The Antitrust Review
of the Americas
2011
Published by Global Competition Review
in association with
Proskauer Rose LLP
www.globalcompetitionreview.com
us: monopolisation
Single-Firm Conduct Enforcement in the US
-- A Year in Review
Alicia J Batts and Jessica L Sonenshein*
Proskauer Rose LLP
The current antitrust enforcement administration promised early on
that single-firm conduct would get a fresh look and a higher level
of scrutiny than in recent years. Following through with verve and
vigour, the Department of Justice Antitrust Division has in the past
16 months initiated several single-firm conduct investigations that
might not have been brought previously, sending a clear message to
those with market power to tread lightly or face the enforcers.
The US Department of Justice Antitrust Division
When Assistant Attorney General Christine Varney announced
early in her tenure that the Department of Justice Antitrust Division
would reverse the Bush administration’s policy with respect to Sherman Act section 2 enforcement, antitrust lawyers rushed to counsel
their clients on the implications of the policy shift, and on how to
avoid becoming the exemplar for the government’s new enforcement efforts. The experience of the last year has shown those early
concerns to be well placed.
Section 2 prohibits, among other things, monopolisation and
attempts to monopolise, including exclusionary and predatory
practices by companies in positions of market power, and seeks to
prevent the formation of monopolies that restrain competition.1 A
monopoly exists when an enterprise exercises sufficient control over
a particular product or service to determine significantly the terms
on which others have access to it.
Section 2 serves the same fundamental purpose as other provisions of US antitrust law: promoting a market-based economy
that increases economic growth and freedom, and that promotes
competition in the marketplace. The theory behind monopolisation policy is that competition in a free market benefits consumers
by facilitating lower prices, better quality and greater choice. Free
competition enables businesses to compete on price and quality in
an open market and on a level playing field, unhampered by anticompetitive restraints.
But promoting a healthy level of competition is a balancing act.
While section 2 and the antitrust laws generally seek to thwart anticompetitive behaviour aimed at exclusive control in the marketplace,
the antitrust laws also strive to avoid chilling aggressive competition
and lawful ‘growth or development as a consequence of a superior
product [or] business acumen.’2 Section 2, thus, does not aim to
eradicate firms from exercising monopoly power gained as a result
of legitimate success. Rather, section 2 seeks to protect the process
of competition.
During the Bush administration, the Antitrust Division issued
a policy statement concerning single-firm conduct under section 2
that provided an analysis of the Division’s views and enforcement
intentions at that time.3 The Division’s views were embodied in a
report issued by the Department of Justice on section 2 enforcement
(the Report).4 Notably, the Report was not joined by the Federal
Trade Commission. It was generally understood to signal a reduction
in section 2 enforcement activity by the Antitrust Division. As her
first step in initiating a new wave of antitrust enforcement, Varney
withdrew the guidelines for bringing section 2 cases that the Divi34
sion had promulgated at the end of the Bush administration. Varney rejected the Report’s concerns that antitrust enforcers and the
courts would be unable to distinguish between anti-competitive acts
and lawful conduct, and that their failure would lead to over-deterrence.5 Varney disapproved of the Report’s conclusion that the anticompetitive effects of unilateral conduct should be regulated only
where the anti-competitive harm substantially outweighs procompetitive benefits.6 Instead, Varney emphasised the importance
of vigorous antitrust enforcement, particularly in the government’s
response to economic crises.7
In its spring 2010 Update, the Antitrust Division repeated its
commitment to section 2 enforcement and to the standards laid out
in leading section 2 cases, including Lorain Journal v United States,
Aspen Skiing Co v Aspen Highlands Skiing Corp, and United States
v Microsoft.8 In Lorain Journal and Aspen Skiing, the Supreme
Court held conduct to violate section 2 of the Sherman Act where a
firm with significant market share takes affirmative steps to exclude
smaller competitors from the market for its products.9 In the Microsoft case, the DC Circuit similarly held that affirmative steps to
exclude rivals, when taken by a firm with a significant market position, can lead to a Sherman Act section 2 violation.10 The Division’s
recent Update also echoed Varney’s comments about removing barriers to government challenges to illegal monopolisation, and the need
for strong enforcement to prohibit predatory or unjustified acts by
companies with market power.11
While the Division has not yet brought any monopolisation
cases, it initiated several monopolisation investigations in 2009,
and it has already brought a number of investigations in 2010.12
