The Dominance and Monopolies Review: USA
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:
- monopolisation, which requires monopoly power and anticompetitive conduct that helps to obtain or maintain that power;4
- 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
- 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 through civil actions brought by the US Department of Justice (DOJ) and private litigants, 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 actions for injunctions and prospective cease-and-desist orders.9
Many US states have analogous statutes that apply to monopolists. In certain industries, other regulations can also apply to and potentially limit monopolists.
The US Congress is currently considering two pieces of antitrust legislation, the American Innovation and Choice Online Act10 and the Open App Markets Act,11 that would address the conduct of certain technology firms.
Year in review
During the past year, scrutiny of technology firms increased with the appointment of prominent big tech critics to head the FTC and the DOJ's Antitrust Division. Under Chair Lina Khan's leadership, the FTC approved broad resolutions enabling aggressive investigations into monopolistic practices by digital platforms, hospitals, pharmaceutical companies and others.12 The monopolisation cases against Google and Facebook brought by previous leadership at the US antitrust agencies and state attorneys general continued to develop: in addition to the three ongoing cases brought by the DOJ and states regarding Google's search and advertising businesses, a new suit brought by many states alleges that Google engaged in exclusionary conduct in an Android app market. The FTC's monopolisation case against Facebook (now known as Meta) is proceeding to discovery after the FTC's amended complaint survived a motion to dismiss. In private enforcement, a district court largely ruled for defendant Apple in a monopolisation case brought by Epic Games, the maker of popular videogame Fortnite. In addition, the Supreme Court ruled that the FTC's long-time practice of seeking equitable monetary remedies from federal courts must end because it lacks a statutory basis.
i State attorneys general latest monopolisation suit against Google
In July 2021, attorneys general of 36 states and the District of Columbia filed a lawsuit alleging that Google had monopolised markets for Android app distribution and in-app payment processing.13 The complaint alleges that Google engages in a variety of exclusionary tactics to obstruct competition and close the distribution system for Android apps. The challenged conduct includes imposing technical barriers to deter consumers from directly downloading apps or app stores that compete with the Google Play Store, blocking competing app stores from distribution via the Google Play Store, and requiring Android device manufacturers to preload the Google Play Store and make it undeletable. Regarding payment processing, the complaint alleges that Google's requirement that in-app purchases be made through Google Play Billing reflects anticompetitive tying.
This latest suit joins three others brought against Google in 2020 by the DOJ and state attorneys general, alleging monopolisation in markets for online searches and advertising.14 The two suits brought by the DOJ and states regarding Google's online search have been consolidated for discovery, with trial scheduled for 2023.15 The separate case on online advertising brought by states is pending a decision on Google's motion to dismiss.
ii FTC monopolisation case against Facebook survives motion to dismiss
In January 2021, the FTC filed a lawsuit alleging that Facebook monopolised the US market for personal social networking services by acquiring Instagram in 2012 and WhatsApp in 2013, as well as by requiring that third-party developers not use Facebook's interconnection protocols (APIs) to compete with Facebook's core functionality or to connect Facebook to competing social networks.16 A district court dismissed the FTC's complaint in June 2021 because the FTC's allegations – that Facebook has a market share over 60 per cent and does not have competitors of a similar scale – were not sufficient to establish monopoly power.17 The court noted that '[t]o merely allege that a defendant firm has somewhere over 60% of an unusual, nonintuitive product market … is not enough.'18 Additionally, the court held that the challenge to Facebook's interoperability policies did not state an antitrust claim, because generally 'a monopolist has no duty to deal with its competitors'.19 Those policies also had not been exercised in several years, so the FTC was not entitled to a prospective injunction under Section 13(b) of the FTC Act.20
The FTC amended its complaint, and in January 2022 the district court permitted the claim based on prior acquisitions to proceed to discovery. The court noted that the FTC had 'done its homework' and added 'substantial new allegations' in support of Facebook's durable market share over 60 per cent to complement its allegations that network effects and switching costs create barriers to entry.21 However, the court again rejected the challenge to Facebook's interoperability policies.22
iii District court issues verdict for Apple on Epic Games' federal claims of monopolisation in markets for iOS app distribution and in-app payments
