Articles Posted in Antitrust Counseling

Articles about antitrust counseling and training.

Antitrust Courses Still Can Teach Valuable Practical Skills — If Taught Well

August 25, 2021 | Bona Law PC

In addition to being a full-time antitrust attorney at Bona Law PC, I have taught at least one antitrust course every year since 2009 at three different Michigan law schools. As I prepare for another semester, I had reason to return to an article I wrote six years ago. There, I captured my thoughts on the practical benefits to all future lawyers, not just members of the antitrust community, from taking a well-taught antitrust course. In that article — Antitrust Courses Can Teach Valuable Practical Skills – If Taught Well — I made the case for using hypothetical materials to teach both the law and practical counseling and advocacy skills that any new lawyer can use.

In the intervening six years, I have continued that practice in many seminar and survey courses, always using my Antitrust Simulations book and its hypothetical materials based on some of my past antitrust matters. I still think my original conclusions in the article are valid; however, other aspects of teaching antitrust law have changed, as I explain below.

Six years ago, one of my premises was that law schools, under pressure from employers and accreditation bodies to graduate students more “practice-ready,” would be incorporating experiential learning in many more of their classes. Based on comments from my admittedly small sample of students, that trend seems to have slowed. At least at schools where the majority of the faculty are not current or former practitioners, students have commented that my class is the most practical one they have taken. It appears that experiential learning is still being outsourced exclusively to legal practice classes and clinics. If so, that is too bad, for the reasons explained in my original article — after all, most graduates even from top schools will spend their careers counseling clients and meeting with regulators, not writing law review articles and clerking for justices.

One unfortunate trend among some students is what I call “the Google-ization of legal thinking.” I refer to the idea that all legal matters can be easily solved by simple application of rules or black letter law or that a perfectly formed query will spit back “the” answer. Such an attitude is especially troublesome in antitrust where more than a century of shifting caselaw based on short statutes turns most questions outside of naked price fixing into grey areas requiring extended consideration.

I try to counter this tendency in two ways. First, I quote Prof. Daniel Crane and his reaction to students who complain he did not teach enough antitrust black letter law: “This is the marker of the student who has not ‘gotten it.’ There is relatively little black letter law in antitrust law. (Some would say there is relatively little law in antitrust law.)”

Second, discussion of the hypothetical material allows the students to see that changing the facts slightly can lead to a different conclusion. For instance, all my classes end up discussing a hypothetical set of facts and whether it adds up to an “agreement” under the antitrust laws. After the students have reviewed the facts, I “poll the jury” and ask a few students which fact was the one that convinced them. I then ask if their opinion would change if that fact were absent or changed. The students then begin to understand that answers to some questions require gathering and evaluating various bits of evidence, not searching for the one right answer.

Another unfortunate trend among still a minority of students is the “Twitter-ization of legal thinking.” Here, some students will start from a strongly held premise that can be described in under 280 characters (“all government intervention is bad”; “I don’t like that unfair result so antitrust law should change it”) and then reason backwards so that all matters are consistent with that premise. This development seems to be correlated with, and perhaps caused by, the increased amount of questionable “anti-trust” coverage in the general media in the last six years. Here, discussion of the hypothetical material and a polling of the class (in-person or virtually) can at least show that other students have different opinions and good reasons for them.

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Leniency Applications and Limited Liability Under ACPERA

August 5, 2021 | Bona Law PC

Author: Jon Cieslak

I recently wrote about the DOJ Antitrust Division’s Leniency Program, and the benefits it can provide to a company engaged in criminal antitrust conduct. Those benefits can extend beyond a company’s immunity agreement with the DOJ to the civil litigation that frequently follows a DOJ investigation. The civil law benefits of a successful leniency application are provided by the Antitrust Criminal Penalty Enhancement and Reform Act, Pub. L. No. 108-237, § 213(a)-(b), 118 Stat. 665, 66-67 (2004), commonly referred to by its acronym, ACPERA.

