Intellectual property rights and market definitions under scrutiny—is the commission’s new Notice innovative enough?

Abstract

This article analyses the 2024 Commission Notice on the Relevant Market Definition and recent case law to review the European Commission’s approach to identifying the relevant market when intellectual property (IP) rights and innovation are present. The analysis is undertaken with reference to the 2014 Transfer Technology Block Exemption Regulation, the new R&D Block Exemption Regulation, the 2017 US IP Licensing Guidelines, and the new 2023 US Merger Guidelines. It identifies that the Commission has not ensured alignment between its regulations and guidelines, instead playing hopscotch with legal certainty. In terms of the broader contribution, this article reflects on the development of the interface between competition law and IP rights and the central part innovation now plays in European Union competition law enforcement. It marks a positive move away from Schumpeterian theories of innovation needing monopoly power towards Arrow’s idea that competition can be a key influencer of innovation. This shift in attitude comes alongside the recent regime change in US antitrust enforcement and the Commission’s own adoption of the Digtial Markets Act and Digital Service Act to regulate the digital economy. However, for IP rights, the ex-ante approach and reliance on ‘innovation spaces’ in defining the relevant market risks overstepping the competition law’s role as second-tier regulator of IP rights.

1. INTRODUCTION

Technological progress has been hailed as the most important driver for economic growth, more so than labour and capital.¹ Furthermore, due to technology spillovers, there are likely to be more social returns from investment in R&D than private returns.² Fostering innovation and technological progress has therefore in recent years become central to many governments and competition authorities.³ Both the USA and the European Union (EU) seek to enhance innovation through two main drivers: (i) an effective intellectual property (IP) system and (ii) efficient competition rules.

However, in line with the growth of the digital market economies, we are also seeing a concentration of technology-rich industries. These are often supported by growing reliance on IP rights.⁴ This is exemplified by the Big Five Tech companies: Microsoft holds 52,140 active patents worldwide,⁵ Google holds 78,883 active patents,⁶ and Apple has 78,104 active patents.⁷ Meta holds 17,746 active patents,⁸ while Amazon has 26,859 active patents worldwide.⁹ However, it is also worth noting companies such as Huawei which worldwide holds 158,631 active patents,¹⁰ and Samsung, which has 272,537 active patents.¹¹ All seven companies are primarily holding patents in computer technology and digital communications, although Samsung also holds a significant number of patents for televisions and home appliances. These numbers are staggering, illustrating that IP rights are an integrated part of these markets; yet, from these statistics, one cannot answer whether it is the IP rights themselves that are influential in the companies generating and holding market power or whether they are coincidental, that is a natural consequence of the technological progress and innovation that these companies have undertaken in the markets.

Over the last decade or so, competition authorities have targeted IP right-driven and high-tech industries, where the competition is less on price and more about the development of the next-generation product.¹² It could be argued that the cases were focused on giving space to follow-on innovation as a means of ensuring that markets remain competitive.

In 2010, I wrote a paper reviewing the application of the relevant market definition in tying cases involving IP rights under Article 102 TFEU.¹³ The article highlighted that Article 102 TFEU case law was not awarding sufficient attention to innovation and new technologies but simply focused on a product market centred around the IP right. This was in contrast to the approach under the 2004 Technology Transfer Block Exemption Regulation (hereinafter the 2004 TTBER)¹⁴ and the US IP Licensing guidelines, both of which advocated for the identification of a product, technology, and occasionally an innovation market.¹⁵ I suggested, at the time, that the Commission consider applying the same approach as the 2004 TTBER to cases under Article 102 TFEU to allow for better consideration of innovation and alignment of the two approaches. The Commission has recently updated its Notice of the Relevant market definition,¹⁶ and it has also updated its horizontal block exemption regulations: the Research and Development Block Exemption Regulation¹⁷ (hereinafter the R&D BER) and the Specialisation Agreements Block Exemption Regulation.¹⁸ Its 2014 Technology Transfer Block Exemption Regulation (hereinafter 2014 TTBER)¹⁹ is currently under review for another update, as it expires in 2026. Finally, the Commission has recently issued a draft of the Guidelines on Article 102 Enforcement Priorities.²⁰

Furthermore, over the last decade, there have been several important competition law cases involving IP rights, such as Generics,²¹  Servier,²² and the Dow/Dupont²³ merger. In these cases, the market definition played an important role in the outcome, and not always in favour of the IP right holder or innovation, but in favour of competition and, to some degree, competitors.

It is therefore apt timing to reassess the approach applied by the European Commission to identifying the relevant market when IP rights are involved. This article analyses recent case law and the 2024 Commission Notice on the Relevant Market Definition (hereinafter the 2024 Notice) to assess whether the Commission in comparison to a decade ago is now more receptive to the importance of innovation in a competitive assessment. The analysis undertaken is with reference to the 2014 TTBER, the new R&D BER, the US IP Licensing Guidelines, and the new 2023 US Merger Guidelines.²⁴ In terms of the broader contribution, this article reflects upon the development of the interface between competition law and IP rights and how innovation now plays a much more central part in recent EU competition law rulings in comparison to previous years. It marks a move away from the Schumpeterian theories of the need for monopoly power to support innovation towards the work of Kenneth Arrow who recognized the importance of competition as a key influencer of innovation.²⁵ This shift in attitude also means that IP rights no longer have the same status as before of being significant to ensuring that innovation happens. Instead, IP rights are today seen more as tradeable commodities that generate some, but not insurmountable barriers to entry and thus less of a ‘threat’ to competition. This understanding of IP rights has slowly worked its way into case law.²⁶ Furthermore, the change also comes alongside the recent regime change in US antitrust enforcement²⁷ and the Commission’s own adoption of more and sharper ‘tools’ to regulate the digital economy such as the Digital Markets Act and the Digital Service Act,²⁸ which both have ‘ex-ante construction of the market’ focus.

This article is structured as follows: Section 2 considers the competition rules as second-tier regulators of IP rights and the curtailing that occurs of the IP rights as a result. This leads to Section 3, which dissects the 2024 Notice’s stance on IP rights in defining the relevant market through its division of ‘pre-product’ stages and compares and contrasts with other legislation and policies, such as the 2014 TTBER, the 2023 US Merger Guidelines, and the 2017 US IP Licensing Guidelines. In Section 4, the identification of the ‘pre-product’ stages is discussed further in light of the parameters already set out in IP law for granting the IP rights, the 2024 Notice’s outlook on innovation and the impact the 2024 Notice will have on IP rights and the interface between competition law and IP rights. Section 5 concludes.

