International Competition Issues in Standard Setting

• Pages: 203-243

203

CHAPTER VII

INTERNATIONAL COMPETITION ISSUES IN

STANDARD SETTING

A.

Introduction

Outside the European Union (EU), there has been almost no

international competition law enforcement involving standard setting,

and compared to the United States, where the case law with respect to

standard setting is well developed, there are only a limited number of

cases in the European Union that deal with standardization issues. In the

last two decades, however, the EU has adopted legislation dealing with

standards and has issued several policy statements that hav

e clarified and

elaborated on the important role given to standardization with respect to

the creation of a single market, one of the main goals pursued by the

founding countries of the European Economic Community in 1957.1 In

fact, the EU institutions perceive standardization as a strategic asset in

support of innovation and competitiveness.2 As a result, the EU

competition authorities in recent years have stepped up the enforcement

of the EU competition rules to prevent anticompetitive practices in the

context of standard setting.

3

1. Market integration is an important policy goal in the European Economic

Area and standards have been used as one of the key instruments to

achieve a single market.

See

EU Commission, Towards an increased

contribution from standardisation to innovation in E

urope

, at 3-4, COM

(2008) 133 final (Mar. 11, 2008) (“Formal European standardisation has

been particularly i mportant in supporting New Approach legislation for

the Single Market for g oods. This legislative technique has been

instrumental in putting in place innovation-friendly regulation, where

technical specifications which allow compliance with legal requirements

are developed by the interested parties themselves and updated according

to the state of the art.

”).

2.

See

EU Commission, Towards an increased contribution from

standardisation to innovation in Europe

,

supra

note 1, at 2 (“The current

standardisation models in Europe and at international level are called into

question . . . . This occurs in the context of growing i

nternational

competition in standards-setting from emerging powers, who consider

standardisation an important strategic asset. It follows that

standardisation must adapt to this changed landscape, while strengthening

its role in support of innovation and

competitiveness”).

3.

Id.

204

Handbook on the Antitrust Aspects of Standard Setting

This chapter discusses the application of antitrust law to standard

setting in the European Union. It provides a short overview of the EU

legal framework and addresses the most significant antitrust issues

relating to standar

d setting in this jurisdiction.

B.

Legal Framework under EU Law

Standard

-setting activities are subject to EU competition rules set

forth in Articles 101 and 102 of the Treaty on the Functioning of the

European Union (TFEU).

4

1.

Article 101

Article 101(1) prohibits agreements, decisions by trade associations,

and concerted practices which have as their object or effect the

prevention, restriction or distortion of competition (analogous to

Section

1 of the Sherman Act).

Article 101(1) may be inapplicable, provided that the conditions of

Article 101(3) are satisfied. Pursuant to Article 101(3), Article 101(1)

will not apply if agreements, decisions and concerted practices:

(1)

improve the production or distribution of goods, or promote technical

or economic progres

s;

(2)

allow consumers a fair share of the resulting

benefit;

(3)

only

impose restrictions which are indispensable to achieve

the benefits; and

(4)

do not eliminate competition in a substantial part of

the relevant market.

In addition, the Council of the E

uropean Union (the Council) and the

European Commission (EC

or Commission

) (empowered by the Council)

may

adopt block exemption regulations, which define categories of

agreements that can be regarded as normally satisfying the conditions

laid down in Article 101(3).5 The prohibition set by Article 101(1) will

4. Treaty on the Functioning of the European Union, March 30, 2010, 2010

O.J. (C 83) 1, at 47-199. Effective December 1, 2009, Articles 81 and 82

of the

Treaty Establishing the European Community, Nov. 10, 1997, 1997

O.J. (C 340) 3, at 173-306 (“EC Treaty”) have become Articles 101 and

102, respectively, of the TFEU; the two sets of provisions are in

substance identical. See Changes after the entry into force of the Treaty

of Lisbon (Dec. 1, 2009), available at

http://ec.europa.e

u/competition/information/treaty.html. The new

numbering is used in the text for ease of reference, even when describing

cases decided under the old numbering system.

5.

E.g.

, Commission Regulation (EU) 330/2010 of 20 April 2010 on the

application of Article 101(3) of the Treaty on the Functioning of the

European Union to categories of vertical agreements and concerted

practices, 2010 O.J. (L 102) 1-7; Commission Regulation (EC)

International Competition Issues in Standard Setting

205

not apply to an agreement fulfilling the conditions listed in a

block

exemption regulation. Therefore, although “

undertakings”

6 may self-

evaluate their agreements to assess whether they comply with A

rticle

101(3),

7 it may be more practical to draft the agreement in order to

satisfy the conditions listed in one of the “block exemptions.”

An agreement prohibited by Article 101(1) which does not qualify

for a “block exemption” nor satisfy the conditions of Article 101(3) is

null and void according to Article 101(2).

2658/2000 on the application of Article 81(3) of the Treaty to categories

of specialisation agreements, 2000 O.J. (L 304) 3-6; Commission

Regulation (EC) 2659/2000 on the application of Article 81(3) of the

Treaty to categories of research and development agreements, 2000 O.J.

(L 304) 7-12; and Commission Regulation (EC) 772/2004 on the

application of Article 81(3) of the Treaty to categories of technology

transfer agreements, 2004 O.J. (L 123) 11-17. The block exemption

regulations applicable to specialization agreements and research and

development ag reements will expire on December 31, 2010. The

Commission is therefore reviewing the regime for the assessment of

horizontal cooperation agreements and preparing new block exemption

regulations.

6. Under EU competition law, “undertaking” is generally defined as “any

entity engaged in an economic activity.” Case C-41/90, Hofner & Elser

v. Macrotron, 1991 E.C.R. I

-1979

, ¶ 21.

7. The EC Commission provides guidance in its Commission Guidelines on

the application of Article 81(3) of the Treaty, 2004 O.J. (C 101) 97-

118;

Commission Guidelines on vertical restraints, 2010 O.J. (C 130) 1-

46

[hereinafter

Guidelines on Vertical Restraints

];

Commission Guidelines

on the applicability of Article 81 to horizontal cooperation agreements

,

2001 O.J. (C 3) 2-30 [hereinafter Guidelines on Horizontal Cooperation

Agreements

]; and Commission Guidelines on the application of Article

81 to technology transfer agreements, 2004 O.J. (C 101) 2 [hereinafter

TTBE Guidelines

].

As

part of the review of the

regime for the assessment

of horizontal cooperation agreements, the Commission published the

Commission Draft Guidelines on the applicability of Article 101 of the

Treaty on the Functioning of the European Union to horizontal co-

operation agreements, SEC(2010) 528/2 (May 4, 2010) [hereinafter

Draft

Guidelines on Horizontal Cooperation Agreements

(2010)

],

available at

http://ec.europa.eu

/competition/consultations/2010_horizontals/guidelines

_en.p

df. The latter contains an expanded chapter on standardization

agreements, providing new guidance with respect to, e.g., intellectual

property right policies of standard-setting organizations. The guidelines

also address competition issues relating to the so-called “standard terms,”

which

establish standard conditions of sale or purchase between

competitors and consumers for substitute products. This chapter will not

focus on standard terms

.