The US Supreme Court has emphasised that the opportunity to attain a monopoly and reap its benefits encourages investment and innovation.2 Thus, possessing and exercising monopoly power does not violate US antitrust law ‘unless it is accompanied by an element of anticompetitive conduct ’.3 Unlike the competition laws of many other jurisdictions, therefore, US antitrust law does not recognise claims for abuses of dominance that merely exploit existing monopoly power, such as claims for excessive pricing. This difference in focus is reflected throughout the standards adopted in US law, as discussed below.
The US antitrust statute specific to monopolies is Section 2 of the Sherman Act, 15 USC Section 2. It provides that ‘[e]very person who shall monopolize, or attempt to monopolize, or combine or conspire with any other person or persons, to monopolize any part of the trade or commerce among the several States, or with foreign nations, shall be deemed guilty of a felony’. US law recognises three separate violations that arise under this statute:
- a monopolisation, which requires monopoly power, and anticompetitive conduct that helps to obtain or maintain that power;4
- b attempted monopolisation, which requires a dangerous probability of achieving monopoly power, anticompetitive conduct that threatens to help achieve that power and a specific intent to monopolise;5 and
- c conspiracy to monopolise, which requires a conspiracy, a specific intent to monopolise and an overt act in furtherance of that conspiracy.6
The Sherman Act can be enforced in civil actions through injunctions brought by the US Department of Justice (DOJ) and through private litigation, as detailed below.7
Other statutes also apply to the behaviour of monopolists. Most notable is Section 5 of the Federal Trade Commission (FTC) Act, 15 USC Section 45, which prohibits ‘unfair methods of competition’. The FTC Act reaches all conduct covered by the Sherman Act and probably reaches more broadly.8 It can be enforced solely by the FTC through civil action for injunctions and prospective cease-and-desist orders.9
Many US states have analogous statutes that apply to monopolists. In addition, in certain industries, other regulations can also apply to and potentially limit monopolists.
II Year in Review
In the past year, the FTC pursued litigation challenging abuse of government processes in the pharmaceutical industry. The FTC went to trial in one such case, while another case was dismissed by the district court on procedural grounds. As in prior years, the FTC and private litigants continued to challenge ‘reverse payment’ settlements. The FTC also continued its litigation against a semiconductor device manufacturer that allegedly raised its rivals’ costs and foreclosed those rivals from key customers through its patent licensing practices.
i The FTC challenges sham litigation at trial
In 2014, the FTC brought a lawsuit against AbbVie alleging sham litigation related to AndroGel, a topical testosterone replacement therapy.10 In 2011, AbbVie brought patent infringement lawsuits against two generic entrants, alleging that their use of specific ‘penetration enhancers’, which accelerate the drug’s delivery through the skin, infringed AbbVie’s patents. The FTC alleged that, during the patent approval process, AbbVie had surrendered any claim to those penetration enhancers and that the patent lawsuit was therefore a sham. In 2017, the court granted partial summary judgment to the FTC, holding that AbbVie’s patent infringement lawsuits were objectively baseless. In 2018, the case proceeded to trial on the remaining elements of the FTC’s claim: whether AbbVie had monopoly power and whether the lawsuits were subjectively motivated by an anticompetitive intent to interfere with generic entry. The FTC sought over US$1 billion in disgorgement, and the court’s decision was pending at the time of writing.
ii Federal court dismisses FTC lawsuit against Shire ViroPharma for abuse of government process
In February 2017, the FTC filed a complaint in federal court against Shire ViroPharma (ViroPharma). The FTC’s lawsuit alleged that ViroPharma abused government processes to delay entry of generic competitors to ViroPharma’s branded Vancocin capsules, which are used to treat a gastrointestinal infection.11 Specifically, the FTC alleged that, between 2006 and 2012, ViroPharma made more than 40 regulatory and court filings aimed at delaying Food and Drug Administration approval of competing generics, failed to support its filings with any clinical data and continued making filings even after an independent panel rejected its claims. ViroPharma moved to dismiss the lawsuit, challenging the FTC’s statutory authority to challenge conduct that was wholly in the past and arguing that its conduct did not qualify as an abuse of government process. The district court ruled that the FTC could not challenge ViroPharma’s past conduct, holding that the FTC could not seek a permanent injunction because it did not allege an ongoing or imminent violation of the FTC Act. While the court dismissed the case on that procedural basis, it noted that the factual allegations would have otherwise been sufficient to state a monopolisation claim. The FTC has appealed this ruling. If the district court’s ruling is accepted, that would significantly limit the FTC’s ability to seek injunctions, as well as other equitable relief, in federal court for alleged violations of the antitrust laws.