Originally passed in 2004, and made permanent by Congress in 2020, ACPERA provides additional incentives for companies engaged in criminal antitrust conduct to participate in the Leniency Program. ACPERA does so by altering the damages that can be recovered from a successful leniency applicant in two ways:

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How to Avoid an HSR Second Request (Maybe)

July 21, 2021 | Bona Law PC

Author: Steven J. Cernak

Submitting the form and documents required under the Hart-Scott-Rodino premerger notification system can be complicated. If only the initial submission must be made, however, the pain and expense can be short-lived. If, on the other hand, the parties receive a “second request” for information at the end of the thirty-day waiting period, the parties and their executives are in for months of discovery, questioning, and plenty of quality time with antitrust lawyers instead of their customers. To give themselves a chance to avoid that fate, parties should consider taking a few basic steps before and immediately after the initial HSR filing.

HSR Basics

As we discussed in prior posts, HSR requires the parties to certain large mergers and similar transactions to submit a form and certain documents to the two U.S. antitrust agencies prior to closing the transaction. If the antitrust agencies fear the transaction will cause antitrust problems, they can sue to stop it; if not, they allow the transaction to move forward. After the parties complete their submission, the agencies have thirty days to decide if they need more information to make that determination.

HSR was the first premerger notification scheme when it was passed in 1976. Since then, dozens of other jurisdictions have passed similar, but far from identical, schemes. HSR remains simpler (not simple) in two key-ways. First, the HSR form does not require any market, share, or similar information that would go into an antitrust analysis; instead, the parties must merely describe themselves and the transaction. Second, the HSR process does not require any pre-filing consultation with the agency to ensure the submission is complete; instead, the parties can just upload the submission and wait to be told if anything is missing.

That is not to say that submitting the HSR form and documents is simple. Like most tax forms, the form itself is only a few pages long but the instructions, definitions, rules, and interpretations necessary to correctly fill in the blanks run to hundreds of pages. And some of the information required can be obscure—for instance, many companies do not have ready their U.S. revenues classified by North American Industry Classification System codes. (Those of us who have been filing for decades appreciate that the FTC has simplified the form. For example, it no longer requires a base year of revenues or a list of added and deleted products since that base year.)

HSR Second Requests

Most parties submit the filing, let out a sigh of relief, and try not to think of HSR again. Usually that course of action is correct. After all, the vast majority of all HSR filings are cleared in the first thirty days. If the reviewing antitrust agency believes it needs more information to decide the transaction’s likely effects, however, it will issue a “second request” for information.

A second request is a long list of document requests and interrogatories that can take months to fulfill. In the meantime, the parties and their lawyers, executives, and expert economists will debate the meaning of all that information. At the end of the process (often about a year later), the agency will decide if it should sue to stop the transaction from closing. If the agency challenges the transaction, the parties must then decide to either abandon the transaction or spend several more months, at least, defending it in court.

An HSR Second Request—Will You Get One?

Therefore, parties to an HSR filing need to predict if their filing will be one of the minority that receive a second request. If so, they must then decide which steps, if any, to take to try to head it off.

There is no set of questions to ask that will unfailingly predict the receipt of a second request; however, a positive response to several of the following questions makes it much more likely that the reviewing agency will want more information than is contained in the initial HSR submission:

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The Department of Justice Antitrust Division’s Leniency Program

July 1, 2021 | Bona Law PC

Author: Jon Cieslak

In 1993, the U.S. Department of Justice Antitrust Division created its Leniency Program by issuing its Corporate Leniency Policy. The Leniency Program provides means for a company to avoid criminal prosecution for violating federal antitrust laws—such as price fixing, bid rigging, and market allocation—by self-reporting the illegal activity to the Antitrust Division.

Since then, the Leniency Program has been a major impetus for criminal antitrust cases in the United States. In fact, because the Antitrust Division’s criminal prosecutions are almost always followed by civil litigation filed by private plaintiffs, it is widely understood (though not always confirmed) that some of the largest antitrust cases of the past thirty years started with leniency applications, including In re TFT-LCD (“Flat Panel”) Antitrust Litigation and In re Sulfuric Acid Antitrust Litigation.

Although some have lately questioned the Leniency Program’s effectiveness, the Leniency Program is widely considered a success and a key part of the Antitrust Division’s enforcement toolbox. Accordingly, any time a company discovers that it may have engaged in conduct violating the antitrust laws, it should consider participation in the Leniency Program.

How does a company qualify for the Leniency Program?

The Leniency Program provides two ways in which a company can obtain leniency, commonly referred to as “Type A” leniency and “Type B” leniency. The key difference between the two is that Type A leniency is only available before the Antitrust Division opens an investigation of the illegal activity, whereas Type B leniency can be obtained even after an investigation is opened. Flowing from this key difference, the requirements to obtain each type of leniency vary slightly.

