Distribution, Competition, and Antitrust / IP Law

More Evidence that California May No Longer Follow the Per Se Rule in Vertical Pricing Fixing Cases

 In Kaewsawang v. Sara Lee Fresh, Inc., Case No. BC360109 (Cal. Los Angeles Superior Ct. May 6, 2013), the trial court dismissed a challenge to Sara Lee’s pricing practices brought under California’s state antitrust law, the Cartwright Act.

The plaintiffs were a purported class of distributors of Sara Lee products, and challenged Sara Lee agreements with chain retailers that gave Sara Lee the right to set pricing (to the chain stores) for Sara Lee products. The distributor agreements required the distributors to comply with the terms of the Sara Lee-chain store agreements.

In dismissing the claim, the court first ruled that plaintiffs had not alleged a price-fixing allegation. The court’s discussion is somewhat unclear, but it appears to have rejected an argument that there was some sort of horizontal agreement between and among Sara Lee and the chain stores.

The court then turned to the question of per se unlawful vertical price-fixing, and held that, despite the California Supreme Court’s decision in Mailand v. Burckle, 20 Cal. 3d 367 (1978), following the U.S. Supreme Court’s decision in Leegin Creative Leather Products, Inc. v. PSKS, Inc., 551 U.S. 877 (2007), “it remains unlikely that the Mailand’s court holding is still applicable . . . .”

The court then rejected the plaintiffs’ rule of reason claim for vertical price fixing.

It is conceivable that the court did not even need to reach the issue.  Unlike the traditional vertical price-fixing scenario, Sara Lee apparently did not agree with its distributors on downstream pricing — it had the power to set the downstream pricing directly.  The distributors were more similar to middlemen or agents than true distributors with pricing authority.

Sara Lee is but one trial court decision, but it is further evidence that California courts will be receptive to arguments based on developments in federal law that vertical price-fixing is not per se unlawful.

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When Price Fixing Is Not Price Fixing

Seal of the United States Court of Appeals for...

Seal of the United States Court of Appeals for the Seventh Circuit. (Photo credit: Wikipedia)

According to a recent decision by Judge Posner in the Seventh Circuit in In re Sulfuric Acid Antitrust Litigation, the following scenario is not subject to the per se rule against price fixing:

  1. Companies outside the United States, as an unwanted manufacturing byproduct, produce what is to them a waste chemical for which there is little or no market in their home country.
  2. There is a U.S. market for the chemical and U.S. producers who manufacture it.
  3. The foreign companies have no U.S. distribution network and so sign up the U.S. producers as distributors (giving them exclusive territories), in return for “shutdown” agreements that preclude the U.S. producers from manufacturing their own supplies of the chemical.
  4. Absent the shutdown agreements, there would be an oversupply, and the foreign companies might sell into the U.S. at a loss. They might be willing to do that to avoid the environmental and storage costs they would otherwise incur, but then they could be subject to antidumping proceedings brought by the U.S. manufacturers.

Under these facts, the shutdown agreements are subject to a Rule of Reason analysis, and not the per se rule, so they still could in theory be unlawful. But the fact that the plaintiffs in Sulfuric Acid abandoned a Rule of Reason case suggests that they thought it would be very difficult to win.  After all, the agreements facilitated market entry, which is pro-competitive.

Update: In response to a reader question, there was no agreement on prices in this case.  There was an alleged output agreement, though, and economically the two types of agreements are thought to be equivalent.  An agreement to raise prices will decrease demand and output; an agreement to cut output will raise prices.  The shutdown agreements would tend to raise prices.

In applying the Rule of Reason, Judge Posner noted that this case was unique, “combining such elements as involuntary production and potential antidumping exposure.” He rightly concluded that “[i]t is a bad idea to subject a novel way of doing business (or an old way in a new and previously unexamined context . . . .) to per se treatment under antitrust law.”