2. COMPETITION LAW—THE SECOND-TIER REGULATOR

The competition rules have a long, complex relationship with IP rights,²⁹ whilst it is recognized that they, in principle, have the same goal, to achieve more innovation,³⁰ they do so from opposite positions: one takes away what the other seeks to achieve. In a few key cases over the years, both in the EU and the USA, competition authorities have demonstrated the workings of the competition rules as a second-tier regulator of IP rights, that is, where the laws of IP rights do not reach, the competition rules will step in to control the market participants to generate or restore effective competition in the markets. The competition rules do not interfere in the granting or the existence of the IP rights as such, only the exercise where this is undertaken in a manner that is seen as inhibiting the competitive process.³¹ This in itself gives rise to an askew treatment of IP rights because competition rules strive to achieve competition and will therefore give way in favour of follow-on innovation as opposed to protecting the original innovator.³²

Originally, there was a presumption amongst competition authorities that IP rights generated market power without further consideration of the benefits IP rights brought to innovation, R&D investment, and development. This perception has slowly eroded to be replaced by a more sensible understanding that the value of IP rights is a form of fuelling market power, which must be assessed empirically in each individual case.³³ That said, there still seems to be some divergence in the treatment of IP rights depending on the competition law rule; that is, Article 101 TFEU and the Block Exemption Regulations appear to have a more positive outlook on IP rights and their impact on innovation, whereas there is still some scepticism towards IP rights and the potential market power they hold under Article 102 TFEU and in merger control.s

One aspect where this divergence comes across is the weight placed on IP rights in relation to the assessment of market power and the establishment of the relevant market. As regards the latter, in line with the assumption of automatic market power, there have been numerous cases where the relevant market also has been established as the IP right itself. While this may be appropriate in some cases, in others, it has generated an artificial hypothetical market centred around the IP right without due consideration for the consequences of such narrow definition. This can create a form of double jeopardy for the IP right owner: if a narrow market definition is adopted for the product market in the first instance, then there may be no possible substitutes for the IP right-protected product, meaning that this effectively becomes the relevant market. This was seen in Magill,³⁴ where the CJEU identified three separate markets: (i) the market for television broadcasting in the UK and Ireland; (ii) the market for television listings, in which the broadcasters held copyright; and (iii) the market for weekly television guides.³⁵ The television listings were merely a by-product of the broadcasting, but the CJEU nevertheless held that, due to the circumstances, the broadcasters held a de facto monopoly in the television listings market and were therefore in a position to prevent effective competition in the downstream market of weekly television guides.³⁶ A similar approach was also applied in IMS,³⁷ also a refusal to licence case, in which the CJEU went further in its interpretation of market definition, holding that it would be:

… sufficient that a potential market or even hypothetical market can be identified. Such is the case where the products or services are indispensable in order to carry on a particular business and where there is an actual demand for them on the part of undertakings which seek to carry on the business for which they are indispensable.³⁸

The case set a new bar for market definitions under Article 102 TFEU cases, allowing for products or technologies that are not necessarily marketed separately from a main product by the IP right owner but are nevertheless seen as an indispensable inputs for the main product to be identified as a ‘relevant product market’ in itself.³⁹ Some discussion can be had as to why the CJEU chose this narrow market definition, one explanation was that there was controversy as to the strength of the IP right itself, but as the IP rights are issued nationally, the CJEU did not have jurisdiction to meddle with these and therefore instead applied the market definition under the competition rules to ‘circumvent’ the problem.⁴⁰ A similar argument can be raised in regards to Generics,⁴¹ which will be discussed below. In this case, the patent under scrutiny from a competition law perspective was also under scrutiny from an IP perspective. The cases highlight the delicate balance between competition law and IP rights and demonstrate the competition rules working as a second-tier regulator of the IP laws; in other words, when the IP laws fail, the competition rules can still curve the power exuded from the IP rights.

There is nevertheless a fine line to tread to ensure that the protection of effective competition does not impact the incentive to invest in R&D. Adopting a too narrowly defined market with the subsequent finding of market power can blur the lines between the permitted and prohibited exercise of IP rights and inadvertently push a company into having acted abusively without intent. The competition rules only work as an optimum second-tier regulator where they provide entrepreneurs opportunity to innovate through the incentive package generated by IP law. Therefore, they should only bite where the firms are acting abusively, unilaterally, bilaterally, or collaboratively and thus beyond the scope of freedom provided by IP laws.⁴²

The Section 3 will discuss the 2024 Notice in this light and assess if due consideration has been given to the delicate balance between competition law and IP rights.

3. MARKET DEFINITION IN THE 2024 NOTICE AND CASE LAW

General issues relation to IP rights in the 2024 Notice

Abusive behaviour and market power must be assessed in relation to a market. It cannot exist in a vacuum. This is where the definition of the relevant market assessment comes into play. The purpose of defining the relevant market is, in fact, purely instrumental in legal cases, and there is therefore an expectation that the market definition would be an objective assessment. It is there to set a framework for the identification of competitive constraints on the company/ies under scrutiny.⁴³ The problem is that this is ultimately a legal analysis, but one that is strongly rooted in economic science.⁴⁴ As such, competition authorities and judges have ‘to turn economic theories into solid legal criteria’⁴⁵ that can generate legal clarity and certainty. As highlighted by Judge Vesterdorf when he acted as AG in the Rhône-Poulenc⁴⁶: ‘the findings of economic experts cannot take the place of legal assessment and adjudication.’⁴⁷ Partly because, even for economist, defining the relevant market is not an accurate science and thus, if the relevant market definition were purely an economic exercise, it would risk causing legal injustice and unfairness.⁴⁸ Therefore, although, the Commission claims that the relevant market definition is merely a tool to supports its competitive assessment,⁴⁹ the definition itself holds fundamental value in establishing legitimacy for that competitive assessment.

In competition law, we tend to distinguish primarily between two different types or dimensions of markets: the product market and the geographical market.⁵⁰ However, for certain cases and industries, three further dimensions are also recognized: the temporal market,⁵¹ the technology market,⁵² and the ‘innovation space’.⁵³ Interestingly, the technology market has not been given much attention in the new 2024 Notice, despite being defined in the 2014 TTBER⁵⁴ and also playing a role in the new R&D BER, whereas the application of an innovation space was only applied in Dow/Dupont.

