februar 18th, 2011

Is it infringing just to tell the truth?

This essay was handed in as an answer to my exam in “Intellectual Property Rights” during my stay at the University of Leicester

This essay examines the relationship between trademarks and comparative advertising in the light of the judgement in L’Oreal v Bellure.  The statement* postulates that the application by the Court of Appeal, of the preliminary ruling by the ECJ, is positive news for trade mark proprietors and brand owners since secondary functions of the registered mark is protected. The essay consists of a description of relevant legislation on the topic, an analysis of the judgement of L’Oreal v Bellure that critically evaluates the statement with extensive reference to case law and a conclusion.

Read the essay here

*“The outcome of the ECJ’s judgment [in L’Oreal v Bellure] and its (albeit reluctant) application by the English court is clearly positive news for trade mark proprietors and brand owners, emphasising as it does that the ‘essential functions’ of a registered mark in such circumstances extend not only to the classic, core function of protecting the mark as a badge of trade origin, but more widely to what were perhaps previously seen as minor and perhaps unstoppable intrusions into the secondary functions of communication, investment and advertising.”

(Heritage, “Smells-alike” defeat for truthful comparative advertising” [2010] Communications Law 105 at 107)

Introduction

This essay examines the relationship between trademarks and comparative advertising in the light of the judgement in L’Oreal v Bellure.  The statement[1] postulates that the application by the Court of Appeal[2], of the preliminary ruling by the ECJ, is positive news for trade mark proprietors and brand owners since secondary functions of the registered mark is protected[3]. The essay consists of a description of relevant legislation on the topic, an analysis of the judgement of L’Oreal v Bellure that critically evaluates the statement with extensive reference to case law and a conclusion.

Legislation

The relevant legislation on this topic are the Trademark Directive 89/104/EEC (TMD), which was transposed into English law by the Trade Marks Act 1994[4](TMA), and The Comparative Advertising Directive 84/450/EEC (MCAD), amended by Directive 97/55/EC, repealed by Directive 06/114/EC. Art. 5(1) and (2) of the Trademark Directive were transposed into sections 10(1) and (3) of the TMA. The implementation of Art. 5(2) was not required by the member states. Article 3a(1) in MCAD was transposed into English law as regulation 4a in the Control of Misleading Advertisements Regulations 2000 (CMAR). For the simplicity in this essay the provisions in the directives will be cited instead of the provisions in the TMA and The CMAR.

L’Oreal v Bellure

The essential function of a trademark is to act as a badge of origin, to separate the goods from one undertaking to another[5]. In L’Oreal v Bellure it was found that there was no misinterpretation[6], so passing off was rejected by Justice Lewison in The High Court of Justice.

The question the Court of Appeal had to answer, since some issues was resolved by lower courts[7], was whether the use, in relation to a comparison list, was within Art. 5(1)(a) and whether the use of the comparison list was within Art. 5(2) in relation to the criteria of “unfair advantage”. After this it was necessary for the court to decide whether the use was protected by the MCAD with “due cause” – if not, it is not within the exception in Art. 6(1)(b), since it is not “in accordance with honest practices”[8]. To answer these questions the court had to make a reference for a preliminary ruling from the ECJ according to Art. 267 of the TFEU[9].


Is the use within Art. 5(1)(a)?

The ECJ has established six conditions that must be satisfied to succeed in a claim under Art. 5(1)(a)[10]. Condition number 6, which says: “it must affect or be liable to affect the functions of the trade mark, in particular its essential function of guaranteeing to consumers the origin of the goods or services”[11], attracts most interest, since the rights protected in Art. 5(1)(a) includes “not only the essential function of the trade mark, which is to guarantee to consumers the origin of the goods or services, but also its other functions, in particular that of guaranteeing the quality of the goods or services in question and those of communication, investment or advertising”[12]. In Arsenal v Reed the ECJ stated that the right under Art. 5(1)(a) was given to “ensure that the trade mark can fulfill its functions”[13]. There seems to be a difference between these quotes, and the wider protection of the secondary functions was opened in Arsenal, but is clear after the ruling in L’Oréal v Bellure. This means that, even though there is no infringement of the essential function of the mark[14], it is possible that there could be an infringement of the mark under Art. 5(1)(a). In Adam Opel GmbH v Autec the essential function of the mark was not affected, since the average consumer did not think that the Autec cars was produced by Adam Opel[15], and since Art. 5(1)(a) only deals with identical goods (toycars) the effects in relation to real cars is not relevant, but it is worth noting that Adam Opel did not “appear to have claimed that that use affects functions of that trade mark other than its essential one”[16], which leaves room open for protection of secondary functions of a mark.

The defendant, in the L’Oréal case, raised two points; first that the use by L’Oréal of word marks in the comparison list is not within Art. 5(1)(a), because it was descriptive use, and, “second, that if it is, it is saved by Art. 6.1(b)”[17]. The L’Oréal word trademarks are used in two ways; first it is used to refer to the L’Oréal product and secondly it is used to compare the smell-alike product to the original product – the first use is not an infringement[18], but the second use is[19]. The reason why the comparison lists falls within Art. 5(1)(a), is because it is not “purely descriptive”[20] as they are used in advertising. In Hölterhoff v Freiesleben the trademarks, that was claimed to be infringed, were used to describe a certain way to cut diamonds – just as the L’Oréal trademarks were used by Bellure to describe how the smell-alike-perfumes smelled like. In the Hölterhoff-case the use was descriptive[21], and did not infringe the interests Art. 5(1)(a) is supposed to protect[22], while the use in L’Oréal v Bellure was infringing since it was for advertising. There is a difference between using a method of cutting diamonds (trademark) to describe how they are cut between sellers of diamonds, and using a trademark to describe how another product smells in a comparison list in advertising – the difference is that the latter affects some of the functions of the mark and is therefore not “purely descriptive”[23]. The use is then within Art. 5(1)(a), and must be within the exception in Art. 6(1)(b), in accordance with the conditions in the MCAD Art. 3(a)(1), not to be infringing.


Is the use within Art. 5(2)?

The purpose of Art. 5(2) is to create a strong protection of known marks and “facilitate the free circulation of goods and services, to ensure that henceforth registered trade marks enjoy the same protection under the legal systems of all the Member States”[24]. An oral interpretation of Art. 5(2) would not lead to a conclusion where the use of a similar mark on identical/similar goods would be within Art. 5(2). The ECJ took, however, the position that an interpretation of Art. 5(2) cannot lead to a better protection of a known mark used on identical/similar goods than use of a known mark on non-similar goods[25]. The claimed infringement of Art. 5(2) is connected to the use by Bellure of similar marks on identical goods on the packaging and bottles of the smell-alike perfumes[26]. The use by the defendant of a known trademark is within Art. 5(2) when: 1) the defendant’s sign is identical with, or similar to, the registered trade mark, 2) use of that sign is without due cause and 3) the use takes unfair advantage of, or is detrimental to, the distinctive character or the repute of the trade mark. Under the first condition it is not necessary that there is likelihood of confusion between the mark with reputation and the sign used[27], but sufficient if “the relevant section of the public establishes a link between the sign and the mark”[28] and there must some “effect on the economic behaviour of consumers”[29]. The first condition is met[30]. The second condition is met[31]. The third condition, which is the injury that Art. 5(2) protects against, is the most interesting in relation to taking “unfair advantage” of the “distinctive character or the repute of the trade mark”[32], and just one of these injuries has to be met for the protection to apply[33]. The ECJ states that the “unfair advantage” is “where a third party attempts, through the use of a sign similar to a mark with a reputation, to ride on the coat−tails of that mark in order to benefit from its power of attraction, its reputation and its prestige, and to exploit, without paying any financial compensation and without being required to make efforts of his own in that regard[34]”. Whether the use is taking unfair advantage is a “global assessment, taking into account al factors relevant to the circumstances of the case”[35] Lord Jacobs opinion is that ECJ-judgment means that the provision should be read as the word “unfair” not to be there[36], which could be argued to be wrong. It is necessary to make a global assessment to decide whether the use is unfair or not, including factors as “the strength of the mark’s reputation and the degree of distinctive character of the mark, the degree of similarity between the marks at issue and the nature and degree of proximity of the goods or services concerned.[37]”- the ECJ shows, unclearly, how to make this assessment in paragraph 44-49 in the judgment, and therefore the use by the defendant had to be found to take unfair advantage of the mark, and is within Art. 5(2)[38].


Does the use comply with the conditions in Art. 3(a)(1)?

