EC v Samsung: A whole year to compile a case

 Joaquín Almunia, Vice-President of the EC in charge of Competition, gave a press conference on several decisions regarding business agreements and abuse of dominant position. 20/12/2012.

Joaquín Almunia, Vice-President of the EC in charge of Competition, gave a press conference on several decisions regarding business agreements and abuse of dominant position. 20/12/2012.

It took almost one year to the European Commission to decide that Samsung is potentially abusing its dominant position, in the mobile telephony standard patents.

It was January 2012 when the EC issued a statement saying that, “The European Commission has opened a formal investigation to assess whether Samsung Electronics has abusively, and in contravention of a commitment it gave to the European Telecommunications Standards Institute (ETSI), used certain of its standard essential patent rights to distort competition in European mobile device markets, in breach of EU antitrust rules”.

Then a few days before Christmas of 2012, on 21 December, the EC sent to Samsung a “Statement of Objection” accusing the company of on potential misuse of mobile telephony standard and essential patens. The background of the story has taken place in 2011 in the courtrooms of a number of EU member states, with Samsung seeking injunctions against Apple, on the basis of its mobile phone standard-essential patents (“SEPs”). Then the EC in December 2012 decided that this behaviour by Samsung “amounts to an abuse of a dominant position prohibited by EU antitrust rules”.

Commission Vice President in charge of competition policy Joaquín Almunia some days before Christmas 2012 said: “Intellectual property rights are an important cornerstone of the single market. However, such rights should not be misused when they are essential to implement industry standards, which bring huge benefits to businesses and consumers alike. When companies have contributed their patents to an industry standard and have made a commitment to license the patents in return for fair remuneration, then the use of injunctions against willing licensees can be anti-competitive.”

The question is why it took so long to Mr Almunia to decide that this behaviour is a breach of fair competition rules, detrimental to business and consumers. Of course there are certain procedures in those matters that take time, but the issue didn’t need an extensive market research by the Commission services, in order to conclude that Samsung with those legal injunctions was seeking to intimidate its competitors and extend as long as possible its dominant market position, based on those patents.

In reality a whole passed for the Commission to simply state that, “Samsung’s seeking of injunctions against Apple in various Member States on the basis of its mobile phone standard-essential patents (“SEPs”) amounts to an abuse of a dominant position prohibited by EU antitrust rules. While recourse to injunctions is a possible remedy for patent infringements, such conduct may be abusive where SEPs are concerned and the potential licensee is willing to negotiate a licence on Fair, Reasonable and Non-Discriminatory (so-called “FRAND”) terms”.

But this was just a legal issue that required a logically brief period to compile. Any delays in applying the relevant fair competition rules, is truly a licence for the offender, to continue exercising its practices and thus pocket more returns from this unfair and possibly illegal behaviour.

As they say “time is money” and in cases like this there is much of it. The logical conclusion of his argument may even be that the Commission gives an indirect permission to the offender to continue profiting from its unfair practices.

Unless the EC manages at the end to impose such a big fine, to the culpable party so as to take account of the extra profits illegally pocketed.
The European Sting will be closely monitoring this case.

Read the EC’s decision:







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