Mexico’s Federal Competition Commission has whacked Telcel – Mexico’s largest mobile phone provider – with a $1 billion fine for using “substantial market power” to unfairly increase its competitors’ costs.

According to the Commission, Telcel charged its competitors interconnection fees for calls terminating on its network that were higher than fees paid for calls made within Telcel’s network.

The fine constitutes roughly 10% of Telcel’s assets, the largest permitted under Mexican law for repeat offenses.  The Commission’s 3-2 vote in favor of the fine follows an investigation of charges filed in 2006 by Telcel’s smaller competitors, including Axtel, Alestra, Marcatel, Megacable, Protel, and Telefonica.  Under the ruling, Telcel has 30 days to provide the Commission with a plan to ensure that Telcel ceases its anticompetitive practice.

Telcel is owned by one of the world’s largest mobile phone providers, America Movil, which in turn is controlled by Carlos Slim, purportedly the wealthiest person in the world.  Telcel has stated that it will seek reconsideration by the Commission and may also seek relief in the courts.

Adobe Systems Inc. has been hit with an antitrust class action in federal court by Free FreeHand Corp., a non-profit group, and graphic design professionals and consumer users of FreeHand, the vector-graphic illustration software product acquired by Adobe several years ago.

The complaint in Free FreeHand Corp. et al. v. Adobe Systems Inc., 5:11-cv-02174 (N.D. Cal.), alleges monopolization in violation of the Sherman Act § 2 as well as violations of California’s antitrust statute, the Cartwright Act, and the State’s broad-sweeping Unfair Competition Law.  The complaint also seeks relief under Washington’s antitrust and unfair competition statutes.

The complaint alleges that when Adobe bought Macromedia Inc. in 2005 and acquired the FreeHand software, it did so to monopolize the market for vector-graphic illustration software by eliminating competition for its own software product, Illustrator, the chief competition for FreeHand in the professional graphic software market.

Plaintiffs allege that Adobe has a 100% share of Mac users and an 80% share of Windows users in the relevant market.  The complaint excludes so-called “hobbyist” level vector-graphic illustration software from the alleged market, such as Serif DrawPlus, Xara X, Draw well, Photoline, Inkscape, Lineform, Sketsa SVG editor, Zeusdraw, Easy draw, and Intaglio.  The complaint also excludes computer-aided design programs, bitmap graphic illustration and page layout software from the alleged market.

Adobe likely will challenge the market definition vigorously as that threshold issue could determine whether Adobe is found to have market power. 

Free Freehand alleges that Adobe monopolized the market by acquiring the competing software, then raising the price of Illustrator and at the same time failing to update FreeHand.  It also alleges that Adobe tried to eliminate FreeHand from the market completely by announcing that it would stop developing FreeHand in 2007 and by publishing documents detailing how consumers can migrate from FreeHand to Illustrator.

The complaint, however, may be vulnerable to an argument by Adobe that the claims are barred by the applicable four-year statutes of limitations.  If the complaint survives a motion to dismiss, Adobe is also likely to argue that the plaintiffs’ claims encroach on its product design decisions which were undertaken for legitimate and procompetitive reasons. 

In addition to seeking damages for purported overcharges, the complaint seeks a divestiture of Freehand source code to turn it into an open-source competitor of Illustrator.

Adobe won antitrust clearance from U.S. regulators in 2005 for the acquisition of Macromedia Inc., the developers of FreeHand, which cleared the way for the $3 billion deal.  Approval came after U.S. Justice Department officials issued a second request to take a closer look at the design and vector-graphics illustration products at issue in the complaint.

The sun will soon set on the epic antitrust battle between the U.S. Department of Justice (“DOJ”) and Microsoft.

The DOJ’s mammoth case against the software giant began 13 years ago, when the agency filed an antitrust complaint accusing Microsoft of using its market power to mercilessly pound its rivals.  The case was actively litigated until 2001, when the parties reached a settlement that provided for government oversight of Microsoft for a decade.

The government oversight is now coming to an end, and will expire on May 12, 2011.

It was back in 1998 that the DOJ, along with by a number of states, sued Microsoft for illegally using its dominance of the operating system market with Windows to shut out rivals to its Internet Explorer web browser.  Two years later, a district judge ruled in favor of the government, but an appeals court overturned that ruling, leading to the settlement in 2001.

The antitrust controversy surrounding college football’s Bowl Championship Series (BCS) is heating up.