In January 2010, the Antitrust Division reached a proposed settlement with the Daily Gazette Company and MediaNews Group Inc
(now known as Affiliated Media Inc), that requires the companies
to restructure their newspaper joint operating arrangement and take
other steps to remedy the anti-competitive effects of their 2004 transaction, which consolidated ownership and control of the only two
local daily newspapers in Charleston, West Virginia under the Daily
Gazette Company.13 The Division’s complaint stated that the Gazette
Company had monopolised the Charleston local daily newspaper
market and that it possessed substantial monopoly power in the
sale of local daily newspapers in the Charleston area in violation of
section 2 of the Sherman Act.14
The Antitrust Division also has initiated a number of high-profile
investigations into the potentially monopolistic behaviour of large
internet and technology companies. The agency is reportedly in the
preliminary stages of an investigation into Apple’s alleged refusal to
promote music that is part of Amazon.com’s ‘MP3 Daily Deal.’15
DoJ investigators have reportedly interviewed executives from the
four major music labels and several digital music retailers about
Apple’s business practices with respect to iTunes.16 Regulators are
also expected to launch a separate investigation of Apple following
a complaint from Adobe, the software company whose video-onthe-internet platform Flash has never been supported on iPhones
and other mobile devices from Apple.17 Last year, additionally, the
The Antitrust Review of the Americas 2011
us: monopolisation
technology giant IBM was the subject of a preliminary investigation
by the DoJ into whether it had abused its monopoly position in
the market for mainframe computers.18 In October 2009, antitrust
regulators sought information about IBM’s business practices from
companies that compete with IBM in the market for large computer
hardware and software.19 The investigation followed a complaint
by a computer trade organisation, backed by IBM competitors like
Microsoft and Oracle, which alleged that IBM stymied competition
in the mainframe market and blocked efforts by competitors and
potential partners to license IBM’s software.20
The Antitrust Division has also restated its goal of prioritising
competition advocacy efforts by enhancing cooperation with antitrust enforcement partners, and it has taken steps in the past year
to create stronger relationships with other agencies to form a more
unified front against anti-competitive conduct.21 On 25 June 2010,
the Antitrust Division and the US Department of Agriculture held a
joint public workshop to examine competition and trends in the dairy
industry, including market consolidation and market transparency.22
This unprecedented joint effort by the DoJ and the USDA may signal
a heightened regulatory interest in ensuring efficiency and competition in the dairy industry through antitrust enforcement. Indeed, the
DoJ has recently launched several widely publicised investigations
into anti-competitive conduct in the agriculture sector. In March, the
DoJ and seven state attorneys general reportedly began investigating
whether Monsanto Co, the world’s largest seed company, is using
gene licences to keep competing technologies off the market.23 At issue
is how the company sells and licenses its patented trait that allows
farmers to kill weeds with Roundup herbicide while leaving crops
unharmed.24 The company’s Roundup Ready gene was in 93 per cent
of US soya beans last year.25 In addition, it was reported in May 2010
that the Department of Justice began conducting an investigation into
whether the handful of large meatpackers that slaughter most of the
nation’s cattle are illegally driving down cattle prices.26 Varney promised that the government was undertaking an ‘unrelenting quest to find
the correct balance’ within the agricultural industry.27
The Federal Trade Commission
Over the past year the Federal Trade Commission likewise has
taken steps to enhance antitrust enforcement efforts. The Commission announced its plan to employ greater use of section 5 of the
Federal Trade Commission Act as an enforcement tool to combat
anti-competitive conduct. In a March 2010 speech, Commissioner
Rosch stated that ‘section 2 is not the only weapon in the Federal
Trade Commission’s arsenal ... the Commission can also attack anticompetitive conduct under section 5 of the Federal Trade Commission Act.’28 Section 5 prohibits ‘unfair methods of competition’ and
conduct that constitutes ‘unfair or deceptive acts or practices.’29 The
FTC’s enhanced reliance on section 5 unsaddles it from the more
stringent standards of proof that have emerged in the Supreme
Court’s section 2 jurisprudence.
Historically the Commission has relied on section 5 in a relatively
small number of antitrust litigations; the overwhelming majority of
the FTC’s antitrust litigations have involved a traditional Sherman
Act or Clayton Act analysis. Section 5, nonetheless, has a long history, and the FTC has sought to revive that history by using section 5 as another way to pursue free-standing claims alleging unfair
methods of competition.
