2003 Antitrust Law Section Symposium
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NYSBA 2003 Antitrust Law Section Symposium January 23, 2003 New York Marriott Marquis NEW YORK STATE BAR ASSOCIATION ANTITRUST LAW SECTION ANNUAL MEETING Thursday, January 23, 2003 New York Marriott Marquis New York City Section Chair Program Chair STEVEN M. EDWARDS, ESQ. PAMELA JONES HARBOUR, ESQ. Hogan & Hartson LLP Kaye Scholer LLP New York City New York City Dinner Speaker ORSON SWINDLE Commissioner Federal Trade Commission Washington, DC TABLE OF CONTENTS ANNUAL REVIEW OF ANTITRUST DEVELOPMENTS......................................1 William T. Lifland, Esq. Cahill, Gordon & Reindel New York City Stephen D. Houck, Esq. Reboul, MacMurray, Hewitt, Maynard & Kristol New York City Professor Edward D. Cavanagh St. John’s University School of Law Queens, NY UNITED STATES v. TAUBMAN AND BEYOND: RECENT TRENDS IN CRIMINAL ENFORCEMENT...........................................10 Panel Chair: Steven Tugander, Esq. Antitrust Division United States Department of Justice New York City Panelists: John J. Greene, Esq. Antitrust Division United States Department of Justice New York City Ralph T. Giordano, Esq. Chief, New York Field Office Antitrust Division United States Department of Justice New York City Scott D. Hammond, Esq. Director of Criminal Enforcement Antitrust Division United States Department of Justice Washington, DC William J. Linklater, Esq. Baker & McKenzie Chicago, IL Gary R. Spratling, Esq. Gibson, Dunn & Crutcher LLP San Francisco, CA Dr. Stephen D. Prowse Principal, KPMG Forensic Dallas, TX ANTITRUST FEDERALISM REVISITED................................................................26 Panel Chair: Lloyd Constantine, Esq. Constantine & Partners New York City Panelists: Honorable Eliot Spitzer Attorney General of the State of New York Honorable Deborah P. Majoras Deputy Assistant Attorney General Antitrust Division United States Department of Justice Washington, DC Michael L. Denger, Esq. Gibson, Dunn & Crutcher LLP Washington, DC ANTITRUST DINNER.................................................................................................53 Service Award Recipient: David Boies, Esq. Boies Schiller & Flexner LLP Armonk, NY Dinner Speaker: Orson Swindle Commissioner Federal Trade Commission Washington, DC Section Business Meeting, Election of Officers and Members of the Executive Committee MR. EDWARDS: Okay, we are going to begin. It is The committee also nominates the following indi- my job to call the business meeting to order. We are a viduals to be newly elected to the Executive Committee very flexible and informal organization. Normally at a to serve one-year terms to end on the date of the Annu- business meeting like this you start with the reading of al Meeting in 2004. David Copeland, Dara Diomande, the minutes and then the approval of the minutes, but Susan Raitt. nobody can find the minutes, so we’ll dispense with the If I could have a motion from the floor from a mem- minutes. And I guess my only role here this morning is ber of the Section to nominate those individuals. to introduce the incoming Chair, Pamela Jones Harbour. AUDIENCE MEMBER: So moved. MS. JONES HARBOUR: Thank you very much, Steve. MS. GIFFORD: Second? It is my pleasure to be incoming Chair, and also AUDIENCE MEMBER: Second. Program Chair of today’s Antitrust Law Section’s Annual Meeting. Before we begin our program, we are MS. GIFFORD: All Section members in favor of the going to take just a few minutes to conduct Section election of those individuals, please say aye. business, and I would like to ask Meg Gifford, a mem- (Members voted aye.) ber of the Nominating Committee, to read the report on the election of the officers and new Executive Commit- MS. GIFFORD: Thank you. Now, finally, the Nomi- tee members. Meg. nations Committee also nominates the following mem- bers of the Executive Committee for election to one-year MS. GIFFORD: Thank you, Pamela. Thank you, terms in the offices that I will identify. And I will ask Steve. each of the nominees for an office to stand briefly. Good morning. This is the report of the Nominating Pamela Jones Harbour for Chair of the Section. Barbara Committee. The committee nominates the following Anthony, Vice Chair and Program Chair. I believe Bar- current members of the Executive Committee for reelec- bara is not here yet. And Steven Tugander, Secretary. tion to a one-year term to end on the date of the Annual Thank you. May I have a motion to elect those individ- Meeting in 2004. Bear with me, I need to read a long list uals to those offices. of names. AUDIENCE MEMBER: So moved. Barbara Anthony, Kevin Arquit, Michael Bloom, MS. GIFFORD: Second? Linda Blumkin, Molly Boast, Barry Brett, Edward Cavanagh, Bruce Colbath, Lloyd Constantine, John AUDIENCE MEMBER: Second. Desiderio, Steven Edwards, Howard Ellins, Harry First, MS. GIFFORD: All in favor? Lawrence Fox, Martha Gifford, Ilene Gotts, Pamela Jones Harbour, David Hayes, John Herfort, Stephen (Members