The use does not comply with the condition in 3a(1)(h)[39] of the MCAD, which excludes compliance with the condition in 3a(1)(g), and the reason is that the smell-alike perfumes is presented as imitations by using registered trademarks in comparative advertising. When the use does not comply with the conditions in Art. 3(a)(1) the use is “with out due cause” and not within Art. 6(1)(b) of the TMD[40].

Conclusion

Is it infringing to tell the truth? No, not if the truth is the only thing said and done; in relation to Art. 5(1)(a) and the comparison list it was infringing, since the use affected the function related to advertising and was not then purely descriptive. In relation to Art. 5(2), dealing with the packaging and bottles[41], it was infringing to tell the truth after a global assessment, where “all factors relevant to the circumstances of the case”[42], were taken into account. It might not have been the case if Bellure had only told the truth, but they did more than that; the marks owned by L’Oréal were very strong and distinctive, the signs used by Bellure were very similar to the trademarks owned by L’Oréal and the “proximity of the goods or services concerned” was very close[43]. Under these circumstances the use was within Art. 5(2).

The result in L’Oréal v Bellure is “positive news” for trademark owners, since it is now almost impossible for fabricants of replicas and imitations to use a registered mark in comparing advertising and impossible to use similar bottles and packaging with similar trademarks. The scope of the trademark protection is wider than the essential function, as the above analysis shows, but it is taking it to far to state that every advantage in comparing advertising should be read as unfair. In this global assessment, under Art. 5(2), the bottles and packaging plays an important role, and the result might have been different if the packaging and bottles were not imitated as well – this seems to be what is bringing the “unfair advantage argument” home. The problem with this assessment is that it is very unclear, and the ECJ did not give clear guidelines how to exercise it.

The case shows that even in situations where the essential function of a mark is not infringed, the secondary functions[44] can be “enough” to infringe the rights of a mark. When the interests of free competition clash together with intellectual property rights it is hard to decide what is most important. Lord Jacobs had a strong opinion on the right to free comparison in the name of free competition and freedom of speech, but it is worth to remember that the TMD is a harmonisation of the “conditions under which comparative advertising in Member States might be lawful[45]“, and what might be the normal approach in the UK might not be it in Sweden, that is why judges should read and understand the law. The fact that the defendant is fabricating imitations of the L’Oréal products does not seem to matter to Lord Jacobs, since the products are legal – from my point of view the defendant is riding on the coat tail of L’Oréal trying to get an economical benefit out of the massive investments in advertising and brand protection. Lord Jacobs points out that the background for this decision by the ECJ is that “copyists, even of lawful products should be condemned”[46] and not economic content. How to prioritize between the free competition and the intellectual property rights is most of all a political question, but it is not true that the decision by the ECJ is with no economic content; the undertakings is using millions of pounds to built up these trademarks, which means that the product price is higher than the imitations and L’Oréal trademarks could also be weakened by the look-alikes on the market since the exclusivity vanishes[47]. The fact that L’Oréal, assumingly, is not in competition with the smell-alike perfumes, so it is not necessary for Bellure to compare to the L’Oréal products to compete effectively on the market[48] is also very important. The purpose of protecting the functions of a trademark in the context of imitations, replicas and copy products is reasonable since the actions of Bellure, in many other parts of Europe, would be regarded, as taking unfair advantage – and this was also the result the ECJ reached to.

Tables of Authorities

 

Legislation

United Kingdom

The Control of Misleading Advertisements Regulations 2000

TRA 1994

Directives

The Comparative Advertising Directive 84/450/EEC, amended by Directive 97/55/EC, repealed by Directive 06/114/EC

The Trademark Directive 89/104/EEC

Cases

United Kingdom

L’Oreal SA v Bellure NV Court of Appeal (Civil Division) [2010] E.T.M.R. 47

L’Oreal SA v eBay International [2009] EWHC 1094 (Ch)

L’Oreal SA & Ors v Bellure NV & Ors [2007] EWCA Civ 968

Germany

Case I ZR 88/08 – Adam Opel GmbH v Autec [2010] E.T.M.R. 50

European Union

C-2/00 – Hölterhoff v Ulrich Freiesleben

C-44/01 – Pippig Augenoptik GmbH & Co. KG v Hartlauer Handelsgesellschaft mbH and Verlassenschaft nach dem verstorbenen Franz Josef Hartlauer

C-59/05 – Siemens v VIPA

C-112/99 – Toshiba v Katun

C-206/01 Arsenal v Reed

C-252/07 – Intel Corp Inc v CPM United Kingdom Ltd [2009] E.T.M.R. 13

C-292/00 – Davidoff v Gofkid [2003] ECR I-389. [2003] ETMR 42C-44/01

C-408/01 – Adidas-Salomon AG v Fitnessworld Trading Ltd [2003] E.C.R. I-12537

C-487/07 – L’Oréal SA and Others v Bellure NV and Others

C-533/06 – 02 Holdings Ltd v Hutchison 3G Ltd [2008] R.P.C. 33

2008/C 8/15 reference for C-487/07

 

Bibliography

Books

Bentley, Lionel and Sherman, Brad. (2009) “Intellectual Property Law” (3rd edition Oxford University Press, Oxford, 2009)

Madsen, Palle Bo, (2007) “Markedsret del 2” (5th edition Jurist- og Økonomforbundets Forlag, København Ø, 2007)

Journals

Journal 1: Heritage, Mark “Smells-alike” defeat for truthful comparative advertising” [2010] Communications Law 105

 

Journal 2: Breitschaft, Andreas, “The future of the passing-off action in the law against unfair competition – an evaluation from a German perspective” E.I.P.R. 2010, 32(9), 427-436

 

Journal 3: Gowers, Review of Intellectual Property (2006), para.5.82 box 5.3

 

Websites

http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:31989L0104:en:HTML (typo)

 

[1] Journal 1 in the “impact” section.

[2] L’Oreal SA v Bellure 2010

[3] Ibid.

[4] C-487/07 para. 12

[5] See definition in the TMA section 1

[6] See Journal 2 para.5.82 box 5.3.

[7] L’Oreal SA v Bellure 2010 para. 1.

[8] Ibid para. 45

[9] 2008/C 8/15

[10] L’Oreal v eBay para. 283

[11] Ibid.

[12] Case C-487/07, para. 58

[13] para. 51

[14] As it was the case in Arsenal v Reed, para. 60

[15] Adam Opel GmbH v Autec, para. 24

[16] Adam Opel GmbH v Autec, para. 25

[17] L’Oreal SA v Bellure 2010, para. 30

[18] Ibid. para. 25

[19] Ibid. para. 26

[20] Ibid. para. 28

[21] Ibid. para. 26

[22] Hölterhoff v Ulrich Freiesleben, para. 16

[23] Same discussion as Lord Jacobs in L’Oreal v Bellure 2007, para. 31

[24] 9th recital to the TMA

[25] Davidoff v Gofkid, para. 25

[26] See “La Valeur”compared to “Trésor” in L’Oreal v Bellure 2007 para. 9 and 19

[27] Adidas-Salomon AG v Fitnessworld, para. 31

[28] Ibid. para. 31

[29] L’Oreal v Bellure 2007, para. 79

[30] Ibid. para. 82

[31] C-487/07, para. 45

[32] Ibid. para. 41

[33] Intel v CPM, para. 28

[34] C-487/07, para. 49

[35] Ibid. para. 44

[36] L’Oreal v Bellure 2010, para 49

[37] C-487/07, para. 44

[38] L’Oreal v Bellure 2010, para. 50

[39] See recital 19 in the preamble to the MCAD

[40] On http://eur-lex.europa.eu/ – TMD it says h instead of b in Art. 6 (typo).

[41] A fact the ECJ mentioned in para. 47

[42] C-487/07 para. 44

[43] Ibid.

[44] L’Oreal v Bellure 2010, para 31

[45] Pippig v Hartlauer, para. 44

[46] C-487/07, para. 49

[47] Journal 3

[48] Toshiba v Katun, para. 54 and Siemens v VIPA, para. 15

 

februar 18th, 2011

Access to judicial review by private parties after the Treaty of Lisbon

This essay was handed in as an answer to my exam in “European Union Law” during my stay at the University of Leicester.

This essay examines the impact of the amendment of art. 263 TFEU by the Treaty of Lisbon, and whether the problem of access to judicial review of Union acts by private parties was addressed successfully. The essay consists of a short description of the scope of art. 263 TFEU, an analysis of the access to locus standi for non-privileged applicants and what the Treaty of Lisbon changed in relation to this, a description of other ways to remedy and a conclusion.