Depending on the facts of the case, IP rights can play either a central role in this assessment, as was seen in Magill,⁵⁵  IMS,⁵⁶  Generics,⁵⁷ and the Dow/Dupont merger,⁵⁸ or merely be one of the elements that impact the final outcome. Another influence is what competition rule the case falls under: Article 101 TFEU, 102 TFEU, or the merger regulation, as this will also dictate the level of scrutiny that is granted to the market definition.⁵⁹

To give some background to the Commission’s approach to market definition, in 1997, the Commission issued its first Notice on the Relevant Market Definition.⁶⁰ This notice has been updated (and expanded upon) by the 2024 Notice to reflect the changes to market dynamics, including the increase of the digital economy, two- or multi-sided markets, and the increasingly interconnected and globalized nature of commercial exchanges. It also permits the Commission to showcase its relevant market assessments in its own cases. Out of the 134 cases referred to in the 2024 Notice, 96 (72%) are the Commission’s own decision—of these, 86 are merger cases, the other 10 a mix between Article 101 and 102 TFEU cases. Out of the 134 cases, only 31 cases (23%) revolve around Article 101 and/or 102 TFEU. It is therefore heavily focused on merger control, which requires an ex-ante assessment of the market, whereas Article 102 TFEU cases require an ex-post assessment. This may be a smaller detail, but it will nevertheless have some impact on the legal certainty that the 2024 Notice can offer IP holders.

Although, an improvement from the 1997 Notice, where the Commission only referred to Hoffmann La Roche,⁶¹ it is disappointing that the focus is primarily on merger regulation cases and not more balanced with the use of a broader spectrum of cases, including Article 102 TFEU key cases such as United Brands,⁶²  Michelin I,⁶³  Commercial Solvents,⁶⁴  Hugin,⁶⁵  Hilti,⁶⁶  Tetra Pak,⁶⁷  Magill,⁶⁸ and Microsoft,⁶⁹ as well as important Article 101 TFEU cases like Consten and Grundig,⁷⁰  Nungesser,⁷¹ and Coditel II.⁷² While these may be seen as ‘older’ cases, they are still very much relied upon by the EU Courts.⁷³ By making the 2024 Notice so centred around its merger regulation cases, the Commission impairs the 2024 Notice’s purpose of being an umbrella guidance⁷⁴ covering the assessments of markets in all the competition rules and weakens any legal certainty the 1997 Notice had for Article 101 and 102 TFEU cases.

The misalignment is also illustrated when comparing with the 2014 TTBER and the new R&D BER, where these Regulations have a slightly different viewpoints on the assessment of the relevant market definition. Moreover, it is ironic that the Commission, in its new Draft Article 102 Guidelines,⁷⁵ specifically refers to the 2024 Notice for market definition, while the 2024 Notice has prioritized merger review over Article 101 and 102 TFEU cases, where in particular for the latter, market definition has played a central role in establishing abuse in some high-profile cases such as Microsoft⁷⁶ and Google Android.⁷⁷ There is of course an argument for referring to more merger cases in the Notice, as self-assessment of the market by companies plays an important role in merger review. As for Article 101 TFEU cases and block exemption agreements, companies are already guided by the regulations themselves and their responding guidelines,⁷⁸ and at times in different directions than those of the 2024 Notice, but this still leaves the Article 102 TFEU situations unsupported.

One could speculate whether, with the 2024 Notice, the Commission is signalling a greater change of competition enforcement to come, that is, a move away from the traditional ex-post market correction to stronger ex-ante market construction regulation, in alignment with the DMA.

Unlike the old 1997 Notice, the proposed assessment of the markets in the 2024 Notice is more holistic, as emphasized in paragraph 15, where the Commission sets out a much-expanded list of parameters of competition it will consider. In particular, the Commission’s greater attention on innovation shines through in the 2024 Notice, when it recognizes that the definition of the relevant market may be impacted by structural transitions within the market—or rather, expectations of structural transitions, such as if a new technology is coming onto the market, a shift in geographical reach of products and technology, or regulatory framework can change.⁷⁹ Although being innovation focused, the 2024 Notice hardly refers to IP rights⁸⁰; only in respect of market shares does it note how patents can be of assistance in assessing the relevant market shares of the R&D market.⁸¹ This may not necessarily be a negative—no news is, after all, good news: the silence conveys a message that the Commission does not consider IP rights to be a cause of concern for the market definition assessment. On the other hand, absence also speaks volumes, and thus the market definition assessment in the 2024 Notice may actual be a cause for concern for IP rights owners.

Case law tells us that there are key aspects of the relevant market assessment that impact IP rights owners more than other companies, such as the initial framing of the market based on an assessment of interchangeable or substitutable products. As the IP rights are granted to companies to generate a commercial breathing space for their unique innovation, there are no immediately interchangeable products to the innovation—or at least only a limited number. The assessment of interchangeability of a product thus hinges upon the level to which the IP right is intertwined with the actual product. The more innovative and successful an IP right product is, the less likely it is to find substitutes that will fulfil that consumer demand.⁸² This is echoed in the 2024 Notice, where the Commission notes that it will review:

the reasons why customers would or would not substitute one product with another, such as customer preferences relating to product characteristics, prices, functionalities, intended use, barriers to switching and switching costs… For operational and practical purposes, this assessment usually focuses on reactions to price increases, but it can also consider changes in other competitive parameters, such as in the quality of the product or its level of innovation.⁸³

In other words, the more innovative and desirable a product is to consumers, the narrower the market definition will be, because there are less likely to be close substitutes. This has also been confirmed in case law time and time again, where the reliance on a narrow market definition, especially, in Article 102 TFEU cases, has led to the IP right itself dictating the scope of the relevant product market.⁸⁴

This approach is seen again in the recent case of Servier.⁸⁵ This case was a pay-for-delay and market-sharing case in the pharmaceutical industry, where Servier used these arrangements to restrict competition to its blood pressure medicine, perindopril, from other generic companies. The case is interesting as it demonstrates that the EU Courts are not always in agreement with each other. The General Court (hereinafter the GC) dismissed the Commission’s definition of the relevant market as too narrow, criticizing the Commission for overreliance on certain aspects of the market, such as the price factor.⁸⁶ In particular, Servier’s own promotional efforts, which primarily targeted new patients⁸⁷ and therefore led the Commission to disregard patients already on perindopril’s and their willingness to change treatment from perindopril.⁸⁸

