Antitrust concerns are causing the U.S. Department of Justice to eye an unprecedented auction of a mother lode of digital-communication technology warily.

Bankrupt telecom equipment maker Nortel Networks plans to auction off a treasure trove of more than 6,000 high-tech patents next week.  The patents cover vital parts of the new 4G LTE wireless protocol, wireless video, Wi-Fi, and many other wired and wireless communications technologies.

The Justice Department has expressed concern that the new owner of these patents could use them to create barriers to entry in digital communications.

The first company to announce a bid was Google, which began the public positioning for the auction with an $800 million “stalking horse” bid that others are expected to top.  The winning bid may easily exceed $1 billion.

While the Justice Department has approved Google’s bid, it is also reported to be investigating some others.  Apple, Intel, RIM, and Ericsson are expected to bid before the auction concludes next week.

According to the Justice Department’s guidelines on antitrust issues with intellectual property, a patent owner can generally license or refuse to license its patents to anyone, if it acts unilaterally.  Refusing to license a patent is considered an exercise of the rights inherent in a patent, to exclude others from using or selling an invention.  This rewards innovation and creates an incentive to disclose new inventions instead of keeping them secret.

On the other hand, licensing patents with conditions can harm competition outside the rights granted by the patent itself, and can violate the Sherman Act, according to the Justice Department’s guidelines.  While not per se illegal, patent licenses that require the licensee to license its own, unrelated patents to the original licensor, or to transfer any follow-on patents to the licensor, may diminish other companies’ potential to profit from their own inventions, which could suppress innovation in general.  Licenses that dictate the pricing of goods that use the patent are more likely to be found illegal.

One worry that some technology companies have expressed about the Nortel auction is that the winner could change the terms of their licenses to the patents going forward.  Where a patented technology is vital to a company’s business, demanding new terms when renewing a longstanding license in a way that would significantly raise their costs of doing business could possibly violate Section 2 of the Sherman Act, based on the Supreme Court’s decision in Aspen Skiing Co. v. Aspen Highlands Skiing Corp.

However, the Supreme Court has since said that Aspen Skiing represents the “high-water mark” of liability for refusing to deal with a competitor.  It may well be that no liability would arise for a licensing change, even with a long-term relationship between owner and licensee.

Given that the Justice Department has already cleared a major bid in the Nortel auction, the auction is likely to proceed without any formal antitrust challenges.  But the Justice Department’s positions on patent licensing – not to mention the courts’ – have certainly had an impact on the content of the bids and the conduct of the auction itself.

The Antitrust Division of the U.S. Department of Justice is investigating whether third-party sellers of airline tickets have violated antitrust law

The federal investigation opens a new front in the legal battles involving several U.S. airlines and the companies that aggregate and distribute flight and booking – the practices known as global distribution systems (“GDSs”).  GDSs serve as intermediaries between airlines, online ticket sellers, and travel agents by providing airlines’ flight information to the ticket sellers and booking information to the airlines.

Several airlines, including American Airlines, Delta, and U.S. Airways, and the major GDSs, including Sabre, Travelport, and Amadeus, have confirmed that they have received civil investigative demands from the Antitrust Division.  According to several reports, the Justice Department is investigating “the possibility of anti-competitive practices in the global distributions industry.” 

In April, American Airlines sued Orbitz Worldwide Inc. and air fare data provider Travelport, one of the leading GDSs, for allegedly making American’s fares wrongfully appear more expensive than the fares of other airlines.  Also in April, U.S. Airways filed an antitrust suit against Sabre, another major GDS.

American claims that Travelport was retaliating against American’s Direct Connect network, which directly connects online ticket sellers and travel agents to the airline’s reservation system.  Such a system circumvents GDSs and their associated fees.

GDSs typically charge about two percent of total tickets costs.  In 2008, GDSs sold 64 percent, or $81 billion, of U.S. airline tickets.

The United States Department of Justice (“DOJ”) is seeking to revive competition in the market for point-of-sale terminals by blocking VeriFone Systems Inc.’s proposed $485 million acquisition of Hypercom Corp.

Both companies operate in the electronic payments industry, and the DOJ claims that the deal would harm competition in the market for point-of-sale terminals in the United States.

The DOJ has commenced an antitrust lawsuit alleging that the merger of VeriFone and Hypercom would result in a dominant point-of-sale terminal manufacturer that would be likely to raise prices and reduce innovation, quality, product variety and service.   The complaint also alleges that a divestiture to French competitor Ingenico that had been proposed would not resolve the competitive concerns raised by the VeriFone/Hypercom transaction.

Last month, Hypercom announced that it had entered into an agreement to sell its U.S. point-of-sale terminal business to Ingenico in an effort to allay such antitrust concerns.  The DOJ, however, opined that the sale would not resolve antitrust concerns raised by the VeriFone deal because the Hypercom assets would be sold to another significant competitor in the market in a manner that does not create a new, independent, long-term competitor.

However, Hypercom has now abandoned its plans to divest its point-of-sale business to Ingenico after U.S. regulators stated that the divestiture would not satisfy the DOJ’s antitrust concerns.  The DOJ’s lawsuit to block the overall deal between VeriFone and Hypercom is still pending, and the DOJ is in discussions with them to identify an alternative buyer, presumably one the DOJ would consider to have the potential to be a long-term competitor of the companies.

MasterCard is discovering that Dutch competition authorities may be serious in their goal to increase competition in the payments market by encouraging banks not to go “steady” with MasterCard.

MasterCard is reporting in its 10-Q report that the Netherlands Competition Authority is challenging its co-branding and co-residency rules, which restrain banks from expanding their relationships with other payment systems.

According to MasterCard, the co-branding rules at issue can prohibit “financial institutions licensed by MasterCard from placing other payment systems’ brands on MasterCard cards.”  The challenged co-residency rules can prohibit “financial institutions from encoding other payment systems’ applications on the electronic ‘chip’ in MasterCard cards.”  A hearing on the matter was held on April 14, 2011.

This challenge comes after the Netherlands Competition Authority released its Vision Document on the Payments Market in December 2010.  In that statement, the Dutch authorities expressed the view that they would “like to see banks conclude contracts with payment systems other than MasterCard.”

Britain’s Office of Fair Trading (“OFT”) will announce this month whether it is investigating market dominance of the “Big Four” accounting firms – Deloitte LLP, Ernst & Young LLP, PricewaterhouseCoopers LLP and KPMG LLP.

The investigation would follow a House of Lords Economic Affairs Committee report entitled “Auditors: Market concentration and their role,” released in late March criticizing the big four auditors for their lack of oversight and their failure to warn regulators before the financial crash.

In that report, the Committee calls for a competition probe of the large auditors and dominance in the market.  According to the Committee, 99 out of the FTSE 100 companies (and 240 of the FTSE 250 companies) were audited by the Big Four.  The Committee noted concerns about “competition, choice, quality and conflict of interest.”

The OFT previously made submissions to the Committee and to the European Commission regarding competition in the audit market.  An OFT probe would likely include bank loan covenants that require borrowers to use the big four auditors.