The FTC’s greater interest in section 5 may reflect its concern
that recent political and judicial activity has constrained access to
traditional tools of antitrust enforcement. Specifically, the Commission has noted the judicial trend in recent decades to limit the
www.globalcompetitionreview.com
reach of antitrust, which the Commission attributes to ‘concern over
class actions, treble damages awards, and costly jury trials.’30 ‘[T]he
result [of this judicial trend] has been that some conduct harmful to
consumers may be given a ‘free pass’ under antitrust jurisprudence,
not because the conduct is benign but out of a fear that the harm
might be outweighed by the collateral consequences created by private enforcement.’31 As Commissioner Rosch noted, the most recent
guidance from the Supreme Court on section 5 is a 1972 decision in
FTC v Sperry & Hutchinson Co,32 where the court held that section
5 is not simply coextensive with other federal antitrust statutes, but
instead reaches further.33 Just how far section 5 should reach beyond
the Sherman Act, however, remains an unanswered question, and
one that may be shaped in part by FTC enforcement efforts during
the past year that have explicitly relied on section 5.
The Commission has outlined three areas of cases where it anticipates using section 5 as an enforcement tool in the future. First,
where a party’s conduct causes anti-competitive effects, such as an
increase in price or a reduction in output (as required under the
Sherman Act), but also conduct that causes a reduction in consumer
choice by restraining free competition in the marketplace – such as
a firm that uses deception to establish monopoly power and thereby
eliminate competition. The second area of enforcement involves cases
that fall into gaps in the Sherman Act, such as where the Commission
believes that conduct is clearly having anti-competitive effects, but it
determines that the facts would not be sufficient to bring a successful
Sherman Act section 2 case. Finally, the FTC anticipates pursuing
cases that Congress did not intend for private plaintiffs to be able
to pursue under the other federal antitrust laws. Examples of such
cases include instances where the conduct is in its incipient stages,
and allegations that hinge on claims of deception.34
Over the past year, the FTC has begun to shape the contours
of section 5 enforcement. In a high-profile move last December, the
FTC charged Intel Corporation with illegally using its dominant
position in the markets for central processing units and graphics
processing units to stifle competition and to strengthen its monopoly
in violation of section 5 of the FTC Act.35 Specifically, it alleged
that Intel carried out an anti-competitive campaign using threats
and rewards aimed at the world’s largest original equipment manufacturers to coerce them not to buy rival CPUs.36 The FTC’s complaint also alleges Intel secretly redesigned key software in a way
that deliberately stunted the performance of competing CPUs.37 The
administrative trial is set to begin on 15 September 2010.38 The FTC
also charged Transitions Optical Inc with violating section 5 of the
FTC Act by using exclusionary contracts to maintain its monopoly
in the photochromic lenses market.39 According to the FTC, Transitions had an 85 per cent market share of photochromic lenses sold in
the US and new entrants could not find outlets for their products.40
Under a settlement with the FTC reached in April of this year, Transitions agreed to end existing exclusive dealing contracts and not enter
into new ones.41
The Commission’s proposed use of section 5 as a broad mandate to restore competition enjoys ample historical, yet by no means
recent, judicial support.42 The judicial history of section 5 lends support to the FTC’s broad mission to use section 5 to ‘fill gaps’ in
antitrust law and to challenge conduct it finds harmful to consumers
and against the spirit of free competition. It also supports the Commission’s authority to bring such challenges where it could not, or
would not, do so using other antitrust enforcement tools.
The Commission’s decision to enhance use of section 5 is not
without controversy however. Critics argue that this is simply a way
for the FTC to evade section 2 monopolisation law and the narrower
35
us: monopolisation
and more stringent legal requirements for bringing a claim under
the Sherman Act. Commissioner Rosch’s statements regarding the
FTC’s reliance on section 5 in its complaint against Intel provide
fodder for such criticism. According to Commissioner Rosch, the
FTC brought the case against Intel under section 5 partly because it
involved a reduction of consumer choice, which warrants antitrust
action even if the that loss is not also associated with a reduction in
output, increase in price, or some demonstrably measurable competitive harm.43 Another reason, according to the Commission, that
section 5 was the more appropriate claim against Intel is that intent
evidence was relevant in that case, and some courts restrict the use
of intent evidence in Sherman Act cases.44
Over the past year, the FTC has also recommended changes in
legal standards that apply to single-firm conduct under section 2 of
the Sherman Act. Commissioner Leibowitz has addressed the controversial notion that, to promote efficiency, it is more important to
protect potentially efficient conduct by monopolists than it is to protect competition.45 According to Leibowitz, proponents of this view
favour per se legality and safe harbours for many types of conduct
that could harm competition.46 Leibowitz has stated that this notion
is inconsistent with the fundamental policy of the antitrust laws that
competition leads to efficiency and to consumer gains.47 Similarly,
Commissioner Rosch has fiercely criticised Justice Scalia’s position