In September 2021, the District Court for the Northern District of California ruled largely in favour of defendant Apple and against plaintiff Epic Games after a 16-day bench trial.23 The Court rejected all of Epic's federal antitrust claims. It found a lack of substantial barriers to entry and output restrictions in the market for digital mobile gaming transactions, which precluded a finding that Apple could have monopoly power.24 The Court also found that Apple's restrictions on iOS app distribution and in-app payment processing had legitimate procompetitive justifications that Epic Games failed to rebut, including improving security, promoting interbrand competition, and protecting its intellectual property.25
Under California's Unfair Competition Law, however, the Court found that Apple's anti-steering provisions for in-app payments, which prohibit app developers from directing consumers to in-app payment methods other than Apple's, were unlawful. These provisions, the Court held, created the prospect of an 'incipient' antitrust violation 'by preventing informed choice among users of the iOS platform'.26 The Court issued an injunction under California law prohibiting Apple's anti-steering provision.27 Both parties have appealed the Court's decision.28
iv Supreme Court rules that the FTC does not have authority to seek equitable monetary relief in court
In April 2021, the Supreme Court ruled in AMG Capital Management, LLC v. FTC that the FTC does not have the authority to seek equitable monetary relief directly in district court without prior use of the FTC's administrative proceedings.29 The FTC had challenged a group of payday lenders' practices by filing a complaint in federal district court seeking injunctive and monetary relief, as had been common practice for the agency.30 It did so under a provision of the FTC Act that by its text authorises the FTC to seek only a permanent injunction in district court, without going through its own administrative proceedings.31 The lower courts granted the FTC's request for an injunction and for restitution and disgorgement.32
The Supreme Court reversed, holding that the FTC Act does not authorise the FTC to obtain such monetary relief directly from courts.33 It emphasised that nothing in its opinion would prohibit the FTC from obtaining restitution by engaging in an administrative proceeding and then requesting that a court enforce its order.34 The Court also noted that the FTC was 'free to ask Congress to grant it further remedial authority',35 and in fact, at the FTC's request, the US Congress is considering legislation that would grant the FTC explicit authority to obtain monetary relief for violations of the laws that it enforces.36 Unless and until such legislation is enacted, the Supreme Court's decision halts the FTC's decades-long practice of bypassing the administrative process when seeking monetary awards.
Market definition and market power
Monopoly power – the ability to control prices or exclude competition – is a prerequisite to bringing a monopolisation claim.37 It can be proven directly through evidence of actual price increases and restricted output or the exclusion of rivals. More typically, however, courts infer monopoly power from indirect evidence, namely high market shares combined with barriers to entry. Higher market shares are more likely to support the inference of monopoly power, but even a very high share does not automatically establish monopoly power.38 Typically, shares below 50 per cent cannot support that inference.39
Monopoly power is not required for claims of attempted monopolisation or conspiracy to monopolise. 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.40 Geographic markets are defined by looking at other geographies that sellers operate in and buyers can turn to.41 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.42
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.43
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 procompetitive and anticompetitive conduct.44 The Supreme Court has, however, clarified that courts evaluating two-sided platforms (such as credit cards) must consider the effect of the defendant's conduct on both sides of the market, such that procompetitive effects on one side might justify some anticompetitive effects on the other.45
The US Congress is considering two pieces of legislation that would create new antitrust claims applicable to the technology sector. The American Innovation and Choice Online Act (AICOA) would prohibit certain discriminatory conduct by large online platforms.46 Covered firms would be prohibited from, among other things, preferencing their own products and services over those sold by others on their platforms; restricting the ability of competitors to interoperate with their platforms, systems or features; and conditioning access to their platforms on the purchase or use of other products or services that they offer.47 The Act provides for affirmative defences, including that the defendant's conduct is reasonably necessary to maintain or enhance its products' core functionality or does not materially harm competition.48
The Open App Markets Act would establish rules for the operation of large app stores.49 Covered firms would be prohibited from, among other things, requiring app developers to use the app store's own in-app payment systems as a condition of distribution or accessibility; imposing most-favoured nation (MFN) policies for the conditions of sale of an app on its app store relative to other app stores; and sing non-public information from a third-party app for the purpose of competing with that app.50 The Act would also require covered firms to take affirmative steps to promote interoperability, such as by allowing users to directly install third-party apps and app stores.51
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 under current law.
