1. IMPORTANT TRENDS IN
ANTITRUST COMPLIANCE
ENFORCEMENT & LITIGATION
FOR MANUFACTURERS

2. Edwardsville
(Madison County)
130 N. Main St.
(618) 656-0184
Chicago
30 N. LaSalle
Suite 2900
(312) 230-9100
Springfield
(General Liability)
4340 Acer Grove
(217) 528-3674
Springfield
(Environmental)
3150 Roland Avenue
(217) 523-4900
St. Louis
211 N. Broadway
Suite 2700
(314) 241-6160
PROVEN LAWYERS
IN THE RIGHT PLACES
www.heplerbroom

3. Glenn E. Davis glenn.davis@heplerbroom.com
Partner
HeplerBroom LLC
Successfully serving clients with challenging, complex
legal matters for over 33 years domestically and internationally.
Deep experience with antitrust and distribution matters, securities litigation, corporate
litigation and compliance, internal investigations, and intellectual property litigation.
Recognized leader in business litigation in court and in law firm management: experience
that matters. Published author in ABA Antitrust Section publications and In the Mind Series
on Antitrust Litigation Winning Strategies and Missouri Bar Deskbooks on Antitrust and
Securities litigation.
Client Value. Thrives on efficiently helping clients achieve their objectives and move their
business forward, as an integral part of their team.

4. Glenn E. Davis
• Licensed in Missouri & Illinois
• ABA, Antitrust Section
• Charter Member, Litigation Counsel of America, Trial lawyer honorary
society.
• Missouri & Kansas Super Lawyer since 2011/ Top 100 Super Lawyers for the
Missouri/Kansas region and Top 50 in St. Louis.
• Best Lawyers’ in America since 2003.
• Best Lawyers’ 2014 St. Louis Franchise Law “Lawyer of the Year.”
• Best Lawyers’ 2015 Missouri Antitrust Litigation “Lawyer of the Year.”
• Best Lawyers' 2016 Missouri Antitrust Law "Lawyer of the Year."
• AV Preeminent® Attorneys by Martindale-Hubbell.

5. Our Goals Today
Learn About Antitrust Laws
Consider Key Concepts for Manufacturers
Enforcement and Litigation Trends
Discuss the Importance of Antitrust Compliance

6. About the Antitrust Laws
In 33 words or less, what are antitrust laws about?
Their purpose is to promote consumer welfare through
effective competition. Competition is protected by
prohibiting conspiracies in restraint of trade, undue
restrictions on purchasers, excessive concentrations of
economic power and other anticompetitive practices.

7. Basic Antitrust Laws
Promote Competition
Protect Consumers
Establish Rules to Prohibit Anticompetitive Conduct
Legal Penalties to Punish Violators and Deter Future
Violations

8. Who Do Antitrust Laws Apply To?
Individuals
Business Organizations
Trade and Professional Associations
Non-Profit Organizations
Standard Setting Organizations

9. The Basic Economics of Antitrust
• Free enterprise economy uses competitive
markets to allocate goods & services
• When the forces of supply and demand work
freely in open markets, consumers receive:
• The best quality products/services
• At the lowest possible prices
• Competition spurs economic performance
• Promotes efficiency, creativity, and innovation
• Monopolies, Market Concentration & Collusive
Conduct inhibit competition and reduce market
performance

10. ENFORCEMENT MECHANISMS
Department of Justice- Antitrust Division
Criminal Enforcement
Civil Enforcement
Pre-Merger Review
Federal Trade Commission
Civil Enforcement- FTC Act
Pre-Merger Review
Consumer Protection
State Attorneys General
International Regimes
Private Enforcement
Treble damage civil litigation
Class actions

11. Intent and Effect May Not Matter
Conduct May be Illegal Regardless of motive or intent
May be Illegal Even if Conduct is Unsuccessful or Fails to Meet Goal
Certain Conduct is Always Illegal
Price Fixing
Customer or Geographic Market Division
Certain Boycotts and Tying Arrangements
Bid Rigging
Mergers/Joint Ventures that create risk of sustained higher prices,
reduced output, market coordination

13. Penalties Are Severe
Companies convicted of antitrust violations pay very large fines
Individuals convicted serve actual jail time and pay substantial fines
Debarment from Federal and State Programs
Defending antitrust claims is very costly and a drain on organizations
Civil actions may result in 3X actual damages plus payment of
adversaries’ attorneys fees

18. ACTIVE CRIMINAL ENFORCEMENT
2014- 19 Jurisdictions levied cartel fines $16 Billion (US)
 20 Dawn Raids in US, China and the EU annually
Expanding Charges (i.e., criminal fraud, tax evasion)
Representative investigations/prosecutions
Auto Parts Industry (60 individuals/40 separate companies)($2.6 Billion in fines)
Flat Panel Screen Manufacturers
Financial Services Industry Market Manipulation/ Currency Exchange Rates
Real Estate

