By Ankur Kapoor

In the latest skirmish in the e-books case of United States v. Apple, Inc., Apple has accused the external compliance monitor appointed by the court of conducting a “roving” and “unfettered” investigation into Apple’s business practices, including seeking to interview lead designer Jony Ive and board member and former Vice President Al Gore.

Apple is now moving the U.S. District Court for the Southern District of New York to suspend the court’s appointment of the external compliance monitor pending Apple’s appeal of that appointment.  According to Apple, the monitor is not only interfering with Apple’s business by exercising wide-ranging investigative powers, but is also charging excessive fees.  In a December 13, 2013, letter to the court responding to Apple’s court filings, the U.S. Department of Justice disputed Apple’s accusations and stated that, based on the DOJ’s review, the monitor’s “actions to date have been wholly within the scope of his authority under the Final Judgment.”  Judge Denise Cote will hear oral arguments on Apple’s motion on January 13, 2014.

In its filings with the court, Apple portrays an aggressive monitor seeking to examine Apple’s internal antitrust compliance program well before the court ordered Apple to have that program in place.  While the monitor certainly needs to understand Apple’s business before he can begin to evaluate Apple’s internal compliance program, it is questionable that needing to understand Apple’s business would justify seeking interviews with individuals who have little, if anything, to do with Apple’s day-to-day business operations and antitrust compliance program.  click here for more »

The United Kingdom’s Competition Appeal Tribunal is expressing serious doubts that the British government’s plan to streamline competition appeals will actually reform the process for the better.

The Tribunal expressed its doubts and criticisms in a detailed response to the government’s plan for “Streamlining Regulatory and Competition Appeals,” which was published by the Department of Business Innovation and Skills (“BIS”) in June.  In making this response, the Tribunal cited its central role in the private enforcement of competition law in the U.K.

The BIS proposal has the announced goal of simplifying and accelerating the appellate process for both government competition authorities and regulators.  The Tribunal, however, expressed doubts that the reforms would achieve these goals, and concerns that they would be inconsistent with the approaches taken by EU courts and competition policy.

According to the Tribunal, the BIS proposal “contains little, if any, analysis of the competition system; it appears not to appreciate the significance of current expectations and developments at the European level in relation to appeals in competition cases; and it threatens to undermine a key element of the government’s current reform of the competition system.”

Although the Tribunal agreed with the goal of speeding up competition appeals, it disagreed with the government’s suggestion that its current appellate rules encouraged meritless appeals or allowed the introduction of too much new evidence on appeal.  The Tribunal stated that “We do not believe that placing specific restrictions upon the admission of such ‘new’ evidence, or upon CAT timetables or other procedures is either necessary or sensible.”

The Tribunal also criticized the proposal to lower the standard of review in competition cases.  The Tribunal disagreed with the proposal’s view that a lower standard of review was justified by the EU’s General Court standard of review for antitrust decision of the European Commission.  According to the Tribunal, the proposal “fails to take account of the way in which the EU courts are developing their own appeal procedures to comply with the fundamental requirement of compliance with the [European Convention on Human Rights], in the light of widespread and growing concern about the more limited scope which has at times been attributed to the review carried out by the General Court in that context.”  The Tribunal stated that “at a time when pressure for more intense judicial scrutiny within the EU competition regime is increasing, the government appears to be contemplating the restriction of such scrutiny in the U.K. system.”

Microsoft’s restrictions on third-party web browsers in its upcoming Windows RT mobile operating system is drawing criticism from the general counsel of the Mozilla Foundation, the non-profit organization responsible for the development of the popular Firefox web browser.

Google, which has developed its own Chrome web browser, has wasted no time in joining Mozilla’s criticism. 

Windows RT is a slimmed-down version of Windows 8, the next-generation Windows operating system due late this year.  Windows RT is specifically designed for ARM microprocessors, which are commonly used in mobile devices like tablets and smartphones.  It represents the first version of the Windows operating system not intended for the x86 architecture used in desktop and laptop computers for decades.  In short, Windows RT is Microsoft’s response to the runaway successes of Apple’s iOS and Google’s Android operating systems. 

The restrictions at issue allegedly prevent other browsers from running in Windows RT’s “classic” Windows mode, although other browsers can be used in the new Windows Metro “tiled” mode.  The controversy evokes memories of 1998, when Netscape, Mozilla’s predecessor, accused Microsoft of illegally bundling Internet Explorer with Windows 95.  The controversy led to a series of lawsuits against Microsoft, including United States v. Microsoft, and the European Commission’s investigation. 