To obtain Type A leniency, a company must:

Report the illegal activity before the Antitrust Division receives information about the illegal activity;
Take “prompt and effective” steps to end its involvement in the illegal activity as soon as it was discovered;
Report the illegal activity “with candor and completeness” and cooperate with the Antitrust Division’s investigation;
Confess to its wrongdoing on behalf of the company, “as opposed to isolated confessions of individual executives or officials;”
Provide restitution to injured parties if possible; and
Not be a ringleader or originator of the illegal activity.

Type B leniency shares some of these requirements, but has several of its own. To obtain Type B leniency, the following conditions must be met:

The company is the first “to come forward and qualify for leniency;”
The Antitrust Division does not already have evidence against the company “that is likely to result in a sustainable conviction;”
As with Type A, the company ended its involvement in the illegal activity;
As with Type A, the company cooperates with the investigation;
As with Type A, the company confesses its wrongdoing;
As with Type A, the company provides restitution; and
The Antitrust Division determines that leniency “would not be unfair to others” under the circumstances.

What are the benefits of the Leniency Program?

While the Leniency Program’s requirements are considerable—it is no small thing to self-report and admit to an antitrust crime—the program offers substantial benefits to those that qualify. First and foremost, a successful leniency application means that the Antitrust Division will not bring criminal charges against the company for the reported activity. Although there are other ways to avoid charges, such as a deferred prosecution agreement, the Leniency Program provides the surest path to immunity.

In addition, if a company qualifies for Type A leniency, all company directors, officers, and employees who admit their involvement and cooperate with the Antitrust Division’s investigation will likewise receive leniency. Under Type B leniency, the Antitrust Division will evaluate leniency for directors, officers, and employees on an individual basis, but still commonly grants leniency.

Finally, a successful leniency application provides benefits in any related civil litigation pursuant to the Antitrust Criminal Penalty Enhancement and Reform Act (ACPERA). An upcoming article will discuss those benefits in detail.

How does a company participate in the Leniency Program?

A company’s participation in the Leniency Program can vary depending on the facts and circumstances of the illegal activity and, in particular, how the Antitrust Division chooses to investigate it. But there are a few common steps you should plan on at the outset.

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How to Obtain Specific US Antitrust Agency Guidance: The DOJ Business Review and the FTC Advisory Opinion Processes

June 28, 2021 | Bona Law PC

Authors: Jim Lerner and Luis Blanquez

Both of the U.S. government agencies responsible for antitrust enforcement (the Department of Justice– “DOJ” and Federal Trade Commission – “FTC”) have review mechanisms available for companies seeking guidance on whether they are likely to take antitrust enforcement action against a proposed agreement or course of conduct: the DOJ has a Business Review process and the FTC has an Advisory Opinion process.

From a practical perspective (and putting aside mandatory Hart-Scott-Rodino merger filings), it is uncommon in the U.S. for parties to submit their agreements to the competition authorities for review before entering the agreement or undertaking the proposed conduct. Except in particular circumstances—such as with complex antitrust and intellectual property issues—most parties decide that the potential antitrust-enforcer guidance is not worth the time and effort involved in seeking such review.

But there are instances in which it does make sense to seek antitrust agency review, so we describe the processes here.

With respect to the DOJ Business Review process, while there has been expedited treatment for collaborations directly related to COVID, the “traditional” Business Review process tends to be lengthy (it can regularly take up to 6 months or more to get through the entire process) and complicated. Applicants for a Business Review letter must make a complete disclosure of all the necessary information about the agreement or collaboration for which a review is requested. This requires background information about the parties and industry, copies of any/all operative documents, detailed statements of any/all collateral oral understandings, and any additional information the Division requests. Depending on how the Division responds, it doesn’t necessarily result in any guarantees about what the Division will or will not do if the described conduct/collaboration goes forward. One other big downside is that the process is truly prospective––that is, it requires that the parties not start their proposed activities until after the Division responds.

