The expansion of international cooperation in antitrust enforcement in recent years is likely to continue and benefit both businesses and consumers, according to a top U.S. antitrust enforcer.

Joseph Wayland, Acting Assistant Attorney General for the Antitrust Division of the U.S. Department of Justice, surveyed the benefits of international cooperation among antitrust authorities in a recent speech at the International Bar Association’s Annual Competition Conference in Florence, Italy.

According to Wayland, international cooperation helps to achieve three principal purposes of antitrust enforcement – increasing the understanding of the competitive process, the effectiveness of competition enforcement, and the efficiency of global enforcement in order to facilitate and promote economic activity to the benefit of consumers.

Wayland suggested that greater coordination of antitrust enforcement at the international level would help companies understand competition rulings and lessen the chances of companies facing unfair penalties in multiple jurisdictions.

“Our goal as antitrust authorities should be to avoid, as much as possible in a multi-authority world, imposing inconsistent, conflicting, or inefficient rules on businesses, either generally or in individual cases,” Wayland said.

Wayland argued that increased cooperation was leading to more effective enforcement.  With greater globalization, it is necessary for competition regulators to learn how competition works in markets that are no longer just local in scope.

Wayland gave several examples of international cooperation in investigating and prosecuting cartels that operate across national borders.  In the Auto Parts investigation, the Antitrust Division worked with its enforcement counterparts in Japan, the European Union, Canada and other antitrust agencies around the world.  The Antitrust Division has already obtained criminal fines of nearly $800 million as a result of that investigation.

The Antitrust Division has also worked closely with the European Commission on civil enforcement matters, such as the e-books matter, which led to the Division filing a lawsuit – U.S. v. Apple, Inc. – against Apple and five of the largest book publishers in the U.S., alleging that they had conspired to increase the prices of e-books.  While three of the publishers settled, the Antitrust Division is continuing to litigate against Apple and the other two publishers.

Finally, Wayland discussed how international antitrust cooperation can increase economic activity that benefits consumers.   He noted that recent international coordination among competition authorities has helped consumers, who largely bear the costs of cartels and monopolies.

For example, the Antitrust Division, the European Commission and the Canadian Competition Bureau coordinated their enforcement activities in reviewing the United Technologies/Goodrich transaction – the largest merger in the history of the aircraft industry – which enabled the antitrust enforcers to agree on what conditions needed to be met for the merging parties to address the competitive concerns that were raised both in the U.S. and internationally.

To make compliance easier, all three agencies approved the merger on the same day and coordinated the conditions imposed on the merger for approval.

The Office of Fair Trading (the “OFT”) – the United Kingdom’s consumer and competition authority – has announced new guidelines for setting penalties for violations of British competition laws.

The most drastic change contained in the new guidelines increases the maximum starting point for calculating a penalty from 10 to 30 percent of a company’s relevant turnover.

The OFT indicated that it is increasing the maximum penalty because it will improve the ability of the OFT to set penalties which better reflect the gravity of different types of infringements.  The OFT noted that increased penalties could be imposed “in particular for the most serious breaches of competition law, such as hardcore cartel activity and serious abuses of a dominant position.”  The revision of the guidelines also serves the purpose of bringing the “OFT in line with the approach of the European Commission and many European competition authorities.”

In addition to the increased penalties, the new guidelines also clarify the steps used to judge the severity of an antitrust violation.

For example, leniency programs and settlement agreements will now be taken into consideration when issuing fines in order to impose lesser penalties on companies that come forward to admit wrongdoings. 

The previous guidelines had been in place since 2004.  The revised guidelines “reflect our experience in applying the guidance in a series of cases, as well as recent court judgments,” according to Jackie Holland, Senior Director of the OFT Policy Group.

According to a 2010 study by the American Antitrust Institute, revising penalty guidelines to be more specific can help deter antitrust violations.  The study indicated that from 1990 to 2008 the European Commission’s fines minimally deterred antitrust violations because vague guidelines failed to accurately assess the amount of harm a company’s actions caused, and the most harmful violations were not fined severely enough.

The European Commission has opened an investigation to determine whether Microsoft failed to comply with its 2009 commitment to the Commission to encourage Internet browser competition by providing Windows users in Europe with a screen showing the 12 most popular browsers.

In December 2009, the Commission’s competition office found that Microsoft’s practice of offering only its browser, Internet Explorer, to Windows users was anticompetitive.  The Commission made legally binding Microsoft’s commitments, including the browser-choice screen, to address the antitrust concerns.

According to the Commission, however, it appears that Microsoft has not fulfilled this commitment.  “Since the launch of Windows 7, in February 2011, the choice screen has no longer been displayed,” said Joaquin Almunia, Commissioner for Competition, at a press conference .  “As a result about 28 million users may not have seen the choice screen at all.”