Read the essay here

Introduction

This essay examines the impact of the amendment of art. 263 TFEU by the Treaty of Lisbon, and whether the problem of access to judicial review of Union acts by private parties was addressed successfully. The essay consists of a short description of the scope of art. 263 TFEU, an analysis of the access to locus standi for non-privileged applicants and what the Treaty of Lisbon changed in relation to this, a description of other ways to remedy and a conclusion.

The scope of art. 263 TFEU

Art. 263 was amended by the Treaty of Lisbon, which made it possible to review, not only, the traditional institutions[1], but also the European Council and EU agencies, offices and bodies[2].

Locus standi

Art. 263(1) TFEU separates the applicants, able to challenge Union acts, in privileged, semi-privileged and non-privileged applicants. The latter is the subject of this essay, since it covers “any natural or legal person” as set out in art. 263(4). The access to challenge Union acts is, however, interpreted narrowly by the ECJ, so it is hard to meet the requirements listed in art. 263(4). The Treaty of Lisbon amended art. 263(4), where a distinction between regulatory and other acts were introduced. If a private party wants to challenge a regulatory act it is only necessary to establish direct concern, which, prior to the Treaty of Lisbon, has not been as problematic to establish as individual concern[3]. There is no definition of the term regulatory act, but they are interpreted as being non-legislative acts, since these are not based on decisions made by representatives chosen by the citizens of the member states – and therefore it should be easier for private parties to challenge these acts.  The legislative acts have been interpreted by the ECJ as “any measure that is couched in general an abstract terms”[4], which is a different definition than the one given in art. 289(3) TFEU – where a legal act is “anything adopted by one of the legislative procedures”[5]. The Treaty of Lisbon should have dealt with this problem, since it creates a democratic deficit, when private parties cannot challenge a delegated or implementing act, managed without a representative institution, without direct- and individual concern[6].

Direct concern

The direct concern-criteria consist of a requirement for causation and legal interest. The requirement for causation means that there must be a link between the act and the damaged suffered, and it must be the act that changed the legal position[7]. In some situations directives gives the member states a degree of free choice in how to implement the legislation, which in some cases has led to the causation to be gone. This raises a problem in relation to private parties access to judicial review, since the ECJ has found, that if there is no national discretion or only theoretical[8], it is only then possible to challenge the community act. From a democratic point of view it would be better if, in cases with a little discretion, that the community act and the national legalisation were interpreted to inflict the damage[9], so the private parties would have direct concern in these matters. The requirement for legal interest means that there must be a legal right to infringe, and can be illustrated by the Front National-case[10], where members of the European Parliament did not have a legal right to form a “groupe mixte”, and therefore did not fulfil the requirement for direct concern. There is no problem connected to this requirement in relation to access to judicial review for private parties, since it is a reasonable approach that if there is no legal right from the institutions, then there cannot be an injury.

 

Individual concern

The other condition to challenge a legislative act is to establish individual concern. The leading case is Plaumann & Co. v Commission, where the “Plaumann test” was established; to establish individual concern, without an expressly addressed act (which a general legislative act seldom is), it is necessary to be “differentiated from all other persons and by virtue of these factors distinguishes them individually just as in the case of the person addressed”[11]. It is very difficult to meet the requirement in the “Plaumann test”, since it is hard to distinguish one importer of clementines from all established and future importers of clementines[12]. The question is whether the private party is a member of an open group, as importers of clementines, or member of a closed group – if it is the latter it is possible to establish individual concern[13]. The argument of H. Rasmussen[14], saying that the locus standi requirement has been used to make a filter for the ECJ, is problematic, since there are situations where it is impossible to seek for remedy in national courts[15]- for instance with regulations and directives, and it should not, from a democratic point of view, be an argument against remedy that more people than a specific group is influenced of an act[16]. Advocate General Jacobs was very critical about the “Plaumann test” in his opinion in UPA[17], trying to use the right to access to a remedy as an argument for a new interpretation of “individual concern” in art. 263(4). The arguments of Advocate General Jacobs are understandable, but the ECJ must be very careful with changing its interpretation of the individual concern, since it should be done by the member states through treaty amendments, regardless of the fact that art. 263(4) do not give a definition of how to define individual concern. The ECJ has, since the case of Plaumann, used the same interpretation – and it creates a bigger democratic deficit, when judges changes the interpretation of law, when democratic institutions chooses not to[18].

Other ways to remedy

Art. 267 TFEU makes it possible for the national courts to ask for a preliminary reference, but it is up to court to decide whether such action is necessary and the national courts are not competent to declare community-law void[19]. It might be necessary for the private party to breach the “implementing measures in order to challenge the resulting sanctions or, in the absence of implementing measures (as in Jégo-Quéré), to breach the Community law and then assert its illegality in proceedings against it”[20]. It is a serious problem if a party has to breach the law to be able to seek for a remedy. Art. 288 do not have formal requirements to achieve locus standi, but the breach of the law has to be “sufficiently serious”[21], which makes it very hard to succeed this way.

Conclusion

It is positive news for private parties that the Treaty of Lisbon has made it easier to challenge regulatory acts, since it is only needed to establish direct concern. The idea behind this is, as mentioned, that a regulatory act is created by non-elected-persons, so a representative mandate is missing – and then it should be easier to challenge than in relation, for instance, with a legislative act. The Treaty of Lisbon did, however, not change enough in relation to judicial review, since not all of the problems were addressed. After the judgement in UPA[22], where it was clarified that the system had to be changed through a treaty amendment, the member states had a great opportunity to compensate on the democratic deficit, which has been an obstacle to the integration of member states in the European Union because of the “fear” of giving away power to the community in the memberstates – with England as a leading memberstate in this relation. A treaty amendment, which had addressed the problems discussed above, could have been used to legitimate the “Constitutional treaty” that never became a reality. The narrow interpretation of direct- and individual concern creates democratic deficit, and even though the Treaty of Lisbon made it possible to take action for proceedings at the ECJ for a juridical review of a regulatory act without “individual concern”.

The structure of the institutions in the community is a problem, if it should be decided to change the access to judicial review. At the moment the ECJ has a very big workload, which will only increase if more applicants could challenge EU acts – this would create a long processing time to reach a final result. It is unclear to what extend the work load would rise, but some sources do not find it significant[23]. Another argument is that “too many challenges by private parties will unduly disrupt Union decision-making processes”[24], since the legal process in the European Union is complex and with many actors – it is difficult to agree on legislation. These arguments are standing alone against the critique above of the limited access to judicial review for private parties, and since a new treaty is very unlikely to happen in the nearest future, the amendment by the Treaty of Lisbon must be characterized as a disappointment in relation to judicial review. The conclusion is that private parties should be able to challenge general legalisation as regulations and directives, which have influence on the life of a lot of private parties, and that the Treaty of Lisbon did not address this problem.

Tables of Authorities

 

Legislation

Treaties

The Treaty of Lisbon

The Treaty on the Functioning of the European Union

Consolidated version of the Treaty establishing the European Community

Cases

European Union

Cases 16/62 Confédération Nationale des Producteurs de Fruits et Légumes and Others v Council [1962] ECR 471

Case C-50/2000 P, Union de Pequeños Agricultores v. Council [2002] ECR I-6677

Case C-486/01 P Front National v European Parliament [2004] ECR I-6289

Case C-519/07 P Commission v Koninklijke Friesland Campina [2009] ECR I-00000

Case T-177/01 Jégo-Quére

Case T-289/03 BUPA and Others v Commission [2009] ECR II-81

Case T-585/93 Greenpeace and Others v Commission (1995) ECR II-2205

Case 5/71 Zuckerfabrik Schöppenstedt v Council [1971] E.C.R. 975

Case 11/82 Piraiki-Pitraiki v Commission [1985] ECHR 207

Case 69/69 Alcan v Commission [1970] ECR 385

 

Bibliography

Books

Chalmers, Damian; Davies, Gareth and Monti, Giorgio. (2010) “European Union Law” (2nd edition Cambridge University Press, Cambridge, 2010)

Cygan, Adam and Szyszczak, Erika, (2008) “Understanding EU Law” (2nd edition Thomson, Sweet & Maxwell, London, 2008)

Neergaard, Ulla and Nielsen, Ruth, (2010) “EU Ret” (6th edition Thomson Reuters, Copenhagen 2010)

Journals

Balthasar, Stephan, “Locus standi rules for challenges to regulatory acts by private applicants: the new art. 263(4) TFEU” (2010) – European Law Review 542.

