manishin glenn
TRANSCRIPT
Antitrust:
How To Survive and Prosper In a Hostile Market and Judicial
Environment
Von.x Pre-Conference 17 March 2008 San Jose
17 March 2008 2
Panelists
• Glenn Manishin• Duane Morris LLP
• Mark Ostrau• Fenwick & West LLP
• Al Pfeiffer• Latham & Watkins LLP
• Harvey Saferstein• Mintz Levin et al. LLP
• David Turetsky• Dewey & LeBouef LLP
17 March 2008 3
Outline
• Price Squeeze Claims• Standards & Antitrust• VoIP, Broadband & Antitrust• Antitrust & Related Litigation• Some (Unanswered) Questions
17 March 2008 5
Basic Price-Squeeze TheoryKey Assumptions:• Incumbent controls key input
with no effective sub- stitutes• Incumbent charges entrant
more than its own input cost• Input costs result in raising
entrant’s total costs above retail price
• Equally (or more) efficient competitor excluded 0
10
20
30
40
50
60
Incumbent Entrant
Retail
Input
Total
17 March 2008 6
The Uncertain Impact of Trinko• Trinko did not deal directly with price
squeeze claims, but recognized broad right to refuse to deal altogether
• Price squeeze claims were recog-nized under pre-1996 Act antitrust law
• Has led to split among Circuit Courts, in a series of cases arising from DSL carriers’ claims against RBOCs
17 March 2008 7
The Covad Rulings
Covad v. Bell Atlantic398 F.3d 666 (D.C. 2005)407 F.3d 1220 (D.C. 2005)
• Rejected Covad’s price squeeze claim
• If incumbent can refuse to deal, it can price as it wants
• Predatory pricing claims still viable
Covad v. BellSouth374 F.3d 1044 (11th 2004)
• Price squeeze claims remain potentially viable after Trinko
• Upheld Covad’s price squeeze claim
• But found must be tied to predatory pricing by incumbent
17 March 2008 8
The LinkLine Ruling
• Distinguished between fully reg-ulated POTS markets and partially-deregulated DSL market
• Price squeeze claims are viable, even without showing predatory pricing
• Dissent: Predatory pricing should be required, but if shown, price squeeze claims viable
17 March 2008 9
Key Questions For Plaintiffs• Fight or Negotiate?
• Late ‘90s track record favors fighters• Public lawsuits may hurt investor confidence
• Can you file in the Ninth Circuit?• Can/should you allege predatory pricing,
as a backup?• Requirements of Rule 11
• How do you measure incumbent’s cost?
17 March 2008 11
Overview
• Generally pro-competitive: • Increased efficiency, interoperability, lower
barriers to entry • Facilitate comparisons, increase price
competition
• But numerous antitrust hazards:• Patent holdup • Excluding or injuring competitors• Limiting downstream competition
17 March 2008 12
What to Look For in an SDO/SSOMembership: Open, with multiple constit-uencies
Beware market power, exclusiveness, exclusivity
Process: Participatory, impartial, consensus-driven Beware bias, subjectivity, exclusionary result
Implementation: Voluntary, accessible, non-exclusive
IP rules: Clear disclosure obligations and RAND (or better) license rules
17 March 2008 13
Handling IP – Play Fair or Else Don’t fail to disclose relevant IP
Dell UNOCAL RambusDon’t violate license commitments
N-Data Qualcomm
Don’t mess up the pool “Non-essential” patents, exclusiv-ity, discrimination, noncompetes
17 March 2008 14
VoIP, Broadband & Antitrust
What Is ― or Should Be ― the Role of the Federal Trade
Commission?
(Harvey Saferstein)
17 March 2008 15
Overview
• Jurisdictional Issues ― FCC Regulation; Common Carrier Exclusion
• Antitrust• Consumer Protection
17 March 2008 16
The FTC & Consumer Protection
• Privacy Ventures ― Do Not Call List• Deceptive Billing and Advertis- ing
of Services• Telemarketing
17 March 2008 17
The FTC, Antitrust & Competition
• Merger Reviews, e.g., Time Warner• Bundling? Privacy?• Standards-Setting
17 March 2008 18
Antitrust & Related Litigation
Survival in a Hostile Market and Judicial Environment Requires Attentiveness to Every Opportunity
(David Turetsky)
17 March 2008 19
Achieving Business Objectives• Set goals and consider multiple and
complementary ways to achieve them. Consider:• Antitrust: Private litigation, mediation,
possible government enforcement interest?• Other theories: contract, tort, common law,
statutes• FCC proceedings, congressional interest
17 March 2008 20
Media and Content: Bundling and Access• FCC considering whether:
• programmers must sell each network separately to cable rather than in bundles
• cable must sell networks a la carte to customers or can sell in bundles or “tiers”
• Congressional committees have examined these issues and some have voted — against requiring a la carte
• Federal class action complaint under Sherman Act §§ 1 and 2 alleging anticompetitive bundling or
tying by programmers and cable
17 March 2008 21
Media Ownership Issues
• Cross-ownership rules — newspapers, TV stations, cable, etc.
• Congressional concerns — media concentration, diversity of voices, timing, etc.
• Third Circuit tossed out revised ownership rules
• Antitrust merger reviews
17 March 2008 22
Bottlenecks and Miscellaneous• FCC bans exclusive access by cable
providers to MDUs• Antitrust case on building access for CLEC
dismissed• The Twombly hurdle• What about MFN clauses as applied to
independent programmers?• Any different from “best terms” agreements
criticized as anticompetitive by EC in business insurance competition report?
17 March 2008 23
Some (Unanswered) Questions• Can successful price squeeze claims be
presented in real-world trials?• Will building barriers to entry with IP
claims/litigation be sustained absent “deception”?
• Does FTC “jurisdiction” present a Trinko limitation for suits about VoIP or broadband anticompetitive practices?
• Will digital content distribution face antitrust or regulatory constraints for competitive nondiscrimination?