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Updates on Developments in Global Privacy & Data Security

Competition in digital markets: head of the CMA urges to separate the signal from the noise

Posted in Competition Law

Speaking at last week’s CRA Competition Conference in Brussels, Alex Chisholm, Chief Executive of the UK Competition and Markets Authority (“CMA”), suggested that competition authorities confronted with antitrust allegations against tech giants should “separate the signal from the noise and the sound from the fury”.  His remarks were made against the backdrop of the ongoing European Commission investigation into Google, and the European Parliament resolution to break up the US company.  So what is the role of competition authorities when confronted with these antitrust allegations?

Four types of problems, four different reactions

Chisholm posits that there are four types of problems, each of which warrants a different reaction from competition authorities.

  • Special pleading – Often competition authorities are confronted with complaints from competitors, and the challenge is to remain objective in their assessment: “In these cases, the role of competition authorities is first and foremost to separate the signal from the noise. To ask: is this complaint a genuine concern that impacts the public good? Or is it the desperate plea of a special private interest? If the latter, then the competition regulator needs to be robust enough to let Schumpeterian competition run its course.”  In other words, regulators should not allocate resources to cases only because new comers and new technologies make established business models obsolete.
  • Big societal questions – Disruptive innovation can throw up questions “which can be couched in competition terms but actually are much, much bigger”, like questions about the commercial use of personal data.  These questions can only be addressed once social and political processes have played their role, i.e.,we have developed a new social contract around privacy.”
  • Regulatory barriers to disruption – There are still many new business models to come in the new digital world.  Competition authorities need to make sure that those business models are not impeded by regulatory barriers from a different age, because they may no longer be necessary to enhance consumer welfare.  For instance, smart meters allow customers to adopt their behavior in response to changes in the energy market in real time, instead of having to wait for the electricity company technician to visit once in a year.  This may arguably affect the way energy markets should be regulated.

Competition authorities should try to stimulate creation of new businesses, as the OFT did in recommending open sourcing some public information, a suggestion that Transport of London followed.

  • Bread and butter competition issues – Do tech giants tend towards dominance, and if so, what is to be done?  Today there is intense competition between platforms, at least on certain parameters.  The platforms argue that this competition creates value and drives further innovation.  On the other hand, these new business models do seem to have a tendency towards natural monopoly or natural oligopoly, on both sides of the platform.  Tech giants might stir up competition on one side of the market, but fail to pass on the benefits to consumers. “What if – hypothetically – one of the digital giants were to come to exercise market power for its own account?  We can imagine a scenario where consumers come to them and there is the appearance of a competitive marketplace, with a multitude of offers for goods and their close substitutes.  But in reality, the platform is extracting all the rent from that competition through an unchallenged control over listing fees and sales commissions.”  Price parity clauses, restrictive agencies, bundling, foreclosure and predation should be considered on a case-by-case basis with a view to maintaining vigorous inter-platform competition. “…it must be remembered that an economy in the throes of creative destruction needs to be kept on a knife-edge (…) Markets need to contain enough promise of profit to spur innovation, while being competitive enough to keep strong incentives to continue to innovate and serve customers.”

Chisholm concluded that markets should reward innovation and investment, and that competition authorities must be vigilant and agile, “with the ability to sort real market distress signals from all the noise of creative destruction; and to tell the sound of actual market failure, from the fury of the out-competed.”

Please click here to read to full text of the speech.

STELAR (STELA Reauthorization) Enacted

Posted in Broadcasting & Cable, Telecommunications

The STELA Reauthorization Act (“STELAR”) has been signed into law by the President.  STELAR extends the statutory copyright license for satellite carriage of distant signals for another five years (through December 31, 2019).  It also extends through January 1, 2020 the statutory good faith negotiation requirement imposed on broadcasters and MVPDs for retransmission consent negotiations.  As discussed below, it makes several other changes to the Communications Act and to the Copyright Act.

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Advocate General’s Opinion in Case C-170/13 – Huawei Technologies Co. Ltd v ZTE Corp., ZTE Deutschland GmbH

Posted in Competition Law, FRAND, Intellectual Property

On 5 April 2013, the Landgericht Düsseldorf referred questions relating to injunctive relief over standard-essential patents (“SEPs”) to the Court of Justice (“CJEU”) in connection with a patent dispute between Huawei and ZTE relating to an alleged infringement by ZTE of a patent owned by Huawei and declared to be essential in connection with the LTE standard. As the Advocate General (“AG”) put it in his 20 November Opinion, the CJEU “is called for the first time to answer whether seeking an injunction by the holder of SEP, committed to grant licences on FRAND terms, against a candidate-licensee may amount to an abuse of dominant position and which conditions apply.”