in Trinko suggesting that monopolists are valuable; in Rosch’s view,
the net effect of a monopoly is less innovation.48
FTC commissioners have also commented on the legal tests
used to evaluate single-firm conduct. In an October 2009 speech
concerning the scope and application of section 2, Commissioner
Rosch suggested that there should be a single test for evaluating all
exclusionary conduct under section 2, even if that test is not perfect and does not apply to all monopolisation cases.49 Rosch noted
that the court came close to establishing such a test in Aspen Skiing.50 In Rosch’s view, under such a test a firm with monopoly or
near monopoly power that engages in exclusionary conduct that
has anti-competitive effects could be liable under section 2.51 Anticompetitive effects would be measured by looking at: the effect of the
defendant’s exclusionary practices considered together,52 allowing a
plaintiff to plead and prove a section 2 claim based on a course of
conduct, even where a series of actions, standing alone, would not
be unlawful; evidence that a firm intended its exclusionary conduct
to exclude or cripple a rival or would-be rival, which should be
considered probative of monopolisation; and a defendant’s change in
practices, which can bespeak an anti-competitive intent.53 The idea
of considering a change in practice as indicative of a firm’s intent is
not without judicial support. For example, the District Court for
the Northern District of California, in an extension of Aspen Skiing, refused to dismiss a challenge based in part on a monopolist’s
duty to deal and their sudden change of course.54 There, Abbott
manufactured an HIV drug, Norvir, which was found to work better as a booster to other drugs, decreasing its required dosage and
thus its daily price.55 It introduced its own ‘boosted’ version called
Kaletra, but competitors introduced more effective drugs, Reyataz
and Lexiva, which used Norvir as a ‘booster.’56 Abbott then raised
the wholesale price of Norvir 400 per cent while keeping the price
of Kaletra constant.57 The court found that Abbott’s sudden change
in practices, combined with an alleged duty to deal, was enough to
sustain the plaintiff’s complaint.58
As far as industry-specific activity, the FTC has made it clear that
healthcare enforcement is a major priority, particularly in light of the
national debate on healthcare policy, and the idea that competition
in this area is especially critical to reducing costs and encouraging
36
innovation. The FTC has been active in the area of follow-on biologic drug competition, which involves drugs manufactured using
living tissues and microorganisms which are classified as ‘large
molecule’ drugs (in comparison to their ‘small molecule,’ chemically-synthesised cousins). In June 2009, the FTC issued a report
which concluded that follow-on biologic drug (FOB) competition is
unlikely to be similar to generic drug competition.59 Commissioner
Rosch stated that:
In theory, follow-on biologics are like generic drugs in that they
provide a lower cost replica of the original large molecule biologic
drug. However, because follow-on biologics are not ‘identical’ (in
the same way a small molecule generic drug is to its brand counterpart), follow-on biologics pose significant challenges from a regulatory standpoint.60
The FTC June 2009 report found that the dynamics of the FOB market will contrast sharply with the market dynamics of generic drug
competition, where lower-cost generic entry and automatic substitution lead to rapid erosion of the branded drug’s market share.61
Instead, FOB entry is likely to occur only in biologic drug markets
with more than US$250 million in annual sales; only two or three
FOB manufacturers are likely to attempt entry in competition with
a particular pioneer drug product; and these FOB entrants likely will
not offer price discounts larger than 10 to 30 per cent off the pioneer product’s price.62 The FTC concluded that innovative products
should not receive additional market exclusivity beyond the term of
their patents.63
However, on 23 March 2010, President Obama signed into law
the Patient Protection and Affordable Care Act, which included
the Biologics Price Competition and Innovation Act of 2009 (the
Biologics Act).64 The Biologics Act creates an abbreviated regulatory approval pathway for biosimilar versions of branded biological products. Some features of the Act that may impact antitrust
regulation include: a 12-year data exclusivity period for the innovator biological product; one-year exclusivity for an interchangeable biosimilar product; procedures to accelerate the litigation of
patents through the creation of a list to identify patents in question;
and provisions that require information sharing between innovator
firms and FOB manufacturers.65 Before the Bill passed, Commissioner Rosch criticised the information-sharing provision, warning
it would create anti-competitive outcomes by chilling developments
by generic firms – as well as innovator firms – because all of the
trade secrets flowing from development will have to be disclosed.66
The effects of the Bill are yet unknown, but many will be watching
to see whether Commissioner Rosch’s predictions prove true. Also
relevant to monopolisation is the unique effect the Biologics Act may
have on advertising campaigns surrounding FOB products. Because
the Biologics Act only requires an FOB product to be biosimilar and
not identical, FOB products will necessarily be different from the
innovator’s product in some way. Unlike brand drug manufacturers
of small-molecule pharmaceuticals, innovators could be incentivized to initiate advertising campaigns that compare the innovator’s
product to the FOB product. Such advertising campaigns may be
vulnerable to attempted monopolisation challenges under section 2
of the Sherman Act.
