Articles Posted in Types of Antitrust Claims

What the Fire Apparatus MDL Teaches Every Acquisition-Driven Company About Section 2 Risk

May 7, 2026 | Bona Law PC

Seven U.S. cities have filed antitrust suits in five weeks against two manufacturers of “fire apparatus”—and the lawsuits are consolidating into a federal multidistrict litigation in the Eastern District of Wisconsin.

The case is about fire trucks. If you have ever been the parent of a five-year-old, you probably have heard about just how awesome fire trucks can be. But you probably don’t make fire trucks or use them in your business.

You should still take note of this litigation. Especially if you’re in private equity, at an acquisition-driven company, or serve markets involving specialized products or institutions like municipalities.

The defendants—REV Group and Oshkosh Corporation’s Pierce Manufacturing subsidiary, along with several entities connected to private equity investor American Industrial Partners—are accused of violating Sections 1 and 2 of the Sherman Act and Sections 3 and 7 of the Clayton Act. The theory is straightforward: through a series of acquisitions, two players came to dominate the fire apparatus market, and the alleged result is what antitrust lawyers call an “acquisition monopoly.”

This is not a new legal theory, but it is a legal theory that, just a few years ago, was unlikely to turn into a major MDL. A plaintiff’s burden on a monopolization claim under Section 2 is historically much more difficult to meet than a price-fixing claim under Section 1 because the latter is per se illegal, requiring no proof of anticompetitive effect, and face fewer doctrinal hurdles. So the antitrust class plaintiffs’ bar rarely brought them.

That’s changing, and acquisition-based monopolization claims could be a driving factor. The fire apparatus MDL is an example: just look at the pace at which top plaintiffs’ firms are filing cases, the involvement of municipalities as plaintiffs, and the rapid MDL consolidation. This could be a new era of sprawling antitrust blockbusters not centered on allegations of a price-fixing cartel.

Here is what you need to understand about acquisition monopolies.

What “Acquisition Monopoly” Actually Means

Section 2 of the Sherman Act prohibits monopolization—defined as (1) the possession of monopoly power in a relevant market, and (2) the willful acquisition or maintenance of that power, as distinguished from growth or development as a consequence of superior product, business acumen, or historical accident.

The word “willful” is where acquisitions get complicated. Courts have long recognized that a company can violate Section 2 not by outcompeting rivals, but by buying them. Where each acquisition is a deliberate step in a strategy to eliminate competition and entrench market dominance, the cumulative pattern can satisfy Section 2’s willfulness requirement even if any individual deal was commercially rational on its face.

The Clayton Act adds another layer. Section 7 prohibits any acquisition—of stock or assets—where the effect “may be substantially to lessen competition, or to tend to create a monopoly” in any line of commerce or any section of the country. Note the word “may.” Section 7 is forward-looking: it catches transactions at the point where competition might be substantially harmed, not only after the damage is done. When a series of acquisitions is alleged, plaintiffs can argue both that individual deals violated Section 7 as they occurred and that the pattern of acquisitions collectively violates Section 2.

That is the double-barrel structure: Clayton Act Section 7 targets the deals as they happened; Sherman Act Section 2 targets the market power that resulted. Both claims are in the fire apparatus complaints.

The Specialized Market Problem

Antitrust liability under Section 2 depends critically on how the relevant market is defined. Market concentration and power can more easily be established where product specifications are highly customized, procurement cycles are long, and the number of qualified suppliers is small by nature.

Fire apparatus is that kind of market. Municipal fire departments operate under precise technical specifications—apparatus must meet NFPA standards, comply with state fire codes, and satisfy local procurement requirements. Fire trucks are not commodity equipment. The design, engineering, and production timelines make this a market with high barriers to entry, long customer relationships, and limited competitive alternatives.

Plaintiffs in specialized-equipment cases have an easier time with market definition because the product’s own characteristics draw the boundary. When you make the only commercially viable product for a specific application—or one of two—that fact does much of the plaintiffs’ work and makes it harder for defendants to argue a broader market such that monopoly power disappears.

How Courts Evaluate Roll-Up Claims

Plaintiffs’ antitrust lawyers have learned how to structure acquisition-monopoly cases, and the template is worth understanding.

The theory typically runs like this: defendant or its PE sponsor conducted a buy-and-build strategy, acquiring companies A, B, C, and D over a period of years; each acquisition eliminated a meaningful competitor; post-acquisition, defendant raised prices, reduced product quality, or restricted output; and the cities or businesses that purchased the product paid more than they would have in a competitive market.

Courts do not require plaintiffs to prove that every individual acquisition was anticompetitive. The question is whether the acquisitions, viewed as a course of conduct, reflect a willful strategy to acquire monopoly power. Internal communications—board materials, deal memos, strategic plans—that discuss market consolidation, competitor elimination, or pricing power post-acquisition are among the most damaging documents defendants face in discovery.

