las migraciones

In general, while EU competition authorities are more willing to intervene and to stress the necessity of short-term competition, “which may result in a certain over-deterrence”, US antitrust authorities appear to be reluctant to step in and “expect the market will correct itself”228 _{on the ground that the courts are not supposed “to act as central planners, identifying}

the proper price, quantity, and other terms of dealing” and they should not “to assume the day-to-day controls characteristic of a regulatory agency”229_{. Such divergent attitudes may}

originally stem from the different philosophies of two jurisdictions, which could be reflected, during their application in relevant laws, by the distinct proportions of attention which have been paid by the EU and US’s competition authorities on balancing some social and economic values, such as efficiency and social equity, consumer welfare and rivalry preservation.230 _The

US antitrust law focuses more on efficiency.231 _{The US antitrust authorities are lenient on}

unilateral commercial behaviour conducted by dominant undertakings and see less danger

226 _{See e.g. Hearing on Competition and Intellectual Property Law and Policy in the Knowledge Based Economy}

Strategic Use of Licensing: Is There Cause for Concern about Unilateral Refusals to Deal?, co-hosted by Department of Justice Antitrust Division and Federal Trade Commission, Washington, D.C., 1 May 2002. Available at

http://www.ftc.gov/opp/intellect/020501xscript.pdf, last visited on 22 Dec 2011. See also e.g. Herbert J. Hovenkamp, Mark D. Janis and Mark A. Lemley, ‘Unilateral Refusals to License in the U.S.’ (2006) 2 Journal of Competition

Law & Economics 1; Mark R. Patterson, ‘When is Property Intellectual? The Leveraging Problem’, (2000) 73 Southern Californian Law Review 1133; Sharon Brawner McCullen, ‘The Federal Circuit and Ninth Circuit Face-off:

Does a Patent Holder Violate the Sherman Act by Unilaterally Excluding Others from a Patented Invention in More than One Relevant Market?’, (2001) 74 Temple Law Review 469; R Hewitt Pate, ‘Refusals to Deal and Intellectual Property Rights’, (2002) 10 George Mason Law Review 429.

227

U.S. Department of Justice and Federal Trade Commission, “Antitrust Enforcement and Intellectual Property Rights: Promoting Innovation and Competition”, (2007), supra note 215, p32.

228 _{Hans Henrik Lidgard, ‘Application of Article 82 EC to Abusive Exclusionary Conduct – Refusal to Supply or to}

License’, (2009) 4 Europarättslig tidskrift, 694, p701.

229 _{Trinko, 540 U.S. 398, 408 and 415.}

230 _{Mark Furse, ‘Competition Law Choice in China’, (2007) 30(2) World Competition 323, pp.325-326.}

231 _{See Katarzyna A. Czapracka, ‘Where Antitrust Ends and IP Begins-On the Roots of the Transatlantic Clashes’,}

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towards competition from such business tactics. They “see little scope for antitrust policy to mitigate the consequences of imperfect IP policies”232_{, based on the belief that “any}

competitive concerns are better remedied by changes in the IP policy.”233 _{The EU competition}

authority, however, is more aggressive to ensure that the trade between Member States is not adversely affected by the unilateral conducts of dominant undertakings. EU Competition authorities “perceive [the] competition process as vulnerable and are more eager to address perceived distortions”234_{, since they “see a role for competition law to correct improvidently}

defined IPRs, even if it entails adjusting competition principles.”235 _{It is also worth noting that}

against the background of lack of harmonized patent/copyright law at the EU level, EU Commission has confronted a further complicated situation at the interface between competition rules and IPR protection than its US counterparts.236

The different manners of the EU and US competition authorities towards dominant undertakings’ commercial freedom also impact the balancing of competitor interest and the consumer welfare in refusal cases. Although EU Commission claims that it only concerns consumer welfare but not the protection of competitors,237 _{it has been contended that the EU}

competition authority has “focused on preserving rivalry rather than on efficiency”.238 _One

negative trend of such over-protection may be that some disadvantaged competitors, in order to win back the market position, try to rely on judicial limitation imposed on the dominant undertaking rather than to compete on the merits. The former US officer in charge of

232 _{ibid, abstract.} 233 _{ibid, p100.} 234 _{ibid, p57.} 235 _{ibid, abstract.}

236 _{Heike Schweitzer, ‘Controlling the Unilateral Exercise of Intellectual Property Rights: A Multitude of}

Approaches but No Way Ahead?’ in Inge Govaere and Hanns Ullrich (eds.) Intellectual Property, Market Power and

the Public Interest (P.I.E. Peter Lang, 2008) 59, p71.

