More on predatory innovation – and innovative Apples…

19.12.2014

I blogged a while back about the concept of predatory innovation in a competition law context. Since then, the French Competition Authority’s Nespresso case has been decided, and I have had the opportunity to put together a more considered view on the issues, courtesy of Competition Law Insight.

The article, written jointly with Kevin Coates of 21st Century Competition blog fame (oh, and he also works for a small outfit in Brussels…), looks at whether the concept of predatory innovation could be a viable basis for an Article 102 case in the EU.

Fortuitously, this issue has been under consideration just this week a new ruling in a class action lawsuit brought against Apple in the US. The case related to certain technical changes made to the Apple iPod software in 2007. These changes, alongside certain improvements to graphics and video elements of the software, comprised a security update which made it impossible to play tracks based on reverse-engineered versions of Apple’s DRM technology.

The jury tasked with assessing this issue was directed to consider, under the applicable US law, whether the changes to Apple’s technology represented a genuine product improvement – if it did, any harm to competitors was immaterial. Reports (e.g. here or here) indicate that the jury rapidly decided the case in Apple’s favour, holding that the technology did indeed represent a genuine product improvement, and that, as a result, there was no antitrust liability. The Nespresso case and the points considered in my and Kevin Coates’ joint article suggest that the position in the EU in similar cases is likely to be somewhat more nuanced.

Sophie Lawrance

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