Presentation on theme: "Amelia Fletcher Chief Economist Office of Fair Trading"— Presentation transcript:
1 Amelia Fletcher Chief Economist Office of Fair Trading IP and the role of National Competition Authorities: A perspective from the OFTAmelia FletcherChief EconomistOffice of Fair Trading1
2 IntroductionSome views on the IP/competition law interface, and hot issuesThe role of the OFTThe OFT’s work to date with an IP dimensionThe role of NCAs such as the OFT with respect to IP
3 The treatment of IP by competition authorities: some traditional views? “I might just as well use this patent as wallpaper if competition law won’t let me enforce it”An anonymous patentee (attrib)
4 From...worlds in collision... “Intellectual Property and Competition Law: When Worlds Collide”Paper by Donald M Cameron, 1997 Annual Canadian Bar Association Competition Law Conference
5 ...to....happy marriage?“It is of course a longstanding topic of debate in economic and legal circles how to marry the innovation bride and the competition groom. In the past some have argued that such a marriage will unavoidably lead to divorce because of conflicting aims of IPR law and competition law. But I think that by now most will agree that for a dynamic and prosperous society we need both innovation and competition. Contrary to what some might think, competition is a necessary stimulus for innovation. IPR law and competition law have a complementary role to play in promoting innovation to the benefit of consumers. I therefore firmly belief in this marriage and, like in all good marriages, the real question is how to achieve a good balance between both policies.”Former EU Commissioner of Competition Mario Monti speaking in Paris, on 16 January 2004
6 Some hot issues in the IP and competition law interface
7 Some hot issues in the IP and competition law interface
8 Where the does the OFT come in? Mission is to make markets work well for consumersWork consists of:Enforcing competition lawEnforces the Competition Act 1998 (CA98) (and where there is an effect on trade between EU Member States, Articles 101 and 102 of the Treaty on the Functioning of the European Union)Merger controlAnalysing marketsCompetition advocacyEnforcing consumer law
9 Where does the OFT come in? IP is an area of focus for the OFT in its annual plan:“We also propose to take forward work on intellectual property rights (IPRs) which, by safeguarding product or service differentiation and driving innovation, are an essential part of ensuring strong competition and economic growth. Competition and consumer policy can be an important complement to IPRs in driving innovation. Where appropriate, they can also ensure that IPRs are not exercised in a manner that acts against the interests of consumers.”Page 19 of the Annual Plan
10 OFT activity with an IP and innovation dimension to date No CA98 infringement decisions specifically concerned with the existence or exercise of IPHowever, a number of OFT Chapter II infringement decisions have related to the pharmaceutical sector, where IP issues have had to be consideredNappanti-competitive pricing strategies for pharmaceutical product, post-patent expiryGenzyme:margin squeeze with respect to pharmaceutical productGavisconfinding withdrawal of Gaviscon Original Liquid with the intention of limiting pharmacy choice and hindering competition from suppliers of generic medicines, post-patent expiry (effective patent extension)Also an ongoing case under Chapter I, considering allegation of “pay for delay” in the pharmaceutical sector10
11 OFT activity with an IP and innovation dimension to date “At the Races”collective selling of certain media rightsinfringement decision annulled by the Competition Appeal Tribunal11
12 OFT activity with an IP and innovation dimension to date And note, where the OFT has not taken action under CA98:For example, BSI (2003)The British Standards Institution granted an online licence to Barbour Index plc following an investigation by the OFT into an alleged abuse of a dominant position.Barbour Index had alleged that BSI was breaching the Competition Act by refusing to grant it a licence to supply BSI standards online.The OFT closed its case without reaching any conclusion on whether BSI holds a dominant position or has abused any such position.
