Antitrust

At his core, Jonathan Pollard is an antitrust and competition lawyer. Pollard’s groundbreaking work in defending non-compete cases and changing non-compete law is built on his knowledge of antitrust law. Pollard began his career at Boies, Schiller & Flexner where he dedicated much of his time to antitrust litigation. Over the past decade, Pollard has brought that antitrust knowledge into the arena of non-compete litigation, often reminding others that Florida’s non-compete law is part of the Florida Antitrust Act. Pollard has litigated both sides of antitrust cases, but is more interested in plaintiff-side antitrust work. In addition to antitrust litigation, Pollard has served as an expert witness in litigation related to antitrust and competition law.

Given Pollard’s expertise on non-compete law, the Firm is particularly interested in antitrust matters that arise at the intersection of antitrust and employment law. Specifically, the Firm’s antitrust practice is focused on the following types of matters:

• Monopolists or attempted monopolists abusing non-compete agreements. Pollard has written extensively about non-compete abuse as an antitrust violation. Per Pollard, post-employment non-compete agreements are paradigmatically horizontal restraints of trade and should be evaluated as such. This would open the door to per se illegality or illegality under a quick look analysis. However, this is a difficult case to make based on current law. Instead, a far more viable antitrust/non-compete claim arises when there is a dominant actor with market power. Once a company has market power (or monopoly power), its conduct is subject to heightened scrutiny. A monopolist (or near monopolist) using overly broad, abusive, illegal non-compete agreements gives rise to a Section 2 antitrust claim. 

• No-poaching agreements among market competitors. Many companies are not satisfied by restraining labor competition through use of their own unreasonable non-compete agreements. Instead, to obtain an even stronger grip on the labor market, these companies enter horizontal no-poaching agreements with their competitors and rivals. These agreements provide that Company A and Company B will not hire each other’s’ employees, or, will not hire each other’s’ employees without permission. No-poaching agreements give rise to some of the strongest antitrust claims. Beyond that, companies that engage in no-poaching arrangements may also be subject to criminal

• Wage fixing agreements among competitors. The ultimate goal of non-compete abuse and no-poaching agreements is to restrict employee mobility, limit labor competition, and ultimately suppress wages. Essentially, these types of anticompetitive restrictions make it harder for employees to switch jobs. When it is tougher to switch jobs, companies can exploit that situation by paying lower wages. In today’s economy, companies routinely engage in this sort of illegal anticompetitive behavior. Sometimes, companies go directly to the issue of wages and broker wage-fixing agreements with their competitors. For instance, a private security guard company conspires with multiple competitors to fix wages for entry level hires at $11 an hour. In these types of cases, industry groups or trade associations frequently play a central role in the conspiracy. 

• Customer or territory allocation schemes. Non-compete abuse and efforts to restrain employee mobility are often the tip of the iceberg. Where this type of misconduct exists, there is often more. In many instances, a company or partnership breaks up. Or, a high-ranking executive goes from one company to another. Afraid of losing market share, companies routinely make pacts with their competitors to allocate customers or markets. For instance, Company A and Company B agree to divide the map into exclusive territories. Company A will not sell into Company B’s territory and vice-versa. The goal: Both companies protect their market share and avoid price competition.

If your rights have been impacted by any of the foregoing situations, or a similar anticompetitive scheme, contact Pollard PLLC at 954-332-2380. More background information on federal antitrust law is provided below.

The Sherman Act: The Basis for Antitrust

 The Sherman Act prohibits:

• Contracts, combinations and conspiracies in restraint of trade (Section 1).
• Monopolization, attempts to monopolize, and conspiracies to monopolize (Section 2).

The Sherman Act and the relevant body of case law interpreting the Act is vast and incredibly complex. Some key points to note:

Section 1 – Contracts & Combinations

• Naked Restraints of Trade: The most clear-cut examples of antitrust violations are horizontal restraints of trade among competitors. Examples include price-fixing and market allocation schemes. These types of restraints are innately so anticompetitive that they are likely to be considered per se or automatic violations of the antitrust laws. Almost every other potential antitrust violation will be evaluated under what is known as a rule of reason analysis: This basically just means reasonableness.
• Vertical Restraints of Trade: Vertical restraints of trade generally, by nature, are less likely to raise anticompetitive concerns. Vertical restraints are almost always evaluated under the rule of reason. Typical vertical restraints include the following:
• Tying: The seller has market power in a particular product. The seller says if you want this product, you also have to buy this other product. Basically, the seller is using its power in one market to force buyers to purchase another product that they do not want.
• Exclusive dealing: A party agrees to purchase only from a particular manufacturer or distributor. These are tough claims to prove and require a high degree of market foreclosure and clear anticompetitive effects.
• Resale Price Maintenance: The seller fixes the price at which the buyer can resell the product. Both minimum and maximum resale prices are subject to the rule of reason.