Private equity creates a particular documentation problem here. PE sponsors routinely model acquisitions in terms of EBITDA multiples, synergies, and market positioning. Investor presentations may explicitly reference competitor acquisition as a strategy for pricing power. That framing, which is entirely normal in PE deal documents, can look incriminating in an antitrust complaint. The plaintiffs in fire apparatus cases almost certainly obtained public filings, investor presentations, and press releases in which the defendants’ market consolidation strategy was described in terms that plaintiffs’ counsel will characterize as an admission.

Private Plaintiffs, Treble Damages, and the Municipal Angle

What makes the fire apparatus MDL structurally significant is the identity of the plaintiffs: cities. Municipal governments purchase specialized equipment through formal procurement processes, maintain records of every competitive bid, and have institutional incentives to pursue antitrust damages aggressively. Unlike a private commercial buyer who might want to preserve a supplier relationship, a city has no such constraint. Seven cities have filed antitrust lawsuits in five weeks. Others almost certainly will.

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Beyond the DOJ Complaint: Potential Exclusionary Conduct Theories in the Apple Ecosystem

May 4, 2026 | Bona Law PC

Authors: Pat Pascarella & Luke Hasskamp

Recent proceedings involving Apple Inc.—including the U.S. Department of Justice case and Epic Games v. Apple—together with developments in AI markets, suggest an evolving framework for platform-focused antitrust analysis. This article considers how those threads may fit together.

I. The DOJ Has Done Substantial Groundwork

Begin with market power. In U.S. v. Apple, the district court accepted as plausible a U.S. smartphone market in which Apple holds roughly 65%—now closer to 70%—reinforced by barriers to entry, network effects, and switching costs.

The DOJ also presents an alleged pattern of exclusionary conduct: the repeated neutralization of technologies that reduce platform dependence, including middleware, super apps, cloud streaming, smartwatches, messaging, and digital wallets. According to the complaint, each time a product threatened to make device choice less consequential, Apple constrained or neutralized it. If this allegation is supportable, such a pattern could address concerns about improperly “punishing success.”

II. The Markets Apple Controls at 99 Percent

If a higher market share is needed, the more compelling market is not some smartphone submarket. Rather, it will be markets Apple controls at 99 percent: the iOS functionalities and apps themselves. While not every function is a separate product, some may well be—particularly those Apple allegedly targets.

Epic v. Apple is instructive on this point, and not fatal. The court did not hold that iOS-tethered markets are inherently non-cognizable—only that Epic failed to establish that consumers lacked awareness of iOS restrictions and could not factor them into purchasing decisions. But those gaps seem addressable.

The full scope of any restraints—and their costs—is obscured in a dense web of contractual and technical restrictions. No reasonable consumer could anticipate the extent to which app review, API access, and distribution control could be wielded against rivals. Nor should antitrust liability turn on whether consumers anticipated unlawful conduct.

Even if consumers had advance knowledge of such restraints, a single-brand market is not foreclosed. Apple’s own counsel acknowledged in Epic that consumers entering the iOS ecosystem cannot predict downstream costs related to app distribution, in-app payments, or aftermarkets. If the costs of any restraints are unknowable at the time of purchase, foremarket competition cannot discipline aftermarket conduct. The remaining elements of a single-brand iOS functionality or app market also appear to be present, including allegations of intentional degradation of interoperability to maintain switching costs—without corresponding loss of share or margin.

III. CoStar, Exclusive Dealing, and the End User License Agreement

Some claims may not require pleading a single-brand market. For example, under the Ninth Circuit’s decision in CoStar v. CREXi, “substantial foreclosure” is sufficient to plead an exclusive dealing agreement.

The agreement? The EULA itself. While a web of contractual and technical restrictions might enable foreclosure, the enforceable agreement between Apple and the user is embodied in the EULA. In that sense, Apple may have supplied potential plaintiffs with the central instrument of its own potential liability.

IV. The EULA as a Negative Tie

The EULA may also provide a foundation for tying claims. Courts often resist tying theories in platform cases, frequently reasoning that coercion must be directed at consumers rather than suppliers. That argument, though contestable, is predictable.

A potential response may be that it is the EULA that effectively conditions use of the platform on the consumer’s agreement not to obtain competing products, services, or apps outside Apple’s approval.

V. Attempted Monopolization and Dangerous Probability of Success

Tying allegations also expand the analytical framework, though courts ultimately may analyze them as attempted monopolization. On the “dangerous probability of success,” a defendant such as Apple likely would invoke concerns about outdated leveraging theories. But this would not be a classic leveraging case.

Any company that demonstrates both the ability and the willingness to neutralize technologies or rivals that threaten its market position may struggle to characterize that conduct as competing on the merits. Such a pattern should reduce concerns about punishing a company simply for being successful. Where a company has demonstrated a pattern of exclusion and retains the ability to repeat it, the “dangerous probability” standard should be satisfied.

VI. Inextricably Intertwined—and Antitrust Standing

A direct monopolization claim targeting the U.S. smartphone market faces a threshold question: standing. Developers and rivals operating at the functionality level are neither customers nor competitors in the smartphone market.

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Ninth Circuit Affirms Robinson-Patman Victory — But Is There Now a Circuit Split?