However, upon appeal, AG Kokott adopted a scathing opinion of the GC’s assessment of the relevant market, stating that the GC was too quick to dismiss the Commission’s assessment of the market.⁸⁹ The CJEU followed AG Kokott’s view and set aside the GC’s findings regarding the Commission’s application of Article 102 TFEU.⁹⁰ Principally, the CJEU noted that:

irrespective of the specific characteristics of the pharmaceutical sector which are associated with the applicable legislation, with the role of prescribing doctors and with the fact that the price of medicinal products is covered by insurance mechanisms, the economic substitutability between medicinal products must be assessed in the light of the shifts in sales between medicinal products intended for the same therapeutic indication, brought about by the changes in the relative prices of those medicinal products. A finding that there is no such substitutability reveals the existence of a distinct market, whatever the reasons for that finding, whether it be the intrinsic quality of the medicinal product or products falling within that market or the promotional activities undertaken by their manufacturers.⁹¹

The CJEU therefore found that the GC had contradicted itself in its assessment of the Article 102 TFEU issues raised in the case. Whilst Servier effectively confirms that the application of a narrow market definition still stands when it comes to IP rights, it does demonstrate a willingness by the Commission and the Courts to engage in a more detailed assessments of relevant markets, taking it away from the traditional assumption of IP rights inferring market power, as seen in cases such as Volvo,⁹², Magill,⁹³ and IMS⁹⁴ and as such a positive development although, in the case of Servier, not a win for the IP holder.

The narrow market definition is further enhanced in the 2024 Notice, as the Commission, in addition to product and geographic markets, has included some additional market assessments: that of technology markets, pipeline products, and innovation spaces. These will be discussed in detail in the section below.

Technology market, pipeline products, and innovation space

Given the importance innovation plays in many markets and as a direct consequence of numerous mergers in digital markets and high-intensity industries, the Commission has sought to generate greater flexibility in its market definition assessment of R&D intense industries.⁹⁵ In the 2024 Notice, the Commission carves up the production of a product before it is commercialized and becomes part of the relevant product market into several stages: the innovation space, the early production stage/pipeline products, and the technology market. These three stages are viewed by the Commission as separate markets in which a company’s market power can be ascertained. There are naturally some overlaps between these markets and stages, as well as question marks over the need for such a stringent approach.

Each stage will be discussed in turn in this section, commencing with the technology market.

Technology market

Although the 2024 Notice is keen on highlighting the importance of innovation, it says very little about IP rights, their impact on innovation, and the surrounding markets. The 2024 Notice does not follow the 2014 TTBER’s approach (and its guidelines⁹⁶—hereinafter the TTA Guidelines) or the R&D BER for that matter and has not explicitly included a separate technology market disjointing the approach taken between the guidelines and the 2024 Notice. It has, however, developed further the idea of an innovation market. It seems like a missed opportunity not to draw clear parallels to the 2014 TTBER and, in this way, create internal alignment and legal certainty between the Commission’s own policies and legislation. The lack of parity is also at odds with the Commission’s presentation of the 2024 Notice as ‘umbrella guidance’.⁹⁷

The idea of separating the technology from the product was initially introduced by the US IP Licensing Guidelines back in the 1990s.⁹⁸ These guidelines also identified an innovation market for research and development directed to new or improved goods or processes, including R&D efforts, technologies, and products, where existing products would compete with the innovation.⁹⁹

The Commission followed suit with a similar approach in its 2004 TTBER and again in the 2014 TTBER, but importantly, it never included an innovation market, only a technology market.¹⁰⁰ The 2014 TTBER defines technology markets as

the market for the licensed technology rights and their substitutes, that is to say all those technology rights which are regarded as interchangeable or substitutable by the licensee, by reason of the technology rights’ characteristics, the royalties payable in respect of those rights and their intended use.¹⁰¹

The R&D BER also makes use of a technology market with a similar definition,¹⁰² as do the 2017 US IP Licensing Guidelines.¹⁰³ The technology market specifically refers to the market for the IP right and its substitutes, rather than the product, process, or service itself. It is an upstream or input market from that of the product market. The inclusion of this additional dimension in the market definition under the 2014 TTBER and the R&D BER is to clearly delineate the IP right as a separate entity from that of the product. This will allow for a more accurate assessment of market power because it sees the IP right as separate from that of the product instead of the traditional assumption that the IP right exert a de facto monopoly over the product.

The Commission acknowledges in a footnote in the 2024 Notice that technology markets exist but states that these should be treated no differently than ordinary product markets.¹⁰⁴ From an IP perspective, it is a positive development that technology markets have made it into the 2024 Notice, as it means that these are no longer just a quirky part of Article 101(3) TFEU exemptions and allows for some alignment and legal certainty between the Commission’s own policies. However, it is problematic that it is hidden away in footnotes and indicates that either the Commission is not considering the definition of technology markets to be a major concern in future competition law cases or that it has not fully grasped the important role technology markets play at the interface between competition law and IP rights.

Pipeline products—potential competition

The 2024 Notice introduces the concept of pipeline products. It holds that ‘pipeline products’ can impact the relevant market definition. ‘Pipeline products’ being:

products [that] are not yet… available to customers, [but] there may be sufficient visibility on their R&D process to establish with which other product(s) the pipeline product is likely to be substitutable, if the development of the pipeline product is completed successfully and the product is brought to market. ¹⁰⁵

The inclusion of pipeline products is primarily minded in merger review cases, emphasized by the case examples given.¹⁰⁶ Yet, given the silence, there is nothing stopping the Commission from also applying this approach to Article 101 or Article 102 TFEU cases. As pipeline products are linked to future innovation, assimilations can be made to previous Article 102 TFEU case law, such as IMS, where the CJEU held that the identification of a potential or even a hypothetical market was sufficient when there was a demand for an indispensable (component of a) product or service.¹⁰⁷ The CJEU also noted that it is possible to divide the production stage of the product into two, an upstream and downstream product, where the former may be indispensable to the latter.¹⁰⁸ This interpretation was reapplied in Microsoft,¹⁰⁹ where the GC reasoned that the potential negative impact of a compulsory licence on Microsoft’s interoperability information would have on Microsoft’s incentive to innovate was outweighed by the positive impact such a licence could have on the industry as a whole.¹¹⁰ It is therefore already accepted in EU case law that a market definition assessment can scrutinize beyond the traditional or commercial understanding of a product, occasionally to the detriment of the IP holder, as the right itself may not protect them against a requirement of supply or licensing.¹¹¹ The 2024 Notice’s pipeline products are broader, though, than the ‘component’ market suggested by the CJEU in IMS and Microsoft, as these can also be products that are completely separate from that of the product in the relevant product market, potentially the next generation, but at such a stage in development that they are likely to be commercialized in the foreseeable future. They are also broader than technology markets, as they could contain the same IP right as the relevant product but may also be completely separate with their own technology. Importantly, pipeline products could be included by the Commission in the relevant product market assessment as substitutes, as was the case in Novartis/GlaxoSmithKline Oncology Business.¹¹² Yet, clarity on any connection, if any, with Articles 101 and 102 TFEU is missing and, this is not further helped by the fact that the Commission has left out an explanation as to the difference, if any, between these pipeline products and potential competition.