ii Exclusionary abuses
Exclusive dealing can have many procompetitive 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.52 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.53 Courts have also suggested that the foreclosure required to sustain a claim may be somewhat lower where the defendant is a monopolist.54
Loyalty conditions, in which a seller offers a discount if the customer purchases a certain percentage of its needs from the seller, can procompetitively reduce costs, shift risk in volatile industries, and 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 they result in below-cost pricing.55 Other courts have applied an exclusivity analysis, finding loyalty conditions to be potentially anticompetitive when they foreclose a substantial share of the market.56
MFNs provide that a customer will receive pricing or other terms as good as the terms that the seller offers any other customer.57 MFNs can procompetitively help buyers obtain low prices and 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.58
Tying and bundling
Tying refers to conditioning the sale of one product (the tying product) on the customer purchasing another product (the tied product).59 Tying can be accomplished through an absolute refusal to sell the items separately, or through a sufficiently large price difference between the bundle and the separate items that causes most or all customers to purchase the bundle. Tying can procompetitively lower costs, increase the value of the products 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 a company protect its monopoly power in the tying product or otherwise increase the company's 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.60 Additionally, tying requires that the defendant have market power in the tying product.61 More recent cases have recognised the potential procompetitive benefits of tying, although some older precedents could be read to suggest that procompetitive justifications are inadmissible in a tying case.62 Proving that a substantial share of the relevant market is foreclosed is not a requirement for a tying claim.
Bundling, in which a supplier offers a discount if a customer purchases two or more products together, can procompetitively lower costs or increase the value of the products to customers, but it 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 from a particular company across multiple products. 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.63 In analysing costs, some courts have used a discount attribution test that applies the entire price 'discount' across all bundled products to the stand-alone price of the competitive product, and then compares the resulting price to the cost of the competitive product.64 Other courts have instead found that bundling can be potentially anticompetitive whenever it forecloses a substantial share of the market.65
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,66 antitrust laws encourage innovation and US courts are reluctant to second-guess product design decisions and customers' purchasing decisions.67 Similarly, US courts defer to customers' choices about which product to purchase, and courts are therefore unlikely to sustain an exclusionary product design claim unless customers were 'coerced' into their choice.68
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. In limited circumstances, however, a refusal to deal with rivals can suffice as anticompetitive conduct. The cases in which courts have found a duty to deal generally involve the defendant ceasing a prior, voluntary and profitable course of dealing with its rivals, or 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).69 US courts generally will not find an antitrust duty to deal even where other US regulations mandate dealing between competitors.70
Predatory pricing is charging low prices to try to drive competitors from the market. Because low prices are generally 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 there is a 'dangerous probability' the defendant will recoup the losses by raising its prices above competitive levels after driving competitors from the market.71 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.
In a price squeeze or margin squeeze, a firm 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 competing with low prices for downstream sales. However, US law does not recognise price-squeeze claims without either an upstream duty to deal with competitors or downstream predatory pricing.72
Price discrimination occurs when a seller charges different customers different prices for the same product. Unless the pricing is predatory, price discrimination alone is not anticompetitive. A statute that is not specific to monopolists, the Robinson-Patman Act, prohibits price discrimination in the sale of commodities where the effect may be to reduce downstream competition between customers.73 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.74 Price discrimination 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.75
iv Exploitative abuses
As noted, exercising monopoly power is generally legal under US law, which therefore does not generally recognise exploitative abuses.
A variety of other types of conduct can, in certain circumstances, support a monopolisation claim under US law. A non-exhaustive list is discussed here.