March 5, 2026 | Bona Law PC

Authors: Steven Cernak and Cansu Gunel

In May 2024, this blog discussed a rare plaintiff victory in a Robinson-Patman case. In February 2026, the Ninth Circuit affirmed that victory in L.A. International Corp. v. Prestige Brands Holdings, Inc. In doing so, the court confirmed our key takeaways from 2024 — a successful Robinson-Patman case, while possible, will be expensive and lengthy and will only get easier if more plaintiff-friendly opinions, like this one from the Ninth Circuit, are written. In crafting that opinion, however, the court might have created a split with at least the Second Circuit that the Supreme Court could find interesting.

Robinson-Patman and Case History

This blog has recounted the elements and history of Robinson-Patman in prior posts. In summary, RP is a Depression-era amendment of the Clayton Act that makes certain manufacturer discounts to some (usually large) resellers but not to other (usually small) resellers illegal if there is the requisite harm to competition.

For decades, the FTC and private plaintiffs brought numerous cases that generated many opinions, including from the Supreme Court. As antitrust law evolved to focus nearly exclusively on benefits to consumers, especially lower prices, the FTC stopped bringing cases and private cases dwindled. The few cases brought often resulted in plaintiff losses and defendant-friendly precedent. Still, the non-zero risk of RP enforcement meant that most manufacturers and retailers paid at least some attention to RP. Because the FTC has become more interested in RP enforcement, including bringing two cases recently, RP clearly is not “gone” and now might not even be “forgotten.”

L.A. International Corp. v. Prestige Consumer Healthcare, Inc., is one of those rare private RP suits and even rarer plaintiff wins. As we detailed in 2024, Defendants manufacture and distribute Clear Eyes eye drops. The suit alleged that Defendants sold Clear Eyes at a lower price and with greater promotional allowances to Costco (specifically, Costco Business Centers that resell to retailers) than to Plaintiffs. Plaintiffs are several distributors that also buy and resell such products to retailers like local convenience stores.

After years of litigation, the case was tried to a jury, which found for Plaintiffs and allocated around $700,000 in damages among the several distributors. The lower court rejected various objections to its jury instructions by Defendants, which formed the basis of Ninth Circuit appeal.

Competitive Injury Standards: A Circuit Split

The Ninth Circuit’s “Geographic Proximity” Approach

The Ninth Circuit affirmed, applying what it characterized as the traditional “chain-store paradigm,” where wholesalers and large retailers like Costco both “carried and resold an inventory of [a product] to all comers.” The court found that “to establish that two customers are in general competition, it is sufficient to prove that:

one customer has outlets in geographical proximity to those of the other;
the two customers purchased goods of the same grade and quality from the seller within approximately the same period of time; and
the two customers are operating on a particular functional level such as wholesaling or retailing.”

Critically, the Ninth Circuit rejected any requirement that competitive injury be “substantial,” holding that “Congress strung together the clauses in Section 2(a) with the disjunctive ‘or,’ which requires that we treat the clauses separately.” Section 2(a), in relevant part, states:

. . . where the effect of such discrimination may be substantially to lessen competition or tend to create a monopoly in any line of commerce, or to injure, destroy, or prevent competition . . .

Thus, in rejecting the Defendants’ claim that the instructions should have included the “substantial” requirement because “the word ‘substantially’ … modifies the phrase ‘to injure, destroy, or prevent competition,” the court concluded that “[w]holesalers needed to show only that the effects of Prestige’s discriminatory actions ‘may be … to injure, destroy, or prevent competition’” and that “the district court did not err when it instructed the jury that the plaintiff was required to establish ‘a reasonable possibility of harm to competition.’”

The Ninth Circuit rejected Defendants’ argument for three reasons:

the ABA Model Jury Instructions only requires plaintiffs to show “a reasonable possibility of harm to competition;”
standard canons of construction would not have “substantially” in the first element of the list modify the third element; and
Ninth Circuit precedent never addressed the issue explicitly but did describe the element as “a reasonable possibility that a price differential may harm competition.”

The Ninth Circuit buttressed this finding with a reference to the Supreme Court’s most recent RP opinion, Volvo v. Reeder-Simco, noting that the Court “omitted the word ‘substantially’ when recounting the elements for secondary-line injury, requiring that a plaintiff need only show that ‘the effect of [the price] discrimination may be to injure, destroy, or prevent competition.’”

Importantly, and consistent with its rejection of any “substantial” harm requirement, the Ninth Circuit also clarified that the Morton Salt inference—which permits courts to presume competitive injury from substantial price differences sustained over time—operates as an affirmative presumption once such a sustained price disparity is shown. As the court explained, this presumption generally suffices to establish a reasonable possibility of injury to competition without requiring proof of substantiality or significant direct lost sales. This approach aligns with the foundation laid by the Supreme Court in Federal Trade Commission v. Morton Salt Co. which held that a factfinder may infer injury to competition from a sustained, substantial price differential because such disparities can impair the competitive opportunities of individual merchants and thereby create a “reasonable possibility” that competition itself may be harmed.

