The Competitive Assessment of Vertical Mergers: The ATT/TimeWarner judgment

The decision regarding  the first challenge to a vertical merger brought by the U.S. federal government since 1979  came out recently: it is the ATT / Time Warner merger judgment, decided on 12 June, which can be found at http://www.dcd.uscourts.gov/sites/dcd/files/17-2511opinion.pdf. The DoJ’s case was that the merger would substantially lessen competition in the video programming and distribution market by enabling AT&T to use Time Warner’s ‘must have’ television content to either raise AT&T’s rivals’ video programming costs or to drive those rivals’ customers to AT&T’s video distribution channels.  ATT / Time Warner’s (the merging parties) case was that the video programming and distribution market is in the middle of a revolution where digital players such as Netflix, Amazon and Hulu are integrating video programming and distribution, while companies such as Facebook and Google are syphoning advertising from the TV to the digital space. The merger of AT&T and Time Warner would allow them to catch up to the competition –…

How to define two-sided markets? Ohio v American Express

A recent US Supreme Court decision is  likely to have an impact on antitrust practice: Ohio v American Express 585 U. S. [to be determined] (2018), available here. In short, the case is about the correct antitrust treatment of anti-steering provisions introduced by American Express (Amex) into its contracts with merchants. The United States and several States (collectively, the plaintiffs) sued Amex, claiming that its anti-steering provisions violate §1 of the Sherman Act. The District Court agreed, finding that the credit-card market should be treated as two separate markets—one for merchants and one for cardholders—and that Amex’s anti-steering provisions are anticompetitive because they prevent competition in the merchant side of the market and results in higher merchant fees. The Second Circuit reversed; it determined that the credit-card market is a single market, not two separate ones; and that Amex’s anti-steering provisions did not infringe the Sherman Act. You may remember that I reviewed the Circuit court decision almost two years…

Chinese Vitamins – Extraterritoriality and State Compulsion

This is a U.S. Supreme Court decision in the ‘Chinese Vitamins case’ (Animal Science Products, Inc. v. Hebei Welcome Pharmaceutical Co. Ltd, 585 U. S. [to be determined] (2018), available here). As to the facts of the case, in 2005 Animal Science sued Hebei Welcome. Animal Science manufactures livestock supplements, in which it uses Vitamin C. It alleged that Hebei and other Chinese manufacturers had fixed the prices of the Vitamin C that they sold to the United States. The Chinese sellers moved to dismiss the complaint on the ground that Chinese law required them to fix the price and quantity of vitamin C exports, thus shielding them from liability under U. S. antitrust law by the act of state doctrine, the foreign sovereign compulsion doctrine, and under principles of international comity. The Ministry of Commerce of the People’s Republic of China (the ‘Ministry’) filed an amicus brief explaining that it is the administrative authority authorized to regulate foreign trade,…

A Quarter Pounder tying with Cheese

I would like to refer you to a very interesting (i.e. entertaining) class action – which you can find here. In short, the claim is that McDonald’s Quarter Pounder and Double Quarter Pounder with Cheese constitutes an unlawful tying of Quarter Pounders and … cheese. While a customer may still obtain (single or double) Quarter Pounders without cheese, this is not a listed product in stores and a customer who enters into a physical store in the US will still be forced to pay the price of the (single or double) Quarter Pounder with cheese. This leads to an overcharge of 30 to 90 cents, reflecting the price McDonalds charges for the additional slices of cheese which customers ‘do not want, order, or receive’. I would point out that this requires evidence that McDonald has market power in the market for… fast food? Burgers? Fast-food burgers? Coronary-disease inducers? You may feel that this is a silly class action. But one…