FBE 429 Final

Know-how

firm's intellectual property that is protected through secrecy and confidentiality agreements rather than through patents or copyright laws

fluctuation risk

possibility that currency of country in which U.S. investor has put its money will devalue against U.S. dollar

currency exchange rights

preferential access to hard currency by negotiating with gov't and offering to bring in industry to soft-currency nation

Blocking legislation

statutes containing provisions that block discovery of documents located in their countries and bar enforcement of foreign judgments there

Barter

direct exchange of goods for goods (or services)

Currency swaps

Broad assortment of financial contracts purchased to hedge against fluctuation risk

Acquis Communautaire

"Which has been agreed upon by the community"

What does EU competition law apply to?

Any business activity that affects trade between EU member states.

What are the enforcement mechanisms in the E.U.?

Administrative fines, court orders, and injunctions.

Consent agreement

Agreement which maintains the beneficial aspects of the deal while removing the anticompetitive elements - U.S. View: how mergers can go through if there are concerns

What do nations need to review to prevent inter-licensee competition?

All arrangements between firms, distributors, customers, and suppliers.

FCN treaties

Allows foreign employer to choose its own executives and experts to run its operations in other signatory countries

What is the act that unreasonably restrains competition by creating or maintaining monopoly power?

Antitrust law.

How are mergers evaluated under the U.S. Merger Control?

Based on their impact on competition, including prices and consumer choice.

What additional remedies can the EU impose compared to the U.S.?

Behavioral or structural remedies to ensure long-term competition, and substantial fines.

Corruptness

Businessperson displays reckless or conscious disregard for consequences of personal actions

Knowing requirement

Businessperson must prove he did not know about the bribe and was reasonably unattached -- not just ignored the issue

What are the enforcement mechanisms in the U.S.?

Civil and criminal penalties, fines, and court orders.

Leveraging theory

Company's ability to leverage dominance in one market to become dominant in another market

What does US Antitrust Law prohibit in relation to company behavior?

Concerted anticompetitive conduct.

What is the primary focus of US Antitrust Law?

Consumer welfare.

Evergreen contract

Continuing a contract after the stated term of the original contract -- continually renews after that

What does the E.U. emphasize in terms of Remedies and Sanctions?

Corrective actions and remedies.

European Union

Created by Maastricht Agreement, expression of member states' underlying unity. The EU was created to make a common market

Gray market

Importation of merchandise produced and sold abroad and then imported back in the U.S. for sale in competition with U.S. trademark owner

EU regulation

EU rule that has general application, binding in its entirety, directly applicable to all member states

EU directive

EU rule that is binding as to the result to be achieved on each member state to which it is addressed, but shall leave to the national authorities choice of form and methods

What does the EU consider in the E.U Merger Control?

Effects on market integration.

Bona Fide Occupational Qualification (BFOQ) defense

Employer may engage in discrimination if it is reasonably necessary to normal operation of particular business or enterprise

Materiality

Facts of a financial magnitude that a prudent investor of the company should know

What are the primary government agencies for enforcement in the U.S?

Federal Trade Commission (FTC) and Department of Justice (DOJ).

What are some remedies often included in the U.S.?

Fines, changes in business practices, and in extreme cases, breaking up companies.

For what purpose was EU Antitrust Law enacted?

For the prevention, restriction, or distortion of competition within the common market.

Clawback provision

Foreign companies can sue in their own country to recover against local U.S. assets all or part of the amount of antitrust judgment rendered in U.S.

Four freedoms

Free movement of goods, services, capital, and people

Informal consortia or parallel exchanges

Groups to trade local soft currency. Spread risk over larger group with hopes of reducing vagaries of local bureacracy

What is the E.U.'s approach towards preventing market dominance?

Higher focus on preventing market dominance, even if not being abused.

Under what circumstances can U.S. antitrust laws apply to foreign conduct?

If it has a substantial effect on U.S. commerce.

Which statement accurately reflects a key difference between U.S. and EU approaches to antitrust regulations?

In the EU, merely possessing market dominance is considered illegal, while in the U.S., a firm must abuse its monopoly power to be in violation of antitrust laws.

Which of the following statements best describes the enforcement of antitrust laws in the U.S. and the EU?

In the U.S., antitrust laws are enforced by government agencies like the FTC and DOJ, along with private enforcement, whereas in the EU, the European Commission is the main enforcer with less emphasis on private enforcement.

Which statement accurately compares the remedies imposed for antitrust violations in the U.S. and the EU?