Monopoly leveraging is using monopoly power in one market to gain an advantage in a second market. 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).76
Monopolisation claims have 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.77 The FTC has used Section 5 of the FTC Act to pursue enforcement actions against alleged abuses of the standard-setting process.78
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.79 Similarly, enforcing intellectual property rights obtained through fraud can be monopolisation.80 Other abuses of governmental processes are also actionable,81 such as filing false citizen petitions with the FDA.82
'Reverse payment' settlements – that is, payments made by a branded drug manufacturer to a generic competitor as part of a patent settlement that can delay generic entry – can also be challenged as monopolisation in some situations.83 The FTC has pursued several enforcement actions against these types of settlements and there has also been private litigation.
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.84
Mergers that help obtain or maintain a monopoly can constitute monopolisation. Mergers are typically 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', but the DOJ recently sued to block a merger under both the Clayton Act and Section 2 of the Sherman Act.85
Remedies and sanctions
Available remedies in monopolisation cases include injunctive relief and monetary damages.86 Civil fines are not currently available but are included in pending legislation.
Both the US antitrust regulators and private plaintiffs can seek injunctive relief – a court order that requires or prohibits certain actions by the defendant. Injunctive relief has multiple purposes, including stopping the anticompetitive conduct, reversing its anticompetitive effects and denying the defendant the fruits of that conduct.87 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, for plaintiffs other than the FTC, injunctive relief can include monetary equitable remedies such as disgorgement (an order requiring the defendant to give up supra-competitive profits related to the antitrust violation) or restitution (an order requiring the defendant to compensate victims for their losses).88 However, a plaintiff must show that the defendant is violating or is about to violate the law in order to obtain injunctive relief; simply showing past conduct and a likelihood of recurrence are insufficient.89
Private plaintiffs can seek monetary damages equal to three times their actual injury, plus litigation costs and reasonable attorneys' fees, as detailed below.90 US and state governments also can seek treble damages for injury to their own business or property, while foreign governments are usually limited to single damages.91 In addition, a US state can bring a parens patriae action seeking treble damages on behalf of its residents.92
The AICOA and Open App Markets Act would grant the FTC the authority to seek civil penalties for violations.93 For example, any company who violates the AICOA would be liable for a fine of as much as 15 per cent of its total US revenues during the period the violation occurred.94 Federal and state regulators would also be able to seek temporary injunctive relief of up to 120 days.95 The AICOA contemplates forfeiture of compensation by corporate officers of firms that are repeat offenders.96 As for private plaintiffs, under the Open App Markets Act only app developers injured by prohibited conduct would have the right to seek damages and injunctive relief.97
Monopolisation enforcement principally occurs through government investigations by the US antitrust regulators and court proceedings initiated by the US antitrust regulators, states and private plaintiffs.
Investigations by regulators can start in a variety of ways, including on 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, but they can also use compulsory process including subpoenas and 'civil investigative demands' to obtain documents, written responses to questions and witness testimony.98 Entities subjected to a compulsory process often seek to negotiate the scope of the discovery and sometimes seek to quash it,99 although in practice doing so is relatively difficult, particularly for a target of an investigation. An investigation can be ended 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 its five 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 Commissioners and then an appeal to a federal appellate court. The FTC can also bring lawsuits in federal court seeking injunctive relief but, as noted, one recent 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.100 Antitrust cases that seek monetary damages are generally tried before a jury, while antitrust cases that seek only injunctive relief are 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, even if true, do not state a plausible claim under the law. If the case proceeds, parties engage in potentially wide-ranging discovery, including document production, written interrogatory responses and depositions.101 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 undisputed 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.
US antitrust regulators, states, 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 be obtained only 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 regulators' enforcement intentions as to certain conduct.102 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 (as opposed to conduct that is already ongoing), and are permitted to decline to issue guidance. If the DOJ or the FTC responds, the request and response 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 such guidance (except in special circumstances, such as if the facts provided by the requesting party were inaccurate). The guidance does not preclude private plaintiffs from challenging the proposed conduct.