iii The FTC and private litigants continue to target ‘reverse payment’ settlements
In 2013, the US Supreme Court held in FTC v. Actavis that ‘reverse payment’ settlements – that is, payments made by a drug manufacturer to delay the entry of a generic competitor – ‘can sometimes violate the antitrust laws’.12 Over the past few years, the FTC has continued its enforcement efforts against these settlements. In 2017, brand-name manufacturer Endo Pharmaceuticals settled FTC claims that Endo entered into anticompetitive payment settlements that blocked entry by generic versions of the drugs Opana ER and Lidoderm.13 At the same time, the FTC brought an administrative action against Impax (a generic manufacturer of Opana ER) and a federal lawsuit against Watson Laboratories (a generic manufacturer of Lidoderm) for their part in these settlements. In 2018, the administrative law judge in the Impax proceeding ruled that the pro-competitive benefits of Impax’s ‘reverse payment’ settlement, which gave Impax a broad licence for all patents needed to enter, outweighed the anticompetitive effects. As this was an administrative action within the FTC, the FTC staff that brought the case appealed the decision to the Commission. At the time of writing, the Impax appeal was pending, and the Watson litigation had been stayed by the district court while Watson challenged the FTC’s authority to challenge conduct that occurred wholly in the past (similar to the ViroPharma case discussed above).
Private litigants have also continued to bring enforcement actions against reverse payment settlements. During the past year, the Third Circuit Court of Appeals clarified that plaintiffs are not required to estimate the dollar value of the reverse payment to plead an antitrust violation, and affirmed summary judgment for the defendants in an appeal involving antidepressant Wellbutrin XL where the district court had found that plaintiffs failed to prove that the generic drugs would have entered the market earlier but for the alleged anticompetitive settlement.
iv The FTC continues action against Qualcomm for standard-essential patents licensing terms
In January 2017, the FTC filed a complaint in federal court against Qualcomm, charging it with using anticompetitive patent licensing practices to maintain its monopoly in the supply of baseband chips, which are semiconductors used in cell phones and other products.14 Apple and other private plaintiffs have also brought similar claims against Qualcomm.
The FTC alleged that Qualcomm implemented a ‘no license, no chips’ policy, meaning that Qualcomm would only supply its baseband chips to cell phone manufacturers that also agreed to a Qualcomm patent licence requiring the customer to pay royalties to Qualcomm even when using baseband processors purchased from Qualcomm’s competitors. The FTC also alleged that Qualcomm refused to license its standard-essential patents to its competitors in contravention of its commitments to license its technology on fair, reasonable and non-discriminatory (FRAND) terms. The FTC argued that these practices imposed an anticompetitive ‘tax’ on competitors and raised the cost of using competing baseband processors.
Qualcomm moved to dismiss the case, but the district court denied that motion in June 2017. The FTC was still pursuing the case at the time of writing, but it is possible that the Trump Administration FTC could eventually decide to voluntarily dismiss the case. Notably, when the FTC filed its complaint, Republican Commissioner Ohlhausen dissented, arguing that the FTC failed to allege that Qualcomm charged more than a reasonable royalty for its patents and that this omission ‘speaks to the dearth of evidence in this case’.15 DOJ officials from the Trump Administration have also expressed concerns that certain aspects of antitrust enforcement in the intellectual property area have been too aggressive. For example, the DOJ Antitrust Division’s Assistant Attorney General Makan Delrahim suggested that antitrust policy with respect to standard-setting organisations should shift from focusing on ‘hold up’ by patent holders to the ‘more serious risk’ of ‘hold out’, where patent implementers use their leverage against patent holders to impose anticompetitive licensing terms.16 The DOJ also wrote a letter to the American National Standards Institute (ANSI), suggesting that ANSI should include both patent holders and implementers on a task force revising its intellectual property policies, explaining that pro-competitive standard setting ‘is furthered when standard setting is attractive to both patent holders and implementers’.17
III Market Definition and Market Power
Monopoly power is a prerequisite to bringing a monopolisation claim. Monopoly power is the ability to control prices or exclude competition.18 It can be proven through direct evidence of actual price increases or the exclusion of rivals. More typically, however, courts infer monopoly power from the combination of high market shares and entry barriers. Higher market shares are more likely to support the inference of monopoly power, and typically shares below 50 per cent cannot support that inference.19 But even a very high share does not automatically establish monopoly power.20
Monopoly power is not required for attempted monopolisation or conspiracy to monopolise claims. Attempted monopolisation instead requires only a ‘dangerous probability’ of achieving monopoly power, and thus can be sustained with a lesser showing of market power. A conspiracy to monopolise arguably requires no showing of market power at all, although cases alleging a conspiracy to monopolise in the absence of market power are relatively rare.
