Unilateral Conduct Committee E-Bulletin
Issue 47
November 27, 2006

The Section 2 Committee's monthly E-Bulletin is intended to offer the antitrust community updates and information on the latest developments relating to monopolization law and policy. If you have any comments or suggestions on the E-Bulletin, please e-mail Jay Modrall (jmodrall@cgsh.com), Adam Nyhan (anyhan@constantinecannon.com), Tanya Dunne (tdunne@cgsh.com), and Alee Scott (ascott@constantinecannon.com).

U.S. DECISIONS

TENTH CIRCUIT AFFIRMS SUMMARY JUDGMENT TO DEFENDANT MANAGED CARE PROVIDER IN CASE BROUGHT BY OPTOMETRISTS ALLEGING, INTER ALIA, ATTEMPTED MONOPOLIZATION CLAIMS

Abraham v. Intermountain Health Care Inc. , 2006 WL 2556357 (10th Cir. Sept. 6, 2006). The plaintiffs, forty-nine therapeutic optometrists, their affiliated professional organizations, and eye clinic Standard Optical Company, which employs optometrists, sued Intermountain Health Care (IHC), the largest managed care company in Utah, and others including two ophthalmologists, alleging violations of Sherman Act Sections 1 and 2. 2006 WL 2556357 at *1. The Utah District Court granted summary judgment in favor of the defendants on all claims. On appeal, the Tenth Circuit affirmed the lower court's decision. Only the Section 2 claims are addressed below.

In Utah, optometrists sell optical hardware and are permitted to perform the full scope of non-surgical eye care (NSEC). Therapeutic optometrists are also authorized to prescribe prescription drugs. In Utah, ophthalmologists also sell optical hardware and perform the full scope of NSEC. Unlike optometrists, however, ophthalmologists are licensed physicians and are authorized to perform surgical eye care (SEC) as well as NSEC. As a result, ophthalmologists often have staff privileges at hospitals to enable them to use the hospitals to perform eye surgery. IHC administers four managed health care plans that provide health care services to enrollees in exchange for periodic premiums. The plans designate certain health care providers (panel providers) from whom enrollees may seek treatment and manage access to these providers and the type of care that enrollees may obtain (which includes SEC and NSEC). IHC then reimburses these panel providers for services provided. Panel providers accept lower rates from IHC in exchange for increased patient volumes. IHC therefore limits the number of health care providers with whom it contracts. With one exception, IHC's panel providers of eye care on the Wasatch Front are ophthalmologists. Competing managed care companies in this area have both optometrists and ophthalmologists on their panel provider lists. Id. at *2.

The plaintiffs claimed that the agreement between IHC and its panel ophthalmologists is designed to preserve for ophthalmologists the exclusive ability to provide NSEC to about sixty percent of the region's managed care enrollees in exchange for patient referrals that increase IHC's dominance in the market for the provision of hospital and surgical facilities. Id at *3. The plaintiffs alleged, inter alia, that IHC had attempted to monopolize the surgical facilities market on the Wasatch Front by leveraging its power in the managed care market to increase its power in the surgical facilities market (providers are willing to agree to send as many patients as possible to IHC surgical facilities in exchange for being included in the managed care provider's panel).

The Tenth Circuit stated the threshold inquiry for antitrust standing is whether a plaintiff has sufficiently alleged antitrust injury. The court held that the plaintiffs made "no attempt to delineate any injury they have suffered or will suffer that is associated with IHC's dominance in the surgical facilities market, let alone how that injury is ‘of the type the antitrust laws were designed to prevent and that flows from that which marks defendants' acts unlawful.'" Id at *14 (quoting Associated Gen. Contractors of Cal., Inc. v. Carpenters, 459 U.S. 519, 535 n.31 (1983). According to the court, the plaintiffs "completely failed to discuss how IHC's purported plan to monopolize the surgical facilities market bears any relation to the practice of optometry or any other interest the Plaintiffs could possibly allege was invaded as a result of the plan." Id. The Tenth Circuit found that the plaintiffs had simply assumed standing, which was not sufficient to withstand a motion to dismiss. To further support its decision on lack of standing, the court found the plaintiffs were not the most efficient enforcers of the antitrust laws -- plaintiffs had no "natural economic self-interest" in preserving competition in the market for surgical facilities -- and that other regional providers of surgical facilities and consumers of surgical facilities may be more directly harmed by IHC's attempted monopolization. Id.