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.103 Antitrust actions are sometimes 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, important procedural hurdles remain, including demonstrating that impact can be proven on a common basis and common issues will predominate over individual issues.
Typically, monopolisation suits are brought either by customers alleging that they paid more because of a reduction in competition or by competitors alleging that they made less profit because their ability to compete was impaired. In general, customers who purchased indirectly through a middleman cannot bring claims under US federal antitrust laws, but many state antitrust laws allow claims by indirect purchasers.104 Users of both sides of two-sided platforms are direct purchasers, regardless of who nominally pays the allegedly higher price.105
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 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 world but-for 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. In practice, plaintiffs 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 damage 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 providing prima facie evidence of a violation and precluding the defendant from re-litigating certain issues in future private actions.106 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.
The proposed Open App Markets Act would allow app developers to bring private actions for treble damages and injunctive relief.107 The AICOA would not be enforceable through private actions.
Antitrust enforcement against technology firms and platform services is likely to continue to be a priority throughout the rest of the Biden Administration under the new leadership of aggressive enforcers. In September 2021, FTC chair Khan announced that a top priority for the FTC is to 'address rampant consolidation and the dominance that it has enabled across markets' by 'scrutinizing dominant firms' and focusing resources 'on the most significant actors'.108 She added that the agency will be 'forward-looking in anticipating problems and taking swift action . . . being especially attentive to next-generation technologies, innovations, and nascent industries'.109 In Assistant Attorney General Kanter's first address in his new role, he stated that 'it will take an aggressive campaign of antitrust enforcement' to meet the current challenges of 'increased consolidation and decreased competition'.110 In particular, he noted 'a dearth of Section 2 case law addressing modern markets' and stated that a 'Section 2 doctrine that is responsive to market realities, not outdated models, is a necessary step to build a competitive economy'.111
The DOJ Antitrust Division has endorsed the AICOA and Open App Markets Act proposals in a letter to the US Senate Judiciary Committee, stating that it 'views the rise of dominant platforms as presenting a threat to open markets and competition, with risks for consumers, businesses, innovation, resiliency, global competitiveness, and our democracy'.112 The letter noted that the Antitrust Division 'strongly supports the principles and goals animating the legislation and looks forward to working with Congress to ensure that the final legislation enacted meets these goals'.113 Both pieces of legislation must still be passed by the Senate and the House, as well as signed by the President, before they would take effect.
1 Alan B Freedman and Molly Ma are associates 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, 456, 459 (1993).
6 See United States v. Yellow Cab Co, 332 US 218, 225–26 (1947).
7 Criminal sanctions – including fines and imprisonment – are also theoretically available in monopolisation cases. For more than 40 years the DOJ has limited its pursuit of criminal charges to cases involving horizontal cartels that engage in plainly illegal activity, such as price fixing. In April 2022, however, Assistant Attorney General Jonathan Kanter suggested that the DOJ would consider bringing criminal monopolisation cases again. See Jonathan Kanter, Assistant Attorney General, Dep't of Justice, Remarks at 2022 Spring Enforcers Summit (4 April 2022), available at https://www.justice.gov/opa/speech/assistant-attorney-general-jonathan-kanter-delivers-opening-remarks-2022-spring-enforcers.
8 See FTC v. Cement Inst, 333 US 683, 691–94 (1948).
9 15 USC Sections 45, 53(b).
10 American Innovation and Choice Online Act, S. 2992, 117th Cong. (2022), available at https://www.congress.gov/bill/117th-congress/senate-bill/2992.
11 Open App Markets Act, S. 2710, 117th Cong. (2022), available at https://www.congress.gov/bill/117th-congress/senate-bill/2710.
12 Press release, Fed. Trade Comm'n, 'FTC Authorizes Investigations into Key Enforcement Priorities' (1 July 2021), available at https://www.ftc.gov/news-events/news/press-releases/2021/07/ftc-authorizes-investigations-key-enforcement-priorities.
