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Presentation final

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Presentation final

  1. 1. 1STANDARD & POORAlfio ShkretaAli Baris Sahin
  2. 2. 2Table of Content• Understanding the product • What is the product? • How does it work?• Allegations • What is Standard and Poor accused for?• Putting forth the arguments • The main arguments against the allegations• Concluding
  3. 3. 3Understand theproductInternationalSecuritiesIdentification Numbersystems (ISINs)Unique identificationmethodDebtsecurities, bonds, shares etc…..
  4. 4. 4Understand the product• National Numbering Agencies• US Securities – S&P• Crucial in interbank communicationsSource: ANNA, European Commission
  5. 5. 5Allegations• Infringement of Article 102 of the TFEU • “Any abuse of dominance by one undetaking....shall be prohibited....when affecting trade between MS” • Abuse of dominance • Excessive prices• Infringement of Article 54 of the EEA Agreement • Same as Art. 102• and as a result UNFAIRLY High Fees were setSource: European Commission
  6. 6. 6Charging indirect users? Why not?• Intellectual property rights discussion• Reason for charging indirect users: evaluating the effects of first sale doctrine• Discussion as to whether there is an infringment of Art. 102 even if as alleged we do not have intellectual propery rights
  7. 7. 7IP RIGHT (CGS)We do not claim IP rights on ISIN structure but …We DO CLAIM IP rights on CUSIP code.( local identifier)
  8. 8. 8First sale doctrine• Example of a fiction author- Can be reselled, loaned etc.- Cannot be reproduced.• What is the difference in our case? (Tait, 2009)- We do not charge indirect users if they are using read only format.- We charge them if our database is reproduced for them.
  9. 9. 9Assumption of lack of IP Rights• Would be transferring what we do not own.Thus: Licence contracts would not be valid.Thus: No legal basis of received fees.Thus: End users have a restitution claim based on unjustenrichment.Thus: They can get the fees they have paid back.What is your problem? Whose welfare is damaged?
  10. 10. 10Where is the abuse?• Abuse of dominace?• Hoffman-La Roche (1979) • Restricting competition • System of rabtes • Informations assymetry• Michelin (1983) • Discounts offered • Discriminatory nature of offers Source: European Commission
  11. 11. 11……..• So clearly the Hoffman – La Roche (1979) and Michelin (1983) fail to apply to us• The benchmark of abuse of dominance is undermined• Natural monopoly • Economies of scale • Patent • Tacit knowledge Source: European Commission
  12. 12. 12Price analyses, anywhere? Nowhere!• Excessive Pricing???????• Chiquita (1976) • Detailed business operating analyses • Conditionig retailers use of product • Welfare analysis• ECJ “The Commission has failed to analyze the cost structure of the company”Source: European Commission
  13. 13. 133 unanswered questions…………….• What is our cost?• What is our margin?• What is our unfair profit?
  14. 14. 14Cost recovery principle• Under ISO 6166 – NNA must charge enough to cover distribution costs• This condition applies when CUSIP is considered a public good• “CUSIP Global Services is unique among national numbering agencies in serving a dual role. It’s not only a numbering agency, but also a commercial – aka for-profit – data vendor. Most other numbering agencies are owned by either exchanges or securities depositories”.Source:
  15. 15. 15Cost recovery principle cont’d• Lack of harmonization in categorizing goods• European Commission treats this good differently• Article 106 of TFEU “In cases where a measure of a member state is not in conformity with stated rule, EC address decision to Member States” (Slaughter and May, 2011)• Out-reach of the ECSource: European Commission
  16. 16. 16Suing the wrong party• CUSIP intellectual property rights owned by American Bankers Association• Standard & Poor manages such a product. (ABA)• Same in the Bond Dealers of America’s letter to SEC ((Bond Dealers of America, 2010)• Therefore it follows ABA policiesSource: American Bank ers Association
  17. 17. 17Wrapping it up• Failure to apply Article 102 of TFEU• Un-sustained allegations• Inability to provide a thorough financial analysis• Immediate dismissal of claims!!!
  18. 18. 18References• ANNA: http://www.anna-web.com/index.php/home/isinsaiso6166• American Bankers Association: http://www.aba.com/Products/Pages/PS_CUSIP.aspx• Bond Dealers of America: http://www.bdamerica.org/wp- content/uploads/2010/12/CUSIP-SEC-Letter-FINAL-IAA-GFOA-BDA-111010.pdf• CUSIP Global Services: https://www.cusip.com/cusip/about-cgs-identifiers.htm• Slaughter and May: http://www.slaughterandmay.com/what-we-do/publications- and-seminars/publications/client-publications-and-articles/a/an-overview-of-the- eu-competition-rules.aspx• Standard and Poors: http://www.standardandpoors.com/products- services/main/en/us• Reese, R. A. (2003). The First Sale Doctrine in the Era of Digital Networks. The University of Texas School of Law Public Law Research Paper No. 57; Law and Econ Research Paper No. 004, 585-592.• Tait, N. (2009, November 19). Financial Times: http://www.ft.com/intl/cms/s/0/ed9d69a0-d528-11de-81ee- 00144feabdc0.html#axzz2DNcfcQd9• http://europa.eu/rapid/press-release_IP-11-1354_en.htm• http://eur- lex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:12008E102:EN:HTML