Antitrust and Unfair Competition Law

Competition: Fall 2018, Vol 28, No. 1


Anna Fabish

Appellate Court Attorney, California Court of Appeal, Second District

Los Angeles, CA

After receiving positive feedback on our healthcare and pharmaceuticals issue of Competition earlier this year, I am thrilled to present another topically-themed edition of our journal. This time around, we have set our sights on high-tech industries. Advances in technology present numerous complex and fascinating antitrust, unfair competition, and privacy law issues—and the list of these issues is growing. As an attorney who is by no means savvy in technology matters (high or low), it has been my great privilege to learn from this edition’s team of authors and editors. That said, the articles that follow offer helpful and informative insights, regardless of whether you have a deep background in these areas, lack any experience with them, or fall somewhere in between.

First, the edition offers a series of articles discussing "big data" from various angles. In his article, "Antitrust Is Already Equipped to Handle ‘Big Data’ Issues," Abiel Garcia discusses how "big data" is in fact an imprecise term, and explores the types of conduct related to mass data sets that have generated antitrust concern. Garcia argues that current antitrust law is well equipped to handle such concerns, and questions the premise that data collection per se could be a source of anticompetitive activity. Next, in their article, "D-Link Systems: Possible Signs for the Future of FTC Data Security Enforcement," Ronald Cheng and Mallory Jensen discuss how the Federal Trade Commission has taken an increasingly active enforcement role regarding the collection and handling of personal data through Internet of Things (IoT) products. In discussing the FTC’s action against D-Link Corporation, Cheng and Jensen explore the approaches the FTC has taken to this issue and the implications those approaches may have for IoT manufacturers in the U.S. and overseas. Eliana Garces and Daniel Fanaras offer economists’ perspectives on big data issues in their article, "Antitrust, Privacy, and Digital Platforms’ Use of Big Data: A Brief Overview." Specifically, they discuss the role of data in creating value for businesses and consumers, and suggest a case-by-case assessment of related antitrust and privacy issues, rather than generalized conclusions.

High-tech industries present a rich host of intellectual property law issues as well, and these often intersect with antitrust and unfair competition laws in challenging ways. For example, antitrust practitioners, government enforcers, academics, and economists remain divided on the question of whether and how antitrust law should address concerns that owners of standard essential patents (SEPs) will leverage those patents to exclude competition in standardized markets. That split has only grown deeper in the first two years of the Trump administration, and these issues are arising in new and unanticipated contexts. Ben Hendricks and Brian Quinn explore this lack of consensus in their article, "The Hold-Up Tug of War: Paradigm Shifts in the Application of Antitrust to Industry Standards." Robert McNary offers a related discussion of SEPs and the fair, reasonable, and non-discriminatory (FRAND) licensing commitments that govern them in his article, "Above FRAND Licensing Offers Do Not Support a California UCL Action in TCL v. Ericsson" In the context of reviewing a recent California Unfair Competition Law decision involving SEPs, McNary discusses an approach to SEP disputes that is based on contract, rather than antitrust law.

Our high-tech edition of Competition also includes articles addressing indirect purchaser issues. Indirect purchasers seeking monetary damages for state antitrust violations must show the alleged overcharge was passed on to them by intermediaries in the distribution chain. In "The Difficulties of Showing Pass-Through in Direct Purchaser Component Cases," James Bo Pearl and Allison Smith analyze the pass-through issues presented in the large body of cases alleging anticompetitive conduct by manufacturers of electronic components used in many everyday devices. Ryan Sandrock tackles an issue posed by federal indirect purchaser cases in his article, "Applying Illinois Brick to E-Commerce: Who Is the Direct Purchaser from an App Store?" which considers the application of the Illinois Brick rule to electronic marketplaces. He argues that the Supreme Court’s decision to grant certiorari in Apple v. Pepper signals that there will be clarification of the direct/indirect purchaser paradigm as applied to app stores and on-line marketplaces.

Of course, advances in technology are not limited to computer technology and data. Rosanna McCallips addresses the antitrust implications of advancements in medical and pharmaceutical technology in her article, "Antitrust Treatment of the Introduction of New Drug Products: The Tension Between Hatch-Waxman’s Dual Goals of Cheaper Drugs and Better Drugs." She argues that courts in so-called "product-hopping" cases should be reticent to conclude because of the risk of deterring welfare-enhancing innovation in the pharmaceutical industry.

We round out our high-tech issue with two pieces discussing, respectively, employment agreements for those responsible for many new technologies, and one important new technology in particular. Jiamie Chen offers a piece on no-poach agreements— commitments by two unrelated companies to not hire each other’s employees—which have generated notable litigation in high-tech industries. The jurisprudence surrounding no-poach agreements as antitrust violations has progressed more in the past 10 years than in the preceding century. Chen surveys this remarkable evolution and discusses how that history will affect the future of the law in this area in "’No-Poach’ Agreements as Sherman Act § 1 Violations: How We Got Here and Where We’re Going." To complete our high-tech edition, Ai Deng offers an intuitive introduction to blockchain technology and smart contracts in his article, "Smart Contracts and Blockchains: Steroid for Collusion?" Deng discusses the implications of smart contracts and blockchain technology on both explicit and tacit collusion.

I hope that you enjoy reading these articles and pondering some of the antitrust, unfair business practices, and privacy law issues that advances in technology are creating at a rapid pace. I certainly did.

Finally, some words of thanks to those who helped make this edition possible. First and foremost, thank you to our authors for their insightful work, and to our team of talented and diligent editors for their contributions to that work. I would also like to express special gratitude to Sarah Trela for her invaluable efforts finalizing all articles.

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