Australia: Technology - Antitrust Developments, Restrictions on Hazardous substances and REACH in Europe

Communications, Media and Technology Updater

Europe - Antitrust developments in the technology sector

The new European Commissioner for Competition, Joaquin Almunia, has had a busy first few months in office and the technology sector has seen a number of interesting developments.

Cisco had its acquisition of Tandberg - the Norwegian producer of video conferencing products - approved by the European Commission but only after offering a rather novel remedy. The Commission was concerned by the overlap between Cisco and Tandberg in high-end video conferencing equipment and, in particular, by the ownership of certain IP rights which were essential to allow video conferencing equipment from rival manufacturers to communicate with each other. The Commission thought that, post-merger, Cisco would have the ability and incentive to use its IP rights to eliminate competition in the high-end market. To alleviate this concern, Cisco committed to divest the essential IP rights to a consortium of 70 telecommunications companies to ensure that access was available to all competitors. It is the first example of a company divesting a de facto industry standard in order to obtain a merger clearance and sets an interesting precedent for future high-tech mergers.

Meanwhile, in May, nine Dynamic Random Access Memory (DRAM) chip producers, including Samsung, NEC, Hitachi and Toshiba were fined over ?331 million for participation in a price-fixing cartel. The case is the first to be decided under the European Commission's new cartel settlement procedure. The procedure aims to significantly lighten the burden of a cartel investigation for companies and the Commission. In return for admissions of liability, the parties are subject to a streamlined investigation. In this case, a decision was reached within 15 months of the case being opened (as opposed to an average 3.5 years for a normal cartel investigation).

The Commission has also been busy updating its guidance to business. At the end of April, the Commission adopted new rules relating to agreements between suppliers and distributors. The new rules are interesting in that they now envisage, in certain circumstances, suppliers being able to limit sales of their products over the internet (e.g. by setting quality standards by which online distributors must abide or by limiting territories or customer groups that online distributors can actively target). In addition, the Commission is currently consulting on revised guidance to competitors seeking to enter into cooperation agreements. The guidance contains a section on standard-setting agreements, which gives suggestions on how to avoid infringements of antitrust rules when adopting industry standards (in light of recent enforcements cases against Rambus and Qualcomm).

Europe - Restrictions on hazardous substances

EU legislators are considering whether to expand the scope of the EU Directive on the Restriction of Use of Certain Hazardous Substances in Electrical and Electronic Equipment (RoHS).

On 18 May 2010, an alliance (including Acer, Dell, Hewlett-Packard and Sony Ericsson, together with public interest organisations ChemSec, Clean Production Action and the European Environmental Bureau) wrote to EU legislators to lobby for the expansion of RoHS. In particular, the alliance called for a ban of the use of all brominated flame retardants (BFR) (some of which are already banned under RoHS) and polyvinyl chloride (PVC) in consumer electronics from 2015 onwards.

At present, the European Parliament is considering recasting RoHS and is due to consider proposed amendments in plenary in early July 2010. Suggested amendments include expanding the scope of RoHS to cover: (1) all electronic and electrical equipment (at present certain electronics are exempt from RoHS including electrical parts used in aircraft, trains and ships); and (2) further substance restrictions (including a ban on PVC (among other substances)).

Europe - REACH and the classification, labelling and packaging of chemicals

Legislation has come into force to ensure that the European chemical's regime - REACH - is consistent with EU Classification, Labelling and Packaging (CLP) Regulations.

Over a transitional period (from 1 December 2010 to June 2015) chemical substances (including "articles" e.g. electrical and electronic equipment) regulated under REACH will be required to be classified, labelled and packaged according to the CLP Regulations in addition to the Dangerous Substances Directive (which will cease to exist as at 1 June 2015).

The UK's penalty regime for non-compliance with REACH is considered to be one of the strictest in Europe. Persons failing to comply with REACH in the UK may be subject: (a) on summary conviction, to a fine not exceeding S5,000 and/or to imprisonment of up to 3 months; or (b) on conviction on indictment, to an unlimited fine and/or to imprisonment of up to 2 years. In addition, the Courts may order that steps be taken to remedy the breach (e.g. by correctly labelling and packaging products).

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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