Private party litigation
A number of developments have also emerged with respect to private
party antitrust litigation – with mixed results. Although both the
Department of Justice and Federal Trade Commission have stated
The Antitrust Review of the Americas 2011
us: monopolisation
their intentions to make enforcement of the antitrust laws in the
healthcare markets a priority, courts have recently been reluctant
to sustain plaintiffs’ antitrust challenges in healthcare markets. For
example, in Howard Hess Dental Labs Inc v Dentsply Int’l Inc,
a group of dental laboratories brought a class action alleging that
agreements between manufacturers of artificial teeth and distributors, which prohibited the distributors from carrying competitive
brands violated, inter alia, section 2 of the Sherman Act. 67 Plaintiffs
sought injunctive relief to prevent Dentsply from imposing exclusive agreements on the distributors and retaliating from those that
did not submit to Dentsply’s demands.68 The Third Circuit upheld
the denial of plaintiffs’ summary judgment motion on monopolisation claims even though the same defendants had successfully been
prosecuted by the DoJ for the same monopolisation claim. In the
government’s case, United States v Dentsply Int’l Inc,69 the court
found that Dentsply both possessed monopoly power in the artificial
tooth market and had used that power to foreclose competition.70
The Hess plaintiffs argued that the court’s holding in the government’s case led to an inference of antitrust injury that defendants
were estopped from denying.71 The Third Circuit, however, found
that antitrust injury was not a necessary component of the holding
in the government’s case and thus collateral estoppel did not apply.
The Third Circuit held that plaintiffs had failed to state a cognisable
claim of antitrust injury because the government’s injunction was
sufficient to remedy any antitrust harms.72
Courts have also recently addressed the ability of monopolists
to make alterations to their products that have the effect of reducing
compatibility with competitors’ products. While these changes are
not immune from antitrust scrutiny, product improvements alone,
even by a monopolist whose improvement harms competitors, generally do not violate section 2 of the Sherman Act. For example, in
Allied Orthopedic Appliances Inc v Tyco Health Care Group LP, the
Ninth Circuit held that Tyco’s improvements to its pulse oximetry
sensors did not constitute anti-competitive conduct. 73 Tyco patented
a new system incompatible with generic sensors, which plaintiffs
argued was done unlawfully to maintain its monopoly over the sensor market.74 The court found that although Tyco’s improvements
might have reduced competition, it was due only to improvements
in the product, not to any anti-competitive conduct. There is no
room in this analysis for balancing the benefits or worth of a product
improvement against its anti-competitive effects. 75 Even an admitted
monopolist thus has the right to redesign products to make them
more competitive or more attractive to buyers, without weighing the
resulting injuries to competitors. There was no evidence that Tyco
used its market power to force anyone to adopt the new system and
summary judgment was granted to defendant.76
Contrast that result with In re Apple iPod iTunes Antitrust Litigation, where the court denied the defendant’s motion to dismiss
a monopolisation claim.77 The plaintiffs alleged that Apple used
software updates to shut out competition from the digital music
and music player industries.78 Plaintiffs argued that the software
redesigns had no legitimate antipiracy or other purposes and were
solely to exclude rivals from the market.79 The court held that those
allegations, if proven, sufficiently established a claim for monopolisation.80
Courts, in the past year, have enforced strict limits on antitrust
standing for cases brought by competitors. For example, in Four
Corners Nephrology Assocs PC v Mercy Medical Ctr of Durango,
Mercy Medical sought to bring plaintiff, Dr Bevan, to its practice,
but he declined.81 It then hired someone else, revoked Dr Bevan’s
consultation rights at the hospital, and made the new hire the excluwww.globalcompetitionreview.com
sive nephrology provider at the hospital.82 Bevan sued, arguing that
the exclusive contract was either monopolisation or an attempt to
monopolise the market for nephrology services in the Durango,
Colorado area.83 The court found that even if the defendant was
a monopolist, the plaintiff was simply attempting to join in the
monopoly, not to compete with it effectively. Plaintiff thus lacked
antitrust standing.84
Similarly, in Race Tires Am Inc v Hoosier Racing Tire Corp,
plaintiffs challenged ‘single tyre rules’ where bodies that sanction
car races require that a specific tyre type and brand be used in races