The use of FTC Advisory Opinion process is similarly infrequent, also due to narrow set of conditions under which the Commission or the Commission Staff will actually consider such a request. At the linked document set out, the Commission will only consider an Advisory Opinion when (1) the matter involves a substantial or novel question of fact or law and there is no clear Commission or court precedent, or (2) the subject matter of the request and consequent publication of Commission advice is of significant public interest. The request for an advisory opinion must concern a course of action that the requesting party proposes to pursue. That is, the requesting party must intend to engage in the proposed conduct; hypothetical questions or questions about conduct that is already ongoing will not be answered. Furthermore, a proposed course of action must be sufficiently developed for the Commission or its staff to conclude that it is an actual proposal rather than a mere possibility, and to evaluate the proposal based on the description and supporting information provided with the request. At the same time, however, the parties cannot have started their requested conduct. As you can tell, the scope of this tool is very limited.

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Alston v. NCAA: Helpful for Future Antitrust Defendants?

June 23, 2021 | Bona Law PC

Author: Steven J. Cernak[1]

On June 21, 2021, the U.S. Supreme Court affirmed lower court decisions and held that certain NCAA restrictions on educational benefits for student-athletes violated Sherman Act Section 1. The unanimous opinion was a clear win for the plaintiff class and almost certainly will lead to big changes in college sports.

It was also a clear defeat for the NCAA. While the opinion (as the NCAA’s reaction emphasized) maintained the NCAA’s ability to prohibit non-educational benefits and define limits on educational ones, any such NCAA rules must be defended under a full antitrust rule of reason analysis, not a special deferential standard based on language from a 1984 Supreme Court case. Litigation on such issues is already in the lower courts and more can now be expected.

Justice Gorsuch’s unanimous opinion for the Court, however, contains numerous references, concepts, and phrases that will prove helpful to future antitrust defendants, especially those in joint ventures with competitors. The opinion is a reminder that any effort to aggressively change antitrust’s status quo will need to deal with a judiciary steeped in decades’ worth of precedent. Below are some highlights of the opinion sure to be noted by future antitrust defendants.

American Express, Trinko Alive and Well

The recent House Majority Report on antitrust issues in Big Tech, co-authored by recently confirmed FTC Commissioner Lina Khan, had several general recommendations. One of those recommendations was for Congress to overturn several Court antitrust opinions, including Ohio v. American Express (written by Justice Thomas) and Verizon v. Trinko (written by Justice Scalia). We covered the ramifications of such reversals here and here.

Apparently, the Court disagrees with that recommendation. American Express was cited at least seven times by the Court, both for when the rule of reason analysis should be used and the three-part burden-shifting process of such an analysis. In a heavily criticized part of the American Express opinion, the Court found that the rule of reason analysis needed to account for effects on both sides of a two-sided market. While Justice Gorsuch’s opinion here did not cite American Express for that proposition, it and the parties assumed that the NCAA could try to justify its restraints in the labor or input market with positive effects in the output market, further cementing the American Express analysis.

The opinion cites Trinko at least four times, usually for the proposition that judges should not impose remedies that attempt to “micromanage” a company’s business by setting prices and similar details. Another citation, however, is to Trinko’s admonition to courts to avoid “mistaken condemnations of legitimate business arrangements” that could chill the procompetitive conduct the antitrust laws are designed to protect. This focus on “error costs” has been embedded in antitrust jurisprudence for decades but has come under attack in recent years from commentators who would prefer more aggressive antitrust enforcement. This unanimous opinion ignores that criticism.

Bork and Easterbrook

Many of today’s antitrust principles can be attributed to Chicago School theorists, including Robert Bork and Frank Easterbrook. Their writings, both as academics and appellate court judges, have remained influential, although both recently have come under withering attack. Justice Gorsuch seems to remain a fan of both.

Bork’s opinion in Rothery Storage v. Atlas Van Lines is cited twice, once for the proposition that the reasonableness of some actions can be judged quickly and once that courts should not require businesses to use the least restrictive means for achieving legitimate purposes. Bork’s recently re-released The Antitrust Paradox is also quoted for the proposition that competitors in sports leagues must be allowed to reach some agreements, such as on number of players, in order to have any competitions at all.

