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Competition Law

Adams & Adams is one of the very few firms, if not the only firm, that is suitably placed to provide competition law services in respect of the interface of intellectual property and competition law, the depth of the competition law group spanning all areas of intellectual property with a specialist intellectual property attorney having specific practice in the field of competition law and intellectual property. In this regard the firm has advised clients in the pharmaceutical sector, the petrochemical sector, automotive sectors and retail sectors on issues arising from the interface between competition and intellectual property law.

The main statutory instrument in South Africa with respect to competition law is the South African Competition Act 89 of 1998 (the Competition Act). In so far as licensing and technology transfer is concerned notice must also be taken of the provisions in the South African Patents Act 57 of 1978 (Patents Act) which includes provisions aimed at preventing an unfair distortion of competition through the exercise of a patent.

The Competition Act has certain unique features which are not likely to be found in comparable jurisdictions. More particularly, the Competition Act states in its preamble that one of its aims is to provide all South Africans equal opportunity to participate fairly in the national economy, to regulate the transfer of economic ownership in keeping with public interest and, in terms of section 2 of the Competition Act, to promote employment and advance the social and economic welfare of South Africans thus to promote a greater spread of ownership, in particular to increase the ownership stakes of historically disadvantaged persons.

Insofar as the exercise of intellectual property rights is concerned, it is to be noted that whereas the preceding legislation dealing with competition law, i.e. the Maintenance and Promotion of Competition Act, 1979, did not apply to the exercise of intellectual property rights, the Competition Act now applies to all economic activity within or having an effect within the Republic of South Africa and this would include the exercise of intellectual property rights. This is further supported by section 10 of the Competition Act which allows an exemption to be granted in respect of an

agreement or practise or category of agreements or practices that relate to the exercise of intellectual property rights.

Given that it is necessary to consider the lawfulness of the exercise of an intellectual property right not only with reference to the relevant intellectual property law statute but also with reference to the Competition Act, it must be appreciated that there may be cases in which there is a jurisdictional tension between the Competition Act and the relevant intellectual property statute. This tension arises in that the Competition Tribunal is regarded as being the court of first instance in respect of competition law matters, although it may very well be competent to appear before the Court of the Commissioner of Patents in respect of the anti-competitive practises outlined in the Patents Act, for example. Such jurisdictional tension may lead to forum shopping whereby a complainant may seek to find redress in a forum in which it is likely to be easier to obtain a judgment in its favour.

From a general perspective, the interface between IP and competition law concerns the following:

• Cross Licensing, Patent Pools & Standard Setting, Patent Settlement Agreements, the Enforcement of Intellectual Property Rights and a Refusal to License;

o Territorial, Field of Use and Customer Restraints o Quantity Restrictions and Tying and Bundling o Grant Back and No Challenge Clauses
o Pricing Restrictions and Price Discrimination

o Franchising
o Technology Transfer in the Context of Mergers and Acquisitions