On 1 February 2012, the European Commission has announced that it has prohibited the proposed merger between Deutsche Börse which operates ‘Eurex’ and Liffe which operates ‘NYSE Euronext’ both described as the two largest exchanges in the world for financial derivatives to the extent that they are deemed to compete head-to-head and are each other’s closest competitors, on the basis of the EU Merger Regulation, as it would have resulted in a quasi-monopoly in the area of European financial derivatives traded globally on exchanges.

The proposed merger would have eliminated this global competition and created a quasi-monopoly in a number of asset classes, leading to significant harm to derivatives users and the European economy as a whole. With no effective competitive constraint left in the market, the benefits of price competition would be taken away from customers. There would also be less innovation in an area where a competitive market is vital for both SMEs and larger firms.

The two companies claimed that the merger would benefit customers through greater liquidity.

EU Commissioner Joaquin Almunia whilst addressing the first European Competition Forum on the 2 February, 2012, on the importance to maintain vigilance of the internal market, stated that “The latest proof of our continued vigilance is in today’s papers. Yesterday, the European Commission prohibited the proposed merger between Deutsche Börse and New York Stock Exchange – Euronext. We decided to block the deal because it would have established a near monopoly in the market for listed derivatives based on European interest rates or equity. Because derivatives are vital for Europe’s economy, we could not let this happen.

He further commented that “Today, the two companies control over 90% of this market globally and compete head-to-head. The merger would have eliminated this competition and – as a result – firms and investors would have had to turn to a quasi-monopolist with little or no incentive to fight for their business. I rarely have to propose the prohibition of a merger; since I took office, this is the second time. This means that I do not do so lightly; but I have done and will continue to do so whenever necessary.”

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Addressing the first European Competition Forum held in Brussels, on 2 February 2012, Joaquín Almunia, Vice President of the European Commission responsible for Competition Policy, whilst emphasising that together with the single currency, the internal market remains our most important asset, “one that gives us an edge over our global competitors”, he explained that “Everyone knows that competition enforcement is a delicate and complex task which demands a great deal of care, reflection and expertise ... Competition is one of the most powerful engines of growth in the EU.”

As expected, most of his speech addressed State Aid policy as well as the role of Competition in today’s European society which encourages innovation, fosters growth and consequently, enhances the standard of living for European citizens. “I don’t need to tell you how, in these dire times, the benefits of competition are extremely valuable ... releasing the creative and productive forces of our economy will bring lasting results.” adding that “however, the latest stage of the crisis is revealing worrying cracks in the structure that holds our common currency together; so, a two-pronged approach is needed: urgent measures to reinforce the EMU and solve the sovereign-debt crisis, and a plan of reforms agreed and coordinated at EU level to stimulate economic dynamism and re-launch growth.” Competition policy has therefore, a vital role to play within the current financial crisis.

On State Aid control, the EU Commissioner explained that he was keen to commence an open dialogue with the Member States and the European Parliament “to review across the board the rules that we use in State Aid Controls” admitting that many aspects thereof were amenable to change. Hence, the need to modernise EU State Aid policy, in particular its control, given that “Public funds that are used to favour certain companies in particular, harm their competitors across the EU... and we all know that aid granted to protect inefficient companies eventually erects barriers within the internal market and hinders growth.” He vowed to provide simpler rules for the applicability of State Aid control which would mean swifter decisions by the Commission.

Commissioner Joaquin Almunia further commented that he strongly favoured the idea that “State Aid control can have a positive impact on budgetary discipline and on the quality of public finance as it can help redirect spending on targeted growth-enhancing policies.” He advocated his belief that the eventual State Aid reform should support the present on-going efforts being made by Member States to reallocate their spending as budgeted or otherwise, by redirecting it towards growth-enhancing policies and activities, and consequently, making better use of taxpayers’ money, always keeping in mind as to whether and to what extent, State Aid benefits could lead to possible distortions of competition in the internal market.

“The plan to reform our State Aid policy that I have unveiled today falls in this tradition. The new regime will help Member States spend taxpayers’ money more wisely; strengthen Europe’s economy; and meet the growing needs of our people.”, he remarked, targeting this coming summer to set out in detail the challenges to be addressed and before the last quarter of this current year to have the main elements of the package for specific measures in place.

For Full Speech: http://europa.eu/rapid/pressReleasesAction.do?reference=SPEECH/12/59

In what is considered by many lawyers practising in the field of Intellectual Property Rights to be a landmark case, Advocate General Yves Bot has advised the European Court of Justice (ECJ) that computer programs which would have the same possible functions can co-exist without copyright being infringed but creators of the means by which the programs carry out those functions can obtain copyright protection for those methods. Therefore, a computer program is not deemed to infringe the copyright of another computer program just because it performs the same function or functions, but it could be deemed to infringe copyright should it copy the means by which the other program works.

The advice was tendered by Advocate General Bot on 1 December, 2011 relative to the case between SAS Institute Inc., a US giant software company and World Programming Ltd, a relatively small copyright company operating in the United Kingdom, referred by the UK High Court to the European Court of Justice (ECJ) to rule on the interpretation of copyright protection for software in the EU's Computer Programs Directive and the Information Society Directive.

In brief, SAS Institute Inc. claimed that World Programming Ltd had infringed its copyrights by developing a rival software program, using information carried in its software manuals, alleging that World Programming Ltd had written a piece of software which would allow users the execution of the programs written by SAS Institute Inc. without having to pay SAS Institute Inc. for the use of its systems.

World Programming Ltd claimed that its software program was cheaper than that developed by SAS Institute Inc.

Under the Computer Programs Directive copyright protection is given to "the expression in any form of a computer program" but does not apply to "ideas and principles which underlie any element of a computer program, including those which underlie its interfaces". The same Directive also states that "the person having a right to use a copy of a computer program shall be entitled, without the authorisation of the right holder, to observe, study or test the functioning of the program in order to determine the ideas and principles which underlie any element of the program if he does so while performing any of the acts of loading, displaying, running, transmitting or storing the program which he is entitled to do".

The Information Society Directive sets out rules on reproduction rights. Under this Directive EU Member States are obliged to "provide for the exclusive right to authorise or prohibit direct or indirect, temporary or permanent reproduction by any means and in any form, in whole or in part for authors, of their works".

In his opinion, Advocate General Bot explains that the possible workings of a computer program and the language used to create it, is not in itself copyrightable because they constitute ideas without "concrete expression". Ideas on their own are not copyrightable. "In other words, the functionality of a computer program is the service which the user expects from it. In my view, the functionalities of a computer program cannot, as such, form the object of copyright protection under the Computer Programs Directive." he emphasised, adding further: "To accept that a functionality of a computer program can be protected as such would amount to making it possible to monopolise ideas, to the detriment of technological progress and industrial development.”

Although the Advocate General’s advice is not binding under EU law, it is the norm that the European Court of Justice follows such learned opinion in its decision.