19. NEW (HEIGHTENED)FOCUS
ON INDIVIDUAL LIABILITY
 The Impact of the DOJ Yates Memo on antitrust crime
 DOJ Plea Deals no longer release former employees
 Impact on leniency program and
requirements for credit for cooperation
Non-Prosecution Agreements

20. Specific Relevant Conduct for Manufacturers
Agreements among Competitors
Relations with Distributors & Customers
Trade & Professional Associations

21. Section 1 of the Sherman Act
Prohibits agreements that restrain competition
Elements:
Two or more entities
An express or implied agreement
An unreasonable restraint on competition
• Proved – Rule of Reason (actual and substantial lessening of competition)
• Presumed – Per Se (Automatic) liability

22. Doctrine of Per Se Illegality
Inherently anticompetitive agreements are:
Presumed to restrain competition unreasonably
Are ILLEGAL without the need to prove the relevant
market or any anticompetitive effect
May be punished criminally
Can subject firms to enormous liability
Individuals at risk too; criminal liability severe

23. Red Flags: Per Se Agreements
Agreements to fix or maintain prices
• All agreements with competitors to fix or maintain
prices, price levels or terms and conditions of sale are
illegal
Boycotts, customer allocations, bid rigging
Agreements between competitors to boycott (refuse to
deal with) a customer or supplier, allocate or share
customer or geographic markets, or to bid a price or
coordinate bids are illegal
Some tying arrangements
Tie-in sales are illegal per se when there is sufficient
power in the tying product market to force the sale of
the the tied product

24. Rule of Reason Conduct
Vertical customer and territorial restrictions
Exclusive dealing and requirement agreements
Tie-in sales where market power in tying product is insufficient to
warrant per se treatment
Reciprocal dealing – the use of purchasing power to obtain sales

25. Section 3 of the Clayton Act
Deals with three types of arrangements:
Exclusive Dealing Arrangements
Tying Arrangements
Requirements Contracts
Common issues are extent and length of foreclosure
“Incipiency Standard”
• Proof of actual adverse competitive effects not required
• Only requires proof of reasonable probability of anticompetitive effects

26. Section 5 of the FTC Act
Government (FTC) enforcement only
FTC expanding application and theories of liability
Broadly proscribes acts of unfair competition
Concurrent with other antitrust laws
Examples:
Commercial disparagement
False Advertising
Industrial espionage
Commercial bribery

27. Robinson – Patman Act
Prohibits discrimination in pricing and promotional
allowances and services
Price discrimination may be illegal where
Two or more contemporaneous sales
Commodities of like grade & quality
Different prices
Substantial adverse effect on competition
Defenses
Cost justification
Meeting Competition
Availability
Changed Conditions

28. Competitor Relations—Price/Output
Agreement or conspiracy to restrain competition
Price Fixing and Agreements to Restrict Output Always Illegal
All price, discount, rebates, bids, RFP responses, terms and
conditions of sale, capacity and resources, marketing or promotions
are problematic
Determine Independently
No discussion with Competitors

29. Competitor Relations—Other Conduct
Market Allocation
Bid Rigging
Collective or Group Boycotts/ Refusal to Deal
Tying sales of services

30. Resale Price Agreements
Vertical price-fixing – an agreement between a
manufacturer and a customer/distributor that fixes the
minimum resale price of a product – may violate state
antitrust laws or become a rule of reason violation.
Area evolving after recent Supreme Court Case; but State
and International rules differ
The antitrust laws, however, give a manufacturer latitude
to adopt a policy regarding desired resale prices and to
deal only with customers/distributors who independently
decide to follow that policy.

31. Resale Price Agreements (continued)
A manufacturer is permitted to stop dealing with a buyer
who breaches the manufacturer’s resale price maintenance
policy.
The manufacturer can adopt the policy on a “take it or
leave it” basis.
The key: No agreement, express or implied, between the
manufacturer and the buyer to fix specific minimum resale
prices.
Agreements on maximum resale prices are less likely to be
found unlawful because in most situations these
agreements can benefit consumers by preventing non-
competitive high prices.

32. Termination for Pricing Policy
Violations
The “Pricing Policy” must be followed.
If a buyer advertises or sells pre-announced
suggested resale price products below minimum they
must be terminated immediately.
No structured or staged terminations;
 e.g., no progressive penalties prior to termination
No second chances;
 e.g., no grace periods, extensions or acceptance of
temporary reprieves
No threats of termination or pressure to adhere;
 e.g., no pressuring distributors to agree to prices
No communications with outsiders about it;

33. Distributor Communications
Complaints or information from other distributors may be received
and considered, but not encouraged. Distributors supplying such
information should be informed:
 will exercise its unilateral judgment with the information.
 will not take any specific action based on the communication.
 will not enter into any Agreement with one distributor concerning
manufacturing relationship with any other distributor.
 will not engage in extensive or ongoing discussions with one distributor
concerning relationship with any other distributor.
 Remember . . .anything you say or write about distributors may come out in any
future disputes.

