United States
Answer ... In the United States, the mere possession of monopoly power alone is insufficient to support a finding of monopolisation. Monopolisation requires the possession of monopoly power in a relevant market coupled with anti-competitive conduct to acquire or maintain that power. That said, there are two approaches to monopoly. The first is forward looking (preventative) and is based on Section 7A of the Clayton Act (15 USC § 18A), which examines the effect of a proposed merger or acquisition (of stock or assets) in a relevant market. The question is whether the potential effect of a merger or acquisition “may be substantially to lessen competition, or to tend to create a monopoly” in any line of interstate commerce. In other words, what is the likelihood for monopoly to exist if the merger or acquisition is consummated? The second approach is more of a traditional approach to monopoly law: what is the actual anti-competitive effect on competition? As to mergers and acquisitions, Section 7 of the Clayton Act (15 USC § 18) asks whether the effect of a prior consummated merger or acquisition “may be substantially to lessen competition, or to tend to create a monopoly” in any line of interstate commerce. By contrast, Section 2 of the Sherman Act (15 USC § 2) asks whether a monopolist’s conduct was sufficiently exclusionary to “unreasonably restrain” interstate commerce. The analysis is referred to as ‘the rule of reason’, which asks whether the anti-competitive effects of the monopolistic restraint are outweighed by any pro-competitive effects in the effective area of competition. Section 2 of the Sherman Act makes unlawful not only the completed act of monopolisation, but also attempted monopolisation and conspiracy to monopolise. While Section 2 of the Sherman Act makes monopolisation, attempted monopolisation and conspiracy to monopolise criminal acts, these are very rarely prosecuted criminally. Furthermore, the Federal Trade Commission’s (FTC) authority extends to prevent the formation of monopoly under Section 5 of the Federal Trade Commission Act (15 USC § 45).
United States
Answer ... In the United States, once an entity is found to possess monopoly power in a relevant market, how that entity acquired or maintained that power becomes the focus. The acquisition or maintenance of monopoly power as a consequence of a superior product, business acumen or historical accident is lawful. The acquisition or maintenance of monopoly power in a relevant market by exclusionary means, by contrast, can lead to a finding of monopolisation. Such conduct can exist, for example, in the misuse of contract devices or IP rights. Evidence of improper leveraging or predatory pricing may also be relevant. Recently, the FTC has advanced the theory that a firm’s prior acquisition of one or more nascent competitors can furnish evidence of exclusionary conduct.
United States
Answer ... In the United States, M&A transactions (and parties) of a certain size must notify the Antitrust Division and the FTC prior to consummation, to give the regulators time to analyse the potential for monopoly (Section 7A of the Clayton Act (15 USC § 18A)). Potential mergers or acquisitions that pose a serious risk of monopoly can be challenged to enjoin the consummation or be permitted to consummate with certain competitive restrictions or divestiture requirements. As to closed mergers or acquisitions, or to conduct of targets suspected of monopolisation, the Antitrust Division and the FTC can initiate an investigation to determine whether monopolisation has occurred. The same is true for the state attorneys general within their own states. Furthermore, the FTC’s authority extends to prevent the formation of monopoly under Section 5 of the Federal Trade Commission Act (15 USC § 45).
United States
Answer ... In the United States, both the Antitrust Division and the FTC may issue civil investigative demands (CIDs) to the entity under examination, as well as to industry participants in the relevant market. The FTC can initiate its own investigation into monopoly. The Antitrust Division can file a civil lawsuit in federal court alleging monopolisation or can seek to enjoin the consummation of a proposed merger or acquisition. The state attorneys general of each state can file a civil action in federal or state court.
United States
Answer ... In the United States, third parties are permitted to complain to the federal or state regulators and/or to give evidence in support of a civil action brought by a federal or state regulator. In addition, it is quite common for third-party market participants to receive CIDs from a federal or state regulator to gather evidence of monopoly.
United States
Answer ... In the United States, federal and state regulators have the authority to investigate monopolisation claims and use discovery tools – including CIDs and depositions – as to the target and interested parties within the industry.
United States
Answer ... In the United States, while federal and state regulators have the authority to investigate monopolisation claims and use discovery tools – including CIDs and depositions – as to the target and interested parties within the industry, targets and interested parties have rights as well. Targets have the right to:
- defend themselves against allegations of monopolisation or achieving monopoly through a merger or acquisition; and
- offer defensive evidence that the target did not (would not) acquire monopoly power in the relevant market or that the relevant market itself was improperly defined.
Interested parties on both sides of the government’s position could get drawn into the investigation, willingly or not. Interested parties may receive third-party subpoenas from the government (CIDs) or from the target itself requesting documents and/or depositions. Interested parties have rights to limit the scope of such discovery devices or seek protections from a court of proper jurisdiction.
United States
Answer ... In the United States, federal and state regulators (and courts) consider a wide variety of relevant market factors, including potential competitive and anti-competitive features of an alleged restraint, in analysing monopoly.
United States
Answer ... In the United States, federal and state regulators can (under certain circumstances) suggest remedial changes with a target during an investigation to avoid a monopolisation determination, including but not limited to structural changes, such as sale of certain assets or lines of businesses – particularly within the ambit of pre-merger investigations under Section 7A of the Clayton Act (15 USC § 18A).