As South Korean firms have become increasingly prominent players in the global technology marketplace, the Korean government has become an increasingly prominent player in the regulation of global technology firms.

Since the mid-2000s, the Korean Fair Trade Commission (KFTC) has investigated, and often sanctioned, global tech firms such as Microsoft, Intel and Qualcomm.  It recently turned its sights to Google.

In 2010, the KFTC significantly revised its guidelines for enforcing Korea’s competition laws with respect to IP licensing.  Those guidelines apply equally to non-Korean firms whose conduct affects Korean markets. 

The US also employs antitrust guidelines for IP licensing, issued in 1995.  How do the new Korean guidelines compare to their US counterparts?

Constantine Cannon recently published an article addressing that question and identifying some similarities and differences.  Click here to read the analysis.

The OFT has referred Great Britain’s aggregates, cement, and ready-mix concrete markets to the U.K.’s Competition Commission, an independent body that conducts in-depth investigations into mergers and markets.

The OFT, which has been investigating these markets since 2010, announced that it has concerns that the markets “are not working well.”  In particular, the OFT notes that  five major players account for upwards of 90% of the cement market, 75% of aggregates sales, and around 70% of ready-mix production.

The big five firms are London-based Anglo American Plc, Germany’s Heidelberg Cement AG, Switzerland’s Holcim Ltd., Paris- based Lafarge SA, and Mexico’s Cemex SAB.

The OFT also believes that there are high barriers to entry, vertical integration, and multiple contacts and information exchanges across the markets.

If the Competition Commission concludes that any feature or combination of features in these markets prevents, restricts or distorts competition, the Commission must seek to remedy the problems that it identifies either by introducing remedies itself or by recommending action by other British agencies.

The European Commission began the investigation in November 2009.  The ongoing proceedings are aimed at examining a possible abuse of Thomson Reuters’ dominant position.  The Commission noted that the use of RICs makes it difficult for consumers to cross-reference data with other providers.  Further, RICs could lock in customers due to the length of time and high costs involved with reconfiguring software applications to replace RICs with a competitor’s product.  If a violation is found, the Commission is able to fine Thomson Reuters up to 10% of the company’s annual turnover.

The settlement offered by Thomson Reuters would allow customers to license additional user rights for a monthly fee.  These licenses would permit customers to use RICs with the codes used by other data suppliers, increasing the number of providers a customer could access.  Thomson Reuters stated it would supply all the information needed for customers to link RICs with those used by rival data suppliers.

The proposed settlement has not yet been accepted.  Competitors, customers, and other third parties will have until January 25, 2012 to comment on the proposal.  The Commission will then determine if it will make the offer binding and terminate the investigation.

For example, Apple recently prevailed in a skirmish before the International Trade Commission that could theoretically stop the importation into the United States of all smartphones based on Google’s Android mobile operating system.  In Germany, Motorola Mobility, which Google is in the process of acquiring, won a victory against Apple for patent infringement that could lead to the iPhone and iPad being pulled from store shelves in that country.

Could patent pools, a 100-year-old legal device, provide a possible solution? Constantine Cannon recently published an article about the smartphone patent pools in Law360 and whether they would be a good way to foster innovation and protect intellectual property.  Click here to read the article.

The companies manufacture bearings for the automotive and aerospace industries. 

The Commission is investigating whether the companies violated European Union (“EU”) laws prohibiting cartels and restrictive business practices by allegedly entering into agreements which fixed the prices for ball-bearings.  The Commission noted that the inspections are part of a preliminary investigation and do not mean that the companies have committed any anticompetitive behavior. 

SKF, the world’s largest rolling bearings manufacturer, said its offices in Gothenburg, Sweden and Schweinfurt, Germany were visited by EU Officials. 

SKF and Schaeffler are both cooperating with the investigation.

First, on October 14, 2011, the U.S. Department of Justice, the Federal Trade Commission and the European Commission (the “EC”) issued an updated set of “best practices” that they use to coordinate merger reviews under their concurrent jurisdictions.  Three days later, the EC announced another set of revised best practices regarding its unilateral review of alleged anticompetitive conduct.

