The case pending before the regional court in Düsseldorf concerns a thirty-year cartel of cement companies, and is being brought on behalf of 29 of the largest customers by Cartel Damage Claims (CDC). CDC is a Belgian claims consolidator, which is seeking over 100 million Euros in the action.

The  Düsseldorf court of appeals ruled yesterday that the collective action brought by the claims consolidator is admissible, upholding the ruling of the regional court. No leave to appeal was granted. The ruling means that the substantive case will go forward. The press release in German can be found here.

Bloomberg reports that China

will become a full member of the International Competition Network within a year, said Philip Collins, head of the Office of Fair Trading, in an April 10 interview in London. The move comes as China is taking steps to bring its competition laws in line with other nations, he said.

Following up on a previous post, here’s a brief article on China that I co-authored. The current edition of the Antitrust Magazine also has very useful, in depth discussions of China’s Anti-Monopoly Law by Lester Ross, Fei Deng, and Gregory Leonard. Amazingly, the ABA still does not offer a useful online version. If anyone could explain to me the logic of restricting access to these articles, please educate me. For authors, the restrictive ABA publication polices are a bad deal.

China’s Legislative Affairs Office of the State Council recently clarified certain key provisions relating to merger control in the Anti-Monopoly Law, which will come into force on August 1, 2008. One of the stranger pronouncements is that “being the largest shareholder” now qualifies as an “acquisition of control” and thus as a concentration. That makes no sense. There’s no connection between “being the largest shareholder” and a change in control. A pension fund holding 5% of a public company may well be its largest shareholder, but that doesn’t mean that it exercises any competitively relevant measure of control. Moreover, I can find myself in the position of being the largest shareholder just by virtue of the fact that someone else sold off their holdings. The public comment period expires on April 12, 2008, and I’m sure that this “clarification” will receive its fair share of hate mail attention.

Of the many comments on the Chinese draft regulations, here are two that I found particularly noteworthy/peculiar:

Lester Ross, a partner in charge of the Beijing office of law firm WilmerHale, agreed it was unwise to use annual sales as a threshold. He said antitrust laws in most key jurisdictions focused on the size of the deal rather than on sales. “Sales have nothing to do with [whether there is a] monopoly,” Mr Ross said. “The rules should focus on the size of the transaction.”

It seems to me that the US is pretty much the only key jurisdiction that does not focus on revenues. In fact, staggered combined revenue tests are by far the most common and sensible way to design notification thresholds. The size of a transaction tells us nothing about the competitive impact. Combined sales, in contrast, are a pretty reasonable proxy. The same article offers further surprising insights:

Wang Xiaojun, a principal of law firm XJ Wang, said the threshold should focus more on market share rather than revenue.

Market share thresholds are even worse than size of transaction thresholds. The latter are somewhat pointless but at least they are easy to apply. The former, in contrast, are a complete pain, which is why the ICN has consistently counseled to abolish them.

From the AP (via the Washington Post):

The European Union fined Microsoft Corp. a record $1.3 billion Wednesday for the amount it charges rivals for software information.

EU regulators said the company charged “unreasonable prices” until last October to software developers who wanted to make products compatible with the Windows desktop operating system.

The fine is the largest ever for a single company and brings to just under $2.5 billion the amount the EU has demanded Microsoft pay in a long-running antitrust dispute.

Microsoft immediately said the issues for which it was fined have been resolved and the company was making its products more open.

The fine comes less that a week after Microsoft said it would share more information about its products and technology in an effort to make it work better with rivals’ software and meet the demands of antitrust regulators in Europe.

…

Microsoft fought hard against a March 2004 decision that led to a 497 million euro ($613 million) fine and an order that the software maker share interoperability information with rivals within 120 days. The company lost its appeal in that case in September.

Microsoft was fined $357 million in July 2006 for failing to obey that order.

The EU alleged that Microsoft withheld crucial interoperability information for desktop PC software _ where it is the world’s leading supplier _ in an effort squeeze into a new market and damage rivals.

The company delayed compliance for three years, the EU said, only making changes in October to the patent licenses for companies that need data to create software that works with Microsoft.

Microsoft had initially set a royalty rate of 3.87 percent of a licensee’s product revenues for patents and demanded that companies looking for communication information _ which it said was highly secret _ pay 2.98 percent of their products’ revenues.

The EU complained last March that the rates were unfair. Under threat of fines, Microsoft two months later reduced the patent rate to 0.7 percent and the information license to 0.5 percent _ but only in Europe, leaving the worldwide rates unchanged.

