Legal Presentation Answers

Competition Law (Chapter 4)

2.        K Company is a large American manufacturer of computers.  It controls approximately 65 percent of the market in the European Community.  It refuses to share the patents and copyrights it owns for the operating system software that controls its computers, thus not allowing other manufacturers to make computers that are compatible with K’s computers (i.e., other manufacturers cannot make and sell computers that will run with the same programs as K Company’s computers).  

(a) Is this a violation of Article 81 or 82 of the European Community Treaty?

(b) Could K Company be charged with violating the American anti-trust laws?

Discuss (a) and (b).

1. Yes, as it is limiting or controlling production of the software that controls its computers thus limiting the market and technical development of the market. (Article 81) Under Article 82 as well, as it is holding a dominant position in the market, by limiting production, markets or technical development, it is considered as an abuse of their dominant position.         
   
2. They could be charged as a feature of the American anti-trust law is that the American courts are willing to apply it extraterritorially. It would apply to conduct that affect trade or commerce among the several states or with foreign states, which in this case K company is affecting the commerce in EC by holding on to the patents and copyrights for the operating system software,  

Trade Terms (Chapter 11)

10.         Seller in Bombay sells 5,000 bales of cotton to Buyer, CFR (Incoterms 2000) Liverpool. Seller transports the cotton to the Bombay harbour and to the ship specified by Buyer – the SS Clumsy. Due to an error in counting, only 4,987 bales were loaded. The ship’s bill of lading, however, shows the quantity as 5,000 bales. Seller then signs over the bill of lading to Buyer in exchange for full payment for the cotton. When the SS Clumsy arrives in Liverpool, the error is discovered, and Buyer sues the ship for the value of the missing bales. Is the ship liable? Would it make any difference if Seller admitted that it was not the ship’s fault, but that of Seller? Discuss.