The Power of Perspectives

The Canadian Bar Association

Rodney Frank

Competition in the Valley

January 15 2015 15 January 2015

There is no such thing as bad publicity, except your own obituary,  Brendan Behan once said. The Irish poet, a self-described “drinker with a writing problem,” might well have changed his tune had he chosen to pursue a career as in-house counsel instead.                       

Indeed a number of headline-grabbing antitrust cases were the focus of discussion at last December’s Spotlight on Antitrust Compliance in the Tech Sector, hosted by the ABA’s Compliance and Ethics Committee. A panel of the first order, moderated by Michelle Lee (Visa), examined what key learnings could be appropriated from these cases when implementing compliance programs.

First, however, was a (chilling, for counselors) tour through the facts:

  • Anant Raut of the Free Press provided a fascinating review of the recent Silicon Valley high tech anti-poaching cases. It is still startling to hear that executives in Blue Chip companies left damming email paper trails leading right up to conspiracy violations. The follow-on civil claims added to the penalties, including those instigated by a judge who rejected an agreed settlement, signalling the plaintiffs had sold themselves short. Clearly, in house counsel’s education and training can never be overkill.           
  • Apple has taken some flak for its treatment of the court appointed monitor in the eBooks case. Interestingly, however, Raut pointed out the monitor was appointed when Apple was still appealing the lower court’s decision. Oh, and the monitor appointed (at Apple’s expense) reportedly charged out at S1100/hour, plus 15% administration fees.                                                                                                         
  • Apple also generated headlines defending allegations of an illegal iPod and iTunes tie-in, by ensuring only those two products worked together. Plaintiffs claimed section 2 Sherman violations and breaches of California consumer and competition statues in the portable player and audio download markets.

An eight person jury sided with the defendant’s position that the software in question improved listeners’ experience, prevented theft, and promoted security; reported Jennifer Driscoll (Sheppard Mullin). This case is under appeal.

  • Bazaarvoice’s litigation with the DOJ shows courts will grant divestiture of acquired assets; and the DOJ will challenge a non-reportable transaction it finds anticompetitive. On top of that Bazaarvoice was saddled with an antitrust compliance monitor after it continued to use technology it had agreed to sell off.
  • Finally, the Qualcomm investigation by Chinese enforcers was reviewed. Authorities allege predatory pricing and abuse of dominance in chip manufacturing. The company is facing one billion dollars in fines, and requirements to reduce patent fees.

What does this disquieting array of high profile enforcement actions mean for in-house counsel? Raut, Driscoll, and Renée DuPree (Google) offered a number of practical tips in designing and implementing compliance programs:

  • First, cover the basics: Senior management support; written policies; training and education; monitoring, auditing and reporting; and disciplinary measures for offside conduct.
  • Off the shelf/paper compliance programs are not good enough. Tailor your program to your company, generic programs do not work.
  • A culture of compliance is fundamental; your program is fatally wounded without the proper tone from the top.
  • Understand your company and clients. Make the program real by talking in the employees own language, and in formats they normally communicate in.
  • Do a thorough risk assessment; it will help you target those most needing training. Also, risk assessment cannot be a one-time thing, it needs to be dynamic.
  • Compliance education and training also is not one and done, institute it as an annual practice.
  • Involve external antitrust expertise when under investigation.
  • Don’t talk to competitors! Certainly not on price, markets, and supply. Do nothing that raises the specter of an arrangement with a competitor. And while on the pedantic – do not write damming emails!

Good advice indeed for in-house counsel, lest they become lawyers with a drinking problem.


In house counsel – Note that during the months of January and February the ABA has a series of Brown Bags on fundamentals of Antitrust Economics – well worth the investment of time for an understanding of key underlying concepts. First up: Market Power, by Valerie Suslow.

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