Articles Posted in Antitrust News

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For the third time in recent years, the US Supreme Court decided to review an antitrust case involving state-action immunity.

Unlike the first two cases, however, the primary issue in this case is procedural: The petition requesting review fairly described the issue as “Whether orders denying state-action immunity to public entities are immediately appealable under the collateral-order doctrine.”

The case at issue is a Ninth Circuit case called SolarCity Corporation v. Salt River Project Agricultural Improvement and Power District. SolarCity, of course, is now a unit of Elon Musk’s Tesla.

The substantive case underneath the procedural issue involves a monopolization lawsuit by SolarCity against a public entity power company in Arizona, which is the only supplier in that area of traditional electrical power.

Here is what they did: SolarCity, like other solar-energy-panel companies, was having success in selling and leasing rooftop solar panels to customers, especially in sunshine places like Arizona (and Southern California, of course). Instead of viewing the move toward solar power as good for the environment and peoples’ pocketbooks, the power company—a public entity—viewed it as a threat. And, like many government entities that view private enterprise as a threat to their budgets and influence, the power district changed the rules.

That is, the power company changed the pricing structure so customers that acquire power from their own system—a solar-panel system, for example—must pay a prohibitively large penalty. The government entity’s rule change had its intended effect: SolarCity received ninety-six percent fewer applications for new solar-panel systems in that territory.

This is, of course, one of the grossest forms of government abuse and a disgrace to competition. It is also one of the reasons why Luke Wake of the NFIB Small Business Legal Center and I argued both as an amicus in Phoebe Putney and in a law review article that the Supreme Court should adopt a market-participant exception to state-action immunity. If a government entity is a commercial participant in a market, it shouldn’t be immunized from cheating in that market.

Bona Law currently has another case pending in the Ninth Circuit in which government entities that compete in the market violated antitrust laws and are using the shield of state-action immunity to try to get away with it.

The Collateral Order Doctrine

In the SolarCity case, the trial court rejected state-action immunity at the motion-to-dismiss stage. Typically, a defendant that loses a motion to dismiss cannot appeal the issues until later in the case, sometimes after trial. The plaintiff gets to take a shot at proving its case.

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Antitrust News is a new feature at The Antitrust Attorney Blog. We will periodically report on and address new developments in the antitrust world, from FTC or DOJ guidance to important court decisions to relevant legislative developments to worldwide antitrust issues.

Although some of our prior articles involve antitrust developments, most of these posts consist of content that is less timely and more evergreen. Our intent is to help our readers by describing Antitrust News through the filter of our antitrust expertise.

On November 16, 2017 in Washington, DC, Deputy Assistant Attorney General Donald G. Kempf, Jr. made news about antitrust merger review at the American Bar Association’s Antitrust Fall Forum.

Kempf said—simply—that the DOJ will try to shorten the time it takes it to review mergers for antitrust and competition issues. In 2011, the average merger took just over 7 months to review. In 2016, the review time increased to 11.6 months on average.

That is unacceptable. Companies that want to merge should not have to wait almost full year to do so. A lot can happen in a year, particularly now where technology and low entry barriers mean that entire markets often change in a short period of time.

How did the excess delays happen?

To explain, let’s back up and explain—briefly—how an antitrust merger review works:

The merging parties begin by completing what is called a Hart-Scott-Rodino (HSR) filing. Either the DOJ or FTC has 30 days to decide whether to issue what is called a second request. If one of the antitrust agencies thinks that there could be genuine competition issues for the merger, they may issue this second request, which opens up a heavy set of fact-finding, including document production.

At some point, the antitrust agencies may either approve the merger, reach an agreement with the parties to approve the merger with certain requirements (like selling assets) or (in the case of the DOJ) to seek a preliminary injunction stopping the merger.

According to Kempf, over time the second request period increased in scope and complexity and the preliminary injunction hearings became mini-trials. Indeed, they often have the same effect as a trial on the merger because if the DOJ wins, the parties often abandon the merger. If the DOJ loses, it often halts the challenge.

Kempf went on to articulate why shortening merger review time is so important. His best line was that “delaying competitive mergers is anticompetitive, and that’s not the business the Antitrust Division wants to be in. Just the opposite.”

He offered five suggestions to shorten antitrust merger reviews: Continue reading →

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Update: As you may have heard, the Senate confirmed Judge Neil Gorsuch to the U.S. Supreme Court. Read below for my thoughts on the confirmation process and Justice Gorsuch and antitrust.

We have entered a Supreme-Court-Justice-Nomination season. These are always interesting times for lawyers, politicians, and real people.

There are only nine Justices on the Supreme Court, so whenever there is an opening, it is a big deal. Appointments are for life, or until a Justice wants to leave, for whatever reason (or impeachment, but we haven’t had to worry about that lately). So the nomination seasons are whenever they are.

For lawyers, it is the rare time when the rest of the country cares about what they care about. Thus, news talk shows and articles are full of attorney quotes, ideas, and predictions about, first, who they think the nominee will be; and second, after the name is known, whether that person is qualified.

A Supreme Court Justice, as a job, is not an easy one. Sure, it comes with some perks like lifetime appointment, cool robes, and the right to interrupt attorneys whenever you want. But it is a lot of pressure because you are making decisions in a wide variety of legal subjects, covering constitutional, statutory, and even federal common law, each of which may create upheavals for huge groups of people.

As a Justice, you can’t afford the time to become and stay an expert in every area of law, but you (and your Justice colleagues) are making decisions that set the parameters for all legal fields, even over experts in those fields. Some may say that this is a feature not a bug. But, from the perspective of the individual Justice, it creates an enormous responsibility to think through everything you do. You can’t just take an opinion off.

Because of the impact and responsibility of a Supreme Court Justice, this isn’t a job for anyone. You have to love the law and want to contribute positively to it—in a way that might even seem a little obsessive.

So let’s talk about qualifications: At least since I’ve been following it, it is unusual to see a nominee for the US Supreme Court that isn’t qualified to work on the Court. That is, the qualifications of the men and women that Presidents of both parties have nominated over the last couple of decades have been impressive and adequate for the extremely high standards of the Court. That includes DC Circuit Judge Merrick Garland.

But, unfortunately, the word “qualifications” has become a word that every side, at one time or another, has lifted to mean “I think will do what I want on the rare controversial case that could likely go either way on the law,” or some other interest-focused meaning.

That is because most people, especially people on television, don’t like to just say, honestly, that they support or oppose a particular nominee for pure reasons of self or philosophical interest. Instead, they filter out their own biases by using the word “qualified” or “not-qualified,” or “extremist” or some other mismatched word. The reasons for this probably range from cognitive dissonance to political marketing.

President Donald Trump Nominates Judge Neil Gorsuch to the US Supreme Court

Thanks for sticking around through that long-winded introduction. I added the context I wanted to add, so I can now speak (well, write) more transparently.

Judge Gorsuch is a federal appellate judge on the Tenth Circuit Court of Appeals (which hears appeals from district courts in Colorado, Kansas, Oklahoma, New Mexico, Utah, and Wyoming). He has a BA from Columbia, graduated from Harvard Law in 1991 (exactly one decade before I did), and has a Doctor of Philosophy Degree in Law from Oxford. He clerked on the DC Circuit with Judge David B. Sentelle, then clerked on the United States Supreme Court with both Justices Byron White and Anthony Kennedy. He later worked with the Department of Justice and for many years at a strong law firm.

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