Regulator GLOBAL NEWS OF RELEVANCE TO EntITIES & InDIVIDUALS AffEctED BY AntItrUST ISSUES – FALL 2009, Vol. II, No. 3 IN THIS ISSUE: n Reed Smith in Antitrust History—Page 2 n Reed Smith At The Podium—Page 2 n International Update—Page 3 n Comments on China’s Guidelines on Market Definition—Page 3 n Vertical Restraints Block Exemption and Guidelines in the EU—Page 4 n Is It Time for the European Commission to Start Communicating on Information Exchange?—Page 5 n United States Update—Page 7 n U.S. Legislative Update—Page 7 n Statute Limiting Civil Antitrust Liability for Amnesty Applicants Renewed—Page 8 n FTC Challenges Proposed and Completed Acquisitions in the Health Care Industry— Page 9 n U.S. Supreme Court to Address ‘Single Entity’ Issue—Page 11 n The Third Circuit Tightens the Requirements to Certify a Class—Page 14 n Application of Twombly Standard in State Court Is Uncertain—Page 17 n Does State Action Immunity From Antitrust Laws Extend To Private Contracting Parties?—Page 19 ANTITRUST REGULATOR – FALL 2009 2 REED SMITH IN ANTITRUST HISTORY In 1911, alleging violations of the Sherman Antitrust Act, the United States n After successfully defending U.S. Steel from allegations of Sherman Act Government brought the “Great Suit”1 to dissolve the United States Steel violations in United States v. U.S. Steel Corporation,5 David A. Reed also Corporation. David A. Reed, son of firm founder James H. Reed and a future U.S. argued Kellogg Co. v. National Biscuit Co.6 in the U.S. Supreme Court. Senator, successfully defended the world’s first n Reed Smith lawyer, Edward T. Tait, served as a member of the Federal Trade billion-dollar corporation in a case that changed Commission from 1956–1960. Did you know that during his tenure as a the face of business in America. Historians have member of the FTC, the Commission was party to no less than seven antitrust noted that if U.S. Steel had been “adjudged cases before the United States Supreme Court?7 a monopoly in restraint of trade, then all big business was doomed, for the corporation, n A Richards Butler8 team successfully argued Sea Containers v. Stena Sealink,9 certainly had sought in every way to meet the first case in which the European Commission 2 fully the requirements of the law.” In a case adopted the “essential facilities” doctrine? that continues to be the bedrock of antitrust jurisprudence, the firm’s rich history, and the Future issues of the Regulator will detail these Daniel I. Booker Partner – Pittsburgh firm’s ongoing relationship with one of its most moments in antitrust history…and many more! Global Regulatory Enforcement valued clients, James H. Reed wrote: __________ My Dear Mr. Carnegie, 1 United States v. U.S. Steel, 251 U.S. 417 (1920). 2 The Great Suit has begun, and I see that you receive honorable mention as one Mary Brignano & J. Tomlinson Fort, Reed Smith: A Law Firm Celebrates 125 Years, 46 (2002). of the defendants. I presume that you will expect U.S. to look after you…and 3 Brignano 15. Chananya Kunvatanagarn file answer when the proper time comes.3 4 193 U.S. 197 (1904). Associate – Pittsburgh Commercial Litigation Eastern The “Great Suit” is just one of many Reed Smith moments in antitrust history. In 5 251 U.S. 417 (1920). an ongoing series, future issues of the Regulator will feature articles highlighting 6 305 U.S. 111 (1938). Reed Smith moments in antitrust history. Here is a taste of what’s coming up: 7 F.T.C. v. Anheuser-Busch, 363 U.S. 536 (1960); F.T.C. v. Henry Broch & Co., 363 U.S. 166 (1960); F.T.C. v. Simplicity Pattern Co., 360 U.S. 55 (1959); F.T.C. v. Mandel Brothers, Inc., 359 U.S. 385 (1959); F.T.C. v. Standard Oil Co., 355 U.S. 396 (1958); n One Reed Smith founding partner, Philander Knox, was U.S. Attorney General Moog Industries v. F.T.C., 355 U.S. 411 (1958); F.T.C. v. National Lead Co., 352 U.S. 419 in the cabinets of Presidents McKinley and Theodore Roosevelt from 1901 to (1957). 1904 and later also a U.S. Senator. Did you know that while Attorney General, 8 Richards Butler merged with Reed Smith in 2007. Mr. Knox argued the seminal case of Northern Securities Co. v. United States,4 9 Commission Decision of 21 December 1993, IV/34.689, 94/19/EC, OJ 1994 L 15/8. in front of the U.S. Supreme Court? REED SMITH AT THE PODIUM… September 10, 2009: Reed Smith’s Antitrust & Competition team hosted a Organization’s 15th Annual Conference held at Reed Smith’s London office. presentation by the U.S. Department of Justice Antitrust Division on “The new Please contact Marjorie Holmes for more information. antitrust enforcement focus of the Obama administration.” The guest speakers November 6, 2009: Michael Lowenstein will be participating in a Mock were Robert Connolly, Chief of the Antitrust Division’s Philadelphia office, and Argument on “American Needle, Inc. v. National Football League” at the Maribeth