13 Complaint, Utah v. Google LLC, No. 3:21-cv-05227 (ND Cal, 7 July 2021), available at https://attorneygeneral.utah.gov/wp-content/uploads/2021/07/Utah-v-Google.1.Complaint-Redacted.pdf.
14 Complaint, United States v. Google LLC, No. 1:20-cv-03010 (DDC, 20 October 2020), available at www.justice.gov/opa/press-release/file/1328941/download; complaint, Colorado v. Google LLC, No. 1:20-cv-03715 (DDC, 17 December 2020), available at https://coag.gov/app/uploads/2020/12/Colorado-et-al.-v.-Google-PUBLIC-REDACTED-Complaint.pdf; complaint, Texas v. Google LLC, No. 4:20-cv-00957-SDJ (ED Tex, 16 December 2020), available at www.texasattorneygeneral.gov/sites/default/files/images/admin/2020/Press/20201216_1%20Complaint%20(Redacted).pdf.
15 Order Granting in Part and Denying in Part Plaintiffs' Motion to Consolidate, Colorado v. Google LLC, No. 1:20-cv-03715 (DDC, 7 January 2021) available at https://www.law360.com/articles/1342942/attachments/0.
16 Complaint, FTC v. Facebook Inc, No. 1:20-cv-03590-JEB (DDC, 13 January 2021), available at www.ftc.gov/system/files/documents/cases/051_2021.01.21_revised_partially_redacted_complaint.pdf.
17 Opinion, FTC v. Facebook Inc. No. 1:20-cv-03590-JEB (DDC, 28 June 2021), available at https://www.ftc.gov/system/files/documents/cases/073_2021.06.28_mtd_order_memo.pdf.
18 id. at *32.
19 id. at *39-40, citing Aspen Skiing Co v. Aspen Highlands Skiing Corp, 472 US 585 (1985).
20 id. at *41-46.
21 Opinion, FTC v. Facebook Inc. No. 1:20-cv-03590-JEB, at *13-24 (DDC, 11 January 2022), available at https://www.law360.com/articles/1454616/attachments/0.
22 id. at *34-38.
23 Opinion, Epic Games, Inc. v. Apple Inc., No. 4:20-cv-05640-YGR (ND Cal, 10 September 2021), available at https://cand.uscourts.gov/wp-content/uploads/cases-of-interest/epic-games-v-apple/Epic-v.-Apple-20-cv-05640-YGR-Dkt-812-Order.pdf.
24 id. at *1, 137-39.
25 id. at *141-50.
26 id. at *164.
27 id. at *168.
28 Epic Games, Inc v. Apple Inc, Nos. 21-16506 & 21-16695 (Ninth Circuit).
29 AMG Capital Management, LLC, v. FTC, 141 S Ct 1341 (2021).
30 id. at 1345.
31 id. at 1346-47.
32 id. at *1345.
33 id. at *1347-49.
34 id. at *1352.
36 Consumer Protection and Recovery Act, H.R. 2668, 117th Cong. (2021), available at https://www.congress.gov/bill/117th-congress/house-bill/2668/text.
37 See, for example, United States v. EI DuPont de Nemours & Co, 351 US 377, 391–92 (1956).
38 US law does not recognise relative dominance or collective dominance.
39 See, for example, Domed Stadium Hotel Inc v. Holiday Inns Inc, 732 F 2d 480, 489 (Fifth Circuit 1984) ('Supreme Court cases, as well as cases from this court, suggest that absent special circumstances, a defendant must have a market share of at least fifty percent before he can be guilty of monopolization').
40 See, for example, Brown Shoe Co v. United States, 370 US 294, 325 (1962); DuPont, 351 US at 395.
41 See, for example, Tampa Elec Co v. Nashville Coal Co, 365 US 320, 327–28 (1961).
42 cf Horizontal Merger Guidelines, US Dep't of Justice and the Fed. Trade Comm'n Section 4.1.1 (19 August 2010) (describing similar approach in merger context using prevailing prices as baseline).
