Once again the EU has performed some dawn “raids” on the offices of pharmaceutical firms.  Bloomberg reports:

Teva Pharmaceutical Industries Ltd., the world’s biggest generic-drug maker, Denmark’s H. Lundbeck A/S and other pharmaceutical companies were raided Wednesday by the European Union as part of an antitrust investigation.

…

The inspections mark the fourth time drugmakers’ offices have been visited since the EU started a probe of the pharmaceutical industry in January 2008. The EU has focused on whether manufacturers misuse patents and lawsuit settlements to keep less-expensive generic medicines off the market.

Commission officials conducted a surprise inspection at Teva’s office in London on Wednesday, according to Yossi Koren, a spokesman for the company. The raid followed an EU inspection of Teva’s Paris office in October.

Lundbeck, the Nordic region’s second-largest drugmaker, said in a statement its Milan office had been inspected. It said it expects the raid was a follow-up on a 2005 visit and that it didn’t address any new issues.

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Last week, China rejected on antitrust ground Coca-Cola’s acquisition of the China Huiyuan Juice Company.  Today, the AP (via the NY Times) reports:

In its first detailed explanation of the March 18 ruling, the commerce ministry said it looked at China’s beverage market and concluded that Coca-Cola’s dominance in carbonated drinks could be used to promote sales of Huiyuan Juice Group, stifling competition and leading to higher prices.

…

“Whether Huiyuan is a national brand is not a factor that needs to be considered in an antimonopoly investigation and has nothing to do with the commerce ministry’s rejection of this acquisition,” a ministry spokesman, Yao Jian, said in statement on its Web site.

…

Coca-Cola’s “dominant position in the carbonated beverage market could be transferred to the fruit juice market,” Mr. Yao said. “This would seriously cripple or deprive other fruit juice producers of the ability to compete. It would harm competition in the fruit juice market, forcing customers to accept higher prices and fewer products.”

He said Coca-Cola might have used its carbonated beverage brands to promote Huiyuan or bundle products together for sale.

…

The company [Coca-Cola] has a 16 percent share of China’s soft drink market — which also includes fruit and vegetable juices, bottled teas and sports drinks — and adding Huiyuan would have raised that to 18 percent, according to the consulting firm Euromonitor.

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Earlier today, the Chinese government rejected on antitrust ground Coca-Cola’s acquisition of the China Huiyuan Juice Company.  The New York Times reports:

The ministry of commerce said Coke’s bid to acquire the China Huiyuan Juice Company was rejected on antitrust reasons. The government said the deal would allow Coke to dominate a huge segment of the beverage market. In a statement released Wednesday, the commerce ministry said it was worried that Coke would “set up some exclusive terms to restrict competition in the juice market,” drive up the consumer prices and squeeze out smaller beverage makers.

The statement is available, in Chinese, here (if/when we can find the statement in English, we will post a link to it too).

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In a new amendment to Korea’s Monopoly Regulation and Fair Trade Law, Korea will abolish the 30-day waiting period that previously applied to pre-closing merger notification. While the parties may therefore file as soon or late after the triggering event (such as the signing of a definitive agreement) as they like, the reportable transaction may not close before it is cleared by the the KFTC. The amendments will go in effect in about 3 months.

HT to Kim & Chang.

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Here are some (draft) slides and materials from my course in International Antitrust and Policy at U.C. Berkeley.

• Segment 1: Introduction
• Segment 2: Horizontal Agreements in the U.S. and the EU
• Segment 3: International cartels at work

As always, everything is licensed under a Creative Commons attribution only license. The (ever evolving) syllabus is here. By the way, weary as I am of the cloud for privacy and policy reasons (I like to control my tools, not vice versa), Google Docs is one great app that just keeps getting better.

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Today, the European Commission published its preliminary report on the competition inquiry into the pharmaceutical sector. The New York Times, which misleading headlines its article “E.U. Accuses Drug Makers of Gouging Consumers,” reports:

The European Union accused drug companies on Friday of adding billions of dollars to health care costs by delaying or blocking the sale of less expensive generic medicines.

One common tactic, said Neelie Kroes, the European competition commissioner, was for drug companies to amass patents to protect active ingredients in the medicines — in one case, 1,300 patents for a single drug.  Another tactic, she said, was for pharmaceutical companies to sue the makers of generic drugs for ostensible patent violations, which tended to delay the availability of the lower-cost products for years.

Hyperbole aside, as the report itself states, it “does not seek … to each any conclusion as to whether certain practices described in the report infringe EC Competition law.”

