Intel Antitrust Suit Filed

Intel has been fighting an antitrust suit in Europe for years (recently getting hit with €1.06bn in fines) and now it must deal with essentially the same allegations in the United States.  According to the NY Times (found via Gizmodo, but there are more here), New York’s Attorney General–Andrew Cuomo–has filed a federal antitrust claim in the District of Delaware alleging that Intel “used bribery and coercion to maintain a stranglehold on the market.”

A copy of the 87-page complaint can be found here (PDF), and the first 77 pages or so lay out the alleged acts which led to the case being filed.   There are actually only four claims in the complaint, and only one of which is covered by the Sherman Act.  The other three claims involve New York state laws.  The Sherman Act claim alleges that Intel exercises monopoly powers, and by virtue of those powers, it “willfully maintained, and unless restrained by the Court may continue to willfully maintain, that power by anticompetitive and unreasonably exclusionary conduct.”

15 U.S.C. § 2 makes it a felony for a company or person to monopolize, or attempt to monopolize, any part of trade or commerce.  It’s punishable by up to ten years in prison, up to a million dollars in fines, or both.  But you’ll notice that this is a civil complaint, and not a criminal indictment.  This is because 15 U.S.C. § 15 gives an injured person the right to bring suit in federal court, and seek treble damages plus reasonable attorneys fees.

Naturally, Intel disputes the claims and promises to defend itself against the allegations.  (Link)

Antitrust Workshops

The last time the DOJ and the FTC devised guidelines governing horizontal mergers, it was 1992.  Seventeen years later, the agencies are coming back to the guidelines, hosting a series of workshops across the country.  (Source:  DOJ Presser.)

The topics that will be considered include:

  • the overall method of analysis used by the agencies;
  • the use of more direct forms of evidence of competitive effects;
  • market definition;
  • market shares and market concentration;
  • unilateral effects, especially in markets with differentiated products;
  • price discrimination;
  • geographic market definition;
  • the relevance of large buyers;
  • the distinction between uncommitted and committed entry;
  • the distinction between efficiencies involving fixed and marginal cost savings;
  • the non-price effects of mergers, especially the effects of mergers on innovation;
  • and remedies.

Later today, the DOJ will post a series of discussion-starting questions, which can be found here, when the page goes live.

Google Books and Antitrust Problems

The Antitrust Division of the DOJ has weighed in on the Google Books settlement, and rejection of the settlement is urged.  (See news articles on it here.)  According to the DOJ press release, “the Department proposed that the parties consider a number of changes to the agreement that may help address the United States’ concerns, including imposing limitations on the most open-ended provisions for future licensing, eliminating potential conflicts among class members, providing additional protections for unknown rights holders, addressing the concerns of foreign authors and publishers, eliminating the joint-pricing mechanisms among publishers and authors, and, whatever the settlement’s ultimate scope, providing some mechanism by which Google’s competitors can gain comparable access.”  (Source.)

But what’s actually in the Statement of Interest, which can be found here?  First, it assumes that the parties have been acting in good faith, that is “it should not be a surprise that the parties did not anticipate all of the difficult legal issues such an ambitious undertaking might raise.”  Authors Guild v. Google, No. 05-Civ-8136 (S.D.N.Y. 2009), Statement of Interest of the United States of America Regarding Proposed Class Settlement at 1.  Furthermore, it says that the basic idea is good: it would “breathe new life” into out-of-print books, which benefits the public.  Id.

Read more “Google Books and Antitrust Problems”

More on the Google Books Settlement

The Google Books settlement is generating a lot of ink over the past few days, with Microsoft wading into the waters.  According to PC Magazine, Microsoft filed objections with the Southern District of New York, arguing that Google had no right to “restructure copyright,” and that any changes should be handled by Congress.  (Microsoft posted a copy of its brief on its “Microsoft on the Issues” blog.)

Microsoft joins a fairly heavy-hitting group which objects to the settlement, including the American Law Institute (which is responsible for the various Restatements), Amazon, DC Comics, and the American Society of Media Photographers, just to name a few.

Yeah, it’s ironic that Microsoft is complaining about competition given its track record, but don’t discount its sway.  (And also don’t discount it’s probably ticked that Google is stirring things up in Europe.  Speaking of Europe, Europe isn’t so thrilled with the settlement, either…)  As Wired magazine pointed out a few months ago, Microsoft has the DOJ’s ear to a certain degree.  And given that the DOJ is investigating the settlement for competitive harm, I’m not so certain that the settlement is completely safe.

(As for whether Congress should be the ones deciding this topic, perhaps Microsoft and the others are right, but it’s not like I trust Congress to keep consumer interests in mind.  The DMCA should be proof enough of that….)

Google Books Settlement and Privacy Concerns

Google has always been a problematic company for me.  On one hand, its search engine has become the de facto starting point for the vast majority of internet users, so much so that when Google goes down (as it will from time to time), people say that the internet is broken.  (See this Ars Technica article.)  Its clean, uncluttered search interface revolutionized searching, and its results were usually spot-on, with its “I’m Feeling Lucky” feature almost always taking you where you wanted to go.  In recent years, however, my experience with Google’s ability to find what I’m looking for has dwindled as SEO services have cluttered up search results, which is why I often use Bing or Yahoo! in addition to or instead of Google.