This new investigation is the latest in an extended series of antitrust enforcement actions taken by the Commission to rein in what it perceives to be Microsoft’s continuing market power in personal computer operating systems.

In 2004, the Commission found that Microsoft’s tying of Windows Media Player to the Windows operating system was an abuse of a dominant position, and ordered the company to share interoperability information.  In addition to fining Microsoft 497 million euros in 2004, the Commission slapped Microsoft with penalties – for non-compliance with the 2004 decision – of 280.5 million euros in 2006 and 899 million euros in 2008.  In 2012 the European General Court upheld the 2008 finding of non-compliance, but reduced the penalty to 860 million euros.

If the investigation finds Microsoft guilty of failing to fulfill its 2009 commitment, the Commission can impose an antitrust fine of 10 percent of the company’s annual turnover, according to Almunia.

As the United States continues to process the Supreme Court’s opinion on the constitutionality of the Affordable Care Act, the Court has accepted another important case in the health care industry. 

The Supreme Court has granted the FTC’s petition challenging a hospital merger in Federal Trade Commission v. Phoebe Putney Health System, Inc.  Antitrust practitioners are closely following the case because the decision could provide valuable guidance on the boundaries of state action immunity in antitrust cases.  

As described in a previous Antitrust Today post, the FTC brought a federal action in April 2011 to preliminarily enjoin this hospital merger in Georgia.  The terms of the merger are somewhat complicated: Phoebe Putney Health System, Inc. (“PPHS”) announced a plan to have a political subdivision, the Hospital Authority of Albany-Dougherty County (“Hospital Authority”), use its general corporate powers to acquire Palmyra Park Hospital, Inc. (“Palmyra”) and lease Palmyra’s assets to PPHS or one of its subsidiaries.  

The FTC claims that the acquisition is practically a “merger to monopoly” that threatens harm to competition.  Defendants argue that the statutory authorization and the involvement of the Hospital Authority triggered the state-action doctrine, which immunized the plan from antitrust scrutiny.  The FTC counters by arguing that the Hospital Authority is merely a strawman that was included solely for the purpose of immunizing the transaction from antitrust scrutiny.  The U.S. District Court for the Middle District of Georgia and the Eleventh Circuit Court of Appeals sided with the defendants.  Now the FTC gets to take its case to the Supreme Court. 

The Supreme Court will consider two specific questions raised by the FTC: (1) “Whether the Georgia legislature, by vesting the [Hospital Authority] with general corporate powers to acquire and lease out hospitals and other property, has ‘clearly articulated and affirmatively expressed’ a ‘state policy to displace competition’ in the market for hospital services,” and (2) “Whether such a state policy, even if clearly articulated, would be sufficient to validate the anticompetitive conduct in this case, given that the [Hospital Authority] neither actively participated in negotiating the terms of the hospital sale nor has any practical means of overseeing the hospital’s operation.” click here for more »

The U.S. Department of Justice (“DOJ”) is conducting an investigation to determine whether or not Internet usage caps and subscription perks offered by large cable and Internet providers violate antitrust laws by unreasonably restraining streaming video.

The Wall Street Journal has reported that the DOJ’s Antitrust Division has spoken about Internet data caps with Comcast, Time Warner Cable, and other cable companies, as well as Netflix and Hulu, two online video streaming services.

Both Netflix and Hulu argue that Internet data caps on cable company service plans limit the amount of video that can be streamed, and ultimately deter consumers from ditching the traditional channel bundle and switching to online video.

The DOJ will also examine services offered only to subscribers.  For example, Comcast offers unlimited data usage when a viewer is using the company’s own video streaming app, Xfinity for Xbox or iPad.  Some television programmers offer online video, which Comcast has also made available only to subscribers.

Comcast and Time Warner have said the limits on data and the subscription perks are in response to consumers’ use of multiple devices.  The data limits are necessary to keep their broadband networks from being too inundated, and the apps and special access allow consumers to view television programming on a game system, tablet or computer.

Research indicates that consumers are ready to embrace online video.  According to a recent comScore study, 17 percent of the 10,000 participants viewed television programs solely through online platforms.

A separate study conducted by Nielsen indicates that the largest group of Americans watching online video is between the ages of 18 and 34.  However, with one third of Hulu’s consumers over the age of 50, even older generations have embraced the new technology.

Government officials have also recognized the change.  This week, Attorney General Eric Holder identified himself as a digital consumer during a committee hearing after Senator Al Franken argued that “consumers want to be able to cut the cord and watch television shows and movies online rather than paying over $100 per month to their cable companies.”