In the U.S., remedies for antitrust violations include fines, changes in business practices, and breaking up companies, whereas in the EU, apart from similar remedies, there is also a focus on imposing behavioral or structural remedies to ensure long-term competition

Currency inconvertibility

Inability to convert currency

Bad faith

Intentional wrongful behavior, even without intent

What is the EU more likely to do regarding vertical restraints?

Intervene to prevent them.

Active investment

Investor has ownership interests in foreign business

Counterpurchase agreement

Involves sale of goods to buyer (often foreign gov't) which requires as a condition of sale that seller buy other goods produced in that country

What activity are we about to engage in?

Kahoot.

What should we use to follow the instructions?

Laptops.

How does private enforcement in the E.U compare to the US?

Less common.

Royalty

Licensing fee

Grant back

Licensor grants back ownership (of new tech/improvement made by licensee)

License

Limited permission to use the firm's trademarks/copyrights/know-how

Geographical limitation

Limiting licensee sale within a nation

What is the system of pre-merger notification in the US?

Mandatory.

Import substitution rights

Manufacturing product in soft currency country that nation had previously imported

What does EU Antitrust Law emphasize?

Market integration and ensuring a level playing field for all companies.

What are the two elements of the act?

Monopoly power in relevant market and gaining or maintaining position through improper conduct.

Who supports the enforcement in member states?

National competition authorities.

Is there a pre-approval system for mergers in the U.S.?

No, there is no pre-approval system, but the DOJ can bring litigation against a deal at any time.

How does the EU compare to the US in terms of forgiveness regarding vertical arrangements?

Not as forgiving as the US.

Permanent establishment

Office that a principal opens once it has hired a dependent agent within host country

Principal

Party in agency relationship who directs another party to perform a variety of functions

Agent

Party in agency relationship who performs a variety of functions on behalf and at direction of another party

Passive investment

Passive debt investment or passive equity investment Passive debt investment=making a loan to a foreign business Passive equity investment=purchasing equity interest in foreign business as portfolio investment

Nonobvious patent

Patent involving a inventive step

Design patent

Patent protecting ornamental features of article of manufacture

Useful patent

Patent that are capable of industrial application and are useful

Utility patent

Patents protecting a novel and useful process

Independent contractor

Perform general tasks for business, but retain substantial discretion and independence in carrying them out

Foreign compulsion defense

Permits U.S. firms flexibility when enforcement of U.S. employment laws overseas would result in violation of foreign law

What happens if the deal 'raises serious doubts as to its compatibility to market' in the E.U Merger Control?

Phase 2 begins.

Language laws

Policing of language in commercial advertising

What must all deals provide to the commission in the E.U Merger Control?

Pre-transaction notices.

What does the EU focus on in terms of vertical arrangements?

Preventing inter-licensee competition.

Profit margin preservation (unitary index adjustment)

Price or payment to foreign investor will be adjusted periodically to maintain the same profit margin

What aspects of consumer welfare does US Antitrust Law primarily focus on?

Prices, Quality, Innovation.

Just cause

Proof that breach affected principal in substantial manner such that breaking of contract is warranted

Buy-back agreement

Provider of equipment or tech used in manufacturing will receive, as its payment, portion of goods manufactured by supplier's equipment

What triggers a 5-phase approval process in the E.U Merger Control?

Providing pre-transaction notices to the commission.

What does the U.S. focus on in terms of Remedies and Sanctions?

Punitive measures and fines.

Inconvertibility insurance (non-transfer insurance)

Purchase policies to insure against hard blockages (when gov't prevents conversion)

Product liability

Responsibility to consumers for defects in product In context of product liability, agent-relationship relationship not critical b/c if you're in chain of distribution and likely to suit

Field of use limitations

Restrict applications for which licensee may employee IPR

What does the EU have a strong belief in applying, specifically for patent law?

Restrictive provisions.

Grease payments exception

Routine governmental action exception Any facilitating or expediting payment that secures performance of routine governmental action that is non-discretionary

What are the two main laws that form the basis of US Antitrust Law?

Sherman & Clayton Laws.

What is the approach to market dominance?

Strategies and actions used by a company to establish and maintain a leading position in a particular market.

How does the E.U approach extraterritoriality?

The E.U. applies its laws within its territory and to entities doing business within its jurisdiction.

What was the takeaway from the Microsoft case regarding the E.U.'s approach?

The E.U. has a more aggressive approach to preventing market dominance.

