Israeli Start-Up Boosted by Investment of USD 109 Million; Pharmaceutical Companies Discuss Antitrust Probe with US; US Lawmakers Looking to Consider Privacy Lapses in Antitrust Cases; German Cartel Office Fines Carmakers Over Antitrust Practices; CCI’s Investigates Price Collusion by Bearings Manufacturers in India; European Union Leads the Way in Global Antitrust Influence and more.
Israeli Start-Up Boosted by Investment of USD 109 Million
Israeli start-up Vayyar, which builds radar-imaging chips and sensors and associated software that effectively detect and track images from their surrounding while maintaining the privacy of individuals being tracked, has received a Series D investment of a total of USD 109 million. Vayyar’s “4D” technology uses software to interpret images captured by the sensors to provide accurate information about what is occurring at a particular place, even behind a wall or another object, but without the “granular detail” that would actually be able to identify an individual.
The round of investment was done at a valuation over USD 600 million, and the company plans to use the funds to establish itself in markets like the US and China, and to expand the range of applications it can cater to, which currently primarily pertain to automobiles and Internet of Things. Vayyar already has a number of big customers for its technology, including automotive supplier Valeo and another major Silicon Valley company involved in the smart home business.
Vayyar’s technology is a unique and refreshing nexus of the contradicting advances, on the one hand, in the need for data, as technology, especially artificial intelligence, becomes more pervasive in nearly every aspect of our lives, and, on the other hand, in the concerns surrounding data privacy as we realise just how much of our data is currently being collected and used.
Pharmaceutical Companies Discuss Antitrust Probe with US
Several pharmaceutical companies, including Israeli-American company Teva Pharmaceuticals and Indian company Sun Pharmaceuticals, have been in talks with the US Department of Justice (DOJ), trying to seek an amicable resolution to long-running criminal antitrust investigations into these companies. The DOJ is holding talks with each company separately, and the failure of any one or more of these individual negotiations could cause the talks as a whole to collapse. The investigations pertain to allegations that pharmaceutical companies involved in the manufacture of generic drugs colluded to raise prices, over the last five years, of some widely-used drugs, essentially forming a “cartel”. Lawmakers claim that, given the widespread use of generic drugs, such increases in prices have cost federal health programs billions of dollars.
This case has left the US government in a Catch-22. While one of the aims of the Trump administration is to lower drug prices and make them as affordable as possible, a criminal conviction of major pharmaceutical companies would render them ineligible to do business in relation to federal health programs. This would drive up costs by reducing options of government drug purchasers, effectively limiting competition. Thus, a deferred prosecution agreement resulting from these talks would be an attractive option for both sides. In such an agreement, the companies would admit to certain wrongdoing, but would not be indicted and would only have to pay fines. By escaping a criminal conviction, the companies would be able to continue doing business with the government.
US Lawmakers Looking to Consider Privacy Lapses in Antitrust Cases
Companies like Facebook and Google, whose primary products and services are essentially free, have long been a quandary for antitrust authorities. In the US, to show that a practice is anti-competitive, a consequent harm to the consumer must be established. The traditional focus of the application of antitrust law has been on price as the determinant of this harm, which is a problem when products and services are free. Now, however, with increasing antitrust investigations by the US Department of Justice (DOJ), Federal Trade Commission (FTC), Congress and the states, academics and some regulators are stressing the need to look beyond price when it comes to the establishment of harm to the consumer, and consider privacy lapses as a proxy for anti-competitive behaviour.
The rationale behind this line of reasoning is that monopolists stop innovating and let the quality of products drop knowing that consumers have no alternatives to their products or services. Privacy lapses can be considered as a sign of such slip in quality, and this harm to the consumer can be considered in the context of antitrust law. Up till now, privacy and competition were treated as independent issues, and while Google and Facebook have been found liable for privacy breaches and violations, they have faced little antitrust action.
However, lawmakers like Senator Josh Hawley and U.S. Representative David Cicilline are seeking to change this, and several state attorney generals are exploring similar ideas. Conflating privacy lapses with antitrust law could open a whole new range of issues that antitrust enforcers could look into, including Facebook’s past acquisitions and Google’s conduct in the digital advertising market. However, not all legal experts agree that this idea is sound in law. Non-US jurisdictions have attempted to address the two together, with mixed results, including a German appeal in a Facebook case which is currently pending. It will be interesting to note how the US courts approach this interpretation of antitrust law.