The EU’s Court of First Instance ruling that upheld regulators’ views changed the company’s mind again in October when it offered a new license for interoperability information for a flat fee of 10,000 euros ($14,900) and an optional worldwide patent license for a reduced royalty of 0.4 percent.

Microsoft does not yet have a statement about this on its website, but one should appear here shortly.

Thomas Barnett, the Assistant Attorney General for Antitrust, gave a speech in Germany yesterday, during the celebration for 50 years of the German Competition Act. Did you know that the Germans had premerger notification before the U.S. did? Here is a taste from the speech:

Dr. Franz Bohm, a prominent German thinker and champion of the ARC, once observed that ‘a free market economy resembles a monarchy in that the consumer is the king.’ In substance, this sentiment closely mirrors the U.S. commitment to consumer welfare as the foundation of a free market.

With the adoption of the ARC, the newly-established BKA instantly became the preeminent model of an independent, court-like expert administrative body. The BKA’s first President, Dr. Eberhard Gunther, held his post for eighteen years — an extraordinarily long tenure — and set the BKA on a firm foundation. One of the great strengths of the German antitrust regime has been that the BKA is insulated from political considerations. Any ministerial overruling of its decisions on non-competition grounds is open and transparent, clearly exposing the trade-off between competition and other policies for healthy debate. This has surely been an important confidence-building measure for German consumers and businesses alike.

…
Germany has also played a leading role in the development of EuropeanCommunity competition law as a source of highly-qualified enforcementofficials, having provided the first Commissioner responsible forcompetition policy (Dr. Hans von der Groeben) and a stellar series ofDirectors-General for Competition (including Drs. Manfred Caspari, ClausEhlermann, and Alexander Schaub). And last, but not least, while we in theU.S. often think that we invented premerger notification, in fact theGerman merger notification regime was established in 1973, three yearsbefore our Hart-Scott-Rodino Act, and 16 years before the EC’s MergerControl Regulation.

Barnett then makes some remarks on unilateral conduct, and concludes:

Turning back to the occasion for our celebration today, I emphasizethat overall we have much in common. The BKA has long pursued anti-cartelenforcement, has become a firm proponent of serious economic analysis, andcontinues to expand the role and number of its economists.

The U.S. and German agencies face many common antitrust challengestoday, and we must continue to work closely together in the future.International cartels disrupt the efficient working of our economies, andwe need to expand our cooperation even further, coordinating our leniencyprograms and ensuring that our criminal and administrative approaches worktogether to achieve maximum deterrence. The role of private antitrustenforcement seems likely to grow in Germany, and the European Union as awhole, and European courts thus will have to address some of theprocedural, jurisdictional and comity issues that have already arisen inU.S. courts.

According to the Wall Street Journal:

European Union investigators raided drug companies in several countries as the bloc’s antitrust watchdog launched a wide investigation of potentially anticompetitive practices in the industry.

Neelie Kroes, the EU antitrust chief, said the industry-wide inquiry would examine whether large companies are abusing their market power to prevent competitors from bringing new drugs to market, or whether companies were colluding to restrain competition.

AstraZeneca PLC, GlaxoSmithKline PLC, Sanofi-Aventis SA, and Pfizer Inc. said they were among the companies contacted, although the commission did not name the companies searched Tuesday and early Wednesday, nor where they were located.

The EU’s so-called sector inquiries are broad-brush examinations; they don’t necessarily lead regulators to bring antitrust cases, but can result in substantial fines. Recent sector inquiries have focused on energy markets and payment-card systems. Both eventually resulted in antitrust action — most recently in the EU’s declaring unlawful a type of interbank fee set by MasterCard.

…

The EU began the sector inquiry with unannounced inspections — triggering the first ones within hours of the commission’s decision Wednesday to authorize the inquiry. In earlier sector inquiries, EU officials had begun more politely, with requests for information.

Bloomberg also has a report.

The Commission’s press release is here; and the Commission’s FAQ on its antitrust sector inquiry into pharmaceuticals is here.

According to the AP (via the Washington Post):

Microsoft Corp. dropped a nearly decade-long legal battle with European regulators Monday, agreeing to key parts of an antitrust ruling that has already led to hundreds of millions in fines.

The world’s largest software company will slash the royalty fees it charges rivals for critical interoperability information needed to make programs that work smoothly with Microsoft’s ubiquitous Windows. It will broaden access for open source developers that the EU said are now “virtually the only alternative for users.”