Inferring monopoly power requires measuring market shares, and thus requires defining a relevant market. Relevant markets have both product and geographic dimensions. Product markets are defined by looking at what products are reasonably interchangeable substitutes for one another.21 Geographic markets are defined by looking at what other geographies sellers operate in and buyers can turn to.22 One method that is often used to determine what products or geographies are in the market is to ask whether customers would substitute from one product or geography to another in response to a small price increase above competitive levels.23
Monopolisation requires anticompetitive conduct that helps to obtain or maintain a monopoly. Obtaining or maintaining a monopoly through other means, such as ‘superior product, business acumen or historic accident’, is therefore not a violation.24
US courts and antitrust regulators have not established a definitive list of what conduct can be anticompetitive; nor have they adopted clear standards for distinguishing between pro-competitive and anticompetitive conduct. The DOJ did issue guidance on monopolisation in 2008, but withdrew it in May 2009.25 The list below, although not exhaustive, discusses the most important types of potential anticompetitive conduct that courts and regulators have recognised could support a monopolisation claim.
ii Exclusionary abuses
Predatory pricing is charging low prices to try to drive competitors from the market. Because low prices are generally pro-competitive and beneficial to consumers, US law imposes rigorous requirements to sustain a predatory pricing claim. Specifically, a plaintiff must prove that the defendant’s prices are below cost, and that the defendant has a ‘dangerous probability’ of recouping the losses that it incurs when charging below-cost prices by raising its prices above competitive levels after driving competitors from the market.26 The US Supreme Court has not specified the precise measure of cost that should be used in this analysis, although most lower courts have required pricing below some measure of incremental cost.
A price squeeze or margin squeeze is when a firm that is active in upstream and downstream markets charges high prices for the upstream input and low prices for the downstream product. The potential antitrust concern is that a downstream competitor that is not vertically integrated must therefore pay high prices for an input while charging low prices to compete downstream. However, US law does not recognise price-squeeze claims without either an upstream duty to deal with competitors or downstream predatory pricing.27
Exclusive dealing can have many pro-competitive benefits, including encouraging investment by reducing uncertainty about future sales, encouraging relationship-specific investments, and encouraging better product promotion and related services. However, exclusive dealing can also have anticompetitive effects when it forecloses rivals from the market and impairs their competitiveness. Under US law, exclusive dealing cannot be anticompetitive unless it forecloses a ‘substantial share’ of the relevant market.28 What counts as ‘substantial’ is unsettled. Some courts have suggested that foreclosure of 30 per cent or less may suffice, while others have suggested that 40 to 50 per cent may be required.29 Courts have also suggested that the foreclosure required to sustain a claim may be somewhat lower where the defendant is a monopolist.30
Loyalty conditions are when a seller charges customers one price if the customer purchases a certain percentage of its needs of a product from the seller and a higher price if the customer does not. Loyalty conditions can pro-competitively reduce costs, shift risk in volatile industries, or lead to efficient contracting such as by encouraging promotional or marketing efforts. However, like exclusive dealing, they can also foreclose rivals and impair their competitiveness. US law on loyalty discounts is unsettled. Some courts have applied a predatory pricing analysis, finding loyalty conditions to be potentially anticompetitive only when the resulting price is below cost.31 Other courts have applied an exclusivity analysis, finding loyalty conditions to be potentially anticompetitive whenever they foreclose a substantial share of the market.32 Some courts and regulators may also focus on the loyalty condition’s effect on the incremental price of a customer’s ‘contestable’ share that it would be willing to switch to the defendant’s rivals.33
Most favoured nation (MFN) clauses provide that a customer will receive pricing or other terms as good as those that the seller offers other customers.34 MFNs can pro-competitively help buyers obtain low prices and can help prevent opportunism when one party makes relationship-specific investments. However, MFNs can also anticompetitively limit competition by preventing new entrants from obtaining prices as low as they otherwise would have. US case law on MFNs is relatively undeveloped. However, antitrust regulators have pursued enforcement actions against MFNs, most often in healthcare.35
Tying is when a supplier conditions its sale of one product (the tying product) on the customer purchasing another product (the tied product).36 Tying can be accomplished through an absolute refusal to sell the items separately, or through a price difference between the bundle and the separate items if the difference is sufficiently large that most or all customers would purchase the bundle. Tying can pro-competitively lower costs or increase the value of the items to customers, improve quality or protect goodwill, and efficiently meter consumption. On the other hand, tying may anticompetitively allow a company with monopoly power in the tying product to increase its market power in the tied product, help it protect its monopoly power in the tying product or otherwise increase its monopoly profits. A successful tying claim requires that the tying and tied items be separate products. Items are deemed separate products when customers want to buy them separately and when offering them separately is possible and efficient.37 Additionally, tying requires that the defendant have market power in the tying product.38 More recent cases have recognised the potential pro-competitive benefits of tying, although some older precedents could be read to suggest that pro-competitive justifications are inadmissible in a tying case.39 Proving that a substantial share of the relevant market is foreclosed is not a requirement for a tying claim.
