Last week, President Trump nominated Makan Delrahim to serve as the Assistant Attorney General for the Antitrust Division of the U.S. Department of Justice. Mr. Delrahim, who is currently serving as White House Deputy Counsel, is a former lobbyist and veteran of the George W. Bush Justice Department. He served as Deputy Assistant Attorney General for International from 2003–2005. Mr. Delrahim had a good working relationship with the career staff who he will now rely upon to advance the Trump Administration’s antitrust enforcement agenda and priorities.
Posts by: Editorial Board
On January 13, 2017, the U.S. Department of Justice and the Federal Trade Commission issued their updated Antitrust Guidelines for the Licensing of Intellectual Property, first issued in 1995, which explains how the two agencies evaluate licensing and related activities involving patents, copyrights, trade secrets and know-how. Although the agencies have issued a variety of reports since 1995 regarding antitrust and IP issues, this is the first comprehensive update of the Guidelines. The final updated Guidelines do not differ significantly from the proposed Guidelines released in August 2016, which we analyzed in this blog post.
Also on January 13, 2017, the DOJ and FTC issued their revised Antitrust Guidelines for International Enforcement and Cooperation, first issued in 1995 as the Antitrust Enforcement Guidelines for International Operations. These Guidelines explain the agencies’ current approaches to international enforcement policy and their related investigative tools and cooperation with foreign enforcement agencies. The revised Guidelines differ from the 1995 Guidelines by adding a chapter on international cooperation, updating the discussion of the application of U.S. antitrust law to conduct involving foreign commerce (e.g., the Foreign Trade Antitrust Improvement Act, foreign sovereign immunity, foreign sovereign compulsion, etc.), and providing examples of issues that commonly arise.
On November 17, 2016, Jon Sallet, DOJ’s Deputy Assistant Attorney General for litigation, presented a speech at the American Bar Association Antitrust Section’s Fall Forum in which he outlined his views regarding the DOJ’s approach to vertical mergers and other transactions that raise the potential for vertical restraints on competition. After recapping some of the history regarding the DOJ’s treatment of vertical restraints, Mr. Sallet commented on issues such as merger-related efficiencies, competitive effects, input foreclosure and raising rivals costs, innovation effects, the exchange of competitively sensitive information that could harm interbrand competition, and potential anticompetitive effects in transactions that do not involve a combination of vertically related assets. Finally, he noted that if the DOJ has concerns regarding anticompetitive effects, it might feel that conduct remedies are insufficient and may require structural remedies or even try to block the transaction. Any company considering a vertical merger or a transaction that may raise the potential for vertical restraints on competition will benefit from reviewing Mr. Sallet’s speech. The speech is available here.
On Mar. 2, 2015, China’s National Development and Reform Commission (“NDRC”) published its decision in the Qualcomm case, which resulted in a $975 million fine against Qualcomm for alleged violations of the Anti-Monopoly Law. The decision provides useful guidance with respect to the NDRC’s views regarding several intellectual property licensing practices involving standard-essential patents (“SEPs”).
China’s State Administration for Industry & Commerce has published its long-awaited regulations regarding the use of intellectual property rights to eliminate or restrict competition. The Regulations, which are designed to foster innovation and competition, improve economic efficiency and protect consumer welfare, address both monopolistic agreements and the abuse of dominant market positions resulting from the ownership of IP rights. They go into effect on August 1, 2015.
On Feb. 25, 2015, the European Commission set out its strategy to achieve a European Energy Union with a forward looking climate change policy (“Framework Strategy”). Reforming and reorganizing Europe’s energy policy into a single energy market was outlined as a top priority by Jean-Claude Juncker, President of the Commission, in his political guidelines. The project is based on the three objectives of EU energy policy: (i) competitiveness; (ii) security of supply; and (iii) sustainability of infrastructure. The EU is the largest energy importer in the world, importing 53% of its energy, at an annual cost of around €400 billion.