The Second Circuit’s “Substantial Harm” Requirement

This Ninth Circuit language seems inconsistent with the Second Circuit’s opinion in 2015’s Cash & Henderson’s Drugs, Inc. v. Johnson & Johnson. There, the Second Circuit affirmed a summary judgment for Defendants because Plaintiffs’ showing of a loss of approximately .25% of customers to the favored purchasers was de minimis, thus inadequate to show the requisite harm to competition. In doing so, the court found that plaintiffs “failed to raise a question of material fact as to whether they suffered competitive injury” because they “could not generate evidence tending to show that they lost more than a de minimis number of customers to the favored purchasers, indicating that competition was not substantially harmed or threatened by the price difference in question.” [emphasis added]

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Antitrust Lawyers: AI’s Wartime Consiglieres

February 17, 2026 | Bona Law PC

Author: Pat Pascarella

AI will weaponize antitrust. AI markets have high fixed costs, winner-take-all dynamics, platform leverage, bundling power, and data lock-in. These dynamics predict concentration. And market concentration is an accelerant for antitrust litigation—both private and government. We saw it with IBM, Microsoft, and the telecom wars.

Private actions will move faster than government enforcers—not because they are necessarily stronger on the merits, but because they are less constrained by politics and bandwidth. A well-timed complaint can slow a rival’s rollout, trigger regulatory scrutiny, and create settlement leverage. When markets tip quickly, the losers litigate.

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The Latest Death of Antitrust’s Robinson-Patman Act?

May 28, 2025 | Bona Law PC

Author: Steven Cernak

Last week, the FTC voluntarily dismissed its Robinson-Patman Act case against Pepsi that it filed in January. The dismissal and the Commissioner statements accompanying it hinted that the FTC’s determination to revive Robinson-Patman will not be as strong in the Trump Administration.

Short and Recent History of the Case

This blog has detailed the basics of Robinson-Patman and the efforts of the Biden Administration FTC to revive its enforcement several times including here, here, and here. Rumors hinted that the FTC was conducting a large investigation of soft drink sales to major retailers, like Walmart and Costco. So, it was somewhat surprising when the first major Robinson-Patman action by an FTC in decades was the December 2024 case against Southern Glazer’s Wine & Spirits, LLC. The Commission vote to file the complaint was 3-2, with the two Republican Commissioners dissenting because the complaint was likely to fail on cost justification grounds and because the Commission should use its limited resources on actions more clearly anticompetitive.

In the last days of the Biden Administration, the same divided FTC filed this action against Pepsi. Here, the Republican dissents were even more heated. First, the dissents claimed that the Commission leadership forced staff to file a flawed complaint merely to obtain one more headline before Trump appointees took charge. Second, the complaint alleged violations of Robinson-Patman’s Sections 2(d) and (e), which prohibit some discrimination in promotional allowances and do not require proof of harm to competition. According to the dissents, the allegations, if anything, read more like discriminatory price differences under Section 2(a), which does require proof of harm to competition. Because the complaint and the statements discussing the allegations in detail contained so many redactions to hide confidential information of the parties involved, it was difficult to evaluate these disagreements.

Dismissal

Last week, the current Commission — now composed only of three Republican appointees — dismissed the complaint and issued two statements. Those statements echoed the earlier dissents: Of course, the Commission must enforce the Robinson-Patman Act; however, the cases it chooses to bring must have some chance of success and this deeply flawed complaint, brought solely for political reasons, was a poor use of limited resources because it was likely to fail.

Death of Robinson-Patman, Again?

So, does this dismissal mean that the much-discussed Robinson-Patman revival has died in its infancy? Not so fast, my friend. That FTC case against Southern Glazer’s survived a motion to dismiss in April. Also, all the Republican commissioners vowed to enforce Robinson-Patman Act with the right case. Such enforcement would seem consistent with the desire of those same commissioners to bring actions that will help the common man and woman.

Also, as our prior posts have discussed repeatedly, private enforcement of Robinson-Patman has never completely died out; in fact, this firm helped file a complaint that included such claims and also recently survived a motion to dismiss.

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Quick Update on Algorithmic Pricing: Yardi and the “Per Se” Standard

February 24, 2025 | Bona Law PC

Author: Luis Blanquez

In simple terms algorithmic pricing takes place when competitors make use of a software platform to share competitively sensitive information, which the pricing algorithm uses to recommend prices for all users.

Algorithmic pricing has been in the antitrust spotlight over the past few years.

The FTC has Algorithmic Price-Fixing in its Antitrust Crosshairs

New Antitrust Cases and Statements of Interests About Algorithmic Collusion

The main reason? Antitrust laws apply to algorithms implementing human agreements.

How to Show the Existence of an Agreement: Direct and Circumstantial Evidence

Remember that under US antitrust law, there are two ways to show the existence of an agreement:

Through direct evidence (sometimes this is a “smoking gun”), and;
Through circumstantial evidence: Alternatively, it’s more common to show the existence of an agreement through a combination of parallel conduct and “plus factors,” i.e., a common motive to conspire, evidence that shows that the parallel acts were against the apparent individual economic self-interest of the alleged conspirators, and/or evidence of a high level of interfirm communications.

