April 5, 2007 | Posted By Sheppard Mullin
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The Federal Trade Commission Splits On Whether It Could/Should Order Mandatory Licensing With Zero Royalties

On July 31, 2006, a unanimous Federal Trade Commission (“Commission” or “FTC”) ruled that Rambus Inc.’s “acts of deception constituted exclusionary conduct under Section 2 of the Sherman Act, and that Rambus unlawfully monopolized the markets for four technologies” that were incorporated into the Dynamic Random Access Memory (“DRAM”) standards adopted by the Joint Electron Device Engineering Counsel (“JEDEC”) for the Synchronous DRAM (“SDRAM”) and the Double Data Rate SDRAM (“DDR-SDRAM”) in violation of Section 5 of the Federal Trade Commission Act (“FTC Act”).  Liability Op. at 3.[1]  In its Liability Opinion, the Commission found, “Through a course of deceptive conduct, Rambus exploited its participation in JEDEC [an industry-wide standard-setting organization] to obtain patents that would cover technologies incorporated into now-ubiquitous JEDEC memory standards, without revealing its patent position to other JEDEC members.  As a result, Rambus was able to distort the standard-setting process and engage in anticompetitive ‘hold up’ of the computer memory industry.”  Id. at 3.

[1] “Liability Opinion”  and “Liability Op.” refer to the Commission’s July 31, 2006 opinion.  For a copy of the Commission’s Liability Opinion, please refer to In the Matter of Rambus, Inc., FTC Docket No. 9302, available at http://www.ftc.gov/os/adjpro/d9302/index.htm (filed on August 2, 2006). 

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April 5, 2007 | Posted By Sheppard Mullin
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Sixth Circuit Examines Functional Availability of Market Share Discount Programs and Finds No Price Discrimination in Same

In two companion cases concerning the Robinson-Patman Act's prohibition of price discrimination, the Sixth Circuit holds that a loyalty program that is functionally available to competing purchasers does not violate the RPA.  Smith Wholesale Co., Inc. v. R.J. Reynolds Tobacco Co., 6th Cir. No. 05-6053, 2/27/07; M-K Grocery Co. v. Philip Morris USA, Inc., 6th Cir., No. 05-6481, 2/27/07 (unpublished).  Unlike other RPA decisions that have applied the functional availability doctrine to volume-based loyalty programs, these cases stand-out as one of the first occasions where a court has discussed in detail the circumstances in which a market share based loyalty program may or may not be functionally available and discriminatory.  The decisions reveal that a loyalty (or other discount) program that requires a purchaser to alter its business strategy or marketing decisions to obtain the best price does not render the discount functionally unavailable.

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April 5, 2007 | Posted By Sheppard Mullin
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EC Warns Microsoft of Further Penalties over Unreasonable Pricing as Interoperability Information Lacks Significant Innovation

On March 1, the European Commission ("EC") sent a Statement of Objections ("SO") to Microsoft for failing to comply with certain of its obligations under the March 2004 Commission Decision.  Part of that Decision found Microsoft to have infringed the EC Treaty rules on abuse of a dominant position (Article 82) by leveraging its near monopoly in the market for PC operating systems onto the market for work group server operating systems.  Microsoft was required to disclose complete and accurate interface documentation on "reasonable and non-discriminatory terms" to allow non-Microsoft work group servers to interoperate with Windows PCs and servers.  The SO indicates the EC's preliminary view that there is no significant innovation in the interoperability information, rejecting as unfounded 1500 pages of submissions by Microsoft from December 2005 onwards, and hence that the prices proposed by Microsoft are unreasonable. Continue Reading Questions & comments
April 5, 2007 | Posted By Sheppard Mullin
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Vaultmaker Claims Exclusive Dealing, but SBC Need Not Accept the Charges

A maker of concrete vaults that house telephone cables cannot add an exclusive dealing claim to the host of antitrust allegations it has leveled against SBC Services Inc., a California District Court judge has ruled. Continue Reading Questions & comments
April 5, 2007 | Posted By Sheppard Mullin
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Lights Go Out For Remaining Plaintiffs In California Wholesale Electricity Antitrust Cases

On February 26, 2007, the California Court of Appeal, Fourth District pulled the plug on the remaining wholesale electricity manipulation cases, based upon the California recent energy crisis.  See, Wholesale Electricity Antitrust Cases I & II, California Court of Appeal, Fourth District, Nos. 4204, 4205, February 26, 2007. Continue Reading Questions & comments
April 5, 2007 | Posted By Sheppard Mullin
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Department of Justice & Federal Trade Commission Highlights for March

FTC Kills Funeral Home Directors’ Attempt to Bury Competition

 

            On March 9, the Federal Trade Commission reached a settlement with the Missouri Board of Embalmers and Funeral Directors on charges that they had illegally attempted to eliminate non-funeral home retailers from the sale of caskets in Missouri.  The consent decree does not require that the Board eliminate the allegedly anticompetitive regulation, but only requires that the Board provide a proviso on its website stating and in its newsletters and magazines that the new regulation does not restrict the right of non-funeral homes to sell caskets. Continue Reading Questions & comments