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The application of the Refusal to Supply principle and Essential Facility Doctrine to Intellectual Property Rights in the EU

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European antitrust liability can be grounded on an Abuse of a Dominant Position, a prohibited practice under article 82 ECT which addresses “any abusive conduct by a dominant undertaking (DU) within the Common market or substantial part of it which may affect competition between Member States”. This practice must be likely to harm consumers in order to be reprehensive. As it is, competition rules don’t address refusals to share IPR.

An IPR is a right conferred upon IP owners to exclude a competitor which is seeking access to the Intellectual Property. As such the company holding the IPR is placed in a legal monopoly and benefits from a dominant position on the technology market and/or product market incorporating the technology.

Combining both concepts, under certain circumstances, a DU holding an IPR and denying access or refusing to supply its resource to competitors could be found liable of anti-competitive practices if its conduct is deemed abusive.

From the examples of abusive conduct given by article 82 (b) the European case law developed two principles:

On the one hand, the principle of Refusal to Deal /RS according to which a RS by a DU may be considered as an exclusionary conduct in the light of article 82 ECT if its practice is not objectively justified. In that case, should the duty to supply be applied broadly to cover also a refusal to grant access to an intangible asset, such as an IPR? And if yes, would it be efficient to deprive innovating company from the protection they are entitled to?

On the other hand, the EFD is applied by the Commission to IPR since the early 90’s. According to the latter, under certain conditions, an input considered as essential on a market and owned or controlled by a DU should be accessible to competitors wishing to operate on this market. In that case, what are these specific conditions and which justifications could immunize the dominant undertaking?

The EU antitrust policies through the EFD and RS principles were implemented in matters regarding intangible assets. However their application to IPR is limited to exceptional circumstances.

The last case at issue, the Microsoft case, re-opens the fears of dominant undertakings because no precise criteria are given as to the conditions required to define an ADP in the light of the RS/EFD principles: the judges did not use the new product requirement implemented by the Magill and IMS cases and they introduced a new incentive test. Therefore, it can be expected that this legal uncertainty might foster the incentive for SMEs to start proceedings against DU holding an IPR, instead of investing in technological projects. The fact that this case was dealt differently by the US and EU judges underline the gap between both competition policies.

Bearing in mind that there is also a gap between national and EU enforcement policies and interpretations in the field of IPR, the efficiency of the EFD/RS principles applied to IPR is really arguable.

Neither Bronner/IMS/Microsoft define what could be a valid legitimate justification of a refusal to deal and today many questions still remain open : what is an EF, to who and on what terms access should be compulsory, when does access has to be given. All these issues will be treated case by case.

The Discussion Paper on the Application of Article 82 ECT to Exclusionary Conduct issued by the Commission in 2005 might lead to a convergence of approach although it is only a non-binding guidance. However, when it provides that “a refusal to license an IPR protected technology which is indispensable as a basis for follow-on innovation by competitors may be abusive even if the license is not sought to directly incorporate the technology in new products”, the improvements are more than uncertain. Indeed, this obiter tends to apply different standards to different situations and thus increase the legal uncertainty. It is likely “to annihilate the incentives of firms engaging in radical, first-generation innovations for the sake of protecting firms that are merely engaged in exploiting the technological breakthroughs of their competitors ».²


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