1. Antitrust Treatment of Dominant Firms: Is the Atlantic Getting Wider or Narrower? Ken Glazer ABA Antitrust Section March 31, 2005

2. How Wide Is the Ocean?  In the area of “vertical” monopolization...  The ocean is as wide as ever if not wider.

3. Different Tones  E.U. approach Dominant firm has “special responsibility not to allow its conduct to impair genuine undistorted competition.” Dominant firm has “special responsibility not to allow its conduct to impair genuine undistorted competition.” Emphasized in Michelin II and BA Emphasized in Michelin II and BA  U.S. approach “The successful competitor, having been urged to compete, must not be turned upon when he wins.” (Learned Hand) “The successful competitor, having been urged to compete, must not be turned upon when he wins.” (Learned Hand) “Even an act of pure malice by one business competitor against another does not, without more, state a claim under federal antitrust laws.” (Brooke Group) “Even an act of pure malice by one business competitor against another does not, without more, state a claim under federal antitrust laws.” (Brooke Group)

4. Predatory Pricing  Brooke Group (USSC) Below-cost pricing Below-cost pricing Plus plausible recoupment Plus plausible recoupment American Airlines rejected attempt to broaden test from AVC. American Airlines rejected attempt to broaden test from AVC.  Tetra Pak (ECJ) Not necessary to prove that dominant firm had realistic chance of recouping Not necessary to prove that dominant firm had realistic chance of recouping

5. “Consensual” Exclusive Dealing  E.U. Presumptively illegal Presumptively illegal E.g., Hoffman-La Roche; AKZO E.g., Hoffman-La Roche; AKZO  U.S. Rule of reason Rule of reason Microsoft Microsoft Many upheld (e.g., CDC v. IDEX) Many upheld (e.g., CDC v. IDEX) E.D. struck down recently in Geneva Pharmaceuticals v. Barr Labs E.D. struck down recently in Geneva Pharmaceuticals v. Barr Labs

6. “Coerced” Exclusive Dealing (aka Refusal To Deal)  Strong presumption of illegality in E.U. British Plasterboard British Plasterboard  Weak presumption of illegality in U.S. Lorain Journal Lorain Journal Dentsply Dentsply Greater willingness to examine alternatives Greater willingness to examine alternatives

7. “Fidelity” or “Loyalty” Rebates  Virtually per se illegal in E.U. Reaffirmed by CFI in Michelin II Reaffirmed by CFI in Michelin II  In the U.S. At worst, rule of reason governs At worst, rule of reason governs At best it is per se lawful (Concord Boat) At best it is per se lawful (Concord Boat) Canada Pipe followed rule of reason approach. Canada Pipe followed rule of reason approach.

8. Volume Rebates of Various Kinds  Illegal in E.U. if they have “loyalty- inducing” (Michelin II) or “fidelity-building” (British Airways) effect. Award for increasing purchases over some previous time period (British Airways) Award for increasing purchases over some previous time period (British Airways) Award for purchasing higher amount on a scale applicable to all customers (Michelin II) Award for purchasing higher amount on a scale applicable to all customers (Michelin II)  Lawful in the U.S. unless predatory under Brooke Group

9. Concluding Thoughts  E.U. test: fidelity-inducing or loyalty- enhancing  Very different from U.S. test  But European Comm’n is currently rethinking its approach to dominance.  Will that include proof of dominance?