Bundling is when a supplier charges one price if a customer purchases two or more products together, but charges a higher price when the products are purchased separately. Bundling can pro-competitively lower costs or increase the value of the products to customers, but raises similar potential anticompetitive concerns as tying. Bundling can also be combined with loyalty conditions, such that obtaining a lower price requires that the customer buy a certain share of its needs across multiple products from a particular company. Similar to loyalty conditions, US case law on bundling is unsettled. Some courts have ruled that bundling cannot be anticompetitive unless it results in prices that are below ‘an appropriate measure’ of cost.40 In applying this cost-based test, some courts have used a ‘discount attribution test’ that applies the entire price ‘discount’ across all bundled products to the standalone price of the competitive product, and then compares the resulting price to the cost of the competitive product.41 Other courts have instead found that bundling can be potentially anticompetitive whenever it forecloses a substantial share of the market.42
Exclusionary product design – where a company designs its product in a way that makes it difficult for competitors to develop compatible or interoperable products – can raise similar concerns as tying. Although exclusionary product designs can in certain circumstances be actionable,43 antitrust laws encourage innovation, and US courts are generally reluctant to second-guess product design decisions.44 Unless the product design clearly has no benefits to customers, a court is relatively unlikely to sustain an exclusionary product design claim.
Refusal to deal
US law generally does not impose a duty to deal with competitors, because the possibility of obtaining monopoly power and the ability to exclude rivals encourages investment and innovation, and because setting the terms of dealing and monitoring would be administratively burdensome. However, in limited circumstances, a refusal to deal with rivals can be anticompetitive conduct. The cases where courts have found a duty to deal generally involve the defendant ceasing a prior, voluntary and profitable course of dealing with its rivals and the defendant dealing with rivals on different terms than with non-rivals (such as where the defendant refuses to sell a product to rivals that the defendant sells at retail).45 Even when other US regulations mandate dealing between competitors, US courts generally will not find an antitrust duty to deal.
Discriminatory pricing occurs when a seller charges different customers different prices for the same product. Unless the pricing is predatory, price discrimination alone is not anticompetitive conduct. However, a separate statute called the Robinson-Patman Act, which is not specific to monopolists, prohibits discriminatory pricing in the sale of commodities where the effect may be to reduce downstream competition between customers.46 This aspect of the Robinson-Patman Act has been widely criticised, and enforcement of it is relatively rare. Although the statute requires an effect on competition, US courts typically infer that effect from the fact of differential pricing.47 Discriminatory pricing is not prohibited by the Robinson-Patman Act if the sale does not involve commodities; if the customers do not compete with one another downstream; or if the price differential is justified by differential costs, an effort to meet competitors’ pricing or changing conditions.48 The Robinson-Patman Act therefore does not prohibit price discrimination between final consumers, as they do not compete downstream.
iv Exploitative abuses
As noted, exercising monopoly power is generally legal under US law. US law therefore does not in general recognise exploitative abuses.
A variety of other types of conduct can, in certain circumstances, support a monopolisation claim. A non-exhaustive list is discussed here.
Monopoly leveraging is using monopoly power in one market to gain an advantage in a second market. However, under US law, monopoly leveraging likely cannot support a monopolisation claim unless it involves some anticompetitive conduct (such as tying, exclusive dealing or a refusal to deal) and it helps the defendant obtain or maintain a monopoly in the second market (or creates a dangerous probability of doing so).49
Monopolisation claims have also been brought against patent holders for abusing standard-setting processes. Such claims might be brought where the patent holder induces a standard-setting organisation to adopt a standard that includes its patents but either deceptively promises to license the patents on FRAND terms and reneges or fails to disclose the existence of its patents in the first place. The concern is that such abuses may result in monopoly pricing that otherwise could have been avoided. Some courts have allowed such claims to go forward, while others have suggested they do not constitute monopolisation.50 The FTC has also used Section 5 of the FTC Act to pursue enforcement actions against alleged abuses of the standard-setting process.51
Monopolisation claims can also be brought against companies that abuse government processes. For example, ‘sham’ litigation and other abuses of the litigation process can be monopolisation.52 Similarly, enforcing intellectual property rights obtained through fraud can be monopolisation.53 Other abuses of governmental processes are also possible.