The revised practices regarding merger reviews are the latest development in a joint effort by the U.S. and the EC, started in 1991, “to promote cooperation and coordination and lessen the possibility or impact of differences … in the application of their [respective] competition laws.”  In 2002, they jointly issued their first set of best practices on concurrent merger reviews.

The trans-Atlantic antitrust enforcers have now revised those practices, “confirming” the 2002 version and building on the “experience gained” since they were issued. 

The most significant enhancement is the emphasis on the role of merging parties in facilitating cooperation.  For example, the revised practices encourage parties to authorize the agencies to share information, and to execute confidentiality waivers to enable such sharing.

The practices also advise parties to coordinate the timing of their filings with the various agencies, warning that if a final decision in one jurisdiction is reached before filing has taken place in the other, any possibility of meaningful cooperation between the agencies will have been excluded.

In addition, the practices implore the agencies to do their part to improve coordination.  For instance, they advise the agencies to:   

• contact one another promptly upon learning of a merger that may require simultaneous review;  

• align the timing of their investigations;

• engage in inter-agency consultations, particularly at “key stages” such as before issuing a second request, negotiating remedies, or deciding to prohibit a merger;

• sharing information such as draft discovery requests and their analyses of market definition, competitive effects and other relevant issues; and

• permitting parties to give joint presentations, interviews and document submissions to the agencies.

The revision notes the particular value of cooperating with respect to remedies, and includes an expanded discussion of how coordination can be improved in that regard.  For instance, it advises the agencies to “keep one another informed” of remedy discussions, “share draft remedy proposals,” and generally ensure that their remedies “do not impose inconsistent or conflicting obligations.”  The revised practices also encourage improvement of coordination with authorities in other nations.  For example, they advise parties to inform the U.S. and EU of any actual or anticipated outside review, and they advise the agencies to “seek to cooperate with [such] other authorities….” 

Like the revised best practices on merger review, the EC’s recently-revised best practices for unilateral antitrust proceedings also aim to promote efficiency.  They follow a 2010 draft and were developed through “public consultation and practical experience.”  Significant improvements over the 2010 draft include advising the EC to:     

• inform parties of the parameters for potential fines;

• extend “state of play meetings” to cartel cases and complainants in certain circumstances;

• provide enhanced access  to “key submissions” such as economic studies; and

• publish rejection of complaints.

The EC has also expanded the role of the independent Hearing Officer, who is responsible for guarding the procedural rights of the parties being reviewed.  Among other changes, the Hearing Officer can now resolve issues regarding attorney-client privilege and questions that might force parties to admit to violations.

The Guidelines describe how the Competition Bureau will analyze merger transactions. 

The new Guidelines were issued on October 6, 2011, after the Bureau held consultations during the last two years with foreign competition agencies and throughout Canada.  The changes are the first revisions to the Guidelines since 2004. 

The Guidelines were changed after the United States revised its Horizontal Merger Guidelines in 2010.  As we reported in an earlier post, the U.S. revisions offered a more tolerant approach for analyzing mergers by downplaying the role of market definition and by emphasizing the need to avoid interference with competitively beneficial mergers. 

Some of the Canadian revisions follow the U.S. approach by having less of an emphasis on market definition and by looking more at the competitive effects of a merger.  Other features of the new Guidelines include discussing how a merger is defined under the Competition Act, providing for greater scrutiny of vertical mergers, and giving an update to the merger “efficiencies defence.”

A draft of the Commission’s proposed revisions to the EU’s 2004 Markets in Financial Instruments Directive (“MiFID”) obtained by some news outlets would require “that all trading venues on which commodity derivative contracts are traded adopt appropriate [position] limits or alternative arrangements to ensure the orderly functioning of the market and settlement conditions for physically delivered commodities and provide systematic, granular and standardised information on positions by different types of financial and commercial traders to regulators … and market participants ….”

