Refusal to License as an Abuse of Market Dominance – From Commercial Solvents to Microsoft

Posted by Social Science Research Network

Refusal to License as an Abuse of Market Dominance – From Commercial Solvents to Microsoft –  Matthias Lamping (Max Planck Institute for Innovation and Competition)

Abstract: Although intellectual property rights do not automatically confer a dominant market position, they may put the right holder in the position to behave more or less independently of its competitors, customers and ultimately of its consumers. The extent of that relative immunity from competition depends on a number of factors, from the specific characteristics of the protected subject-matter through to the structure of the relevant market. In extreme cases, an intellectual property right will constitute an “essential facility” and therefore enable the right holder to control access to, and thus competition in, the market. In such cases, a refusal to license may lead to an abuse of market dominance within the meaning of Article 102 TFEU. Depending on the circumstances of the case, the abuse may consist in a discrimination of trading partners, an unjustified foreclosure of competitors, a negligence of market needs or an expansion of market power to another related market. However, a compulsory license will not always be the appropriate remedy to stop the established abuse, its anti-competitive effects, and its recurrence. In principle, the European Commission asks the dominant company to cease and desist from the abusive conduct, but it does not grant compulsory licenses.