But finding an express agreement between companies to fix prices is not super common these days. So, what happens when there is no agreement involved, and the algorithm “only” facilitates tacit collusion between the companies using it? Things get much murkier. That happens, for instance, when competitors use the software platform to share sensitive commercial information.

Agreements to Exchange Information: “Per Se” or Rule of Reason?

Section 1 of the Sherman Act prohibits every contract, combination or conspiracy that restrains trade, so long as those restraints are unreasonably restrictive of competition in a relevant market. This includes both an agreement and tacit collusion.

Restraints analyzed under the “per se” rule are those that are always (or almost always) so inherently anticompetitive and damaging to the market that they warrant condemnation without further inquiry into their effects on the market or the existence of an objective competitive justification. Business practices considered per se illegal under antitrust laws include: (a) horizontal agreements to fix prices, (b) horizontal market allocation agreements, (c) bid rigging among competitors; (d) certain horizontal group boycotts by competitors; and (e) sometimes tying arrangements.

On the other hand, a contract, combination or conspiracy that unreasonably restrains trade and does not fit into the per se category is usually analyzed under the so-called rule of reason test. This test focuses on the state of competition within a well-defined relevant agreement. It requires a full-blown analysis of (i) definition of the relevant product and geographic market, (ii) market power of the defendant(s) in the relevant market, (iii) and the existence of anticompetitive effects. The court will then shift the burden to the defendant(s) to show an objective procompetitive justification. Most antitrust claims are analyzed under this test.

Depending on the type of unlawful information exchange, it might be categorized as:

“Per se”unlawful conduct, when facilitates price fixing, bid rigging, or market allocation, so plaintiffs do not need to show actual harm to competition, or;
Unlawful conduct under the rule of reason, if the exchange of information leads to some anticompetitive effect, based on factors such as the structure of the industry involved, and the nature of the information exchanged, among others.

This is an important distinction to keep in mind if you want to understand why the District Court for the Western District of Washington in Duffy v. Yardi Systems Inc. recently denied the defendants’ motion to dismiss, while stating—for the first time involving an antitrust case on algorithmic pricing—that plaintiffs’ allegations were sufficient to allege a per se unlawful antitrust conspiracy.

New Legal Standard for Algorithmic Pricing Antitrust Cases? Maybe…

We’ve seen several government and private antitrust lawsuits on algorithmic pricing during the past years, claiming that the use of a software platform to set prices constituted an anticompetitive conspiracy under the antitrust laws.

We’ve previously discussed all these cases in detail here. In a nutshell:

In 2022 plaintiffs in Realpage, Inc. Software Antitrust Litigation sued RealPage and its landlord-customers alleging that a management software tool helped them coordinate on prices by collecting non-public information on rents and vacant units. In January 2024, the Court denied the motion to dismiss––plaintiffs were able to show that RealPage’s software uses confidential competitor information through its algorithm to spit out price recommendations based on that private competitor data.

Second, it rejected claims alleging a horizontal price-fixing conspiracy (no agreement and no absolute delegation of their price-setting to RealPage) ––which would have been “per se” illegal––but concluded that those same landlords vertically conspired with RealPage.

In 2023, plaintiffs in Gibson v. MGM Resorts International and Cornish-Adebiyi v. Caesar’s Entertainment, Inc., alleged that hotels in Las Vegas and Atlantic City used a pricing algorithm to facilitate collusion, by providing hotel and casino room pricing and occupancy information. The district courts dismissed both cases, on May 8 and September 30, 2024, respectively, based on several grounds. First, plaintiffs did not show a horizontal agreement: the hotels were not using the platforms around the same time, did not agree to be bound by such price recommendations, and did not charge the same prices. And second, plaintiffs failed to show that the pricing recommendations were based on nonpublic, competitively sensitive information.
In Duffy v. Yardi Systems, Inc. plaintiffs similarly alleged that competing landlords violated Section 1 of the Sherman Act, by unlawfully agreeing “to use Yardi’s pricing algorithms to artificially inflate” multifamily rental prices. On December 4, 2024, the court denied the motion to dismiss and allowed the case to proceed into discovery. There are two important nuances to highlight here.

First, and similarly to the RealPage case, the Court sided with plaintiffs and agreed on the existence of an antitrust conspiracy. This decision was not only based on defendants’ acceptance of Yardy’s invitation to trade sensitive information, which allow them to charge increased rents, but also on defendants’ parallel conduct (while contracting with Yardi), and “plus factors,” such as the exchange of nonpublic and competitive sensitive information, which suggested defendants acting for their mutual benefit.

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Dividing Markets and Customers: Are Market Allocation Agreements Per Se Antitrust Violations?

September 21, 2024 | Bona Law PC

Author: Jarod Bona

Have you ever considered the idea that your business would be much more profitable if you didn’t have to compete so hard with that pesky competitor or group of competitors?