More to come, but until then, check out the preliminary report and its executive summary; also online are several fact sheets, a press release and Commissioner Kroes’ comments.

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The EC fined four companies 1.3 billion euros ($1.66 billion) for price fixing.  Reuters (via the Washington Post) reports:

The EU’s antitrust chief on Wednesday fined car glass producers Asahi, Pilkington, Saint-Gobain and Soliver more than 1.3 billion euros ($1.66 billion) for price-fixing, the largest sum ever levied by the EU for a cartel.

France’s Compagnie de Saint-Gobain SA must pay 896 million euros ($1.14 billion) - more than any other company has been fined before.

The European Commission said the four companies control 90 percent of the glass used to make European cars, a market worth 2 billion euros in 2003.

EU Competition Commissioner Neelie Kroes said the companies fixed prices over a period of five years. She said the fines were high because European industry had to “learn the lessons the hard way.”

…

The EU said it increased Saint-Gobain’s fine by 60 percent because the company was a cartel repeat offender. It was fined last year for an EU-wide window glass cartel, following earlier fines for a Belgian flat glass cartel in 1988 and a similar cartel on the Italian market in 1984.

The statement of Neelie Kroes can be found here.

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Check out this great tool to determine whether a work is in the public domain. The problem (not with the tool, but with the law) is the the correct answer in most cases is “maybe.” This comes in the wake of frustrating news from Europe re retroactive extension of copyrights.

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In June, the Korean Executive Branch approved amendments to the merger control regime (called Monopoly Regulation and Fair Trade Law or MRFTL), which went into effect yesterday, July 1. Here is a summary:

1. Increase of the Size Threshold for Business Group Designation

• The size threshold for the “Business Group” designation under the MRFTL will increase from KRW 2 trillion to KRW 5 trillion.
• The increase of this threshold is expected to reduce the number of companies subject to the restrictions on cross-investment and guarantee applicable to the Business Group.
• The number of companies subject to the Business Group restrictions is expected to be reduced from 79 to 41 due to the amendment that intends to improve flexibility in managing business groups of a smaller scale.

2. Increase of the Asset or Threshold for Business Combination Filing Obligation

• Currently, one of the conditions to trigger a filing obligation in Korea is that one of the involved parties should have assets or sales in the amount of KRW 100 billion or more and the other party should have assets or sales in the amount of KRW 20 billion.
• Since this KRW 100 billion threshold has not been revised since 1997, the amendment this time increases it to KRW 200 billion.
• The Korean FTC expects that the number of transactions requiring a business combination report filing would decrease by 33% once the amendment takes effect and that smaller-sized companies would be relieved from the burden of preparing and submitting a business combination filing, while more in-depth analysis is expected for the transactions that have been filed.

HT to J.W. Hyun at Kim & Chang.

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The Financial Times Deutschland reports, according to Marketwatch, that

the European Union’s competition authority will take action later this year against Intel Corp. over the semiconductor giant’s sales and distribution practices.  The Financial Times Deutschland said the EU had acquired enough evidence to act to keep Intel from selling its microprocessors at a discount to PC companies.  The paper said the EU could fine Intel up to 10% of its annual sales, or $4.1 billion.

Thompson Financial (via Forbes.com) reports that:

The European Commission is planning to bar some of Intel Corp.’s sales practices to curb the company’s market power in Europe, Financial Times Deutschland reported, citing sources in Brussels.

Commissioner for competition Neelie Kroes has already made a ‘factual’ decision, the paper said, with the decision to be published in late summer.

According to the EU plans, Intel will have to stop marketing its processors at discount prices to PC-manufacturers.

In addition, the EU intends to ban Intel from paying marketing cost subsidies to retailers, if Intel demands exclusivity in return.

I would link to the FTD article but my German is poor.  Perhaps one of my fluent-in-German co-bloggers can link to and/or report on the original article.

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Yesterday, the House of Representatives passed HR 6074 which, in part, would amend the Sherman Antitrust Act.*  The bill provides, in part:

The Sherman Act (15 U.S.C. 1 et seq.) is amended by adding after section 7 the following:

Sec. 7A. (a) It shall be illegal and a violation of this Act for any foreign state, or any instrumentality or agent of any foreign state, to act collectively or in combination with any other foreign state, any instrumentality or agent of any other foreign state, or any other person, whether by cartel or any other association or form of cooperation or joint action–

    (1) to limit the production or distribution of oil, natural gas, or any other petroleum product;

    (2) to set or maintain the price of oil, natural gas, or any petroleum product; or

    (3) to otherwise take any action in restraint of trade for oil, natural gas, or any petroleum product;

when such action, combination, or collective action has a direct, substantial, and reasonably foreseeable effect on the market, supply, price, or distribution of oil, natural gas, or other petroleum product in the United States.

