Antitrust Law Blog

Businesses that participate in Standard Setting Organizations ("SSOs") and seek adoption of their technologies in standards now arguably face additional exposures.  Extending a line of previous SSO patent "hold-up" cases, including Dell, Unocal, and Rambus, the Federal Trade Commission has used its most recent SSO case to define a broader potential scope for liability under Section 5 of the FTC Act, 15 U.S.C. § 45.  The zone of liability now includes businesses that do not conceal their patents before SSO adoption, but later engage in "hold-up" behaviors after adoption – "ex ante," by trying to reneg on previously negotiated agreements with an SSO about the future economic terms on which the patent would be licensed if they were included in the standard.  According to at least a majority of the current FTC, the Act now appears to encompass such actions by corporations with questionable market power, and also provides the basis for additional liability under the consumer protection provisions of the Act as well as unfair competition.

In one of the first cases to apply the U.S. Supreme Court's opinion in Credit Suisse Securities (USA) v. Billing, 127 S.Ct. 2383 (2007), a New York District Court found  "clear incompatibility" between federal securities and antitrust laws and dismissed allegations that brokerage firms fixed prices charged to short sellers.  In re Short Sale Antitrust Litig., 2007 U.S. Dist. LEXIS 94116 (S.D.N.Y. Dec. 20, 2007).

Dudley v. Aspen Realty, Inc., D. Idaho, Case No. CV-04-121-S-BLW, 11/30/07

Defendants were realtors in Boise, Idaho.  The realtors based their commission charges on the price of both an undeveloped lot, and the price of the home to be built on the lot at a subsequent time.  The plaintiffs, purchasers of undeveloped lots, brought an action under the federal antitrust laws alleging an illegal tie between the commission charged for the sale of the undeveloped lot, and the commission charged on the home which would be built on the lot.  The trial court granted motions for summary judgment, based upon the court's finding that there was no claim, as the degree of foreclosure was "zero".  Under no set of facts, would any of the plaintiffs have purchased the alleged tied product, namely commissions to be paid on a home to be located on the undeveloped lot, from any other seller.  This being the case, there was zero foreclosure, and zero claim.  Dudley v. Aspen Realty, Inc., D. Idaho, Case No. CV-04-121-S-BLW, 11/30/07.

In a Fourth Circuit opinion, the court upheld the standing to sue of a plaintiff (former owner of WordPerfect) assertedly injured by defendant as a means to inflict harm to competition in the defendant's market (operating systems) even though plaintiff did not participate in defendant's market.  The court also rejected defendant's proposed bright-line rule that only consumers or competitors in the relevant market have standing to sue.  Novell, Incorporated v. Microsoft Corporation, 505 F.3d 302 (4^th Cir. 2007).

The Hart-Scott-Rodino Antitrust Improvements Act of 1976 imposes premerger notification and waiting period obligations on transactions over a certain size, where the parties are over a certain size, before those transactions may be completed.  Each "person" who is a party to an HSR-reportable deal must file an HSR notification with the DOJ and the Federal Trade Commission.  On January 28, 2008, the Federal Trade Commission published revised thresholds for premerger filings under the HSR Act.  The new thresholds go into effect February 28, 2008.  Acquisitions that have not closed by that date will be subject to the new  thresholds.  The Act requires all persons contemplating certain mergers or acquisitions meeting the jurisdictional thresholds in the Act to file notification with the FTC and the Department of Justice's Antitrust Division.  Filing persons must wait a designated period of time, usually 30 days, before completing their transactions.

On January 11, the newly elected Australian Labor government issued draft legislation to criminalize "serious cartel conduct".  Acting on a November 2007 election promise to introduce criminal penalties for cartel conduct within the first 12 months of gaining office, the new Government issued a Discussion Paper, and is seeking public comment on two principal issues: (i) how to distinguish the proposed criminal prohibitions from civil prohibitions; and (ii) whether telephone interception powers should be available to the Australian Competition and Consumer Commission (ACCC) in relation to the new criminal cartel offences.  The draft legislation would create criminal offences for making, or giving effect to, a contract, arrangement or understanding (CAU) that contains a cartel provision "with the intention of dishonestly obtaining a benefit".  A cartel provision is defined in the draft legislation as a provision of a CAU that relates to: price- fixing; restricting outputs in the production and supply chain; allocating customers, suppliers or territories; or bid-rigging by parties "that are or otherwise would be in competition with each other".  The draft legislation also proposes jail terms of up to five years, and fines of AUS$220,000 for corporate executives found guilty of engaging in cartel conduct.  Companies face exposure to fines of at least AUS$10 million. The draft legislation also creates new civil cartel offences which parallel the criminal cartel offences.  These civil offences do not require proof of "dishonest intent".