Microsoft said it would not appeal a EU Court of First Instance decision on Sept. 17 that turned down its challenge to a 2004 European Commission order three years ago that found it guilty of monopoly abuse.

…

The company will now charge a one-time fee of 10,000 euros ($14,310) to any developer _ including those working on open source systems such as Linux _ for “complete and accurate” technical information to help make software compatible with Microsoft’s Windows desktop operating system. It had previously demanded a percentage of future sales.

Developers _ such as IBM Corp. and Sun Microsystems Inc. _ which sell software based on Linux will pay a worldwide patent fee of 0.4 percent of revenues for Microsoft’s data. Microsoft’s original rate was 5.95 percent.

Microsoft will now charge for only 31 server protocols under patent instead of the 154 originally offered for licensing.

Earlier this week, the European Commission searched the offices of several freight forwarders and at least one US freight forwarder confirmed it the Department of Justice subpoenaed it.  As reported by the Wall Street Journal:

A slew of freight forwarders including Switzerland-based Kuehne & Nagel International AG and Panalpina Welttransport Holding AG have been searched as part of a U.S. and European probe into pricing practices.

The European Commission said Wednesday that it carried out unannounced inspections at the offices of several international freight-forwarding companies without naming them, saying it has “reason to believe that the companies concerned may have violated EC Treaty rules that outlaw restrictive business practices.” Freight forwarders make delivery arrangements for shipping companies.

The raids were sparked by information received from an unidentified person, who tipped EU, U.S. and Swiss authorities to alleged cartel behavior, said Patrik Ducrey, deputy director of Switzerland’s competition authority.

…

DHL, an international shipping unit of Deutsche Post AG, said European authorities had contacted the company, but it didn’t provide further detail. The investigation centers on whether the freight forwarders fixed prices for fuel and other surcharges, Kuehne & Nagel Chief Financial Officer Gerard van Kesteren said Wednesday.

…

In the U.S., international freight-forwarding and logistics company Expeditors International of Washington Inc. said Wednesday that it received a subpoena from the Justice Department ordering the company to produce information and records relating to an investigation of air-cargo freight forwarders. The company said it intends to work with the Justice Department.

The UK’s Office of Fair Trading has issued a statement of objections, which charges that several UK supermarket operators and dairy processors have been keeping the price of milk and dairy products artificially high. This SO was issued to Asda, Morrisons, Safeway, Sainsbury and Tesco, as well as dairy processors Arla, Dairy Crest, Lactalis McLelland, The Cheese Company and Wiseman.

The provisional finding is that these supermarkets and dairy processors engaged in fixing the retail prices for milk, butter and cheese, in breach of the Competition Act, by sharing highly commercially sensitive information, including details of the levels of price increases, over a two year period (2002 and 2003).

The press release is here.

As the Global Competition Review ($) reports, China has adopted a new competition law. The law will be effective in a year (August 1, 2008).

“It definitely has a full complement of antitrust bells and whistles,” says Abbott B “Tad” Lipsky of Latham & Watkins LLP. “As far as its substantive standards are concerned, it’s well within hailing distance of international standards and, beside a couple of wrinkles, would be more or less recognisable to a US or EU competition lawyer.”

The WSJ has background, and raises some questions about the new law:

Some see it as a tool that can aid domestic and government-owned companies and protect them from inroads by foreign multinationals. Accelerating inflation this year has also led to renewed official interest in controlling price increases by manufacturers.

Yet other local proponents see the antitrust code as a way to bring more competition and openness to the Chinese economy, many parts of which are still dominated by the state.  . . .

Whether the law lives up to that promise depends less on the language that is finally approved by legislators and more on the priorities of future Chinese administrations. And in the last couple years, foreign investment in China has come under increasing political scrutiny, as leaders worry less about attracting money from abroad and more about supporting emerging local companies.

The always interesting Sports Law Blog wonders if Michael Vick will also be banned from the Canadian Football League as well as the NFL. 

Since the NFL announced its suspension of Michael Vick, many of my esteemed colleagues have presumed that Vick will also get banned from the Canadian Football League (”CFL”) based on the “Ricky Williams Rule,” which prevents any player suspended by the NFL from entering the CFL.

But is there an antitrust problem?

Isn’t it true that an agreement amongst all of the teams in a pro sports league to boycott a class of players would indicate a prima facie case of an antitrust violation? Isn’t it also the case that the CFL has market power in the labor market for players banned by the NFL (presuming that issue is even relevant) because NFL teams are not part of the viable market for such players’ services?

