European Competition Law provides a wide-ranging review of the European rules relating to competition: restrictive agreements, abuse of a dominant position, impact of intellectual property rights, procedure, merger control, State aid.

European Competition Law

The exploitation monopoly that national legislations grant to proprietors of an intellectual property right on a territorial basis directly goes against the principles of the free movement of goods and freedom of competition established by the Treaty, which are simultaneously designed to counter any monopoly power and to promote an integrated market. At first, the letter of the Treaty only provided Articles 101 and 102 TFEU as the basis for EU jurisdiction to review the compatibility of national intellectual property laws with the EU rules. As from the Sirena decision , the Court has shown that the authority of EU law in respect of intellectual property rights, whether based on the principle of free movement or on Articles 101 and 102 TFEU, comes from the same basic notion: “Article 36, although it appears in the chapter of the Treaty dealing with quantitative restrictions on trade between Member States, is based on a principle equally applicable to the question of competition, in the sense that even if the rights recognized by the legislation of a Member State on the subject of industrial and commercial property are not affected, so far as their existence is concerned, by Articles 85 and 86 [101 and 102 TFEU] of the Treaty, their exercise may still fall under the prohibitions imposed by those provisions.” Then, in the Deutsche Grammophon decision , the Court held that if the exercise of an intellectual property right does not exhibit those elements of contract or concerted practice referred to in Article 101 TFEU, it is necessary to consider whether the right in question is compatible with other provisions of the Treaty, in particular those relating to the free movement of goods. Articles 101 and 102 TFEU are therefore not the exclusive foundations of the EU jurisdiction in this matter: the EU rules on free movement of goods apply additionally where, like competition rules, they pursue the same objective of merging national markets into a single market. Thus, the proprietor of a trade mark in all Member States can prevent the sale of products bearing the same trade mark, originating from a non-Member State, without affecting the free movement of goods within the meaning of Article 36 TFEU, provided that the exercise of the trade mark right does not manifest itself as the result of an agreement or of concerted practices which have as their object or effect the partitioning of the internal market . Likewise, since the exercise of the trade mark right is lawful under Article 36 TFEU, such exercise is not contrary to Article 102 TFEU just because it is the act of an undertaking in a dominant position .

The existence/exercise distinction for IP rights, which developed in connection with the application of competition rules, soon proved to be insufficient to reconcile intellectual property and free movement. As part of competition law, the exercise of the right is illegal if anticompetitive: the concepts of agreement and abuse of dominant position are sufficient to set the limits for control. By contrast, as the law of intellectual property confers exclusive rights by its nature, the EU authorities have had to introduce additional criteria to make a distinction between legal and illegal behavior. Such is the role of the concepts of specific subject-matter  and essential function of the intellectual property right. Firstly aimed at reconciling exclusive rights and the principle of free movement, these concepts were also used subsequently in the field of competition law. Since the abuse of dominant position was no longer held illegal per se, but only in cases of disproportionate behavior, they could also effectively be used as a reconciling principle .

Case 40/70 Sirena v Eda [1971] ECR 69, LawLex200400002879JBJ.

Case 78/70 Deutsche Grammophon v Metro SB [1971] ECR 487, LawLex200400002881JBJ. See also Case 192/73 Van Zuylen v Hag AG [1974] ECR 731, LawLex200400003457JBJ.

Case 51/75 EMI Records v CBS United Kingdom [1976] ECR 811, LawLex200400002893JBJ, Case 96/75 EMI Records v CBS Schallplatten [1976] ECR 913, LawLex200400002895JBJ and Case 86/75 EMI Records v CBS Grammofon [1976] ECR 871, LawLex200400002898JBJ.

Case 102/77 Hoffman-La Roche v Centrafarm [1978] ECR 1139, LawLex200400002972JBJ.

The concept appeared in the Deutsche Grammophon decision in which the Court assessed for the first time an intellectual property right with respect to the principle of the free movement of goods.

According to the General Court, in principle the protection of the specific subject-matter of a copyright entitles the copyright-holder to reserve the exclusive right to reproduce the protected work. However, the exercise of the exclusive right must not pursue an aim manifestly contrary to the objectives of Article 102 TFEU. The holder of exclusive rights must not adopt a conduct that clearly goes beyond what is necessary to fulfill the essential function of the copyright as permitted in EU law: Case T-69/89 RTE v Commission [1991] ECR II-485, LawLex200400002913JBJ, approved by Cases C-241/91 P and C-242/91 P RTE and ITP v Commission [1995] ECR I-743, LawLex200400002891JBJ.

159. Background