SEVENTH CIRCUIT AFFIRMS SUMMARY JUDGMENT AGAINST ANAESTHESIOLOGIST ON SECTION 1 AND 2 CLAIMS FOR LACK OF ANTITRUST INJURY AND STANDING

Kochert v. Greater Lafayette Health Serv., Inc. , 2006 WL 2597863 (7th Cir. Sept. 12, 2006). Plaintiff Dr. Kochert, an anesthesiologist, brought claims in September 2001 alleging violations of Sherman Act Sections 1 and 2, including illegal tying, group boycott and conspiracy to monopolize. The Indiana District Court granted summary judgment in favor of defendants Greater Lafayette Health Services, Inc. (GLHS) and anesthesia group Anesthesia Associates based, inter alia, on Kochert's failure to show antitrust standing and that defendants' alleged practices were anti-competitive. Kochert appealed. The Seventh Circuit affirmed the District Court's judgment holding that Kochert could show neither antitrust injury nor antitrust standing.

From 1985 to 1994, Kochert practiced anesthesiology at Home Hospital and St. Elizabeth's Medical Center (SEMC), the two hospitals in Lafayette, Indiana. In 1994, defendant Anesthesia Associates was granted exclusive rights to provide anesthesiology services at Home Hospital. Anesthesia Associates offered subcontracts to local anesthesiologists and Kochert continued under a subcontract to provide anesthesia services at Home Hospital until 1998. Independently, she also provided anesthesia services at SEMC. In 1998, Home Hospital and SEMC merged to form defendant GLHS. Lafayette Anesthesiologists, a practice group of which Kochert was a member, obtained an exclusive three-year anesthesiology contract at SEMC, in which Kochert participated. When the contract expired in 2001, GLHS chose Anesthesia Associates instead of Lafayette Anesthesiologists to provide exclusive anesthesia services at Home Hospital and SEMC. 2006 WL 2597863 at *1. Kochert, however, opened a pain management practice in 1999 and by 2000-2001 was practicing pain management full time (and, therefore, was no longer a practicing anaesthesiologist). Kochert practices pain management at Home Hospital and SEMC today.

Kochert filed suit in September 2001 claiming she suffered antitrust injury because the defendants' actions had excluded competition from the market. Id at *2. Kochert claimed that Lafayette Anesthesiologists was the only group within an hour of Lafayette that could provide a competitive check on Anesthesia Associates, and that she was forced into pain management because under Anesthesia Associates' exclusive contacts, she was unable to practice anesthesiology at Home Hospital since March 1998 and at SEMC since 2001. She also claimed that consumer welfare, particularly the quality of anesthesiology care, decreased after GLHS awarded Anesthesia Associates an exclusive contract for services. Id at *1. To support her claims, she attempted to introduce the testimony of an economist, Dr. Seaman, who defined the product market as "anesthesia services" and the geographic market as eight contiguous counties. Id at *2. Defendants filed a motion for summary judgment to dismiss all claims.

The District Court granted summary judgment to the defendants, finding that Kochert had no antitrust standing and had not met her burden of proving an antitrust violation. The District Court held that Kochert could not show that the defendants' alleged practice had produced any anti-competitive effects in the relevant market. More specifically, the District Court held that Seaman's geographic market was defined too narrowly, given that the results of his analysis did not support his market definition and that he ignored commercial realities of the area. Id at *2. The District Court also held, inter alia, that: (i) the exclusive contract was not shown to be an unlawful tying arrangement; (ii) the contract did not constitute an illegal group boycott; (iii) no actual harm to competition or restraint of trade due to GLHS' market power could be found; (iv) the defendants lacked the specific intent required to show a conspiracy to monopolize; and (v) Kochert's "essential facility" claim could not survive, because of the presence of alternatives. Id at *2.