The Supreme Court cites two of Easterbrook’s Seventh Circuit opinions. The Court cites Polk Bros. v. Forest City Enterprises for the proposition that a joint venture among firms without the ability to reduce output is unlikely to harm consumers. A page later, the Court uses Chicago Professional Sports v. NBA to explain that different restraints among joint venturers might require different depths of analysis to ascertain their effect on competition. Finally, the Court cites one of his law review articles to support judicial caution in summarily condemning business conduct until courts and economists have accumulated sufficient understanding of its likely competitive effect. Surprisingly, Easterbrook’s most famous article — The Limits of Antitrust — was not used in the discussion of the error-cost framework discussed above, despite continuing to be celebrated as one of the leading descriptions of the concept.

Other Quotable Quotes

In addition to the citations above, several other portions of the opinion are sure to be used by future antitrust defendants. In fact, on June 21 Prof. Randy Picker (@randypicker) put together a Letterman-like Top 10 List of Things that Defense Attorneys will Like in Alston tweet thread. No arguments here with any item on Prof. Picker’s list but two groups of such quotes are worth highlighting.

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Who is Capable of Conspiring to Violate the Antitrust Laws?

June 13, 2021 | Bona Law PC

Author: Jarod Bona

When you think about Sherman Act Section 1 antitrust cases (the ones involving conspiracies), you usually consider the question—often framed at the motion to dismiss stage as a Twombly inquiry—whether the defendants actually engaged in an antitrust conspiracy.

But, sometimes, the question is whether the defendants are, in fact, capable of conspiring together.

That isn’t a commentary on the intelligence or skills of any particular defendants, but a serious antitrust issue that can—in some instances—create complexity.

So far I’ve been somewhat opaque, so let me illustrate. Let’s say you want to sue a corporation under the antitrust laws, but can’t find another entity they’ve conspired with so you can invoke Section 1 of the Sherman Act (which requires a conspiracy or agreement). How about this: You allege that the corporation conspired with its President, Vice-President, and Treasurer to violate the antitrust laws. Can you do that?

Probably not. In the typical case, a corporation is not legally capable of conspiring with its own officers. The group is considered, for purposes of the antitrust laws, as a “single economic entity,” which is incapable of conspiring with itself. Of course, the situation is complicated if we aren’t talking about the typical corporate officers, but instead analyzing a case with a corporation and corporate agents (or in some cases, even employees) that are acting for their own self-interest and not as a true agent of the corporation. The question, often a complex one, will usually come down to whether there is sufficient separation of economic interests that the law can justify treating them as separate actors.

A lot of tricky issues can arise when dealing with companies and their subsidiaries as well. In the classic case, Copperweld Corp. v. Independence Tube Corporation, for example, the United States Supreme Court held that the coordinated activities of a parent and its wholly-owned subsidiary are a single enterprise (incapable of conspiring) for purposes of Section 1 of the Sherman Act.

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What Pandemic Changes Will Be Lasting and Affect Antitrust Practice?

May 18, 2021 | Bona Law PC

Author: Steven J. Cernak

With the number of vaccinations rising and mask mandates going away, it appears that life might be heading back towards something like the “old normal.” But during the pandemic, businesses and consumers formed new habits. How many of those new actions will continue post-pandemic and how will those changed processes affect antitrust practice? With all the caveats about predicting the future, here is one set of opinions.

Joint Ventures

At the beginning of the pandemic, many law firms chose to remind their readers that antitrust laws still applied and, for instance, price-fixing was still per se illegal. We chose to remind our readers that pro-competitive joint ventures of various sorts have always been fine under the antitrust laws and might prove useful to businesses struggling to survive a pandemic and lockdowns. The DOJ and FTC also reminded everyone that antitrust laws still applied but, to their credit, also pointed to permissible joint ventures. They also streamlined their review processes for parties wanting an advisory opinion on joint efforts related to the pandemic.

Obviously, it is too early to tell if there has been any change in the number of price-fixing and similar conspiracies consummated during the pandemic; however, it does appear that many businesses did use joint ventures to improve efficiency. As of this writing, at least six joint efforts took advantage of DOJ’s streamlined Business Review Letter processes to obtain greater antitrust certainty about their joint efforts. Also, over 160 notices under the National Cooperative Research and Production Act were filed with DOJ and the FTC in the past twelve months. While many of those notices were merely updates from a much smaller number of joint ventures to disclose changes in membership of the consortium, they do provide some evidence that many companies remembered the pro-competitive business benefits of some collaborations of competitors. As businesses look for ways to improve efficiencies in uncertain times, look for these collaborations to continue.

