Antitrust Lawyer Blog

Commentary on Current Developments

Epic Games, creator of the popular multi-platform game Fortnite, has filed a complaint in federal district court seeking injunctive relief after Apple booted the game from its App Store.[1]  The event was kicked off when Epic Games introduced the ability to pay for in-app purchases directly through Epic Games, rather than through Apple’s in-app payment processing.  Apple requires that any in-app purchases for apps available in Apple’s App Store must be processed by Apple and that Apple collects a 30% commission on such sales.

Apple’s 30% commission has attracted criticism from app developers claiming that the commission is unfair and a product of anticompetitive practices.  Developers must create apps for a particular operating system (“OS”), and in the case of iPhones and iPads, that includes the iPhone OS (“iOS”).  Apps developed for the iOS must be specifically programmed and, as such, cannot be used for Android OS, Windows OS, or even Mac OS.  Once the app is developed for the iOS, the app is solely distributed through Apple’s App Store, where apps compete against each other for consumer selection.

Epic Games described in their complaint that there are two markets in which Apple has engaged in anticompetitive conduct.  The first is in the app-distribution market, where Apple’s App Store is the only method by which developers can sell their products to consumers.  Second, Apple has engaged in anticompetitive conduct in the in-app payment processing market by not allowing other methods of payment processing.

This week, a United States District Court approved the Department of Justice’s move to terminate the consent decrees (known as the Paramount Decrees) entered into by the government and major movie production and distribution companies nearly 70 years ago.

In 1938, the Department of Justice brought an antitrust action against several companies involved in the production and distribution of motion pictures—including Paramount, after which the decrees are named—alleging that their conduct of led to monopoly power in the distribution market for first-run motion pictures and conspiracies to fix licensing practices, including admission prices, run categories, and “clearances” for substantially all theaters located in the United States.

The consent decrees aimed at preventing film producers and distributors from using their positions to engage in anticompetitive conduct such as granting exclusive licenses based on geography or by tying multiple films into one theatrical license.  The DOJ announced their decision terminate the ParamountDecrees in November 2019.

On June 26, 2020, the Federal Trade Commission (“FTC”) entered into a settlement agreement that allowed Eldorado Resorts, Inc. (“Eldorado”) to acquire Caesars Entertainment Corporation (“Caesars”) for $17.3 billion.


Eldorado agreed to acquire Caesars for $17.3 billion on June 24, 2019. Eldorado is a provider of casino entertainment and hospitality services, operating 23 casino gaming properties. Caesars is a similar provider, operating 53 casino gaming properties in 14 states and in 5 countries outside the United States.

On May 5, 2020, the FTC approved AbbVie Inc.’s (“AbbVie”) $63 billion acquisition of Allergan plc (“Allergan”) on the condition that the merging parties divest three minor products.  The consent agreement was approved by a 3-2 party line vote.

The FTC has a long history of scrutinizing transactions in the pharmaceutical industry, but Commissioners’ statements demonstrate that they are not on the same page with regards to the analytical approach of analyzing pharmaceutical mergers and how to remedy the competitive problems that are identified.

The three Republican Commissioners in the majority adhere to the traditional framework, which examines actual competition between existing treatments and potential competition between existing and pipeline treatments, and then tailors very narrow remedies to address those competitive overlaps.

Beginning in March 2018, President Trump issued proclamations imposing duties on steel and aluminum imports into the United States.  In response, one company filed a complaint last week alleging that the administration of these duties is unconstitutional.  Thyssenkrupp Materials, NA, Inc. and several of its related operating divisions, filed a complaint with the Court of International Trade (CIT) last week seeking to challenge the Section 232 duties.

The complaint alleges improper administration of the exclusion request process.  The Presidential Proclamations imposing the Section 232 tariffs on steel and aluminum imports indicated that the Department of Commerce be permitted to “exclude from any adopted import restrictions” certain steel and aluminum “articles.”   However, the final rules promulgated by the Commerce Department approve exclusions only to the “individual or organization that submitted the request” and that “[o]ther individuals or organizations that wish to submit an exclusion request for steel or aluminum product that has already been the subject of an approved exclusion request may request an exclusion under this supplement.”

As a result, the complaint alleges that the Commerce Department has unfairly and arbitrarily granted exclusions of steel and aluminum products to some requesters, yet the same products imported by a different party may have to pay the duties on items subject to Section 232.   Thyssenkrupp lists 27 non-exhaustive subheadings under which it has imported since the Section 232 duties went into effect.  While Thyssenkrupp paid duties on these imports, the complaint alleges that other companies had the benefit of having their products under the same subheadings excluded from the duties.

