1. Brooke Group Ltd. v. Brown & Williamson Tobacco Corp. 509 U.S.

209 (1993)

FACTS: Cigarette manufacturing is a concentrated industry dominated by only six firms, including the two parties
here. In 1980, petitioner (hereinafter Liggett) pioneered the economy segment of the market by developing a line
of generic cigarettes offered at a list price roughly 30% lower than that of branded cigarettes. By 1984, generic
cigarettes had captured 4% of the market, at the expense of branded cigarettes, and respondent Brown &
Williamson entered the economy segment, beating Liggett's net price. Liggett responded in kind, precipitating a
price war, which ended, according to Liggett, with Brown & Williamson selling its generics at a loss. Liggett filed
this suit, alleging that volume rebates by Brown & Williamson to wholesalers amounted to price discrimination
that had a reasonable possibility of injuring competition. Liggett claimed that the rebates were integral to a
predatory pricing scheme, in which Brown & Williamson set below-cost prices to pressure Liggett to raise list
prices on its generics, thus restraining the economy segment's growth and preserving Brown & Williamson's
supracompetitive profits on branded cigarettes.

ISSUE: Is Brown & Williamson engaged in predatory pricing that is injurious to competition?

RULING: No. To hold a competitor liable under the antitrust laws for charging low prices, two pre-requisites must
be established. First, a plaintiff seeking to establish competitive injury resulting from a rival's low prices must
prove that the prices complained of are below an appropriate measure of its rival's costs. Second, there must be
a demonstration that the competitor had a reasonable prospect, or a dangerous probability, of recouping its
investment in below-cost prices. Without recoupment, even if predatory pricing causes the target painful losses,
it produces lower aggregate prices in the market, and consumer welfare is enhanced.

In this case, the evidence cannot support a finding that Brown & Williamson's alleged scheme was likely to result
in oligopolistic price coordination and sustained supracompetitive pricing in the generic segment of the national
cigarette market. Without this, Brown & Williamson had no reasonable prospect of recouping its predatory losses,
and could not inflict the injury to competition the antitrust laws prohibit.

2. International Salt Company v. United States

FACTS: International Salt Company (International Salt) (defendant) sold industrial-grade salt. International Salt
also leased patented machinery for industrial salt processing. The machine leases forced the lessees to purchase
unpatented salt tablets for the machines from International Salt. Some of the leases contained a provision that
required International Salt to either match the lowest market price or else allow the lessee to buy the salt tablets
elsewhere. The United States (plaintiff) sued International Salt, alleging the lease agreements were unlawful tying
arrangements in violation of § 1 of the Sherman Act and § 3 of the Clayton Act. International Salt argued the
leases did not create a monopoly, because some lessees could buy in the open market if International Salt did not
match market prices. International Salt also argued the salt-buying restriction was necessary to ensure only high-
quality salt was being used in the leased machines. The district court entered summary judgment in favor of the
United States. International Salt appealed directly to the United States Supreme Court.

ISSUE: Whether or not the tying arrangements are in violation of § 1 of the Sherman Act and § 3 of the Clayton
Act or the antitrust laws.

HELD: Yes. It is violative per se of § 1 of the Sherman Act and § 3 of the Clayton Act for a corporation engaged
in interstate commerce in salt, of which it is the country's largest producer for industrial uses, and which also
owns patents on machines for utilization of salt products, to require lessees of such machines to use only the
corporation's unpatented products in them. Agreements which "tend to create a monopoly" being forbidden, it is
immaterial that the tendency is a creeping one, rather than one that proceeds at full gallop; nor does the law await
arrival at the goal before condemning the direction of the movement. A requirement in a lease of patented
machines that the lessee use only the lessor's unpatented products in them is not saved from unreasonableness and
from the tendency to monopoly by provisions entitling the lessee to the benefit of any general price reduction in
the lessor's products and permitting the lessee to purchase the products in the open market if the lessor fails to
furnish them at a price equal to the lowest price offered by any competitor.

