The Antitrust Attorney Blog

How Should the Antitrust Laws Analyze Loyalty Discounts and Bundled Rebates?

March 17, 2014 | Bona Law PC

In the most recent issue of The Antitrust Law Journal, attorney Sean P. Gates describes several possible approaches to these discounts, analyzing the good and the bad for each. His article, Antitrust by Analogy: Developing Rules for Loyalty Rebates and Bundled Discounts, is really quite good.

I identified this article as a must-read in a previous blog post, and finally had the opportunity to review it over the weekend (Note: I had been busy starting a new law firm, so fell behind on my reading). I am glad that I did. Since most of the country is having winter this year, I won’t point out that I read it on my San Diego outdoor patio while enjoying the whiff of freshly-cut lawn, the sight of palm trees, and the distraction of whether to eat a delicious orange right off the tree. I won’t mention it even though after many years in Minnesota—I put in my cold time—I would feel justified in doing so.

Anyway, I recommend the article generally, but more specifically for the following people: (1) antitrust attorneys that are into exclusionary conduct; (2) non-antitrust attorneys with clients that sell in a distribution network (including to retailers); (3) business people involved in pricing and marketing decisions for their company; and (4) antitrust law students that are looking for a good review of various types of exclusionary conduct.

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I Left BigLaw to Start My Own Law Firm . . . Today

March 10, 2014 | Bona Law PC

I am excited to announce that after a dozen years of big-law practice, I am leaving DLA Piper to start my own law firm—Bona Law PC. I believe that through Bona Law I can offer clients the legal services of the best law firms, but in a much more efficient way. I am headquartered in the San Diego, California area, but expect to continue to practice nationally.

My family, friends, and former co-workers have commented lately that I seem very happy—maybe even giddy. It is true. I am as enthusiastic about the practice of law—and life—as I have ever been. I have a wonderful supportive family and am about to embark on a journey that marries my entrepreneurial spirit with a profession that I love. I feel like I am living the dream.

After years of analyzing other markets for antitrust matters, I finally sat down and analyzed my own. My conclusion is the legal market has structurally changed such that the largest law firms are concentrating more and more on their biggest clients and developing such diseconomies of scale that they are no longer competitive for most businesses. Unless a company can provide these law firms with a minimum volume of work, the firms are unlikely to offer a competitive price for their services.

First, matters with less volume could create conflict issues, which are a significant and costly issue for large law firms. Without sufficient volume, it just isn’t worth it for firms to discount their already high prices.

Second, large law firms have huge fixed overhead—leases, management, marketing departments, etc. Moreover, many (probably most) of them have excess capacity, which means that they are paying a lot of attorneys that aren’t billing as many hours as the firm would like. So volume is a big deal.

This is where I come in.

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What Does the Possible Demise of the Securities Class-Action Lawsuit Mean for Antitrust?

February 28, 2014 | Bona Law PC

On March 5, the Supreme Court will hear arguments on whether the fraud-on-the-market presumption in securities class actions should survive. The case is Halliburton v. Erica P. John Fund and it could be groundbreaking. If the Supreme Court jettisons the presumption, it will close a major avenue for securities class-action lawsuits.

Update: The US Supreme Court issued its decision on June 23, 2014.

But what does this mean for antitrust lawsuits? We’ll get to that in a moment.

First, some background: In 1988, the Supreme Court held in Basic v. Levinson that when a shareholder class sues a company under Rule 10b-5 (for misrepresentation, etc.), it need not show that the individual class members relied on the misrepresentations because the stock market is “efficient” and such statements are quickly incorporated into the stock price.

So if you purchased a share of stock after a management official said that the company increased revenue twenty-percent year-over-year even though the manager knew that the revenue numbers were not accurate, you purchased stock that was already inflated from the statements because the market incorporated those statements immediately into the stock price.

Remember the classic book, A Random Walk Down Wall Street? It is all about efficient-market theory. Great book, by the way.

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Congratulations to Team USA Hockey and Especially Warroad, Minnesota

February 16, 2014 | Bona Law PC

Here at The Antitrust Attorney Blog, we like to talk about competition. And what could be a better example of competition than Olympic Hockey. Mostly ignored by all but die-hard fans, hockey—Olympic style—captures the world’s attention every four years, as we all become fans of this exciting sport.

Story lines are everywhere and history unfolds before our eyes, like it did on Saturday when the United States beat Russia in a wild shootout that went on and on. Not surprisingly, the hero from Saturday’s exciting preliminary match, T.J. Oshie, is from a small Northern Minnesota town called Warroad.

As you might recall, even though my family now lives in beautiful Sunny San Diego, we are Minnesota natives. My wife, in fact, has many (and I really mean many) family members that live in Warroad, as well as neighboring town and hockey rival, Roseau, Minnesota.

The two towns are adjacent to the Canadian border, and hockey is kind of a big deal. I have traveled there myself several times. It is a long drive from Minneapolis, best experienced during the warm months. You might be interested to know that two well-run and successful companies also call the area home—Polaris and Marvin Windows.