sanctioned by that body.85 Plaintiffs argued that defendant’s exclusive single tyre contracts with various sanctioning bodies foreclosed
competition.86 The competition to be the exclusive supplier, however,
created a competitive market in which plaintiff had successfully competed. Accordingly, the court found as a matter of law that there is
no antitrust injury to the plaintiff when it loses the competitive battle
to be the exclusive supplier.87
Moreover, in Kentucky Speedway LLC v Nat’l Ass’n of Stock
Car Auto Racing Inc, Kentucky Speedway LLC (KYS) brought sections 1 and 2 claims against both the National Association of Stock
Car Auto Racing Inc (NASCAR) and an affiliated company, International Speedway Corporation (ISC) that owns multiple racetracks,
on the grounds that not sanctioning a Sprint Cup race at KYS’s
racetrack in Kentucky and preventing KYS from purchasing other
racetracks that already host such a race violated the antitrust laws.88
The appeals court upheld dismissal by the district court on the basis
of failure to adequately define a relevant product market, but also
noted that the plaintiff did not suffer an antitrust injury.89
At least one case, however, Palmyra Park Hosp v Phoebe Putney
Memorial Hosp, allowed a competitor’s antitrust challenge to proceed based on the unique circumstances of the healthcare industry
and the low likelihood of other plaintiffs suing.90 Plaintiff, Palmyra,
operated a for-profit hospital and defendant, Phoebe Putney, operated a non-profit hospital in the same area.91 Phoebe Putney was the
only area hospital that held certificates of need (CONs) from the
state, which entitled it to provide certain specialty services.92 Private
insurers, therefore, needed to ensure that Phoebe Putney was within
its network to compete effectively.93 Palmyra alleged that Phoebe
Putney used its monopoly in the areas where it had the only CONs to
force insurers to remove Palmyra from their networks.94 The district
court dismissed for lack of antitrust standing. The appeals court
reversed, employing a two-prong test for antitrust standing. First,
there must be antitrust injury. Second, the plaintiff must be an efficient enforcer of the antitrust laws.95 The court held that, given the
unique market circumstances in the healthcare industry, Palmyra
had antitrust standing.96 It did not address the merits of the parties’
positions on antitrust violations, and remanded to the district court
for further consideration.97 The court distinguished the case at issue
from those where the plaintiff simply wants to join in the alleged
anti-competitive behaviour because Palmyra lacks CONs for the
services, so could never join Phoebe Putney in its alleged unlawful
arrangement.98
These developments in enforcement of the antitrust laws indicate
the need for companies to monitor the pulse of the changing regulatory environment. While gaps between agency enforcement and
judicial decision-making exist, the courts, especially lower courts,
continue to pay deference to the agencies’ policy objectives and
enforcement efforts to promote competition. The near-term future
is likely to see still stricter scrutiny of exclusionary conduct by firms
with market power, and business practices will need to be tailored
accordingly with the advice of antitrust counsel.
37
us: monopolisation
Notes
*
The authors wish to thank John R Ingrassia for his assistance in the
(transcript available at www.ftc.gov/speeches/rosch/100323uscremarks.
pdf) (hereinafter Rosch, Dynamic Antitrust Law ).
preparation of this article.
29 15 USC sections 41-58.
1
15 USC section 2 (2000).
30 Jon Leibowitz, chairman & J Thomas Rosch, commissioner, Fed Trade
2
nited States v Grinnell Corp, 384 US 563, 571 (1966).
U
Comm’n, Statement of Chairman Leibowitz & Commissioner Rosch, In the
3
US Department of Justice, Competition and Monopoly: Single-Firm Conduct
Matter of Intel Corporation, Docket No. 9341, available at www.ftc.gov/os/
Under Section 2 of the Sherman Act (2008), available at www.justice.gov/
4
adjpro/d9341/091216intelchairstatement.pdf.
atr/public/reports/236681.pdf.
31 Id.
Christine A Varney, assistant attorney gen, Antitrust Div, US Dep’t of Justice,
32 405 US 233, 244 (1972).
Vigorous Antitrust Enforcement in this Challenging Era, Remarks Prepared
33 Rosch, Dynamic Antitrust Law, supra note 28.
for the Center for American Progress 14 (11 May 2009) (transcript available
34 Id.
at www.usdoj.gov/atr/public/speeches/245711.pdf).
35 Press Release, Fed Trade Comm’n, FTC Challenges Intel’s Dominance of
Worldwide Microprocessor Markets (16 December 2009) (available at www.
5
Id.
6
Id.
7
Id.
36 Id.
8
9
ftc.gov/opa/2009/12/intel.shtm).
Christine A Varney, US Dep’t of Justice Spring 2010 Update, www.justice.
37 Id.
gov/atr/public/update/2010/aag-message.html (last visited July 26, 2010)
38 Id.
(hereinafter 2010 Update ).
