Other Areas Flashcards
There are a number of fields addressed by competition law not considered in substance in the course. What are the most important?
1) State monopolies and services in the general economic interest
2) Intellectual property rights
3) State Aids
What is State monopolies and services in the general economic interest concerned with?
In a number of member states a legitimate interest of economic policy is the publicly owned undertaking – owned and operated by the government as a means of pursuing specific policy goals. They used to be quite common in the United Kingdom, but few now exist here. Because a publicly owned undertaking could distort competition with relative ease, the TFU Treaty makes provision for their supervision by the Commission in order to ensure they are bound to the requirements of articles 101 and 102 and afford it powers to intervene to correct a failure to do so. This is article 106(1); there is no equivalent in the Competition Act.
At the same time it is recognised that certain economic activity which operates for the general good, and which may, or may not, be carried out by publicly owned undertakings, simply could not operate if bound wholly to the rigour of the competition rules. This applies, for example, to the utilities (public water, gas and electricity supply), the postal service, a public telephone system and other telecommunications services, national public broadcasting (television) services, transport, health and social care. These are ‘services in the general economic interest’, and are immunised to an extent from the competition rules of both the Treaty (article 106(2)) and the Competition Act (Schedule 3, paragraph 4).
What are Intellectual property rights concerned with?
The existence of an intellectual property right is reserved to the member states (TFU, article 345) but its exercise may be a matter which may fall within the Treaty rules on the free movement of goods (articles 34-36) and the competition rules, and also the Chapters I and II prohibitions. Because an intellectual property right confers upon the proprietor a monopoly it is frequently in the context of article 102/section 18 that the matter arises, although it sometimes becomes a matter for article 101/section 2 – for example, restrictive provisions in a licensing agreement. The Court of Justice has developed a concept of the ‘specific subject matter’ of a right which is immune from the competition rules (see Case 78/70 Deutsche Grammophon v Metro-SB-Großmärkte [1971] ECR 487); it is the exercise of a right beyond the areas falling within its specific subject matter which may fall within the competition law prohibitions.
One of the most widely recognised EU competition cases, involving one of the highest fines imposed by the Commission - € 497 million – was an intellectual property case, against Microsoft for various abuses of article 102; see Decision 2007/53 (Microsoft) OJ 2007 L32/23 (summary publication); upheld in Case T-201/04 Microsoft v Commission [2007] ECR II-3601. The highest ever single fine imposed, €1,060 million against Intel, was another intellectual property case, for infringement of article 102 through fidelity rebates and direct payments to downstream manufacturers to halt or delay use of its (only effective) competitor’s components; Case COMP/37.990 (Intel) OJ 2009 C227/13 (summary publication); under review as Case T-286/09 Intel v Commission, pending.
What are State Aids concerned with?
Amongst the rules on competition in the Treaty, but forming a distinct section in the chapter and a lex specialis, are rules governing ‘Aids granted by States’, addressed in articles 107 to 109. That they are necessary, and logically to be addressed as part of the rules on competition, is self-evident: any subvention granted by a member state to an undertaking gives that undertaking a comparative advantage over its competitors. The need increases with EU integration, the Treaty depriving member states of the tools with which they would traditionally combat foreign subvention (countervailing duties). That the rules are different is equally apparent: they address not the anticompetitive conduct of undertakings but the financial intervention of member states (which are not undertakings in this context) in the market.
Because the rules on state aids are different a body of law has been developed by the Commission and the Court of Justice distinct to articles 107 to 109 both in substance and procedure. It is an important, highly sensitive and complex area of competition law, tightly bound up with industrial and regional policies (both national and Union), and raises fundamental economic questions of the viability and desirability of public services and, for example, public support for crisis industry, ‘sunset’ industries and remote industry. Generally the Treaty prohibits state aids as a distortion of competition, but of course the prohibition is shot through with loopholes. They have come front and centre since the onset of the economic and sovereign debt crises.
The Competition Act is silent as to state aids.