voted aye.) Houck, Robert Hubbard, Norma Levy, William Lifland, Joseph Lipofsky, Kenneth Logan, Stephen Madsen, Saul MS. GIFFORD: Thank you very much and congrat- Morgenstern, Kenneth Newman, Bernard Persky, ulations to everyone. Bruce Prager, Yvonne Quinn, Moses Silverman, Steven MS. JONES HARBOUR: Thank you, Meg. The Tugander, Vernon Vig, Michael Weiner, Alan Weinschel. report of the Nominating Committee has been adopted. Annual Review of Antitrust Developments MS. JONES HARBOUR: In my first official act as and have chosen to focus on market definition in Section Chair it is my pleasure to present to you three monopoly cases. excellent programs today. You’ll note that the familiar In one case the Ninth Circuit ruled that the product half-day format has been replaced this year by a full day market in issue could be limited to branded goods and of programs. exclude unbranded goods where customers recognized Our first panel is the Annual Review of Antitrust the branded goods as a separate economic entity for Developments. Our panel consists of Bill Lifland of which they would pay more money.1 This was a case Cahill, Gordon & Reindel. Earlier in his career, Bill involving tires for vintage cars. clerked for United States Supreme Court Justice Harland. He is currently an adjunct professor at Fordham Law Not everyone would go so far as to say that because School where he has taught for more than 20 years. Bill customers were willing to pay more there was a separate was the first recipient of the Section’s Service Award and market for the branded product, as a brand preference has been presenting the Annual Review for us as a does not a market make. But there appear to have been 2 perennial favorite for many, many years. other cases, such as a Tenth Circuit ruling that also adopted a market-limited approach. Steve Houck will provide commentary during Bill’s presentation. Steve is a former partner of Donovan Much more common than rulings approving restrict- Leisure. He is a past Chair of this Section. Steve served ing the market are rulings criticizing proposed restrictive as Chief of the New York State Attorney General’s definitions which serve to exaggerate the market influ- 3 Antitrust Bureau where he was originally trial counsel ence of the challenged party. Those kinds of definitions for the 19 plaintiff states in the Microsoft litigation. Steve inflate market share and urge courts to find power is currently a partner with the law firm of Reboul, Mac- where none exists. Murray, Hewitt, Maynard & Kristol. An example is a case involving retailers of jeans and Also providing commentary will be Ned Cavanagh. T-shirts in a relatively small area of Chicago. The Sev- Ned is a professor of law at St. John’s University and of enth Circuit described the market as “absurdly small” counsel to Morgan Lewis & Bockius. He is also past and was unwilling to assume that Chicago consumers Chair of this Section. Ned is a reporter for the Eastern would disappear into a “black hole” once they left their 4 District of New York’s Special Committee on Ethics. He regular neighborhoods. has published many articles focusing primarily on Some other courts seem unwilling to draw inferences antitrust and federal practice issues. from statistics not clearly pertinent. Witness the Eleventh I will now turn the podium over to Bill Lifland. Circuit’s upholding a directed verdict for a brewer with a 48 percent market share that was charged with MR. LIFLAND: Thank you, Pam. This part of the restraining trade by prohibiting public ownership of its program highlights a group of about 30 cases that are distributors. The court said that market power as to beer included in the endnotes. We can’t go deeply into all of did not automatically translate into market power as to them, and we won’t even mention some of them, but ownership interests in beer distributors unless the two they serve as one version of the most significant cases of markets were connected.5 the year. The selection is more or less arbitrary, so please do not be offended if your favorite case, particularly one There was another Eleventh Circuit ruling that cast you’ve won, has been omitted. doubt on the proposition that an elevated return on assets could be used as an indicator of market power. We have tried to include some cases on monopoly, The evidence was that defendant’s estimated rate of some on conspiracy, some on foreign commerce and so return on its assets for a two-year period was substan- on. tially greater than the average rate of return for Fortune 500 companies. The court said that even if return on Monopoly assets could be used to measure market power, the appropriate comparison would be between the preda- Everyone will agree that a key building block of an tor’s return and the return of similar firms in the same or antitrust case is a properly defined relevant market. That similar industries over the course of several years.6 tends to be true in monopoly cases as well as in acquisi- tion cases, and even in some conspiracy cases.