 

Berry, Elspeth and Boyes, Simon, “Access to justice in the Community courts: a limited

right?” (2005) – Civil Justice Quarterly 224.

 

Craigh, Poul, “Legality, Standing and Substantive Review in Community Law” (1994) Oxford Journal of Legal Studies 14(4) 507

 

Harlow, Carol “Public Law and Popular Justice” (2002) 65 Modern Law Review 1.

[1] See art. 230(1) EC

[2] Chalmers, Davies and Monti, p. 396

[3] Ibid., p. 415

[4] Chalmers, Davies and Monti, p. 415 with reference to the joined cases Confédération Nationale des Producteurs de Fruits et Légumes and Others v Council

[5] Ibid., p 415

[6] Ibid., p. 415

[7] BUPA and Others v Commission, para 81 (named T-29/03 on p. 416 in Chalmers, Davies and Monti instead of T289/03 – typo) and Alcan v Commission, para. 15

[8] See for instance Piraiki-Pitraiki v Commission

[9] Chalmers, Davies and Monti, p. 416

[10] Front National v European Parliament, para. 36

[11] Plaumann & Co. v Commission of the European Economic Community, para. 1 under the section “Grounds”.

[12] Since the “Plaumann test’s” date for deciding is a undefined date in the future – see Craigh, Poul, “Legality, Standing and Substantive Review in Community Law” 509-10 as referenced in Chalmers, Davies and Monti, p. 419 footnote 105

[13] Commission v Koninklijke Friesland Campina

[14] Rasmussen, H. “Why is Article 173 Interpreted Against Private Plaintiffs?”

[15] See Greenpeace and Others v Commission and Unión de Pequeños Agricultores v Council

[16] Harlow, Carol “Public Law and Popular Justice” as refered to in Cygan and Szyszczak, p. 63. and the opinion of Advocate General Jacobs in Unión de Pequeños Agricultores v Council, para. 59

[17] Ibid.

[18] See different approach in Balthasar, Stephan, “Locus standi rules for challenges to regulatory acts by private applicants: the new art. 263(4) TFEU”

[19] Advocate General Jacobs opinion in Unión de Pequeños Agricultores v Council, para. 41 as refered in Berry, Elspeth and Boyes, Simon, “Access to justice in the Community courts: a limited

right?” p. 4

[20] Berry, Elspeth and Boyes, Simon, “Access to justice in the Community courts: a limited

right?” p. 4

[21] Zuckerfabrik Schöppenstedt v Council

[22] Case 50/2000 P, para. 41

[23] Balthasar, Stephan, “Locus standi rules for challenges to regulatory acts by private applicants: the new art. 263(4) TFEU”

[24] Chalmers, Davies and Monti, p 421

 

by Kristian Bro | Posted in EU-ret | No Comments » | Tags: , , , , ,
februar 18th, 2011

The balance between the rights of artists and the protection of children under British law

This essay was handed in as an answer to my exam in Human Rights and Civil Liberties during my stay at the University of Leicester. The essay examines the balance between the rights of artists and the protection of children under British law.

Read the essay here

Introduction

This essay examines the balance between the rights of artists and the protection of children under British law in the light of the quote from The Daily Telegraph. The essay consists of a description of relevant legislation on the topic, a section with arguments for and against restriction, an analysis of the protection under British law and a conclusion.

The English law restricting obscenity and indecency is very cryptic and difficult. The fact that several acts are overlapping each other, sometimes with identical words with an opposite meaning[1], is an indication of how difficult it has been to reach a political consensus of the direction of controlling obscenity and indecency under British Law. Before dealing with the substantive law in relation to obscenity and indecency it is necessary to present the arguments for and against restriction, since it otherwise would be difficult to analyse “the balance struck between the rights of artists and the protection of children” later on. It might seem obvious that children should be protected, but the difference between the cover of the Nirvana album “Nevermind”, picturing a naked baby swimming, and pictures with crying children being abused shows that there is a balance to be made.

Legislation

The relevant legislation on this topic are the European Convention on Human Rights art. 8 and 10, the Human Rights Act 1998, The Optional Protocol to the Convention on the Rights of the Child on the sale of children, child prostitution and child pornography – the General Assembly Resolution A/RES/54/263, the Obscene Publications Act of 1959 amended by the Obscene Publications Act of 1964, the Protection of Children Act 1978, the Criminal Justice and Public Order Act 1994 and the Sexual Offences Act 2003.

Arguments for and against regulation

The starting point is the right to freedom of expression, which is protected, with a margin of appreciation to the member states[2], in art. 10 of the ECHR and art. 10 of the HRA 1998. The HRA 1998 is more relevant in relation to freedom of expression, than other human rights protected in the ECHR, because of the margin of appreciation to the member states, which makes the rulings in the European Court of Human Rights in Strasbourg difficult to use as more than a guideline in domestic courts[3], but should still be taken into account in accordance to s. 2 and 3 of the HRA 1998. Since the British Law does not have a written constitution, the freedom of expression is not protected on “constitutional level” like the US Bill of Rights in the First Amendment (a strong protection of the freedom of speech) and the Danish Constitution art. 77 (a strong protection against pre-censorship). The protection in the First Amendment is very relevant in relation to pseudo-photographs and drawings of naked children[4], after the judgement in the Ashcroft-case, where the Supreme Court of the United States declared the Child Pornography Prevention Act of 1996 “§§2256(8)(B) and 2256(8)(D) are overbroad and unconstitutional”[5], which shows a different approach than the one in British Law.  Most of the arguments for freedom of expression do not seem to be very strong in relation to obscenity and indecency, since the argument of truth, from the essay “On Liberty” written by John Stuart Mill, does not have much relevance in with the protection of children in relation to the rights of an artist. It could, however, be relevant in relation to the publishing of art, school[6]- and medicine-education material. The argument of democracy is not very strong either in relation to arguments against restriction on obscene or indecent material, since it does not “make one better able to exercise the responsibilities of a voting citizen”[7]. The argument of self-fulfilment seems to be the most fitting, of the arguments mentioned by Richard Stone[8], and even though this essay is dealing with the protection of children, it could be self-fulfilling to draw a picture of a naked child if you were a paedophile, but also for an artist to publish a picture of children playing without clothes on as it was the case in the photograph by Nan Goldin named “Klara and Edda Belly-Dancing”. The approach taken by the Williams Committee[9], in relation to reform the legislation on obscenity and indecency, was inspired by the libertarian principle in chapter one of the essay, as earlier referred to, “On Liberty”, generally known as the “harm principle”[10]. The “harm principle” in “On Liberty” was inspired by the book “On the Limits of State Action” by Wilhelm von Humboldt, but clarified by John Stuart Mill, and says that it should be possible to do anything unless it harms others. John Stuart Mill states however, which is not referred by Stone[11], that: “It is, perhaps, hardly necessary to say that this doctrine is meant to apply only to human beings in the maturity of their faculties. We are not speaking of children, or of young persons below the age which the law may fix as that of manhood or womanhood. Those who are still in a state to require being taken care of by others, must be protected against their own actions as well as against external injury”[12]. This is a good argument in relation to the arguments for and against restriction of obscene and indecent material of children, since it is necessary for the state to protect these – even in situations where they agree to have material produced. It is not arbitrary to state, without further reference, that it harms children to be abused in obscene or indecent material, and this protection is very central in the discussion of to which extend children should be protected. It is not clear what the impact on morals in society of published or non-published content with children without clothes on is, but this is not as important a question as in relation to adults[13], since the children does not have the same understanding of their actions and the question about a decrease/increase in sexual assaults or rapes should not be an argument for allowing abuse of some children[14].

 

The protection of children under British law

The Protection of Children Act 1978.

The Protection of Children Act 1978 (PCA) is the central legislation in relation to the protection of children under British law. Most of the material under the PCA would be within the scope of the restriction in the Obscene Publications Act 1959, but it was found necessary to create separate legislation dealing with photographs and films of children[15]. In 1988 s. 160 of the Criminal Justice Act was created, because of the “new” problems in relation downloading material from the internet, which made possession with knowledge of the material[16] illegal unlike the PCA(1)(C).