237 _{See e.g. Speech of Director-General for Competition Alexander Italianer, ‘Prepared remarks on: Level-playing}

field and innovation in technology markets’, at Conference on Antitrust in Technology, Palo Alto (US), 28 Jan 2013, available at http://ec.europa.eu/competition/speeches/text/sp2013_01_en.pdf, last visited on 20 July 2014, p6: “Like in the US, the aim of the Commission’s enforcement activity in relation to exclusionary conduct is to ensure that dominant undertakings do not impair effective competition by foreclosing their competitors in an anticompetitive way. We are not concerned about protecting competitors as such. We are only concerned about ‘anticompetitive foreclosure’ that is likely to lead to an adverse impact on consumer welfare, in the form of higher prices or by limiting quality, innovation and consumer choice.”

238 _{Rick Rule, Steve Houck, Doug Melamed and Joe Watershed, ‘The EC Decision against Microsoft: Windows on}

the World, Glass Houses, or Through the Looking Class’, The Antitrust Source, (September 2004), available at

http://www.americanbar.org/content/dam/aba/publishing/antitrust_source/Sep04MSBB.authcheckdam.pdf, last visited on 20 Dec 2012, p19.

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Department of Justice’s Antitrust Division issued the following statement after the General Court’s judgment in Microsoft:

“We are, however, concerned that the standard applied to unilateral conduct by the [General Court], rather than helping consumers, may have the unfortunate consequence of harming consumers by chilling innovation and discouraging competition. In the United States, the antitrust laws are enforced to protect consumers by protecting competition, not competitors. In the absence of demonstrable consumer harm, all companies, including dominant firms, are encouraged to compete vigorously. U.S. courts recognize the potential benefits to consumers when a company, including a dominant company, makes unilateral business decisions, for example to add features to its popular products or license its intellectual property to rivals or to refuse to do so.”239

However, protecting competitors is one path to reach the ultimate goal of consumer welfare, which has been in the heart place of EU competition policy. According to the Commission Guidance, the existence of competitive constrain from rivalry is necessary to ensure that the efficiency brought about by the dominant undertaking would be passed onto the consumer.240

From this perspective, it makes some sense to protect competitors from exclusionary practices. On the other hand, it is claimed that the EU Commission and EU Courts have worried too much about the actual existence of a sufficient number of competitors and has erroneously related the promotion of consumer welfare to the preservation of a certain amount of competitors.241 _This

may be the reason why in fast-moving industries, where ‘winner takes all’ due to first mover advantage, the EU competition authority appears to lack confidence than its counterparts on the other side of the Atlantic Ocean, which finally leads to the EU Commission’s tougher remedy imposed on Microsoft.242

6. Conclusion

The Court of Justice in Magill established the main principle in refusal to license IPR cases that “the exercise of an exclusive right by the proprietor may, in exceptional circumstances, involve

239 _{Press release by Thomas O. Barnett, Assistant Attorney General for the Department’s Antitrust Division, on}

European Microsoft Decision, Washington, 17 September 2007, available at

http://www.justice.gov/atr/public/press_releases/2007/226070.htm, last visited on 23 Dec 2011.

240 _{See Commission Guidance, supra note 65, Para 30.}

241 _{Roberto Pardolesi and Andrea Renda, ‘The European Commission’s Case Against Microsoft: Kill Bill?’, (2004)}

27(4) World Competition 513, p565.

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abusive conduct”.243 _{The EU Commission and Courts however have been at pains in the}

following cases, including Magill, IMS Health and Microsoft I, to interpret the content of the ‘exceptional circumstances test’, namely the three prongs of exceptional circumstances and one prong of justification, in order to improve the legal certainty of the assessment framework for the competition authorities and courts at Member States’ level and the competition law practitioners. EU Microsoft I case, as a milestone exclusionary case under the framework of Article 102 TFEU, has provided the EU Commission and General Court a good opportunity to re-consider the application of the ‘exceptional circumstances test’ in the fast-moving industries and more detailed meaning of each condition. After having adopted lower criteria of the ‘exceptional circumstances test’ inter alia the stricter new product requirement has been broadened to include technical development brought about by follow-on innovations in the relevant market, the EU Commission has demonstrated its interventionist stance towards the refusal behaviour by an undertaking with monopoly market power in a market characterized by strong network effects. This stance is even more obvious when compared to the US antitrust authorities’ generally lenient approach on unconditional, unilateral refusal to license by a dominant undertaking. While the triumph in Microsoft I has encouraged the EU Commission to inquire the high-tech industries, it is not clear whether the tough remedy imposed on the software giant has impeded the incentives of other undertakings to innovate and invest, or the chilling effect is only psychological and negligible. The question of whether EU’s gradually weak per se lawful rule, or even “rule of reason analysis”244 _{on refusal to license could be}

transposed to the Chinese legal and economic context, or the US lenient approach would fit better into the enforcement framework of China’s antitrust law will be analyzed in the next chapter.

243 _{Judgment in Magill ECLI:EU:C:1995:98, Para 50.}

244 _{Christian Ahlborn and David S. Evans, ‘The Microsoft Judgment and Its Implications for Competition Policy}

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CHAPTER Ⅳ FRAND Related Issues