34. Conduct that Invites Liability
 Refusals to deal mid-relationship;
 e.g., a manufacturer under a written dealer agreement cannot impose
price controls without pre-announcing its terms prior to the
agreement.
 Pulling territories until distributor adheres to prices;
 e.g., a manufacturer cannot force a retailer to sell a widget in Kansas at
X price to supply the retailer with widgets for Oklahoma.
 Structured termination (three strikes you’re out) policies;
 e.g., manufacturer cannot have a series of suspensions or penalties
prior to termination.
 Threats, intimidation, or coercion;
 e.g., manufacturers cannot harangue or threaten distributors to induce
pricing compliance.

35. Conduct that Invites Liability
Enlistment of third parties to enforce;
e.g., manufacturers should not use customers, trade groups, or any one else
to enforce its policies.
Conditioning special allowances or price breaks on acquiescence;
e.g., conditioning valuable promotional allowances on price agreements may
be seen as coercion.
Terminations at behest of competing distributors.
e.g. manufacturers decisions must be independent and not look like they are
part of any Agreement with competing distributors.
(continued)

37. Trade & Professional Associations
Meetings of actual and/or potential competitors—may evidence
agreement
But pro-competitive and lawful normally
Conduct is a problem if activity or focus is on coordinating price,
output, or other unlawful agreements
Potential for exclusion to disadvantage competitors of members
Reason for compliance sensitivity

38. Trade Association Topics
Do Not Discuss
Prices
Profits or margins
Discounts
Terms and conditions
Allocation of customers and markets
Refusals to deal with others
OK To Discuss
Product/Technology standards
Benchmarking Best Practices
Lobbying
Codes of Ethics
Data collection and dissemination if
properly managed (aggregated and de-
identified)

39. Association Safeguards—Meetings
Prior Written Agenda Distributed and Followed
Avoid off-agenda discussion topics
Maintain accurate minutes
Seek legal guidance when needed
Respect concerns of participants who fear topics are off-limits
Avoid discussion of sensitive topics at social gatherings or in side discussions
before, after or during meetings
Keep accurate, factual minutes
If Policy disregarded leave meeting and note your departure memorably

40. Association Safeguards—Issue Planning
Joint Lobbying and Advocacy
Historical (not future) Price Data Reporting
Statistical Programs
Development of Standards
Certification Programs
Design and Management of Member Entry

41. Antitrust-IP Intersection
Past Hostility
Current “Harmonization”/ “Complemetarity”
Seeking proper balance of competition and patent law and policy
Intersection? Or Collision Course?
Licensing
Refusals to Deal
Boycotts
Single Firm Conduct
Remedies

42. MERGERS ACQUISITIONS & JOINT VENTURES
 Increasing enforcement activity emerging from economic recovery
 HSR Notified transactions increased by 25% in 2014
 Challenges occur for mergers reducing competitors from 4-3, 3-2 or 2-1 and between competitors with large market
shares
 Gun jumping
 Marked by large strategic transactions
 Transactions reported with values over $1B increased 58%
 Agency standards for assessment continue to evolve
 Challenging consummated transactions
 Refined econometric analysis
 Primacy of market definition and potential entry
 Remedies
 Divestiture
 Structural modification
 Agencies showing increased willingness to litigate

43. HIGH PROFILE AGENCY MERGER MATTERS
DOJ
TicketMaster/Live Nation
Comcast/NBC Universal
Google/ITA Software
United Airlines/Continental
GE/Alstom
AT&T/DirecTV
Chicken of Sea/Bumblebee Tuna
Electrolux/GE
Whirlpool/Maytag
H&R Block/TaxAct
FTC
Nielson/Arbitron
Hertz/Dollar-Thrifty
Office Depot/OfficeMax
Medtronic/Covidien
Kinder Morgan/El Paso Energy
Reynolds/Lorillard
Sysco/US Foods
Staples/Office Depot

44. KEY TREND TAKEAWAYS
Government Enforcement
Class Action Litigation
International Exposure
Industry focus on healthcare/pharma/defense/national
retail/manufacturers with high market share and ability to engage in
exclusionary practices

45. Compliance Policy
Influence Prosecutorial Discretion
Provides Guidance
Build Sensitivity to Concerns
Improve Effectiveness
Recommend adoption
Next Steps/ Provision for Annual Review

46. Response to Government Inquiries
If anyone approaches you asking questions about the affairs of the
Association notify the President immediately
Respectfully express wish to cooperate but decline interview until
review of situation
If agents of state or federal law enforcement present a search
warrant, call President and counsel immediately
You have the right to consult with your counsel or association
antitrust counsel before submitting to any interview

47. THANK YOU (and let’s be careful out there)
Glenn E. Davis
HeplerBroom LLC
One Metropolitan Sq.-2700
211 N. Broadway
St. Louis, MO 63102
314.241.6160
glenn.davis@heplerbroom.com