However, 14 years have gone by, and the operating system landscape has shifted dramatically.

Nevertheless, and perhaps not surprisingly, Microsoft’s decision to restrict third-party web browsers immediately attracted the interest of the United States government and the European Commission.  The U.S. Senate Judiciary Committee is reportedly looking at Mozilla’s and Google’s allegations, and the European Commission is exploring the issue as well.  The EC is likely to invoke Microsoft’s commitment to give European Union consumers a choice of browsers, implemented as the so-called “browser ballot” agreement with the European Commission.  However, both the European and U.S. cases involved desktop and laptop operating systems, and their applicability to Windows RT is debatable. 

In addition, Microsoft’s announced restrictions on third-party applications are hardly unusual for mobile devices.  For example, through its popular App Store, Apple exerts complete control over which applications can be installed on iPhones and iPads, and Apple’s policies have been repeatedly criticized for allegedly restricting competition from third-party applications and services.

The enormous costs of expert fees in antitrust cases is proving to be both a silver lining for plaintiffs bound by class action waivers and a focal point for calls to reform the fee shifting provisions of U.S. antitrust law.

As discussed in a recent article by Constantine Cannon attorneys, the high cost of antitrust experts has led the United Sates Court of Appeals for the Second Circuit to hold a class action waiver unenforceable in the In re American Express Merchants’ Litigation, 667 F.3d 204 (2d Cir. 2012) (“In re Amex”).

Mandatory arbitration provisions and class waivers have received much judicial attention, particularly when the clauses appear in consumer contracts.  The Supreme Court’s decision in AT&T Mobility LLC v. Concepcion, 131 S.Ct. 1740 (2011) – which held that the Federal Arbitration Act preempted a California state rule finding many such clauses unenforceable on unconscionability grounds – was seen by many as support for the validity and enforceability of these clauses in consumer contracts. 

Despite the holding in Concepcion, the Second Circuit has now reaffirmed its prior decision that the class waivers found in merchant agreements found in In re Amex are unenforceable. 

The Second Circuit relied heavily on an affidavit from Dr. Gary French, an economic expert, and found that the plaintiffs had established that proceeding with their claims on an individual basis was economically infeasible.  Dr. French’s analysis showed that the high cost of the economic expert analysis necessary to successfully prosecute the case would dwarf the potential treble damages for each plaintiff and would thereby make such a strategy cost-prohibitive.

Based on this economic analysis, the Second Circuit found that private plaintiffs would effectively be deprived of the ability to vindicate their causes of action under the federal antitrust laws – making the class action waiver unenforceable. 

The Second Circuit’s decision raises another issue: a potential need to reform the fee shifting provision of the Clayton Act, 15 U.S.C. § 15(a).  The recent article by Constantine Cannon attorneys analyzes In re Amex, and considers whether the Clayton Act should be amended to shift the cost of expert fees by making such costs recoverable by successful antitrust plaintiffs.

Pressure from the U.S. meat industry and Congress has succeeded in trimming new competition rules designed to help farmers contained in the U.S. Department of Agriculture’s (“USDA”) final regulations for the Grain Inspection, Packers and Stockyards Administration (“GIPSA”).

The Food, Conservation, and Energy Act of 2008 (the “2008 Farm Bill”) required the USDA to promulgate new, and clarify existing, GIPSA regulations on a wide variety of topics.  The final regulations represent a significant retreat from the proposed rules and demonstrate the political power of large industrial meat companies.

As directed by Congress in the 2008 Farm Bill, the USDA proposed several changes to the relationship between farmers and meat packagers and processors.

Many industry observers have long criticized the power imbalance that exists between individual farmers, who have little bargaining leverage in the context of a multi-billion dollar industry, and large corporate meat dealers.  The proposed regulatory changes included rules that were intended to help level the playing field, such as creating definitions of competitive injury, unfair and unjust practices, and undue or unreasonable preferences or advantages. 

None of those provisions survived a year of heated debate and lobbying by the meat industry.

In addition to the notice and comment process, Congress intervened before the USDA published its final rule to prohibit the agency from passing most of the competition-related reforms.  The provisions that did make it into the final rule, such as allowing farmers to decline mandatory arbitration provisions in growing contracts, have come under heavy criticism, and the meat industry will likely continue to push for their repeal or modification.