Articles Posted in Department of Justice

In 2007, the Supreme Court issued a bombshell of a case called Bell Atlantic v. Twombly, which caused both antitrust lawyers and civil procedure law professors to rethink how they go about their work.

For those of you not obsessed with law or antitrust, Twombly changed the antitrust pleading standards in federal court from one of extreme permissibility to the current “plausibility” standard.

Courts quickly began applying Twombly beyond antitrust cases, and it now is THE case for motions to dismiss that argue that plaintiffs have not plead enough to move to the next stage of litigation.

When the Supreme Court decided Twombly, it created a surge of excitement, and federal courts began dismissing cases left and right because plaintiffs had not alleged sufficient facts to show a “plausible” claim to relief, under antitrust or other laws.

Since then, I don’t think I have seen any antitrust complaint that wasn’t followed by a motion to dismiss, usually citing Twombly. Notably, courts coupled this elevated standard with refusals to start discovery until after plaintiffs leaped the motion-to-dismiss hurdle.

I believe, however, that the antitrust-pleading-standard pendulum is beginning to shift back toward the plaintiff.

Update: On November 10, 2014, the United States Supreme Court in Johnson v. City of Shelby issued a new plaintiff-friendly pleading decision.

Update 2: You can read my new article on antitrust pleading standards here: “What is the Biggest Mistake that District Court Judges Make in Antitrust Cases?”

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Real EstateI had the honor to speak on “Antitrust and Real Estate” to the Legal Affairs Forum of the California Association of Realtors at their meeting in downtown San Diego shortly before posting this article.

Putting aside the substance of the talk for a moment, I enjoyed the experience immensely because (1) the Realtors’ association was both welcoming and accommodating; (2) the audience was engaged, and asked questions such that we could delve into a little bit of advanced antitrust; and (3) my wife and I invest in real-estate, so the topic of real-estate investing is an interest of mine. Thank you to the California Association of Realtors for the invitation.

As we discussed at the conference, antitrust is especially relevant to real-estate professionals because (1) competitor brokers both compete and cooperate on a daily basis; (2) prices, and commission splits, are often announced and well-known; (3) there is a history of tension and battles between a traditional business model and new business models (this can create antitrust litigation in any market); (4) associations and cooperative Multiple-Listing Services (MLS) play large roles in the industry; (5) US antitrust enforcers, like the Department of Justice, have seriously scrutinized the real-estate industry.

If you are a real-estate investor, you might enjoy our new blog “Titles and Deeds.”

Here are five antitrust issues that real-estate professionals should understand:  Continue reading →

This article is cross-posted in both English and French at Thibault Schrepel’s outstanding competition blog Le Concurrentialiste. Like most antitrust issues today, questions about loyalty discounts are relevant across the globe as competition regimes and courts grapple with the best way to address them.

Companies like to reward their best customers with discounts. It happens everywhere from the local sandwich shop to markets for medical devices, pharmaceutical products, airline tickets, computers, consumer products, and many other products and services.

Customers like loyalty-discount programs (or rebates) because they get more for less. And the reason so many companies offer them is because they are successful.

Everyone wins, right?

Usually. But the program could very well violate antitrust and competition laws in the United States, the European Commission, or other jurisdictions.

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For SaleWhen you think about a government antitrust investigation, you probably picture monopoly accusations against large companies like Microsoft in the 90’s and early 2000’s or AT&T in the 70’s and 80’s. Or perhaps you imagine a global price-fixing cartel like that depicted in the movie The Informant.

In any event, the target in your mind is a big company, along with their officers and executives, and perhaps some sales people.

The Department of Justice actions against individual real-estate investors in Northern California should shatter those preconceptions. Over the last few weeks, the Antitrust Division of the DOJ has announced a series of plea agreements arising out of its antitrust investigations into bid rigging at real-estate-foreclosure auctions for certain Northern California counties.

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Let’s pretend that you are starting the new year with an exciting opportunity: You were just named general counsel of a multi-national corporation with several market-leading products.

You received lots of congratulations, high-fives, and kudos during holiday parties and family get-togethers, but you can’t help but start to think about the arduous task ahead.

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The Internet didn’t fall down after my first post, so I thought I’d try another.

In the US, certain conduct is so obviously anticompetitive that antitrust law labels it per se illegal. These restraints lack redeeming pro-competitive value in almost all instances, so the law allows plaintiffs an important short-cut to pleading and proving such a claim.

The short-cut is that a plaintiff asserting a per-se-antitrust claim need not demonstrate anticompetitive harm. The law presumes such harm. This is huge because this element is one of the most difficult and expensive to prove.

Proving anticompetitive harm is often tough. Plaintiffs usually start by defining the relevant product and geographic markets. This is obvious is some cases; difficult and disputed in others.

Within that defined market, the plaintiff will then usually have to show market or monopoly power, then actual competitive harm in that market that exceeds any competitive benefits from the challenged restraint. It doesn’t always go like this, but that is the typical journey.

Proving all of this almost always requires expert economic testimony, which is—again—almost always disputed by defendants’ economic expert.

So this anticompetitive harm element can become quite burdensome and expensive. That is why fitting a case into a per-se-antitrust package is so valuable for a plaintiff, and risky for a defendant.

Price-fixing agreements usually come to mind as the prototypical per se antitrust violation (keep in mind that antitrust views agreements to limit volume as effectively the same thing). Other examples are market-allocation agreements and certain boycotts.

Let’s talk about market-allocation agreements—as price-fixing is a bit too obvious—so we can see how dangerously easy it is for this per-se-antitrust violation to develop.

Market allocation is an antitrust problem because competitors are agreeing not to compete. The most simple market-allocation agreement is geographic—“you take customers West of the Mississippi, and we will take the ones to the East.”

But sometimes it develops more subtly.

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