Antitrust Law Blog : Antitrust Lawyer & Attorney : Sheppard Mullin Law Firm : Antitrust Law Blog

On October 27, 2006, the Second Circuit issued its opinion in Paycom Billing Services, Inc. v. MasterCard Int'l, Inc., 2006-2 Trade Cas. (CCH) ¶ 75,470, 2006 U.S. App. LEXIS 26820 (2d Cir. October 27, 2006), affirming the dismissal of Paycom's complaint against MasterCard by Judge Trager in the Eastern District of New York. See 2005-1 Trade Cas. (CCH) ¶ 74,751, 2005 U.S. Dist. LEXIS 4920 (E.D.N.Y. 2005). Paycom, a processing service for primarily adult internet credit card services, had purported to allege violations of Sections 1 and 2 of the Sherman Act with respect to MasterCard's (1) chargeback system; (2) former Competitive Programs Policy ("CPP"); and (3) Cross-Border Acquiring Rules ("CBA Rules"). Paycom abandoned its Section 2 claims on appeal.

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An October 30, 2006 Business Review letter ("BRL") from the Antitrust Division of the Department of Justice (the "Department") is a potentially important step forward in providing guidance to Standard Development Organizations (SDO's) and their lawyers about the form of acceptable SDO patent disclosure requirements. The BRL was in response to a request by VITA, an international trade association, and its standards development subcommittee, VSO. VITA is an SDO that is accredited by the American National Standards Institute, and includes developers, vendors and users of real-time modular imbedded computing systems originally based on the VMEbus Computer Architecture. VITA sought guidance on the propriety of its proposed new rules for requiring disclosure of relevant patents and pending patent applications as a precondition to participating in standard setting activity.

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One of the most significant developments in U.S. antitrust law in years has come upon the horizon: the much criticized, nearly 100 year old rule holding that  minimum resale price maintenance ("RPM") is per se illegal is in jeopardy. This per se rule was  adopted in Dr. Miles Med. Co., Inc. v. John D. Park & Sons.¹ and could be overturned by the Supreme Court which on December 7, 2006, granted a petition for writ of certiorari. The Court has also granted leave to manufacturers associations and economists to file amicus curiae briefs.

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On November 30, Judge Sullivan held yet another hearing in his review of the mergers between SBC and AT&T and Verizon and MCI. The purpose of the hearing was to determine if the Court should hold an evidentiary hearing to examine the government’s witnesses or, if not, what the court’s next steps should. Although the first exchanges between the government’s lawyer, Mr. Claude Scott, and the court were fairly cordial and professional, Judge Sullivan took umbrage at Verizon’s suggestion that there was nothing the court could do to undo the completed parts of the merger, and Mr. Reback, representing ACTel, accused the government’s lawyers and economists of misrepresentation.

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• On November 29, the European Commission fined five groups of companies a total of €519m for allegedly participating in a cartel to fix prices and share customers for certain types of synthetic rubber in violation of the EC Treaty’s ban on restrictive business practices (Article 81).  The overall fine is the second highest imposed by the Commission in a cartel case, and brings the total amount of cartel fines imposed this year to €1.843 billion - a new annual record for the Commission. The Commission stated that its Decision was based on numerous documents, corporate statements, and witness interviews provided by the Leniency applicants, together with meetings notes discovered by the Commission during an on-site inspection. The Commission alleged that the cartel agreements were made before, or after, the official meetings of the European Synthetic Rubber Association which took place in various European cities.  During these meetings, the Commission alleged that the participants agreed prices, exchanged information on key customers, and the amounts of synthetic rubber supplied to them. Competition Commissioner, Neelie Kroes, stated, “Cartels strike at the heart of healthy economic activity.  They undermine competition, raise prices for consumers and reduce the diversity, quality and innovation of European companies. The Commission has imposed high fines in this case, but if companies continue to indulge in cartel activities, then they can expect their fines to be even higher in the future”.

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Court Refuses to Dismiss Division’s Suit against National Association of Realtors

• In United States v. National Association of Realtors, No. 05 C 5140 (N.D. Ill. Nov. 27, 2006) (available at http://www.usdoj.gov/atr)., Judge Filip rejected the National Association of Realtors' ("NAR") arguments that the Court lacked subject matter jurisdiction or that the Division had failed to state a claim. Importantly, Judge Filip held that just because NAR had changed its policies in response to the threatened filing of a complaint did not mean that there was no case or controversy about the initial filing.

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