November 30, 2009

From Russia, An Antitrust Cooperation Agreement

Russia’s head antitrust agency, the Russian Federal Antimonopoly Service (“FAS”), has signed a Memorandum of Understanding (“MOU”) with the United States Department of Justice and Federal Trade Commission to promote greater cooperation between the two governments on antitrust issues.

FAS Head Igor Artemyev, FTC Chairman Jon Leibowitz, and Assistant Attorney General for Antitrust Christine Varney signed the MOU in Washington, D.C., earlier this month.

The MOU provides that the two countries will inform each other of basic activities of the two antitrust agencies, exchange their views on options for development of bilateral cooperation in competition enforcement, and exchange materials on their areas of authority and expertise.  Chairman Leibowitz stated with regard to the agreement between the two countries, “We are delighted to enter into this antitrust Memorandum of Understanding with the Russian Federal Antimonopoly Service.  It will enable us to enhance our cooperation, provide a framework for technical cooperation, and facilitate consultation on policy and enforcement matters with our counterpart in this important jurisdiction.” click here for more »

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Categories: Antitrust Enforcement, International Competition Issues

    November 25, 2009

    Chase Rips Up Credit Card Arbitration Clauses To Settle Class Action

     JPMorgan Chase bank, one of the world’s largest issuers of credit cards, has announced that it will abandon the controversial practice of mandatory arbitration of cardholder disputes.  The move is part of a settlement reached between Chase and consumers in an antitrust class action challenging the use of such clauses.

    Like many card issuers, Chase includes language in its cardholders’ contracts that requires the parties to use private arbitration, not the courts, to resolve disputes.  That has meant that cardholders with grievances lose benefits that courts offer, including the class action mechanism.  Consumer advocates argue that the inability to bring class actions effectively meant that most cardholders could bring no action at all.  The legal fees for bringing a complaint via arbitration often exceed the total amount that may be at stake.

    Chase and other issuers defend the use of arbitration clauses by arguing that they keep the issuers’ legal fees down.  Arbitration is far cheaper than litigation in court, and the less issuers spend on litigation in court, the less they must subsidize those costs by increasing fees or interest rates to cardholders. click here for more »

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    Categories: Antitrust Law and Monopolies

      November 24, 2009

      Arranged Marriage Of Comcast And NBC Stumbles Over One Parent’s Dowry Demand

      General Electric’s attempt to arrange a marriage for its 80-percent owned subsidiary NBC Universal is hitting a snag as NBC’s other parent, Vivendi, demands a greater dowry before it consents to Comcast’s proposal.

      Even if the marriage of these media giants is arranged, consummation of the deal will still be dependent on review by federal agencies, which will confront such issues as combined control over media content and distribution, and “net neutrality,” the principle that Internet service providers should not block or prioritize traffic based on content.

      G.E. has been negotiating for weeks with French media conglomerate Vivendi over buying its 20 percent share of NBC and then selling a majority interest in NBC to Comcast. G.E. and Comcast have reached an agreement in principle that would transfer 51 percent of NBC to Comcast.  Comcast is reported to be contributing its cable networks and between $4 billion and $6 billion in cash to the deal. click here for more »

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      Categories: Antitrust Enforcement

        November 19, 2009

        DOJ Statement Is Ray Of Sunshine For Oracle’s Acquisition Of Sun

        The outlook for Oracle’s proposed acquisition of Sun Microsystems is only partly cloudy now that federal antitrust enforcers have announced that they will not be joining their European counterparts in opposing the acquisition.

        The Antitrust Division of the United States Department of Justice issued a statement on November 9, 2009, concluding that Oracle’s proposed acquisition of Sun is unlikely to be anticompetitive.  This announcement came on the heels of the European Commission’s objection to the proposed $7.4 billion transaction.

        After an investigation that included gathering statements from a number of industry participants and reviewing Oracle’s and Sun’s internal business documents, the DOJ based its determination on a number of factors.

        For example, the DOJ concluded that there are many open-source and proprietary database competitors who offer consumers a variety of well established and widely accepted data products, and thus the proposed acquisition would be unlikely to harm consumers.  The DOJ also determined that there exists a large community of developers and users of Sun’s open source database with significant expertise in maintaining and improving the software, and who could support a derivative version of it.

        Still, Oracle must find a way to convince the European Commission that the proposed transaction is not anticompetitive.  Oracle has expressed confidence that it can do so.  The company stated that “[g]iven the lack of any credible theory or evidence of competitive harm, we are confident we will ultimately obtain unconditional clearance of the transaction.”

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        Categories: Antitrust Enforcement, International Competition Issues

          November 18, 2009

          FTC May Pluck CVS-Caremark Merger For A Second Bite Of Merger Review

          The completed CVS-Caremark merger may be the first fruit to be plucked by federal antitrust enforcers who have indicated a willingness to take second bites at the apple of merger review.

          Antitrust enforcers in the new administration have expressed an interest in re-examining previously approved mergers to ensure that competition was not compromised.  Christine A. Varney, Assistant Attorney General in charge of Antitrust at the Department of Justice, has stated that she is “absolutely” open to reviewing the effects of mergers approved under the previous administration.  No statute of limitations exists on mergers.  The DOJ under the most recent Bush administration filed suit against a company, Microsemi, seeking to undo its acquisition of competitor Semicoa Inc, and it seems likely that there will be more to come under the current administration.

          The March 2007 merger of CVS drugstores with pharmacy benefits manager Caremark RX has been criticized by both lawmakers and various public interest groups.  In July 2009, various US Senators wrote to FTC Chairman John Leibowitz requesting the FTC to reexamine the merger of CVS and Caremark to determine whether the combined entity has engaged in anticompetitive practices.  (Letters are available here and here).  The National Community Pharmacists Association issued a statement that prices are higher under the combined company.  The FTC is conducting a “non-public investigation” into CVS, which has revealed in a recent SEC filing that it is producing documents and other information in compliance with that investigation. click here for more »

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          Categories: Antitrust Enforcement

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