Petrizzi, Chief of the Litigation II Section of the Antitrust Division. The First Annual Great Lakes Antitrust Institute’s Hot Topics in a New Age of presentation took place in Reed Smith’s Pittsburgh office. Antitrust Enforcement seminar. Please contact Michael Lowenstein for more September 16–18, 2009: Marjorie Holmes participated in the Women’s information. International Shipping & Trade Association 2009 Diversity and Corporate Social December 3, 2009: The Reed Smith Annual Competition Forum will take place Responsibility Conference on “Regulation in the Current Financial Climate.” at Reed Smith’s London office. The guest speaker will be Sir Gerald Barling, October 7–8, 2009: Katherine Holmes will be speaking at Kaplan Hawksmere’s a judge of the High Court and President of the Competition Appeal Tribunal. Annual Conference for in-house lawyers in London on recent developments in Please contact Katherine Holmes for more information. competition law. Please contact Katherine Holmes for more information. October 22–23, 2009: Marjorie Holmes will be participating in a panel discussion on “Alliances in Shipping and Aviation” at European Maritime Law ANTITRUST REGULATOR – FALL 2009 3 INTERNATIONAL UPDATE COMMENTS ON CHINA’S GUIDELINES ON MARKET DEFINITION On 7 July 2009, the Anti-Monopoly Commission under the State Council established concepts of market definition. The Guidelines borrow from this published the “Guidelines on the Definition of a Relevant Market” (the first-hand experience of other jurisdictions and adjust it to China-specific market “Guidelines”). The Guidelines are the culmination of a process of review conditions and stage of economic development. undertaken since publication of the first draft in January 2009, and the first attempt by the Ministry of Commerce (“MOFCOM”) at providing a “scientific and Analysis reasonable” definition to guide China’s Anti-Monopoly Enforcement Agency (the Article 2 of the Guidelines reiterates the function of defining the relevant market “AMEA”) through the process of enforcement and adjudication and render such first found in the earlier draft: process more transparent and certain. The AMEA is a three-pronged structure A scientific and reasonable definition of relevant markets serves a critical role set up by the State Council whereby three important government bodies, in identifying competitors and potential competitors, as well as determining a previously with responsibility for areas now covered by the Antimonopoly Law business operator’s market share and the extent of its concentration. It also (“AML”), were brought together to form China’s enforcement agency and to share serves to identify a business operator’s market position, assisting in analysing in the proper implementation of this new piece of the impact of a business operator’s activities upon market competition, legislation. The three bodies are: (1) MOFCOM, assessing whether a business operator’s behaviour is in violation of the law responsible for handling pre-merger reviews; and the legal liabilities in case of violations etc. (2) the State Administration of Industry and Commerce (“SAIC”), with authority to investigate The Guidelines then set out the factors to be considered when defining a market. anti-monopoly agreements and abuses of market These include the product/service’s characteristics, its application, pricing and dominance excluding price-related agreements sales channels, as well as the geographic area within which different products/ or abuses; and (3) the National Development and services compete. Other factors may be relevant Reform Commission (“NDRC”) which administers depending on the circumstances. For example, in Yvonne Percival the Pricing Law with its provisions on, inter alia, cases involving intellectual property, considerations Counsel – London price fixing, price discrimination and false or such as intellectual property rights, market Shipping misleading pricing. innovation and the technology market are also taken into account. Defining the relevant market is a precondition to a proper analysis of competitive actions and is critical to the process of anti-monopoly enforcement. It follows that According to the Guidelines, the approach to the Guidelines are of considerable importance to the work of the AMEA. market definition should focus on analyzing product substitutability from both demand and supply Background Julian Chen perspectives, with the main focus on demand. Associate – Beijing Despite the central role played by market definition in the analysis of competitive The list of factors to be considered in the context Corporate & Securities behaviour, prior to the AML becoming effective on August 1, 2008, the concept of demand substitutability conforms to standard did not exist in Chinese laws and regulations. At that time, China had no international practice.