May 11, 2011

Novell’s Antitrust Claim Against Microsoft Is Reborn Just As Feds’ Oversight Expires

Although Microsoft’s epic antitrust battle with the U.S. Department of Justice officially comes to an end tomorrow, with the expiration of the government’s decade-long oversight of the software giant, Microsoft has learned that another antitrust challenge has just received a new lease on life.

The United States Court of Appeals for the Fourth Circuit has revived the antitrust action Novell filed against Microsoft involving Novell’s office software applications WordPerfect and Quattro Pro.  Last year, the U.S. District Court in Maryland dismissed Novell’s antitrust claims.

The Fourth Circuit has now held that Novell is free to pursue an antitrust claim even though Microsoft settled a related suit with another company, Caldera, Inc., for $280 million.  The Fourth Circuit ruled that Novell’s sale in 1996 of its desktop operating system business to Caldera did not prevent it from seeking damages from Microsoft for allegedly using its monopoly power in the operating systems market to squash Novell’s office applications.

In 1996, Novell made a deal assigning certain rights to sue Microsoft to Caldera.  Caldera sued Microsoft over competition in the operating system market, receiving a $280 million settlement four years later, of which Novell received a $35 million share.  Then in 2004, Novell sued Microsoft in its own right, claiming WordPerfect was the victim of unfair competition by Microsoft, and last year Microsoft won summary judgment against Novell in that case on the grounds that Novell’s claims were subject to the 1996 agreement with Caldera.

But whereas the district court held that Novell signed away its software application claims to Caldera along with the operating system claims, the appeals court refused to abandon distinctions between the products harmed by Microsoft’s allegedly anticompetitive practices and will allow Novell to proceed with its one remaining antitrust claim.

Novell, which was purchased by Seattle-based Attachmate, Inc. last month, is seeking several billion dollars in treble damages under the antitrust laws.

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Categories: Antitrust Enforcement, Antitrust Law and Monopolies, Antitrust Litigation

    May 5, 2011

    Curtain Falling On Feds’ Long-Playing Epic Antitrust Battle Against Microsoft

    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.

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    Categories: Antitrust Enforcement, Antitrust Litigation

      May 3, 2011

      College Bowl Games May Face Playoffs With Antitrust Enforcers

      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.

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      Categories: Antitrust Enforcement, Antitrust Litigation

        April 22, 2011

        French Banks Offer To Cut Payment Card Fees to Resolve Price-Fixing Allegations

        A consortium of 130 financial institutions operating the leading interbank network in France is offering to lower most interbank fees for card transactions in order to resolve a price-fixing investigation by the French Competition Authority.

        Groupement des Cartes Bancaires (“CB Group”), whose network accounts for more than two thirds of all card transactions in France, are offering to lower the fees to settle the Authority’s investigation into allegations that the fees were the result of anticompetitive price-fixing between member banks.  The investigation was triggered by complaints lodged with the French competition agency in 2009 and 2010 by two leading trade associations representing France’s retail industry.

        The Authority stated in a press release that it was not necessarily illegal for the CB Group to collectively set interbank fees for card transactions within its network.  However, the level of these fees must be based on objective justifications, such as security or interoperability requirements.  The competition watchdog noted that the Group had not provided sufficient data to justify the fees’ current levels, and that some of the fees had remained unchanged for over two decades, in spite of changes to the competitive landscape and a vast increase in the use of payment cards over that period of time.

        Details of the Group’s proposed commitments have been posted on the Competition Authority’s website to allow interested parties to submit comments, pursuant the so-called “market testing” procedure, which will close on May 5, 2011.  Under the plan, interbank fees for card payments would be cut by 25%, while the fees for withholding cards would be reduced by 50%.  ATM withdrawal interbank fees, however, would remain at their current level.  If accepted by the Authority, the commitments will remain in force for a 5-year period.

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        Categories: Antitrust and Price Fixing, Antitrust Enforcement, International Competition Issues

          April 11, 2011

          Feds Prescribe Antitrust Enforcement For Health Care Organizations

          The U.S. Department of Justice and the FTC have issued a Proposed Statement of Antitrust Enforcement Regarding Accountable Care Organizations Participating in the Medicare Shared Savings Program.

          The Proposed Statement was made on the same day that the United States Department of Health and Human Services, Centers for Medicare and Medicaid Services, filed its proposed rule regarding Medicare Shared Savings Program Accountable Care. 

          The Proposed Statement contains provisions regarding an “Antitrust Safety Zone” for certain Accountable Care Organizations (“ACOs”), defines an expedited review process for ACO antitrust clearance, and identifies materials that must be submitted to the DOJ or FTC in order to receive an expedited review.

          The Proposed Statement applies only to groups of competitors formed after March 23, 2010, to participate in the Shared Savings Programs.  The Proposed Statement is also inapplicable to mergers, which will continue to be evaluated under the Horizontal Merger Guidelines of the federal agencies.

          Public comments on the Proposed Statement are due by May 31, 2011.

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          Categories: Antitrust Enforcement

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