In fact, the Commission is rather dismissive of ‘potential competition’ when defining the relevant market in the 2024 Notice.¹¹³ It views potential competition as a secondary assessment and, in most cases, one it need not engage with, as the competitive restraint is ‘too remote and contingent’.¹¹⁴ If potential competition is to be reviewed, the 2024 Notice comments that this will be in the ‘competitive assessment’ part of the case.¹¹⁵ It has therefore not altered its general stance on potential competition in comparison to the 1997 Notice.¹¹⁶ This is in contrast to its new R&D BER, which gives a clear definition of ‘relevant’ potential competition, namely where the competitor can introduce a product into the market within a period of 3 years, it will be a potential competitor that places a relevant competitive constraint upon the company.¹¹⁷

Furthermore, although the Commission does not discuss the ‘pipeline product’/potential competition dichotomy, it has introduced a new term: ‘structural market transitions’: changes to supply and demand within the market on a general scale as a reaction to changes in the market conditions, for instance, where new types of products arrive on the market.¹¹⁸ In the footnotes, the Commission refers to the Generics case¹¹⁹ as an example. The case revolved around the expiration of a patent and ‘pay-for-delay’ agreements over the supply of paroxetine (the patent for this ingredient had expired, but the process to produce this was still patented). The CJEU reviewed the case both from an Article 101 TFEU perspective, as anti-competitive agreements, and from the perspective of an abuse of a dominant position under Article 102 TFEU. It was in this latter context that the Court had a closer look at the market definition and found that the interchangeability between the patent holder’s medicine and that of generic medicine would be limited to only those having that active ingredient, and therefore the product market would be equally limited to only products containing paroxetine.¹²⁰ The CJEU acknowledged that substitutability and interchangeability of products is a dynamic process that adapts when new products appear.¹²¹ The CJEU continued, noting that interchangeability in Generics was based on the fact that the generic producers were able to enter the market ‘within a short period on the market concerned with sufficient strength to constitute a serious counterbalance to the manufacturer of the originator medicine already on the market’.¹²² The CJEU did not clarify further what a ‘short period’ amounted to in terms of length of time, but an educated guess would be less than 3 years. In Generics, the CJEU concluded that the structure of the market was changing due to the appearance of new alternatives, and this caused a competitive constraint on the incumbent, which had to be factored into the relevant market definition itself.¹²³

Therefore whilst the market definition appears narrow to the layman in Generics, it was in fact slightly broader¹²⁴ than previous approaches to IP rights, where only the IP right holder was seen to hold a de facto monopoly.¹²⁵ The CJEU reasoned that although the IP right (the process patent) allowed the patent holder to possibly impede market entry by generic medicine companies, it was not a certain foreclosure, and therefore these generic companies that were ready to enter the market would have to be taken into account.¹²⁶ This signals that the Courts are recognizing that potential competitors in innovative markets can place pressure on incumbents and thereby weaken their dominance in these markets. Although the CJEU heavily leaned on the ‘readiness’ of the potential competitors to move into the market, the case is significant from an IP rights perspective because it moves away from previous attitudes of assuming that the IP right was the ‘product market’, and therefore a more detailed analysis of substitutes did not occur.¹²⁷ Inclusion of the case in the 2024 Notice demonstrates a willingness by the Commission to recognize that in markets involving IP rights, greater scrutiny must take place of the outer boundaries of the market because of the lack of interchangeable products.

The 2024 Notice could have done a better job of fleshing out the relationship between structural market transitions and pipeline products, as both will alter the market dynamics. It seems these may, in fact, be different approaches depending on the type of case before the Commission, but if so, transparency of the Commission’s intentions is missing. Equally, the definition of a ‘potential competitor’ in R&D BER is remarkably similar to the generic competitors accepted by the CJEU in Generics as a counterbalance to the incumbent company, but again, how the ‘potential competitor’ compares with the structural market transition scenario is also left unanswered in the 2024 Notice.

Innovation space

The new R&D BER only includes a technology market,¹²⁸ in comparison, the 2024 Notice additionally identifies ‘early stages of research’, that is an ‘innovation space’. This inclusion is to assist the Commission in considering early innovation efforts by the relevant companies.¹²⁹

The Commission defines this as

…early stages of research, which may serve multiple purposes and, in the longer term, feed into various products. Although the fact that such early innovation efforts do not immediately translate into tradeable products may render it difficult to identify a relevant product market in the strict sense, it may still be relevant to identify the boundaries within which undertakings compete in such earlier innovation efforts, in order to assess whether there could be a loss of innovation competition due to a concentration or behaviour.¹³⁰ (emphasis added).

Although there are links to other Commission guidelines, the inclusion of ‘innovation space’ stems from the Dupont/Dow case,¹³¹ which is extensively cited in the Notice. The case was based on an increased concern that technological markets, pharmaceutical, and other high-intensity R&D industries were becoming ever more concentrated, with companies growing larger and larger, and thus risking the stifling of effective competition in the markets. The Commission has therefore, over the last decade, closely scrutinized mergers for impact on innovation¹³² and has in the process gradually departed from a traditional understanding of ‘harm to innovation’,¹³³ only intervening in mergers that ‘lead to a reduction of innovation competition through the combination of firms with strong capabilities to innovate in a specific direction’,¹³⁴ to a theory focusing on innovation in the market as a whole.¹³⁵ A prime example is the market for seeds, where the companies went from being six large corporations to now four (Bayer-Monsanto, DowDuPont/Corteva, ChemChina-Syngenta, and BASF) because of mergers cleared by the Commission.¹³⁶ The Dow/Dupont merger would create a world leader in the markets for seeds and pesticides, but in addition to horizontal concerns, the Commission was also concerned about the impact the merger would have on innovation.¹³⁷ In particular, whether there would be a chilling effect on innovation, in general, in the market, given that Dupont was an active innovator and that there were potential overlaps between the parties’ lines of R&D and pipeline products.¹³⁸ In addition to identifying a relevant product market, it also considered an ‘innovation space’ to assess the impact the merger had on innovation.¹³⁹

