Antitrust Law Blog

Answer: NO. (But read the following fine print).

The passage of the Antitrust Criminal Investigation Improvement Act of 2005 (March 9, 2006) authorizing antitrust wiretapping for the first time has generated plenty of comment. And, in some circles, alarm. None of the comments, however, have been authored by practitioners experienced with wiretaps. That is not surprising. Almost all wiretaps are used in drug cases — not an area generally frequented by antitrust lawyers.

On July 31, 2006, the Federal Trade Commission issued its long awaited decision concerning abuse of a technical standard setting process, In the Matter of Rambus, Inc., Docket No. 9302. The Rambus FTC proceeding has been closely watched by practitioners responsible for policing the involvement of companies in standard setting organizations ("SSO's"), and the companies themselves. Standard setting is increasingly important in this era of rapid technological change, as competitors seeks to cooperatively create open standards that operate pro-competitively by providing for interoperability to increase the value and commercial acceptance of a wide variety of products.

"Monopoly leveraging," or the use of monopoly power in one market to achieve an advantage in a related market, is not in itself a violation of Sherman Act section 2, according to a recent opinion from the U.S. Court of Appeals for the Seventh Circuit. Schor v. Abbott Laboratories, No. 05-3344 (7th Cir. 2006). The complaint alleged that defendant Abbott Laboratories ("ABBOTT") attempted to leverage a monopoly on its patented AIDS drug Norvir to obtain a second monopoly on other drugs that can be combined with Norvir. The District Court dismissed the complaint for failure to state a claim and the Seventh Circuit affirmed. The court reasoned that such a practice cannot increase a monopolist's profits. "A monopolist can take its monopoly profit just once," Judge Frank H. Easterbrook wrote for the unanimous panel. "An effort to do more makes it worse off and is self-deterring." Therefore, the court concluded, monopoly leveraging does not violate the antitrust laws unless it takes a particular form, such as predatory pricing, tie-in sales or a refusal to deal.

The Robinson-Patman Act provides price discrimination in the sales of commodities of like grade or quality. In Water Craft Management LLC v. Mercury Marine, No. 04-31139 (5^th Cir. 2006), plaintiff Water Craft, a retailer of outboard motors, sued its supplier, Mercury Marine, alleging that Mercury engaged in price discrimination prohibited by the Robinson-Patman Act by offering Water Craft's largest competitor, Travis Boating Center, discounts that far exceeded those offered to Water Craft. Mercury invoked the "meeting competition" defense to price discrimination claims, i.e. that the lower price offered to Travis was a good faith attempt to meet the low price offered to Travis by Mercury's competitor. After a bench trial, the district court agreed with Mercury that the meeting competition defense applied and entered judgment in favor of Mercury. Water Craft appealed to the Fifth Circuit, arguing that the district court erred in applying the meeting competition defense because (1) the district court's factual finding that Mercury's price discrimination was a good faith response to its competitor's low prices was erroneous and (2) where a defendant offers a price to the favored purchaser that is not as low as the price offered by the defendant's competitor, as was the case here, the defendant cannot, as a matter of law, avail itself of the meeting competition defense. The Fifth Circuit rejected these arguments and upheld the district court ruling. 

In the first time a Canadian court has considered the tests for exclusive dealing and abuse of dominant position under the Competition Act, Canada's Federal Court of Appeal (the FCA or the court) held last June that the Competition Tribunal failed to correctly apply these tests.¹  The FCA thus overturned the Tribunal's dismissal of the Competition Commissioner's application seeking orders against manufacturer Canada Pipe Company Ltd. for abusing its dominant position and having a practice of exclusive dealing and remanded the case to the Tribunal for re-determination. The Commissioner appealed the Tribunal's dismissal of its claims, and Canada Pipe cross-appealed the Tribunal's finding that it had market power in the relevant markets.²  The case also reveals significant differences in the legal tests employed in the United States and Canada for unlawful exclusive dealing.