… under antitrust law, there are less restrictive alternatives for the CFL to prevent the entry of troublesome players, such as for the CFL to review the candidacy of each prospective player on a case-by-case basis. A case-by-case review of players banned by the NFL would make more sense given that the CFL has already “grandfathered” players that are currently playing in the CFL but previously banned from the NFL. In a statement that may prove especially damning to the CFL, the CFL in November of 2006 stated that “one of the reasons for the ban is to maintain a good relationship with the NFL.”

Indeed, the biggest challenge to bringing a suit against the CFL may involve proving U.S.-based anti-competitive effects given that much of this allegedly anti-competitive conduct occurred outside of the United States.  However, given that most of the football players that would be banned from the CFL under this rule live in the United States, as well as that some of the CFL fans reside in the United States, and that CFL games are broadcast into the American market through Dish Network, DirecTV and America One, these concerns should not prevent a bona fide antitrust challenge against the Ricky Williams Rule in United States federal courts.

Of course, the question is a slightly premature as Vick will have to serve twelve to eighteen (at least) first.

Nicolas Sarkozy won the French presidential election yesterday.  American presidents, and Presidential candidates rarely mention antitrust (or competition) law, but the same is not true in France.  The Antitrust Hotch Potch notes that although antitrust/competition law was not mentioned during the televised debate between Sarkozy and Ségolène Royal, but they did express their views in a Revue Concurrence questionnaire.

On Wednesday, the Department of Justice announced that it had arrested eight executives and charged them “for their role in a conspiracy to rig bids, fix prices, and allocate markets for United States sales of marine hose used to transport oil.” The press release also states that:

A criminal complaint was unsealed today in U.S. District Court in Miami, against four executives: Peter Whittle, owner of the U.K.-based consulting firm PW Consulting (Oil & Marine) Ltd.; Bryan Allison, managing director, and David Brammar, sales and marketing director, both of the U.K. company Dunlop Oil & Marine Ltd.; and Jacques Cognard, the oil and marine manager of Trelleborg Industrie S.A. in France. A separate criminal complaint was filed late last night in U.S. District Court in Ft. Lauderdale, Fla. against four executives: Christian Caleca, the president of the Industrial Hose Business Unit of Trelleborg Industrie S.A. in France; Vanni Scodeggio, a business unit manager at Parker ITR slr in Italy; Francesco Scaglia, a product manager at Manuli Rubber Industries SpA in Italy; and Misao Hioki, an executive involved in the sale of marine hose for Bridgestone Corporation in Japan. According to the criminal complaints, the charged executives participated in the conspiracy at various times during the period from at least 1999 to the present. … Marine hose is a flexible rubber hose used to transport oil between tankers and storage facilities and buoys. Marine hose is purchased by companies such as Shell, Exxon, and Chevron that are involved in the off-shore extraction and transportation of petroleum products. It is also purchased and used by the Department of Defense. Court papers allege that during the conspiracy the conspirators sold hundreds of millions of dollars worth of marine hose and related products. According to the affidavit filed in support of the criminal complaint charging Whittle, Allison, Brammar and Cognard, the conspirators met in locations such as Key Largo, Fla., Bangkok, and London. At these meetings, the conspirators discussed and agreed to the rules for implementing their bid-rigging, price-fixing and allocation scheme. They also allegedly kept agendas and detailed “minutes” of cartel meetings.

Technorati Tags: antitrust, price fixing, marine hose, more exciting than the cement industry price fixing cases DOJ has recently been bringing

Yesterday, the House held a hearing on House Bill 1902 which would “prohibit brand name drug companies from compensating generic drug companies to delay the entry of a generic drug into the market ….”  The House Committee on Energy and Commerce heard from FTC Commissioner Leibowitz, Mike Wroblewski of Consumers Union, Professor Scott Hemphill (Columbia Law), Phillip Proger of Jones Day, Ted Whitehouse of Willkie Farr, and Bernard Sherman, CEO of Apotex.  The AP (via Forbes.com) has a short article about the hearing.

In other Congressional antitrust news, last week the Senate Judiciary Committee passed Senate Bill 879 which would “amend the Sherman Act to make oil-producing and exporting cartels illegal.”  As Trade Regulation Talk explains, the bill

would allow the federal government to take legal action against foreign states, including members of OPEC, for price fixing and artificially limiting the amount of available oil. … The bill, which would amend the Sherman Act, would clear the way for the federal courts to hear antitrust suits against OPEC, according to Senator Herb Kohl, the bill’s sponsor and chairman of the Judiciary Committee’s Antitrust, Competition Policy and Consumer Rights Subcommittee.