Will the CJEU’s Decision in MEO Change FRAND Disputes Globally?

J. Gregory Sidak & Urška Petrovčič

Purchase a reprint version of the Article (Amazon) | Read the Article (PDF) | Download the Article (PDF) Download the Article (PDF)

In April 2018, the Court of Justice of the European Union (CJEU) issued a decision in MEO v. Autoridade da Concorrência that clarified the circumstances in which price discrimination would trigger liability under Article 102(c) TFEU. The decision in MEO has so far received sparse attention from lawyers, academics, and competition law commentators. Yet, it represents an important addition to the analysis of price discrimination under EU competition law. The CJEU emphasized that Article 102(c) TFEU does not categorically prohibit a dominant firm from engaging in price discrimination, but instead prohibits only price discrimination that “tends to distort competition on the downstream market.” The CJEU also said that one cannot assume that price discrimination will have that prohibited effect, but rather one must examine the circumstances of each case to determine whether the challenged practice has a prohibited effect on the downstream market and thus violates Article 102(c) TFEU.

Although MEO concerned the licensing of copyrights, for two reasons it has important implications for disputes concerning standard-essential patents (SEPs) that are subject to the owner’s commitment to offer to license them on fair, reasonable, and nondiscriminatory (FRAND) terms. First, MEO clarifies that an SEP holder’s differential offers to its licensees are discriminatory within the meaning of Article 102(c) TFEU only when that differential treatment is so substantial as to be capable of distorting competition in the market in which the licensees compete. Thus, after MEO, scrutiny of an SEP holder’s licensing practices under Article 102(c) TFEU turns on the potential effects of the differential treatment. Second, to the extent that the prohibition against discrimination in the FRAND contract is equivalent to the prohibition against discrimination contained in Article 102(c) TFEU, MEO will require an effects-based analysis in cases alleging a breach of the FRAND contract. In those cases, MEO provides guidance for scrutinizing an SEP holder’s discharge of its duties under the FRAND contract, not only in the European Union, but also in foreign jurisdictions where a court must construe and enforce the nondiscrimination requirement of an SEP holder’s FRAND contract.

Read the Article (PDF) Flip through the Article

Cite as

J. Gregory Sidak & Urška Petrovčič, Will the CJEU’s Decision in MEO Change FRAND Disputes Globally?, 3 Criterion J. on Innovation 301 (2018).

J. Gregory Sidak is the chairman of Criterion Economics. He testifies as an expert economic witness in complex business disputes throughout the Americas, Europe, Asia, and the Pacific, and he has twice served as Judge Richard Posner’s court-appointed neutral economic expert on patent damages. Sidak held the Ronald Coase Professorship of Law and Economics at Tilburg University in The Netherlands and the F.K. Weyerhaeuser Fellowship in Law and Economics at the American Enterprise Institute for Public Policy Research. He has also been a senior lecturer at the Yale School of Management and a visiting professor at Georgetown University Law Center. Sidak received A.B. and A.M. degrees in economics and a J.D. from Stanford University. He was Judge Posner’s first law clerk, served on the senior staff of the Council of Economic Advisers in the Executive Office of the President, and was deputy general counsel of the Federal Communications Commission. Sidak has published six books and roughly 200 articles or book chapters. The Supreme Court of the United States, the Supreme Court of Canada, the European Commission, state supreme courts, the U.S. Courts of Appeals, and many other courts and regulatory bodies have cited his writings approvingly.

Urška Petrovčič is a Director at Criterion Economics, where her work focuses on antitrust and intellectual property. She holds a B.A. in law from the University of Ljubljana, a Master of Law and Economics from Erasmus University Rotterdam, and an LL.M. and a Ph.D. in law from the European University Institute. Her publications on the enforcement of standard-essential patents (SEPs) include a book, Competition Law and Standard Essential Patents: A Transatlantic Perspective (Wolters Kluwer 2014), and articles in the Common Market Law Review and other journals. Since 2017, Dr. Petrovčič has acted as the European Commission’s Non-Governmental Adviser for the Unilateral Conduct Working Group of the International Competition Network. She has been a visiting scholar at the University of California, Berkeley and the University of Oslo. She was chosen as the inaugural scholar of the American Bar Association’s International Scholar-in-Residence Program, which enabled her to conduct research at the Office of Policy Planning of the U.S. Federal Trade Commission on antitrust enforcement concerning SEPs. Dr. Petrovčič previously worked in the Brussels office of the law firm Skadden, Arps, Slate, Meagher & Flom LLP and was a stagiaire at the Directorate-General for Competition of the European Commission.