The Commission is reported to be simultaneously drawing up plans for an overhaul of the Market Abuse Directive (“MAD”) enacted in 2003.  If adopted by the Council of the European Union and the European Parliament, that reform would give European regulators enhanced authority to investigate trading systems on spot commodity markets, which had thus far escaped effective oversight.

Reuters has quoted a leaked draft of the Commission’s proposal as saying that “By gaining access to spot commodity market traders’ systems, competent authorities are also able to monitor real-time data flows.”

The Commission’s proposed amendments to MiFID and MAD are expected to be made public – officially, this time – this month.

The European General Court has annulled the European Commission’s 31.66 million euro antitrust fine assessed against beer brewer Koninklijke Grolsch NV.  In case T-234/07, Koninklijke Grolsch v. Commission, the European General Court focused on the imputed liability to Koninklijke Grolsch for actions of its subsidiary, Grolsche Bierbrouwerij Nederland BV.

This appeal stems from a 2004 case in which the Commission found a cartel among the Netherlands’ four largest beer brewers.  The Commission determined that Koninklijke Grolsch NV, Heineken NV (jointly and severally liable with its subsidiary Heineken Nederland BV), Bavaria NV and InBev NV divided the Dutch market and coordinated on prices, price increases, and various commercial conditions.

The conduct resulted in fines totaling 273.78 million euros (including 219.28 million to Heineken and 22.85 million euros to Bavaria).  InBev was not fined as it was granted full leniency for participating in the investigation.  The three penalized companies appealed.

In June 2011, the European General Court reduced the fines assessed to Heineken and Bavaria by a total of  23.42 million euros  after finding there was a lack of evidence on the coordination of commercial terms.

On the remaining appeal, the European General Court ruled in favor of Koninklijke Grolsch stating that the Commission failed to demonstrate why Koninklijke Grolsch, which had not directly participated in the alleged cartel, should be liable.  There is a rebuttable presumption in EU law that a parent company exercises decisive influence over the conduct of a wholly owned subsidiary.  However, in the case at hand, the Commission did not discuss the economic, legal, and organizational links between Grolsche Bierbrouwerij Nederland and Koninklijke Grolsch.  Thus there was insufficient evidence to attribute liability to Koninklijke Grolsch NV.

The European Commission fared better in T-216/06, Lucite International and Lucite International UK v. Commission. In this case, Lucite International, a division of Mitsubishi Rayon Co. appealed a 25 million-euro fine from the Commission for colluding on acrylic glass prices.

Lucite claimed its fine should be reduced due to attenuating circumstances.  Lucite alleged its participation was limited to lower-level employees acquired after its 1999 purchase of Imperial Chemicals Industries plc (ICI).  Further, a commercial policy put in place by Lucite after the acquisition of ICI worked to undermine the cartel.  The European General Court disagreed, and ruled that Lucite failed to show “the Commission erred in its assessment of attenuating circumstances.”

The investigation, which the Commission began in August 2010, followed a three-year study of the pay TV market by the U.K.’s communications regulator, Ofcom.

According to the Commission’s findings, Sky has held the exclusive rights to distribute first releases of movies on pay TV from the six largest Hollywood studios for the past 20 years.  The lead investigator for the Commission noted that Sky’s position as the largest provider of pay TV in the U.K. has allowed it to continually outbid its rivals for these rights. 

The Commission found that Sky’s exercise of these rights and its market dominance cost consumers £50-£60 million ($80-$95 million) a year more than they otherwise would have paid in a more competitive market.  The Commission also found that while Sky provided first releases of movies to one of its competitors, Virgin Media, to distribute, it did so at unfavorable rates.

The Commission has proposed three possible remedies for which it seeks comment: (1) restricting the number of studios granting exclusive rights to Sky; (2) restricting the nature of those rights (such as by allowing for competitors to have concurrent distribution rights through other means); and/or (3) requiring Sky to purchase and offer to its subscribers movie channels created by its rivals.

The Commission’s final report is due August 3, 2012.