Covington published an alert on 25 November 2014 that summarises the opinion and the potential implications.   Please click here to view the alert.

D.C. Circuit Extends Stay in Battle Over Access to Content Companies’ Confidential Information

Posted in Telecommunications

By Nicholas Dashman

This morning the U.S. Court of Appeals for the D.C. Circuit granted a stay of an FCC order that would have made hundreds of thousands of pages of highly confidential unredacted programming distribution and negotiation strategy documents available for inspection by third parties.  The disclosure of these materials would have occurred as part of the FCC’s review of the Comcast-Time Warner Cable and AT&T-DIRECTV mergers.  The stay was granted in response to a petition filed by a coalition of broadcast and cable programmers (the “Content Companies”) represented by Covington & Burling.  The stay will remain in effect pending the D.C. Circuit’s consideration of the merits of the Content Companies’ petition for review of the FCC order.  See our previous entry entitled D.C. Circuit Grants Stay in Battle Over Access to Content Companies’ Confidential Information for more information.

In issuing the order, the D.C. Circuit noted that the FCC itself already has access to the confidential documents and therefore can “continue to evaluate the proposed merger during the stay”.

The case is CBS Corporation, et al., v. Federal Communications Commission, No. 14-1242.  The full order can be found here.

D.C. Circuit Grants Stay in Battle Over Access to Content Companies’ Confidential Information

Posted in Broadcasting & Cable

The FCC was set to release today hundreds of thousands of pages of highly confidential documents — including unredacted programming distribution agreement materials and negotiating strategy documents — for inspection by third parties as part of the Commission’s review of the Comcast-Time Warner Cable and AT&T-DIRECTV mergers.  On Friday, November 14, however, a coalition of the largest broadcast and cable networks (“Content Companies”) won a temporary stay from the U.S. Court of Appeals for the D.C. Circuit, which halted the FCC’s disclosure of such documents and ordered briefing to help it decide whether the companies’ confidential pricing and negotiation information should be released by the FCC.

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FCC Issues “Enforcement Advisory” Warning Political Campaigns and Promoters Against Robocall Abuse

Posted in Telecommunications

Yesterday, the Federal Communications Commission’s Enforcement Bureau issued an advisory reminding political campaigns about the restrictions placed on the use of autodialed calls, prerecorded calls, and text messages by the Telephone Consumer Protection Act (“TCPA”) and the FCC’s corresponding rules.  The Enforcement Bureau warns that it is “closely monitoring this space” and will “rigorously enforce the important consumer protections in the TCPA and [the FCC’s] corresponding rules.”

The advisory summarizes four key restrictions on political calls:

1.  Political prerecorded calls or autodialed calls to cell phones and other mobile services are prohibited unless made with the “prior express consent” of the recipient. 

  • This restriction applies to autodialed live voice calls, prerecorded calls, and text messages.
  • Callers contending that they have the “prior express consent” to make such calls have the burden of proof to show that they obtained the requisite form of consent.

2.  Political prerecorded calls or autodialed calls to certain types of landline phones are prohibited unless made with the “prior express consent” of the recipient.  

These restrictions apply to the following types of landline phones:

  • emergency telephone lines, including any 911 line and any emergency line of a hospital, medical physician or service office, health care facility, poison control center, or fire protection or law enforcement agency;
  • telephone lines in guest or patient rooms at a hospital, nursing home, or similar establishment; or
  • any service for which the recipient is charged for the call, such as a toll-free line.

3.  Political prerecorded calls must include certain identification information about the caller.

 All prerecorded calls must include the following:

  • At the beginning of the message:  the identity of the business, individual, or other entity that is responsible for initiating the call.  If a business or other corporate entity is responsible for the call, the recording must contain that entity’s official business name (meaning the name registered with a state corporate commission or other regulatory authority).  
  • During or after the message:  the telephone number of such business, individual, or other entity.  The telephone number may not be for (1) the autodialer or prerecorded message player that placed the call, (2) a 900 number, or (3) any other number for which charges exceed local or long distance transmission charges.

4.  Automatic telephone dialing systems that deliver prerecorded calls must release the recipient’s telephone line within five seconds after the recipient has hung up.  

  • In addition, an automatic telephone dialing system may not be used in a way that simultaneously engages two or more telephone lines of a multi-line business. 

The Enforcement Bureau issued a similar advisory in September 2012, which we described here.