3. PARKE V. PROBEL

FACTS: Petitioner Parke is the holder of a Netherland patent which relate to a micro-biological preparation
process and a chemical anti-biotic preparation process called chloramphenicol. While the respondent Probel,
Interpharm, and Centrafarm companies marketed or resold and delivered said chloramphenicol WITHOUT THE
PERMISSION of petitioner Parke.
Parke then brought an action for breach and sought damages and order requiring them to refrain from any further
infringement against Respondents, alleging that chloramphenicol in question had been made by one of the
processes for which it held a patent in the Netherlands and furthermore that it was not only entitled to intervene
in the matter but was even under an obligation to do so because of the license which it had granted to a certain
company for the exploitation of these patents.
In defense, the three defendants opposed this claim first for reasons concerning both the facts and the
interpretation of Netherlands patent law. It was only during the proceedings before the Gerechtshof, The Hague,
that Centrafarm alleged that Parke, Davis & Co. was acting in disregard of Articles 85 and 86 of the EEC Treaty
in using its Netherlands patent to prevent the importation into the Netherlands of chloramphenicol produced and
freely sold in Italy. It is a fact that under Italian patent law no patent can be granted for medicaments and
processes for their preparation. Centrafarm stated that it had bought chloramphenicol from Carlo Erba at Milan.
The court ruled that three companies were illegal, and ordered them to cease forthwith from infringing the two
patents concerned in any way, and threatened them with periodic penalty payments for non-compliance with the
order. But this order was made 'except as regards products from Italy'. The Gerechtshof reserved its decision as
regards the imports from Italy, and in accordance with Article 177 of the Treaty it referred a question relating to
the interpretation of the Treaty to the Court of Justice.

Issue:
1. Whether the concept of practices prohibited under Articles 85(1) and 86, possibly considered with Articles
36 and 222 of the treaty, includes the action of the holder of a patent issued in a member state when, by
virtue of that patent, since he requests the national courts to prevent all commercial dealing in the territory
of that state in a product coming from another member state which does not grant an exclusive right to
manufacture and sell that product .
RULING:
The national rules relating to the protection of industrial property have not yet been unified within the community.
In the absence of such unification, the national character of the protection of industrial property and the variations
between the different legislative systems on this subject are capable of creating obstacles both to the free
movement of the patented products and to competition within the common market.
As regards the provisions relating to the free movement of products, prohibitions and restrictions on imports may
be justified under article 36 on grounds of the protection of industrial property, but subject to the expressly stated
reservation that these " shall not, however, constitute a means of arbitrary discrimination or a disguised restriction
on trade between member states ". For similar reasons, the exercise of the rights arising under a patent granted
in accordance with the legislation of a member state does not, of itself, constitute an infringement of the rules on
competition laid down by the treaty .
Under Article 85(1) of the Treaty, "all agreements between undertakings, decisions by associations of
undertakings and concerted practices " which may affect trade between member states and which have as their
object or effect an interference with competition are prohibited as incompatible with the common market.
Although the generality of the words used is evidence of an intention to include without distinction all the
categories of agreement described in this provision, the restrictive nature of the said provision is incompatible
with any extension of the prohibition for which it provides beyond the three categories of agreement exclusively
enumerated therein.
A patent taken by itself and independently of any agreement of which it may be the subject, is unrelated to any
of these categories, but is the expression of a legal status granted by a state to products meeting certain criteria,
and thus exhibits none of the elements of contract or concerted practice required by article 85(1). Nevertheless
it is possible that the provisions of this article may apply if the use of one or more patents, in concert between
undertakings, should lead to the creation of a situation which may come within the concepts of agreements
between undertakings, decisions of associations of undertakings or concerted practices within the meaning of
article 85(1).
However, notwithstanding the allusions made during these proceedings to such a situation, which is for the
Gerechtshof, the Hague, alone to assess, the wording of the questions referred and the contents of the file do
not enable the court to take this possibility into account.
Under Article 86 of the Treaty: " any abuse by one or more undertakings of a dominant position within the
common market or in a substantial part of it shall be prohibited as incompatible with the common market in so
far as it may affect trade between member states ". For this prohibition to apply it is thus necessary that three
elements shall be present together: the existence of a dominant position, the abuse of this position and the
possibility that trade between member states may be affected thereby . Although a patent confers on its holder
a special protection at national level, it does not follow that the exercise of the rights thus conferred implies the
presence together of all three elements in question. It could only do so if the use of the patent were to degenerate
into an abuse of the abovementioned protection.
Moreover, in a comparable field, Article 36 of the treaty, after providing that Articles 30 to 34 shall not preclude
restrictions on imports or exports justified on grounds, inter alia, of the protection of industrial and commercial
property, expressly states, as has already been observed, that such restrictions " shall not, however, constitute
a means of arbitrary discrimination or a disguised restriction on trade between member states ".
Accordingly, since the existence of patent rights is at present a matter solely of national law, the use made of
them can only come within the ambit of community law where such use contributes to a dominant position, the
abuse of which may affect trade between member states .
ISSUE:
2. Whether the possible application of the abovementioned articles may be affected by the fact that the assign
of the patent - holder offers the patented product at a price higher than that of a similar unpatented product
coming from another member state.
RULING: No. Although the sale price of the protected product may be regarded as a factor to be taken into
account in determining the possible existence of an abuse, a higher price for the patented product as compared
with the unpatented product does not necessarily constitute an abuse.
CONCLUSION:
It follows from all the above: first, that the existence of the rights granted by a member state to the holder of a
patent is not affected by the prohibitions contained in articles 85(1) and 86 of the treaty; secondly, that the
exercise of such rights cannot of itself fall either under article 85(1), in the absence of any agreement, decision
or concerted practice prohibited by that provision, or under article 86, in the absence of any abuse of a dominant
position; finally, that a higher sale price for the patented product as compared with that of the unpatented product
coming from another member state does not necessarily constitute an abuse .
The costs incurred by the commission of the EEC and the governments of the kingdom of the Netherlands, the
federal republic of Germany and the French Republic, all of which have submitted their observations to the court,
are not recoverable.
As these proceedings are, in so far as the parties to the main action are concerned, in the nature of a step in the
action pending before the Gerechtshof, the Hague, the decision as to costs is a matter for that court.