Pricing

Pricing at all levels of distribution sends key signals to consumers, distributors, and manufacturers and so is often an important antitrust topic. As we explained early in the pandemic, however, price gouging is not a violation of the federal antitrust laws. State price gouging laws and contractual provisions were used early in the pandemic to protect consumers from high prices and manufacturers from blame for high prices by authorized and other distributors. Fears of price gouging seemed to fade early in the pandemic and, other than isolated incidents caused by temporary shortages, seem unlikely to return; instead, the pricing issue currently top of mind is general price inflation, a topic not covered by antitrust laws.

Supply Chain Issues—From Just in Time to Just in Case?

At the beginning of the pandemic, it was shortages of toilet paper and other paper products. Here near the end, it is a shortage of computer chips for motor vehicles (and other products), chicken, and other products. Both the products and the causes of the shortages seem to have changed during the pandemic. The toilet paper shortage was caused by a sudden and extreme temporary increase in demand; the more recent ones are caused by various supply chain and labor issues resulting in multiple and long-term dislocations.

At bottom, many of these dislocations stem from companies trying to implement their interpretations of the Toyota Production System, particularly a just-in-time supply chain. Such supply chain management reduces costs and inefficiencies by eliminating buffer stocks and working closely with a smaller network of suppliers. In normal times, such systems reduce costs; however, they can be fragile and unable to quickly adjust to exogenous supply shocks, like natural disasters or unexpected bankruptcies. All such systems are based on assumptions that such shocks will not take place or that sufficient additional supply can be quickly found and substituted. When those assumptions turn out to be wrong, businesses can suffer.

Will living through these trying times cause businesses to think more about “just-in-case” supply? Will manufacturers be more likely to object on antitrust grounds to supplier consolidation that leaves one fewer potential, even if not current, supplier? Will “5-to-4” mergers now be problematic? Will the FTC object to a hospital merger that could reduce supply unlikely to be used except in a pandemic? If businesses, economists, and enforcers modify their thinking on “efficiencies”, merger review results could be different at least on the margins.

Fewer Smoke-Filled Rooms But Not Necessarily Less Price Fixing

Business travel seems to be coming back, though apparently more slowly than personal travel. As companies and their employees have become more comfortable interacting virtually, it seems unlikely that travel to trade association and other meetings of competitors will soon, if ever, get back to prior levels. If so, there would be fewer opportunities for competitors to physically meet in typical “smoke-filled rooms” or hotel bars or other places where anti-competitive agreements have been hatched in the past. But that does not mean fewer opportunities to collude—it just means the conspirators will use Zoom, WhatsApp or many other communication and messaging methods. Fortunately, DOJ has understood these trends for years, as detailed in the links here. For counselors and antitrust compliance specialists, we might need to update our training examples.

Zoom—The Next Google?

Remember when you first discovered Google? Not only how well the search engine worked but how clean the site was, except when it included cute drawings and links like the Santa Tracker on Christmas Eve? Might be hard to remember now but the company whose motto was “Don’t be evil” seemed to be universally popular. Now? Well, it still remains at least respected and used by a lot of people, but it has also gathered enemies across the political spectrum and around the globe, often for alleged antitrust violations.

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What is a Lanham Act False Advertising Claim and Why Does it Matter for Competition?

April 17, 2021 | Bona Law PC

Author: Jarod Bona

You might have a Lanham Act claim if your competitor is making false statements to promote its products or services in a way that deceives customers and injures you because you lost business, for example, as a result.

Although many people think of the Lanham Act as a trademark statute—and it is—it also allows competitors to sue each other for false advertising.

So the Lanham Act is on the battlefield for competition as competitors often use lawsuits as part of their arsenal to gain whatever advantage they can.

The Lanham Act is particularly interesting because it allows competitor standing when harm is done to consumers, so long as the plaintiff suffered lost profits or something similar because of the false statements.

Indeed, Congress designed the competitor enforcement mechanism because competitors have both the knowledge and motivation to enforce the Lanham Act. The Supreme Court explained this enforcement rationale in its POM Wonderful LLC v. Coca-Cola case, which you can read about here:

“Competitors who manufacture or distribute products have detailed knowledge regarding how consumers rely upon certain sales and marketing strategies. Their awareness of unfair competition practices may be far more immediate and accurate than that of agency rulemakers and regulators.”

