A View from Constantine Cannon’s London Office

By Richard Pike and Yulia Tosheva

On Thursday, the EU Commission launched three separate investigations into suspected anticompetitive practices in the online sales of consumer electronics, video games and hotel accommodation.

The launch of these investigations does not come as a surprise.  On September 15, 2016, the Commission published a Preliminary Report following its sector inquiry into e-commerce which identified retail price restrictions, discrimination on the basis of location and geo-blocking practices as areas of concern.

During the sector inquiry, the Commission gathered evidence from nearly 1,800 companies operating in e-commerce sales of consumer goods and digital content and analysed around 8,000 distribution contracts.  The inquiry is part of the EC’s wider Digital Single Market Strategy, which was adopted on May 6, 2015.  As this blog discussed, the goal of the Digital Single Market is to ensure better access for consumers and businesses to digital goods and services across Europe, and create a level playing field for digital networks and innovative services.

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Here are some of the developments in antitrust news this past week that we found interesting and are following.

Amazon Offers to Scrap E-book Clauses to Settle EU Antitrust Probe.  Amazon has offered to alter its e-book contracts with publishers in a bid to end an EU antitrust probe and stave off a possible fine, the European Commission said on Tuesday.  Amazon, the biggest e-book distributor in Europe, proposed to drop some clauses in its contracts so publishers will not be forced to give it terms as good as those for rivals, the Commission said.  Such clauses relate to business models, release dates, catalogs of e-books, features of e-books, promotions, agency prices, agency commissions and wholesale prices.

Judge Blocks Aetna’s $37 Billion Deal for Humana.  A federal judge ruled that a $37 billion merger between the health insurance giants Aetna and Humana should not be allowed to go through on antitrust grounds, siding with the U.S. Justice Department, which had been seeking to block the deal.  The deal is one of two mega-mergers proposed by the nation’s largest health insurers; both were challenged by the Obama administration. Another federal judge is expected to rule soon on the case involving Anthem and Cigna, the larger of the two deals, at $48 billion.

FTC Settles Pay-for-Delay Lawsuit, Files Two Related Complaints.  The U.S. Federal Trade Commission announced that it has settled allegations that Endo Pharmaceuticals violated antitrust law when it agreed to pay rivals Watson Laboratories and Impax to delay introducing generic versions of two painkillers.  The FTC filed charges against Watson, and Allergan Plc , accusing it of breaking the law by reaching an agreement with Endo to block a generic competitor for the local anesthetic Lidoderm.

As Regulators Waver, Apple Takes on Qualcomm in Courts.  Apple’s new legal assault on Qualcomm in the United States and China reflects its conclusion that regulators are unlikely to put an end to what it considers the chip maker’s unfair business practices, according to analysts.  Apple has long objected to Qualcomm’s practice of charging for the “modem” chips that help phones use wireless networks data plans and its demands for a license fee based on the total price of the phones.  Qualcomm was the original inventor of a number of key wireless technologies.

Here are some of the developments in antitrust news this past week that we found interesting and are following.

Apple Depicts Qualcomm as a Shady Monopolist in $1B Lawsuit.  Apple is suing mobile chip maker Qualcomm for $1 billion in a patent fight pitting the iPhone maker against one of its major suppliers.  The 100-page complaint filed Friday in a San Diego federal court depicts Qualcomm as a greedy monopolist abusing its power in a key segment of the mobile chip market to extort royalties for iPhone innovations that have nothing to do with Qualcomm’s technology.

EU Antitrust Regulators Welcome Amazon, Apple Audiobook Deal.  A decision by Amazon and Apple to scrap all exclusivity obligations in the supply and distribution of audiobooks will likely boost competition, EU antitrust regulators said on Thursday.  The companies announced their decision on Jan. 5 after talks with the European Commission and the German Federal Cartel Office.  Such curbs had prompted a complaint from the German Publishers and Booksellers Association to both regulators, triggering an investigation by the German enforcer in November 2015.

FTC Not Sold on Walgreens’ Plan to Win Nod for Rite Aid Deal: Bloomberg.  The U.S. Federal Trade Commission is not satisfied with Walgreens Boots Alliance Inc.’s plan to divest stores to win antitrust clearance for its acquisition of Rite Aid Corp, Bloomberg reported, citing people familiar with the matter.  The FTC is not convinced that Walgreen’s proposal to sell 865 drugstores to Fred’s Inc. would do enough to preserve competition that would be lost in the $9.4 billion tie-up, Bloomberg reported on Friday.

