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Antitrust Treatment of Dominant Firms: Is the Atlantic Getting Wider or Narrower?

Antitrust Treatment of Dominant Firms: Is the Atlantic Getting Wider or Narrower?. Ken Glazer ABA Antitrust Section March 31, 2005. How Wide Is the Ocean?. In the area of “vertical” monopolization . . . The ocean is as wide as ever if not wider. Different Tones. E.U. approach

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Antitrust Treatment of Dominant Firms: Is the Atlantic Getting Wider or Narrower?

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  1. Antitrust Treatment of Dominant Firms: Is the Atlantic Getting Wider or Narrower? Ken Glazer ABA Antitrust SectionMarch 31, 2005

  2. How Wide Is the Ocean? • In the area of “vertical” monopolization . . . • The ocean is as wide as ever if not wider.

  3. Different Tones • E.U. approach • Dominant firm has “special responsibility not to allow its conduct to impair genuine undistorted competition.” • Emphasized in Michelin II and BA • U.S. approach • “The successful competitor, having been urged to compete, must not be turned upon when he wins.” (Learned Hand) • “Even an act of pure malice by one business competitor against another does not, without more, state a claim under federal antitrust laws.” (Brooke Group)

  4. Predatory Pricing • Brooke Group (USSC) • Below-cost pricing • Plus plausible recoupment • American Airlines rejected attempt to broaden test from AVC. • Tetra Pak (ECJ) • Not necessary to prove that dominant firm had realistic chance of recouping

  5. “Consensual” Exclusive Dealing • E.U. • Presumptively illegal • E.g., Hoffman-La Roche; AKZO • U.S. • Rule of reason • Microsoft • Many upheld (e.g., CDC v. IDEX) • E.D. struck down recently in Geneva Pharmaceuticals v. Barr Labs

  6. “Coerced” Exclusive Dealing (aka Refusal To Deal) • Strong presumption of illegality in E.U. • British Plasterboard • Weak presumption of illegality in U.S. • Lorain Journal • Dentsply • Greater willingness to examine alternatives

  7. “Fidelity” or “Loyalty” Rebates • Virtually per se illegal in E.U. • Reaffirmed by CFI in Michelin II • In the U.S. • At worst, rule of reason governs • At best it is per se lawful (Concord Boat) • Canada Pipe followed rule of reason approach.

  8. Volume Rebates of Various Kinds • Illegal in E.U. if they have “loyalty-inducing” (MichelinII) or “fidelity-building” (British Airways) effect. • Award for increasing purchases over some previous time period (British Airways) • Award for purchasing higher amount on a scale applicable to all customers (Michelin II) • Lawful in the U.S. unless predatory under Brooke Group

  9. Concluding Thoughts • E.U. test: fidelity-inducing or loyalty-enhancing • Very different from U.S. test • But European Comm’n is currently rethinking its approach to dominance. • Will that include proof of dominance?

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