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Does My Company’s Loyalty-Discount Program Violate Antitrust and Competition Laws?

January 22, 2014 | Bona Law PC

This article is cross-posted in both English and French at Thibault Schrepel’s outstanding competition blog Le Concurrentialiste. Like most antitrust issues today, questions about loyalty discounts are relevant across the globe as competition regimes and courts grapple with the best way to address them.

Companies like to reward their best customers with discounts. It happens everywhere from the local sandwich shop to markets for medical devices, pharmaceutical products, airline tickets, computers, consumer products, and many other products and services.

Customers like loyalty-discount programs (or rebates) because they get more for less. And the reason so many companies offer them is because they are successful.

Everyone wins, right?

Usually. But the program could very well violate antitrust and competition laws in the United States, the European Commission, or other jurisdictions.

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A New Issue of the Antitrust Law Journal is Out!

January 14, 2014 | Bona Law PC

I was excited to find a brand-new crisp copy of the Antitrust Law Journal at my San Diego office today. That may seem like an odd statement, but I am admittedly a bit of a law nerd, particularly when it comes to antitrust and competition issues.

Many lawyers today have, unfortunately, lost the enthusiasm for law that they once had in law school or early in their careers. I have not. I love legal ideas and arguments, and the deeper I can explore a subject, the better.

What is great about antitrust and competition law is that unlike many areas of practice, it is well-connected to the academic and economic world. Indeed, I believe that to truly excel in this area, an attorney must follow and even participate in the exchange of ideas that might seem academic. The ideas in the Antitrust Law Journal, and antitrust articles in university law journals, for example, quickly infiltrate their way into agency practice and court decisions.

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Even Individual Real-Estate Investors Can Violate The Antitrust Laws

January 6, 2014 | Bona Law PC

When you think about a government antitrust investigation, you probably picture monopoly accusations against large companies like Microsoft in the 90’s and early 2000’s or AT&T in the 70’s and 80’s. Or perhaps you imagine a global price-fixing cartel like that depicted in the movie The Informant.

In any event, the target in your mind is a big company, along with their officers and executives, and perhaps some sales people.

The Department of Justice actions against individual real-estate investors in Northern California should shatter those preconceptions. Over the last few weeks, the Antitrust Division of the DOJ has announced a series of plea agreements arising out of its antitrust investigations into bid rigging at real-estate-foreclosure auctions for certain Northern California counties.

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I Commend AT&T and T-Mobile for Fighting

January 5, 2014 | Bona Law PC

Competition is beautiful. As an antitrust lawyer, I often face situations where one side or the other asserts that competition is restricted for some reason. And sometimes it isn’t, but another party claims that it is because it is losing the competition.

Or a government official prematurely acts on a fashionable new paper from a confident economist describing an economic model—with several assumptions having nothing to do with the real world—showing that some business practice violates the antitrust laws. It is a lot of work—but important work—to untangle these allegations.

So when I read an article that shows honest straightforward competition between two companies, I smile.

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“It’s A Wonderful [Competitive] Life”

January 2, 2014 | Bona Law PC

Note: I co-authored this blog entry with my wife, Mary Bona.

We hope you all enjoyed the holiday season!

Along with the holidays come many traditions. One tradition in our family is to watch the heart-warming, iconic holiday film, It’s A Wonderful Life, starring James Stewart and Donna Reed. It’s no surprise that this film is amongst my wife’s favorites, not only because she loves the old classics, but also because, like the main character George, she is a small-business owner, and, like George’s wife (also named Mary), she loves old homes and fixing up the dilapidated ones.

Frank Capra, the film’s director and producer, was a Sicilian immigrant who grew up in the Italian ghetto of San Francisco. He started from very humble beginnings to become one of the most influential directors of his time. During his acceptance speech for the AFI Lifetime Achievement Award in 1982, Capra stressed his most important values:

“The art of Frank Capra is very simple: …the love of people…coupled with the freedom of each individual, and the equal importance of each individual, [is] the principle on which I based all my films.”

He went on to recall “celebrating” his 6th birthday in the miserable steerage section of a boat full of other terrified immigrants. After 13 awful days at sea, the boat stopped, and Capra’s father brought him up to the deck of the huge ship. “’Chico, look at that!’”, his father cried, “That’s the greatest light since the star of Bethlehem! I looked up, and there was the statue of a great lady, taller than a church steeple, holding a lamp over the land we were about to enter, and my father said, ‘It’s the light of Freedom, Chico. Remember that. Freedom.’”

It’s no wonder that, when he finally formed his own independent film production, he titled it “Liberty Films,” and the first thing we see when the movie starts is the tolling of the famous Liberty Bell. Continue reading →

Building an Antitrust and Competition Policy: Where to Begin

December 26, 2013 | Bona Law PC

Let’s pretend that you are starting the new year with an exciting opportunity: You were just named general counsel of a multi-national corporation with several market-leading products.

You received lots of congratulations, high-fives, and kudos during holiday parties and family get-togethers, but you can’t help but start to think about the arduous task ahead.

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