On appeal, the Seventh Circuit stated that Kochert must meet the requirements for both antitrust injury and antitrust standing in order to succeed on the merits. Id at *4.

Antitrust Injury. The threshold question for the Seventh Circuit on antitrust injury was whether Kochert had demonstrated that her claimed injuries were "‘of the type the antitrust laws were intended to prevent' and ‘reflect the anticompetitive effect of either the violation or of anticompetitive acts made possible by the violation.'" Tri-Gen Inc. v. Int'l Union of Operating Eng'rs, Local 150, 433 F. 3d 1024, 1031 (7th Cir. 2006) (quoting Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc., 429 U.S. 477, 489 (1977)). The Seventh Circuit found that Lafayette Anesthesiologists were foreclosed from GLHS only after 2001 and that Kochert was not a practicing anesthesiologist at that time. Id at *5. To counter this, Kochert argued a "chain reaction theory of anticompetitive effects" stating that the starting point of the anti-competitive conduct was 1998, when her subcontract with Anesthesia Associates was not renewed, and the acts that followed were a part of a chain reaction which resulted in her exclusion from the Lafayette anesthesia services market. Id at *5. The Seventh Circuit disagreed, finding that there was no precedential support to require a court to "look backward from the point of the actual anticompetitive activity in search of the genesis of the acts that eventually allowed the anticompetitive behavior to occur." Id. The Seventh Circuit concluded that GLHS's 2001 elimination of the exclusive contract between SEMC and Lafayette Anesthesiologists was the starting point for the antitrust injury analysis. In doing so, the Seventh Circuit held that GLHS's anticompetitive behavior in 2001 could not have injured Kochert's anesthesiology practice, because it was non-existent at that time. Id. at *7 (quoting Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc., 429 U.S. 477, 489 (1977) (antitrust injuries must "flow [ ] from that which makes defendants' acts unlawful.")).

Antitrust Standing. The Seventh Circuit also held that Kochert did not have antitrust standing, because even if she could establish antitrust injury, under the six-factor test articulated by the Supreme Court in Associated General Contractors v. Cal. State Council of Carpenters, 459 U.S. 519, 537-46, Kochert could not show at least three of the factors: (i) the directness between the injury and the market restraint, i.e., that there are more efficient claimants than Kochert to bring forth such claims (such as a group of doctors, insurers or consumers); (ii) sufficient causal connection between the alleged antitrust violation and the alleged injury; or (iii) evidence of improper motive. Id at *7-8. As a result, the Seventh Circuit held that Kochert did not have antitrust standing.

CALIFORNIA DISTRICT COURT GRANTS DEFENDANTS' MOTIONS TO DISMISS SECTION 2 CLAIMS IN PART AND DENIES IN PART IN TELEPHONE VAULT MARKET CASE

Jensen Enterprises, Inc. v. Oldcastle, Inc. , 2006 WL 2583681 (N.D. Cal, Sept. 7, 2006). Plaintiff Jensen Enterprises, a manufacturer of pre-cast concrete telephone and electrical vaults, filed suit against competitor Oldcastle, Inc. and land-line telephone service provider AT&T, alleging, inter alia, violations of Sherman Act Sections 1 and 2 (monopolization, attempted monopolization, and conspiracy to monopolize) and state antitrust laws in California and Nevada. Defendants filed a motion to dismiss Jensen's second amended complaint. The California District Court granted the motion in part and denied in part.

