Distribution, Competition, and Antitrust / IP Law

Is Antitrust Relevant for Startups, Emerging, and Non-Dominant Firms?

The answer is (surprise!) “yes.”

There are a number of ways in which antitrust law is relevant to emerging and non-dominant companies. Those firms may:

  • Need to deal with the dominant firms in their markets, including by (i) responding to threats or actions by dominant firms to foreclose access to products, services or markets, or (ii) negotiating to acquire or maintain access to needed IP;
  • Need access to standard-essential patents (“SEPs”) and to understand their rights to and under FRAND licenses;
  • Want to exploit and license their own IP and put restrictions on its use without triggering antitrust issues;
  • Want to collaborate with other firms – including (dominant) competitors – in producing products or delivering services (i.e., entering into joint ventures);
  • Want to merge with, acquire, or be acquired by another firm, including a dominant one;
  • Want to impose vertical price or non-price restraints, or offer different customers, dealers or distributors different prices; or
  • Need to respond to a government merger or conduct investigation as a third party.

All of the above issues (and more) require the consideration of antitrust law. This is not to say that, for example, every complaint by an emerging firm against a dominant firm is the nucleus of a valid antitrust claim. There are many considerations – including whether there is harm to competition, whether a party has antitrust standing, and the like – and often there is no claim, just the rough-and-tumble of normal business competition. But it’s always helpful to understand the legal landscape, and to consider whether Congress and the courts have struck the appropriate balance between robust competition and truly exclusionary conduct. And on the defensive end, it’s always a good idea to understand how far you can push restraints.

Is the NCAA a Cartel?

English: National Collegiate Athletic Associat...

The usually good Planet Money program has an excellent recent podcast setting forth the arguments for and against the NCAA [National Collegiate Athletic Association] being an unlawful cartel.

Basketball, Surreptitious Recordings, and Antitrust

Donald Sterling — yes, that Donald Sterling — filed an antitrust lawsuit a few days ago against the National Basketball Association.  You can download a copy here: Sterling Antitrust Complaint.

It’s not clear if the complaint has now been mooted — Mr. Sterling apparently filed it after reaching an agreement to sell the Los Angeles Clippers to Steve Ballmer only because the NBA allegedly refused to confirm that it was cancelling the June 3, 2014 owners’ meeting(*) regarding a forced sale of the franchise.

The complaint asserts causes of action for breach of contract and the like.  The gist of the single antitrust claim is that there is a market for ownership of NBA franchises and that a collective decision to force a sale of the Los Angeles Clippers would injure not only Mr. Sterling but also competition in the market.  It would “mak[e] the relevant market unresponsive to consumer preference and to the operation of the free market.”

The complaint seeks at least $1 billion in damages.

The issue raised is an interesting one: can a sports league collectively control its membership?  If the answer is “no,” how far does the principle extend?  Is there a “market” for golf club memberships which cannot be constrained by collective action to vote out a club member for boorish behavior?  What about membership in non-profit associations generally?  If you think these latter restraints are OK, is the limiting principle found in the relevant market definition (i.e., being banned from one golf club out of dozens or hundreds in a metropolitan area isn’t competitively significant)– or somewhere else?

(*) Technically, a meeting of the NBA Board of Governors.

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Collusion Regarding Terms of Medical Resident Employment?

Did you ever wonder why teaching hospitals can conduct their medical residency “match” program?  And why they can share data and use it to help set wages for residents?  And why the match program effectively forbids salary negotiation?  The apparent result is that medical residents’ wages have remained flat for about 40 years.

Slate has the story — including the explanation for the above phenomenon, an antitrust exemption granted by Congress.  Discuss among yourselves the wisdom of that exemption.

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A Rare Challenge to a Class Action Settlement . . . From a Named Plaintiff

One of the named class plaintiffs in the high-tech employee antitrust case has filed an objection to the proposed class settlement.  The plaintiff, Mr. Michael Devine, analogized the approximately $300 million settlement (worth approximately 10% of alleged damages) to a “shoplifter . . . caught on video stealing a $400 iPad from the Apple Store” and a resulting settlement of $40, with the shoplifter keeping the iPad and making no admission of wrongdoing.

Objections by named plaintiffs are quite rare — though a single objection, even by a named plaintiff, is unlikely to carry the day.

The New York Times has the details here.

 

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Can Competitors Agree to Share Profits?

I just wrote an article about this issue, and the Ninth Circuit’s recent decision in the Safeway case, for the American Bar Association’s Antitrust Counselor newsletter.

You can view the whole article here.

Working On An Article

I’m working on an article on profit-sharing arrangements, and the labor antitrust exemption, for the American Bar Association’s Antitrust Counselor.  Should be out in a few months.

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