Source: http://www.techlawjournal.com/alert/2011/07/11.asp
Timestamp: 2019-04-19 04:19:22+00:00

Document:
TLJ Daily E-Mail Alert No. 2,255, July 11, 2011.
July 11, 2011, Alert No. 2,255.
7/6. Christine Varney, Assistant Attorney General (AAG) in charge of the Department of Justice's (DOJ) Antitrust Division will leave the DOJ, effective August 5, 2011. See, DOJ release.
She has served in that position since April of 2009. She worked for the law firm of Hogan & Lovells before her appointment. She will go to work for Cravath Swain. President Obama has not yet nominated a replacement.
She is a revolving door attorney, as are many senior officials at the DOJ, Federal Communications Commission (FCC), and Federal Trade Commission (FTC), where she was a Commissioner during the Clinton administration. She has also worked for Presidential campaigns and transitions. In the private sector, she has represented large technology companies.
Varney (at right) will give a speech titled "Reinvigorating Antitrust Enforcement" on Tuesday, July 12, 2011, in Washington DC at the offices of the Center for American Progress (CAP).
She may be remembered as an AAG who reinvigorated antitrust enforcement after eight years of enforcement informed by free market economics during the Bush administration. On the other hand, a review of her record suggests that her reputation and speeches have been more vigorous than her actions.
She did promptly withdraw the entirety of the DOJ's 2008 report on single firm conduct. But, during her tenure the DOJ did not attempt to block any major information or communications technology (ICT) related mergers, or bring any major ICT single firm conduct cases.
The following is a review of her actions, and the actions of the Antitrust Division, during her brief tenure.
Section 1 Actions. On October 4, 2010, the DOJ and several states filed a complaint [35 pages in PDF] in the U.S. District Court (EDNY) against American Express, MasterCard and Visa alleging violation of Section 1 of the Sherman Act, which is codified at 15 U.S.C. § 1, in connection with their alleged restraints on competition at the point of sale. See, story titled "DOJ and States Bring Antitrust Action Against Credit Card Companies" in TLJ Daily E-Mail Alert No. 2,139, October 5, 2010.
In addition, the DOJ continued during the tenure of Varney to criminally prosecute makers of dynamic random access memory (DRAM) chips who conspired to fix prices in violation of Section 1. However, these investigations and prosecutions began long before the Obama administration.
Section 1 of the Sherman Act, which is codified at 15 U.S.C. § 1, provides, in part, that "Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is declared to be illegal. Every person who shall make any contract or engage in any combination or conspiracy hereby declared to be illegal shall be deemed guilty of a felony, and, on conviction thereof, shall be punished by fine ..."
Resale Price Maintenance. On June 28, 2007, before Varney's appointment, the Supreme Court issued its opinion [55 pages in PDF] in Leegin Creative Leather Products v. PSKS. See, story titled "SCUS Holds That All Vertical Price Restraints Are Subject to Rule of Reason" in TLJ Daily E-Mail Alert No. 1,603, June 28, 2007.
The Bush DOJ advocated the position taken by the Court. Varney could do nothing to change the Court's holding, but nevertheless criticized it.
For example, on October 7, 2009, she gave a speech titled "Antitrust Federalism: Enhancing the Federal/State Relationship" in New York City to the National Association of Attorneys General in which she stated that "I am not ruling out the possibility that Leegin's dissenters were right".
She also encouraged states, in applying state law, not to follow the Supreme Court. See, story titled "Varney Discusses Antitrust, States AGs, RPM and the Rule of Reason" in TLJ Daily E-Mail Alert No. 1,999, October 8, 2009.
Merger Reviews. The DOJ has conducted several major technology related antitrust merger reviews during Varney's tenure.
The DOJ imposed conditions upon the LiveNation TicketMaster transaction. On January 25, 2010, the DOJ and numerous states filed, and simultaneously settled, a complaint [PDF] in the U.S. District Court (DC) against Ticketmaster and Live Nation alleging violation of Section 7 of the Clayton Act, which is codified at 15 U.S.C. § 18, in connection with their proposed merger.