Unless you lack competition—which is great for profits, read Peter Thiel’s book—this notion has probably crossed your mind. And that’s okay—the government doesn’t indict and prosecute the antitrust laws for what is solely in your mind, at least not yet.

But, except in limited instances, you should definitely not divide markets or customers with your competitors. Indeed, you shouldn’t even discuss the idea with your competitors, or, really, anyone (many antitrust cases are made on inconveniently worded internal emails and texts).

The reason that you shouldn’t discuss it is that market-allocation agreements are one of the few types of conduct that the antitrust laws consider so bad, courts label them “per se antitrust violations.” The other per se antitrust offenses are price-fixing, bid-rigging, maybe tying, and sometimes group boycotts.

What is a Market-Allocation Agreement?

When competitors divide a market in which they can compete into sections in which one or more competitors decline to compete in favor of others, they have entered into a market-allocation agreement.

The antitrust problem with a market-allocation agreement is that a group of customers experience a reduction in the number of suppliers that serve them. The companies dividing the markets benefit, of course, because they have less competition for at least some of the market, which means that it is easier to raise prices or reduce quality.

It doesn’t matter, from an antitrust perspective, how the competitors divide the markets or even whether they both end up competing for that product or service after the agreement.

For an obvious example, ponder a small town with two large real-estate brokerage businesses—Northern Real Estate Brokers and Southern Real Estate Brokers. A river flows through the town, roughly dividing it into northern and southern regions. The Northern Real Estate Brokers mostly attract clients north of the river and the Southern Real Estate Brokers usually service clients south of the river. But the river is passable; there is a bridge and it isn’t that big of a river anyway. So sometimes agents of each brokerage will participate in transactions on the other side of the river from their normal client base.

Late one evening, in the middle of the bridge, the leaders of the two companies meet and agree that from that point on, each company would only represent sellers for properties on their side of the river.

This is a market-allocation agreement and the leaders could find themselves in antitrust litigation, or even jail (the Department of Justice will often prosecute per se antitrust violations as criminal law violations).

While the geographic boundary created an obvious method for the two companies to divide markets, they also could have agreed not to steal each other’s existing customers (market allocation based upon incumbency, which is common). So if a real estate agent from the northern brokerage firm won a customer, no agent from the southern brokerage firm would compete for that customer’s business in the future.

This customer allocation agreement is also a per se antitrust violation. To see how this type of antitrust offense can develop in a seemingly innocent way, read our article on the anatomy of a per se antitrust violation.

In this way, the antitrust laws actually encourage stealing customers.

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New Antitrust Cases and Statements of Interests About Algorithmic Collusion

June 9, 2024 | Bona Law PC

Author: Luis Blanquez

We recently wrote about the Federal Trade Commission’s blog post explaining how relying on a common algorithm to determine your pricing decisions might violate Section 1 of the Sherman Act.

The FTC has Algorithmic Price-Fixing in its Antitrust Crosshairs

It was just a matter of time until the first cases would hit the courts. That’s why during the last couple of years, we’ve seen four main federal antitrust cases alleging that algorithmic pricing might violate the antitrust laws. In three of them, the antitrust agencies also filed Statements of Interest (SOI), outlining the agencies’ opinion about what the legal principles applicable to claims of algorithmic price fixing should be.

Realpage, Inc. Software Antitrust Litigation

This multidistrict litigation in the Middle District of Tennessee involves unlawful price-fixing schemes against multifamily housing developers and managers, and student housing developers and managers, both organized by RealPage––a software algorithm company. RealPage developed software to collect property owners’ and managers’ data, used for pricing and inventory strategies, that later shared with its clients.

In January 2024, the Court: (i) denied the motion to dismiss the multifamily housing cases––the renters plausibly alleged an antitrust violation, but (ii) rejected claims alleging a horizontal price-fixing conspiracy among landlords, which would have been per se illegal. The Court, however, concluded that those same landlords vertically conspired with RealPage. The Court also dismissed the student housing plaintiffs’ complaint.

In parallel, the DOJ opened an investigation and filed a SOI. Among other things, the DOJ highlighted:

