The government’s inquiry focused on how Apple transformed the way publishers charge for e-books. The tech giant allowed the publishers to set the prices of books on Apple’s online store. In exchange, Apple got 30 percent of the proceeds. The pricing model gave publishers leverage over Amazon, which tried to set book sales at $9.99 when it debuted its Kindle e-reader in 2007 ….

A copy of the complaint is available here (pdf).

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Baer, who is the chair of Arnold and Porter’s Antitrust Practice Group, also previously headed the Federal Trade Commission’s competition division when it stopped a merger between Staples and Office Depot in 1997. He will replace Sharis Pozen, the acting assistant attorney general for antitrust, who plans to step down at the end of April. Pozen succeeded Christine Varney, who left last August.

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• Ky. Can’t Force AT&T To Supply Competitors: 6th Circ.
• FTC Announces Revised Thresholds For Clayton Act Antitrust Reviews
• FTC To Drop Antitrust Suit Over Lundbeck Heart Defect Drug
• DOJ Antitrust Chief At Justice Is Leaving 
• Race Under Way To Find Next DOJ Antitrust Chief

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Yet the deal collapsed anyway, and some of the backlash has been aimed at the attorneys advising the transaction. Some Wall Street pundits were quick to point fingers, particularly now that AT&T will have to cough up a $4 billion breakup fee.

The only analyst quoted is CNBC commentator Jim Cramer (always a calm, dispassionate voice of reason).  And then it quotes a bunch of other lawyers who cast doubt on the analysis that the lawyers gave the deal an all clear and advised that AT&T agree to a $ billion dollar breakup fee.  The general theory seems to be the lawyers are at fault because they presumably said with 100% confidence that the government would approve the deal.  First, I have no idea what advice the lawyers gave and neither do any of the analysts (or reporters).  It is lazy to make assumptions about this.  Second, this seems to feed into a post-breakup meme that it was a surprise that the merger was challenged by the government.  As we said at the time, and again (and this site is certainly not the one who voiced this) but a vigorous examination of the merger by the government was perhaps one of the least surprising antitrust developments of 2011.  This meme should never exist but since it does, it should die a quick death.

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An ACO is a network of doctors and hospitals that shares responsibility for providing care to patients. In the new law, an ACO would agree to manage all of the health care needs of a minimum of 5,000 Medicare beneficiaries for at least three years.

Think of it as buying a television, says Harold Miller, president and CEO of the Network for Regional Healthcare Improvement and executive director of the Center for Healthcare Quality & Payment Reform in Pittsburgh. A TV manufacturer like Sony may contract with many suppliers to build sets. Like Sony does for TVs, Miller says, an ACO would bring together the different component parts of care for the patient – primary care, specialists, hospitals, home health care, etc. – and ensure that all of the “parts work well together.”

The problem today, Miller says, is that patients are getting each part of their health care separately. “People want to buy individual circuit boards, not a whole TV,” he says. “If we can show them that the TV works better, maybe they’ll buy it,” rather than assembling a patchwork of services themselves. “But ACOs will need to prove that the overall health care product they’re creating does work better and costs less in order to encourage patients and payers to buy it.”

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One thing I found odd was this statement from the Times’ article:

“People in this town didn’t think that the department was willing to take the risk to litigate big, complex cases,” said a senior Justice Department official, who spoke on the condition of anonymity because employees were not authorized to go beyond the department’s public statement. “But this puts down a very firm marker that we are taking antitrust enforcement very seriously.”

To copy a Seth Meyers/SNL bit, really?  I mean really?

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Adding a whistleblower rewards provision is likely to be a counter-productive addition to U.S antitrust policy. It is unlikely that employees who are not engaged in cartel activity will be able to provide the Antitrust Division with the vital information needed to prosecute a cartel. The implementation of such a policy may both eliminate procompetitive collaboration among firms and result in higher internal costs to firms. Furthermore, with a whistleblower rewards program, the financial interests of the whistleblowers could supersede both the actual individuals damaged by the cartel and general public policy considerations.

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Although it does not identify the any of the settlements, which precludes anyone from evaluating the staff alleged analysis, I think it is fair to say that the FTC has not challenged 28 “pay for delay” settlements in FY 2011.  If the settlements really were anticompetitive, presumably they would have been challenged by the FTC in court.