The PCA is criminalizing a very wide group, since the word “person” in the PCA(1) includes everyone that a) “takes or permit to be taken or to make”[17], b) “distributes or shows”, c) “has in possession with a view to their being distributed or shown by himself or others”, d) “publishes or cause to be published any advertisement likely to be understood as conveying that the advertiser distributes or shows such indecent photographs or intends to do so”, “of a indecent photograph of a child”. An artist would normally fit under all these criteria, maybe with PCA1(D) as the exception.

The PCA is restricting photographs, which include films as shown in the PCA section 7(1), of children that are indecent. After the amendment by CJPOA 1994(84)(4) the PCA(1)(1)(a) is including photographs in electronic data format and pseudo-photographs. The CJPOA created a big extension of the restriction on “indecent” material, since it changed focus from protecting children to motives behind the making of the material[18]. This is interesting in relation to the “harm principle”, since the no children is harmed, directly, by making indecent pseudo-photographs. It may be the case that the legislation has changed focus from protecting the children to protecting morals in society. From a libertarian point of view it could be argued, that the rights of artists, at least when no harm is done to children, should be increased.

The definition of a child is given in the amendment of the PCA by s. 45 of the Sexual Offences Act 2003, where “16” substituted “ 18”, meaning that a person under the age of 18 is a child; this was done to change the definition of a child into the international definition[19].

The interpretation of “indecency” is not given in the legislation, but case law shows that it “means shocking and disgusting, but not as shocking and disgusting as “obscene”[20].  This definition is very unclear, which was thought to be an advantage by some Members of Parliament[21], but from a legal point of view this is not positive, especially not when dealing with criminal offences. It should be possible to give a guide to the interpretation such as a specific attention to genitals is regarded to be indecent[22], such as the Oliver-test[23] used now – the problem might be that there is no political consensus of what is indecent, and then it is left to judges to decide. Case law has clarified that the jury in their decision of whether the photograph is indecent can take the age of the person into account or not[24]. If the age of the person in the picture is unknown the prosecutor must prove that the person is a child, and the jury must then decide whether this is the case or not – if there is “any reasonable doubt on the issue, they should acquit”[25]. It is not required for the prosecutor to prove that the defendant knew that the person in the material was a child[26], which is a modification of the requirement for mens rea in accordance with PCA(2)(3). Case law has clarified that the motive of the creation of indecent material is not relevant on the issue of whether material is indecent or not[27], so this is not “a way out” for artists either.

The above shows that the protection of children under British law is very strong, and that artists does not have a defense under PCA(1)(4)(a), since art is not a legitimate reason for distributing, showing or having them (photographs or film) in possession. The PCA(1)(4)(b) is not a defense either, since an artist sees the pictures and knows, in this relation, that they are indecent when he shoots them. Then it all comes down to whether the pictures are indecent or not, which in some cases might be hard to tell before the judge has spoken.

HRA 1998 – ECHR art. 10

Richard Stone argues that the vague definition of “indecent” in the PCA might be problematic in relation to art. 10 in the EHCR, with could be challenged under art. 10 of the HRA 1998, since it is up to a jury or a magistrate to decide whether material is so[28].  In the light of the judgement by the ECtHR in Handyside, where the “obscenity test” was “prescribed by law”, it is not very likely that the  “indecent test” will not satisfy this condition. The courts showed the same view[29] in R v Smethurst and Connolly v DPP. The situation might be different in relation to the vague definition of “to make”, which some cases[30] has clarified the definition of. In the case of Vereinigung Bildender Kunstler v. Austria the ECtHR would not accept the “Austrian Government’s argument that the interference also pursued the legitimate aim of protecting public morals as neither the wording of the Copyright Act nor the terms in which the relevant court decisions were phrased, referred to that aim”, but the as the “prescribed by law” criteria is most likely to be met in the PCA, and one of the aims is to protect public morals, it is very unlikely that this case changes anything in relation to the protection of children in relation to the rights of artists. The balance struck between the rights of artists and the protection of children under British law is not disproportionate in relation to the ECHR art. 10, since the protection in a copyright law is very likely to be different than the protection of children. As mentioned in the beginning, the amount of appreciation from the ECtHR to the member states makes the HRA 1998 more important to issues dealing with the freedom of expression. The artists might try to claim that art. 10 of the HRA 1998 is infringed by not giving an “artist defence” in the PCA[31], since it is not be necessary for the protection of morals to establish such a strong protection of normal “art with children”. The prosecutors if left with too much power, since it is rather unclear what an “indecent” picture is, and when dealing with criminal offences this is a juridical problem.

Conclusion

The balance struck between the rights of artists and the protection of children under British law is a political question based on morals, which is hard to discuss in a law essay. The legalisation dealing with protection of Children under British law is not as blurry as the laws on obscenity and indecency in general, but the vague definitions in these laws, mentioned throughout the essay, has an impact on the PCA. Some might find the vague definition of “indecency” a good thing, since it gives the judges the opportunity to change it in accordance with changes in society. In some areas of law this could be a good thing, but when dealing with criminal offences there must be a clear legislation, which leaves as less space for uncertainty as possible. The vague definition of “indecent” and “make” might be, as discussed, in conflict with the criteria of being “prescribed by law” in the ECHR art. 10(2) and HRA 1998 art. 10(2). The quote from the Daily Telegraph gives an indication of the police being uncertain whether the picture was illegal or not[32], and this could be prevented by creating a more specific definition of what is indecent and what is not. It is difficult to think of ways to make a stronger protection of children, than the protection under British law, but the fact is that the PCA, someday, when prosecutors think it is time, brings a case to the court that would not be in conflict with the general morals in society, but in conflict with the law. That is why Parliament should make stronger definitions and an artists defence – which would be in accordance to morals in society in relation to the protection of children. “The harm principle” could be used as a guideline on this topic, since it, in the light of the action chosen against the photographs by Tierney Gearon and Nan Goldin, seems to be the law that these pictures should be legal. A “harm principle” would protect children against harm, and with a strong definition of how to interpret “harm”, with the Oliver-test as a guideline, the legalisation would create a higher degree of certainty and being, with no doubt, in accordance with the ECHR and most important the HRA 1998. The conclusion is that there is hardly any balance between the protection of children and the rights of artists under British law at the moment. The reason why a reform of the PCA is not done so far might be, that the Members of Parliament does not want to be connected with a “softer approach” on the restriction of pictures of children that might be/or not be indecent – if anyone knows what this word exactly means – or a problem with political consensus for a new Act on obscenity and indecency. It does not seem likely to see a change in this area of the law, and hopefully the prosecutors are aware of the power they have been given by Parliament.

 

Tables of Authorities

 

Legislation

United Kingdom

The Human Rights Act 1998 (HRA)

The Obscene Publications Act of 1959 amended by the Obscene Publications Act of 1964

The Sexual Offences Act 2003

The Protection of Children Act 1978.

The Criminal Justice and Public Order Act (CJPOA) 1994.

Conventions

The European Convention on Human Rights

Resolutions

The Optional Protocol to the Convention on the Rights of the Child on the sale of children, child prostitution and child pornography, General Assembly Resolution A/RES/54/263, 25 May 2000

Constitutions

The Danish Constitution (Grundloven)

The First Amendment to the United States Constitution

 

Cases

United Kingdom

Atkins v DPP (20009 2 All ER 425

 

Connolly v DPP (2007) EWHC 237, (2007) 2 All ER 1012

Handyside v United Kingdom (1976) EHRR 737

Knuller v Dpp (1973) AC 435

R v Bowden (Jonathan) (2000) 2 W.L.R. 1083

R v Graham-Kerr (1988) 1 WLR 1098

R v Land (1998) 1 All ER 403

R v Smethurst (2001) EWCA Crim 722, (2002) 1 Cr App R 6

R v Smith (2003) EWCA Crim 683

R v Oliver (2002) EWCA Crim 2766

R v Owen (1988) 1 WLR 134

United States of America

Ashcroft v. Free Speech Coalition (00-795) 535 U.S. 234 (2002)

 

Bibliography

Books

 

Akdeniz, Yaman (2008) “Internet child pornography and the law” (Ashgate Publishing Limited, Aldershot, 2008)

Humboldt, von Wilhelm (1792) “Ideen zu einem Versuch, die Grenzen der Wirksamkeit des Staates zu bestimmen” (E. Trewendt, Germany, 1851)

Humboldt, von Wilhelm (1854 ed. By Joseph Coulthard) “The Sphere and Duties of Government (The Limits of State Action)” (John Chapman, London, 1854)

Stone, Richard. (2010) “Civil Liberties and Human Rights” (8th edition Oxford University Press, Oxford, 2010)