Plaintiff Jensen Enterprises manufactures pre-cast concrete vaults that are placed underground and used by telephone and utility companies (separate vaults are required for each) to connect newly constructed homes and businesses to the existing landline telephone network. 2006 WL 2583681 at *1. (The concrete telephone vaults are underground rooms that contain telephone wiring and equipment and are considered as replacements for traditional telephone poles.) Defendant Oldcastle also manufactures these vaults and is a direct competitor. Defendant AT&T is allegedly the sole provider of landline telephone services in most of California and Nevada. Id. When a new property is purchased, the vaults are either purchased and installed by the property developer (who is required to re-sell the vaults to AT&T) or purchased and installed by AT&T itself. Id. For many years Jensen sold vaults in California and Nevada through direct sales to AT&T and to developers. In 2000, AT&T offered Jensen a new direct sales contract, but Jensen alleges the contract provisions, which required Jensen to offer blanket indemnities and to make direct sales at unreasonably low prices, were "onerous and one-sided" and rejected the offer. Id. Oldcastle, in contrast, allegedly accepted a similar offer from AT&T. Id. Soon after, AT&T announced that Oldcastle was its sole approved vendor of telephone vaults in California and that it would only accept Oldcastle vaults from property developers. Id. After this lawsuit was filed, AT&T announced that Oldcastle would also be its sole approved vendor of telephone vaults in Nevada.

Relevant Market and Antitrust Injury. The District Court noted that a plaintiff must allege both a relevant antitrust market and antitrust injury in order to survive a motion to dismiss. Id. at *2. The District Court, in denying defendants' arguments that it was a single-purchaser market and that the relationship between defendants was only an exclusive supplier arrangement not typically subject to antitrust claims, held that Jensen had properly pled the elements of a relevant market: "a specific product (telephone vaults), multiple purchasers (property developers and contractors), and an appropriate geographic region (properties seeking connections to the AT&T network in California and Nevada)." Id. at *3. On antitrust injury, defendants argue that Jensen had failed to plead both direct harm to it and harm to competition in general. The District Court disagreed. The court found that Jensen had sufficiently pled direct and proximate harm resulting from the defendants' conduct (including loss of profits and that it was both a competitor of Oldcastle and a target of AT&T's and Oldcastle's alleged anticompetitive conduct) and harm to competition (Jensen alleges competition in the market for telephone vault sales to developers has been eliminated, and that customers are now required to pay excessive prices and are forced to take a loss on vault purchases).

Monopolization Claims. The District Court upheld the monopolization claim against Oldcastle but dismissed with leave to amend the monopolization claim against AT&T. With respect to Oldcastle, the District Court held that Jensen has adequately pled facts sufficient to sustain its claim of monopolization by demonstrating (1) possession of monopoly power in the relevant market; (2) willful acquisition or maintenance of that power that is not the result of growth of a superior product or historical accident; and (3) causal antitrust injury. Id at *5, citing US. v. Grinnell Corp., 384 U.S. 563, 570-71. "Oldcastle is now the sole provider of telephone vaults in the relevant market (dominant market share) and … competitors are prevented from entering the market as a result of AT&T's alleged edict (significant barriers to entry)." Id. at *6. Jensen also alleged that the acquisition of monopoly power by Oldcastle was improper (i.e., by acquiring a monopoly concession from AT&T in order to charge developers higher prices and entering into the direct sales agreement with AT&T solely for the purpose of manipulating prices). The District Court held that Jensen's monopolization claim against AT&T failed, however, because Jensen had not sufficiently alleged that AT&T's monopoly power is not a result of a superior product or historical accident. Id at *6.

Attempted Monopolization/Monopoly Leveraging/Misuse of Monopoly Power Claims. The District Court dismissed Jensen's "misuse of monopoly power" claim against Oldcastle without leave to amend, but allowed the attempted monopolization claim to stand. Id. at *6-7. In both claims, Jensen argues that Oldcastle took advantage of its monopoly power in the telephone vault market to gain an unfair advantage and a monopoly in the electrical vault market. Id. at *6. The court found that the misuse of monopoly power claim was essentially a claim of monopoly leveraging (i.e., the use of monopoly power in one market to gain a competitive advantage in a second market). In the Ninth Circuit, a monopoly leveraging claim can only be pled as part of a monopolization or attempted monopolization claim. Id.

Improper Retaliation Claims under Sherman Act Sections 1 and 2. The Court dismissed an "improper retaliation" charge because under the standard in Brook Group Ltd. v. Brown & Williamson Tobacco Group, 509 U.S. 209, 225, " [e]ven an act of pure malice by one business competitor against another does not, without more, state a claim under the federal antitrust laws" and here the District Court held that Jensen's allegations did not support an independent claim. Id. at *8.