The DOJ required that Ticketmaster license ticket software, and divest ticketing assets to two different companies. See, story titled "DOJ Requires Ticketmaster Live Nation to License Ticket Software and Divest Ticketing Assets" in TLJ Daily E-Mail Alert No. 2,038, January 25, 2010.
The DOJ also approved, with conditions, the merger of Comcast and NBCU. On January 18, 2011, the DOJ and several states filed, and simultaneously settled, a complaint in the District Court. See also, proposed final judgment.
On April 8, 2011, the DOJ filed, and simultaneously settled a complaint [16 pages in PDF] in the U.S. District Court (DC) against Google, Inc. and ITA Software, Inc. See, story titled "DOJ Imposes Conditions on Google's Acquisition of ITA" in TLJ Daily E-Mail Alert No. 2,220, April 11, 2011.
On November 9, 2009, the DOJ announced that it would take no action to block Oracle's acquisition of Sun Microsystems. In contrast, the DOJ during the Bush administration attempted to block Oracle's acquisition of PeopleSoft. Oracle fought back, and the DOJ's case crashed and burned in the District Court.
During Varney's tenure, the DOJ did not block outright any major technology related mergers.
It may be recalled that Google and Yahoo abandoned their proposed advertising agreement, due to DOJ objections, but just prior to the Obama administration and Varney's appointment. See, story titled "Google and Yahoo Announce Search and Advertising Agreement" in TLJ Daily E-Mail Alert No. 1,779, June 13, 2008, and story titled "Google and Yahoo Abandon Advertising Agreement Because of DOJ Objection" in TLJ Daily E-Mail Alert No. 1,852, November 4, 2008. Google and Yahoo announced this agreement on June 12, 2008.
Also, the federal administrative action against Intel was brought by the Federal Trade Commission (FTC), not the DOJ. And, there is a major review that is still pending at the DOJ involving AT&T and T-Mobile USA.
EC Antitrust Regulators. Unlike her predecessors in the Bush administration, Varney did not stand up to heavy handed and extraterritorial antitrust enforcement by the European Commission (EC) in disputes between U.S. companies. Rather, she urged the U.S. to converge and cooperate with EC regulators.
On February 15, 2010, Varney gave a speech in Paris, France, titled "Coordinated Remedies: Convergence, Cooperation, and the Role of Transparency" in which she advocated greater convergence and cooperation See, story titled "Varney Addresses Extraterritorial Effects and Divergent Outcomes in Antitrust" in TLJ Daily E-Mail Alert No. 2,046, February 17, 2010.
Similarly, on September 24, 2009, Varney gave a speech in New York City titled "Our Progress Towards International Convergence".
However, a key action in relations with the EC was her withdrawal of the Antitrust Division's report on single firm conduct.
Section 2 and Withdrawal of Single Firm Conduct Report. Section 2 of the Sherman Act, which is codified at 15 U.S.C. § 2, provides that "Every person who shall monopolize, or attempt to monopolize, or combine or conspire with any other person or persons, to monopolize any part of the trade or commerce among the several States, or with foreign nations, shall be deemed guilty of a felony, and, on conviction thereof, shall be punished by fine not exceeding $100,000,000 if a corporation, or, if any other person, $1,000,000, or by imprisonment not exceeding 10 years, or by both said punishments, in the discretion of the court."
This section provides little guidance as to what conduct is prohibited. Nevertheless, it is the section that the Antitrust Division uses to address single firm conduct.
Single firm conduct does not include anti-competitive acts that involve multiple firms, such as price fixing, market allocation, and anti-competitive mergers and acquisitions. It does include actions such as tying, bundled discounts, refusals to deal, and predatory pricing. These are all issues of particular importance in the technology sector.
The DOJ, after a lengthy process that included wide input from economists, released a report on September, 8, 2008, titled "Competition and Monopoly: Single-Firm Conduct Under Section 2 of the Sherman Act". See, PDF version [215 pages].