U.S. Top Court Rejects Banks over Libor Antitrust Lawsuits.   The U.S. Supreme Court on Tuesday allowed private antitrust lawsuits brought by investors including big U.S. cities accusing major banks of conspiring to manipulate the pivotal Libor benchmark interest rate to move forward.  The justices rejected an appeal filed by a group of banks including Bank of America Corp., Deutsche Bank AG, UBS AG and JPMorgan Chase & Co. of a May 2016 ruling by the U.S. Court of Appeals for the Second Circuit that allowed various lawsuits against them to proceed.

Here are some of the developments in antitrust news this past week that we found interesting and are following.

Obama’s Work to Limit Mergers May Stop With Trump Administration.  A nascent effort by the Obama administration to limit corporate consolidation, begun after officials concluded that a lack of competition was hurting the American economy, appears to be coming to an abrupt end as the Trump administration takes charge.  President-elect Donald J. Trump railed against media company mergers on the campaign trail, promising to block the proposed combination of AT&T and Time Warner, but conservatives and liberals alike say they see no evidence Mr. Trump will be worried about the continuing rise of megacompanies in other parts of the economy once he takes office.

U.S. Appeals Court Revives Antitrust Lawsuit Against Apple.  iPhone app purchasers may sue Apple Inc. over allegations that the company monopolized the market for iPhone apps by not allowing users to purchase them outside the App Store, leading to higher prices, a U.S. appeals court ruled on Thursday.  The  U.S. Court of Appeals for the Ninth Circuit ruling revives a long-simmering legal challenge originally filed in 2012 taking aim at Apple’s practice of only allowing iPhones to run apps purchased from its own App Store.  A group of iPhone users sued saying the Cupertino, California, company’s practice was anticompetitive.

Source: Obama DOJ Won’t Push Antitrust Case Against Airlines.  The Justice Department, which started investigating alleged collusion between the nation’s major airlines in mid-2015, will not bring an antitrust case against the carriers before the Obama administration leaves office at the end of next week, according to a person familiar with the situation.  The civil investigation has not been closed, cautioned the person, who spoke on condition of anonymity because the Justice Department has not announced anything publicly.

AT&T Chief Executive, Trump Meet Amid Planned Time Warner Merger.  AT&T Chief Executive Randall Stephenson on Thursday met in New York with U.S. President-elect Donald Trump, an opponent of the company’s acquisition of Time Warner Inc.  A spokeswoman for Trump confirmed the meeting after Stephenson was seen entering Trump Tower.  Stephenson, who was accompanied by Robert Quinn, AT&T’s senior executive vice president for external and legislative affairs, would not answer questions from reporters.  AT&T said later on Thursday that the company’s $85.4 billion deal for Time Warner was not discussed.

Here are some of the developments in antitrust news this past week that we found interesting and are following.

U.S. Bucked Rest of World on Antitrust Enforcement in 2016.  It was a record year for antitrust cartel enforcement in 2016, with $6.7 billion in total fines levied — but not in the U.S., which had its slowest year in a decade, according to a new report.  Even as the European Union levied a record $4.1 billion in antitrust fines, the U.S. Department of Justice’s Antitrust Division’s total fines nosedived to $387 million in 2016 — down from a record $2.85 billion in 2015.

U.S. Loses Bid to Overturn AmEx Antitrust Decision.  A federal appeals court on Thursday rejected the U.S. government’s request that it reconsider its decision allowing American Express to stop merchants from encouraging customers to use rival cards that charge lower fees.  Without comment, the U.S. Court of Appeals for the Second Circuit let stand its Sept. 26 reversal of a lower court ruling that had struck down AmEx’s “anti-steering” rules.  That reversal by a three-judge panel allowed New York-based AmEx to block merchants that accept its cards from steering customers to rivals Visa and MasterCard, even if such steering would have saved them money.

Former Barclays Trader Pleads Guilty in Currency Manipulation Conspiracy.  A former Barclays trader pleaded guilty on Wednesday to federal charges arising from a global investigation into the manipulation of foreign-exchange prices at major banks, according to the U.S. Justice Department.  Jason Katz, a former Barclays trader who later worked at BNP Paribas, pleaded guilty in Federal District Court in Manhattan to participating in a price-fixing conspiracy, becoming the first person to admit criminal wrongdoing in the inquiry.  Mr. Katz’s plea came after Barclays and three other banks pleaded guilty last year to conspiring to manipulate currency prices.

Euronext Offers to Buy Unit of London Stock Exchange for $536 Million.  Euronext said on Tuesday that it had offered to buy the French arm of the London Stock Exchange Group’s majority-owned clearing business, as the British company looks to win regulatory approval for a merger with Deutsche Börse.  The London Stock Exchange and Deutsche Börse agreed in March to a merger, which would create Europe’s largest stock market operator by far, combining exchanges in Britain, Germany and Italy.  In July, shareholders from the two exchanges approved the deal, the companies’ third attempt to come together since 2000.