By Ankur Kapoor

In the latest skirmish in the e-books case of United States v. Apple, Inc., Apple has accused the external compliance monitor appointed by the court of conducting a “roving” and “unfettered” investigation into Apple’s business practices, including seeking to interview lead designer Jony Ive and board member and former Vice President Al Gore.

Apple is now moving the U.S. District Court for the Southern District of New York to suspend the court’s appointment of the external compliance monitor pending Apple’s appeal of that appointment.  According to Apple, the monitor is not only interfering with Apple’s business by exercising wide-ranging investigative powers, but is also charging excessive fees.  In a December 13, 2013, letter to the court responding to Apple’s court filings, the U.S. Department of Justice disputed Apple’s accusations and stated that, based on the DOJ’s review, the monitor’s “actions to date have been wholly within the scope of his authority under the Final Judgment.”  Judge Denise Cote will hear oral arguments on Apple’s motion on January 13, 2014.

In its filings with the court, Apple portrays an aggressive monitor seeking to examine Apple’s internal antitrust compliance program well before the court ordered Apple to have that program in place.  While the monitor certainly needs to understand Apple’s business before he can begin to evaluate Apple’s internal compliance program, it is questionable that needing to understand Apple’s business would justify seeking interviews with individuals who have little, if anything, to do with Apple’s day-to-day business operations and antitrust compliance program.  click here for more »

By Allison F. Sheedy

The U.S. District Court for the Southern District of New York has dismissed antitrust claims against Amazon and the six largest book publishers related to the publishers’ contracts with Amazon for the distribution of e-books requiring the use of digital rights management software (“DRM”) in The Bookhouse of Stuyvesant Plaza, Inc. et al. v. Amazon.com, Inc. et al.

The Bookhouse plaintiffs are independent bookstores that sell both print books and e-books.  They alleged claims of unlawful restraints of trade under Section 1 of the Sherman Act against all defendants, and claims of monopolization and attempted monopolization under Section 2 of the Sherman Act against Amazon.

Generally speaking, DRM limits the ability to use digital content after its sale.  The plaintiffs alleged that Amazon, manufacturer of the Kindle e-reader, employed more restrictive DRM technology than required by its agreements with the six publisher defendants – Random House Inc., Penguin Group (USA) Inc., Hachette Book Group USA Inc., Simon & Schuster Inc., HarperCollins Publishers LLC and Macmillan Publishers Inc.  Plaintiffs claimed that this DRM technology effectively restricted the devices on which e-books sold and distributed by Amazon could be read, which rendered Amazon’s e-book platform a “closed ecosystem.”  click here for more »

By Jeffrey I. Shinder

As Congress contemplates passing comprehensive legislation to deal with patent trolls, an intriguing antitrust case involving a defensive patent aggregator—an entity created to deal with such trolls—will proceed in federal court in San Francisco.

The case, Cascades Computer Innovation LLC v. RPX Corporation in the U.S. District Court for the Northern District of California, was brought by Cascades, a so-called patent troll, or non-practicing entity, which is an entity that enforces patent rights against accused infringers in an attempt to collect licensing fees, but does not manufacture products or supply services based on those patents.

Cascades controls a portfolio of patents that include a patent that allegedly enhances the efficiency of the Android operating systems.  Cascades claims that the defendants, HTC Corporation, Motorola Mobility Holdings, Inc, and Samsung Electronics Co. Ltd agreed that none of them would deal with Cascades individually.  According to Cascades, the defendants instead agreed to negotiate any and all licenses with Cascades through their entity, RPX Corporation.  Cascades claims that this agreement is an unlawful conspiracy to create a buyers’ monopoly—a monopsony—in the market for Cascades’ licenses in violation of Section 1 and 2 of the Sherman Act.  click here for more »

By Jeffrey I. Shinder

The proposed P3 shipping alliance among the world’s three biggest container shipping companies encountered more rough seas this past week.

The U.S. Federal Maritime Commission (“FMC”) has requested additional information from the parties.  This request will delay the implementation of the proposed alliance because, after the parties comply with the request, a new 45-day regulatory review period will begin.  While this request should not be interpreted as indicating that the alliance will not be approved by regulators, it almost certainly reflects the significant issues that the proposed deal raises for competition.

The proposed P3 vessel-sharing alliance among Maersk, MSC and France’s CMA CGM S.A has the expressed goal of dealing with overcapacity and declining freight rates through an agreement to share ships and engage in related cooperative operating activities, under a common management, while retaining individual commercial status and control of consignments.

The issues that are raised by this plan to create the world’s largest shipping alliance came into sharp focus last week when reports surfaced that the FMC is apparently questioning “operational contradictions” and “gaps” in the duties of the liners.  See Lewis Crofts,  “P3 shipping lines face questions over alliance’s scope ahead of US, EU, China meeting,” http://www.mlex.com/US/Content.aspx?ID=479918 (MLex, Dec. 6, 2013) (subscription required).  click here for more »

By Jean Kim

The European Commission (the “EC”), as expected, has approved Microsoft’s proposed acquisition of Nokia’s handset devices business, demonstrating that antitrust enforcers no longer view the operating system Goliath of the 1990s as a tempting target.

The European approval was the last remaining regulatory hurdle for the parties to go forward with the $7.2 billion acquisition.  The FTC granted “early termination” approval last week, which means that it will take no action to block the merger.

These relatively easy approvals by U.S. and European regulators are consistent with the similar ease with which Microsoft’s acquisition of Skype (worth $8.5 billion) sailed through U.S. and EC merger review in 2011.  Antitrust enforcers apparently are not concerned with Nokia’s 3% share of the smartphone market going to Microsoft, particularly when Apple and Samsung together account for almost 50% of worldwide smartphone sales in 2013.

Microsoft, after emerging in 2011 from a decade of oversight by the U. S. Department of Justice following the settlement of the DOJ’s 1998 antitrust suit, has truly entered a new era.  Antitrust enforcers have turned their gaze to bigger fish like Google and Apple, and no longer have a knee-jerk reaction to Microsoft’s every move in tech markets.

The EC has not completely withdrawn its scrutiny of Microsoft, however.  As late as March of this year, the EC fined Microsoft $730 million for breaching its five-year commitment to give customers a choice of browser in connection with the upgrade of its Windows 7 operating system.  This penalty was in addition to the more than 1.6 billion euros in fines that the EC had already levied on Microsoft over the last decade.

But Microsoft’s commitment with the EC expires in 2014 (unless extended), and Microsoft may well be left unfettered to pursue an acquisition strategy aimed at making it more competitive in a technological world that is no longer dominated by the personal computer.  Microsoft certainly has the funds for a shopping spree with its $77 billion war chest.

With the rollout of Surface tablets, and Xbox’s healthy 30% plus share of the console market, the Nokia acquisition will round out Microsoft’s portfolio and give it a foothold in three device markets where it can deploy and unify its Windows platform.

— Edited by Gary J. Malone