• On November 28, the Antitrust Division with the FTC announced that they will hold a series of public hearings designed to examine the antitrust implications of single firm conduct under the antitrust laws. The primary goal of the hearings, which will begin in spring 2006, is to examine whether and when specific types of single-firm conduct are pro-competitive or benign, and when they may harm consumers. The hearings will examine and analyze a wide-range of legal and economic issues to help define the boundaries between single-firm conduct that is legal and conduct that is illegal under current antitrust laws.
  • On November 23, the Antitrust Division issued a statement announcing the closing of its investigation of an alleged territorial allocation among Vermont’s 12 Medicare-certified home health agencies. As a result of a new Vermont state law, the Home Health Services Act of 2005, the Division decided not to proceed with its investigation. While the Division’s position remains that a state law cannot retroactively immunize illegal conduct, the Division decided not to pursue the case. Rather, the Division is urging Vermont’s state officials to exercise close oversight under the new Act and to critically evaluate the Division’s arguments for maintaining the status quo and keeping out competition.
  • On November 16, the Antitrust Division closed its investigations of the proposed acquisition of Instinet Group Inc. (“Instinet”) by The NASDAQ Stock Market Inc. (“Nasdaq”) and the proposed merger of the New York Stock Exchange Inc. (“NYSE”) and Archipelago Holdings Inc. (“Archipelago”) (collectively, “the Exchange Mergers”). On April 20, 2005, the NYSE, one of the two leading equities markets in the country, announced plans to acquire Archipelago, which operates ArcaEx, one of the largest all-electronic stock markets in the world. Two days later, Nasdaq, the nation’s other leading equities market, announced its intention to acquire Instinet Group Inc., the institutional brokerage and electronic trading network controlled by the Reuters Group. After the two transactions were announced, several separate enterprises, including regional exchanges such as the Boston Stock Exchange and the Philadelphia Stock Exchange, and others including BATS Trading Inc., announced their intent to enter and compete in the equity trading facilities services, listing services, and/or the market data service industries. Some of these ventures are backed by many of the nation’s leading investment banks and securities firms, including Merrill Lynch, Citigroup, UBS, Credit Suisse First Boston, Morgan Stanley, Goldman Sachs, Lehman Brothers, Citadel, and Fidelity Investments. The Division thoroughly investigated the Exchange Mergers and determined that neither transaction is likely to reduce competition substantially. The critical and determinative issue regarding the deal was ease of entry. Specifically, the Department examined whether the planned and likely entry of several firms, including regional stock exchanges supported by investments from some of the nation’s largest securities firms and investment banks, will be sufficient to resolve any competitive concerns raised by the transactions. The Division determined that the imminent entry of these enterprises should result in additional, viable alternatives to the two merged firms sufficient to ensure that the markets remain competitive.
  • On November 2, the Antitrust Division sent a letter to the New Mexico Real Estate Commission advising it to reject proposed amendments to the New Mexico administrative code that would limit a consumer’s freedom to choose which real estate services to buy and could cause New Mexico consumers to pay more for real estate brokerage services. Under current rules, New Mexico home sellers and buyers can choose between a full-service package of real estate brokerage services and a fee-for-service option that allows consumers to purchase their choice of services. While the rules currently require brokers to provide some negotiation and closing assistance to clients, home sellers may choose not to receive certain services through a written waiver. The proposed amendment would remove this waiver provision so that consumers would no longer have control over which services they receive and pay for. The letter also urged the commission not to define Virtual Office Websites (“VOWs”) as advertising because it would stifle innovation and harm consumers. A state-imposed rule that defined VOWs as advertising could enable traditional brokers to block the customers of their VOW-operating competitors from using the competitor’s website to review the same set of listings that traditional brokers deliver to their customers by other means. The Division has been sending consistent messages to the industry that consumer’s must continue to have choices.

Authored by:
Andre P. Barlow