4. Intel Corp. Inc. vs. European Commission

Facts: Intel is a US-based company that designs, develops, manufactures, and markets central processing units
(‘CPUs’), chipsets, and other semiconductor components, as well as platform solutions for data processing and
communications devices. The present case concerns the market for processors, in particular x86 CPUs. The
x86 architecture is a standard designed by Intel for its CPUs and can run both the Windows and Linux operating
systems. Following a formal complaint submitted on 18 October 2000 by Advanced Micro Devices Inc. (‘AMD’),
supplemented on 26 November 2003, the Commission launched a round of investigations in May 2004 and, in
July 2005, carried out inspections at several Intel premises, inter alia in Germany, Spain, Italy and the United
Kingdom, as well as at the premises of several Intel customers, in Germany, Spain, France, Italy and the United
Kingdom. On 26 July 2007, the Commission sent Intel a statement of objections concerning its conduct vis-à-vis
five major original equipment manufacturers (‘OEMs’), namely Dell Inc., Hewlett-Packard Company (HP), Acer
Inc., NEC Corp. and International Business Machines Corp. (IBM). Intel replied to that statement of objections
on 7 January 2008, and an oral hearing was held on 11 and 12 March 2008.On 17 July 2008, the Commission
sent Intel a supplementary statement of objections concerning its conduct in respect of Media-Saturn-Holding
GmbH (‘MSH’), a retailer of electronic devices and the largest desktop computer distributor in Europe, and
Lenovo Group Ltd. (‘Lenovo’), another OEM. That supplementary statement included new evidence on Intel’s
conduct vis-à-vis some of the OEMs covered by the Statement of Objections of 26 July 2007. Intel did not reply
within the prescribed period. The Commission, in the decision at issue, described two types of conduct by Intel
vis-à-vis its trading partners, namely conditional rebates and so-called ‘naked restrictions’, intended to exclude
a competitor, AMD, from the market for x86 CPUs. The first type of conduct consisted in the grant of rebates to
four OEMs, namely Dell, Lenovo, HP and NEC, which were conditioned on these OEMs purchasing all or almost
all of their x86 CPUs from Intel. The second type of conduct consisted in making payments to OEMs so that they
would delay, cancel or restrict the marketing of certain products equipped with AMD CPUs.In the light of those
considerations, the Commission found that Intel had committed a single and continuous infringement of Article
102 TFEU and Article 54 of the Agreement on the European Economic Area of 2 May 1992, from October 2002
until December 2007, and therefore imposed on it a fine of EUR 1.06 billion.

ISSUE: Whether or not there was abuse of dominance on the part of INTEL.

RULING: Yes. In this case, although the Commission emphasized in its decision that the rebates were by their
very nature capable of restricting competition such that further analysis was not necessary, it nevertheless
carried out an in-depth examination of those circumstances, including a very detailed analysis of the AEC Test
(as efficient competitor test). On this basis, the Commission concluded that an as efficient competitor would have
had to offer prices which would not have been viable and that, accordingly, the rebate scheme at issue was
capable of having foreclosure effects on such a competitor.