May 7, 2007 | Posted By Sheppard Mullin
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CHINA PREMERGER NOTIFICATION RULES

Sheppard Chinese Black.jpg

China has been working on an Anti-Monopoly Law (“AML”) for almost a decade, and the latest draft is expected to be finalized and to come into effect during the later part of 2007. 

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May 7, 2007 | Posted By Sheppard Mullin
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International Highlights

On April 3, the European Commission ("EC") announced that it sent a Statement of Objections to a number of major record companies and Apple, alleging that the agreements between each record company and Apple restrict music sales (via iTunes on-line stores), and infringe Article 81 of the EC Treaty by imposing territorial restrictions which prevent consumers from buying music downloads from the iTunes on-line store in their country of residence.  The EC alleges that this restriction is imposed by verification by iTunes of a customer's country of residence from consumers' credit card details.  The EC further alleges that the territorial sales restrictions in the agreements between Apple and the major record companies restrict consumers' choice as to where to buy music, what music is available and at what price.  The EC has given the undertakings involved two months to respond to the Statement of Objections in writing.  The undertakings will be given access to the EC's file, other than business secrets, other confidential information and internal documents of the EC or member state competition authorities. The undertakings can also request an oral hearing at which to present their defense.  The Statement of Objections does not allege that Apple is in a dominant market position, and does not concern Apple's use of its proprietary Digital Rights Management (DRM) to control usage rights for downloads from the iTunes on-line store.

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May 7, 2007 | Posted By Sheppard Mullin
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Antitrust Modernization Commission Submits Report to the President and the Congress of the United States

On April 2, 2007, the Antitrust Modernization Commission[1] issued its Report and Recommendation to the President and to Congress ("Report").  In its three years of existence, AMC held 17 public hearings and 16 meetings.  First, in its summary to the President and the Congress, AMC states "the report is fundamentally an endorsement of free-market principles.  These principles have driven the success of the U.S. economy and will continue to fuel the investment and innovation that are essential to ensuring our continued welfare."  Second, AMC reports that the state of the US antitrust laws is "sound".  Third, AMC reported that it did not believe that new or different rules are needed to address the so-called "new economy" issues.  Rather, consistent application of the principles in focus of free market principles, in conjunction with current antitrust law and policy, will ensure that the antitrust laws remain relevant in today's environment as well as the environment of the future.  The AMC also noted that differentiated rules for different industries would be unnecessary and unwise.  This is particularly the case  as to antitrust immunities, exemptions, or special industry-specific standards.

[1] The Antitrust Modernization Commission ("AMC") was created by the Antitrust Modernization Commission Act of 2002, Public Law No. 107-273 Section 11054(h), 116 Stat. 1856, 1857 (2002).

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May 7, 2007 | Posted By Sheppard Mullin
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Judge Sullivan Approves SBC/AT&T and MCI/Verizon Mergers

As previously reported in the Blog, Judge Sullivan in the United States District Court for the District of Columbia, surprised many antitrust lawyers by granting applications from a number of competitors and consumer groups and commencing extensive proceedings under the amended Tunney Act to review the consent decree reflecting Department of Justice approval of the merger between SBC and AT&T.  On March 29, 2007 Judge Sullivan finally granted the Antitrust Division's motion to approve the consent decrees between the United States and SBC and AT&T, and between the United States and MCI and Verizon.  SBC and Verizon can now sell off the assets of AT&T and MCI, respectively, listed in the consent decrees, ending the limbo in which the assets had been since December, 2005. Continue Reading Questions & comments
May 7, 2007 | Posted By Sheppard Mullin
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Scent of a Claim: Canada's Competition Tribunal Holds Sears' Refusal to Deal Action Lacks Substance

Unlike other areas of antitrust law and policy, Canada is less lenient than United States law when it comes to refusals to deal and resale price maintenance.  Since January 2004, Canada's Competition Act has included a private right of action for refusals to deal.[1]  Attempting to use this relatively new right, one of Canada's largest retailers, Sears Canada, filed suit against Givenchy and Christian Dior's perfume affiliates earlier this year when Givenchy and Dior advised Sears that they would stop supplying Sears after fourteen years of doing business with it.  Unlike under U.S. law, where firms generally may lawfully refuse to deal to anyone they choose provided the refusal is unilateral, Canada's Competition Act restricts refusals to deal when the refusal is causes a person's business to be "substantially affected" and has or is likely to have "an adverse effect on competition in a market"

[1]           Competition Act § 75, R.S.C. 2002, c. 16, s.11.1, §  103.1, R.S.C. 2002, c. 16, s.12.  Prior to this, the Commissioner of Competition had exclusive jurisdiction to enforce the civil refusal to deal provision of the Act.  Private parties suing under section 75 may not recover damages as section 75 only authorizes the Competition Tribunal to issue orders directing a supplier to deal to a customer on usual trade terms.  

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May 7, 2007 | Posted By Sheppard Mullin
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FTC/DOJ Highlights for April

Antitrust Division Finds No Problem with Pork Merger

On May 4, 2007, the Antitrust Division issued a press release announcing that it had decided not to challenge Smithfield Foods acquisition of Premium Standard Farms.  In its press release, the Division indicated that it found that the acquisition would not pose a competitive problem for either consumers of fresh and processed pork, nor for pork farmers in the Midwest or in Virginia or the Carolinas.

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