On Feb. 12, 2015, the Court of Appeal to England and Wales dismissed Ryanair’s appeal against a judgment of the UK’s Competition Appeal Tribunal (“CAT”). The CAT had, on May 7, 2014, rejected Ryanair’s application for review of the findings of the Competition Commission (“CC”) in connection with Ryanair’s acquisition of a minority shareholding in Aer Lingus. In its final report, dated Aug. 28, 2013, the CC found that Ryanair and Aer Lingus had ceased to be distinct as a result of Ryanair’s minority shareholding (29.82%) that gave it the ability to exercise material influence over the policy of Aer Lingus. The CC reached its view by having regard to Ryanair’s ability to block special resolutions and the sale of slots at London Heathrow Airport. The CC then concluded that the minority stake resulted in a substantial lessening of competition because, in particular, Ryanair’s incentives as a competitor were likely to outweigh its incentives as a shareholder. The CC decided that a reduction of Ryanair’s holding to 5% would be an effective remedy.
The European Union’s Commissioner for Competition, Margrethe Vestager, who began her five-year mandate on Nov. 1, 2014, has indicated that there is more work to be done on the Commission’s initiative to close an enforcement gap related to minority shareholdings. The proposal—which would reform the EU Merger Regulation in order to give the Commission the power to scrutinise the acquisition of non-controlling minority interests—was one of the issues put out for consultation in the Commission’s White Paper, published July 2014. In a speech delivered Mar. 12, 2015, Vestager stated that the replies to the consultation had indicated that the proposal had not struck the right balance between the issues raised and the proposal’s procedural burden. The modalities of the system would now be discussed again within the Commission as well as Member States and other stakeholders. The White Paper had proposed a targeted transparency system that would enable parties to self-assess whether a transaction creates a competitively significant link and, if so, submit an information notice to the Commission. In the event that an information notice is submitted, the Commission would then decide whether to investigate the transaction.
On Feb. 17, 2015, the Court of Justice of the European Union (“CJEU”) brought an appeal before the Court of Justice against an order of the General Court that had found that the CJEU was the correct representative of the EU in an action for damages. The action for damages—that seeks to engage the non-contractual liability of the EU—arises as a result of a General Court failure to deliver a judgment within a reasonable time. As the latest development in a tussle that began in February 2006, the CJEU is contesting its liability for a breach committed by one of its own courts. The General Court’s responsibility for the excessively long proceedings (approximately five years and nine months) has already been confirmed.
On Mar. 9, 2015, the General Court confirmed the European Commission’s decision prohibiting the proposed merger between Deutsche Börse and NYSE Euronext. The merger—which would have brought together the two largest exchanges in the world for European financial derivatives— was blocked by the Commission in February 2012. The Commission’s investigation had found that the merger would lead to a significant impediment to effective competition by creating a near-monopoly position. In particular, the transaction would have led to a single vertical structure, trading and clearing more than 90% of the global market of European exchange-traded derivatives.
On Mar. 26, 2015, the Consumer Rights Act received Royal Assent. Schedule 8 of the Act, which amends the UK’s Competition Act, gives the UK Competition Appeal Tribunal (“CAT”) the power to hear stand-alone private damages actions as well as actions arising from an infringement decision with respect to a finding of a cartel or an abuse of dominance. Infringement decisions by both the UK Competition and Markets Authority (“CMA”) and the European Commission will be relevant for the purposes of a private damages action before the CAT. The Act permits collective proceedings to be brought before the CAT, either as opt-in or opt-out proceedings, and the CAT will also have the power to approve the settlement of claims in collective proceedings. Furthermore, the Act makes it possible for redress schemes to be approved by the CMA.
The measures are expected to come into force on Oct. 1, 2015.
On Apr. 15, 2015, the 11th Circuit affirmed a Federal Trade Commission ruling that McWane, Inc., the dominant producer of domestic pipe fittings, violated Section 5 of the FTC Act when it informed its distributors that unless they bought all of their domestic fittings from McWane, they would lose rebates and be cut off from purchases for 12 weeks. McWane, Inc. v. FTC, No. 14-11363 (11th Cir. Apr. 15, 2015).