‘Innovation spaces’ is not a novel approach. There is a perception of a throwback to the 1995 US IP Licensing Guidelines,¹⁴⁰ which also discussed ‘innovation markets’; although, in the 2017 US IP Licensing Guidelines, the terminology was changed to R&D markets and was linked to ‘commercialised products’.¹⁴¹ In the new 2023 US Merger Guidelines, a similar approach to the 2017 US IP Licensing Guidelines has been taken by the DOJ and FTC in their reference to innovation stating that they

may define relevant antitrust markets around the products that would result from that innovation if successful, even if those products do not yet exist. In some cases, the Agencies may analyze different relevant markets when considering innovation than when considering other dimensions of competition.¹⁴² (emphasis added)

This effectively permits the US enforcement agency to protect not just current innovation, but competition in future product markets. The 2023 US Merger Guidelines refers to US Illumina/Grail,¹⁴³ where the Fifth Circuit US Court of Appeals stated that an R&D market can exist for products that are not currently available but under development.¹⁴⁴ It based this statement on the notion that actual and potential competition can both be equally ‘actual’.¹⁴⁵ The Court was therefore not focused on the innovation market per se but rather on the protection of future product markets, similar to the pipeline products in the 2024 Notice.¹⁴⁶  Illumina/Grail marks a move away from the Schumpeterian approach to innovation that the US Supreme Court has applied in previous case law, such as Verizon v Trinko,¹⁴⁷ a refusal to supply case under Sherman Act section 2. In the case, the Supreme Court protected the monopolist by holding that, because Verizon had not previously marketed the services of its business that Trinko was keen to get access to, these services could not be seen as a separate product, and therefore it denied Trinko access.¹⁴⁸

One explanation for the move towards Arrow’s understanding of innovation in US Illumina/Grail is the recent shift in antitrust enforcement led by Lina Khan at the FTC, which prioritizes competitive markets over short-term consumer welfare wins.¹⁴⁹ Despite changes to the leadership in the White House over the last many decades, antitrust enforcers had kept a steady course, favouring an economic consumer welfare approach embraced by Bork in the 1970s.¹⁵⁰ However, with Khan at the helm of the FTC, the USA has seen an interesting antitrust revolution that challenges the traditional perception of antitrust enforcement and large corporations seeking to create ever more wealth and, consequently, more concentrated markets. Both the 2023 US Merger Guidance and US Illumina/Grail are evidence of the Khan regime change,¹⁵¹ and intriguingly, they bring the US and EU approaches more closely to each other, at least in respect of mergers.¹⁵²

Parallels can also be drawn with the 2014 TTA Guidelines, which suggest that occasionally it will be necessary to assess competition in innovation separately from the product market.¹⁵³ It still refers to innovation as a source of potential competition but is a toned-down version of the 2004 TTA Guidelines, which were much more explicit in referring to innovation markets.¹⁵⁴ Yet, the 2014 TTA Guidelines recognize that the licensing agreement will be dependent on there being ‘a sufficient number of competing research and development poles left for effective competition in innovation to be maintained’.¹⁵⁵

As noted by Petit:

The identification of separate upstream innovation markets implicitly recognises that the players active in those markets are not necessarily the same as those that compete with the merging parties in downstream product markets. Upstream innovation markets are often characterised by a wider pool of participants, including, inter alia, public and private research institutions and tech start-ups. Participants in upstream discovery markets are not necessarily active in the commercialisation of their innovations.¹⁵⁶

Examples of such upstream markets are, for instance, where medication can be applied to different types of diseases or illnesses, the most recent that springs to mind is Novo Nordisk’s insulin product for diabetes patients containing semaglutide, which was found to also work wonders as a weight-loss drug. However, this was unknown at the time Novo Nordisk brought the insulin medication to market.

In the new Guidelines on Horizontal Co-operation Agreements,¹⁵⁷ the Commission has included a reference to ‘early innovation efforts’.¹⁵⁸ As the 2024 Notice is short on details, it is worth looking at these Guidelines, as they note that one way of assessing the market power of the relevant companies, in relation to innovation is to count the number of patents.¹⁵⁹ It thereby implies that the more patents a company holds, the more power it has in ‘innovation’. This assessment focuses on the ‘input’, that is, the IP right-covered technology, in the innovation space, rather than the ‘output’, that is the new products that can result from the innovation, and this changes the focus from the product to the IP right, reinstating the traditional assumption that IP rights equal market power. However, it does not determine whether those IP rights have actual value in terms of ‘products sold’. As such it is not a real indicator of a company’s strength, only its ability to file patents.

As some academics have rightly argued, introducing an innovation market in the market definition adds little new to the traditional approach of assessing potential competition.¹⁶⁰ The inclusion of an innovation space is created under the assumption that an increase in the concentration of research-intensive industries will diminish innovation overall.¹⁶¹ By safeguarding competition in future markets, the Commission is attempting to incentivize further innovation,¹⁶² in line with Arrow’s argument that competition spurs innovation. But this misses key factors of R&D: it can be wasteful, duplicative, and there is no way to distinguish ‘good’ R&D from ‘bad’.¹⁶³ The main problem with identifying an innovation market is the

imprecise relationship between R&D spending, innovation and competition, difference in how technological development occurs in different industries, the difficulties in predicting the success of particular R&D projects and the importance of not penalising firms for investing heavily in R&D.¹⁶⁴

The problem as Rapp points out is that ‘the more removed the R&D projects in question are from issuing commercially viable products or processes, the less predictable and more fragile is their state.’¹⁶⁵ Therefore the finding of overlapping R&D can be flawed and dangerous, risking errors and unpredictable competition law enforcement.

