The state of Mississippi has reached a settlement worth up to $100 million with Microsoft Corp., the largest cash payment so far in a string of deals the technology giant has struck with states over allegations that it abused its monopoly power by bundling its Internet Explorer and its Windows operating system, thereby shutting rivals out of the Web browser market. The settlement will be paid as a combination of a cash payment to the state and hardware and software vouchers to consumers, businesses, government entities, public schools, and public school districts. In January the European Commission began an investigation into whether similar bundling by Microsoft in the European Union has harmed competition and reduced consumer choice in violation of the European Union antirust laws.
Lufthansa Offers Competition Fixes In EC Takeover Probe
June 17, 2009 – 4:45 pm
The European Commission has extended its review of Lufthansa AG’s bid to take over the largely state-owned Austrian Airlines AG because the airlines have offered concessions to handle the regulator’s competition concerns over a deal that calls for Austria to take on a significant share of the airline’s debt. When the EC initially opened its probe into this sale, it expressed doubts over 1) whether the carriers had proposed sufficient measures to keep the combination from distorting the market and harming competing airlines and 2) whether the price Lufthansa agreed to pay reflected the actual market price for the airline, worried that the sale process might not have been truly open, transparent and unconditional. Lufthansa’s proposed $325 million deal to acquire Belgian rival Brussels Airlines has drawn similar scrutiny from EU regulators, who were worried that the deal would reduce competition, especially for passenger transport between Belgium and Germany and Belgium and Switzerland, creating a monopoly on three airline routes, and substantially reducing competition on a fourth route.
Class Action Challenging Steel Manufacturer Production Cuts Survives Motion to Dismiss
June 16, 2009 – 2:27 pm
In a Northern District of Illinois case, a class of steel purchasers allege that steel producers conspired to cut production in order to support prices. The defendants sought to dismiss the complaint for failing to adequately allege conspiratorial activity. The court held that whether the defendants acted unilaterally or in tandum was a fact question that could not be resolved on the pleadings.
EU Challenge to Visa Merchant Fees
June 16, 2009 – 2:08 pm
Just two months after, it was accused of exploiting a dominant position with respect to cross-border interchange fees, a report has surfaced that the EC will challenge Visa’s merchant fees more broadly.
EC’s Microsoft Investigation
June 15, 2009 – 12:10 pm
The EC has taken note of Microsoft‘s plan to offer a version of Windows 7 in the EU without Internet Explorer. The Commission said that it would soon determine whether Microsoft’s tying of the two from 1996 to date constituted an abusive of its dominant position. The U.S. Courts have previously determined that many aspects of Microsoft’s conduct relating to IE violated Section 2 of the Sherman Act, but the DOJ abandoned its tying claim when the DC Circuit remanded it for consideration under hte Rule of Reason. The EC is also uncertain whether Microsoft’s current proposal to sell an IE-less Windows 7 would create genuine consumer choice and address the anticompetitive effects of Microsoft’s long-standing conduct. The Commission has suggested that it may require Microsoft to offer the consumers browser of choice rather than simply sell a browserless version of Windows.
Printer Ink Cartridge Patent Suit Spurs Antitrust Counterclaim
June 9, 2009 – 1:57 pm
In Seiko Epson Corp. et al. v. Glory South Software Manufacturing Inc. et al. Seiko Epson Corp. has been hit with an antitrust counterclaim in its patent infringement litigation against China’s Nenistar Technology and other printer supply manufacturers over ink cartridges. The counterclaim alleges that Seiko Epson has patented features in its ink cartridges that are not novel or distinct from prior art in order to maintain monopoly and prevent others from offering competing ink cartridges for use in Epson printers.
FTC Challenges Blood Plasma Merger
June 9, 2009 – 1:56 pm
Update June 2009: The parties have abandoned the deal.
In In the Matter of: CSL Limited and Cerberus-Plasma Holdings LLC, the FTC has officially moved to block blood plasma-derived therapeutics company SCL Ltd.’s proposed $3.1 billion acquisition of rival Talecris Biotherapeutics, alleging that this deal would have an anti-competitive effect through 1) consolidating the market for protein therapies; 2) increasing the likelihood of collusion; 3) tightening supply relative to demand; and 4) driving up prices. This latest move by the FTC follows the FTC’s earlier concerns about this acquisition’s possible anti-competitive effects, when it asked CSL to provide more informaiton about the deal under the Hart-Scott-Rodino Antitrust Improvements Act.
Municipal Derivatives Action Dismissed
June 9, 2009 – 1:28 pm
In In Re: Municipal Derivatives Antitrust Litigation, Southern District of New York Judge Victor Marrero tossed out claims against 34 of the nation’s largest financial institutions accused of fixing prices of municipal derivatives in multidistrict litigation brought by over a dozen municipalities. The Court ruled that plaintiffs did not provide sufficient evidence for their allegations of bid-rigging, price-fixing, and allocating customers since 1) the mere fact that defendants are part of an industry that is purportedly rife with antitrust violations is not, without more, enough to state a claim; and 2) on-going FBI and IRS investigations of the companies are not enough to constitute evidence of a plot. The court gave plaintiffs 20 days to refile. Despite the ruling, the case continues against MGIC Investment Corp. and Bank of America N.A., which did not join the motion to dismiss. In January, Bank of America entered into an agreement with DOJ where, in exchange for cooperation with the DOJ, DOJ will not bring any criminal antitrust prosecution against it, which also shields Bank of America from potential treble damages in any civil antitrust suit brought against it arising from the investigation and qualifies it for relief from joint antitrust liability.
9th Circuit Revives Web Domain Name Case
June 9, 2009 – 1:08 pm
A group calling itself the Coalition for ICANN Transparency, Inc. brought antitrust claims against Verisign, Inc., the sole entity licensed by ICANN to register .com and .net domain names. The district court dismissed the case, but the 9th Circuit reversed, holding that the complaint adequately stated antitrust claims. All parties agreed that as a practical matter, only one entity could handle registration of domain names. First, the court held that a provision requiring automatic renewal, unless Verisign breached the agreement, raised anticompetitive concerns because competitive bidding for future contracts was likely to be the sole opportunity for competition in this market. Second, the court held that provisions in the contract permitting certain fixed price increases were the product of an anticompetitive agreement. Third, the court held that Verisign allegedly predatory campaign to pressure ICANN to agree to the anticompetitive terms stated a Section 2 claim. Fourth, the court held that expiring domain names may constitute a separate market because they may have additional value compared with new names as a result of prior use and advertising. The plaintiff thus stated a valid Section 2 attempted monopolization claim with respect to Verisign’s efforts to secure the ability to administer registration of expiring names.
The court upheld the lower court’s dismissal of claims relating to the .net market on the ground that this contract was awarded through a competitive process and Verisign’s alledgedly predatory conduct related only to the .com market.
DC Circuit Upholds FCC Ban On Exclusive Cable Contracts
June 2, 2009 – 2:56 pm
Update June 2009: Verizon has argued that the D.C. Circuit’s rationale in upholding the ban on exclusivity deals with apartment owners should be extended to prohibit cable exclusives on regional sports programing channels.
In 2007, the FCC adopted a rule banning cable companies from entering exclusive contracts with apartment building owners and forbidding the enforcement of existing contracts prospectively. The cable companies challenged the rule as outside the scope of FCC statutory authority. The D.C. Circuit held that the ban addressed the sort of competitive limits that Congress intended to prevent in enacting Section 628(b) of the Communications Act.