Conspiracy to Monopolize Claims and State Antitrust Claims. The District Court allowed the conspiracy to monopolize claims to stand, as defendants claimed only Jensen's failure to allege a relevant market or antitrust injury, which the court ruled as properly pled. Id. *3 n.4. As the state antitrust claims were governed by the court's decision on the federal antitrust claims, at least some of Jensen's state antitrust law claims would survive. Id. at *8.

NEW JERSEY DISTRICT COURT DISMISSES SECTION 2 CLAIMS OF DISTRIBUTOR INTERMEDIARIES

A.D.M. Club Mgmt. Sys., Inc. v. Gary Jonas Computing, Ltd., 2006 WL 2689400 (D.N.J. Sept. 19, 2006). P laintiffs were four companies: A.D.M. Club Management Systems, Inc.; Club Solutions, LLC; Jonas Mid-Atlantic, Inc.; and Clubsoft, Inc., that brought suit against defendants Gary Jonas Computing, Ltd. and CSI USA Distribution, Inc. (collectively, Jonas). Defendants develop and sell specialized computer software for use in membership clubs. Plaintiffs individually marketed, sold and distributed Jonas' software in territories exclusively assigned by separate agreements between each plaintiff and the defendants. 2006 WL 2689400 at *1.

Plaintiffs alleged, inter alia, violations of Section 2 of the Sherman Act for monopolization and attempted monopolization of the private club software market in North America. Id. at *2. The software is sold to clubs to keep track of membership information for, e.g., yacht clubs, tennis clubs, and country clubs. Id. at *1. Plaintiffs argued that Jonas monopolized or attempted to monopolize the market by acquiring three of Jonas' competitors in the market, resulting in an alleged two-thirds market share. Plaintiffs were then allegedly injured when Jonas wrongfully terminated plaintiffs' exclusivity agreements and began to sell the software directly to membership clubs. Id. at *2-3.

Jonas moved to dismiss the Section 2 claims with prejudice for lack of antitrust standing. Id. at *9. The court granted the motion. Relying on the five factors for antitrust standing in Barton & Pittinos, Inc. v. SmithKline Beecham Corp., 118 F.3d 178, 181 (3d Cir.1997), the New Jersey District Court held that plaintiffs failed to meet the second and fourth factors for antitrust standing. These factors ask whether the plaintiff has suffered an antitrust injury and whether there are more direct victims of the alleged violation, respectively. Id. at *3.

Plaintiffs claimed antitrust standing by alleging that they were both consumers and competitors in the identified marketplace. Id. at *4. Plaintiffs alleged that they were consumers, because they bought the software directly from Jonas and then distributed it to membership clubs. Id. Plaintiffs alleged they were competitors of Jonas, because Jonas was selling directly to the membership clubs in violation of the exclusivity agreements. Id.

The court held that plaintiffs, as intermediaries, were neither consumers nor competitors. Id. at *5. The court found that the plaintiffs' cause of action may lie in breach of contract, but that the plaintiffs did not assert an injury resulting from the alleged anticompetitive conduct. Id. Finally, the court found that, not only did the plaintiffs not suffer antitrust injury, but that more direct victims of the alleged anticompetitive conduct existed, such as the private clubs that bought software directly from Jonas. Id. at *6.

ILLINOIS COURT GRANTS NOERR-PENNINGTON IMMUNITY TO REAL ESTATE BROKERAGES

Amerimax Real Estate Partners, Inc. v. RE/MAX Int'l, Inc. , 2006 WL 2794934 (N.D. Ill. Sept. 26, 2006). Plaintiff Amerimax Real Estate Partners and defendants RE/MAX International, Inc. and Roaring Fork Capital Partners, doing business as Re/Max Northern Illinois, are all real estate brokerage services. 2006 WL 2794934, at *1. This litigation arose out of allegations that Re/Max contacted Amerimax to demand that Amerimax stop using the trademark "/Max," despite the fact that "/Max" was not specifically part of Re/Max' portfolio of trademarks with the Patent and Trademark Office. Id. Amerimax alleged that Re/Max, and subsequently Roaring Fork, threatened litigation. Id. The litigation threat allegedly constituted attempted monopolization in violation of Section 2 of the Sherman Act and state antitrust laws. Id. at *1-2. It was unclear from the opinion which product and geographic markets were alleged.

