removal from the oversight of the economic ministry, the elimination of the external tribunal that used to have the final say in the agency’s decisions, as well as a new settlement procedure and a potentially shorter investigative process.  In addition, individual financial (not criminal, though) liability may be incurred by participants in hardcore restrictive practices, such as price-fixing cartels or market allocation.

From this month onward, the internal Competition College will not only hear the case but also make a final decision, after the Authority’s separate investigative team has concluded its investigation and made its recommendation for how to dispose of the case.  The NCA body (“Autorité belge de la concurrence” or “Belgische Mededingingsautoriteit“) will, of course, remain on the innately inefficient side of things, as it will have to be multi-lingual, accounting for proceedings to be held French, Flemish/Dutch, and German.

On the personnel front, Jacques Steenbergen will remain the president and Alexis Walckiers the chief economist.  The current in-house counsel and auditor at Dexia bank, Veronique Thirion, will be appointed the NCA’s general prosecutor.

Huh? German merger law changes go into effect “unnoticed” by Federal Cartel Office?

Either the Bundeskartellamt is missing something, or yours truly is — …

…but why is the 8. amendment to the German antitrust statute (allegedly in effect since 1 July 2013) not mentioned anywhere on the BKarta/FCO’s web site? A reference to the revised law is nowhere to be found.

For starters, let’s just take one example from the German legislature’s amendments (the “8. GWB-Novelle”): the change-over from the “creation or strengthening of a dominant position” test in German merger control to the common “significant impediment to effective competition” (SIEC) test used by the European Commission since 2004. Arguably, this change is not quite substantive in nature, and the former is still used as a prime example (“Regelbeispiel”) of the latter, but the change is — sorry to say — in the law, and the FCO doesn’t even mention it?! Not even in its “news” archive? Nor does it update its online reprint of the governing law?

If you look at the FCO’s web page dealing directly with its merger control regime, you will see no reference whatsoever to the new SIEC test. Equally (or more) troubling is that its related “Merkblatt” (roughly, guideline) on merger control is completely out of date, being asterisked with a cute “(wird derzeit überarbeitet)” (“is currently being revised”) note, which has been there for at least a year if not more.

Someone, please tell me that I am wrong and that the Bundeskartellamt actually has things under control. What am I missing here?

(Note: this post is valid as of 10 July…)

Sad times for IP trolls — a multi-front war on NPEs has begun


It’s been a sad time for trolls lately.

As we reported here yesterday, a U.S. Congressman has introduced proposed legislation to combat patent trolls, AKA non-practising entities (“NPEs”), from hiding behind multiple layers of shell corporations that, in turn, own the patents-in-issue outright or are exclusive licencees thereof.

That’s not all the trolls’ worries, however.  In Europe, the European Commission recently issued a public tender notice, calling for a study on “the Changing Role of Intellectual Property in the Semiconductor Industry

Call for tenders: The European Commission will launch soon a call for tenders for a service contract of a maximum value of EUR 60 000.

The purpose of this call for tenders is a study which will firstly focus on the expected changes in IP strategies and patenting practises of the semi-conductor industry due to the concentration/specialisation, the emergence of foundries and fabless, technological developments in the sector and the appearance of non-practising entities (NPE). Secondly the study will focus on the effects these developments will have for the further development of the global semiconductor sector in general and the European clusters in particular.

That’s not good troll news, as any two-front war (here, EU and U.S.) is exponentially harder to win than one with a single enemy.  (Ask the Germans, they know.)

“But wait, there’s more!”

If the proud northern state of Vermont can be counted as a “third [and potentially fourth] front,” it just earned that right in the war on patent trolls: the state’s Attorney General stated on 22 May 2013 that Vermont had sued an NPE troll for violating the VT consumer protection laws, a “groundbreaking” one-of-a-kind suit for the state (indeed, for any state to date.  More to come, I’m sure…).

