Partner Adam Rooney comments in Risk Management in relation to the European Commission fining Qualcomm €997.4 million ($1.23 billion) for unfair competitive practices and the abuse of a dominant market position.
Adam’s comments were published in Risk Management on 1 April 2018, and can be found here.
“In January, the European Commission fined Qualcomm, the world’s largest smartphone chipmaker, €997.4 million ($1.23 billion) for setting up a deal to be Apple’s sole chip supplier for five years. The Commission, which is the European Union’s executive body responsible for proposing and enforcing legislation and implementing policy, held that Qualcomm’s attempts to secure exclusive supply terms with the computer giant was an abuse of its dominant market position…”
“…Competition lawyers say that it can be difficult to determine what constitutes an abuse of dominant position. According to Adam Rooney, partner and antitrust lawyer at London-based law firm Signature Litigation, “It is difficult to provide a checklist of what companies should and should not do to ensure that they are not abusing a dominant position because every case is measured on its own merits. Factors such as offering rebates to customers may be acceptable practice in one scenario, but an abuse in another. It depends on market share and how easy it is for other companies to enter the market.”
“The key questions that companies need to consider are whether their behaviour can be interpreted as exploitative or exclusionary. “The simplest test is to ask yourself what impact do these actions have on your competitors, and whether you would find these practices acceptable if your competitors were doing the same to you,” Rooney said. “If a company has any concerns either way, it should consult its legal teams as a first move.”
“Another possible step, he said, is to go to the regulators and inquire-before any action is taken-as to what might constitute an abuse of dominant position or other unfair practice in a given scenario. “Many competition authorities have an arrangement whereby companies can ask them ‘informally’ if they might be in breach of competition law if they pursue a particular planned course of action, such as offering key clients rebates or reduced prices for exclusivity contracts,” Rooney said.
“Check with the authorities before you go ahead with the deal to get peace of mind about whether the company might be breaking the rules,” he added. “Fines for violations of competition law are going up worldwide, so it is great if you can get some kind of assurance from the regulator or enforcement agency that what you plan to do is acceptable.”