I’ve complained before of Google’s data-mining and -tracking, as well as its emphasis on “Cloud” computing. And now, there’s a new bug in my craw: Google Books.
Read more “Google Books Settlement and Privacy Concerns”

Hiring Practices and Antitrust Concerns

It may not be as sexy as hearing that corporations have colluded with eachother to keep prices high (say in the TFT or DRAM markets), but I see in the NY Times this morning that the Antitrust Division of the Department of Justice has quietly opened an antitrust investigation into tech companies such as Google, Yahoo!, Apple, and others.  According to the Times, the direction of the inquiry is unclear, but seems to be focused on “whether the companies involved agreed to not actively recruit employees from each other.”  See?  Not very sexy.  The Washington Post apparently was the first one to mention the investigation.

Changing Antitrust Landscape

The United States Department of Justice Antitrust Division has signaled a change in how the federal government will be looking at anticompetitive behavior.  According to a press release issued today, “the Department is withdrawing, effective immediately, a report relating to monopolization offenses under the antitrust laws that was issued in September 2008. As of today, the Section 2 report will no longer be Department of Justice policy. Consumers, businesses, courts and antitrust practitioners should not rely on it as Department of Justice antitrust enforcement policy.”

Behind this shift in policy appears to be recognition that “recent developments in the marketplace should make it clear that we can no longer rely upon the marketplace alone to ensure that competition and consumers will be protected.”  

The New York Times has a little more information about the shift, including Assistant Attorney General Varney’s speech.  We are apparently about to see the return of late-90s enforcement policies, which led to suits against Intel and Microsoft.  Additionally, Google may be under the microscope, though Bloomberg states that Ms. Varney has declined to name the tech behemoth individually; speculation has been rampant as of late, however.  (See Ars Technica, TechCrunch, and others…)

Honest Services Fraud

You may hear, from time to time, about something known as “honest services fraud.”  Like “mortgage fraud,” it’s not really a crime in itself. Well, it is, but let me see if I can explain it this way.  Federally speaking,  mortgage fraud, for example, is not encompassed in one specific statute which states “it’s illegal to commit mortgage fraud, and you’ll go to jail for 20 years if you commit it.”  Instead, mortgage fraud is brought under a variety of federal criminal statutes, such as the wire, mail, or bank fraud statutes, or the false statements statutes.  But, since the activity involves mortgages, it’s called “mortgage fraud” even though there’s no specific “mortgage fraud” statute.

“Honest services fraud,” by comparison is not a specific crime encapsulated by a statute.  But!  There is a statute that states “For the purposes of this chapter, the term ‘scheme or artifice to defraud’ includes a scheme or artifice to deprive another of the intangible right of honest services.”  And this statute refers to the fraud statutes.  Thus, one can commit wire fraud by depriving another of the intangible right of honest services, and therefore, that’s why it gets called “honest services fraud.”

All this to say, the DOJ Antitrust Division says that an executive in California has pleaded guilty to committing honest services fraud by “depriving a manufacturing company of the honest services of its employee.” Yong Zhu, the president of an Ex-Im company in California “paid the employee of a manufacturing company approximately $10,000. In return, the employee provided Zhu with sensitive pricing information that assured Zhu’s company would receive subcontracting awards from the manufacturing company.”  The Antitrust Division was involved because it involves anticompetitive behavior, and the investigation is apparently ongoing.

Apple Not A Monopoly (For Now)

Hmmm…  Well, I can’t say I’m that surprised, but U.S. District Judge William Alsup has rejected Psystar’s claim that Apple is a monopolist.  (Psystar markets the OpenMac, which runs OSX on non-Apple hardware, which violates the OSX license, and thus led to them being sued for copyright infringement.) According to CNN Money, Judge “Alsup ruled Apple’s products don’t constitute a market to dominate. As a consequence, Apple then can’t be considered a monopolist.”

The problem, of course, is market definition.  And it’s not as easy as simply telling the court that the relevant market is computers running OSX, because Apple will turn around and try to convince the court that the relevant market is actually all computers, whether they run OSX, Linux, Windows, FreeBSD, or Solaris.  Clearly, then, with Apple’s miniscule (though growing) market-share amongst all computers, well, it can’t exert monopoly power when the market is defined as all computers.  And that, it appears (I haven’t looked at the order), is what has happened.

Anyway, ars technica has a little write-up, and they have thoughtfully provided the case number: 3:08-cv-03251-WHA  (N.D. Cal.)

(Justia, too, has the case number, and an as-yet non-updated reproduction of the PACER docket sheet.)

LCD Price-Fixing Followup

I had been somewhat curious about the LCD price-fixing pleas announced yesterday, because, unlike the DRAM price-fixing convictions, no executives were named.  In the DRAM prosecutions, executives from Samsung, Hynix, and Infineon all ended up pleading guilty in the third wave of that investigation.

When I took a look at the DOJ’s press release, it appears that the LCD investigation might just be beginning.  “Today’s charges were filed in U.S. District Court in San Francisco. The companies have agreed to cooperate with the Department’s ongoing antitrust investigation.”  (Link.)  And the presser rounds out by asking individuals who have information to contact the San Francisco field office.  So there’s a pretty sizable chance that, just like the DRAM prosecutions, this announcement is only the first wave.  We’ll see.