Sticks and stones may break your bones, but disparagement will hardly ever monopolize your market, is the message of Broadcom Corporation’s motion to dismiss a “monopolization-by-disparagement” case brought by its competitor Emulex Corporation.

The case, Emulex Corp. et al. v. Broadcom Corp. et al., No. SACV 09-1310 JVS (ANx), centers on statements Broadcom allegedly made during a 2009 attempt at a hostile takeover of Emulex, a competing communications technology company. Broadcom allegedly accused Emulex of “underperformance” and “unsatisfactory results” (among other shortcomings), and advised customers not to buy Emulex products.

This antitrust complaint, which Emulex filed in the Central District of California in November 2009, is Emulex’s third effort to recover for Broadcom’s statements. Its first effort was a complaint in California Superior Court alleging common law fraud and interference with contractual relations. Its second effort was a previous complaint in the Central District of California, alleging violations of the Securities Act. Emulex dismissed those cases when Broadcom withdrew its tender offer. click here for more »

Can antitrust law protect big companies as well as small companies and consumers?

An increasing number of large companies are discovering – as plaintiffs – that the answer is yes.

Many practitioners ascribe to the following paradigm: Antitrust enforcement is an anathema to large companies.  They point to the fact that big companies, like Microsoft, AT&T and Verizon, have repeatedly fought private plaintiffs and antitrust enforcers as defendants/respondents in civil antitrust proceedings.  But if antitrust enforcement represents inefficient, costly and intrusive forays into nullifying acts taken in an otherwise “free market,” why are these same large companies now seeking the assistance of antitrust enforcement?

Microsoft bitterly complains about Google’s dominance in Internet search, and phone companies balk at the market power of cable providers when they challenge them in video-programming and broadband markets.  One can imagine that these big company complainants, who formerly argued that plaintiffs had to satisfy high evidentiary thresholds to succeed in a monopoly maintenance or attempted monopoly case, are now revisiting that position.

Is this ironic?  Should any complaints by these large companies be given any credence in light of these companies’ former hostility to enforcement?  One would think that they should be given the same consideration as any other antitrust complaint.  If these complaints raise facts and economic theories that are consistent with the pro-consumer rationale at the heart of the Sherman Act, enforcers should act upon them.

Practitioners that specialize in antitrust enforcement may find large companies to be unlikely allies, yet still welcome their efforts to act as private attorneys general in the arena of antitrust enforcement, particularly as government enforcement efforts may be constrained in the future by our nation’s large deficit.

Plaintiffs in The Apple iPod iTunes Anti-Trust Litigation – a putative class action accusing Apple of anti-competitive conduct in the portable MP3 player market – are hoping the third time’s the charm as they again seek to convince the court they have a viable claim.

The plaintiffs have filed an amended complaint after the U.S. District Court for the Northern District of California twice rejected claims that the relationship between iTunes and iPod products constituted illegal tying.

The amended complaint argues that the relationship between Apple’s iTunes and iPod products constitutes unlawful maintenance of monopoly power and attempted monopolization under the Sherman Act, and also violates various California statutes.

According to the plaintiffs, consumers paid a higher price for iPods than they would have if competing devices had the capability to play songs from the iTunes store.  However, while the plaintiffs claim iPods are the only portable player on which songs purchased from iTunes can be played, such songs can still be played on a non-portable basis (such as directly through a computer, or through a computer linked to a receiver).  This ability of consumers to purchase and play iTunes songs without ever purchasing an iPod is the primary reason the court previously rejected plaintiffs’ tying claims.

It will be interesting to watch whether the plaintiffs’ reformed complaint survives court scrutiny.  This is especially true in light of the plaintiffs’ attempt to pursue monopolization claims against two products that the court has already ruled are not illegally tied.

It is well known in the antitrust community that the Justice Department is searching for cases to bring against dominant firms that have violated the antitrust laws.  One such firm may be Monsanto.  In fact, the prices of patented seeds sold by agribusiness giant Monsanto, which make up a majority of the seed market for some staple crops, have roughly doubled in the past decade, leading to new scrutiny by the Justice Department’s Antitrust Division.  Given the importance of those crops to the food supply, government antitrust proceedings against Monsanto could potentially have a huge impact.  Most immediately, farmers, biotech firms, and agribusiness competitors of Monsanto such as the Dow Chemical Company, DuPont, BASF or Syngenta AG, may be impacted by any decision made by the Justice Department. 

The specific issue of concern is that Monsanto’s “Roundup Ready” soybean and corn seeds, which produce plants that can survive treatment with the company’s popular weed-killer Roundup, comprise 93% and 80% of their respective markets.  Prices for these seeds have reportedly increased faster than the crop yields that the seed technology enables.  Monsanto confirmed that the Antitrust Division has recently asked the company for information, mostly relating to an antitrust claim leveled at Monsanto by its competitor DuPont in a patent infringement suit. click here for more »

 JPMorgan Chase bank, one of the world’s largest issuers of credit cards, has announced that it will abandon the controversial practice of mandatory arbitration of cardholder disputes.  The move is part of a settlement reached between Chase and consumers in an antitrust class action challenging the use of such clauses.

Like many card issuers, Chase includes language in its cardholders’ contracts that requires the parties to use private arbitration, not the courts, to resolve disputes.  That has meant that cardholders with grievances lose benefits that courts offer, including the class action mechanism.  Consumer advocates argue that the inability to bring class actions effectively meant that most cardholders could bring no action at all.  The legal fees for bringing a complaint via arbitration often exceed the total amount that may be at stake.

Chase and other issuers defend the use of arbitration clauses by arguing that they keep the issuers’ legal fees down.  Arbitration is far cheaper than litigation in court, and the less issuers spend on litigation in court, the less they must subsidize those costs by increasing fees or interest rates to cardholders. click here for more »