The fact that today software algorithms process more information more rapidly than humans and can be employed to fix prices. The technical capabilities of software can enhance competitors’ ability to optimize cartel gains, monitor real-time deviations, and minimize incentives to cheat.
Section 1 prohibits competitors from fixing prices by knowingly sharing their competitive information with, and then relying on pricing decisions from, a common human pricing agent who competitors know analyzes information from multiple competitors. The same prohibition applies where the common pricing agent is a common software algorithm.
Factual allegations in both complaints point to evidence of an invitation to act in concert followed by acceptance—evidence that is sufficient to plead concerted action. Among other things, RealPage required each user to submit real-time pricing and supply data to it, and RealPage’s marketing materials allegedly “touted” its use of “non-public data from other RealPage clients,” enabling them to “raise rents in concert”; as well as the algorithms’ ability to “facilitate collaboration among operations” and “track your competition’s rent with precision.”
The complaints then allege that the landlords “gave their adherence to the scheme and participated in it.” In particular, the landlords allegedly sent RealPage the non-public and competitively sensitive data (as RealPage proposed), and overwhelmingly priced their units in line with RealPage’s suggested prices (80-90%). Indeed, the complaints also contain ample allegations on how RealPage directly constrained the “deviations” from its suggested prices, including by enforcing and monitoring compliance with those prices, so the landlords effectively delegated aspects of their pricing decisions.
Relatedly, the multifamily plaintiffs allege that the landlords jointly delegated aspects of decision making on prices to RealPage. They allege that, by using RealPage’s pricing algorithms, each client defendant “agreed” to a common plan that involved “delegat[ing] their rental price and supply decisions to a common decision maker, RealPage.” Indeed, RealPage allegedly touted this feature—stating in a press release that it gives clients “the ability to ‘outsource daily pricing and ongoing revenue oversight,’” such that RealPage could “set prices” as though it “own[ed]” the clients’ properties “ourselves.’”
Jointly delegating any part of the decision-making process reflects concerted action. That the delegation is to a software algorithm, rather than a human, makes no difference to the legal analysis. Just as “surrender[ing] freedom of action. . . and agree[ing] to abide by the will of the association” can be enough for concerted action, so can be relying on a joint algorithm that generates prices based on shared competitively sensitive data.
The “per se” rule prohibiting price fixing applies to price fixing using algorithms. And the analysis is no different simply because a software algorithm is involved. The alleged scheme meets the legal criteria for “per se” unlawful price fixing. Although not every use of an algorithm to set price qualifies as a per se violation of Section 1 of the Sherman Act, it is per se unlawful when, as alleged here, competitors knowingly combine their sensitive, nonpublic pricing and supply information in an algorithm that they rely upon in making pricing decisions, with the knowledge and expectation that other competitors will do the same.

The District of Columbia Attorney General has also filed a similar action in the Superior Court of D.C., alleging violations of the D.C. Antitrust Act.

Duffy v. Yardi Systems, Inc.

In this case from the US District Court for the Western District of Washington, plaintiffs allege that competing landlords violated Section 1 of the Sherman Act, by unlawfully agreeing “to use Yardi’s pricing algorithms to artificially inflate” multifamily rental prices.

The Agencies also filed a SOI to explain the two legal principles applicable to claims of algorithmic price fixing. First, a competitors’ agreement to use an algorithm software with knowledge that other competitors are doing the same thing constitutes evidence of a contract, combination or conspiracy that may violate Section 1. Second, the fact that defendants deviate from the pricing algorithm’s recommendations––for instance, by just setting initial starting prices or by starting with prices lower than the ones the algorithm recommends—is not enough to get them “off the hook” for illegal price fixing (even if no information is directly shared between the parties).

The Agencies SOI’s focus was on the second point: Defendants retaining pricing discretion. The Agencies stress in the SOI that it is “per se” illegal for competing landlords to jointly delegate key aspects of their pricing to a common algorithm, even if the landlords retain some authority to deviate from the algorithm’s recommendations. Although full adherence to a price-fixing scheme may render it more effective, the effectiveness of the scheme is not a requirement for “per se” illegality. Consistent with black letter conspiracy law, the violation is the agreement, and unsuccessful price-fixing agreements are also per se illegal.

Casino-Hotel Operators Cases

Two new algorithmic pricing antitrust cases are also ongoing against casino hotel operators in Las Vegas and Atlantic City.

In Cornish-Adebiyi v. Caesar’s Entertainment, Inc., a case pending in the U.S. District Court for the District of New Jersey, plaintiffs allege a conspiracy against eight Atlantic City casino-hotel operators, and the Cendyn Group LLC, which is a provider of the algorithmic software platform, called “Rainmaker,” used to fix, raise, and stabilize the prices of casino-hotel guest rooms in Atlantic City. Rainmaker allegedly gathers real-time pricing and occupancy data to generate “optimal” room rates for each participating casino hotel, which the software then recommends to each casino hotel.

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Is it Possible to Win a Robinson Patman Act Case Now?

May 29, 2024 | Bona Law PC

Author: Steven Cernak

Some of us have been asserting for years that Robinson Patman, the federal price-discrimination antitrust law, is merely “forgotten but not gone.” That is, while there has been no FTC enforcement in decades, a few private lawsuits are filed every year and careful potential defendants still follow Robison Patman compliance programs. Recent statements suggesting a potential FTC revival seemed to jog the memories of practitioners that Robinson Patman remains on the books. Now, a lower court judgment by a dedicated group of plaintiffs and their lawyer provides more evidence that the law is anything but gone.

Clear Eyed Look at Robinson Patman

Very generally, Robinson Patman prohibits a seller of goods from offering lower prices or greater promotional allowances to one purchaser than to another competing purchaser. As we explain in other posts, there are many elements and defenses that make is difficult for a plaintiff to win. Court interpretations of those elements and defenses for the last few decades have only increased that difficulty. Still, one recent case shows that victory at the trial court level is possible.

