The FCC has denied AT&T’s claim that Cox Broadcasting’s refusal to license Padres baseball games to AT&T in San Diego constitutes unfair competition. Cox has an exclusive deal the over-the-air station, Channel 4 San Diego, which has exclusive rights to the Padres games. Cox has agreed to sub-license Time-Warner cable, which like Cox serves large portions of the San Diego market. But Cox and Time-Warner engage in very little head-to-head competition. AT&T is a major competitor of Cox with respect to voice telephone, internet, and now television. The FCC staff found that because Channel 4 is available over the air, the existing unfair competition rules do not apply. The staff indicated that a Rule Making proceeding to determine whether the rule should be expanded would be the appropriate avenue to consider the matter. AT&T plans to appeal to the full Commission. As a dominant provider of cable TV programming in many areas of San Diego, Cox might have an antitrust duty to deal. As yet, AT&T has not pursued that avenue for relief.
Qualcomm Patent Standard Challenge Dismissed on Standing Grounds
March 5, 2009 – 2:22 pm
In Meyer v. Qualcomm, the court dismissed the claim that Qualcomm acted anticompetitively in refusing to license patents essential to a standardized technology. The S.D. of California court ruled that the plaintiff lacked antitrust standing because the chip set it purchased included a broad package of technologies, not just the patented technology involved. Although the claim would not have been barred under the indirect purchaser rule alone, the court held that the plaintiff was too remote to constitute a proper plaintiff.
LCD Private Action Survives Motion to Dismiss
March 5, 2009 – 2:09 pm
In In re: TFT-LCD (Flat Panel) Display Antitrust Litigation, N.D. California Judge Susan Illston denied the LCD television manufacturers’ motion to dismiss a private action filed by direct purchasers. The defendants argued that the allegations of conspiracy were too vague outside the post-2000 period covered by the defendants’ executives guilty pleas in a related criminal proceeding. Pointing to “numerous illicit conspiratorial communications between and amoung the defendants,” the court found the allegations more than sufficient for the period from 1996 to 2001. The court did dismiss indirect purchaser claims, which are generally not cognizable under federal law. Some states permit indirect purchase claims, and the plaintiffs had sought to rely on the antitrust laws of various states. The court held that Virginia, Montana, and Puerto Rico antitrust laws did not extend to indirect purchasers.
U.S. Supreme Court Rules Out Price Squeeze Claim
February 28, 2009 – 9:49 am
In an opinion authored by Chief Justice John Roberts, the U.S. Supreme Court held that a company with no antitrust duty-to-deal with a competitor cannot violate the antitrust laws by squeezing its wholesale and retail prices to such an extent that competitors are unable to earn a sufficient return at the retail level. The case involved a claim by internet services provider, linkLine Communications, against Pacific Bell Telephone. Following the Court’s recent decision in Verizon — which held that a regulatory duty-to-deal did not constitute an antitrust duty-to-deal — the Court ruled in favor of Pacific Bell, remanding for further consideration of the plaintiff’s predatory pricing claim, i.e. that Pac Bell’s retail prices were below cost.
As a matter of logic, the opinion appears to be clearly correct. If a company may refuse to sell to a competitor, and thus block all competition, then it cannot violate the antitrust laws by agreeing to sell, but at a high price. The real problem dates back to the Verizon decision that a regulatory duty-to-deal is not an antitrust duty-to-deal. If a regulatory program is designed to stimulate competition in a market that might not otherwise be competitive, efforts to stifle competition in that market should be tested under the antitrust laws unless the regulatory statute specifies otherwise or, at a minimum, the relevant regulatory agencies opposes the antitrust proceeding. Neither was true in Verizon.
In Pacific Bell, Chief Justice Roberts suggested that no antitrust duty-to-deal existed in the internet service market because it was a competitive market. To be sure, internet service can be provided through telephone lines, cable TV lines, and by satellite. But that competition may not reach all consumers, and may be sub-optimal for many reasons. Presumably, the lack of confidence in robust competition has led to a continuing regulatory duty on the part of telephone companies to provide access to competitive internet service providers.
AP Hot News Doctrine Applied to the Internet
February 27, 2009 – 5:09 pm
In AP v. All Headlines News, the Southern District of New York has held that a publisher of hot news on the internet may sue to prohibit copying and republication by a competitor. The case harkens back to the 1918 US Supreme Court decision in AP v. UPI and constitutes the first time that the doctrine has been applied to internet publishing.
Fiberglass Insulation Price-fixing Case to Go to Trial
February 17, 2009 – 1:10 pm
Northern District of Georgia Judge Julie Carnes denied defendant Masco motion for summary judgment in a case alleging that Masco, a large insulation contractor, orchestrated a price fixing cartel amoung four of the five largest fiberglass insulation manufacturers. The complaint alleges that because of its size, Masco was able to negotiate lower prices from the manufacturers than its numerous smaller competitors. Masco went further, however, extracting agreements from the manufacturers to ensure a specific price spread. The manufacturers are said to have participated in the scheme in order to obtain Masco support for increated fiberglass insulation prices. The court cited documents reflecting that the manufacturers needed to clear price changes with Masco to ensure that they did not violate the agree upon spread. The court also certified a nationwide class of insulation contractors.
EC Considers Responses to Statement of Objections to Prestressed Steel Suppliers
February 12, 2009 – 5:53 pm
The EC has confirmed an October 2008 Statement of Objections was sent to companies supplying prestressed steel regarding expressing concern about cartel behavior. The EC is now considering the responses.
Flat Glass Conspiracy Case To Proceed
February 12, 2009 – 5:50 pm
Judge Ambrose, Western District of Pennsylvania, denied the defendants motion to dismiss a putative class action alleging that the defendants fixed energy surcharges. The motion argued that the plaintiffs had alleged insufficient facts to establish a conspiracy under Twombly. The court held thought otherwise, holding the allegations sufficient because they pointed to a history of an inability to raise price and of varying surcharges that ended abrutly in June 2002. The defendants then acted in virtual loc, the complaint alleges, until the EU began its probe in 2005. The complaint also alleged specific dates on which the defendants met.
DOJ to Investigate Ticketmaster/Live Nation Merger
February 12, 2009 – 5:40 pm
Not surprisingly, the Antitrust Division announced that it would investigate the proposed merger between the ticket selling giant and the concern promoter that had begun selling tickets of its own. Artist Bruce Springsteen and several senators from both parties expressed concerns about the proposed merger.
Antitrust Attack on Concert Promotion Agreement Survives Motion to Dismiss
February 12, 2009 – 5:19 pm
A competing arena has attacked an agreement between concert promoter Live Nation and the Grand Rapids/Kent County Convention Authority that entitles 1) Live Nation to 1/3 of the revenue from non-Live Nation events at Convention Authority venues, and 2) the Convention Authority 1/3 of Live Nation’s revenue at Live Nation events scheduled at competing venues. The owner of the competing DeltaPlex Arena alleges that the agreement will increase price and reduce the number of big-time concerts in the area. The defendants’ argued that they were protected by state action immunity because of their affiliation with local government. The court held that the complaint sufficiently alleged an antitrust violation and that the applicability of state action immunity was not clear.