However, in reaching his conclusion, Judge Posner made some other remarks which are less persuasive. For one thing, in analogizing the analysis to that of Broadcast Music, Inc. v. Columbia Broadcasting System, Inc., 441 U.S. 1 (1979), which allowed blanket music licenses to be sold, he wrote that the blanket copyright licenses were not a product, new or old, but a “contractual instrument” for marketing music, which was the product. But that seems to beg the question of whether a “contractual instrument” for marketing is an unlawful per se agreement. In the alternative, he suggested that the foreign-supplied chemical could itself be the “new [BMI-type] product.” However, that analysis seems to open the door to an argument that any jointly-sold product is a “new product,” even if it is identical to other commodities being sold.

Additionally, Judge Posner noted that exclusive dealing agreements (where a distributor agrees not to carry competing lines) are not per se illegal, so “what difference should it make that the competing line is produced by the distributor himself?  And so the shutdown agreements might be found to be an innocent species of exclusive dealing.”  There is a looseness to this language that may be exploited in unanticipated ways in future cases.  Two competitors cannot agree to curtail output simply by appointing one as the “distributor” of the other.

In short, the opinion seems like the right result on the facts, but it opens the door to Rule of Reason arguments in the future about other arrangements whose status and pro-competitive effects may be less clear.

Court Approves DOJ Antitrust Settlement with Three E-Book Publishers

Last week the Southern District of New York approved the DOJ’s settlement with Hachette Book Group Inc., HarperCollins Publishers LLC, and Simon & Schuster, Inc. (I previously covered the Apple e-book case here and here.)

Under the Tunney Act, consent settlements with the DOJ are subject to court review and public comment. The three e-book publishers reached a settlement with the DOJ before the Department filed its antitrust suit.

Under the settlement agreements, the publishers must end their e-book agency agreements with Apple within seven days of final judgment. They must also end any contracts with other e-book retailers that prevent them from setting their own prices or include most-favored nation (“MFN”) clauses that guarantee that retail competitors are not receiving better terms. Additionally, under the settlements, distribution provisions limiting retailers’ ability to set e-book pricing are banned for several years.

The DOJ has received hundreds of Tunney Act comments about the settlements. Additionally, Apple, Penguin, and others have filed amicus briefs with the court criticizing one or more aspects of the settlements. Bob Kohn, the founder of eMusic, has been a particularly vocal critic. You may have read about his creative five-page cartoon or graphic novel format brief (which he filed due to the court’s page constraints).

Kohn (and perhaps others) have argued that DOJ essentially accused Amazon of price predation, and that the Apple e-book deals were a lawful and appropriate response to such predation.

Apple, Macmillan, and Penguin remain in the DOJ suit.

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What You Need to Know About the Four Basic Types of Pricing Claims (Part 4)

In the last post, we saw that price information exchanges that do not impact pricing are not unlawful. However, we also saw that such exchanges can facilitate collusion and can provide plaintiffs with evidence supporting a price fixing charge.

A comment to the last post asked about how to structure information exchanges to avoid these potential problems.

In their antitrust healthcare guidelines, DOJ and FTC have provided guidance on this issue. Although the guidance comes in the context of the healthcare industry, there is little or no reason to suspect that the guidance would vary according to industry. Note, however, that DOJ/FTC guidelines are not binding on the courts, which may or may not accept them.

With those caveats out of the way, what do DOJ and FTC say about competitors’ collection or provision of price information? According to DOJ and FTC,

“Participation by competing providers in surveys of prices for health care services, or surveys of salaries, wages or benefits of personnel, does not necessarily raise antitrust concerns. In fact, such surveys can have significant benefits for health care consumers. Providers can use information derived from price and compensation surveys to price their services more competitively and to offer compensation that attracts highly qualified personnel. Purchasers can use price survey information to make more informed decisions when buying health care services.”

DOJ and FTC go on to note that without appropriate safeguards, however, information exchanges among competing providers may facilitate collusion or otherwise reduce competition on prices or compensation, resulting in increased prices, or reduced quality and availability of health care services. “A collusive restriction on the compensation paid to health care employees, for example, could adversely affect the availability of health care personnel.”