Original Post:

The Washington Post editorial board apparently obtained a pre-release copy of “[a]n upcoming report by the Federal Trade Commission shows that brand-name pharmaceutical makers continue to cut questionable deals with generic manufacturers that delay the introduction of cheaper drugs onto the market.”  Of interest, the editorial notes that “[i]n its new report, the agency points to 28 cases that bear the telltale signs of pay-for-delay, including ‘compensation to the generic manufacturer and a restriction on the generic manufacturer’s ability to market its product.’”

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• AT&T released a statement.
• The New York Times noted that “[c]onsumer advocacy groups cheered the administration’s move” but that “[l]abor groups, however, have generally supported the merger, in part because a substantial number of AT&T employees are members of the Communication Workers of America, while T-Mobile is a largely nonunion company.”
• At All Things D, Ina Fried reports that the DOJ complaint appears to mirror, in part, T-Mobile’s advertising that -Mobile pitched itself as a scrappy and affordable alternative to big carriers, particularly AT&T, that were offering poorer service and higher prices.
• Over at Truth on the Market, Josh Wright wonders why Sprint’s stock price rose yesterday and Geoff Manne has some quick reactions to the lawsuit, including some thoughts on the relevant market(s).
• The American Antitrust Institute approves of the lawsuit arguing that the “merger would reduce the number of national competitors from four to three and result in highly concentrated markets nationwide and locally.”
• At Fortune, Scott Wooley speculates that AT&T focused on how the merger would create jobs to the (near) exclusion of the argument that it “would make the industry dramatically more efficient, slashing the cost of providing wireless service to its customers” in order to appeal to the FCC and therefore lost the antitrust argument at DOJ.

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Full details, and a link to the complaint, on the Division’s webpage.

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intensifying an investigation into whether tech giants including Apple Inc., Microsoft Corp. and Research in Motion Ltd. could use a recently acquired trove of patents to unfairly hobble competing smartphones using Google Inc.’s Android software, according to people familiar with the matter. A consortium of six companies last month paid $4.5 billion to acquire a portfolio of 6,000 patents auctioned by the bankrupt Canadian telecom equipment maker Nortel Networks Corp., thwarting Google’s interest.

This morning, Google announced it was buy Motorola Mobility for $12.5 billion.  The AP reported that:

What Google likely wants from the acquisition is Motorola’s trove of more than 17,000 patents on phone technology. Google recently lost out to a consortium that included Microsoft Corp., Apple and Research In Motion Ltd. in bidding for thousands of patents from Novell Inc., a maker of computer-networking software, and Nortel Networks, a Canadian telecom gear maker that is bankrupt and is selling itself off in pieces Motorola has nearly three times more patents than Nortel.

It appears that Google paid about 3 times the amount for 3 times the patents (plus, the not insignificant other assets of Motorola Mobility).  And the acquisition of these patents would appear to undercut the argument that the Nortel patents could be used to exclude Google from the smartphone market.  Obviously, a detailed analysis of the patent portfolios is necessary (and beyond anything we can do here) but at least on the surface, this would appear to be a market-based reaction.

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The European Commission’s second monitoring exercise of patent settlements in the pharmaceutical sector shows a continuing decline of settlements potentially problematic under EU antitrust rules. This highlights an increased awareness of so-called originator and generic companies of which types of settlements can give rise to antitrust scrutiny – generally the so-called pay-for-delay settlements – and is good news for consumers who will benefit from cheaper pharmaceuticals.

(The press release, the report and other relevant documents are available online.)

This decline in “problematic” settlements is in stark contrast to the FTC’s May report on this subject: it found a 60% increase in such settlements.  Although I am sure that the differences could technically be explained by examining things like the differences in the time periods covered, geography, definitions, etc., surely no one can dispute the dramatic differences in tone between the EC and the FTC June/May 2011 reports on this subject.

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Kirkland & Ellis LLP is pleased to announce a significant expansion of its already strong antitrust practice with the addition of former Federal Trade Commission (FTC) Chairman Tim Muris and his FTC Chief of Staff Christine Wilson to the Firm’s Washington, D.C., office. Muris is the only former FTC chairman with an active private practice.

Muris and Wilson join Kirkland from the Washington, D.C., office of O’Melveny & Myers, LLP, where Muris co-chaired the antitrust practice and Wilson was a partner. Bilal Sayyed, formerly at O’Melveny & Myers, LLP and the FTC, and Ian Conner, formerly at Hunton & Williams LLP and the Antitrust Division of the U.S. Department of Justice (DOJ), will also join Kirkland with Muris and Wilson.