Importantly, however, the Supreme Court clarified in its Lexmark decision that the plaintiff need not necessarily be a competitor, so long as they suffered “an injury to a commercial interest in sales or business reputation proximately caused by the defendant’s misrepresentations.” This is an important opening and you can read more about our discussion of the Supreme Court’s Lexmark standing decision here. You might also read this Ninth Circuit decision on the Lanham Act.

The Lanham Act is, however, primarily a statute that competitors use to sue each other. You also see this in antitrust law—of course—and intellectual property law (including trade secret and trademark cases). And, under state law, competitors sue for tortious interference, of some sort, along with state statutes that prohibit false advertising and antitrust. And there are other causes of action, state and federal, that come up in specific circumstances.

For better or worse, business competition often takes a detour to the courthouse and companies use litigation to their advantage. Filing a lawsuit for the sake of filing one, without a meritorious claim, could subject you to actions for malicious prosecution, abuse of process, and even antitrust liability in certain circumstances. But companies with prima facie claims against their competitors often relish the opportunity to carry the market fight to the legal forum. We’ve seen this from both sides, many times, over the years.

Sometimes antitrust lawyers call themselves antitrust and competition lawyers. The reason for that is that in the United States our laws that govern competition are called “Antitrust” laws (because of the unique history of the federal statutes that went after the “Trusts” back in the day). Antitrust used to be “anti-trust.” But here is an important tip: If you add the hyphen to “antitrust,” you will tip off to antitrust lawyers that you aren’t that familiar with the subject. So if you want to seem like an insider, skip the hyphen.

In Europe and much of the rest of the world, by contrast, these law are called, straightforwardly, “Competition” laws. And the lawyers that practice in this area are called Competition Lawyers.

But there is a second great reason for US antitrust lawyers to more accurately describe themselves as antitrust and competition lawyers. That is because when you represent clients that compete in a marketplace, you experience their hard-core focus on competition and, necessarily, their competitors.

You help them manage the rules of competition, with your own tools. Many of those involve antitrust knowledge and experience. But—to really help your clients—you also need to understand and have experience with the other causes of action that come up among and between competitors. And that includes, of course, the Lanham Act.

So—while we can accurately call ourselves antitrust lawyers, we are really antitrust and competition lawyers because we advise clients on the rules of competition generally, which are much broader than simply the antitrust laws. We are soldiers on the legal battlefield of competition. Antitrust laws are great weapons, but they aren’t the only ones.

As sort of a related aside, I’ve been thinking a lot lately about what I have learned advising clients in antitrust and competition law. Over time, you experience competition in all forms. You see different ways that competitors try to knock each other out of the market, or otherwise take market share. Sometimes this is about competing better, but it is often about competing differently—that is, adjusting your service and product to not only differentiate yourself, but to create a new market altogether.

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Strong Winds of Change in the Antitrust World in Europe and the United States: Big Tech Under Cross Fire

March 14, 2021 | Bona Law PC

Author: Luis Blanquez

Interesting times to be an attorney; especially an antitrust attorney. If you work in private practice, you are likely witnessing the most significant transformation in the legal sector in the past 20 years. If you are an in-house lawyer, you are probably dealing with a new set of legal and commercial issues you couldn’t even imagine a few years ago. And if you are an in-house antitrust attorney in one of the Big Tech companies, then you are currently involved in the perfect storm.

During the past years, competition authorities all over the world have been closely monitoring the steady acquisition of power by Big Tech companies in the new digital economy. That’s the main reason why they have recently initiated antitrust investigations on both sides of the Atlantic. As Senator Mike Lee (R., Utah), recently mentioned: “antitrust enforcers were asleep at the wheel while Silicon Valley transformed from a center of innovation into a center of acquisition. Instead of competing to be the next Google, Apple, Facebook, or Amazon, today’s tech startups are pushed by their private-equity backers to sell out to Google, Apple, Facebook, or Amazon.”

At the same time, in the U.S. the Antitrust Subcommittee of the House Judiciary Committee issued last year its long-anticipated Majority Report of its Investigation of Competition in Digital Markets. The Report detailed its findings from its investigation of Google, Apple, Facebook, and Amazon along with recommendations for actions for Congress to consider regarding those firms. In addition, the Report included recommendations for some general legislative changes to the antitrust laws.