Defendants moved to dismiss the complaint on the grounds that their actions were protected by the Noerr-Pennington doctrine, which, if applied, would shield their actions from antitrust liability so long as defendants were petitioning the courts to protect their trademarks in good faith. Id. at *6. Plaintiff argued that defendants were not entitled to Noerr-Pennington immunity because defendants were engaging in "sham" litigation activities intended merely to harass plaintiff. Id.

The Illinois District Court found that "defendants' prelitigation activities [were] legitimate, bona fide efforts to protect the ‘Re/Max' mark." Id. at *6. The court found no indication of "sham" litigation, because as soon as the instant action was filed, defendants counterclaimed for infringement to protect their existing marks. Id. Therefore, the court granted defendants' motions to dismiss the federal antitrust claims on Noerr-Pennington grounds and declined to exercise supplemental jurisdiction over the state antitrust claims. Id. at *7.

EASTERN DISTRICT OF NEW YORK DISTRICT COURT DISMISSES SECTION 2 CLAIMS BROUGHT BY DISTRIBUTOR AGAINST MANUFACTURER

Port Dock and Stone Corp. v. Oldcastle Northeast, Inc. , 2006 WL 2786882 (E.D.N.Y. Sept. 26, 2006). Plaintiffs Port Dock and Stone Corp., Port Dock Holdings Corp., and Gotham Sand and Stone Corp. brought suit against defendants Oldcastle Northeast, Inc., CRH Group, PLC, and Tilcon, Inc. for violations of Section 2 of the Sherman Act. 2006 WL 2786882, at *1. Plaintiffs are engaged in the transportation, distribution, and storage of aggregate sand, stone, and crushed gravel. Id. Defendants are involved in the production of construction materials, and own and operate quarries and asphalt and concrete plants. Defendant Tilcon is a subsidiary of Oldcastle, which, in turn, is a subsidiary of CRH. Id.

Plaintiffs, aggregate distributors, based their Section 2 claims on allegations that the defendants' purchase of their competitors in the market for aggregate manufacturing was an effort to "squeeze Port Dock out of the marketplace" for aggregate storage and distribution. Id. at *2. Plaintiffs alleged that after the acquisitions, the defendants then used their market power in aggregate manufacturing to end plaintiffs' distributorship agreements in an attempt to cut out the "middle man." Id. To support their Section 2 claims, plaintiffs alleged a relevant product market for the distribution of aggregate (sand, gravel, and crushed stone). Id. at *1. The alleged relevant geographic market was Long Island, New York City, Westchester county, and northern New Jersey. Id.

Defendants moved to dismiss the complaint for lack of antitrust standing, arguing that the plaintiffs failed to demonstrate antitrust injury. Id. at *1. Defendants argued that plaintiffs, as distributors of the aggregate, were not consumers or competitors in the marketplace, and therefore had not suffered the type of injury the antitrust laws were intended to prevent. Id. at *4. Plaintiffs argued that termination of the distributorship relationship in furtherance of a scheme to monopolize was such an antitrust injury. Id.

The Eastern District of New York District Court granted the defendants' motion to dismiss, finding that the complaint merely alleged that Tilcon's purchase of manufacturer competitors gave Tilcon power in the separate market for supply of aggregate, and the plaintiffs' allegations were based on monopolization of the distribution market. Id. at *5. The court found it "inescapably clear that plaintiffs, who are distributors, are complaining of monopolistic activity within the manufacturing market." Id. at *5.

