The document summarizes recent antitrust enforcement actions and priorities in various industries. It notes that health care will remain a key focus in 2011, as regulators scrutinize mergers and investigate anticompetitive practices in the industry. Enforcement in the technology sector against dominant firms will also continue. Additionally, actions like the recent lawsuit against American Express indicate increased attention on the financial services industry.

1. Criminal Antitrust Update
PATTON BOGGS LLP | February 21, 2011
Powered by Patton Boggs' Criminal Antitrust Team
IN THIS ISSUE: INDUSTRY SCORECARD
Industry Scorecard
Health Care: Given the recent health care legislation and congressional
pressure to increase scrutiny over insurance industry consolidation, we
Compliance Tip: Monopoly
expect the Department of Justice's Antitrust Division (the Division) to devote
Leveraging
substantial time and energy to anticompetitive practices in the health care
industry. The Division has already initiated a lawsuit against Blue Cross
Antitrust Regulators Focus
on Health Care: U.S. et al.,
Blue Shield of Michigan (BCBSM) over its use of anticompetitive
v. DOJ v. Blue Cross Blue contractual clauses, and both the Division and the Federal Trade
Shield of Michigan, Case Commission (FTC) have been actively reviewing consolidations of
No. 2:10-cv-14155 (E.D. hospitals, insurers and physician networks in the health care industry. In
Mich.) March 2010, the Division opposed a merger between BCBSM and another
large Michigan insurer citing the potential for price increases and a
significant reduction in competition given the companies' combined market
share. The FTC announced in January that it will seek to undo ProMedica
If you have any questions or if Health System Inc.'s acquisition of an Ohio hospital because the
you require additional combination limits competition for emergency medical and obstetric
information, please contact: services. Both agencies will continue to carefully scrutinize health care
mergers and investigate suspected anticompetitive practices in 2011.
Andrew M. Friedman
202-457-5267 (Direct) Technology: Antitrust enforcement in the technology sector is likely to
202-457-6315 (Fax) continue in 2011. Consumer groups and smaller companies are actively
afriedman@pattonboggs.com urging the Division to investigate the dominance of many high tech leaders.
The Department of Justice is currently investigating IBM's dominance in the
Julie J. Crain mainframe market as well as Google's plan to acquire ITA Software, a
202-457-6122 (Direct) leader in travel booking software. This continues a trend from previous
202-457-6315 (Fax) years, where collusion among flat screen manufacturers has already
jcrain@pattonboggs.com resulted in indictments and guilty pleas. The European Union (EU)
announced in November that it has opened an investigation of Google's
alleged practice of favoring its own services in its search engine in violation
of EU law. We expect the Division will conduct parallel inquiries of
RELATED WEB SITES: technology companies to determine whether they have violated U.S.
antitrust laws.
Patton Boggs LLP
Financial Services Industry: The Division's October 2010 suit against
Patton Boggs Antitrust American Express Co. signals a focus by antitrust regulators on financial
Practice Group services, in addition to investigations arising from the 2008 market
meltdown. The suit against AMEX focuses on practices surrounding
merchant fees; similar claims already resulted in settlements from Visa and
MasterCard. With significant consolidation in the financial services industry,
we expect the Division to be on the alert for alleged anticompetitive
behavior.

2. Patton Boggs LLP Criminal Antitrust Update | February 2011
COMPLIANCE TIP: MONOPOLY LEVERAGING
Monopoly leveraging occurs when a company uses its monopoly power in one market to obtain a
monopoly in a second market. Monopoly power by itself does not violate the federal antitrust laws.
However, a monopoly gained through anticompetitive means is unlawful.
There are three elements that may combine to create monopolistic leverage: (1) a company possesses
monopoly power in one market; (2) the company is engaging in anticompetitive or exclusionary conduct
and (3) the conduct will create a monopoly in a second market. There must be a dangerous probability that
the company will achieve monopoly power in the second market. Merely gaining a competitive advantage
in the second market is not sufficient to support a monopoly leveraging claim. Courts have held that the
leveraging must take the form of a refusal to deal, predatory pricing or tying.
Companies with a lawful monopoly or a dominant market position in one market are well-advised to
structure a compliance program to identify situations where market dominance could be used improperly.
Sales promotions that offer bundled complementary products or services would be a prime target for
compliance training and monitoring, both at the sales and management levels. Refusals to deal with certain
customers and other exclusive arrangements should also be avoided. For example, companies with a
dominant market position should refrain from refusing to do business with a customer who also does
business with competitors. Companies should also refrain from requiring a customer to purchase all or
most of its needs from the seller (requirements contract). Absent a procompetitive business justification for
this type of behavior, companies with monopoly power or a dominant market position can open themselves
up to antitrust liability under Section 2 of the Sherman Antitrust Act. Companies should, through their
compliance programs, enable sales and managerial staff to identify this type of potentially anticompetitive
behavior.
ANTITRUST REGULATORS FOCUS ON HEALTH CARE: U.S. ET AL., V. DOJ V. BLUE
CROSS BLUE SHIELD OF MICHIGAN, CASE NO. 2:10-CV-14155 (E.D. MICH.)
In October 2010, the Division filed a lawsuit against BCBSM claiming it violated Section 1 of the Sherman
Act's prohibition on restraints of trade by entering into agreements with its providers (Michigan hospitals)
that prohibit the provider hospitals from offering competitive pricing to other insurers/competitors of BCBSM
through the use of "most favored nation" (MFN) clauses. MFN clauses, like the ones used by BCBSM in its
agreements with hospitals, provide that the hospitals cannot offer lower rates to other competing insurers.
According to the Division, BCBSM's MFN clauses guaranteed it a better rate than competing insurers, and
in many cases, the MFN would specify how much more BCBSM's competitors had to pay. The Division
also alleges that BCBSM agreed to raise its prices to each hospital in order to obtain these MFNs. BCBSM
is the largest provider of health care insurance in Michigan. According to the Division, BCBSM's use of
these types of MFN clauses ensured that competing insurers could not get better rates from area hospitals,
thus reducing competition in the sale of health insurance in Michigan by raising hospital costs to BCBSM
competitors and discouraging competing insurers to enter and/or expand the market.
BCBSM maintains that its contracts with hospitals serve to lower health care costs for consumers by
obtaining the lowest costs possible for hospital services. However, it will be difficult for BCBSM to maintain
that its contracts with hospitals are pro-competitive in light of the Division's claim that in many cases,
BCBSM actually specified in its contracts the prices that each hospital must charge BCBSM's competitors,
many times up to 40 percent more.
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3. Patton Boggs LLP Criminal Antitrust Update | February 2011
This is a significant case in the Division's enforcement of the federal antitrust laws in the health care
industry and demonstrates the Division's commitment to competitive prices and affordable health care for
consumers. The use of MFNs by dominant health care insurers occurs throughout the country. We believe
providers may be vulnerable under the federal antitrust laws in many areas. In fact, the Division has
indicated it will pursue complaints against other insurers or health care providers that use similar practices
to raise prices or reduce competition. The BCBSM case demonstrates the Division's commitment to
challenging conduct it views as anticompetitive or exclusionary by dominant health care companies.
Insurers, hospitals and other companies in the health care space should be vigilant about competition
issues, as we expect increased enforcement activity both by the Division and by state attorneys general.
This information is not intended to constitute, and is not a substitute for, legal or other advice. You should consult appropriate
counsel or other advisers, taking into account your relevant circumstances and issues. While not intended, this update may in part
be construed as an advertisement under developing laws and rules. You may receive this industry update from other people, which
often occurs. To SUBSCRIBE or change your address, e-mail vmurray@pattonboggs.com.
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