DOJ and FTC then articulate a “safety zone” for exchanges of price and cost information among providers that they will not challenge, absent extraordinary circumstances. The safety zone applies to a written survey where:

  1. the survey is managed by a third-party (e.g., a purchaser, government agency, health care consultant, academic institution, or trade association);
  2. the information provided by survey participants is based on data more than 3 months old; and
  3. there are at least five providers reporting data upon which each disseminated statistic is based, no individual provider’s data represents more than 25% on a weighted basis of that statistic, and any information disseminated is sufficiently aggregated such that it would not allow recipients to identify the prices charged or compensation paid by any particular provider.

These conditions are designed to prevent the sort of facilitation of collusion discussed in the last post.

Note that a price information exchange that does not meet these criteria is not automatically unlawful; it just does not enjoy the DOJ/FTC safety zone. But there is little reason to design a program that does not meet the safety zone criteria from the outset.

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What You Need to Know About The Four Basic Types of Pricing Claims (Part 3)

This is the third in a series of posts.  The last post can be found here.

Price information exchanges that do not impact pricing.  Such an exchange by itself is probably not subject to private challenge. See, e.g., Blomkest Fertilizer, Inc. v. Potash Corp. of Sask., Inc., 203 F.3d 1028 (8th Cir. 2000) (price verifications only concerned charges on particular completed sales, not future market prices; no evidence supported inference that the verifications had an impact on price increases; the only evidence was that prices were possibly cut as a result; defense summary judgment affirmed).

Note, however, that a price information exchange could be viewed as a “plus factor” that tends to support an inference of an actual price agreement.  Therefore, it is always advisable to consider the antitrust implications of any exchange of price information before engaging in such an exchange.

What You Need to Know About The Four Basic Types of Pricing Claims (Part 2)

This is the second in a series of posts.  The first can be found here.

Price information exchanges that impact pricing.  Such an exchange is not per se illegal. However, it may be unlawful under a rule of reason analysis. See, e.g., United States v. Container Corp. of America, 393 U.S. 333 (1969).

To successfully challenge such an exchange, it is necessary to prove price impact. This can become complicated. For example, if market pricing is instantaneous and entirely transparent, how would one prove that an agreement to exchange price information has impacted prices? Generally, the less transparent the market pricing is, the more opportunity for a price information exchange to work mischief.

The Airline Tariff Publishing Company (ATP) case is informative and illustrates some of the complexities. In December 1992, DOJ sued eight of the largest U.S. airlines and the Airline Tariff Publishing Company (ATP) for price fixing and for operating ATP, their jointly-owned fare exchange system, in a way that facilitated collusion, in violation of §1 of the Sherman Act.

According to the DOJ, ATP was a complex information exchange system among airlines that was widely and openly operated to disseminate fare information through computer reservation systems and travel agents. ATP provided both a means for the airlines to disseminate fare information to the public and a means for them to engage in essentially a private dialogue on fares.

Again, according to the DOJ, the defendants designed and operated ATP’s computerized fare exchange system in a way that unnecessarily facilitated coordinated interaction among them so that they could (1) communicate more effectively with one another about future fare increases, restrictions, and elimination of discounted fares, (2) establish links between proposed fare changes in one or more city-pair markets and proposed changes in other city-pair markets, (3) monitor each other’s changes, including changes in fares not available for sale, and (4) reduce uncertainty about each other’s pricing intentions.

The ATP case involved “cheap talk”– communication that does not commit firms to a course of action — such as announcing a future price increase but leaving open the option to rescind or revise it before it takes effect. If the terms of agreement are complex (e.g., specifying prices in numerous markets) but there is a common desire to reach agreement, cheap talk can help firms reach a collusive equilibrium.

ATP collected fare information from the airlines and distributed it daily to all the airlines and to the major computer reservation systems (CRSs) that serve travel agents. This arrangement was an efficient instrument for cheap talk.

The case was resolved with a consent decree crafted to ensure that the airline defendants did not continue to use any fare dissemination system in a manner that unnecessarily facilitated price coordination or that enable them to reach specific price-fixing agreements.