Additionally, in extreme cases, more general tortious conduct can support a monopolisation claim. For example, one US court allowed a monopolisation claim when a defendant removed its rival’s products and advertising from retail stores without permission.54
Mergers that help obtain or maintain a monopoly can constitute monopolisation, although typically mergers are challenged under Section 7 of the Clayton Act, 15 USC Section 18, which prohibits mergers that ‘substantially … lessen competition’ or ‘tend to create a monopoly’.
V Remedies and Sanctions
Available remedies in monopolisation cases include injunctive relief and monetary damages.55 Civil fines are not available.
Both the US antitrust regulators and private plaintiffs can seek injunctive relief, a court order that either requires the defendant to take certain actions or prohibits the defendant from taking certain actions. Injunctive relief has multiple purposes, including stopping the anticompetitive conduct, reversing its anticompetitive effects and denying the defendant the fruits of that conduct.56 Courts have broad discretion to frame appropriate injunctive relief to achieve these goals. Appropriate relief may include structural remedies (such as dissolving or splitting the defendant or requiring divestitures) or behavioural remedies (such as prohibiting the defendant from engaging in certain activities in the future or requiring that the defendant grant rivals access to certain property). Moreover, injunctive relief can include monetary equitable remedies such as disgorgement (an order requiring the defendant give up supra-competitive profits related to the antitrust violation) or restitution (an order requiring that the defendant compensate victims for their losses).
Private plaintiffs can seek monetary damages equal to three times their actual injury, plus litigation costs and reasonable attorneys’ fees, as detailed below.57 US and state governments also can seek treble damages for injury to their own business or property (as can foreign governments, although they are usually limited to single damages).58 In addition, a US state can bring a parens patriae action seeking treble damages on behalf of its residents.59
Monopolisation enforcement principally occurs through government investigations by the US antitrust regulators, and court proceedings initiated by the US antitrust regulators, states or private plaintiffs.
Investigations by US antitrust regulators can start in a variety of ways, including the regulator’s own initiative, complaints from private parties or requests from other governmental actors (e.g., Congress). The DOJ and the FTC can work voluntarily with the target of the investigation and third parties, or can use compulsory process, including subpoenas and ‘civil investigative demands’, to obtain documents, written responses to questions and witness testimony.60 Entities subjected to a compulsory process often seek to negotiate the scope of the discovery and sometimes seek to quash it,61 although in practice doing so is relatively difficult, particularly for a target of an investigation. An investigation can be dropped at any time, and that decision is unreviewable by a court. An investigation can also be resolved through settlement at any time. The DOJ, as an agency of the US executive branch, must obtain court approval of its settlements, while the FTC, as an independent administrative agency, must approve settlements by majority vote of the FTC Commissioners.
An investigation can also lead to litigation. The DOJ must pursue litigation in federal court, following the procedures described below. The FTC, by contrast, has its own administrative courts, with somewhat different procedures, followed first by an appeal to the Commission itself and then an appeal to a federal appellate court. (The FTC can also bring lawsuits in federal court seeking equitable relief but, as noted above, one recent district court case held that the FTC did not have authority to pursue equitable relief in federal court for conduct that was solely in the past.)
Court proceedings in a monopolisation case are similar to court proceedings in other cases. US federal courts have exclusive jurisdiction to hear cases under the federal antitrust laws, although state courts can hear cases under state antitrust laws.62 Antitrust cases that seek monetary damages are generally tried before a jury, while antitrust cases that seek only injunctive relief are instead tried before a judge. A court case starts with the plaintiff filing a complaint laying out the allegations against the defendant. The defendant can move to dismiss a complaint on several grounds, most importantly that the allegations fail to state a plausible claim. If the case proceeds, parties engage in potentially wide-ranging discovery, including document production, written interrogatories, requests for admissions and depositions. After discovery, a party may move for summary judgment on some or all issues if no genuine dispute exists as to any material fact and, given the material facts, the party is entitled to judgment as a matter of law. During and after a trial, parties can again move for judgment as a matter of law. Adverse decisions can be appealed, although typically not until after a final judgment. In general, the parties are free to settle at any time during this process.