13 OFT activity with an IP and innovation dimension to date OFT advocacy work:Commercial Use of Public Information market study (2006)Found that more competition in public sector information could benefit the UK economy by around £1 billion a year.Made recommendations, including that public sector information holders should:make as much public sector information available as possible for commercial use/re-useensure that businesses have access to public sector information at the earliest point that it is useful to them
14 OFT activity with an IP and innovation dimension to date OFT advocacy work:Pharmaceutical Price Regulation Scheme (PPRS) market study (2007)Recommended that the current 'profit cap and price cut' scheme should be replaced with a patient focused value based pricing schemein which the prices the NHS pays for medicines reflect the therapeutic benefits they bring to patients.This would enable the NHS to obtain greater value for money from its existing drug spend and furthermore, encourage innovation
15 OFT activity with an IP and innovation dimension to date Considerable work on mergers…for example:Princes/Premier (clearance – involved branded, own-label canned foods, divestments of the Fray Bentos brand)SUP Amisco/Prozone (clearance – pace of dynamic innovation overcoming any concern about concentration)GSK/Pfizer (clearance – though key overlaps with respect to innovation rather than product)Project Kangaroo (referred by OFT to CC – blocked – video on demand (VOD) joint venture)
16 OFT activity with an IP and innovation dimension to date Analysis of mergers in nascent and/or innovative sectors has tended to trade off:the likelihood of new entry into a new, fast-moving sector....against the risk that the merger may ‘tip’ the market one way or the other
17 Striking the right balance It is well known that holding an IP right does not confer immunity from competition law interventionHowever OFT is equally alert to the need for caution when considering competition interventions dealing with IPDo not wish to undermine incentives for innovation
18 Striking the right balance Focus on removing anti-competitive obstacles to innovationFocus on dynamic competition, rather than static competitionConsider in particular innovation marketsParticular interest in ensuring that incumbents do not prevent new business models from developingWhat matters is the aggregate amount of inventive activity, not the identity of individual innovators
19 IP is globalNational competition authorities such as the OFT need to ensure that they are well placed when considering IP cases, in terms of being able to obtain evidence and to impose effective remediesAnti-competitive pan-national IP strategies therefore tend be better addressed by pan-national enforcementAnd note provisions on case allocation in ECN notice on co-operation in the network of competition authoritiesWhere agreement or conduct affects more than three member states, then European Commission particularly well placed to deal
20 IP is globalSo…is a National Competition Authority such as the OFT well placed to deal with issues in a global “patent war”?Or better placed to deal with IP and competition issues having a particular focus on, or centre of gravity in, the UK
21 Some potential areas of interest... These could include:IP and competition questions arising from distribution issues with a UK-focusParticular interest in issues arising from brands...Note merger decisions, such as Princes/PremierInternet retailing and selective distributionConsider application of Vertical Agreements Block Exemption Regulation and guidelinesFor example, issues relating to the on-line pricing of branded goodsOFT is attentive to the trade-offs between brand protection and competition
22 Some potential areas of interest OFT recognises IP system has built-in safeguards, for example:strict novelty, inventive step, disclosure requirements required for grant of patent, andopportunity for counterclaim for revocation in patent litigationBUT, competition authorities can have a role in dealing with anti-competitive means of subverting these safeguardsConsider, for example, improperly obtained IPCompare situation in US anti-trust law with respect to “fraud on the Patent Office”And note EU cases (AstraZeneca under Article 102 (under appeal, AG’s opinion on 12 May 2012))Or “pay for delay” allegations with respect to pharma patents
23 Merger control Merger control is potentially very important Many mergers are below EU notification thresholdsFocus is on overlaps and prospective effects of merger on competitionCould involve smaller, innovative businesses with IP and technology in fast-growing marketsWhich are therefore below the EU thresholdsMight also involve transactions involving “Non-Practicing Entities”Consider impact on innovationPotential for packages of IP rights to constitute an ‘enterprise’ under UK merger law?
24 Markets work OFT can conduct market studies with IP dimension Note also the potential effectiveness of suitable market interventions in domestic markets with an IP dimension...Consider for example, section 176 of the Broadcasting Act 1990 (BA90)Requiring certain broadcasters to provide advance information about their programming to publishersAnd provisions allowing reproduction of that information (for example, Schedule 17 of the BA90)Arose from an 1985 MMC report (Cmd 9614)...compare Magill....
25 Note too, advocacyOFT will engage with IP policy makers to ensure effective consideration of competition issues in the IP spaceAnd vice versaOFT to engage with the European Commission on the new Technology Transfer Block Exemption RegulationOngoing engagement between the IPO and the OFTOFT welcomes the competition focus of the Hargreaves reportIPO and OFT have been in discussions about working together more effectivelywill shortly set out how we will do this - watch this space!
26 So, in conclusion...with IP and competition, we want to help facilitate:
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