That said, for mergers where the companies have overlapping research capabilities, an assessment of future innovation can make sense, partly because the merging companies have themselves highlighted the willingness to merge and partly because the merger may reduce the incentive for the merging parties to continue engaging in a particular line of R&D, because there is no longer a competitive pressure upon them.¹⁶⁶ Regardless, caution should still be had because the application of innovation markets is based on three assumptions for which there is a lack of theoretical and empirical support: (i) the assumption that a reduction in R&D expenditure is not favourable; (ii) if there are fewer companies active in R&D, then there will be less R&D and less new products; and (iii) it is possible to predict the future and in particular whether there are enough companies engaged in R&D to develop future products that will compete with the merged entity’s future products.¹⁶⁷

Unfortunately, the 2024 Notice is unclear on whether the probe into innovation spaces is about assessing the merging companies’ market power in innovation activity or whether the assessment is about the future products derived from the innovation.¹⁶⁸ Clarity on this point is crucial, as it makes or breaks the validity of identifying an innovation space. The Commission should already be aware of this, as it commissioned the report by Europe Economics which assessed this in detail back in 2003. It stated that

the key drawbacks of the innovation market approach are that it attempts to analyse the “competition in innovation” dimension of the competitive process in much the same way as product market competition is assessed, by considering activity within an (innovation) market… Nonetheless definition of markets relating directly to innovative activity may be appropriate where the output of the innovation is either actually traded (or would be traded were it not for alleged abuse of dominance via refusal to supply).¹⁶⁹ (emphasis added)

Being an ‘umbrella notice’, the 2024 Notice does not distinguish between the different types of competition rules, and the cases applied as examples are mostly merger cases. This leaves uncertainty for companies with IP rights as regards their activities in R&D, because once included in an umbrella guidance like the 2024 Notice, it is unlikely to be limited in its application to just mergers. If the assessment of competition in innovation is not linked to future outputs,¹⁷⁰ as is suggested in the 2023 US Merger Guidelines, there is a risk that such a level of assessment conflicts with the IP laws themselves and the boundaries that they set for granting an IP right. This is most significant for patents, where the rights are only granted through a strict application process demonstrating, amongst other things, that the patented invention has ‘utility’ or ‘industrial application’.¹⁷¹ This requirement ensures that the purpose of the patent system, that is, being for the benefit of the public, not just that there is a new invention, but that this innovation has the possibility of being utilized, is maintained. The Supreme Court eloquently addressed this essential requirement in Benner v Manson when it stated:

…a patent is not a hunting license. It is not a reward for the search, but compensation for its successful conclusion. A patent system must be related to the world of commerce, rather than to the realm of philosophy…¹⁷²

Similarly, it is only during the patent application process that the inventor is obligated to disclose the innovation. Prior to this, it is seen as a trade secret and will need to remain a secret to later acquire a patent. A competition law probe into the ‘innovation space’ of the company risks stifling a company’s innovation process, if there is a concern that by disclosing such information competitors would be put at an advantage.

To conclude by digging into the ‘innovation space’ of a company, there is a risk of competition law enforcement tipping the delicate balance between regulating the use of IP rights within a competition law setting and entering the sphere of the IP laws and the existence of the IP rights—especially in relation to Article 102 TFEU cases.

4. THE NEED FOR ALIGNMENT OF APPROACHES TO IP RIGHTS UNDER THE COMPETITION RULES AND THE RELEVANT MARKET ASSESSMENT

The 2024 Notice highlights the central role that innovation now plays in the EU competition law enforcement. It also marks a positive move away from the Schumpeterian theories of the need for market power to generate innovation, towards Arrow’s theory, which competition can incentivise innovation. This plays well into the notion of competition law as a second-tier regulator of IP rights, ensuring that follow-on innovation can flourish.

However, it is also important to allow space for ‘original’ innovation. This is the role of IP rights. IP law covers a wide range of subject matters and is not a uniform body of law but rather a grouping of areas of law, with their own individual characteristics.¹⁷³ Yet, they all hold in common that they produce rights. These rights are inherently negative, because they seek to stop others from doing certain things, such as copying, piracy, and even third parties’ exploitation of their own independent ideas, as is the case for patents.

There are, however, limitations on these rights: first, they are territorial, that is only functioning within the jurisdiction where the right was claimed.

Secondly, IP rights are time-limited. For instance, patents are granted for a maximum of 20 years,¹⁷⁴ and copyrights for literary, dramatic, musical, and artistic works are granted for the duration of the author’s life plus a minimum of 50 years.¹⁷⁵ The difference in duration is weighted up by the difference in protection, copyright is in that sense seen as a ‘weaker’ form of IP rights because its greatest asset is its ability to stop others from copying the protected work. In comparison, patents are considered ‘stronger’ rights because they can also stop others from independently developing and producing the same or, even sometimes depending on how the patent claim is written, similar innovation. Given this greater level of protection, there is therefore also a similar reduction in the length of time to balance out the private benefits of the patent owner with the societal benefits of having the innovation.

Thirdly, the IP right is restricted to what is included in the ‘claim’. For copyright, this is found in the expression of the artistic creation, ‘the work’, and what is fixed in a tangible medium.¹⁷⁶ The claim in patents is what generates the ‘legal monopoly’ that the patent owner will hold. However, this legal monopoly is not necessarily synonymous with monopoly power under the competition rules. As Hovenkamp argues:

… it is almost never correct to say that an IP right confers market power. A better way to state the issue is that an IP right may grant freedom from duplication and thus permit appropriation of whatever value an underlying asset already has.¹⁷⁷

In that sense, IP rights generate boundaries within which owners can exclude others, but these are not necessarily whole separate markets. The IP laws themselves work with a carrot-and-stick approach, there are rewards and benefits for innovation, new and improved products, and process development. But there are also restrictions: requirements and limitations that should ensure that the reward of an IP right is not being misused and as such not becoming ‘anticompetitive’. It is beyond the scope of this article to discuss the effectiveness of the IP system, only to highlight that any flaws will naturally have spillover effects in the sphere of competition rules, and thus will continue to trigger second-tier regulation of the IP rights, unless these flaws are corrected within the IP laws themselves.

What is evident from the above legal analysis is that the 2024 Notice is treading a fine line between offering an ideal approach for the competition rules to be a second-tier regulator of IP rights and overstepping that line and encroaching on aspects already regulated by the IP laws in its approach to R&D intensive industries and the assessment of innovation.

A table (see Tables 1 and 2) can be generated to gain overview of how the separate ‘markets’ or ‘spaces’ link to each other within the market definition assessment. It also becomes visible that the 2024 Notice has finetuned its market assessment in the ‘pre-product’ stages into several ‘markets’ (Table 1) whereas the US only operates with two pre-product stages including the technology product market (Table 2).

Whilst there was logic behind the 2014 TTBER of defining a technology market focused on the IP right for licensing agreements, and that this logic is also transferable to Article 102 TFEU refusal to supply and license cases, a discussion needs to be had to what is the purpose of carving up the pre-product development stages into separate markets? Does the identification of such markets aid in protecting innovation? Or does it simply allow the competition authorities to protect competitors and follow-on innovation and if so, there may be a risk of reducing original innovation.