Attorney General Bill Sorrell issued the following press release:

Vermont Attorney General Sues “Patent Troll” in Groundbreaking Lawsuit (May 22, 2013)

In an effort to protect Vermont’s small businesses and non-profit organizations, Attorney General Bill Sorrell filed a first-of-its-kind lawsuit today against MPHJ Technology Investments, LLC. It marks the first time that a state attorney general has filed suit against a so-called “patent troll.” The complaint alleges that MPHJ Technology has engaged in unfair and deceptive acts under Vermont’s Consumer Protection Act.

MPHJ Technology claims to have a patent on the process of scanning documents and attaching them to email via a network. The Attorney General’s complaint alleges that the company has sent letters containing multiple deceptive statements and demanding about $1,000 per employee, to many Vermont small businesses as part of a nationwide campaign. At least two of those businesses are non-profits that assist developmentally disabled Vermonters.

Patent trolling is a national problem. A recent major study out of Boston University estimated the cost of patent trolling on the US economy at $29 billion in 2011 alone. Representative Peter Welch recently co-sponsored the Saving High-Tech Innovators from Egregious Legal Disputes (“SHIELD”) Act of 2013 in Congress to address the problem and the Federal Trade Commission held a workshop to address patent trolling in December 2012.

The Vermont Legislature passed first-in-the-nation legislation creating a new tool for targets of patent trolling and for the Attorney General to address the issue. Governor Peter Shumlin is expected to sign the bill into law today.

Gov. Shumlin indeed signed into law the amendment that permits lawsuits against patent holders making bad-faith IP infringement allegations.

Oh, it’s not over yet…

“If you call within the next 10 minutes, we’ll include yet another U.S. Senate anti-troll bill for free!

This is in addition to the [fifth-front? I’ve stopped counting] simultaneous introduction by U.S. Sen. John Cornyn (R-Tex.) of the “Patent Abuse Reduction, requiring greater levels of claim disclosure by plaintiffs, identification of related entities, and greater cost risks for unsuccessful claimants as well as cost-sharing of extensive U.S.-style patent discovery that goes beyond the “core documentary evidence”.

Call now!

We can’t wait to see the comments of the likes of NTP, Wi-LAN, Ray Niro and other NPE-specialised attorneys on these multi-pronged attacks.  I’m sure they will (quite likely much more quietly, because nobody want to support a ‘troll’ publicly) lobby against the proposed legislative initiatives.  Yet, they will have a tough time arguing that they are being targeted unfairly.  That’s because there’s a difference to “tort reform”, i.e., prior decades’ Republican complaints about personal-injury and product-liability lawsuits.  What’s different this time around about the ‘war’ on plaintiffs’ lawyers and allegedly “frivolous” lawsuits is that the legislative and executive governmental attacks on IP NPEs and their lawyers/lawsuits come from all political stripes & colours, not just Republicans

IP-ID? Identifying patent ownership – a patent troll’s nightmare?


[Our first blog post was on patent trolls.  Here we go again, as it is mildly related to competition issues.]

In an effort to “bring much-needed transparency to our current patents system,” Congressman Ted Deutch (D-Fla.), has introduced proposed legislation that would require any sales or transfers of patents to be disclosed to the Patent and Trademark Office (PTO), including information on the real “party in interest.”

The bill (H.R. 2024), bearing the common name “End Anonymous Patents Act”, would require this “IP-ID” (our moniker) for all new patents and for existing patents upon scheduled maintenance fee payments.

According to Deutch:

“Patent trolls go to great lengths to conceal the relevant ownership and interests involved. This total lack of transparency by people seeking to game the system unfairly disadvantages businesses honestly seeking to license patents and those targeted in frivolous lawsuits brought by trolls.”

An IP professor at Santa Clara Univ. School of Law wrote in her year-old paper, “The Who Owns What Problem in Patent Law, that “the ‘who owns what’ problem frustrates risk management and decision-making about patents, creates arbitrage and hold up opportunities, and forms a major component of patent notice failure.”

While some interest groups, such as the Electronic Frontier Foundation (“EFF”), want even more disclosure than what the pending House bill proposes — including identification of license(e)s — the “IP-ID” proposal would go a long way toward eliminating patent trolls’ ability to hide behind various layers of shell companies.