Monday, December 9, 2013

European Commission rightly doubts adequacy of Samsung's antitrust settlement proposal

Reuters just reports that European Commission Vice President JoaquĆ­n Almunia "told a business conference" that "Samsung may have to improve" the antitrust settlement proposal that was submitted to a market test in October with respect to its use of FRAND-pledged standard-essential patents (SEPs) against Apple and, potentially, others. [Update] The European Commission published the text of the Vice President's speech. [/Update]

In my mid-October reaction to the publication of Samsung's proposed concessions, I didn't mince words. I called these proposed commitments "totally insufficient", expressed concern over a "thoroughly disappointing" outcome of this antitrust case should the proposal be accepted, and the most negative thing I said was that "if the European Commission accepted these proposals, the result would be less clarity than if the Commission had never investigated Samsung's conduct in the first place".

I saw a number of shortcomings in Samsung's proposal. One of the things I took issue with was a rule according to which arbitration would be the default dispute resolution method to which companies seeking cover from the threat of injunctive relief would have to agree. This, to me, is irreconcilable with the rule of law, which is that disputes are resolved in court unless all parties voluntarily (i.e., without the threat of injunctive relief) agree to an arbitration proceeding. Last month Nokia and Samsung announced the extension of an existing patent license agreement and said that an additional payment to be made by Samsung to Nokia in the future would be determined by arbitrators next year. If they agreed to that because they both preferred arbitration over a rate-setting proceeding in court, that's perfectly fine. But if one party to such a dispute prefers a court of law, then that has to be the forum, and injunctions over SEPs are still not acceptable in that scenario.

I'm glad that the European Commission apparently isn't prepared to accept Samsung's proposal in its present form, but I'm still not too optimistic that the outcome will be a procompetitive one because the deficiencies of Samsung's proposal are structural, not just in the details. But if the current proposal is rejected, there could also be structural improvements, provided that the Commission has the same determination on the home stretch of the process that it appeared to have when it took the initiative to launch this investigation.

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