Note that the final judgment did not prevent the settling defendants from disseminating currently available fares through ATP, from advertising currently available fares to consumers, or from offering for sale fares good only for future travel. Also, the settling defendants remained free to give consumers general information on impending fare changes.

Next post: a price information exchange that does not impact pricing.

What You Need to Know About the Four Basic Types of Pricing Claims (Part 1)

To every even casual reader of this blog, it is obvious that antitrust and competition law apply to the pricing behavior of competing firms. But what exactly are the danger zones, and what sorts of claims can be brought? In the next few posts, I will provide some basic information about pricing issues and claims. I will focus on horizontal pricing issues (i.e., pricing between and among “horizontally” situated firms which compete with each other).

We can consider four basic types of claims: (i) an actual price-fixing claim, (ii) a claim for a price information exchange that impacts pricing, (iii) a claim regarding a price information exchange that does not impact pricing, and (iv) a claim for parallel pricing behavior. This discussion focuses on the federal Sherman Act, but the California Cartwright Act (and many other states’ laws) is largely similar.

An actual price-fixing claim. This type of claim requires allegation and proof of an actual agreement to fix or set prices. An agreement need not be formal and written; it can be oral and informal. A “wink and a nod” are enough. But there needs to be a meeting of the minds. If competitors enter into such an agreement, it is per se illegal. Pro-competitive justifications, lack of impact, etc. are irrelevant. (Though to get damages in a private suit, you still need to prove damages.)

An agreement can be proven up directly or through circumstantial evidence. If proven circumstantially, the evidence must essentially exclude the possibility that the defendants’ actions are as consistent with independent action as they are with conspiracy. This is the Matsushita summary judgment rule.

Evidence of a price information exchange (next post) can tend to support the inference of a price-fixing agreement, because price information exchange can help defendants to implement, monitor, and enforce a price-fixing agreement. But price information exchange alone does not prove a price-fixing agreement. It is one of several “plus factors” that can help move permissible parallel pricing over the line into the zone of impermissible agreement.

Compare In re Coordinated Pretrial Proceedings in Petroleum Products Antitrust Litigation, 906 F.2d 432 (9th Cir. 1990) (evidence of parallel pricing in a relatively concentrated market, plus evidence that defendants publicly announced, in press releases, their advance pricing decisions, in order to facilitate either interdependent or plainly collusive price coordination, is sufficient to survive a defense motion for summary judgment on a price-fixing claim) with Reserve Supply Corp. v. Owens-Corning Fiberglas Corp., 971 F.2d 37 (7th Cir. 1992) (defendants’ practices of maintaining price lists for products and of announcing price increases 30 to 60 days before their effective date did not amount to an improper information exchange; discounts were widely used in the industry, making the price lists a poor candidate to coordinate pricing; publicly pre-announcing price increases served a legitimate purpose because customers, who were mostly rehandlers and contractors, needed to be able to inform their customers of price increases or to figure such increases into their bidding).

Next post: price information exchanges that impact pricing.

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ATM Users Lack Standing to Challenge Bank ATM Fees

In In re: ATM Fee Antitrust Litigation, No. 10-17354 (9th Cir. July 12, 2012), the Ninth Circuit ruled that consumers (ATM cardholders) could not challenge ATM fees paid by ATM card issuing banks to the owner of the ATMs accessed by the cardholders. Those fees were allegedly fixed by the banks. However, the fees were not directly paid by cardholders, who instead may have paid higher charges passed on by the banks. The cardholders’ claims were, therefore, indirect price-fixing claims, for which the cardholders had no Sherman Act monetary remedy.

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The eBooks Case: A Canadian Perspective

This is a guest post authored by Steve Szentesi & Mark Katz.  Steve blogs at ipvancouverblog.com.  Thanks to the guest authors for sharing their thoughts on perspectives from Canada.

(A version of this piece was first published in Competition Policy International, Antitrust Chronicle.)