What did the Microsoft case reveal about the E.U.'s intervention in the market?

The E.U. is generally quicker to intervene to protect against market disruptions.

Who can grant exemptions from the prohibition of EU Antitrust Law?

The EU Commission.

What is a key difference between the U.S. and EU approaches to the regulation of mergers and acquisitions?

The EU has a mandatory pre-transaction notice and a multi-phase approval process for mergers, while the U.S. does not require pre-approval but can prohibit or challenge mergers before or after they occur.

Who is the main enforcer of the E.U Enforcement Mechanisms?

The European Commission.

How do the U.S. and EU approaches to vertical arrangements in antitrust law differ?

The U.S. allows vertical restraints within reason, considering their effect on competitive marketplaces, while the EU is more inclined to intervene against vertical restraints, especially in patent law.

How does the U.S approach extraterritoriality?

The U.S. applies its laws to its citizens and corporations worldwide, asserting extraterritorial jurisdiction.

What are the differences in Remedies and Sanctions between the U.S and E.U?

The U.S. focuses more on punitive measures and fines, while the E.U. emphasizes corrective actions and remedies.

What are the differences between US and EU competition law?

The US focuses on consumer welfare and economic efficiency, while the EU emphasizes preventing the abuse of dominant market positions and protecting competition.

What are the differences in the objectives between the US and EU?

The US focuses on promoting national security and economic growth, while the EU emphasizes economic integration and cooperation among member states.

What are the main differences in Merger Control between the US and EU?

The US follows a mandatory pre-merger notification system, whereas the EU operates on a voluntary basis with the possibility of post-merger intervention.

What is extraterritoriality?

The state of being exempted from the jurisdiction of local law, often applied to foreign entities or territory.

What authority do U.S. authorities have regarding M&A transactions?

They are allowed to prohibit mergers and acquisitions before harmful effects occur and can investigate completed mergers.

How can firms address concerns related to mergers with the U.S. Government?

They can work with the Federal Trade Commission or Department of Justice to resolve concerns through consent agreements.

What action might the EU take on mergers that could cause harm?

They might block or impose conditions.

How is enforcement carried out in accordance with private enforcement?

Through lawsuits by individuals or companies.

What is the objective of EU Antitrust Law?

To regulate anti-competitive actions and outlaw the abuse of dominant market power.

What did these US Sherman & Clayton Laws permit to prevent competitive advantages?

Trust busting.

How do U.S. and EU antitrust laws differ in terms of their applicability to foreign conduct?

U.S. antitrust laws apply to foreign conduct if it substantially affects U.S. commerce, while EU competition law applies to activities affecting trade between EU member states, regardless of the company's location.

Which of the following statements best distinguishes US Antitrust Law from EU Competition Law?

US Antitrust Law is based on 19th century Sherman & Clayton Laws and focuses on consumer welfare, whereas EU Competition Law emphasizes market integration and ensures a level playing field for all companies

What does the U.S. Merger Control act aim to prevent?

Unreasonable restraint of competition and creation of monopoly power.

Puffing

Vagueness and exaggeration in advertising

What are the differences in the approach styles?

Varied strategies and tactics used by different companies to achieve market dominance.

What does the US allow within reason?

Vertical restraints.

What system does the EU operate under in terms of merger notification?

Voluntary with the possibility of post-merger intervention.

Qualified majority voting

Voting such that not all member states have to agree on proposals related to internal market. Allows institutions to make decisions even if there's objection

Hard blockages

When gov't prevents conversion or transfer

When will the law intervene in dominance?

When powers are abused (e.g. predatory pricing, exclusive contracts).

Commission override

Whenever a principal makes a sale in a territory that is reserved for the agent, the principal must pay the agent a commission, whether or not agent actually participated in sale

Geographical indications

Where a product is marketed by reference to a geographic region

What does the US consider when reviewing arrangements?

Whether the arrangements enhance or inhibit workings of all competitive marketplaces.

Agency relationship

business arrangement in which agent performs functions for principal

Soft blockages

delays in processing conversion requests by local authorities

Countertrade

reciprocal arrangement between buyer and seller for sale of goods or services intended to minimize outflow of foreign exchange from buyer's country

inconvertibility risk

risk that gov't of country with soft currency will hinder foreign entrepreneur from trading the foreign currency back into U.S. dollars

Currency risk

risk that profits in foreign host country's currency will not translate into equivalent profits in investor's home country

Political risk

risk that profits will be affected by changes in the host country's political structure or instability