43 See, for example, United States v. Grinnell Corp, 384 US 563, 570–71 (1966).
44 The DOJ issued guidance on monopolisation in 2008, which it withdrew less than one year later. Press release, US Dep't of Justice Office of Public Affairs, 'Justice Department Withdraws Report on Antitrust Monopoly Law' (11 May 2009), available at www.justice.gov/opa/pr/justice-department-withdraws-report-antitrust-monopoly-law.
45 Ohio v. American Express Co, 138 S Ct 2274 (2018).
46 S. 2992, Section 2(a)(5).
47 S. 2992, Section 3(a).
48 S. 2992, Section 3(b).
49 S. 2710, Section 2(3).
50 S. 2710, Section 3.
52 Tampa Electric Co v. Nashville Coal Co, 365 US 320, 327 (1961).
53 Compare Twin City Sportservice Inc v. Charles O Finley & Co Inc, 676 F 2d 1291, 1298, 1304 (Ninth Circuit 1982) (finding substantial foreclosure where the defendant 'controlled 24 percent' of the market), with Sterling Merch. Inc. v. Nestle, S.A., 656 F 3d 112, 124 (First Circuit 2011) (foreclosure shares are 'unlikely to be of concern where they are less than 30 or 40 percent, and while high numbers do not guarantee success for an antitrust claim, low numbers make dismissal easy'), with United States v. Microsoft Corp, 253 F 3d 34, 70 (DC Circuit 2001) (en banc) ('roughly 40 per cent or 50 per cent share usually required' for an unreasonable restraint of trade claim).
54 See Microsoft, 253 F 3d at 70.
55 See, for example, Concord Boat Corp v. Brunswick Corp, 207 F 3d 1039, 1060–62 (Eighth Circuit 2000).
56 See, for example, LePage's Inc. v. 3M, 324 F 3d 141, 157–59 (Third Circuit 2003) (en banc).
57 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); Salop & Scott Morton, 'Developing an Administrable MFN Enforcement Policy', 27(2) Antitrust Magazine 15 (2013).
58 See, for example, Complaint, United States v. Blue Cross Blue Shield of Michigan, No. 2:10-cv-14155-DPH-MKM (ED Mich 18 October 2010).
59 See Jefferson Parish Hospital v. Hyde, 466 US 2, 21 (1984).
60 See Eastman Kodak Co v. Image Technical Services Inc., 504 US 451, 462 (1992).
61 See Jefferson Parish, 466 US at 13–14; Ill Tool Works Inc. v. Independent Ink Inc., 547 US 28, 34-37 (2006).
62 See Ill Tool Works, 547 US at 35.
63 See, for example, Cascade Health Solutions v. PeaceHealth, 515 F3d 883, 903 (Ninth Circuit 2008).
64 See id., at 906–08.
65 See, for example, LePage's Inc. v. 3M, 324 F 3d 141, 154–57 (Third Circuit 2003) (en banc).
66 See, for example, United States v. Microsoft Corp, 253 F 3d 34, 65 (DC Circuit 2001) (en banc); CR Bard Inc. v. M3 Systems Inc., 157 F 3d 1340, 1382 (Federal Circuit 1998).
67 See, for example, Berkey Photo Inc. v. Eastman Kodak Co, 603 F 2d 263, 286–87 (Second Circuit 1979).
68 See, for example, New York ex rel Schneiderman v. Actavis PLC, 787 F 3d 638, 654-55 (Second Circuit 2015).
69 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).
70 Trinko, 540 US at 412-16.
71 See 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.
72 See Pacific Bell Telephone Co v. linkLine Communications Inc, 555 US 438 (2009).
73 15 USC Section 13.
74 See FTC v. Morton Salt Co, 334 US 37, 47 (1948).
75 15 USC Section 13(a), (b).
76 See Trinko, 540 US at 415 n. 4.
77 Compare Broadcom Corp v. Qualcomm Inc., 501 F 3d 297 (Third Circuit 2007) (allowing claim for breach of FRAND commitments), with Rambus Inc. v. FTC, 522 F 3d 456, 462 (DC Circuit 2008) (not allowing such a claim).