“As a result of this alleged conspiracy, we believe that consumers paid millions of dollars more for some of the most popular titles. We allege that executives at the highest levels of these companies—concerned that e-book sellers had reduced prices—worked together to eliminate competition among stores selling e-books, ultimately increasing prices for consumers.”

(Attorney General Eric Holder, April 11, 2012)

“This was competition on the merits, with Apple providing a superior reading platform on a beautiful 10 inch iPad screen, with color, multi-media, and fixed display, and access to millions of future iPad purchasers. This is classic procompetitive behavior that should be celebrated, not condemned through litigation.”

(Apple Answer, May 22, 2012)

Before Shortly after the U.S. Department of Justice (“DOJ”) filed its claim in the eBooks case earlier this year, Canadian class action plaintiffs followed suit by commencing commenced their own proceedings in the provinces of British Columbia, Ontario, and Quebec. The Competition Bureau has not, however, yet announced any investigation.

As in the United States, the Canadian actions are challenging the agency eBook distribution model adopted by Apple and five of the world’s largest book publishers, three of which have settled claims brought against them by the U.S. DOJ. Specifically, the Canadian plaintiffs allege that Apple and the defendant publishers violated Canada’s price-fixing offense under section 45 of the Competition Act (the “Act”). The publishers allegedly committed the offense by collectively agreeing to discontinue their former wholesale distribution models, under which publishers sold eBooks at wholesale prices to distributors who in turn set retail prices, for a new agency model under which publishers set prices with distributors receiving sales commissions.

The Canadian plaintiffs also allege that the publisher defendants illegally agreed not to set eBook prices below Apple’s iBookstore prices (a “most-favored-nation” provision) and plead a variety of non-statutory grounds for recovery, including certain common law torts and, in Québec, claims under the Quebec Civil Code.

As in the United States, the key substantive issue in Canada will be whether the conduct of Apple and the defendant publishers constitutes an illegal conspiracy. The case also raises some uniquely Canadian issues relating to jurisdiction and certification and the interpretation of Canada’s conspiracy offense.

Threshold Issues: Jurisdiction and Certification

Fully litigated competition civil actions are still rare in Canada, including class actions. To the extent that litigation has occurred in the class action context, most of it has revolved under the threshold issue of whether or not the class should be certified to proceed and, specifically, whether “indirect purchasers” claims are permissible.

The ability of indirect purchasers to commence price-fixing class actions in Canada is currently unsettled, with conflicting provincial appellate decisions in British Columbia, Ontario, and Québec. The issue is now scheduled to be heard by the Supreme Court of Canada in the fall of 2012.

Depending on how and when the Court decides the “indirect purchaser” issue, the publisher defendants could argue that certification in Canada should be denied on the grounds that the plaintiffs purchased their eBooks indirectly, i.e., through distributors such as Amazon and Apple rather than from the publishers themselves. The plaintiffs’ claims anticipate this argument, as they go to some effort to characterize the eBook sales as direct sales between publishers and consumers, with publishers retaining title and physical possession of the eBooks.

The Canadian plaintiffs also claim that damages are capable of being assessed on an aggregate basis calculated as the difference (i.e., overcharge) between eBook prices in the presence and absence of the alleged agreement. This approach avoids the necessity of making individual damages arguments at the certification stage and is another strategy to counter indirect purchaser related arguments by defendants.

Another defense that can be raised in Canada in the context of “foreign” cartels is that the courts lack jurisdiction over extra-territorial defendants. The Supreme Court of Canada recently pronounced on the substantive aspect of this question in a trilogy of decisions considering the ability of Canadian courts to assert substantive jurisdiction in civil claims involving foreign defendants.

The basic test is that Canadian courts can assume jurisdiction where there is a “real and substantial connection” between the matter at issue and Canada. In its trilogy of decisions, the Supreme Court of Canada clarified that, in establishing whether such a connection exists, a court should consider if: (i) the defendant is domiciled or resident in the province, (ii) the defendant carries on business in the province, (iii) the tort was committed in the province, and (iv) a contract connected with the dispute was made in the province. The Court also held that, even where substantive jurisdiction is established, the claim should proceed subject to a court’s discretion to stay the proceedings on the basis of forum non conveniens.