In L.A. International Corp. v. Prestige Consumer Healthcare, Inc., Defendants manufacture and distribute Clear Eyes eye drops. The suit alleged that Defendants sold Clear Eyes at a lower price and with greater promotional allowances to Costco (specifically, Costco Business Centers that resell to retailers) than to Plaintiffs. Plaintiffs are several distributors that also buy and resell such products to retailers like local convenience stores. Interestingly, some of these same plaintiffs, and their counsel, have been involved in a long-running series of Robinson Patman cases alleging that the manufacturer of 5-Hour Energy also discriminated in favor of Costco.

Here, the case was filed in August 2018 and went to trial in December 2023. A jury found that Defendants had violated Section 2(a) (and a California unfair competition law) by offering a lower net price to Costco than to most of the Plaintiffs. The jury allocated about $700,000 in actual damages among several of the Plaintiffs. In May 2024, the judge found that Defendants also had violated Section 2(d) by offering greater promotional allowances to Costco and issued an injunction requiring Defendants to offer identical prices and proportionally equal promotional allowances to Plaintiffs going forward.

At the same time as his injunction ruling, the judge rejected Defendants’ arguments about several problems with the jury instructions. Specifically, the judge refused to reconsider the instructions laying out the overall standard that Plaintiffs had to meet as well as how a potential “functional discount” claim was to be evaluated. Unlike the lower court and Ninth Circuit in the 5-Hour Energy case, this judge seemed to have no problem supporting the jury’s verdict that most of the Plaintiffs actually competed with the Costco Business Centers.

So, in many ways, this case is unremarkable. A plaintiff presented evidence to a jury that, following a judge’s instructions mostly copied from ABA Model Instructions, found a Robinson Patman violation and set damages. The judge then followed that verdict and found another violation and provided injunctive relief. Yet, such cases and certainly such plaintiff verdicts are rare today. So, what are the takeaways for other potential plaintiffs or defendants?

Takeaways

First, maybe even more than all antitrust litigation, Robinson Patman litigation is time-consuming and fact intensive. The case took over 5 years to get to trial and the possibility of appeals still exists. The Plaintiffs are located in different parts of California plus Texas and New York. Each Plaintiff had to show at the local level that it competed with a specific Costco Business Center and that such competition was harmed by Defendants’ practices. Given the various elements and defenses and courts’ interpretations of Robinson Patman, no short cuts were possible.

Second, as we explained in prior posts and elsewhere, few courts have seen such a case in the last thirty years. Going back a couple decades further, the courts that did face such cases attempted to interpret Robinson Patman consistently with the rest of the antitrust laws under the then-new Chicago-School focus on competition and consumer welfare. As a result, there are plenty of defendant-friendly Robinson-Patman rulings, opinions, and dicta available.

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What Are the Elements for a Monopolization Claim under the Federal Antitrust Laws?

May 20, 2024 | Bona Law PC

Author: Jarod Bona

Do you or your competitor have a monopoly in a particular market? If so, your conduct or their conduct might enter Sherman Act, Section 2 territory, which we call monopolization.

If you are in Europe or other jurisdictions outside of the United States, instead of monopoly, people might label the company with extreme market power as “dominant.”

Of course, it isn’t illegal itself to be a monopolist or dominant (and monopoly is profitable). But if you utilize your monopoly power or obtain or enhance your market power improperly, you might breach US, EU, or other antitrust and competition laws.

In the United States, Section 2 of the Sherman Act makes it illegal for anyone (person or entity) to “monopolize any part of the trade or commerce among the several states, or with foreign nations.” But monopoly, by itself, is not illegal. Nor is it illegal for a monopolist to engage in competition on the merits.

If you are interested in learning more about abuse of dominance in the EU, read this article.

In the United States, monopolists have more flexibility than in the EU, but they are still under significant pressure and could face lawsuits or government investigations at any time, even when they don’t intend to violate the antitrust laws. There can be a fine line between strong competition on the merits and exclusionary conduct by a monopolist.

Here are the elements of a claim for monopolization under Section 2 of the Sherman Act:

The possession of monopoly power in the relevant market.
The willful acquisition or maintenance of that power as distinguished from growth or development as a consequence of a superior product, business acumen, or historic accident.

These two basic elements look simple, but you could write books about them.

The Possession of Monopoly Power in the Relevant Market

To determine whether an entity has monopoly power, courts and agencies usually first define the relevant market, then analyze whether the firm has “monopoly” power within that market.

But because the purpose of that analysis is to figure out whether certain conduct or an arrangement harms competition or has the potential to do so, evidence of the actual detrimental effects on competition might obviate the need for a full market analysis. If you want to learn more about this point, read FTC v. Indiana Federation of Dentists (and subsequent case law and commentary). You can show monopoly power directly.

Sometimes this element leads to difficult questions about the line between monopoly power in a relevant market and something slightly less than that. Other times, the monopoly-power element comes down to how the court will define the relevant market. A broader market definition may create a finding of no monopoly power, while a more narrow definition means the powerful company has monopoly power.

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