The suppression of innovation: testing the open nature of article 102 TFEU

Abstract

Innovation is one of the key determinants of competitive capacity, as either making or suppressing innovation can be effective tools for competing. In addition, innovations have improving characteristics for the advancement of consumer welfare and the economy. Therefore, companies want their contributions to existing technologies to be considered when they are accused of abusing their dominant positions because, in practice, competition conditions are evolving from price-centric to innovation-centric, particularly in technology markets, where almost all companies allocate considerable budgets to research and development (R&D) activities. Hence, the competition starts before the product is even released onto the market in the current economic climate, which requires these companies to innovate constantly. It is therefore likely that noninnovative companies will eventually leave the market, as the existence of companies is directly proportional related to their innovativeness. However, instead of being innovative, businesses can maintain their market share, and even increase it, by suppressing innovation. This can be done in many different ways, but this study examines specific types of innovation suppression practices, namely the non-use of patents, pay-for-delay agreements, standard-setting, spare parts design protection, evergreening patents and exclusionary product design (planned obsolescence), as these issues have not received adequate attention in terms of EU competition law despite their particular importance to the functioning of competitive markets. This thesis, accordingly, debates whether the suppression of innovation is anti-competitive as a form of abusing the dominant position and therefore contrary to Article 102 of the Treaty on the Functioning of the European Union (TFEU), since it leads to less choice for consumers and more market barriers for rivals. In particular, the thesis examines the grey area of the relationship between law and innovation over selected issues by testing Article 102 TFEU, the scope of application of which has been broadened by the AstraZeneca case, which tilted practice towards an entirely fresh approach. Pursuant to this case, whenever a practice causes anti-competitive effects on the market, Article 102 TFEU would be applicable, which provides an open interpretation. This study consequently demonstrates the negative impacts of innovation suppression practices on the market, as well as their anti-competitive features, in order to show the applicability of this specific rule.