As a general observation, it is difficult to succeed in contesting competition cases on jurisdictional grounds unless the defendant has no business presence in Canada at all. Even then, the real issue is often that of establishing “personal” jurisdiction over the defendant rather than “substantive” jurisdiction. Given that the majority of the defendants in the eBooks case carry on business in Canada, the chances of successfully contesting certification on jurisdictional grounds appear remote.

Substantive Issues

The key issue in Canada—as in the United States—is whether the agency agreements between the publishers and Apple are illegal at all involved any illegal coordination at all.

As noted, the plaintiffs in Canada principally rely upon section 45 of the Act, which is analogous to section 1 of the U.S. Sherman Act.

Section 45 makes it a per se criminal offense for competitors (or potential competitors) to enter into agreements to: (i) fix, maintain, increase, or control the price for the supply of a product; (ii) allocate sales, territories, customers, or markets for the production or supply of a product; or (iii) fix, maintain, control, prevent, lessen, or eliminate the production or supply of a product.

In the United States, the defendants have argued vigorously that the agency agreements are the product of a series of separately negotiated bilateral agreements that did not involve any form of illegal horizontal collusion. They also dispute allegations that circumstantial evidence of meetings and information exchanges support the existence of illegal agreements. The defendants argue that the occasional meetings between publishers were only for social purposes or to discuss market trends or legitimate joint ventures, and that the similarity among the agency agreements can be explained by Apple’s desire for uniform supplier agreements.

Proof of the existence of an “agreement” will obviously be a key issue in Canada as well. In Canada, as in the United States, information exchanges between competitors are not in and of themselves illegal. However, they can form the basis for concluding that an illegal agreement was reached, circumstantial evidence being commonly relied upon for that purpose in civil proceedings under section 36 (and in criminal prosecutions as well).

Another issue that has been raised by the U.S. proceedings is whether the shift by the publishers from a wholesale to an agency model was illegal simply because the new model could adversely affect pricing for eBooks, even if there were no express agreements between the publishers (and Apple) to “fix” these prices. In other words, is an arrangement illegal if it does not literally fix prices, but has the effect of increasing prices nonetheless?

This could be an issue in Canada as well, now that liability under section 45 requires that conduct fit within defined categories, i.e., in this case, that there be an agreement to “fix, maintain, increase or control the price for the supply of [a] product”. There is no case law on point yet, but it is interesting to note the Bureau’s approach to the issue in its enforcement guidelines on section 45 (the “Collaboration Guidelines”). In the discussion of price-fixing agreements in these Guidelines, the Bureau takes the very broad view that section 45 prohibits any arrangements between competitors to fix or increase the prices paid by customers (or a component of price, such as a surcharge or credit terms). According to the Bureau, this can include agreements to “fix prices at a predetermined level, to eliminate or reduce discounts, to increase prices, to reduce the rate or amount by which prices are lowered, to eliminate or reduce promotional allowances and to eliminate or reduce price concessions or other price related advantages provided to customers.”

The Bureau also notes that price fixing can be accomplished in many ways, and need not establish an actual price for the relevant product; rather, prohibited price-fixing agreements could involve agreements between competitors to use a common price list in their negotiations with customers, to apply specific price differentials between grades of products, to apply a pricing formula or scale, or not to sell products below cost.

Of note, however, the Bureau also states that it does consider arrangements between competitors to fall under section 45 “solely on the basis that they have the effect of increasing prices charged by competitors”. For example, the Bureau would not proceed against an agreement among competitors to implement certain measures designed to protect the environment or implement a new industry standard simply because this may increase the costs of producing a product and ultimately result in an increase in price to consumers.

While the Bureau’s Collaboration Guidelines are not binding on the courts, one can see the defendants in the eBooks case potentially relying on a similar line of thinking to assert that their distribution arrangements cannot be condemned solely on the basis that an ancillary effect may be to raise prices, when these arrangements otherwise have benign or even beneficial effects.

