May 7, 2014

DOJ And FTC Will Discuss Whether Bundled Discounts Are A Bundle Of Antitrust Trouble Or A Bundle Of Joy For Consumers

By Ankur Kapoor[1]

The Federal Trade Commission (“FTC”) and the Antitrust Division of the U.S. Department of Justice will attempt to unravel the antitrust pros and cons of bundled discounts and other conditional-pricing practices in a one-day public workshop on June 23, 2014.

Bundled discounts, which are discounts offered for the purchase of a “bundle” of goods or services, exist in many markets.  The undisputed heavyweight champion of bundled discounts is the fast-food value meal, for which you pay some five cents more to get the fries (how can you say no to that?).

Although most bundled discounts are good for competition because customers love a good deal, there are cases where bundled discounts can exclude competition and, on balance, harm consumers.  For example, when a company has a monopoly in one product market (say, broadband internet service), it can raise prices in that market and then offer a “discount” only to customers that also buy some other product in a competitive market (say, telephone service).  Because customers need the monopoly product and don’t want to turn down the “discount” on that product, they end up buying the second product from the monopolist as well, to the exclusion of other companies competing in the second product market.  Even if competitors may be able to compete in the first product market, that complicates but does not eliminate the anticompetitive potential of the bundled discount.

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Categories: Antitrust Enforcement, Antitrust Litigation

    May 1, 2014

    The NBA Constitution Might Well Block Donald Sterling From Challenging A Forced Sale Of His Clippers In Court

    By Jeffery I. Shinder and David Scupp

    Donald Sterling is going to find the NBA constitution a major roadblock if he attempts to fight in court the NBA’s decision to seek his ouster as owner of the Los Angeles Clippers.

    Yesterday, we analyzed the antitrust implications of the NBA’s decision to respond forcefully to Sterling’s recently reported offensive and racially charged comments.  In addition to imposing a lifetime ban from NBA activities and a fine of $2.5 million, NBA Commissioner Adam Silver announced that he would urge the NBA Board of Governors to force Silver to sell his basketball team.  We concluded that while joint activity of NBA teams could raise antitrust issues under certain circumstances, it would be difficult for Sterling to prove that his particular expulsion amounted to an antitrust infraction, particularly because it is unlikely that he could show that the NBA’s action caused any competitive foreclosure or impact on price or innovation.

    However, apart from the difficulties inherent in proving an antitrust claim, Sterling would also have to overcome two legal barriers contained in the NBA’s constitution, which the league recently made public in the wake of the Sterling controversy.

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    Categories: Antitrust Litigation

      April 30, 2014

      Can The NBA Force A Sale Of Sterling’s Clippers Without Running Afoul Of The Antitrust Laws?

      By Jeffery I. Shinder and David Scupp

      We applaud the NBA for the firm stance it took against racism, which we believe should have no place in our country.  Having said that, we note that some have suggested that Donald Sterling may file an antitrust lawsuit to maintain his grip on the Clippers, or to gain some leverage to get full value for the team in a forced sale.  Notwithstanding our views on his conduct, we will attempt to analyze the antitrust legal issues dispassionately.

      The sordid tale of Los Angeles Clippers owner Donald Sterling may weave its way into court via an unlikely route – the antitrust laws.

      For the past week, the sports press has been abuzz regarding Sterling’s odious remarks that were caught on tape and released to the public.  Yesterday, NBA commissioner Adam Silver pulled no punches, fining Sterling $2.5 million (the maximum allowed under the league’s constitution), and banning him for life from any association with the Clippers organization or the NBA.  Sterling can no longer attend NBA games or practices, participate in Clippers player or personnel decisions, or even enter any Clippers facility.  Sterling is also barred from attending any NBA Board of Governors meetings, or participating in any other league activities.  He is effectively exiled from the league.

      But can Sterling actually be exiled from the franchise that he continues to own?  In addition to instituting the fine and lifetime ban, Silver has also urged the NBA owners to force a sale of the Clippers.  Under certain enumerated circumstances, the league’s constitution permits the league to take control of a team and sell it, provided three-fourths of the league’s owners agree.  Assuming that Sterling’s offensive conduct constitutes one of the enumerated events required to force a sale (and that is not a foregone conclusion), the question arises as to whether a forced sale would violate the antitrust laws or at least raise antitrust claims that Sterling could use to enhance his weak, or non-existent, bargaining position with the league.

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      Categories: Antitrust Litigation

        April 30, 2014

        Tech Heavyweights Settle Wage-Fixing Fight For $324 Million

        By David Golden

        Google, Apple, Adobe Systems, and Intel have settled an antitrust class action lawsuit brought by software engineers in the high tech industry for a reported $324 million.

        The lawsuit, In re High-Tech Employee Antitrust Litigation, alleged that the four companies (along with Intuit, Pixar, and Lucasfilm) agreed to refrain from “poaching” each other’s employees, a common practice in high-tech industries where one company tries to hire the employee of another company.  Experts had estimated damages of $3 billion, which, after trebling under the antitrust laws, could have totaled $9 billion.

        Because engineers and scientists who have the experience and skills to build cutting-edge hardware and software products are in great demand, high-tech companies and their recruiters frequently try to attract such employees from other companies with offers of higher salaries and bonuses.  The complaint alleged that the high-tech defendants, in violation of the Sherman Act and California state laws, agreed to not recruit each other’s employees, to notify each other when making an offer to another’s employee, and to refrain from price competition in offering positions to each other’s employees.

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        Categories: Antitrust Litigation

          April 25, 2014

          Sixth Circuit Pulls Plug on Merging Hospital’s Weakened Firm Defense

          By Marlene Koury

          The U.S. Court of Appeals for the Sixth Circuit has upheld a Federal Trade Commission (“FTC”) order unwinding a merger of two Ohio hospitals that unsuccessfully sought to breathe life into a “weakened firm defense.”

          In a unanimous opinion, a three-judge panel of the Sixth Circuit denied ProMedica’s petition to overturn a Federal Trade Commission ruling, which ordered ProMedica to divest itself of St. Luke’s after finding that the merger of two of the four hospital systems in Lucas county, Ohio, would adversely affect competition in violation of Section 7 of the Clayton Act.

          ProMedica scooped up its rival St. Luke’s in a widely-publicized merger in 2010.  A year later, the FTC deemed the merger anticompetitive on the grounds that it would lead to higher prices for consumers and ordered ProMedica to divest St. Luke’s.  ProMedica then filed a petition asking the Sixth Circuit to review the FTC order. click here for more »

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          Categories: Antitrust Enforcement, Antitrust Litigation

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