Section 2 – Monopolization & Attempted Monopolization

• Monopoly power: There is no claim for monopolization unless the defendant has monopoly power in the relevant market and has maintained that power through some type of unfair or anticompetitive means.
• Threshold: As a general rule, it is unlikely that monopoly power exists with a market share of anything less than 50%.
• Anticompetitive conduct: In order for a monopolist or attempted monopolist to be liable for antitrust violations, there must be anticompetitive or exclusionary conduct. This is a rule of reason, anticompetitive effects must outweigh any competitive benefits analysis.
• Harm to competition: Harm to a competitor is irrelevant. The antitrust laws are not meant to protect competitors. They are meant to protect competition itself.
• Antitrust standing: Here’s where many plaintiffs lose their antitrust cases. They lack antitrust standing. This happens all the time. Big firms pursue antitrust cases, rack up hundreds of thousands of dollars in fees and then lose the case on antitrust standing. Any antitrust lawyer with half a brain knows that antitrust standing and Article III standing are two very different things. Antitrust standing is much narrower. In order for a plaintiff to have antitrust standing, the plaintiff must have (1) antitrust injury (harm of a type that the antitrust laws were designed to prevent) and (2) must be an efficient enforcer. Let’s unpack this: Antitrust injury is the anticompetitive effect of an anticompetitive act in violation of the antitrust laws. There should be a causal chain. Efficient enforcer is much more complicated. That requires the plaintiff to demonstrate – in brief – that they have a direct injury, clear damages are well-suited to vindicate the alleged harm.

No-Poaching Agreements

Competitors sometimes make agreements with their rivals that they will not hire each other’s employees. These agreements are commonly known as no-poaching agreements. Under antitrust law, no-poaching agreements are referred to as “horizontal” restraints of trade because the agreements exist between companies on the same level of the market. In almost all instances, no-poaching agreements between industry rivals are illegal and violate the antitrust laws. What’s more, no-poaching agreements are generally considered “per se” or automatic antitrust violations. This is because no-poaching agreements serve no legitimate purpose. Their only function is to lock up employee talent, suppress wages and reduce competition. Simply put, no-poaching agreements prevent employees from earning fair compensation in the market and make it harder for employees to move to a better career opportunity. These types of agreements are incredibly harmful to working people.

One of the most noteworthy no-poaching cases involved a conspiracy among Apple, Google, Intel and others. The companies involved agreed not to hire each other’s employees. See, e.g., In re High Tech Employee Antitrust Litigation (N.D. Cal. 2015). That case resulted in a settlement of $415 million, paid to tech workers who were impacted by the conspiracy.

Even more recently, the Department of Justice has reaffirmed its commitment to both civil and criminal prosecution of no-poaching conspiracies. In April 2018, the DOJ announced a civil settlement in a no-poaching case involving two of the largest companies in the rail equipment supplies industry. Beginning in 2009, Knorr-Bremse AG and Westinghouse Air Brake Technologies Corporation (Wabtec) had an explicit, written no-poaching agreement. That agreement was illegal, violated the antitrust laws, and impacted thousands of workers in the industry.

Robinson-Patman Act: Price Discrimination

Here’s the most misunderstood and maligned antitrust law on the books today: The Robinson-Patman Act of 1936. The Act prohibits price discrimination. The Act was enacted to address the comparative competitive advantage that large purchasers would have versus small purchasers in the marketplace. The Act can be best understood through an actual example:

Example of Actionable Price Discrimination

Take two companies that sell various printed paper advertising products: Company A and Company B. A and B both buy paper inputs from paper manufacturers. They print their products and then sell those products to end-users. Company A is massive and has induced the paper manufacturers to treat it as a favored customer and give it lower prices than the prices extended to its competitors, like Company B. Company A has even gone so far as to threaten to pull its business from paper manufacturers if they offer the same pricing to Company B. The result? Company B pays more for the same products/inputs. Company B cannot compete with Company A. This is a classic Robinson-Patman claim. In fact, this specific example is drawn from the recent case Millcraft Paper v. Veritiv Corporation (N.D. Ohio 2016) in which the court denied the defendant’s motion to dismiss.

Elements of a Price Discrimination Claim

Drawing from a recent federal appellate decision, these are the elements of a Robinson Patman Act claim:

(1) that multiple sales were made to two different purchasers in interstate commerce; (2) that the product sold was of the same grade and quality; (3) that defendant discriminated in price as between the two purchasers; and (4) that the discrimination had a prohibited effect on competition.

Defenses to Robinson Patman Claims

Functional Availability: The plaintiff claims price discrimination, but in fact, the seller made the same terms available to the plaintiff. For example: The seller offers a discount for an exclusive relationship with downstream distributors. The plaintiff declined to enter such an exclusive relationship (meaning refused to make the seller its exclusive supplier). In such a scenario, the same price was functionally available to the plaintiff, but the plaintiff opted not to take the deal. Note: Volume discounts can get tricky and CAN violate the RPA when smaller customers cannot afford to participate.

Cost Justification: This defense is rarely raised because it is so difficult to prove. If the buyers are buying the same exact product, then the cost to make that product should be the same. In order to establish this defense, a RPA defendant would have to prove that the price discrimination was based on differences in the costs of manufacturing, distributing or delivering the same exact goods.

Changing Conditions: Think fire sale. Market conditions changed drastically. The products at issue are perishable, deteriorating or seasonal. The seller is a distressed company under court process.

Meeting Competition: The seller was matching a lower price set by one of its competitors. Suppose a long-time buyer goes to its widget supplier and says, “I’m taking all my business to Widget Co. because they’re giving me a better price.” That is potentially a defense for the seller: meeting competition in the market place. Note: Sellers can rely on the buyer’s representations. They don’t need to launch an investigation and confirm their competitors prices (and doing so can get sticky because of potential price fixing claims).