Both the US antitrust regulators and private plaintiffs can also seek preliminary relief prior to a full adjudication by moving for a temporary restraining order or preliminary injunction to stop the challenged conduct. Preliminary relief can only be obtained from a court. Whether preliminary relief is appropriate depends on balancing the likelihood each party will succeed on the merits with the harm to the defendant from granting the preliminary relief and the harm to the plaintiff and the public from not granting it. In general, preliminary relief is unusual in a monopolisation case.
Further, the DOJ offers a business review process and the FTC offers an advisory opinion process that may allow businesses to obtain guidance about the DOJ’s or the FTC’s present enforcement intentions as to certain conduct.63 Businesses must submit a written request to the DOJ or the FTC describing the conduct and provide documents and other information. The DOJ or the FTC typically will consider only requests related to proposed conduct (and thus typically will not consider requests related to conduct that is already ongoing), and they can decline to issue guidance. If the DOJ or the FTC responds, the response and request are made available publicly. The guidance is not legally binding, but in practice the DOJ and the FTC are unlikely to pursue enforcement action against a requesting party that relies on it (except in special circumstances, such as if the facts provided were inaccurate).
VII Private Enforcement
As explained above, private plaintiffs can and often do seek treble damages and injunctive relief in monopolisation cases. Private actions can be brought by individual plaintiffs or through an opt-out class action that adjudicates the claims of many similarly situated plaintiffs in a single lawsuit. Class actions have additional procedural requirements that must be satisfied.64 Often, antitrust actions are viewed as amenable to resolution on a class-wide basis because many of the relevant issues will be market-wide and thus common to the class. Still, procedural hurdles remain, including demonstrating that impact can be proven on a common basis.
Typically, monopolisation suits are brought either by customers alleging that they paid more because of the reduction in competition caused by the monopolisation or by competitors alleging that they made less profit because their ability to compete was impaired. In general, indirect purchasers cannot bring claims under US federal antitrust laws, although many states allow indirect purchasers to bring claims under state antitrust laws.65
To obtain damages, a private plaintiff must establish more than the antitrust violation itself: it must also show that it was injured, that the violation was a material cause of its injury, that its injury was sufficiently closely related to the violation and that its injury resulted from an anticompetitive effect of the violation. Finally, it must prove the amount of damages.
Conceptually, the appropriate measure of damages is the difference between the plaintiff’s position in the actual world and what its position would have been in the but-for world without the challenged conduct. Establishing what would have happened in the but-for world is often difficult, so courts typically require plaintiffs to prove damages only with reasonable certainty. Plaintiffs can do so by offering a rough approximation, and in practice, they typically compare the actual world to a baseline unaffected by the challenged conduct (e.g., the same market before the challenged conduct began or a similar market where the challenged conduct never occurred). Increasingly, damages are modelled using econometric techniques.
To obtain an injunction, by contrast, a private plaintiff must generally show that monetary damages would not be an adequate remedy because it cannot prove the amount of damages with reasonable certainty. The forms of injunctive relief discussed above (including behavioural and structural remedies) are in theory available to private plaintiffs.
Private enforcement also interacts with public enforcement. Private plaintiffs can encourage the government to open an investigation. If the government brings a public enforcement action and obtains a favourable judgment, that may benefit private plaintiffs by precluding the defendant from re-litigating certain issues in future private actions by providing prima facie evidence of a violation under the antitrust statutes or under more general procedural principles governing preclusion.66 In contrast, if the government chooses not to bring an action, or if it brings an action and loses, that does not prevent a future private action. A settlement likewise does not prevent a future private action and, if entered before testimony is obtained, also cannot be used as prima facie evidence of a violation. In addition, regardless of whether the government decides to bring an action, private plaintiffs can often benefit from the fruits of a government investigation, such as the discovery that the government obtains. The statute of limitations for private actions can also be suspended by a government action.
VIII Future Developments
At the time of writing, there were no significant monopolisation cases pending before the US Supreme Court. There was, however, a pending antitrust case brought against credit card network American Express under Section 1 of the Sherman Act, 15 USC Section 1, which prohibits anticompetitive agreements in restraint of trade. The case challenges certain anti-steering restraints that American Express places on its merchants. These restraints are similar to MFN clauses, and the Supreme Court’s ruling could potentially impact US monopolisation law related to exclusionary agreements.
1 Kenneth S Reinker and Daniel Culley are partners, and Morgan L Mulvenon is an associate, at Cleary Gottlieb Steen & Hamilton LLP.