Upcoming Webinar: “Advertising Drugs and Health Care Products via Social Media: FDA Regulation”

Posted in Social Media

On Wednesday, May 7, Covington attorneys Stefanie Doebler and Saurabh Anand will be participating in a webinar that might be of interest to many of the readers of this blog.  The presentation, entitled “Advertising Drugs and Health Care Products via Social Media,” will provide attendees with an overview of a recent FDA draft guidance addressing social media, and will also address the following areas:

  • The regulatory scheme and FDA’s policy surrounding advertising and promotion via social media;
  • Implications of FDA’s enforcement actions relating to social media on advertising and marketing operations; and
  • Open questions relating to FDA’s regulation of advertising and promotion on social media.

The webinar will take place from 11 a.m. to 12 p.m. Eastern time on May 7.  For more information and to register, please click here.  For an overview of the draft guidance, see our client alert here.


ECJ Confirms Application of Consumer Protection Measure to Cross-Border Services

Posted in Uncategorized

By Miranda Cole and Katharina Grosse-Ophoff

In its UPC judgment this week the European Court of Justice (“ECJ”) has clarified the application of consumer protection laws to, and the jurisdiction of national regulatory authorities over, providers of electronic communications services (“ECS”) that are established in one member state who provide services in another.  The court also confirmed that ECS providers need not establish a branch in member states in which they provide service, as long as they are established in at least one member state.

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FDA Issues Untitled Letter Focused On Promotional Claims On Facebook

Posted in Social Media

On March 12, FDA’s Office of Prescription Drug Promotion (“OPDP”) posted an untitled letter on its webpage alleging that Institut Biochimique SA’s (“IBSA”) Facebook page for the drug Tirosint® misbranded the drug.  The untitled letter is particularly noteworthy for its focus on one statement on a firm’s Facebook page.

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FCC Establishes Quality Standards for Closed Captioning

Posted in Broadcasting & Cable

By Daniel Kahn and Paul Swain

The FCC has adopted new rules regarding closed captioning quality for television programming.  At its meeting yesterday, the Commission unanimously approved a Report & Order that will establish four “non-quantitative” quality standards for closed captioning, requiring captions to be (1) accurate, (2) synchronous, (3) complete, and (4) properly placed.  The Report & Order will also address a number of related issues, including captioning of live and near-live programming, responsibility for ensuring caption quality, and new requirements for broadcast stations using Electronic Newsroom Technique.

Live, Near-Live, and Pre-Recorded Programming.  The new rules will distinguish between live, near-live, and pre-recorded programming in the application of the four quality standards—pre-recorded programming, for example, will be held to a higher standard than near-live and live programming, because of the increased opportunity to correct quality issues—but contrary to reports in the trade press that had been circulating, no hard, numerical distinctions will be established.  (FCC staff noted after yesterday’s meeting, however, that there is “an understanding” that there should be “very few errors” in pre-recorded programming.)  The Commission also approved a Further Notice of Proposed Rulemaking (“FNPRM”) seeking comment on how to improve captioning of live and near-live programming, among other issues.

Responsibility for Ensuring Caption Quality.  Under the new rules, video programming distributors (“VPDs”) will be held responsible for ensuring caption quality.  VPDs will be required to “make best efforts” to receive certification that captioning complies with the quality standards, that it meets certain industry best practices, or that it is exempt from captioning requirements.  However, the FNPRM will seek comment on whether responsibility for caption quality should remain with VPDs, or whether and how it should be reapportioned among the entities involved with providing closed captioning.  Commissioner Pai stated that the rules adopted “recognize the limited ability of [VPDs] to control captioning quality” and identified consideration of responsibility as a “near-term” issue.  FCC staff also noted that in some cases, programmers “may be in a better position” to address quality issues.

New ENT Requirements.  The Report & Order will contain additional requirements for broadcast stations permitted to use Electronic Newsroom Technique (“ENT”).  Specifically, broadcasters using ENT will be required to pre-script more of their news programming, including sports, weather, and most late-breaking stories.  Additionally, the new rules will require that crawls and other visual information be used to provide visual access to certain news segments that cannot be pre-scripted.

Procedural Improvements.  The FNPRM will seek comment on measures to enhance access to and improve FCC procedures (including creation of an online dashboard that would allow consumers to monitor the status of closed captioning complaints), as well as methods of reporting captioning outages.

Declaratory Ruling.  The Commission also approved a Declaratory Ruling that will clarify and reaffirm existing rules with respect to captioning of on-demand programming and bilingual English and Spanish programming, obligations of low power television stations, and VPD contact information.

Further details about the new rules, including compliance deadlines, will be available once the decision is released.  The FCC’s news release about the decision is available here.