Antitrust & Competition Policy Blog

Antitrust Cases on the 06-07 Supreme Court Docket

The Supreme Court denied cert in the much-watched Schering-Plough case, leaving the question of the antitrust treatment of reverse payments in patent litigation settlements to be decided, I guess, in the pages of law reviews or perhaps over drinks after a spirited Antitrust conference. 

The Court did grant cert in a case involving the sufficiency of evidence to plead antitrust conspiracy (Bell Atlantic v. Twombly) and in a case involving predatory bidding (Weyerhauser v. Ross-Simmons). The respective appellate court opinions can be downloaded below.

Second Circuit opinion in Bell Atlantic:  Download BellAtlantic.pdf

Ninth Circuit opinion in Weyerhauser:   Download Ross-Simmons.pdf

The Uncharted Role of John Lord O'Brian in Antitrust Law

      As anyone who has addressed a correspondence by snail-mail to someone at The University at Buffalo SUNY Law School knows, the school is housed in O'Brian Hall on the North Campus of SUNY-Buffalo.   Having worked for six years in the upper reaches of O'Brian Hall, I developed a certain curiosity about the namesake.  I, of course, saw his name listed as counsel in many prominent antitrust cases (Line Material, Appalachian Coals, Hartford-Empire) and had a vague sense of his role in the Hoover Administration as Assistant Attorney General for the Antitrust Division.  But other than those randomly gleaned facts,  I had very little sense of the person whose name marks one building among the cluster of North Campus.

     Fortunately, the University of Buffalo Law School library is a repository  of John Lord O'Brian's papers and oral history.  The collection provides an invaluable gateway into a person whose career spanned most of the twentieth century and a vista on the development of antitrust law and economic regulation from the 1910's to the 1960's.   I spent a day last week looking through the materials and will be posting reports about what I discovered.   Today's post gives some general background about the person.  Future posts will look at his work as head of the Antitrust Division from 1929 to 1932 and at the many antitrust cases he litigated, starting in 1913 when he was a prominent US attorney in Buffalo, New York, and ending in 1959, when he was a partner in Covington & Burling.   The materials in the collection were frankly fun to look through and include correspondences with Felix Frankfurter, Charles Evan Hughes, and other prominent figures from the 1920's, 1930's and 1940's.   Documents from O'Brian's work on Ashwander v TVA (the Supreme Court case upholding the TVAs as within the scope of Congressional power), the RCA breakup (perhaps the AT&T case of its day),  Appalachian Coal, and on the War Production Board during WWII, I hope, will entice scholars to pursue some extensive research on the development of economic policy in the United States as witnessed by an important player.

    John Lord O'Brian was born in Buffalo, NY, on October 14, 1874, and passed away in Washington, D.C., buried in National Cathedral, on April 10, 1973.    A graduate of Harvard College and University of Buffalo Law School, he was active in New York state politics at both the local and state levels. His federal service began with his work as U.S. Attorney for the Western District of New York from 1909-1914.   During this time, he worked on a handful of antitrust cases, one of which was against Eastman Kodak Co.   World War One brought O'Brian to Washington, D.C., where he was Head of the War Emergency Division in the Department of Justice from 1917-1919.   As Head, he helped the Department to prosecute dissidents under the Espionage and Sedition Acts.  Cornell University historian Richard Polenberg chronicles O'Brian's work and his views on freedom and security in Fighting Faiths: The Abrams Case, the Supreme Court, and Free Speech (1987).    In 1955,  O'Brian would give the Godkin lecture at Harvard University, entitled National Security and Individual Freedom.  His lecture was aimed at the McCarthy hearings and warned against the use of Big government to subvert the influence of "foreign ideology."  The main conclusion of the 1955 lecture was that Big Government was unnecessary to combat foreign ideology in light of the American public's native ability to withstand such influence.

     O'Brian's reputation in national politics was sealed by his appointment as Assistant Attorney General of the Antitrust Division in 1929.  He had been considered for Solicitor General, but the slot went to the Charles Evans Hughes.   The letters of congratulation that followed the announcement of O'Brian's appointment at the Antitrust Division illustrate his influence. Judge Learned Hand's scripted letter stated that the position of antitrust chief "seems really to offer opportunies for doing things that it would be hard to equal.  A man of imagination, firmness and wisdom can make out of the position almost anything."  Felix Frankfurter,  from Harvard Law School, rejoiced at his appointment "not because I expect you toi make a dent on the so-called trust problem, but because I expect you to have a good time in Washington and through your presence add to the influences for wisdom and skill in the administration."  Frankfurter also expressed gloom "about the state of our profession throughout the country" and hoped that through the newly appointed Attorney General William Mitchell "by force of example the Department of Justice can have considerable influence upon the Bar generally."