The court next ruled that the plaintiffs' reliance on cases such as Crimpers Promotions v. Home Box Office, Inc., 724 F.2d 290 (2d Cir.1983) was inapposite. Id. at *6. Crimpers held that a plaintiff had antitrust standing adequate to survive a motion to dismiss on the ground that the plaintiff in that case alleged that the defendant acted solely to enter the "middle man" market and eliminate the plaintiff. Id. ( citing Crimpers, 724 F.2d at 291.) The court distinguished this case from Crimpers, however, because the plaintiffs here alleged no facts to support the argument that the defendants' acts were based on a desire to monopolize the distribution market or were part of a campaign to eliminate the "middle man." Id.

Finally, the court found the plaintiffs were not the proper party to bring suit, because their injuries were merely "derivative" of the defendants' actions in the manufacturing market. Id. at *8. Therefore, in addition to plaintiffs' lack of antitrust injury, p laintiffs lacked antitrust standing, because they were not the most efficient enforcers of the antitrust laws. Id. at *10.

INTERNATIONAL ANTITRUST ENFORCEMENT AGENCIES

COMMISSIONER KROES' SPEECH ON DEVELOPMENTS IN ANTI-TRUST POLICY IN THE EU AND THE US

EU Competition Commissioner Neelie Kroes' September 15 speech before the Council on Foreign Relations focused on three recent developments in competition policy and enforcement in the United States and the EU: cartels, unilateral antitrust behavior, and private damages actions for breaches of competition law.

On Article 82 versus Unilateral Conduct, Commissioner Kroes acknowledged the differences between the two jurisdictions: in the EU, Article 2 regulates behavior of dominant firms, whereas the Sherman Act regulates the conduct of firms who acquire or maintain monopolies. Although Article 82 requires a "lower market share than a ‘monopoly'", Kroes emphasized that the two enforcement approaches actually converge on a number of points. First, open competition is essential for a dynamic and competitive economy. Second, competition rules are designed to protect competition (ultimately consumers) and not competitors. Third, large companies are a "vital" part of both economies and have a right to compete (dominance is not the concern, but rather the abuse of dominance). Fourth, clear and predictable rules benefit all and ensure that fear of enforcement action will not hinder innovation. Kroes summarized that both the EU and US have similar enforcement goals and that it is important to strike the right balance between preventing abusive behavior and preserving competition on the merits. For further information, please see Kroes' speech. (On private enforcement of the EU antitrust laws, see also theGreen Paper.)

COMMISSIONER KROES' SPEECH ON INDUSTRIAL POLICY AND COMPETITION LAW & POLICY

In her September 14, 2006 speech at Fordham University School of Law, EU Competition Commissioner Neelie Kroes outlined how competition policy should guide and promote modern industrial policy of embracing open markets and renouncing protectionism in order for firms to compete effectively on global markets. "By stimulating efficiency in production, innovation and the allocation of resources, competition in the provision of products and services ensures sustainable economic growth, employment and economic welfare generally." Kroes briefly discussed how the European Commission, pursuant to Articles 81 and 82, prioritizes its enforcement efforts on the most serious impediments to the functioning of markets that produce the most harmful economic effects. She noted that the Microsoft case is emblematic of the Commission's efforts to safeguard innovation, which, in turn, increases industrial competitiveness, and ultimately translates into more consumer choice and lower prices. For further information, please see Kroes' speech.

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Jay Modrall
Vice-Chair, Unilateral Conduct Committee
Cleary Gottlieb Steen & Hamilton LLP
Rue de la Loi 57
B-1040 Brussels
+32 (0)2 287 2024
jmodrall@cgsh.com

Adam Nyhan
Constantine | Cannon
450 Lexington Avenue
New York, N.Y. 10017
(212) 350-2772
anyhan@constantinecannon.com

Tanya N. Dunne
Cleary Gottlieb Steen & Hamilton LLP
Rue de la Loi 57
B-1040 Brussels
ph.: +32 (0)2 287 2057
fax: +32 (0)2 231 1661
tdunne@cgsh.com

Alee Scott
Constantine | Cannon P.C.
450 Lexington Avenue
New York, N.Y. 10017
(212) 350-2796
ascott@constantinecannon.com