(b) A foreign state engaged in conduct in violation of subsection (a) shall not be immune under the doctrine of sovereign immunity from the jurisdiction or judgments of the courts of the United States in any action brought to enforce this section

(c) No court of the United States shall decline, based on the act of state doctrine, to make a determination on the merits in an action brought under this section.

(d) The Attorney General of the United States may bring an action to enforce this section in any district court of the United States as provided under the antitrust laws.

The bill also would require the Attorney General to establish a Petroleum Industry Antitrust Task Force.

Oil & Gas Journal reports:

The new “Petroleum Industry Antitrust Task Force” would be charged with determining the existence and extent of gasoline price gouging, anticompetitive price discrimination by refiners, actions to inflate prices by constraining supplies, and possible oil price manipulation in futures markets, Kagen said.

The bill, which would amend the Sherman Antitrust Act, also requests a Government Accountability Office study on the effects on competition of prior oil industry mergers and divestitures, he indicated.

…

This would be the second time the House considered a No Oil Producing and Exporting Cartels (NOPEC) bill, which would attempt to change the Act of State doctrine and the concept of sovereign immunity, King said. “There is no certainty that enabling the attorney general to sue [the Organization of Petroleum Exporting Countries] for an antitrust violation will result in lower gas prices for Americans. Given the instability that such a suit might create in the world oil market, this legislation would be long on psychic compensation but short on actual returns to America’s pocketbook,” he maintained.

* For our foreign readers, in order for the bill to become a law, it would also have to be passed by the Senate and signed by the President.

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The case pending before the regional court in Düsseldorf concerns a thirty-year cartel of cement companies, and is being brought on behalf of 29 of the largest customers by Cartel Damage Claims (CDC). CDC is a Belgian claims consolidator, which is seeking over 100 million Euros in the action.

The  Düsseldorf court of appeals ruled yesterday that the collective action brought by the claims consolidator is admissible, upholding the ruling of the regional court. No leave to appeal was granted. The ruling means that the substantive case will go forward. The press release in German can be found here.

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Bloomberg reports that China

will become a full member of the International Competition Network within a year, said Philip Collins, head of the Office of Fair Trading, in an April 10 interview in London. The move comes as China is taking steps to bring its competition laws in line with other nations, he said.

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Following up on a previous post, here’s a brief article on China that I co-authored. The current edition of the Antitrust Magazine also has very useful, in depth discussions of China’s Anti-Monopoly Law by Lester Ross, Fei Deng, and Gregory Leonard. Amazingly, the ABA still does not offer a useful online version. If anyone could explain to me the logic of restricting access to these articles, please educate me. For authors, the restrictive ABA publication polices are a bad deal.

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China’s Legislative Affairs Office of the State Council recently clarified certain key provisions relating to merger control in the Anti-Monopoly Law, which will come into force on August 1, 2008. One of the stranger pronouncements is that “being the largest shareholder” now qualifies as an “acquisition of control” and thus as a concentration. That makes no sense. There’s no connection between “being the largest shareholder” and a change in control. A pension fund holding 5% of a public company may well be its largest shareholder, but that doesn’t mean that it exercises any competitively relevant measure of control. Moreover, I can find myself in the position of being the largest shareholder just by virtue of the fact that someone else sold off their holdings. The public comment period expires on April 12, 2008, and I’m sure that this “clarification” will receive its fair share of hate mail attention.

Of the many comments on the Chinese draft regulations, here are two that I found particularly noteworthy/peculiar:

Lester Ross, a partner in charge of the Beijing office of law firm WilmerHale, agreed it was unwise to use annual sales as a threshold. He said antitrust laws in most key jurisdictions focused on the size of the deal rather than on sales. “Sales have nothing to do with [whether there is a] monopoly,” Mr Ross said. “The rules should focus on the size of the transaction.”

It seems to me that the US is pretty much the only key jurisdiction that does not focus on revenues. In fact, staggered combined revenue tests are by far the most common and sensible way to design notification thresholds. The size of a transaction tells us nothing about the competitive impact. Combined sales, in contrast, are a pretty reasonable proxy. The same article offers further surprising insights:

Wang Xiaojun, a principal of law firm XJ Wang, said the threshold should focus more on market share rather than revenue.

Market share thresholds are even worse than size of transaction thresholds. The latter are somewhat pointless but at least they are easy to apply. The former, in contrast, are a complete pain, which is why the ICN has consistently counseled to abolish them.

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