2 See Verizon Communications Inc v. Law Offices of Curtis V Trinko LLP, 540 US 398, 407 (2004).
5 See Spectrum Sports Inc v. McQuillan, 506 US 447, 453–54, 459 (1993).
6 See United States v. Yellow Cab Co, 332 US 218, 225–26 (1947).
7 Criminal sanctions are also theoretically available in monopolisation cases. In practice, however, the DOJ typically pursues criminal sanctions – which include fines and imprisonment – only for horizontal cartels that engage in plainly illegal activity such as price fixing.
8 See FTC v. Cement Inst, 333 US 683, 691–94 (1948).
9 15 USC Sections 45, 53(b).
10 In its complaint, the FTC also alleged anticompetitive reverse payment settlements, but those claims were dismissed in 2015.
11 Complaint, FTC v. Shire ViroPharma Inc, No. 17-131-RGA (D. Del. 2017), available at www.ftc.gov/system/files/documents/cases/170216viropharma_unredacted_sealed_complaint_.pdf.
12 FTC v. Actavis Inc, 133 S. Ct. 2223, 2227 (2013).
13 Joint Motion for Entry of Stipulated Order for Permanent Injunction, FTC v. Allergan PLC, No. 17-cv-00312 (N.D. Cal. 2017), available at www.ftc.gov/system/files/documents/cases/allergan_jt_mtn_re_stip_order.pdf.
14 Complaint, FTC v. Qualcomm Inc, No. 5:17-cv-00220 (N.D. Cal. 2017), available at www.ftc.gov/system/ files/documents/cases/170117qualcomm_redacted_complaint.pdf.
15 Dissenting Statement of Commissioner Maureen K Ohlhausen, In the Matter of FTC v. Qualcomm, Inc,
17 January 2017, available at www.ftc.gov/system/files/documents/cases/170117qualcomm_mko_
16 Assistant Attorney General Makan Delrahim Delivers Remarks at the USC Gould School of Law’s Center for Transnational Law and Business Conference, 10 November 2017, available at www.justice.gov/opa/speech/assistant-attorney-general-makan-delrahim-delivers-remarks-usc-gould-school-laws-center.
17 Letter from Andrew C Finch, Principal Deputy Assistant Attorney General to American National Standards Institute, 7 March 2018, available at https://www.justice.gov/atr/page/file/1043456/download.
18 See, for example, United States v. EI DuPont de Nemours & Co, 351 US 377, 391 (1956).
19 See, for example, Domed Stadium Hotel Inc v. Holiday Inns Inc, 732 F.2d 480, 489 (5th Cir 1984) (‘Supreme Court cases, as well as cases from this court, suggest that in the absence of special circumstances, a defendant must have a market share of at least fifty percent before he can be guilty of monopolization.’).
20 US law does not recognise ‘relative dominance’ or ‘collective dominance’.
21 See, for example, Brown Shoe Co v. United States, 370 US 294, 325 (1962); DuPont, 351 US at 395.
22 See, for example, Tampa Elec Co v. Nashville Coal Co, 365 US 320, 327–28 (1961).
23 Cf. Horizontal Merger Guidelines, US Dep’t of Justice and the Federal Trade Commission Section 4.1.1 (19 August 2010) (describing similar approach in merger context using prevailing prices as baseline).
24 See, for example, United States v. Grinnell Corp, 384 US 563, 570–71 (1966).
26 Brooke Group Ltd v. Brown & Williamson Tobacco Corp, 509 US 209, 222–24 (1993). In a predatory pricing claim based on price discrimination brought under the Robinson-Patman Act, 15 USC Section 13, a plaintiff must prove a ‘reasonable prospect’ of recoupment. Id. at 224.
27 Pacific Bell Telephone Co v. linkLine Communications Inc, 555 US 438 (2009).
28 Tampa Electric Co v. Nashville Coal Co, 365 US 320, 327 (1961).
29 Compare Twin City Sportservice Inc v. Charles O Finley & Co Inc, 676 F.2d 1291, 1298, 1304 (9th Cir 1982) (finding substantial foreclosure where defendant ‘controlled 24 per cent’ of the market), with Stop & Shop Supermarket Co v. Blue Cross & Blue Shield of RI, 373 F.3d 57, 68 (1st Cir 2004) (foreclosure is ‘unlikely to be of concern where they are less than 30 or 40 per cent’), with United States v. Microsoft Corp, 253 F.3d 34, 70 (DC Cir 2001) (en banc) (‘roughly 40 per cent or 50 per cent share usually required’ for an unreasonable restraint of trade claim).