39 Press Release, Fed Trade Comm’n, FTC Bars Transitions Optical Inc from
L orain Journal Co v United States, 342 US 143 (1951); Aspen Skiing Co v
Using Anticompetitive Tactics to Maintain its Monopoly in Darkening
Aspen Highlands Skiing Corp, 472 US 585 (1985).
Treatments for Eyeglass Lenses (3 March 2010) (available at www.ftc.gov/
10 U
nited States v Microsoft Corp, 165 F3d 952 (1999).
opa/2010/03/optical.shtm).
11 2010 Update, supra note 8.
40 Id.
12 John D Harkrider, Obama: The First Year, Vol 24, No. 3, Antitrust 11
41 Id.
(Summer 2010).
42 See, eg, Pan Am World Airways Inc v United States, 371 US 296 (1963)
13 Press release, US Dep’t of Justice Antitrust Division, Justice Department
(stating that section 5 gives the Commission the power to issue cease
Reaches Settlement with Daily Gazette Company And Medianews Group
and desist orders and divestures that would prevent methods of unfair
Inc. (Jan. 20, 2010) (available at www.justice.gov/atr/public/press_
competition); FTC v Sperry & Hutchinson Co, 405 US 233, 244 (1972)
releases/2010/254282.htm).
(confirming the FTC’s power to consider under section 5 public values
14 United States v Daily Gazette Company and Medianews Group Inc;
beyond simply those enshrined in the letter or encompassed in the spirit of
Proposed Final Judgment and Competitive Impact Statement, 75 Fed Reg
the antitrust laws ); FTC v Motion Picture Advertising Serv Co, 344 US 392,
11682-01, ¶ 44 (Dep’t of Justice, Antitrust Division, 11 March 2010).
394-95 (1953) (suggesting that section 5 covers incipient practices that,
15 Greg Sandoval, ‘With iTunes, Apple has Thrown Weight Around’, CNET (26
when full-blown, would violate the Sherman or Clayton Act); FTC v Beech-Nut
May 2010), http://news.cnet.com/8301-31001_3-20006019-261.html.
Packing Co, 257 US 441 (1922) (section 5 prohibits practices which violate
16 Id.
17 Josh Kosman, ‘An Antitrust App: Apple May Be in the Eye of Regulatory
the policy but not the letter of the Sherman Act).
43 J Thomas Rosch, commissioner, Fed Trade Comm’n, Concurring and
Storm’, NY Post, 3 May 2010, available at www.nypost.com/p/news/
Dissenting Statement of Commissioner J Thomas Rosch, In the Matter of
business/an_antitrust_app_buvCWcJdjFoLD5vBSkguGO.
Intel Corporation, Docket No. 9341, available at http://ftc.gov/os/adjpro/
18 Ashlee Vance & Steve Lohr, ‘US Begins Antitrust Inquiry of IBM’, New York
d9341/091216intelstatement.pdf.
Times, 7 October 2009, available at www.nytimes.com/2009/10/08/
44 Id.
technology/companies/08antitrust.html.
45 Jon Leibowitz, chairman, Fed. Trade Comm’n, Remarks of Chairman
19 Id.
Jon Leibowitz, 36th Annual Conference on International Antitrust Law &
20 Id.
Policy, Fordham Competition Law Institute at Fordham Law School (24
21 2010 Update, supra note 8.
September 2009) (transcript available at www.ftc.gov/speeches/leibowitz/
22 Press release, US Dep’t of Justice Antitrust Division, Department of Justice
090924fordhamspeech.pdf).
and USDA Hold Workshop Focused on Competition Issues in the Dairy
46 Id.
Industry (25 June 2010) (available at www.justice.gov/atr/public/press_
47 Id.
releases/2010/260109.htm).
48 J Thomas Rosch, commissioner, Fed Trade Comm’n, Wading into Pandora’s
23 Jack Kaskey & William McQuillen, ‘Monsanto’s Patents may be Resistant to
Box: Thoughts on Unanswered Questions Concerning the Scope and
Antitrust Claims’, The News Journal (Wilmington, Del), 13 March 2010.
Application of section 2 & Some Further Observations on section 5.
24 Id.
Remarks Before the LECG Newport Summit on Antitrust Law & Economics.
25 Id.
(3 October 2009) (transcript available at www.ftc.gov/speeches/rosch/
26 Nate Jenkins, ‘Feds Doing 1st Investigation of Major Meatpackers’,
The Associated Press (May 3, 2010), www.salon.com/wires/
allwires/2010/05/03/D9FF790G2_us_food_and_farm_meatpacker_probe/
50 Id.
index.html.
