Antitrust Update

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Antitrust Update Blog is a source of insights, information and analysis on criminal and civil antitrust and competition-related issues. Patterson Belknap’s antitrust lawyers represent clients in antitrust litigation and counseling matters, including those related to pricing, marketing, distribution, franchising, and joint ventures and other strategic alliances. We have significant experience with government civil and criminal/cartel investigations, providing the unique perspectives of former top U.S. Department of Justice Antitrust Division lawyers from both the civil and criminal sides.

Congress, Regulators, and Justice Department Gear Up to Investigate “Big Tech,” But Focus and Scope Under Current Law Remains Unclear

U.S. lawmakers, regulators, and agencies charged with antitrust oversight have long been criticized for failing to act on alleged anticompetitive activity by the world’s largest technology companies—the so-called “Big Four” of Google, Facebook, Amazon, and Apple.  This year, however, government interest in oversight has spiked: In February the Federal Trade Commission launched a task force to monitor competition in technology markets and review past mergers, and the FTC and U.S. Department of Justice have reportedly reached an agreement to split jurisdiction over the Big Four, with the FTC taking responsibility for any investigations of Facebook and Amazon and the DOJ taking Google and Apple.  On the legislative front, the House Judiciary Committee Subcommittee on Antitrust, Commercial and Administrative Law has announced a series of hearings on competition in digital markets, promising a “top-to-bottom review of the market power held by tech giant platforms.”  And last Tuesday, DOJ Antitrust Division head Makan Delrahim told the Antitrust New Frontiers Conference in Tel Aviv, Israel that the DOJ was equipped under existing law to combat anticompetitive activity in the digital economy, stressing the particular harms of collusion, exclusivity and tying arrangements, and acquisition of nascent competitors.


Update: NCAA Loses in Suit Challenging Student-Athlete Compensation and Benefit Limits, Prepares for Appeal

Last year we wrote about the summary judgment decision in an MDL class action then pending in the U.S. District Court for the Central District of California, In re NCAA Athletic Grant-In-Aid Cap Antitrust Litigation.  The suit against the National Collegiate Athletic Association and eleven member athletic conferences is a challenge by the plaintiffs (men’s football, men’s basketball, and women’s basketball student-athletes) to the NCAA’s student athlete compensation-cap rules as a violation of Section One of the Sherman Antitrust Act.  In that decision, the court rejected several of the NCAA’s defenses and permitted the case to proceed to a bench trial, which was held last September.  On March 8, the court issued its decision, siding against the defendants and holding that the challenged rules were unlawful.


As DOJ Reconsiders Watershed Consent Decrees, Claims of Unlawful “Circuit Dealing” Proceed Against Landmark Theaters

Hollywood and the antitrust laws go way back.  Indeed, antitrust suits have resulted not only some of the most significant cases in the evolution of American antitrust law, but many of the most consequential developments in the history of the movie industry.  Chief among these is United States v. Paramount Pictures, Inc., 334 U.S. 131 (1948), which held unlawful the then-existing vertical integration of production studios, distributors, and exhibitors (i.e., theaters); it also held various prevailing practices—“block booking” (bundling movie licenses and strong-arming theaters into accepting all of a studio’s movies); “circuit dealing” (obtaining mass licenses for entire theater chains, instead of for individual theaters and films); overbroad “clearances” (selling exclusive exhibition licenses for certain geographical areas); and setting minimum movie-ticket prices—to be impermissibly anticompetitive.  By effectively abolishing the so-called “studio system” and requiring the studios to divest themselves of their theater chains, the Paramount case and the resulting consent decrees fundamentally altered the relationships among producers, distributors, and exhibitors, and led to the industry structure that has survived to date.


Disagreeing with D.C. Circuit Colleagues, Supreme Court Nominee Brett Kavanaugh Would Have Rejected Challenges to Major Mergers in Antitrust Enforcement Actions

On Monday, President Trump announced Brett Kavanaugh, a judge on the United States Court of Appeals for the District of Columbia, as his nominee to replace Supreme Court Justice Anthony Kennedy.  Judge Kavanaugh’s most notable antitrust-related decisions in his 12 years on the federal bench include the dissents he issued in United States v. Anthem, Inc. and FTC v. Whole Foods Market, Inc.  In both cases, Judge Kavanaugh disagreed with his colleagues’ decisions to block the contemplated mergers, suggesting an antitrust jurisprudence leery of excessive enforcement activity. 


On Judicial Review Rebound, Court Finds NCAA Compensation Rules Challenge May Proceed

In late March, a district court in the Northern District of California partially granted and partially denied dueling summary judgment motions in an MDL class action—In re NCAA Athletic Grant-In-Aid Cap Antitrust Litigationchallenging the National Collegiate Basketball Association’s student athlete compensation-cap rules as a violation of Section One of the Sherman Antitrust Act.  Defendants—the NCAA and eleven member athletic conferences—previously reached a $208 million settlement with the consolidated plaintiffs, which the court approved in December 2017.  Claims for injunctive relief remain pending, however—and, as a result of the District Court’s ruling, will proceed to a bench trial currently scheduled for December 2018.  (Defendants have asked to postpone the trial until mid-2019; the court will hear argument on that motion later this month.) 


As Germany Targets Facebook’s Data Collection, DOJ Antitrust Division Suggests Friendlier Approach to Data-Powered Digital Market Leaders

Information can be an invaluable asset.  This is especially evident in the technology sector, where companies use increasingly sophisticated methods to collect, aggregate, and analyze data.  Exclusive possession of data can, of course, confer significant competitive advantages—but may also prompt legal challenges from competitors or scrutiny from regulators.  Authorities in France and Germany have investigations underway into whether the collection and use of consumer data by major online platforms including Facebook and Google are having anticompetitive effects.  And on December 19, 2017, Germany’s competition authority—the Bundeskartellamt— informed Facebook that it “holds the view that Facebook is abusing [a dominant market position] by making the use of its social network conditional on its being allowed to limitlessly amass every kind of data generated by using third-party websites and merge it with the user’s Facebook account.”