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When Congress called for a comprehensive review of antitrust law in 2001, Microsoft Corp. had been ruled a monopolist and violator of competition laws in 19 states, mergers had plunged 38% and European regulators had blocked General Electric Co.’s $42 billion bid for Honeywell International Inc. Today, Microsoft has settled with U.S. trustbusters but still battles their European counterparts. Mergers soared in 2005 to $2.7 trillion, a 38% increase from 2004, and the Antitrust Modernization Commission is entering its final months of deliberation. The intensity of interest in antitrust reform has not waned in either the U.S. courts or internationally; the U.S. Supreme Court issued three decisions in the last term but ducked some tough issues, and the European Commission is reviewing modernization of its own monopoly standards, known as Article 82. “The problem is: The list of issues is as long as your arm,” said Stephen Calkins, professor at Wayne State University Law School in Detroit. “The whole thing could overwhelm a congressional audience.” The last time antitrust law came under such intense scrutiny was 1939. If history can be a harbinger, the Temporary National Economic Committee produced 11 bound volumes of the most comprehensive analysis of U.S. antitrust law since its creation, but the panel could not agree on any major changes to the law. Yet for the current antitrust review, a few issues have emerged and ignited the most heat, including whether to: Abandon treble damages after 116 years. Limit the role of individual states in antitrust. Force an end to warring between federal agencies for control of merger investigations. Find a way to achieve more international cooperation. While the commission works, the Supreme Court has avoided the pressing question of how to balance the competing interests of patent and antitrust law. Microsoft raised this in its antitrust case, arguing that enforcement of its copyrights exempted it from Sherman Antitrust Act claims. Although two federal circuits have split since 2000 on how to marry the two opposing legal structures, the high court has not stepped in, according to Eugene Crew, antitrust attorney with San Francisco’s Townsend and Townsend and Crew and lead counsel in 32 California class actions against Microsoft. At the outset, the 12-member bipartisan Antitrust Modernization Commission (AMC) faced criticism as a stacked deck with only one member representing state attorneys general and not one panelist representing plaintiffs’ lawyers or consumers. At least half of the commissioners had some tie to the Microsoft antitrust litigation, according to a 2004 Loyola Consumer Law Review report. “The rumor is that one of the highest priorities is to cut back on the role of the states,” said Robert H. Lande, professor at the University of Baltimore School of Law. “Damages are another priority. The big lesson of Microsoft is you can lose on liability only to win on the remedy. Who cares if you lose, if you get a slap on the wrist as a remedy? That’s what happened to Microsoft,” he said. Donald Klawiter, chair of the American Bar Association’s Section of Antitrust and a partner in Morgan, Lewis & Bockius’ Washington office, agreed that among the priorities, first is whether treble damages are still proper. Among the questions raised: Should some cases be subject to single damages? And should judges be given discretion? Others have urged even higher than treble damages, he said. On May 23, eight members of the AMC voted tentatively to recommend treble damages remain available in all cases. Although some alternatives include assigning single damages in some cases with treble damages retained only for per se violations of the law, such as price-fixing. Lande argued that with no prejudgment interest available, years of delay before damages are awarded and negotiated settlements that reduce potential recovery further, damages are actually too low. But only four commissioners supported a recommendation last month to allow prejudgment interest in all cases. Individual states have become a thorn to those who want antitrust control in the hands of federal courts. A 1977 Supreme Court decision, Illinois Brick v. Illinois, 431 U.S. 720, held that only direct purchasers can recover antitrust overcharges, even if they passed on the charges to their own customers, the indirect purchasers. But 30 states have stepped in to allow indirect buyers to sue in class actions that have produced huge awards. Crew joined 30 plaintiffs’ lawyers in calling on the AMC to recognize the “substantial benefits” to the antitrust system of these indirect-purchaser actions. Klawiter said that the debate in the AMC is coming down to whether direct and indirect purchasers would be subject to federal jurisdiction “so a single judge can look at the entire case and make an award of damages allocated between the two.” The problem is, “The company can be sued and pay the entire overcharge and then pay indirect purchasers-or even multiple layers of indirect purchasers-with no offsets,” said Janet McDavid, an antitrust specialist with Hogan & Hartson in Washington. “The elephant in the room, and the right answer, is that state law should be pre-empted. There should be a single law, but the state attorneys general can’t tolerate that,” she said. One way or another, “the tension and intellectual inconsistency [over Illinois Brick] can’t go on forever,” said Wayne State’s Calkins. An extension of this issue is joint and several liability, a huge problem, said McDavid. “It creates an incentive to settle early and cheaply, leaving the last person standing to pay,” she said. States do have protection as sovereigns against antitrust claims, but what’s known as the state action doctrine has been interpreted very broadly over the years protecting private conduct, not state action, according to Maureen Ohlhausen, director of the Federal Trade Commission’s Office of Policy and Planning. The FTC is attempting to cut back on overreaching by private boards in a South Carolina case against the Board of Dentistry, which, the FTC alleges, illegally restrained competition by restricting services from dental hygienists. The dispute is still pending. Antitrust v. patent law In at least one area, the courts may be heading on a collision course between antitrust, which abhors monopolies, and patent law, which protects them. Crew pointed to a 9th U.S. Circuit Court of Appeals decision that a monopolist can be held liable for antitrust violation for a refusal, based on patent protection, to share technology with downstream competitors. The 9th Circuit created a balancing test between patent and antitrust concerns in Image Technical Services v. Eastman Kodak, 125 F.3d 1195 (1997). The Federal Circuit rejected this approach and held that a patent owner is immune from antitrust scrutiny. Independent Service Organizations v. Xerox Corp., 203 F.3d 1322 (2000). The Supreme Court refused to hear both cases and a similar argument by Microsoft relying on its patents. Perhaps one of the most easily solved, but politically sensitive, issues is bringing an end to fighting between the FTC and the U.S. Department of Justice’s Antitrust Division over which agency should investigate proposed mergers, which is known as the clearance process. “They fight like cats and dogs,” said McDavid. “There is a lot of mud wrestling over who will review a deal.” One of the worst examples was a 12-month fight for control of a digital music investigation. Ultimately, both agencies sent briefs to a mediating law professor who resolved it, but the companies sat on the sidelines waiting for a year. “It was quite stunning,” she said. “In the end the question is whether the AMC will make meaningful recommendations and will Congress heed them. That’s the big question,” said Klawiter.

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