Manufacturer restrictions on aftermarket competition may be subject to claims under Section 1 or Section 2 of the Sherman Act or Section 5 of the FTC Act. Section 1 of the Sherman Act prohibits agreements that restrain competition.[1] Section 2 prohibits monopolization or attempted monopolization by a single entity, as well as by combination or conspiracy.[2] Liability for monopolization requires proof that the defendant possesses monopoly power in a relevant market and has engaged in “the willful acquisition or maintenance of that power as distinguished from growth or development as a consequence of a superior product, business acumen, or historic accident.”[3] Section 5 of the FTC act prohibits unfair methods of competition.[4] Section 5’s unfair methods of competition standard encompasses conduct that violates the Sherman and Clayton Acts, but also prohibits conduct that does not meet the technical requirements of those statutes.[5] Section 3 of the Clayton Act, which prohibits certain contractual arrangements (such as tying or exclusivity arrangements) involving goods (but not services) that may substantially lessen competition or tend to create a monopoly, also may apply.[6]
- ↑ “Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is declared to be illegal.” 15 U.S.C. § 1. Supreme Court jurisprudence has held that the Sherman Act does not prohibit every restraint of trade, only those that are unreasonable. Certain acts, such as price fixing, market division, and bid rigging, however, are considered so harmful to competition that courts treat them as “per se” violations of Section 1, for which no defense or justification is allowed.
- ↑ “Every person who shall monopolize, or attempt to monopolize, or combine or conspire with any other person or persons, to monopolize any part of the trade or commerce among the several States, or with foreign nations, shall be deemed guilty of a felony … .” 15 U.S.C. § 2.
- ↑ United States v. Grinnell Corp., 384 U.S. 563, 570–71 (1966); see also Verizon Commc’ns, Inc. v. Law Offs. of Curtis V. Trinko, 540 U.S. 398, 407 (2004). A recent FTC decision provides an extended analysis of these requirements. See In re McWane, Inc., 2014-1 Trade Cases ¶ 78670 (F.T.C. Jan. 30, 2014), aff’d McWane, Inc., v. FTC, 783 F.3d 814 (11th Cir. 2015), cert. den. 136 S. Ct. 1452 (2016).
- ↑ “Unfair methods of competition in or affecting commerce, and unfair or deceptive acts or practices in or affecting commerce, are hereby declared unlawful.” 15 U.S.C. § 45(a)(1). See FTC v. Actavis, Inc., 570 U.S. 136, 145 (2013); California. Dental Ass’n v. FTC, 526 U.S. 756, 762 & n.3 (1999).
- ↑ Congress intended Section 5 to have a broader reach than the existing antitrust laws. See Neil W. Averitt, The Meaning of “Unfair Methods of Competition” in Section 5 of the Federal Trade Commission Act, 21 B.C. L. Rev. 227, 239–40 (1980) (describing the Supreme Court’s interpretation of Section 5 and its endorsement of the capacity of Section 5 to reach beyond boundaries of other federal antitrust statutes); FTC v. Indiana Federation of Dentists, 476 U.S. 447, 454 (1986). See Fed. Trade Comm’n, Statement of Enforcement Principles Regarding “Unfair Methods of Competition” Under Section 5 of the FTC Act (Aug. 13, 2015), https://www.ftc.gov/system/files/documents/public_statements/735201/150813section5enforcement.pdf.
- ↑ “It shall be unlawful for any person engaged in commerce, in the course of such commerce, to lease or make a sale or contract for sale of goods, wares, merchandise, machinery, supplies, or other commodities, whether patented or unpatented, for use, consumption, or resale within the United States or any Territory thereof or the District of Columbia or any insular possession or other place under the jurisdiction of the United States, or fix a price charged therefor, or discount from, or rebate upon, such price, on the condition, agreement, or understanding that the lessee or purchaser thereof shall not use or deal in the goods, wares, merchandise, machinery, supplies, or other commodities of a competitor or competitors of the lessor or seller, where the effect of such lease, sale, or contract for sale or such condition, agreement, or understanding may be to substantially lessen competition or tend to create a monopoly in any line of commerce.” 15 U.S.C. § 14. Clayton Act § 3 applies only when both the tying and tied
11
