The interaction between the intellectual property policy and competition law remains
arguable due to the conflicts of the aims of both policies.
However, as far as the common goal is concerned, they both focus on the promotion of innovation and consumer welfare.
EU competition law focuses on creating a single market in the European Union and prevent the unfair practices that hinder healthy competition in the market. On the other hand, Intellectual property rights are aimed at providing incentives for the innovators of new creations by ensuring the ownership of those innovations.
The confliction here arises due to the different approaches
the two policies are using to address the objective. European competition law is aimed at promoting and maintaining a healthy competition in the member states of the European Union (EU) by regulating anti-competition practices which are carried out by creating cartels and monopolies. According to article 3(1)g of the EC treaty,
the member states of the European Union should have a system that ensures the competition of the market is not interrupted (Monti, 2007, p, 1-19). Under article 81 of the EC treaty, any agreement that prevents the competition in EC is considered to be prohibited and may face legal fines (Article 81 of the EC Treaty (ex Article 85), 2020). Moreover, article 101 to 109 of the Treaty on the Functioning of the European Union (TFEU) ensures a system of fair competition in the internal market (Competition policy | Fact Sheets on the European Union | European Parliament, 2020). By all these means, EU competition rules are taking an effort to maintain the competition and maintain a dynamic and proper functioning internal market.
Because, competition, by its nature, is beneficial for both consumers as well as the competitors. Fair competition ensures a consistent development in the economy by encouraging and rewarding the competitors to engage in business activities and in return, consumers also get benefited
In a competitive market, consumers get the ability to select products in a wide variety of offerings in the market. And also, as a result of competitors trying to remain in the rivalry, they tend to offer high-quality products. In addition to that, consumers get the opportunity to fulfil their product needs at the best possible prices.
To remain in the rivalry, competitors use all the possible and creative ways including innovating new creations. Therefore, innovation is considered to be helpful to remain and maintain a good market competition. As an incentive to encourage innovations is where the need for intellectual property rights arises. In addition to the national legislation regarding intellectual property rights, article 17 of the charter of fundamental rights of the EU, states that intellectual property rights shall be protected (Tusek, 2010).
On the other hand, as the intellectual property rights policies are aimed at providing legal protection to the owners of the innovations both for industrial properties and copyrights, once the inventors obtain the legal ownership for the intellectual property, they are entitled to certain rights, including the right for licensing.
It is done by Intellectual property agreements and contracts (Article 81 of the EC Treaty (ex Article 85),2020).
Under an intellectual property agreement, the owner lets another party use that particular innovation for a limited period of time for royalty in return. Theses licenses can further be categorized as exclusive license, solo license and nonexclusive license agreements.
Under an exclusive license agreement, the owner agrees not to use the particular technology in addition to, agreeing not to grant a license for any other party while in a solo license agreement owner remains being entitled to use the technology and agrees only not to grant a license for other parties.
In a nonexclusive license agreement, the owner gets the right to both use and grant license to more than one party (Article 81 of the EC Treaty (ex Article 85), 2020).
While the intellectual property license agreements restrict the licensing of intellectual
property under certain circumstances, EU competition law, on the other hand, ensures fair competition in the market, therefore it does not prevent selling licensed products in member states.
This is where the confliction arises between these two policies. Paragraph 269 of the
horizontal cooperation guidelines abstracts that intellectual property rights are pro-competitive because they encourage inventors to engage in new inventions. But simultaneously, it lets the holders of the intellectual rights a considerable control over the intellectual property.
Standard essential patent holders may get the ability to behave in anti-competitive ways such as demanding high royalty fees or by refusing to license the intellectual property etc. However, the important note to consider here is that this power of the IPR holders is by no means can exceed the market power.
Article 36 of the TFEU ensures these exclusive intellectual property rights do not permit the holder of those rights power of monopoly. Article 36 of TFEU, abstracts that “quantitative restrictions between member states shall not preclude prohibitions or restrictions on import, export or goods in transit justified on grounds of public morality, public policy or public security” (EUR-Lex – 12016E036 – EN – EUR-Lex, 2016). And on the other hand, article 345 of TFEU states that the treaties by no mean will harm the rules which govern the property rights of member states. However, the conflictions can still be found between the intellectual property
right law and competition policies. Because intellectual property rights create barriers to entry into the market because those exclusive rights may give a dominant position for the property holder.
In conclusion, even though there may seem to have conflicts between the approaches both policies are trying to achieve their objectives, it should not be neglected that both rules are driving towards achieving a common goal of encouraging innovation and the consumer welfare in the member states. The important fact to pay attention here is that the requirement of maintaining a balance between the intellectual property laws and the EU competition policies wherein together will lead to a proper atmosphere for innovations which will promote a
developed economy in the EU that will result in a good quality market for the consumers.