A wireless telecommunications firm agreed to pay over $2 million in fines for failing to comply with the terms of a court ordered consent decree arising out of the Department of Justice’s challenge to the telecommunications firm’s acquisition of a rival. The consent decree required the divestiture of wireless telecommunications businesses in three rural areas and provided that the businesses would be operated independently pending divestiture. The department alleged that the firm failed to separate confidential customer account information and its employees used this information to take customers from the businesses slated for divestiture.
United States v. AT&T Inc., No. 1:07-cv-1952 (ESH) (D.D.C. Jan. 14, 2009), available at www.usdoj.gov/atr
The U.K. Office of Fair Trade (OFT) announced publication of a restatement of its approach evaluating whether to clear mergers based on “failing firm” grounds, where the acquired firm would be forced to exit the market without the merger. Emphasizing the rationale underlying “failing firm” defenses – that the harm to competition would result even without the merger – the OFT stated it would clear a merger when the business in question would inevitably have exited the market without any serious prospect of being reorganized and a realistic and substantially less anticompetitive alternative to the merger did not exist. The OFT codified its position on “failing firm” claims, previously established through existing guidance and decisional practice, to allow businesses in financial difficulty to understand their options.
Restatement of OFT’s Position Regarding Acquisitions of “Failing Firms,” OFT1047 (December 2008), available at www.oft.gov.uk
Restraint of Trade
The FTC announced the settlement of charges that the operator of a Pittsburgh, Pa., real estate multiple listing service (MLS) restricted access to its database to discourage discount brokerage services in violation of antitrust laws.
The commission stated that the MLS, owned by a membership organization composed of local real estate professionals, is the only such database serving the Pittsburgh area and that access to the database is necessary to provide effective real estate brokerage services.
The FTC alleged that the MLS refused to make nontraditional, discount listings available for viewing on publicly accessible real estate Web sites and noted that the brokers enacting the restrictive rules were in effect agreeing among themselves to limit the way they competed with one another.
The commission added that free-riding concerns did not justify the restrictions because a member of the MLS is always involved in posting the discount listings to the database.
In re West Penn Multi-List Inc., File No. 0810167 (Jan. 9, 2009), available at www.ftc.gov
Group Boycott
The U.S. Court of Appeals for the Sixth Circuit affirmed a district court’s dismissal of a complaint alleging a per se horizontal boycott against an insurance company and its affiliated and independent agents’ decision to sever relations with another group of insurance companies. The court found that the complaint did not allege any horizontal agreement between the insurance company and its agents. Addressing the independent agents, the Sixth Circuit concluded that the defendants did not engage in a horizontal “hub-and-spoke” conspiracy because the plaintiffs could not identify the “rim,” that is, agreements among competing insurance agents.
Total Benefits Planning Agency Inc. v. Anthem Blue Cross and Blue Shield, 2008-2 CCH Trade Cases ¶76,435
Joint Licensing
The Australian Competition and Consumer Commission (ACCC) announced that it did not object to collective bargaining notifications that would allow members of an association of independent labels to offer joint licenses to broadcast music videos. The association proposed to offer nonexclusive licensing rights to certain users to broadcast copyrighted music videos. Noting that transaction costs prevented some members from offering individual licenses – resulting in a loss of fees when their music videos were broadcast – the ACCC stated that joint licensing could lead to more efficient management of licensing rights, generate cost savings for all parties to the license, and increase the viability of the Australian independent music sector.
ACCC allows independent record labels to collectively license music video broadcast rights, NR 002/09 (Jan. 9, 2009), available at www.accc.gov.au
Elai Katz is a partner at Cahill Gordon & Reindel. Lauren Rackow, an associate at the firm, assisted in the preparation of this article.