In addition to the above, other specifically Canadian issues could arise, owing to the particular nature of the conspiracy offense in Canada, both in its current and recently repealed versions.

The current version of section 45 was enacted in March 2009 and came into force in March 2010. Importantly, the previous version of section 45 (i) did not limit the offense to horizontal agreements between competitors/potential competitors, or to the three categories of conduct specified above, and (ii) incorporated a “market effects” test that required proof (beyond a reasonable doubt) that the impugned agreement prevented or lessened competition “unduly” or resulted in an “unreasonable” enhancement in price. It is generally agreed that, by eliminating proof of market impact as a condition precedent to criminal liability, the new section 45 also arguably lowers the bar for civil recovery by private litigants under section 36.

Given the time frames involved, certain of the Canadian plaintiffs are purporting to rely on both the pre- and post-amendment versions of section 45. This could ultimately require these plaintiffs to prove that the pre-March 2010 conduct in question resulted in an “undue” lessening or prevention of competition, or an “unreasonable” enhancement of prices, in order to recover. Although the plaintiffs would not be required to meet the criminal burden of proof in this regard, given the civil nature of the proceeding, there is no doubt that having to prove market impact would significantly complicate their ability to prevail in any contested proceeding. For example, Apple and the publisher defendants would no doubt argue that the arrangements had a pro-competitive effect by facilitating Apple’s entry and accelerating innovation and increased competition and output.

While the assumption is that market impact considerations will not be relevant for civil litigation under the current version of section 45, this is not yet settled since there have not been any decided cases. For example, it is possible that a court might consider the effect of the agreements in this case, including any pro-competitive justifications, in deciding whether they qualify as per se prohibited price-fixing agreements under section 45 to begin with.

At the same time, one of the difficult issues facing plaintiffs with respect to post-amendment conduct will be how to characterize Apple as a “competitor” of the publishers, given that new section 45 only applies to agreements between competitors (or potential competitors). While there are historical precedents in Canada for parties being convicted for participating in cartels organized by upstream or downstream parties, these cases were decided under the old version of section 45, which was not limited to prohibiting anticompetitive agreements among “competitors.”


Although the key legal battles in the eBooks case will no doubt be fought in the United States, the litigation raises interesting issues for Canada as well. In particular, to the extent that the case actually proceeds to litigation, it could raise—and decide—important issues relating to the interpretation of the new per se conspiracy offense under the Act.


Archer Daniels Midland Price-Fixing Video from “Fair Fight in the Marketplace”

I recently stumbled upon this YouTube video from “Fair Fight in the Marketplace.”  This segment shows the real story of the Archer Daniels Midland (ADM) price-fixing case, the basis for the movie “The Informant!“, and includes excerpts from the actual FBI undercover footage of conspiracy meetings shot by Mark Whitacre, played by Matt Damon in the movie.

From the YouTube description: “Fair Fight in the Marketplace provides an engaging look at our antitrust laws that give protection to both American consumers and businesses. The half-hour program also considers a more fundamental question: can a set of regulations created by the Sherman Act at the end of the 19th century be relevant in todays era of digital technology and high-speed communications?

Hosted by NPR and Fox News commentator Mara Liasson, the program provides a short, colorful history of the antitrust laws in America and features three recent case studies.”

Archer Daniels Midland Segment from Fair Fight in the Marketplace

Much of the ADM conspiracy took place overseas.  In related news, the recently convicted AU Optronics Corp. executive apparently intends to appeal his conviction on the basis that, among other things, the Sherman Act doesn’t reach the foreign activity at issue in his case.  (Although he apparently will now file his appeal without former acting Solicitor General Neal Katyal.  Katyal was previously the lead counsel for the Guantanamo Bay detainees in the Supreme Court case Hamdan v. Rumsfeld, which held that military commissions set up by the Bush administration to try detainees at Guantanamo Bay violate both the UCMJ and the four Geneva Conventions, so he probably would have had some interesting things to say about extraterritoriality.)

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