You can read more about it in our previous article: Classic Antitrust Cases: Trinko, linkLine and the House Report on Big Tech. Now, Senator Klobuchar, who chairs the Senate Judiciary Committee’s Subcommittee on Antitrust, Competition Policy and Consumer Rights, in a keynote addressed at the annual State of the Net Conference, announced her antitrust reform legislation, the Competition and Antitrust Law Enforcement Act.

Meanwhile, in the European Union the European Commission is proposing new “ex ante” regulation to increase contestability and fairness in the digital markets, which includes: (i) The Digital Services Act (DSA)––addressed to protect end users and their fundamental rights online; and (ii) the Digital Markets Act (DMA)––which prohibits unfair conditions imposed by online platforms that have become or are expected to become what is called “gatekeepers” to foster innovation, growth and competitiveness.

So yes, Big Tech companies have too many irons in the fire. Let’s try to briefly summarize them here.

The New Proposed Competition and Antitrust Law Enforcement Act from Sen. Amy Klobuchar (D-MN) in the U.S.

In January 2021, Sen. Klobuchar, released her antitrust reform legislation, the Competition and Antitrust Law Enforcement Act, highlighting that “with a new administration, new leadership at the antitrust agencies, and Democratic majorities in the Senate and the House, we’re well positioned to make competition policy a priority for the first time in decades.” She also mentioned that current antitrust laws are inadequate for regulating companies like Amazon, Apple, Facebook and Google.

In a nutshell, the new proposed Act includes the following changes:

New Legal Standards To Determine Whether a Merger is Anticompetitive

The is the first attempt to change the existing standard relating to mergers that substantially lessen competition, to a new one that prohibits mergers that create an appreciable risk of materially lessening competition. The exact meaning of this new standard remains unclear, to say the least.

The new rules would also shift, in certain scenarios, the burden of proof of certain mergers from the government to private parties. These include (i) the acquisition of a competitor or nascent competitor by a company with market power or a market share of 50% or more; (ii) the acquisition of what is called a “disruptor”, (iii) and transactions valued at more than $5 billion, or the buyer is worth at least $100 billion.

Broader Scope To Prohibit Exclusionary Conduct

The proposed Act expands the concept of exclusionary conduct and defines it as any conduct that materially disadvantages competitors or limits their opportunity to compete. It creates a presumption of illegality in those scenarios where exclusionary conduct presents an appreciable risk of harming competition.

This is when a firm with market power, or a market share higher than 50%, engages in conduct that materially disadvantages actual or potential competitors or tends to foreclose or limit the ability or incentive of actual or potential competitors to compete.

Private parties will be still able to rebut such presumption by showing pro-competitive effects that eliminate the risk of harming competition.

Increase of Resources for Antitrust Authorities, More Civil Penalties and New Whistleblower Protections

The proposed Act includes an important funding increase of $300 million for both the FTC and DOJ.

It also increases civil monetary penalties, by imposing on private parties fines the greater of either: (i) 15% of the undertaking’s U.S. revenues in the prior calendar year, or (ii) 30% of the undertaking’s U.S. revenues in any business line affected or targeted by the unlawful conduct during the period of such conduct.

The new rules also provide further incentives to report potential antitrust violations. For instance, they extend anti-retaliation protections to civil whistleblowers, and in certain cases, even include an award up to 30% of the criminal fines.

In the meantime, Representative David Cicilline (Democrat – Rhode Island), who led the House’s investigation into Big Tech, and Senator Mike Lee, Senator (R., Utah), have also agreed to keep this momentum and discuss future changes to the antitrust laws, although with significant differences on their approach.

The Digital Services Act and the Digital Markets Act: A proposal to upgrade the rules governing digital services in the European Union

In the European Union things have not been quiet either.

As part of the European Digital Strategy, last December the European Commission finally published its proposals to regulate the digital sector. These include (i) Digital Services Act (DSA)––addressed to protect end users and their fundamental rights online; and (ii) the Digital Markets Act (DMA)––which imposes new ex-ante rules and prohibits unfair conditions imposed by online platforms that have become or are expected to become what are called “gatekeepers” to foster innovation, growth and competitiveness.

These proposals will now go to the European Parliament and European Parliament for discussion, to be adopted into law and enter into force at some point during 2022.

The DSA

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