McDonald’s couldn’t get its no-poach claims dismissed for lack of standing so it will have to continue to litigate allegations that it drove down wages by enforcing a “no poach” agreement barring different franchise locations from hiring one another’s workers.  The case is  Turner v. McDonald’s, USA LLC, N.D. Ill., No. 19-cv-5524, 4/24/20 which is consolidated with Deslandes v. McDonald’s, USA, LLC, N.D. Ill., No. 17-cv-4857.
McDonald’s arguments were limited because of past decision in Deslandes.  In Deslandes, the court held that the plaintiff employees plausibly alleged that the franchises’ no-poach restraints could be found unlawful under a quick-look analysis so McDonald’s did not move to dismiss for failure to state a claim.  
The Northern District court rejected McDonald’s argument that the lead plaintiff lacked standing because she was never denied a job based on the no-poach policy.  The Northern District’s opinion stated that “[t]he argument misses the point of plaintiff’s alleged injury: Plaintiff alleges she suffered depressed wages.” The court added that “[p]laintiff’s claim is akin to a supplier who sells at a reduced price due to the anti-competitive behavior of a cartel of buyers.”  The court also found that complaint sufficiently supported the claim that the policy’s effects could be isolated from broader economic conditions like the unemployment rate.  The court added that “[p]laintiff’s causation allegations are plausible due to basic principles of economics.”  Indeed, “[i]f fewer employers compete for the same number of employees, wages will be lower than if a greater number of employers are competing for those employees.”  So, the case will move forward.
The suit is part of a wave of challenges to franchise no-poach provisions amid considerable uncertainty about their legality.  Franchise employees have filed a number of private class actions in federal courts across the country. The complaints challenge the use of no-poach agreements in franchise agreements, with lawsuits pending against several fast-food restaurant chains, tax preparation services (e.g., H&R Block), car repair services (e.g., Jiffy Lube) and other franchise-based businesses that include broad no-poach clauses in their franchise agreements.  The private actions typically allege that agreements among the franchisor and franchisees to avoid poaching employees violate Section 1 of the Sherman Act and call for per se treatment or, in the alternative, quick-look review of the alleged conduct.

On March 31, 2020, a group of U.S. Mattress producers filed an antidumping (“AD”) and countervailing duty (“CVD”) petition against mattresses from Cambodia, China, Indonesia, Malaysia, Serbia, Thailand, and Vietnam.  During the preliminary investigation, the International Trade Commission (the “Commission”) is tasked with evaluating the competitive effects of the imports to determine whether the imports cause material injury to the domestic market.  Upon its finding, the Commission may make a preliminary decision to impose duties until it makes a final determination.

The Department of Justice (“DOJ”) filed a Statement of Interest in the matter requesting that the Commission take into account the effects of COVID-19 on the domestic market and whether the imposition of duties on mattress imports are in the best interests of U.S. consumers.  In particular, the DOJ cited to the increase in demand for mattresses in light of the COVID-19 pandemic, and that such demand “will continue to increase significantly during the pandemic as communities around the country expand hospital capacity.”

Given the backdrop of the global pandemic, and the fact that “demand may outpace domestic supply”, DOJ wants to ensure that the imposition of dumping margins, ranging from 48% to more than 1000%, do not increase mattress prices nor affect the supply of mattresses needed around the country.

On March 9, 2020, a new U.S. antidumping petition was filed against common alloy aluminum sheet (“CAAS”) imports from 18 countries.  The Petitioners in the case are Aleris Rolled Products, Inc., Arconic, Inc., Constellium Rolled Products Ravenswood, LLC, JW Aluminum Company, Novelis Corporation, and Texarkana Aluminum, Inc.

The countries named in the Petition are Bahrain, Brazil, Croatia, Egypt, Germany, Greece, India, Indonesia, Italy, Oman, Romania, Serbia, Slovenia, South Africa, South Korea, Spain, Taiwan, and Turkey.  In the petition, it alleges that these countries are “dumping,” meaning that they are exporting the product at issue, CAAS, at a lower market price than it would charge normally in its own market in its home country.

The alleged anti-dumping margins for each country are as follows:

On February 18, 2020, a group of unions, consumer groups, and public interest organizations filed a letter with the U.S. Federal Trade Commission (“FTC”) raising concerns that the divestiture of Allergan plc’s (“Allergan”) pipeline drug, brazikumab, will not succeed unless the FTC addresses AbbVie’s use of rebate walls.

Consumer Group Concerns Regarding Rebate Walls and the Proposed Divestiture

The letter expresses concerns that the proposed divestiture to AstraZeneca of Allergan’s brazikumab, a drug in development, is inadequate to address the clear anticompetitive effects of the AbbVie/Allergan merger.  The letter makes the following points:

On January, 17, 2020, smaller rivals such as PopSockets, Basecamp, Sonos, and Tile testified to the the House antitrust subcommittee about how they have been bullied by big tech giants such as Google, Apple, Facebook, and Amazon and called for swift action.

According to the New York Times, the smaller rivals, which have largely been publicly quiet until the hearing, finally stepped up to the plate and sounded off on big tech at a hearing in Boulder, Colorado.  The Congressional subcommittee heard stories of technology giants wielding their massive footprints and platforms as weapons, allegedly copying smaller competitors’ features or tweaking their algorithms in ways that stifle competition.

The pleas for regulatory relief resonated with lawmakers, led by Rep. David N. Cicilline (Democrat – Rhode Island), the chairman of the House’s antitrust subcommittee. Cicilline noted that “it has become clear these firms have tremendous power as gatekeepers to shape and control commerce online.”

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