FEDERAL TRADE COMMISSION ce of International Affairs The Anticompetitive Aspects of Information Exchange Agreements – A U.S. Perspective Krisztián Katona, Counsel for International Antitrust* •The views are my own and do not necessarily reflect those of the Commission or any of its Commissioners.
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The Anticompetitive Aspects of Information Exchange Agreements – A U.S. Perspective
The Anticompetitive Aspects of Information Exchange Agreements – A U.S. Perspective. Kriszti á n Katona, Counsel for International Antitrust* The views are my own and do not necessarily reflect those of the Commission or any of its Commissioners. Overview. - PowerPoint PPT Presentation
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FEDERAL TRADE COMMISSIONFEDERAL TRADE COMMISSIONOffice of International AffairsOffice of International Affairs
The Anticompetitive Aspects of Information Exchange Agreements –
A U.S. Perspective
The Anticompetitive Aspects of Information Exchange Agreements –
A U.S. PerspectiveKrisztián Katona, Counsel for International Antitrust*
•The views are my own and do not necessarily reflect those of the Commission or any of its Commissioners.
Krisztián Katona, Counsel for International Antitrust*
•The views are my own and do not necessarily reflect those of the Commission or any of its Commissioners.
FEDERAL TRADE COMMISSIONFEDERAL TRADE COMMISSIONOffice of International AffairsOffice of International Affairs
Overview
• US antitrust framework for information exchanges – Section 1 Sherman Act– Section 5 FTC Act
• Supreme Court case law
• FTC and DOJ guidelines
• Recent enforcement actions (National Association of Music Merchants case)
FEDERAL TRADE COMMISSIONFEDERAL TRADE COMMISSIONOffice of International AffairsOffice of International Affairs
Legal Framework – Section 1
• Section 1 Sherman Act– Elements to a Section 1 violation:
• Agreement
• Between entities
• Unreasonable restraint on competition
• Affecting interstate commerce
• Per se – rule of reason
• Information exchanges – rule of reason
FEDERAL TRADE COMMISSIONFEDERAL TRADE COMMISSIONOffice of International AffairsOffice of International Affairs
Legal Framework – Section 5
• Section 5 FTC Act prohibits “unfair methods of competition”
• May reach conduct that doesn’t rise to a Section 1 violation (e.g., invitation to collude – see Valassis case)
• National Association of Music Merchants, Inc.
FEDERAL TRADE COMMISSIONFEDERAL TRADE COMMISSIONOffice of International AffairsOffice of International Affairs
Supreme Court Jurisprudence
• American Column and Lumber Co. v. United States, 257 U.S. 377 394-95 (1921)– “Open Competition Plan” is facilitating practice
• United States v. American Linseed Oil Co., 262 U.S. 371 (1923) – Purpose of exchange is to affect prices
• Maple Flooring Mfrs. Ass’n v. United States, 268 U.S. 563 (1925)– No purpose to fix prices or restrain trade
FEDERAL TRADE COMMISSIONFEDERAL TRADE COMMISSIONOffice of International AffairsOffice of International Affairs
Supreme Court Jurisprudence (cont’d)
• United States v. Container Corporation of America, 393 U.S. 333 (1969) – Shift from purpose to the likely effect on prices
• United States v. Citizens & S. Nat’l Bank, 422 U.S. 86, 113 (1975)– “[t]he dissemination of price information is not itself a per se
violation of the Sherman Act”
• Catalano, Inc. v. Target Sales, 446 U.S. 643, 647 (1980)– “advanced price announcements are legal”
FEDERAL TRADE COMMISSIONFEDERAL TRADE COMMISSIONOffice of International AffairsOffice of International Affairs
Appellate Courts’ Decisions
• In re Petroleum Products Antitrust Litigation, 906 F.2d 432 (9th Cir 1990)– Form of exchange is not determinative of its
legality• United States v. Airline Tariff Publ’g Co., 836
• DOJ’s business review letters– E.g., Fair Factories Clearinghouse (2006)Safeguards:
• Voluntary participation
• Aggregated information
• Antitrust policy statement
FEDERAL TRADE COMMISSIONFEDERAL TRADE COMMISSIONOffice of International AffairsOffice of International Affairs
Procedures and Safeguards
• Market data is gathered and maintained on a confidential basis by a neutral third-party.
• Voluntary participation, with results reasonably accessible to all competitors.
• Data limited to historic market information – no data gathering related to future prices or other competitive issues.
• Indices and reports are designed to aggregate and report data in a way that precludes price calculations.
• Reports not including recommendations or encouraging actions by competitors or others.
FEDERAL TRADE COMMISSIONFEDERAL TRADE COMMISSIONOffice of International AffairsOffice of International Affairs
Recent U.S. Information Exchange Cases
• National Association of Realtors (NAR) case– DOJ suit (Sept. 2005) against NAR to require the
continued operation of an information exchange program (Multiple Listing Service – MLS)
– NAR’s virtual office website policy “. . . [s]uppresses technological innovation, discourages competition on price and quality, and raises barriers to entry”
– Consent decree (May 2008) requires NAR to rescind this policy and treat Internet-based brokers the same as brokers on the MLS
– In sum: the Agencies recognize the procompetitive benefits and will do more than permit programs, i.e. affirmatively require their continued operation
FEDERAL TRADE COMMISSIONFEDERAL TRADE COMMISSIONOffice of International AffairsOffice of International Affairs
National Association of Music Merchants
• FTC complaint and consent order in National Association of Music Merchants (NAMM) (April 2009)
• Complaint: NAMM violated Section 5 FTC Act by enabling and encouraging the exchange of competitively sensitive information about pricing policy and strategy among its members