Websites

 

http://books.google.com/books?id=eavLesJp5xYC&printsec=frontcover&hl=da#v=onepage&q&f=false – “Ideen zu einem Versuch, die Grenzen der Wirksamkeit des Staates zu bestimmen” by Wilhelm von Humboldt – online version

 

http://oll.libertyfund.org/index.php?option=com_staticxt&staticfile=show.php%3Ftitle=589&Itemid=99999999 – “The Limits of State Action” by Wilhelm von Humboldt – online version

 

http://www.gutenberg.org/files/7370/7370-h/7370-h.htm – “Second Treatise of Government” by John Locke – online version

 

http://ebooks.adelaide.edu.au/m/mill/john_stuart/m645o/ – “On Liberty” by John Stuart Mill

[1] Stone, Richard “Civil Liberties and Human Rights”, p. 408

[2] Handyside v United Kingdom

[3] Stone, Richard “Civil Liberties and Human Rights”, p. 401

[4] Pseudo-photographs and comics of naked children is legal in Denmark as well

[5] Ashcroft v. Free Speech Coalition

[6] See Handyside v United Kingdom ruling the destruction of the Little Red School Book written by two Danish Schoolteachers

[7] Stone, Richard “Civil Liberties and Human Rights”, p. 314

[8] Stone, Richard “Civil Liberties and Human Rights”, p. 398

[9] The Williams Committee para. 5.1 as refered in Stone, Richard “Civil Liberties and Human Rights”, p. 398

[10] see also Wilhelm von Humboldt “On the Limits of State Action” and John Locke “Two Treatises of Government”

[11] Just after the quote from “On Liberty” cp. 1 in Stone, Richard “Civil Liberties and Human Rights”, p. 399

[12] “On Liberty” cp. 1

[13] “There is as little in the way of scientific evidence for this beneficial effect, as there is for pornography’s harmful effects” Stone, Richard “Civil Liberties and Human Rights”, p. 401

[14] It is a relevant issue on the topic of whether “Pseudo-photographs” or comics of naked children should be legal

[15] Stone, Richard “Civil Liberties and Human Rights”, p. 418

[16] See Atkins v DPP (20009 2 All ER 425

[17] R v Bowden – Downloading indecent material is within the scope of the PCA(1)(a), and this action is interpreted as “making” an indecent photograph.

 

[18] Stone, Richard “Civil Liberties and Human Rights”, p. 421

[19] Akdeniz, Yaman “Internet child pornography and the law”, p. 19

[20] Stone, Richard “Civil Liberties and Human Rights”, p. 408 with reference to the statement of Lord Reid in Knuller v Dpp

[21] Stone, Richard “Civil Liberties and Human Rights”, p. 408

[22] For an example see Optional Protocol to the Convention on the Rights of the Child on the sale of children, child prostitution and child pornography, General Assembly Resolution A/RES/54/263, 25 May 2000

[23] R v Oliver – the test derived from the Sentencing Advisory Panel (SAP) and was based on the COPINE-projects description of images

[24] R v Owen

[25] Stone, Richard “Civil Liberties and Human Rights”, p. 419

[26] R v Land

[27] R v Graham-Kerr and R v Smethurst

[28] Stone, Richard “Civil Liberties and Human Rights”, p. 409

[29] Stone, Richard “Civil Liberties and Human Rights”, p. 409

[30] R v Bowden and R v Smith

[31] Stone, Richard “Civil Liberties and Human Rights”, p. 422

[32] The situation is comparable to the case of Tierney Gearon referred in Stone, Richard “Civil Liberties and Human Rights”, p. 421

 

februar 18th, 2011

Is there effective means of dealing with oligopolistic industries that are insufficiently competitive?

This essay was handed in as an answer to my exam in “Competition Law and Policy” during my stay at the University of Leicester.

This essay discusses if there is effective means of dealing with oligopolistic industries that are insufficiently competitive. The essay consists of a description on the economic theories that have influence on the competition law, a description of relevant legislation on the topic, a discussion of Art. 101 and 102 TFEU in relation to prohibit certain behaviour by oligopolistic industries, a description of other means to deal with oligopolistic industries and a conclusion.

Read the essay here

Introduction

This essay discusses if there is effective means of dealing with oligopolistic industries that are insufficiently competitive. The essay consists of a description on the economic theories that have influence on the competition law, a description of relevant legislation on the topic, a discussion of Art. 101 and 102 TFEU in relation to prohibit certain behaviour by oligopolistic industries, a description of other means to deal with oligopolistic industries and a conclusion.

Theory

An oligopoly is a market structure dominated by a small group of sellers, and has become important in relation to competition law because of the economic development in the 20th century. The oligopoly has a risk for market failure[1], where parallel conduct increases prices – but because of the few sellers on the market it might not be necessary to communicate to reach a point with no normal competition. The question is how to move the oligopolistic industries in direction of competition instead of parallel conduct, and to answer this question it is necessary to understand the economic theory behind the oligopoly:

“The Harvard School” argued that the best remedy against oligopoly was changing the market share using the “Structure-Conduct-Performance Paradigm”[2] to explain that a great market power was equal to lower efficiency, since it was the idea that undertakings with smaller market power would be more competitive. By using structural remedies, as merger control, it was argued the lower efficiency. The problem is, however, that it is very difficult to say what market power an undertaking must have to be able to be innovative and compete on the market.

“The Chicago School” was, in contrast to “The Harvard School”, of the opinion that undertakings with big market power, not necessarily, were equal to lower efficiency[3]. A market with undertakings with a big market power could be more effective than a market with undertakings with smaller market power[4].

“The New Industrial Economy” came up with another way of understanding the behaviour of the undertakings in an oligopoly based on game theory in the “prisoner’s dilemma”. The idea is that two persons are charged for a crime, and if one of them confess, that person will be free and the other person placed in prison for 10 years. The persons are not able to communicate. If both persons confess they will be placed in prison for 5 years each. If none of them confess they will both be free. If one undertaking charges a high price in an oligopoly; the other undertakings should charge a low price – since this would lead to a higher sale. If both undertakings charge a low price; profit will be low. If both undertakings charge a high price; a higher profit is made than charging the low price. The best solution for an undertaking will then be to charge a low price, when one undertaking do not know what the other undertaking will do, since it has the best outcome. The oligopoly does not work like this in reality, since the undertakings are monitoring the market and changing their prices when “something happens”. This means that an undertaking could raise the price when the other undertakings do so, or se the price lower – the first choice might be the most profitable[5]. The theory shows some of the complexity connected to the burden of proof when the commission has to prove the outcome and purpose of actions on the market.

Legislation

The relevant legislation on this topic are Art. 101 and 102 in the Treaty on the Functioning of the European Union (TFEU) and the EC Merger Control Regulation (ECMCR).

Art. 101 TFEU

The interpretation by the ECJ of the meaning of “concerted practise” in Art. 101 TFEU makes it possible[6], under certain circumstances, to use the Art. as a regulation of the undertakings characterized as “oligopolistic industries” to secure competition in order to complete the internal market and secure consumer welfare. The circumstances required establishing a “concerted practice” prohibited by Art. 101 TFEU, was the question in the “Dyestuff-judgements”[7], where the ECJ ruled that: “Although parallel behaviour may not by itself be identified with a concerted practice, it may however amount to strong evidence of such a practice if it leads to conditions of competition which do not correspond to the normal conditions of the market, having regard to the nature of the products, the size and number of the undertakings, and the volume of the said market”[8]. The parallel behaviour was not enough to establish a “concerted practice”, since it was necessary to make an analysis of the market a whole[9] to decide if the parallel behaviour “was designed to replace the risks of competition and the hazards of competitors’ spontaneous reactions by cooperation constituting a concerted practice”[10]. The meaning of this is that, even though there is no proof of an agreement, if the behaviour on the market is not normal, it could be concerted practice – which was found in the “Dyestuff-cases”. It was not very clear what was required of the assessment of the market as a whole to establish a “concerted practice”, but in Ahlström, Osakeyhtiö and others v Commission[11], known as “Wood Pulp II” the ECJ held that parallel behaviour on its own was not enough to be a “concerted practice”, even when there was evidence of contracts and exchange of information[12], since other factors on the market could explain the simultaneous price raises. Since oligopolistic industries does not have to communicate, at least in theory[13], to prevent competition in the interest of all undertakings involved, it is very difficult, in the light of the “Dyestuff-cases” and  “Wood Pulp II”, for the commission to prove that the parallel behaviour is “designed to replace the risks of competition and the hazards of competitors’ spontaneous reactions”[14]. The fact of the existence of markets where “competition is limited and that, so long as undertakings make their decisions independently, that is not an offence under Article 101 TFEU”[15], leaves the commission with a very hard case, since the structure of the markets with oligopolistic industries can be explained with “concerted practice”, as in the “Dyestuff-cases”, but also with legal actions in order to meet the needs to succeed on the market. This means that Art. 101 TFEU is not effective dealing with oligopolistic industries that are insufficiently competitive.

