US Antitrust Laws Homework
1. Go to the Federal Trade Commission (FTC) website. Once there in the ‘Search’ box, type in a term or terms you believe might reveal FTC involvement with aviation matters (e.g. aviation, airline, air carrier, etc.). After you have discovered one, describe in a short paragraph, consisting of a couple of sentences, an instance of such involvement (e.g. type of action/opinion, entities related to aviation involved, crux/aspect of the order/decision/input, etc.).
Official Airline Guides, Inc. versus Federal Trade Commission (FTC) is a case of a monopolist publisher of flight schedules which was found to have discriminated against commuter airlines in favor of certified air carriers. The US Court of Appeals found no evidence against FTC imposing any improper burden (United States Court of Appeals for the Second Circuit 1980).
2. British and Virgin Airlines discussed fuel surcharges at least six times during an 18-month period from 2005 through 2006 as a result the two companies’ fuel surcharges rose in tandem from 5 pounds (about $10) to 60 pounds (about $120). Would Britain’s Office of Fair Trading be able to establish an anti-trust violation?
Yes. In the Office of Fair Trading (OFT) press release in August 1, 2007, Virgin Atlantic gave full details to the OFT regarding the said discussion with British Airways. Consequently, British Airways admitted collusion over those fuel surcharges and hence, OFT was able to complete its investigation and close the case. British Airways was penalized with £121.5 million while Virgin Atlantic had no penalty. Virgin Atlantic was the first company to give full details on the violation. Thus, Virgin Atlantic qualified for “full immunity under the OFT’s leniency policy” (Office of Fair Trading 2007). In the said policy, a company involved in the cartel and gives full details on such cartel activities will be free from penalties on such prohibited cartel conducts. Moreover, any company personnel involved in the said disclosure will be immune from criminal prosecution. (Office of Fair Trading 2007).
3. David Ungar holds a Dunkin Donuts franchise. The terms of his franchise agreement require him to use only those ingredients furnished by Dunkin Donuts. He is also required to buy their napkins, cups and so on, with the Dunkin Donuts trademark on them. Is this an illegal tying arrangement? What if Dunkin Donuts maintain that it needed these requirements to maintain its quality levels on a nationwide basis? (Ungar vs Dunkin Donuts of America, Inc, 531 f2d 1211 3rd cir. 1976).
No, this is not an illegal tie-in. The Court of Appeals notes that “to prove a per se illegal tie-in, a plaintiff must establish three things…:” a) “’an agreement by a party to sell one product but only on the condition that the buyer also purchases a different (or tied) product.’ Northern Pacific Ry. v. United States, supra, 356 U.S. at 5, 78 S.Ct. at 518, 2 L.Ed. 2d at 550;” b) “…a seller ‘has sufficient economic power with respect to the tying product to appreciably restrain free competition in the market for the tied product.’ Ibid. at 6;” and c) “…a ‘not insubstantial amount of interstate commerce is affected.’ Ibid.” (United States Court of Appeals for the Third Circuit 1976). The US Court of Appeals noted that the district court erred when it rejected the individual coercion doctrine thereby removing the burden of proof from the plaintiff of its accusation of illegality and instead imposing on the defendant to disprove illegality. The Court of Appeals also observed that the franchisor, Dunkin Donuts of America, Inc. used persuasion instead of coercion and that the Texaco and Goodrich agreement case cited by the district court as an example to deny the defendant of the individual coercion doctrine was unrelated with the franchising of doughnuts. The equipment, signs, real estate and supplies were necessary to produce and sell the doughnuts—the end product for consumers, while Texaco’s oil and Goodrich’s tires are two different products that do not result in a new product that will benefit consumers. More importantly, the US Court of Appeals contends that: “…we have found no Congressional expression of policy suggesting that franchising, per se, violates the letter or the spirit of the antitrust laws.” Moreover, the Court of Appeals asserts that upholding the district court’s decision would “threaten the viability of the franchise system…” in the US economy (United States Court of Appeals for the Third Circuit 1976). Thus, Dunkin Donuts is within valid lawful reason to assert that it needed supplies like napkins and cups with the Dunkin Donuts trademark on them to maintain its quality levels on a nationwide basis as these are necessary in the doughnut eating experience.
4. Amanda Resis had completed her residency in ophthalmology in Portland, Oregon and was moving to Phoenix, Arizona to start her practice. She began looking for office space and met with leasing agent who showed her several complexes of medical suites. Dr Resis was ready to sign for one of them when the leasing agent turned to her and said “Oh, by the way, you are not one of those advertising doctors are you, because they do not want that kind in any of my complexes.” Has there been a violation of the antitrust laws?
Yes. Deputy Attorney General Francis P. Walker (1992) notes that; “Justice Brandeis set forth one formulation of the inquiry necessary in a rule of reason analysis: ‘The true test of legality is whether the restraint imposed is such as merely regulates and perhaps promotes competition or whether it is such as may suppress or even destroy competition… Chicago Board of Trade v. United States, 246 U.S. 231, 244 (1918).’” The leasing agent effectively suppressed competition among advertising doctors versus non-advertising doctors.
References
Office of Fair Trading. (2007, August 1). British Airways to pay record £121.5m in price fixing investigation. In Press releases 2007. Retrieved July 07, 2009 from Office of Fair Trading: http://www.oft.gov.uk/news/press/2007/113-07.
United States Court of Appeals for the Second Circuit. (1980, September 18). OFFICIAL AIRLINE GUIDES, INC., Petitioner v. FEDERAL TRADE COMMISSION, Respondent. 630 F.2d 920. Retrieved July 07, 2009 from Alt Law Beta: http://altlaw.org/v1/cases/550669.
United States Court of Appeals for the Third Circuit. (1976, March 3). David UNGAR et al., v. DUNKIN’ DONUTS OF AMERICA, INC. and Quincy Adams Donuts, Inc. 531F.2d 1211. Retrieved July 07, 2009 from Alt Law Beta: http://altlaw.org/v1/cases/540809.
Walker, F.P. (1992, May 28). Correspondence to Patrick E. Miller from the Deputy Attorney General. Retrieved July 07, 2009 from Office of Fair Trading: http://www2.state.id.us/ag/ops_guide_cert/1992/g052892.pdf.