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• Baker Botts welcomed 32 antitrust lawyers from Howery including Sean F.X. Boland, James F. Rill, John M. Taladay, William Bradford Reynolds, William Henry, Joseph Ostoyich, James Kress, Stephen Weissman, Paul Cuomo, Thomas D. Fine and Christopher J. MacAvoy.
• Peter Moll, Brian Wallach, Gregory Langsdale, Jessica Thompson and Elizabeth Wright all moved to Cadwalader, Wickersham & Taft‘s Washington DC office.  The first two are partners the latter three as associates.
• Several attorneys joined Mayer Brown: Carmine R. Zarlenga is a partner in the Washington, DC office and Dale Giali and Michael Resch are partners in the Los Angeles office.  Three associates went to the DC office and two associates to the Los Angeles office but I cannot seem to find thier names.
• Mike Cowie joined Dechert’s Washington, D.C. office.
• Trevor Soames, Götz Drauz, Geert Goeteyn, Stephen Mavroghenis and Miguel Rato all moved to the Brussels office of Sherman & Sterling.
• Dewey & LeBouef snagged M.J. Moltenbrey, Mark Schechter, Jacqueline I. Grise and Roxann Henry for its Washington, D.C. office.
• C. Scott Hataway joined the Washington, D.C. office of Paul Hastings.
• Julian Joshua joined the Brussels office of Steptoe & Johnson.
• Covington & Burling added John Nields, Alan Wiseman, Andrew Lazerow and Jason Raofield to its Washington, D.C. office.
• Tom McQuail joined the Brussels office of Morrison & Foerster.
• Maarten Meulenbelt joined Sidley Austin’s Brussels office.
• David R. Stewart joined Wilson Sonsini where he will be in the firm’s Seattle and Palo Alto offices.

I am sure I am missing a number of the antitrust attorneys who used to work at Howrey.  If you have details, please feel free to forward them to us.

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(i) the demotion of competing online vertical search services in Google’s natural search ranking and the preferential treatment of Google’s own online vertical search services, (ii) the demotion of the Quality Score of advertisers using Google’s AdWords platform, (iii) the imposition of exclusivity obligations on publishers participating in Google’s AdSense programme and/or on Google’s distribution partners, and (iv) the imposition of restrictions on the storage and use of advertisers’ AdWords campaign data with regard to competing online advertising platforms.

There is more.

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Under the proposed settlement and the FCC order, the joint venture must make available to online video distributors (OVDs) the same package of broadcast and cable channels that it sells to traditional video programming distributors. In addition, the joint venture must offer an OVD broadcast, cable and film content that is similar to, or better than, the content the distributor receives from any of the joint venture’s programming peers. These peers are NBC’s broadcast competitors (ABC, CBS and FOX), the largest cable programmers (News Corp., Time Warner Inc., Viacom Inc. and The Walt Disney Co.), and the largest video production studios (News Corp., Sony Corporation of America, Time Warner Inc., Viacom Inc. and The Walt Disney Co.).

In the event of a licensing dispute between the joint venture and an online video distributor, the department may seek court enforcement of the settlement or permit, in its sole discretion, the aggrieved online video distributor to pursue a commercial arbitration procedure established under the settlement. The FCC order also requires the joint venture to license content to OVDs on reasonable terms and includes an arbitration mechanism for resolving disputes. If timely arbitration is available for resolution of disputes under the FCC order, the department ordinarily will defer to the FCC’s arbitration process to resolve such disputes. The FCC order also allows Comcast’s traditional competitors, such as satellite and telephone companies, to invoke arbitration at the FCC to resolve program access and retransmission consent disputes.

The FCC has its own press release but, oddly, issues them only in pdf and Word formats (not html).  There are also separate, and one joint, statements for the individual FCC Commissioners.

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• News broke this past weekend that DOJ is looking into UPS and Fedex’s alleged refusal to work with third-party shipping consultants.
• A new edition of The Antitrust Source is out.
• The FTC (and the state of Ohio) have file a complaint challenging ProMedica Health System, Inc.’s consummated acquisition of rival St. Luke’s Hospital in Lucas County, Ohio.
• DOJ settled an investigation involving an agreement between Lucasfilm and Pixar to not “cold call each other’s employees; … notify each other when making an offer to an employee of the other company; and … when offering a position to the other company’s employee, not to counteroffer with compensation above the initial offer.“

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