Art. 102 TFEU

An alternative to the prohibition in Art. 101 TFEU is to establish abuse of a dominant position by “one or more undertakings” under Art. 102 TFEU. The first problem with Art. 102 TFEU in relation to oligopolistic industries is that most undertakings will not have a market share above 40%, and it is unlikely that the undertaking would be found in a dominant position with a smaller market share[16]. The commission tried to change the narrow interpretation[17] of “one or more undertakings”, which was done by the Court of First Instance (CFI), known as the General Court (GC) after the Treaty of Lisbon, in the case known as “Italian Flat Glass”[18]. The Court of First Instance held that two independent entities could hold a dominant position, and states that: “this could be the case, for example, where two or more independent undertakings jointly have, through agreements or licences, a technological lead affording them the power to behave to an appreciable extent independently of their competitors, their customers and ultimately of their consumers.”[19]. This was thought to mean, even though it is an example, that there has to be a legal connection between the undertakings in order to establish a collective dominant position. In Almeno v Energiebedrijf IJsselmij NV the ECJ held that: “in order for such a collective dominant position to exist, the undertakings in the group must be linked in such a way that they adopt the same conduct on the market”[20]. In Gencor v. Commission it is made clear that a link can be established in an oligopoly through interdependence between two undertakings, where they ”align their conduct in the market, in particular in such a way as to maximise their joint profits by restricting production with a view to increasing prices”[21], and it gives a description of the needed link, mentioned in the Almeno-case, clarifying that it did not necessarily have to be of a legal character. In reality, however, it seems like a legal-link is the only connection strong enough to establish a collective dominant position[22]. What the impact of the description of the link will be in relation to Art. 102 TFEU is a difficult to answer, but it is a fact that it is very difficult for the commission to prove, as showed above, through economic analysis that the conduct on the market is because of coordinated effects as abuse of collective dominant position and not the principles of market economy. This means that Art. 102 TFEU is not effective dealing with oligopolistic industries that are insufficiently competitive.

Other means to deal with oligopolistic industries

The EC Merger Control Regulation (ECMCR) has been used in order to deal with oligopolistic industries, where a collective dominant position was found to be within the scope of the MCR[23]. This was subject was further clarified by the Gencor-case, mentioned above, which made it clear that “the concept of collective dominance was the same under Article 102 TFEU and the MCR” [24], which was the case because of the way the CFI referred to the case of “Italian Flat Glass”[25]. The idea was that if a merger would create coordinated effects on the market, it should be blocked. This was the case with the agricultural company “Kali und Salz”, in which the ECJ blocked a merger with Mitteldeutsch, after an interpretation of the ECMCR based on the “purpose and general structure”[26]. What was necessary to establish a collective dominant position was not clarified before the ECJ created, through case law[27], an “economic assessment of the connecting factors and the structure of the market in question”[28], to decide whether collective dominance existed in the oligopoly. In Airtours v Commission, where the merger was blocked, the ECJ laid down three conditions in this assessment to establish collective dominance[29]: 1) the undertakings had to be able to monitor the behaviour on the market, 2) the situation had to be stable over time and 3) parties outside the oligopoly “would not jeopardise the results expected from the common policy”[30]. In Bertelsmann and Sony v Impala and Commission the conditions in the assessment was clarified. In this case the CFI did not make an analysis of the market transparency[31], which is condition number 1, and this led to critique from the ECJ[32]. It is very difficult for the commission to establish all three conditions in the assessment mentioned above. The ECMCR has not proven itself effective in dealing with oligopolistic industries with insufficient competition.

Conclusion

This essay shows the problems the European Union is facing in relation to oligopolistic industries that are insufficient competition. There is no effective means of dealing with insufficient competition in oligopolies. Art. 101 TFEU was not effective, since it is hard for the commission to prove, by making an analysis of the market as a whole, that parallel behaviour was concerted practise. Art. 102 TFEU was not effective either, since the involved undertaking will not have 40% market share, why collective dominance has to be established. It has proved to be very difficult for the commission to prove the collective dominance, through the economic analysis required, is because of coordinated effects as abuse of collective dominant position and not the principles of market economy. So far the only abuse of collective dominant position established, outside the ECMCR, has been in cases with a legal link – and even though this is not required as mentioned above, there is no example of a non-legal link[33]. Structural remedies, such as merger control, do not solve the problems in relation to already established oligopolies with insufficient competition, and the ECJ has proved to be quite reluctant to block mergers on the grounds of collective dominant position. In the future it might be clarified what the 3 conditions, in relation to establish a collective dominant position, means in depth. The conclusion is that the European Union does not have effective means dealing with oligopolistic industries that are insufficient competitive.

 

 

Tables of Authorities

 

Legislation

Treaties

The Treaty on the Functioning of the European Union

The Treaty of Lisbon

Regulations

The EC Merger Control Regulation

Cases

European Union

Case 48/69 ICI v Commission [1972] ECR 619

 

Case 54/69, SA française des matières colorantes v. Commission , ECR 1972
Case 85/76 Hoffmann-La Roche v Commission [1979] ECR 461

 

Case C-95/04P British Airways v Commission [2007] ECR U-2331

Case C-393/92 Almelo v Energiebedrijf IJsselmij NV [1994] ECR I-1477

 

Case C-413/06P Bertelsmann and Sony v Impala and Commission [2008] ECR I-4951

 

Cases C-68/94 and 30/95 France v Commission [1998] ECR I-1375

Cases C-89, 104, 116, 117, 125, 129/85, Ahlström, Osakeyhtiö and others v. Commission

 

Cases C-395 & 396/96P Compagnie Maritime Belge Transports (CMBT) [2000] ECR I-1365

 

Cases T-68, 77 and 78/89 Società Italiana Vetro (Italian Flat Glass) [1992] ECR II-1403

Case T-102/96 Gencor Ltd v. Commission [1999] ECR II-753

 

Case T-342/99 Airtours v Commission [2002] ECR II-2585

 

Nestlé/Perrier [1992] OJ L356/1

Bibliography

Books

Graham, Cosmo (2010) “EU and UK Competition Law” (1st edition Pearson Education Limited, Essex, 2010)

Chamberlin, Hastings Edward (1933) “Theory of Monopolistic Competition” (Cambridge, Mass, 1933)

 

Robinson, Joan (1933) “The Economics of Imperfect Competition” (London, 1933)

 

Journals

 

Stigler, Joseph George – “A Theory of Oligopoly” The Journal of Political Economy, Volume 72, Issue 1 (Feb., 1964).

 

Websites

Website 1: http://faculty.smu.edu/sroy/indorg06lec6.pdf – info on the Structure-Conduct-Performance Paradigm

 

Website 2: http://www.ogasun.ejgv.euskadi.net/r51-14000/es/contenidos/informacion/imformes_mercados/es_infomerc/adjuntos/090519%20ESTUDIO%20DISTRIBUCION%20COMERCIAL%20ENGLISH%20VERSION.pdf – Distribution of daily consumer goods: Competition, Oligopoly and Tacit Collusion -

Spanish Competition Law Tribunal p. 46

 

 

 

[1] See the theory of “monopolistic competition” Chamberlin, Hastings Edward – “Theory of Monopolistic Competition” and Robinson, Joan – “The Economics of Imperfect Competition”

[2] Website 1

[3] Website 2 – Distribution of daily consumer goods: Competition, Oligopoly and Tacit Collusion -

Spanish Competition Law Tribunal p. 46

[4] See Stigler, Joseph George – “A Theory of Oligopoly” The Journal of Political Economy, Volume 72, Issue 1 (Feb., 1964), p. 59

[5] Graham, Cosmo, p. 372 with reference to Competition Commission, Merger Investigation Guidelines (2003) at para. 3.35

[6] ICI v Commission and SA française des matières colorantes v. Commission

[7] Ibid

[8] Ibid. para. 66 and para. 53

[9] Ibid. para. 68 and 55

[10] Ibid. para. and para. 106

[11] Ahlström, Osakeyhtiö and others v Commission, paras. 66-72

[12] Graham, Cosmo, p. 375

[13] Ibid.