In the just the past two weeks, a group of law and economics professors asked the U.S. Department of Justice to commence an antitrust investigation of the BCS, and Utah’s attorney general vowed to bring an antitrust lawsuit.

The BCS has, in recent years, drawn antitrust scrutiny from colleges, attorneys, congressmen, and even President Obama himself, who all argue that the BCS unfairly excludes schools from the “disfavored” football conferences from the opportunity to compete in one of the BCS bowls (the Rose, Fiesta, Orange, and Sugar bowls) and the national championship game. 

The critics also condemn the uneven distribution of the hundreds of millions of dollars of BCS revenue.  Most BCS critics believes that the current system stands in the way of a more egalitarian (and interesting) playoff system, similar to college basketball’s March Madness.

However, as explained by Gordon Schnell and David Scupp in Competition Law 360 and Sports Business Journal, the antitrust laws are not likely to provide a fix for the inherent inequities in the BCS.  As Schnell and Scupp explain, love it or hate it, the BCS probably does not result in any real consumer harm.  The relevant comparison is not what the world “could be” like without the BCS, but what the world “was” like before it.  And, when compared to the pre-BCS world of loose bowl affiliations and no national championship game, the BCS has likely enhanced the quality of the college football post-season by producing a national championship game between the two top ranked teams every year.

So, despite the Utah attorney general’s promise to bring action, don’t expect the antitrust laws to bring us a college football playoff anytime soon.

UPDATE:  The Department of Justice has sent a letter to the NCAA inquiring as to why there is no FBS (i.e., “Division I football”) playoff.  While the letter does not state that the DOJ is opening an investigation into the BCS, it states that it would be “helpful” to learn the NCAA’s views on the absence of a playoff system.

U.S. Airways is seeking to ground high-flying Sabre Holdings Corp. – which runs the largest U.S. global distribution system linking travel agents with airline fares and other services – for allegedly engaging in monopolistic acts.

U.S. Airways has filed an antitrust lawsuit against Sabre in the U. S. District Court for the Southern District of New York.  The airline’s complaint in U.S. Airways, Inc., v. Sabre Holdings Corporation et al., No. 11 CV 2725 (SDNY), alleges that Sabre has suppressed the ability of travel agents to book tickets directly with airlines, and that it used anti-competitive practices to force the airline into an unfair agreement.

According to U.S. Airways, Sabre threatened to pull U.S. Airways’ listings from its services, which includes the reservations systems used by online travel agency Travelocity, potentially forcing U.S. Airways into bankruptcy because the Sabre Global Distribution System accounts for 35 percent, or about $3.5 billion, of U.S. Airways’ revenues.

Sabre responded to the suit by stating that the antitrust claim was a “misguided attempt by an airline” to undermine a distribution model that “has brought competition to the airline industry,” and that Sabre would “aggressively defend against US Airways’ lawsuit, pursue our own legal rights and take appropriate action to protect consumers’ right to a transparent marketplace.”

The case is just the latest development in a wave of antitrust suits against the global distribution system in the airline sector.  In January, American Airlines sued Sabre on similar grounds, saying that it could lose “countless sales” if Sabre were permitted to give preference to other airlines in flight listings.  American accused Sabre of anticompetitive behavior by slanting information viewed by travel agents before they book flights.  That action is on hold until June 1 as the parties try to reach an agreement.

And just last week, American sued online travel agency Orbitz Worldwide and its largest stakeholder, Travelport, over “anticompetitive business practices” for trying to control the distribution of airline tickets.  In that suit, American contends that Travelport and Orbitz violated Sections 1 and 2 of the Sherman Act by using their control over the distribution of air fare information to maintain their monopoly power and to hinder the development of alternative technologies that could help consumers find cheaper fares.  American pulled its listings from Orbitz and Expedia in December after those services declined to include American’s Direct Connect reservation system for its listings.

In contrast to American, U.S. Airways signed a multiyear content agreement with Expedia in January.  U.S. Airways touted this agreement in announcing its first quarter of 2011 financial results in a section entitled “Notable First Quarter Accomplishments.”  There is no mention among its notable first-quarter accomplishments of U.S. Airways’ agreements with Sabre and Travelocity in February.  Instead, although the action occurred in April, after the first quarter ended, U.S. Airways noted among its “accomplishments” that it filed an antitrust lawsuit against Sabre.