For a summary of the report, and an explanation of the differences between the US and EC, see stories titled "Antitrust Division Releases Report on Single Firm Conduct", "Summary of Single Firm Conduct Report", "Three FTC Commissioners Criticize Single Firm Conduct Report", and "Select TLJ Articles Related to the US-EC Divergence on Single Firm Conduct" in TLJ Daily E-Mail Alert No. 1,827, September 17, 2008.
One of the most significant acts of the Antitrust Division during Varney's tenure has been the withdrawal of the 2008 single firm conduct report.
On May 12, 2009, Varney announced the withdrawal of that report, without any replacement report, guidelines, or rules. See, story titled "Varney Reverses DOJ Policy Regarding Single Firm Conduct" in TLJ Daily E-Mail Alert No. 1,937, May 12, 2009.
Review of the Horizontal Merger Guidelines (HMG). On August 19, 2010, the DOJ and Federal Trade Commission (FTC) jointly released revised Horizontal Merger Guidelines. See, story titled "Antitrust Division and FTC May Amend Horizontal Merger Guidelines" in TLJ Daily E-Mail Alert No. 1,987, September 23, 2009, and story titled "DOJ and FTC Release Revised Horizontal Merger Guidelines" in TLJ Daily E-Mail Alert No. 2,127, August 20, 2010.
Business Review Letters. The DOJ also issued significant technology related business review letters during Varney's tenure.
On March 31, 2010, Varney signed a business review letter to The Associated Press (AP) in which she stated that the DOJ has "no present intention to challenge the development or operation" of "a voluntary news registry ... to facilitate the licensing and Internet distribution of news content created by the AP, its members, and other news originators". See, story titled "DOJ Will Not Challenge AP's Internet News Registry" in TLJ Daily E-Mail Alert No. 2,070, April 2, 2010.
On February 24, 2010, Varney signed a business review letter to MyWire's counsel, Charles Biggio, of the law firm of Wilson Sonsini Goodrich & Rosati, stating that the DOJ will not challenge a proposal by MyWire to form the Global News Service, an online subscription news aggregation service. See, story titled "DOJ Will Not Challenge MyWire Online News Aggregation Service" in TLJ Daily E-Mail Alert No. 2,053, March 2, 2010.
7/6. The American Antitrust Institute (AAI) sent a letter to the Department of Justice's (DOJ) Antitrust Division regarding acquisition of Nortel's patent portfolio.
The AAI urged the DOJ "to commence an in-depth investigation of the proposed purchase of Nortel’s portfolio of more than 6,000 patents and patent applications, many of which may be vital to the future of mobile communications and computing devices, to Rockstar Bidco LP, a consortium consisting of Apple, Microsoft, Research in Motion, EMC, Sony and Ericsson".
The AAI added that it is "troubled by the Department's Early Termination of the HSR waiting period on this transaction two weeks ago".
The AAI elaborated that "Rockstar’s reported $4.5 billion purchase price is five times the reported stalking horse bid from Google at the outset of the auction process. How could shared ownership of the Nortel portfolio be worth so much more to the Rockstar group than sole ownership of it would be worth to Google? This in itself raises questions about the concerted intentions and objectives of the six consortium members that could not be achieved through independent bidding and eventual individual ownership or licensing of some or all parts of the patent portfolio at stake."
The AAI also noted that "The consortium membership includes three leading mobile device operating system competitors -- Apple, Microsoft and Research in Motion. They are the three main commercial rivals to Android, Google's open-source mobile operating system."
The AAI also suggested that "patents within the Nortel portfolio cover technologies that are either already incorporated into industry standards or prime candidates to become incorporated into next-generation industry standards".
7/7. The Department of Justice's (DOJ) Antitrust Division filed a motion to enter final judgment [PDF] with the U.S. District Court (DC) in USA v. Google and ITA.
On April 8, 2011, the DOJ filed a complaint [16 pages in PDF] in the U.S. District Court (DC) against Google, Inc. and ITA Software, Inc.
The complaint alleges that Google's proposed acquisition of ITA, "provider of the leading independent airfare pricing and shopping system", named QPX, would "substantially lessen competition in interstate trade and commerce", and therefore, must be blocked.