[14] ICI v Commission para. 119 and SA française des matières colorantes v. Commission para. 106

[15] Graham, Cosmo, p 375

[16] Ibid., p. 123 with reference to the OFT (n, 26), para. 2.12 – the only exception is in Case C-95/04P British Airways v Commission [2007] ECR U-2331 with a market share one year on 39,7%

[17] Hoffmann-La Roche v Commission, para. 39

[18] T-68, 77 and 78/89 Società Italiana Vetro (Italian Flat Glass) v Commission

[19] Ibid., para. 358

[20] Para. 42

[21] Para. 276

[22] Graham, Cosmo, p. 382

[23] Graham, Cosmo, p. 376 with reference to Nestlé/Perrier

[24] Ibid., p. 377

[25] Gencor v Commission, para. 273

[26] Cases C-68/94 and 30/95 France v Commission, para. 168

[27] Graham, Cosmo, p. 379 with reference to Gencor v Commission and Compagnie Maritime Belge Transports (CMBT)

[28] Ibid., p. 379

[29] Ibid., Cosmo p. 379

[30] Ibid., p. 379 with reference to Airtours v Commission, para. 62

[31] para. 123

[32] Bertelsmann and Sony v Impala and Commission, paras. 113 and 133

[33] Graham, Cosmo, p. 382

 

februar 7th, 2011

Max Sørensen

Ludvig Holberg, Alf Ross, Frederik Vinding Kruse og nyere jurister såsom Peter Germer, Vagn Greve, Hans Gammeltoft-Hansen, Isi Foighel og Bo von Eyben er repræsenteret på Wikipedia. Derfor fandt jeg det interessant at samle information om Max Sørensen, som jeg igennem mit jura-studie ved Aarhus Universitet er stødt på adskillige gange, og skabe en wikipedia-artikel om denne fremragende jurist:

Max Sørensen

Max Sørensen (19. februar 1913-11. oktober 1981), var en dansk jurist (dr.jur), professor ved Aarhus Universitet og den første danske dommer ved EF-domstolen. Han var søn af grosserer Jens Martin Sørensen (død 1949) og hustru Christophine Sørensen, født Poulsen, (død 1942) og gift med cand.jur Ellen Max Sørensen (død 2005), datter af generalmajor Carl Jacobsen.

Sørensen betragtes som en af de største danske jurister, og indenfor området den internationale beskyttelse af menneskerettigheder fremstår han som en af samtidens største eksperter på baggrund af sit praktiske arbejde og på grund af de dybtgående analyser af vanskelige fortolkningsspørgsmål. Ved ændringen af Grundloven i 1953 havde Sørensen væsentlig indflydelse på udformningen af Grundlovens § 20 om suverænitetsafgivelse. Herudover har Sørensen en omfattende videnskabelig produktion inden for områderne folkeret, statsret og menneskerettigheder, hvor ”Le Sources du droit international”, ”Statsforfatningsret” og redigeringen af ”Manual of Public Internatinal Law” fremstår som juridiske klassikere.

Karriere

Max Sørensen blev student i 1931 fra Vestre Borgerdydskole, og modtog i 1934 guldmedalje for sin besvarelse af Københavns Universitets prisopgave om betingelserne for traktaters afslutning. Efter erhvervelse af den juridiske embedseksamen i 1938 fra Københavns Universitet blev han ansat som sekretær i udenrigsministeriet (1938), hvorefter han gjorde tjeneste som attaché ved det danske gesandtskab i Bern (1943) og som legationssekretær ved det danske gesandtskab i London (1944). Herefter blev han fuldmægtig i Udenrigsministeriet. I 1946 erhvervede Sørensen den juridiske doktorgrad på afhandlingen ”Les Sources du Droit International”, som blev udarbejdet sideløbende med arbejdet for Udenrigsministeriet. I 1947 blev Sørensen udnævnt som professor i retsvidenskab ved Aarhus Universitet, som 34-årig, hvor han var ansat indtil 1972. Sørensen var medlem af De forenede Nationers kommission for menneskerettigheder 1949-51 og formand for dennes underkommission til beskyttelse af mindretal 1954-56, medlem af Den europæiske menneskeretskommission fra 1955-72 og dens præsident fra 1967-72, udenrigsministeriets rådgiver i folkeret fra 1956, medlem af den internationale stående voldgiftsret i Haag fra 1956, dansk repræsentant i forskellige juridiske udvalg under FN og Europarådet, har forelæst ved Académie de Droit International (Haag 1952) og medlem (Associé) af Institut de Droit International. Sørensen var ad hoc-dommer ved den internationale domstol i Haag ved behandlingen af sokkelgrænsen i Nordsøen fra 1968-69. Efter folkeafstemningen i Danmark i 1972 vedrørende medlemskab af EF, det senere EU, tiltrådte Sørensen stillingen som den første danske dommer ved EF-Domstolen fra 1973-79. Sørensen fungerede som dommer ved Den Europæiske Menneskerettighedsdomstol fra 1980-81.

Statskundskab

Max Sørensen var idémanden bag oprettelsen af et nyt universitetsstudium; statskundskab, da han var blevet inspireret af et lignende studie oprettet i Sverige. Idéen startede i 1949, hvor han indviede Troels Fink og Theodor Geiger i idéen, og Statskundskab blev etableret som et studie ved Aarhus Universitet i 1959 med to professorater.

Max Sørensens mindefond

Legatet blev oprettet i 1991, men først efter Ellen Max Sørensens død i 2005, kunne Mindefonden begynde sin virksomhed. De midler som legatet afkaster, skal efter bestyrelsens valg tilfalde en eller flere lovende yngre jurister til brug for videnskabelige studier i ind- eller udland. Ansøgere med tilknytning til offentlig ret, fortrinsvis folkeret, og afgangseksamen fra Aarhus Universitet har fortrinsret til legatet. Området omkring studenters mulighed for at komme på studieophold i udlandet var noget der optog Sørensen stærkt, og derfor er det helt i hans ånd at Mindefondens midler anvendes til dette formål.

Æresbevisninger

Max Sørensen accepterede kun sjældent de æresbevisninger han blev tilbudt, men modtog Fortjenstmedaljen i guld. Han blev udnævnt til æresdoktor ved Kiel Universitet i 1964 og æresdoktor ved Strasbourg Universitet kort før sin død i 1981.

Anekdoter

Sørensens ansættelse som dommer ved EF-domstolen medførte et betydeligt følge af personale. Det siges at Sørensen foretrak at cykle, og at hans chauffør derfor stort set ikke lavede andet end at pudse bilen. Under ansættelsen i Århus cyklede han dagligt mellem boligen i Risskov, i den nordlige del af Århus, til Universitetet. Dette var ligeledes tilfældet mellem EF-domstolen og boligen i Luxembourg, indtil fysikken ikke længere gjorde dette muligt i de sidste år. Sørensen var ligeglad med at de øvrige EF-dommere fandt det under embedets værdighed at cykle.

Kort beskrivelse af forfatterskab

  • Betingelserne for Traktaters Afslutning efter Folkeretten og efter Danmarks og de vigtigste fremmede Landes Forfatninger, 1935
  • Les Souces du Droit International, 1946
  • Kan domstolene efterprøve forvaltningens skønsmæssige afgørelser? UfR 1950 p 273-295 (foredrag)
  • Grundtræk af International Organisation, 1952
  • Le Conseil de l’Europe, 1952
  • Responsum vedrørende de problemer, der knytter sig til Grundlovens § 18, 1953
  • Denmark and The United Nations, i fællesskab med Niels J. Haagerup, 1956
  • The Law of the Sea, 1958/59 p. 193-256
  • Principes de Droit International Public. Cours Général, 1960
  • Editor-in-chief af: Manual of Public International Law. Carnagie Endowment for International Peace, 1968
  • Statsforfatningsret, 1969
  • Folkeret. Nogle hovedproblemer i det internationale retssystem, 1971

For en fuldstændig fortegnelse over offentliggjorte værker se bibliografien udarbejdet af bibliotikar ved Aarhus Universitets juridiske bibliotek, cand.jur Karl Georg Schmidt, i Ellen Max Sørensens Bibliografi om Max Sørensen.

Litteratur

Ellen Max Sørensen, Max Sørensen, Aarhus University Press, 1988. ISBN 87-7288-194-1

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