Perhaps these separate ‘markets’ are therefore better understood as important factors of competitive constraints and potential competition, rather than markets as such? This argument is based on the fact that a market needs a minimum of one buyer and one seller because without this basic trade or exchange, there is effectively no market.¹⁷⁸ As Temple Lang has noted, a market for R&D only exists because a company is selling this service to other companies.¹⁷⁹ The Commission itself alludes to this when it acknowledges that a market definition in the strict sense can perhaps not be established for ‘early innovation efforts’, yet it will still seek to identify the boundaries of such ‘spaces’ and whether the merging parties’ R&D efforts translates into tradeable products.¹⁸⁰

The ‘innovation space’ is beyond the level of depth that the 2017 US IP Licensing Guidelines,¹⁸¹ the 2023 US Merger Guidelines, and Illumina/Grail are advocating, where the R&D is specifically linked to the forthcoming product in line with the Commission’s identification of pipeline products. Again, it begs the question as to why the Commission has been so keen to add it to the 2024 Notice. The only conclusion to draw is that Dow/DuPont triggered the inclusion and was thus thought of primarily for merger cases, but it is obviously unhelpful in generating legal certainty for companies in non-merger situations.

The application of ‘innovation space’ in Generics and the reference to the loss of innovation competition in paragraph 92 in the 2024 Notice indicate that the Commission will, in some cases, define ‘innovation markets’ and seek to establish market power in these. The concern is that this leads to an assessment of R&D and patent data, and thus the IP right becomes the focus of the market power, contrary to the current view that IP rights are like other barriers to entry and should be treated as such. When, in reality, patent data information relates to the inputs of innovation—not the outputs. The output, that is, the actual outcome/product of the innovation, are in fact a better measure of innovation and competition.¹⁸² An assessment of innovation output is more directly linked to products and therefore should be considered as ‘pipeline products’ and ‘potential competition’.

Although this is a point addressed to one particular paragraph of the 2024 Notice, it does set the tone for the overall critique of the guidelines. The Commission here had an excellent opportunity to align its regulations and policies with this umbrella guidance on the relevant market, yet, disappointedly, it has not. It is primarily focused on mergers and thus, in many parts, written from an ex-ante perspective of assessing the relevant market. Whilst an argument can be made that it is in merger regulation there is the most need for clarity and guidance, the sheer lack of Article 101 and 102 TFEU case law when addressing key aspects of the relevant market seems inept. Especially as the Commission’s other central guidance document, the Draft Article 102 Guidelines,¹⁸³ refers to the 2024 Notice when addressing the relevant market. Moreover, critical concepts such as ‘potential competition’ appear to have different definitions depending on whether you look at the R&D BER or the 2024 Notice, despite both being issued by the same authority: the Commission. Similarly, there are clear overlaps between the concepts of pipeline products, potential competition, and structural market transitions, which, with some sensible wording, could easily have been tidied up and clarified to ensure that the 2024 Notice achieves what it was published for: to provide guidance and transparency and, with it, greater certainty for companies. It gives the impression that the Commission either has not realized the importance of the interface between competition law and IP rights or has deliberately kept certain concepts vague to achieve as much wriggle room as possible in its assessments. Perhaps, an alternative solution for the future could be to have separate market notices for the different competition rules?

In addition, it is evident that the Commission still struggles with economic theories and how to turn these into solid legal criteria, a crucial aspect of the relevant market definition, as pointed out by Judge Vesterdorf back in 1991,¹⁸⁴ and one that the competition authorities have to get right to ensure legal certainty.

Putting aside the frustrations that this poorly drafted notice brings, there are some interesting developments impacting IP rights. These relate to the general change in competition law enforcement that we are seeing on both sides of the Atlantic. Although the Commission adopted the consumer welfare approach¹⁸⁵ that the USA had encouraged and applied for years, it never sat well within the parameters of EU Law in general. With the recent introduction of new ‘tools’—the Digital Markets Act and the Digital Service Act, as well as the draft Article 102 Guidelines, the Commission has thrown the dice and is ready to move on, perhaps to tackle markets in general from an ex-ante perspective, like the digital markets, rather than the traditional ex-post market correction enforcement? The USA has also had its own antitrust revolution led by Khan and is equally withdrawing from the consumer welfare approach, as is evident in the 2023 US Merger Guidance. The result is that the EU and USA take the same stance on R&D-intensive industries when it comes to mergers, although the USA has stopped short of identifying ‘innovation spaces’. Such an alignment will be beneficial to companies worldwide because it generates efficiencies—a merger cleared in one jurisdiction is then also likely to be cleared in the other, whereas this was not always the case in the past.

5. CONCLUSION

It is encouraging that the 2024 Notice endorses the technology markets used under the 2014 TTBER, bringing alignment between the regulation and the Commission’s methodology in enforcement. It gives some reassurances to IP right holders that this is the case, along with the recognition of structural market transitions, as exemplified in Generics. The recent Servier case also demonstrates a positive stance towards IP rights, where the relevant market was scrutinized in detail and not just defined around the IP right. It acknowledges that IP rights are natural consequences of highly innovative industries and thus are merely barriers to entry like others and therefore should be treated as such, although this is not yet fully reflected in all the Commission’s policies.¹⁸⁶

It is evident from the analysis of the 2024 Notice that the Commission is favouring the economic theory put forward by Kenneth Arrow that competition can spur innovation, which opens the door for follow-on innovators. This is opposed to the previously held idea (mostly in the USA) established by Schumpeter that innovation required monopoly power, and thus originator innovators should be protected. There are, however, misalignments and confusion of concepts in the 2024 Notice; the inclusion of ‘innovation spaces’ beyond ‘pipeline products’ is not innovative, but appears improvident and about catching mergers that will not normally fall under the Commission’s scrutiny, rather than a true reflection of what drives innovation and constructions of markets. It ignores the important interaction between IP rights and the competition rules that balance the positive relationship between space for originator innovation and follow-on innovation.

Footnotes

Acknowledgements

The author would like to thank Emeritus Professor Steven Anderman, University of Essex, Dr Christian Bergqvist, Copenhagen University, Professor Ben Ferrand, Newcastle Law School; Professor Marco Botta, European University Institute and the University of Vienna, Dr Sven Albæk, Charles River Associates and European University Institute; Ms Leonora Onaran, Southampton Law School, University of Southampton; and Professor Lisa Whitehouse Southampton Law School, University of Southampton, for their invaluable feedback and thoughtful comments on the draft of this article. The opinions expressed though remain those of the author, and the responsibility for any errors or omissions within this article rests firmly with the author.