German Cartel Office Fines Carmakers Over Antitrust Practices
German automobile companies BMW, Daimler, and Volkswagen have been fined a total of Euro 100 m (USD 111 m) by Germany’s cartel office, the Bundeskartellamt, for engaging in anti-competitive practices. The case pertained to the companies’ purchase of engineered long-steel products, which are related to steering rods, gear wheels, crankshafts, camshafts, and connecting rods. The Bundeskartellamt found that representatives of the three companies met with steel manufacturers, forging companies, and large systems suppliers twice a year between 2004 and 2013 to discuss uniform surcharges for long-steel products.
It was held that since the surcharges were not individually negotiated with the suppliers, price competition between the companies on these price components was eliminated. The companies accepted the penalties and reaffirmed their commitment toward their adherence to antitrust regulations. However, Volkswagen and Daimler stressed that this case was not one of “classic cartel infringements” and was a “borderline case under antitrust law”.
CCI’s Investigates Price Collusion by Bearings Manufacturers in India
The Competition Commission of India (CCI) has found that units of Tata Steel, National Engineering Industries, Sweden’s AB SKF, and Germany’s Schaeffler AG colluded on the pricing of bearings from 2009 to 2014 to pass higher costs of raw materials onto customers in the automobile sector. These four companies, all involved in the manufacture of bearings, which remove friction in moving parts, shared strategic information regarding future efforts to seek price increases from companies in the automobile industry, ensuring that price increases were coordinated amongst these competitors.
The investigations arm of the CCI analysed company emails, call records, and executive testimonies and concluded that these four firms, which controlled almost 75 per cent of the domestic bearings market from 2009 to 2011, agreed, through personal meetings of key persons, to seek price increases of 12 per cent, and eventually settle upon 6 per cent, in negotiations with tractor and automotive manufacturers. The CCI is empowered to fine companies up to three times the profit made by the companies in each year of wrongdoing or 10% of revenue, whichever is higher. Currently, the CCI’s investigations arm has drafted a report on its findings, and senior CCI officials are reviewing the same.
European Union Leads the Way in Global Antitrust Influence
Despite the fact that modern antitrust laws are essentially an American invention, it is the European Union that is currently leading the way in competition regulation. While the US has launched several antitrust investigations against technology giants like Facebook, Apple, Alphabet, and Amazon, it is the EU that is effectively keeping these American companies, among others, in check with its vigorous enforcement of antitrust laws. For instance, the EU, in just the last two years, has fined Google almost USD 10 billion in antitrust penalties. Moreover, the EU has become the global authority on antitrust legislation and enforcement.
A new study published in the Journal of Empirical Legal Studies analysed antitrust statutes of 125 countries and compared them to US and EU antitrust law. The study considered similarities in two aspects, firstly, linguistic similarities, looking at whether key pieces of language were lifted from US or EU legislation, and secondly, substantive similarities, examining whether provisions effectively mirrored more closely the provisions of US or EU antitrust laws. On both these counts, the study found that countries, despite vast geographical, linguistic, and cultural differences, overwhelmingly adopted antitrust legislation which mirrored that of the EU. Significantly, important regional leaders in antitrust law and major emerging markets like Brazil, China, India, Mexico, Russia, South Africa, and South Korea have implemented laws that were considerably more similar to laws in the EU than in the US.
While this declining American influence is surprising, it is a result of sustained European efforts. The EU has sought to promote and spread its regulatory model across the globe through trade agreements, by making other countries’ access to its consumer market, consisting of over 500 million consumers, contingent on the adoption of a minimum standard of antitrust law. Moreover, owing to cultural and linguistic diversity within the EU, its laws are available in languages like French, Spanish, and Portuguese, essentially offering a ready regulatory template for countries in Africa and Latin America. The US has not benefitted from the Trump administration’s increasing disposition to turn its back on global trade deals and regulatory cooperation, and the EU has shown willingness to step up and take its place.
Authored and compiled by Neharika Vhatkar (Associate, BananaIP Counsels) and Param Gupta (Legal Intern)
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