Antitrust & Competition Policy Blog

Editor: D. Daniel Sokol
University of Florida
Levin College of Law

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Monday, September 6, 2010

Questioning the Frequency and Wisdom of Compulsory Licensing for Pharmaceutical Patents

Posted by D. Daniel Sokol

Richard A. Epstein, University of Chicago - Law School and F. Scott Kieff, George Washington University - Law School are Questioning the Frequency and Wisdom of Compulsory Licensing for Pharmaceutical Patents.

ABSTRACT: Many advocates for using compulsory licensing (“CL”) for pharmaceutical patents in developing countries like Thailand rest their case in part on the purported use of CL in the United States. In this paper we take issue with that proposition on several grounds. As a theoretical matter, we argue that the basic presumption in favor of voluntary licenses for IP should apply in the international arena, in addition to the domestic one. In the international context, voluntary licenses are of special importance because they strengthen the supply chain for distributing pharmaceuticals and ease the government enforcement of safety standards. Next, this paper analyzes several of the key illustrations of purported CL for drug patents in the United States and shows that the use of CL elsewhere deviates in material ways from the standard U.S. practices. These are the compulsory copyright licenses for music; the award of damages instead of injunctions after eBay v. MercExchange, and the use of compulsory licenses in antitrust settlements. Whatever the ultimate desirability of these American doctrines, none of them seeks to reduce the payment on licenses to the marginal cost of the licensed goods. Any need to help poor people gain access should not rely on CL, but instead should rely on tools precisely aimed at that purpose, including direct government purchases of patented drugs from their manufacturers at negotiated prices.

September 6, 2010 | Permalink | Comments (0) | TrackBack (0)

Sunday, September 5, 2010

International Cooperation in a New Era of Canadian Cartel Enforcement

Posted by D. Daniel Sokol

Lindsay Donders (Canadian Competition Bureau) has posted International Cooperation in a New Era of Canadian Cartel Enforcement.

ABSTRACT: In today's globalized economy, it is essential that competition enforcement transcend national boundaries to protect the benefits of competitive and honest markets. The borderless workplace for competition enforcers has prompted the Canadian Competition Bureau (the "Bureau") to engage in a broad array of activities to encourage increased collaboration within a global network of enforcement agencies. This is particularly the case with respect to those agencies dedicated to the detection, investigation, and prosecution of international cartel activity, the focus of this comment paper.

In addition to the case-specific benefits realized, the lessons learned from increased collaboration have contributed to a convergence of legislation, policies, and practice. The international convergence taking place in immunity program practices is but one example of a developing coherence in the international framework for competition enforcement. There is a growing readiness among jurisdictions to consider their competition legislation and practices through the prism of international enforcement cooperation.

Amendments to the conspiracy provision of Canada's Competition Act (the "Act") came into force on March 12, 2010. The previous conspiracy provision was repealed and replaced with a new per se criminal provision that prohibits agreements among competitors and/or potential competitors to fix prices, allocate markets, and restrict output. As such, the previous requirement of proving an undue anticompetitive effect to the criminal burden of proof has been eliminated. Penalties for violating the conspiracy provision also increased: The maximum fine increased from $10 million to $25 million per count, while the maximum term of imprisonment increased from five (5) to fourteen (14) years. Other forms of competitor collaborations, such as joint ventures and strategic alliances, may be subject to review under a new civil provision (section 90.1 of the Act) that prohibits agreements only where they are likely to substantially lessen or prevent competition. These amendments were designed to create a more effective criminal enforcement regime for the most egregious forms of cartel agreements, while at the same time removing the threat of criminal sanctions for legitimate collaborations among competitors.

The Bureau issued Competitor Collaboration Guidelines in December 2009, following extensive public consultations. The Guidelines set out the Bureau's interpretation of the new cartel provision and discuss the manner in which the Bureau will exercise its enforcement discretion. The Guidelines also contain a detailed consideration of how the Bureau will review a variety of agreements between competitors or potential competitors, including commercialization agreements, research and development agreements, and production joint ventures under the new civil provision of the Act.

The modernization of the law and policy in this area enhances the Bureau's ability to cooperate with foreign antitrust agencies and coordinate international cartel investigations, providing Canada with a more productive and effective cartel enforcement regime. Furthermore, increased cooperation and coordination will enhance the predictability regarding the manner in which these types of enforcement matters are assessed for businesses operating within the North American market.

International cartel enforcement presents particular challenges for the Bureau as documents and witnesses often reside outside of Canada; however, the Bureau has a range of tools and mechanisms, both formal and informal, at its disposal to facilitate and enable cooperation with its foreign counterparts. This paper examines existing tools for international cooperation, as well as recent developments in international cooperation in Canadian cartel investigations.

September 5, 2010 | Permalink | Comments (0) | TrackBack (0)