51 Id.
27 Carey Gillam, ‘Update 1-US Pledges to Probe, Bust Agribusiness
52 L ePage’s Inc v 3M, 324 F3d 141, 162 (3d Cir 2003) (en banc).
Monopolies’, Reuters (12 March 2010), www.reuters.com/article/
53 Rosch, Pandora’s Box, supra note 48.
idUSN1215754320100312.
54 Safeway Inc v Abbott Labs, 2010 WL 147988 (N.D. Cal. Jan. 12, 2010).
28 J Thomas Rosch, Commissioner, Fed.Trade Comm’n, Promoting Innovation:
38
091003roschlecgspeech.pdf) (hereinafter Rosch, Pandora’s Box ).
49 Id.
55 Id at *1.
Just How Dynamic Should Antitrust Law Be?, Remarks Before the USC
56 Id.
Gould School of Law 2010 Intellectual Property Institute (23 March 2010)
57 Id.
The Antitrust Review of the Americas 2011
us: monopolisation
76 Id. at 1003.
58 Id at *8.
59 Fed Trade Comm’n, Emerging Health Care Issues: Follow-on Biologic
77 2010 WL 2629907 (N.D. Cal. June 29, 2010).
Drug Competition , FTC Report (June 2009), available at www.ftc.gov/
78 Id. at *3.
os/2009/06/P083901biologicsreport.pdf (hereinafter FTC Biologics
79 Id at *4.
Report).
80 Id.
60 J Thomas Rosch, commissioner, Fed Trade Comm’n, Pay-for-Delay
81 582 F3d 1216 (10th Cir 2009).
Settlements, Authorized Generics, and Follow-on Biologics: Thoughts on
82 Id at 1219.
the How Competition Law Can Best Protect Consumer Welfare in the
83 Id.
Pharmaceutical Context, Remarks Before the World Generic Medicine
84 Id at 1227.
Congress (19 November 2009) (transcript available at www.ftc.gov/
85 660 F Supp 2d 590, 597 (WD Pa 2009).
speeches/rosch/091119worldgenerics.pdf) (hereinafter Rosch, Pay-for-
86 Id at 595.
Delay).
87 Id at 607.
61 FTC Biologics Report, supra note 59.
88 588 F3d 908, 913-14 (6th Cir 2009).
62 Id.
89 Id at 920-21.
63 Id.
90 604 F3d 1291 (11th Cir 2010).
64 Patient Protection and Affordable Care Act, HR 3590, 111th Cong (2010).
91 Id at 1295.
65 Id.
92 Id.
66 Rosch, Pay-for-Delay, supra note 60.
93 Id.
67 602 F3d 237 (3d Cir. 2010).
94 Id at 1297.
68 Id at 246.
95 604 F3d at 1299.
69 399 F3d 181 (3d Cir 2005).
96 Id at 1306.
70 Id at 196.
97 Id at 1307.
71 Hess, 602 F3d at 247.
98 Id at 1304.
72 Id at 251.
73 592 F3d 991 (9th Cir 2010).
74 Id at 994.
75 Id at 1000.
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39
about the authors
Alicia J Batts
Jessica L Sonenshein
Proskauer Rose LLP
Alicia Batts is a partner at Proskauer Rose LLP resident in the Washington, DC office. She is an antitrust lawyer who represents clients
before government antitrust enforcement agencies and in federal
and state courts. Alicia is a former attorney adviser on policy and
enforcement matters to Commissioner Mozelle Thompson of the
Federal Trade Commission. She has extensive experience representing and providing antitrust counselling for companies in the automotive, aeronautics, pharmaceutical, financial and energy industries.
Her broad experience working in both the public and private sectors
contribute to the firm’s strengths in the antitrust arena.
Alicia is former vice-chair of the American Bar Association Antitrust Section Business Torts & Civil RICO Committee. She has also
served on the ABA antitrust section Litigation Task Force, and is a
former member of the editorial board of the Antitrust Law Journal. She is a regular panelist at antitrust conferences, a member of
the board of directors of the Appleseed Foundation, and is listed in
Black Enterprise’s ‘America’s Top Black Lawyers.’ She is a graduate
of Columbia University Law School and Harvard College.
Proskauer Rose LLP
Jessica Sonenshein is a lawyer in the litigation and dispute resolution
department at Proskauer Rose LLP and a member of the firm’s antitrust practice group. Jessica represents pharmaceutical companies
and medical device manufacturers in antitrust litigations, including
class and non-class actions brought under federal and state antitrust
laws. Jessica also represents clients before the DoJ and other administrative agencies, and advises clients in connection with merger
analyses. She is a graduate of the University of Pennsylvania Law
School and the University of California, Los Angeles.
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