The U.S. Court of Appeals for the 9th Circuit issued a landmark ruling on February 20, 2015, affirming a district court’s order blocking a merger between the St. Luke’s Health System (“St. Luke’s”) and the Saltzer Medical Group (“Saltzer”)—the largest independent multi-specialty physician group, including adult primary care, in Nampa, Idaho. See generally St. Alphonsus Med. Ctr.-Nampa Inc. v. St. Luke’s Health Sys., Ltd., 778 F.3d 775 (9th Cir. 2015). Of note, the 9th Circuit rejected using quality care improvements standing alone to defend a merger, reaffirmed the use of the Herfindahl-Hirschman Index (“HHI”) when assessing health care market concentration, and established a challenging standard for defending future clinical provider ventures.
On Mar. 17, 2015, the U.S. Supreme Court was provided an opportunity to review two decisions involving different applications of the Foreign Trade Antitrust Improvements Act (“FTAIA”) to Sherman Act claims based on a price-fixing conspiracy involving TFT-LCD panels. In a petition for certiorari filed that day, Motorola Mobility urged the U.S. Supreme Court to review a 7th Circuit ruling that the FTAIA blocked the majority of Motorola’s civil price-fixing claims against multiple manufacturers of TFT-LCD panels. At the same time, AU Optronics (a manufacturer of TFT-LCD panels) and two of its executives filed a certiorari petition requesting review of a 9th Circuit ruling that arguably diverged from the 7th Circuit opinion, holding that the FTAIA did not bar criminal antitrust claims against them. The Supreme Court now has an opportunity to clarify the meaning of the FTAIA and to resolve the arguably inconsistent circuit interpretations.
On Feb. 27, 2015, in In re Online DVD-Rental Antitrust Litig., 779 F.3d 914 (9th Cir. 2015), the U.S. Court of Appeals for the 9th Circuit affirmed a summary judgment for Netflix in an action alleging that Netflix conspired with Walmart to monopolize the online DVD rental market. The court found that the class of consumer plaintiffs had failed to establish antitrust injury.
On Mar. 25, 2015, the U.S. Circuit Court of Appeals for the 6th Circuit upheld a preliminary injunction against Eastman Kodak Company’s pricing policy for Versamark printer ink, finding that the plaintiff, Collins Inkjet Corporation, was likely to succeed on the merits of its claim that the pricing policy constitutes unlawful tying. Collins Inkjet Corp. v. Eastman Kodak Co., Case No. 14-3306, 2015 WL 1320675 (6th Cir. Mar. 25, 2015).
On Apr. 8, 2015, the U.S. Court of Appeals for the 3d Circuit vacated a district court order that had certified a class of direct purchasers of traditional blood reagents who asserted price-fixing claims under Section 1 of the Sherman Act. In re: Blood Reagents Antitrust Litig., No. 12-4067, 2015 WL 1543101 at *1 (3d Cir. Apr. 8, 2015).
On Mar. 3, 2015, U.S. District Judge Lucy Koh granted preliminary approval to a proposed $415 million settlement of a class action concerning alleged anti-solicitation agreements among certain Silicon Valley high-tech companies. In re High-Tech Emps. Antitrust Litig., No. 5:11-cv-2509-LHK (N.D. Cal. Mar. 3, 2015), Dkt. No. 1054. Orrick’s previous coverage of the case, in which Judge Koh declined to approve the original settlement totaling $324.5 million, is available here. Class members have until May 21, 2015, to opt out or object to the proposed settlement. Judge Koh will hold a final approval hearing on July 9, 2015.
Judge Koh’s Order is available here.
Orrick Antitrust partner Jay Jurata and Managing Associate Amisha Patel have been nominated for a Concurrences Antitrust Writing Award for their article, “Taming the Trolls: Why Antitrust Is Not a Viable Solution for Stopping Patent Assertion Entities,” which appeared in the George Mason Law Review.
Concurrences picks its Antitrust Writing Award winners by vote, so we encourage you to cast yours! Please click here to do so by Friday, Feb. 27!