78 See, for example, FTC v. Qualcomm Inc, 969 F 3d 974 (Ninth Circuit 2020).
79 Professional Real Estate Investors Inc v. Columbia Pictures Industries Inc, 508 US 49, 60–61 (1993) (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).
80 See Walker Process Equip v. Food Mach & Chem Corp, 382 US 172 (1965).
81 Findings of Fact and Conclusions of Law, FTC v. AbbVie Inc., No. 2:14-cv-05151-HB (ED Pa 2018), available at www.ftc.gov/system/files/documents/cases/abbvie_findings_and_order_6-29-18.pdf.
82 Complaint for Injunctive and Other Equitable Relief, FTC v. Reckitt Benckiser Group PLC, No. 1:19-CV-00028 (WD Va 2018), available at www.ftc.gov/system/files/documents/cases/reckitt_complaint_7-11-19.pdf.
83 See FTC v. Actavis, 133 S. Ct. 2223, 2227 (2013) (holding that reverse payment settlements 'can sometimes violate the antitrust laws').
84 See Conwood Co v. United States Tobacco Co, 290 F 3d 768, 783–84 (Sixth Circuit 2002).
85 Complaint, United States v. Grupo Verzatec SA de CV, No. 1:22-cv-01401 (ND Ill 17 March 2022), available at https://www.justice.gov/opa/press-release/file/1484416/download.
86 As noted, criminal sanctions are theoretically available but have not been pursued in practice for several decades.
87 See, for example, United States v. United Shoe Mach Corp, 391 US 244, 250 (1968).
88 AMG Capital Management, LLC, v. FTC, 141 S Ct 1341 (2021).
89 FTC v. Shire ViroPharma Inc, 917 F.3d 147 (Third Circuit 2019).
90 15 USC Section 15.
91 15 USC Section 15(b); 15a.
92 15 USC Section 15c.
93 S. 2992, Section 3(c)(2); S. 2710, Section 5(a)(2).
94 S. 2992, Section 3(c)(5)(B).
95 S. 2992, Section 3(c)(5)(C).
96 S. 2992, Section 3(c)(5)(D).
97 S. 2710, Section 5(b).
98 See 15 USC Sections 46, 49, 57b-1, 1311–1314.
99 See 15 USC Section 1314(b); 16 CFR 2.7(d).
100 See General Investment Co v. Lake Shore & Mich S Ry Co, 260 US 261, 286–88 (1922).
101 Bell Atl Corp v. Twombly, 550 U.S. 544, 558-59 (2007).
102 See 16 CFR Sections 1.1–1.4; 28 CFR Section 50.6.
103 See Fed R Civ P 23.
104 See Illinois Brick Co v. Illinois, 431 US 720 (1977); California v. ARC America Corp, 490 US 93 (1989).
105 Apple Inc v. Pepper, 139 S. Ct. 1514 (2019).
106 See 15 USC Section 16(a).
107 S. 2710, Section 5(b).
108 Memorandum from Lina M. Khan, Chair, Fed. Trade Comm'n, to Comm'n Staff and Comm'rs, Fed. Trade Comm'n, 'Vision and Priorities for the FTC' (22 September 2021), available at https://www.ftc.gov/system/files/documents/public_statements/1596664/agency_priorities_memo_from_chair_lina_m_khan_9-22-21.pdf.
110 Jonathan Kanter, Assistant Attorney General, Dep't of Justice, Remarks to the New York State Bar Association Antitrust Section (24 January 2022), available at https://www.justice.gov/opa/speech/assistant-attorney-general-jonathan-kanter-antitrust-division-delivers-remarks-new-york.
112 Letter from Peter S Hyun, Acting Assistant Attorney General, Dep't of Justice, to Chairman Richard J. Durbin, Chairwoman Amy Klobuchar, Senator Charles E. Grassley and Senator Mike Lee, US Senate (28 March 2022), available at https://s.wsj.net/public/resources/documents/DOJ%20on%20Tech%20Antitrust%20Bills.pdf.