However, the DOJ, Google and ITA simultaneously entered into a stipulation [5 pages in PDF] that provides for entry of a proposed final judgment [33 pages in PDF] that allows the acquisition, but requires Google to continue to license ITA's QPX.
The just filed motion states that the requirements of the Tunney Act have been satisfied, no one has requested a hearing, and final judgment may now be entered.
See also, story titled "DOJ Imposes Conditions on Google's Acquisition of ITA" in TLJ Daily E-Mail Alert No. 2,220, April 11, 2011.
This case is U.S.A. v. Google, Inc. and ITA Software, Inc., U.S. District Court for the District of Columbia, D.C. No. 1:11-cv-00688, Judge Ellen Huvelle presiding.
7/11. Symantec announced in a release that it has completed it acquisition of Clearwell Systems, Inc., a privately held company that provides electronic discovery software for law firms, business, and government agencies. Symantec announced in a May 19, 2011, release that it "has entered into an agreement to acquire" Symantec's Enterprise Vault already provides document management, archiving, retrieval, and searching. Symantec's Deepak Mohan stated in this release that "As information continues to grow at unprecedented rates, the biggest challenge for customers is to protect, manage and backup this information as well as have the ability to categorize and discover it efficiently". He added that "The acquisition of Clearwell's market leading electronic discovery solution will further increase Symantec's ability to get the right information, to the right people, at the right time, while reducing overall legal review costs and limiting risk."
7/7. The Department of Justice's (DOJ) Antitrust Division and the Federal Trade Commission (FTC) announced in a release that they have revised the form to be used to seek antitrust clearance of proposed mergers and acquisitions under the Hart-Scott-Rodino (HSR) Act and the Premerger Notification Rules.
9:00 - 10:30 AM. The Center for American Progress (CAP) will host an event titled "Reinvigorating Antitrust Enforcement". The main speaker will be Christine Varney (outgoing Assistant Attorney General in charge of the DOJ's Antitrust Division). The other speakers will be Winnie Stachelberg (CAP), Mark Cooper (Consumer Federation of America), Albert Foer (American Antitrust Institute), Howard Morse (Cooley), Scott Sher (Wilson Sonsini), and David Balto (CAP). Location: CAP, 10th floor, 1333 H St., NW.
10:00 AM. The House Judiciary Committee's (HJC) Subcommittee on Crime, Terrorism and Homeland Security will hold a hearing on HR 1981 [LOC | WW], the "Protecting Children from Internet Pornographers Act of 2011". The witnesses will be Ernie Allen (National Center for Missing and Exploited Children), Michael Brown (Bedford County Sheriff's Office), and Marc Rotenberg (Electronic Privacy Information Center). See, notice. Location: Room 2141, Rayburn Building.
10:00 AM. The Senate Commerce Committee's (SCC) Subcommittee on Science and Space will hold a hearing titled "National Nanotechnology Investment: Manufacturing, Commercialization, and Job Creation". The witnesses will be Chad Mirkin (Northwestern University), Charles Romine (National Institute of Standards and Technology), Diandra Pelecky (West Virginia University), Thomas O'Neal (University of Central Florida), and George McLendon (Rice University). See, notice. Location: Room 253, Russell Building.
12:00 NOON - 1:30 PM. The DC Bar Association will host an event titled "Calculating Reasonable Royalty Damages After Uniloc v. Microsoft". See, January 4, 2011, opinion [59 pages in PDF] of the U.S. Court of Appeals (FedCir). See also, May 16, 2011, order denying rehearing and rehearing en banc. The speakers will be Maureen Browne (Covington & Burling), Carla Mulhern (Analysis Group, Inc.), Peter Strand (Shook Hardy & Bacon). The price to attend ranges from $30 to $40. For more information, contact 202-626-3463. See, notice. Location: DC Bar Conference Center, B-1 Level, 1250 H St., NW.
The House will be in recess the week of Monday, July 18 through Friday, July 22.

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