30 See Microsoft, 253 F.3d at 70.
31 See, for example, Concord Boat Corp v. Brunswick Corp, 207 F.3d 1039, 1060–62 (8th Cir 2000).
32 See, for example, LePage’s Inc v. 3M, 324 F.3d 141, 157–59 (3d Cir. 2003) (en banc).
33 See, for example, US Dep’t of Justice, Competition and Monopoly: Single-Firm Conduct Under Section 2 of the Sherman Act 107 (2008) (now withdrawn).
34 For discussions of MFNs, see, for example, Baker, ‘Vertical Restraints with Horizontal Consequences: Competitive Effects of “Most-Favored-Customer” Clauses’, 64 Antitrust LJ 517 (1996); and Salop & Scott Morton, ‘Developing an Administrable MFN Enforcement Policy’, 27(2) Antitrust Magazine 15 (2013).
35 See, for example, Complaint, United States v. Blue Cross Blue Shield of Michigan, No. 2:10-cv-14155-DPH-MKM (E.D. Mich. 18 October 2010).
36 See Jefferson Parish Hospital v. Hyde, 466 US 2, 21 (1984).
37 See Eastman Kodak Co v. Image Technical Services Inc, 504 US 451, 462 (1992).
38 See Jefferson Parish, 466 US at 13–14.
39 See Ill Tool Works Inc v. Independent Ink Inc, 547 US 28, 35 (2006).
40 See, for example, Cascade Health Solutions v. PeaceHealth, 515 F.3d 883, 903 (9th Cir 2008).
41 See Id., at 906–08.
42 See, for example, LePage’s Inc v. 3M, 324 F.3d 141, 154–57 (3d Cir 2003) (en banc).
43 See, for example, United States v. Microsoft Corp, 253 F3d 34, 65 (DC Cir 2001) (en banc); CR Bard Inc v. M3 Systems Inc, 157 F3d 1340, 1382 (Fed Cir 1998).
44 See, for example, Berkey Photo Inc v. Eastman Kodak Co, 603 F2d 263, 286-87 (2d Cir 1979).
45 See, for example, Verizon Communications Inc v. Law Offices of Curtis V Trinko LLP, 540 US 398, 409–10 (2004); Aspen Skiing Co v. Aspen Highlands Skiing Corp, 472 US 585, 605–11 (1985).
46 15 USC Section 13.
47 See FTC v. Morton Salt Co, 334 US 37, 47 (1948).
48 15 USC Section 13(a), (b).
49 See Trinko, 540 US at 415 n. 4.
50 Compare Broadcom Corp v. Qualcomm Inc, 501 F.3d 297 (3rd Cir 2007) (allowing claim for breach of FRAND commitments), with Rambus Inc v. FTC, 522 F.3d 456, 462 (DC Cir 2008) (not allowing such a claim).
51 See, for example, In re Negotiated Data Solutions, File No. 051-0094, slip op at 2 (FTC 23 January 2008) (Statement of the Commission), available at www.ftc.gov/os/caselist/0510094/080122statement.pdf.
52 See, for example, Professional Real Estate Investors Inc v. Columbia Pictures Industries Inc, 508 US 49, 60–61 (1993) (holding that sham litigation requires both objective and subjective baselessness); California Motor Transport Co v. Trucking Unlimited, 404 US 508 (1972) (allowing claims based on abuse of the litigation process through repetitive lawsuits).
53 See, for example, Walker Process Equip v. Food Mach & Chem Corp, 382 US 172 (1965).
54 See Conwood Co v. United States Tobacco Co, 290 F.3d 768, 783–84 (6th Cir 2002).
55 As noted, criminal sanctions are theoretically available but not pursued in practice.
56 See, for example, United States v. United Shoe Mach Corp, 391 US 244, 250 (1968).
57 15 USC Section 15.
58 15 USC Section 15(b); 15a.
59 15 USC Section 15c.
60 See 15 USC Sections 46, 49, 57b-1; 15 USC Sections 1311–1314.
61 See 15 USC Section 1314(b); 16 CFR 2.7(d).
62 See General Investment Co v. Lake Shore & Mich S Ry Co, 260 US 261, 286–88 (1922).
63 See 16 CFR Sections 1.1–1.4; 28 CFR Section 50.6.
64 See Fed R Civ P 23.
65 See Illinois Brick Co v. Illinois, 431 US 720 (1977); California v. ARC America Corp, 490 US 93 (1989).
66 See 15 USC Section 16(a).