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

Take Google to Court, Staff Report Urged F.T.C.  The Federal Trade Commission is facing renewed questions about its handling of its antitrust investigation into Google, after documents revealed that an internal report had recommended stronger action.  The 2012 report, from the FTC’s bureau of competition, recommended suing the Internet search giant for anticompetitive practices, according to anonymous sources who saw the report.  In early 2013, the FTC voted unanimously against bringing charges after an investigation.  Google’s critics and competitors are arguing that the FTC failed to take appropriate action, and are urging the European Union to take action to rein in Google.

Tour Bus Companies Agree to Settle Antitrust Lawsuit.  Two of New York City’s biggest tour bus operators have agreed to pay $7.5 million and give up almost 50 of their stops in Manhattan to settle antitrust claims brought by the U.S. Department of Justice and the New York State Attorney General.  The proposed settlement could reshape an industry that was allegedly monopolized after the two companies, City Sights and Gray Line New York, formed a joint venture called Twin America.

Sysco, FTC Battle Over What Stays Secret in Antitrust Tussle.  Sysco is accusing the Federal Trade Commission of failing to provide necessary information about its witnesses in advance of a hearing that will be crucial in determining whether the food distributor can rescue its merger with rival US Foods Inc.  The FTC filed a lawsuit in February asking the U.S. District Court for the District of Columbia for a preliminary injunction blocking the $3.5 billion merger while an FTC administrative law judge holds a parallel proceeding to determine if the deal should be scrapped.

By Allison F. Sheedy

Sysco Corp. announced a divestiture plan this week that it claims should address concerns of the Federal Trade Commission (the “FTC”) about the food behemoth’s proposed acquisition of US Foods, which would combine the two largest food distributors in the United States.

Sysco, the nation’s largest food distributor, said on Monday that it is prepared to sell 11 US Foods distribution centers in the West and Midwest to smaller competitor Performance Foods Group, should the FTC approve its pending deal, which would give Sysco more than 25% of the national market, before divestitures, in the business of buying food and other supplies and selling them to restaurants, hospitals and other institutions. The company has been in discussions with the FTC for over a year with no resolution in sight. What does this proposed divestiture mean for the deal?

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A View from Constantine Cannon’s London Office

By Irene Fraile and Ankur Kapoor

The European Union may be on the verge of embracing “umbrella liability”—a theory of liability that would significantly increase the exposure of members of anticompetitive cartels.

The European Court of Justice is being urged by one of its advocates general to hold that, under EU law, victims of cartels can seek damages from cartel members for higher prices paid to non-cartel members that were able to raise their prices under the pricing “umbrella” created by the cartel. If the Court of Justice endorses such umbrella liability, antitrust liability in the EU could diverge from the approach evolving in U.S. courts which have been reluctant to embrace umbrella liability. click here for more »

By Allison F. Sheedy

The U.S. District Court for the Southern District of New York has dismissed antitrust claims against Amazon and the six largest book publishers related to the publishers’ contracts with Amazon for the distribution of e-books requiring the use of digital rights management software (“DRM”) in The Bookhouse of Stuyvesant Plaza, Inc. et al. v. Amazon.com, Inc. et al.

The Bookhouse plaintiffs are independent bookstores that sell both print books and e-books.  They alleged claims of unlawful restraints of trade under Section 1 of the Sherman Act against all defendants, and claims of monopolization and attempted monopolization under Section 2 of the Sherman Act against Amazon.

Generally speaking, DRM limits the ability to use digital content after its sale.  The plaintiffs alleged that Amazon, manufacturer of the Kindle e-reader, employed more restrictive DRM technology than required by its agreements with the six publisher defendants – Random House Inc., Penguin Group (USA) Inc., Hachette Book Group USA Inc., Simon & Schuster Inc., HarperCollins Publishers LLC and Macmillan Publishers Inc.  Plaintiffs claimed that this DRM technology effectively restricted the devices on which e-books sold and distributed by Amazon could be read, which rendered Amazon’s e-book platform a “closed ecosystem.”  click here for more »

The U.S. Court of Appeals for the Tenth Circuit has rejected Novell, Inc.’s bid to resurrect its antitrust claims accusing Microsoft Corporation of maintaining its monopoly in the operating systems market by withdrawing its support for WordPerfect and other Novell applications.

The Court affirmed the decision of the U.S. District Court for the District of Utah in Novell v. Microsoft Corp. granting Microsoft judgment as a matter of law on Novell’s antitrust claims after a hung jury failed to return a verdict at trial.

In November 2004, Novell filed its antitrust complaint alleging that in the 1990s Microsoft engaged in anticompetitive conduct that caused WordPerfect—a dominant word processor in the 1980s and early 1990s—to lose market share to Microsoft Word.  Novell claimed that Microsoft’s conduct in the 1990s damaged its business and forced the company to sell WordPerfect and other software programs to Corel Corp. at a loss of more than $1 billion.

Novell’s claim that Microsoft sought or maintained a monopoly in a market for applications generally, or office suite applications more particularly, was dismissed on the ground that the statute of limitations for conduct back in the 1990s had long since run.

Novell sought to keep its antitrust claims alive by alleging that Microsoft had maintained its monopoly in the operating systems market by withdrawing its support for WordPerfect and other Novell applications—which support had made it easy for consumers to use those applications on Microsoft operating systems.  Although this claim was also based on Microsoft’s conduct in the 1990s, it was not barred by the statute of limitations because the statute was tolled on such a claim as a result of the U.S. government’s long-running antitrust case against Microsoft based on allegations of monopolization of the operating systems market.  Although Novell was permitted to bring this claim to trial, the jury deadlocked on the claim, and then the district court dismissed it as a matter of law.

The Tenth Circuit agreed with the district court’s ruling that, as a matter of law, Novell could not show that Microsoft’s withdrawal of Windows 95 support for Novell applications was monopoly behavior in violation of Section 2 Sherman Act.  The Court noted that the Supreme Court and the Tenth Circuit have rejected the idea that an alleged monopolist must give a helping hand to rivals.  The Court stated that “the proper focus of Section 2 isn’t on protecting the competitors but on protecting the process of competition, with the interests of the consumers, not competitors, in mind.”

The Court relied on the general rule that a company is free to decide with whom to assist or deal, rejecting Novell’s claim that it came within the exception set forth in the U.S. Supreme Court’s decision in Aspen Skiing Co. v. Aspen Highlands Skiing Corp.  Under Aspen, a monopolist can be found to have violated the Sherman Act if it ends a voluntary, profitable business relationship with a rival solely to attain an anticompetitive end, which cost the monopolist short term profits.  However, the Tenth Circuit held that Novell failed to prove that Microsoft willingly gave up short-term profits when it withdrew its support for Novell applications.  The Court stated that “to the contrary, all the evidence suggests that Microsoft’s decision came about as a result of a desire to maximize the company’s immediate and overall profits.”