Antitrust

Son of Rambus

by Lee Gesmer on August 9, 2006

Foundry Networks, Inc. has filed suit against Alcatel in federal court in Delaware. The claims are very similar to the claims in the Rambus litigations. A copy of the complaint is here (pdf file).

Andy Updegrove discusses this case and its similarities to Rambus in his “Son of Rambus” post, here.… Read the full article

Antitrust and the "Single Entity" Doctrine

by Lee Gesmer on July 24, 2006

It is axiomatic that an entity cannot “conspire” with itself. For example, the Supreme Court has held that a parent corporation and its subsidiary are not capable of an illegal conspiracy under the Sherman Antitrust Act.

Of course, as is true with most legal principles, what looks simple at 30,000 feet altitude becomes more complicated the closer one gets to the ground, and the courts have struggled with the definition of a “single entity” in a variety of contexts.

Dean Williamson of the DOJ Antitrust Division has written an interesting and in-depth paper analyzing the law and economics of this issue. The paper, titled Organization, Control and the Single Entity Defense in Antitrust, is published here.… Read the full article

Antitrust. While most people don’t know a lot about antitrust law, they do know that price fixing is illegal. And, if you asked them whether two large oil companies, such as Texaco and Shell, could form a joint company to sell oil throughout the western U.S. at a single price, they’d probably say that the “joint venture” was a technicality, and that it was no different than if Texaco and Shell got together and decided to sell gas at the same price individually.

Well, the Supreme Court would not agree. In Texaco v. Dagher [link] a case decided earlier this year, the operators of 23,000 service stations selling under the Texas or Shell brands of gasoline challenged the western states joint venture of the two giant oil companies for marketing gasoline, with the product still sold under both the Texaco and Shell brands but at the same price.

The Court held that such a joint venture is not “per se” illegal (illegal on its face and indefensible), because Texaco and Shell did not compete directly in the market, but participated jointly through their investment in the joint venture corporation.… Read the full article

Patents, Antitrust. Suppose that you live in a small farming community, Village 1, that relies entirely on its own members for food supplies. I have the only farm that grows corn. Whenever you come to me to purchase corn I tell you that I will only sell you my corn if you also buy a pound of cauliflower for every pound of corn you purchase. Cauliflower is plentiful, and you don’t want to buy my cauliflower (in fact you don’t even like this vegetable), but since you (and your fellow citizens) need corn you have no choice.

Assume that you move to a new community, Village 2. You still need corn, but you discover that there are several purveyors of corn in your new town. You go to the closest of these, and you discover, to your dismay, that this farmer also insists that if you buy his corn, you must also buy his cauliflower.… Read the full article