     After working on some prominent antitrust cases, including overseeing the RCA breakup, about which more in future posts,  O'Brian resigned from his position as Assistant Attorney General in 1932 after Hoover's defeat in the election to Roosevelt.    His decision seemed to be based on a desire and neeed to return to private practice, rather than party politics.  O'Brian was a lifelong Republican, but he was able to work across party lines.  One example of his bipartisanship is his work as Special Counsel to the Tennessee Valley Authority where he worked to defend the agency against a challenge by a shareholder named John Ashwander.    O'Brian argued the case successfully to the Supreme Court, which ruled in 1939 that the establishment of the TVA was not outside the scope of Congressional authority.  During the course of the litigation,  O'Brian at one point submitted his resignation from the case.  His resignation was not accepted.   What prompted O'Brian's decision was news about Roosevelt's Court packing plan, news that made him sicker, according to an interview with O'Brian as part of the Columbia oral history project, than when he heard about the sinking of the Lusitania.   Despite his hesitations, O'Brian was influential in securing a constitutional victory that expanded the scope of Congressional power. 

    After his stint with the TVA, O'Brian served in private practice before the US' entrance into WWII.    As the US moved into the War,  O'Brian moved to to a position as General Counsel of the War Production Board, where he served until 1944.  In 1944, O'Brian moved to Covington & Burling, where he was a named partner from 1949-1951, and where he remained until his passing. 

   John Lord O'Brian's distinguished career included work on several prominent antitrust cases both as a private and as a government attorney.   A Westlaw search uncovers over thirty antitrust cases from 1913 to 1959 in which he was listed as counsel.  This list includes several classic cases.  Future posts will delve more deeply into his work with the Antitrust Division and the many cases that he litigated.

Collusion by Underwriters: Violation of Securities Law, Antitrust Law, Both or Neither?

SEC Commissioner Paul Atkins published a compelling editorial in this Saturday's Wall Street Journal ("A Serious Threat to our Capital Markets," WSJ, June 10, 2006, A12) urging the Supreme Court to grant review of Billing v. Credit Suisse First Boston et al, a 2nd Circuit decision holding that alleged market manipulation by securities underwriters might be actionable under the Antitrust laws, specifically Section 1 of the Sherman Act and Section 2(a) of the Robinson-Patman Act.  The 2nd Circuit opinion (Download 039284p2.pdf ) overruled the district court's opinion, which found that the underwriters had implied immunity against the antitrust laws under securities regulations.  Commissioner Atkins' editorial points out the SEC, in cooperation with the NASD, has kept a vigilant watch over the IPO market and that the type of conduct at issue in Billing has been dealt with by both the Commission and industry self-regulation.  Citing Verizon v. Trinko, Mr. Atkins concludes that antitrust claims should be immunized when a detailed regulatory scheme, such as the securities laws, exists to correct the problem.  When such regulation exists, "antitrust intervention offers only slight benefits and high potential costs."  Among the costs mentioned are the effects of the spectre of antitrust class action litigation inhibiting investment in capital markets.  In other words, the Commission is warning against securities class action litigation disguised as antitrust claims. 

I hope the Court does grant review in Billing.  In our post-deregulatory environment, it would be helpful if the Court clarified the relationship between regulated industries and antitrust law.  Verizon v Trinko, while arguably providing the correct result, was a confused opinion, especially with Justice Scalia's stark language about antitrust law, the Magna Carta, and exceptions from competition for Congressionally approved monopolies.  A clear opinion about implied preemption would be a useful corrective to Trinko.

Class Action Against Bar Bri

As everyone knows by now, a class was certified in the suit against Bar Bri claiming territorial divisions and other antitrust violations.  Below are copies of the complaint, the class certification, and Order Appointing a Special Master.  Thanks to Eliot Disner of McGuire Woods for passing these on. 

Download barbri_1st_amd. Complaint.PDF

Download class_certification_order.pdf

Download show_case_doc_116_173445_374_1.pdf

Professor Cass on "Antitrust Tourism"

Professor Cass of Boston University School of Law has an interesting editorial in The Wall Street Journal of Monday, June 5, 2006.  His target is the filing of a complaint by Adobe before the European Commission in Brussels, accusing Microsoft of anti-competitive acts such as illegal bundling.  The editorial, essentially, characterizes Adobe's complaint as yet another use of competition law to target competitors as a tactical move in a business dispute.  Professor Cass concludes:

"Narrowly circumscribed antitrust law can promote competition through rules and procedures that reward business acumen.....But when businesses can import government muscle from any friendly forum to use against competitors, bypassing the legal regime that seems best to govern those businesses, competition and consumers suffer--along with our economies and respect for the rule of law."

Professor Cass makes some interesting points, but he seems to conflate two things: antitrust law that may be substantively questionable and, what can be described as, procedural gamesmanship in using antitrust suits in an anti-competitive way.  The two, of course, are related, but the charge that Adobe is "bypassing the legal regime tht seems best to govern these businesses" arguably privileges the US forum over the EC.   Both Adobe and Microsoft do substantial business in Europe; it is not clear why the EC does not also "govern those businesses."  Perhaps, there is some forum shopping going on, and that there is a need for harmonization.  Perhaps, there is a case to be made that US antitrust law is more correct than EC competition law (I am somewhat agnostic on this point).   But to characterize Adobe's actions as "antitrust tourism" undermining the rule of law  and respective economies overstates the case.