Author: Molly Donovan
If I Were You is a new Bona Law podcast that gives in-house lawyers the essential 5 bullets they need to explain real-world antitrust and competition risks to their business teams. This podcast is a quick 10 minutes or less, easily digestible during a commute or errand, and we hope it becomes a practical resource for in-house lawyers.
I’ll be the regular host of the podcast, which was inspired by one of my favorite in-house friends who said, “A good way to talk to the business side is to say something like, ‘I’m not saying don’t do it, but if I were you, I would do x, y, and z to mitigate the risk.’” And—tah dah—this podcast was born.
Each episode will feature a special guest with relevant experience in the topic of the day and will be followed by a write-up of the 5 bullets in blog form for those who don’t like podcasts.
So, if I were you, I’d listen to my first episode about monopolization here. Featuring Bona Law partner Aaron Gott. Blog format follows now:
This Episode Is About: Monopolization
Why: The DOJ indicated recently that it’s prepared to criminally prosecute monopolization and attempted monopolization. We don’t know how real the risk of criminal prosecution really is (it could be nil), but monopolization conduct can lead to burdensome government inquiries as well as private lawsuits, so it’s a good idea for in-house lawyers to get a quick check-up on the topic.
The Five Bullets: In-house lawyers, if I were you, I would educate your business team of the following concerning monopolization…
- You don’t have to be a major tech company or a telecom giant to be a monopolist. Market power is not measured based on the sheer size of the company. A relatively small company that happens to dominate even a niche product area could be seen as a monopolist. What matters is the amount of power you have within a particular product and geographic area—not revenues or profits.
- You do not need 100% or even 90% market share to be deemed a monopolist. Depending on the circumstances, even 50-70% share could indicate monopoly power or a dangerous possibility thereof. One circumstance that matters is high barriers to entry—the idea is that it’s not easy for a new company to spring up and start competing right away because it’s difficult to obtain the necessary IP, the physical production capabilities, etc. Also, look for few or no domestic competitors, and insignificant or no competition from imports.
- If that sounds like your business, then you should be cautious to undertake any conduct that could appear to be “exclusionary.” Exclusionary conduct can take many forms—but in essence, it means coercing, or trying to coerce, a business partner to do something if would not ordinarily do if the market were competitive. Example: threatening a supplier that unless it supplies a necessary component only to you, you will stop doing business with that supplier altogether. The less it seems like competition on the merits, the more likely it can be characterized as nakedly anticompetitive, and that’s what will get you into trouble.
- To mitigate any appearance of exclusionary conduct: document the reasons why business decisions will benefit competition and consumers; track the success of those decisions in terms actual benefits to consumers that result from it; know that excluding a competitor from the market is not a procompetitive justification.
- Avoid any semblance of an agreement—even one with a supplier or distributor, i.e., a third-party in the chain of commerce that does not compete with you—without getting legal advice first. Example: an agreement could take the form of exclusive dealing arrangement between you a customer.