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Eleanor Fox lecture, 18 March 2005

This entry was added to on 21 March 2005.

"Refusal to deal: a right or a wrong? Trinko, IMS and Microsoft"

Notes from a lecture by Professor Eleanor M. Fox of the New York University School of Law, given at King's College London on Friday 18 March 2005.

The title was "Refusal to deal: a right or a wrong? Trinko, IMS and Microsoft". She summarised these cases, focusing in the case of Microsoft on the workgroup server aspect of Microsoft: the EC abuse of dominance case. She also highlighted the key features of the Aspen Skiing US case (1985).

Aspen Skiing, and perhaps also Microsoft: the EC abuse of dominance case, may be better seen as prohibitions on exclusionary practices than as impositions of a duty to deal. In Aspen, a firm controlling skiing in three mountains had terminated an agreement with the firm controlling a fourth mountain which had enabled the issue of four-mountain tickets, and the refusal to continue the arrangement was found unlawful. In Microsoft: the EC abuse of dominance case, Microsoft used to provide information to workgroup server software designers to enable full inter-operability and only ceased to do so when it had developed a sufficiently comprehensive workgroup server offering of its own.

(As an aside, the same argument might be made about Commercial Solvents, an older EC case often held as the basis for a dominant firm's duty to deal under EC competition law.)

Verizon v Trinko, a case of a telecommunications incumbent offering a lower quality of service to other operators than it took for itself, might have been handled similarly, and she thought that it had in any event well handled under the regulatory statute. But she suggested that the court's willingness to hear the case (despite doubts about the standing of Trinko, which represented final consumers rather than the immediate victim of the alleged abuse) was partly motivated by a desire to clarify — or to change — the law on refusal to deal.

The judgment in Trinko treats the case as a mere refusal to deal, and distinguishes Aspen on two key grounds:

She then reviewed the conditions for a duty to deal under EC law which have been set in IMS Health (see iTunes and Genzyme for other reviews). She thought that these conditions were too rigid to be applied to Microsoft: the EC abuse of dominance case. In particular, she doubted that the requirements to show that access to the inter-operability information was indispensable, and that the refusal to deal would exclude all competition in the secondary market (for workgroup server software), were met. This seemed to confirm the idea that Microsoft: the EC abuse of dominance case was about exclusionary conduct rather than mere refusal to deal.

Finally, she argued that recent EC developments such as IMS Health and perhaps even EC law's emphasis on a positive "special responsibility" of dominant undertakings were "wrong", whilst the limits of the duty to deal in US law shown in Trinko and the reluctance of US courts to impose positive duties were "right".

That conclusions appeared to be based on an assessment of the benefits and detriments to "competition, innovation, efficiency and consumers" arising from imposing a wider duty to deal. She thought that the EC approach looked at short-term effects on consumer welfare of a refusal to deal, rather than at the total long-term welfare impact of requiring access. She also agreed with the court in Trinko that the difficulties that can be associated with securing compliance with duties to deal (e.g. disputes on price, etc.) make the judicial imposition of a duty to deal inappropriate.

Nobody challenged that conclusion in the questions and answers session.

Some questioners advanced their own theories of what abuse should be. One argued the State origin of monopoly power in telecommunications and in much of the European economies was a justification for a more positive form of special responsibility. Another suggested that the Magill case was a one-off due to the particular nature of the access that was sought (a copyright licence to television schedules, which may not be eligible for copyright protection in many jurisdictions), and that prior dealing was merely a source of evidence about the counterfactual (what would happen if access was given). She pointed out that the courts had, in fact, decided not to adopt such views.


Entry added by Franck Latrémolière on 21 March 2005

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Last changed by Franck at 8:08 AM on Sunday 8 October 2006.

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Reckon Open "Eleanor Fox lecture 18 March 2005 | viewpoint: Franck" 2006-10-08T08:08:26