Tuesday, December 02, 2008

FTC Asks High Court to Review Standard-Setting Case

This posting was written by Jeffrey May, Editor of CCH Trade Regulation Reporter.

The Federal Trade Commission has petitioned the U.S. Supreme Court to review a federal appellate court decision that set aside a Commission finding that Rambus, Inc. had engaged in monopolistic conduct in violation of the FTC Act, as well as the Commission’s remedy order.

At issue is a decision of the U.S. Court of Appeals in Washington, D.C., holding that the FTC failed to demonstrate that Rambus Inc.’s actions before a standard setting organization (SSO) amounted to exclusionary conduct “under settled principles of antitrust law” (2008-1 Trade Cases ¶76,121).

Acquisition of Monopoly Power

According to the appellate court, the agency did not prove that the developer of computer chip memory technologies unlawfully acquired its monopoly power in the relevant markets for four technologies that had been incorporated into industry standards for dynamic random access memory (DRAM) chips.

The FTC sought review pursuant to Section 16(a) (3) of the FTC Act. This provision permits the FTC to represent itself before the Supreme Court if the Solicitor General declines to file a petition for certiorari. In its petition, the Commission noted that it has exercised this authority on only three prior occasions.

Questions for Review

The agency asked the Court to consider:

(1) whether deceptive conduct that significantly contributes to a defendant’s acquisition of monopoly power violates Section 2 of the Sherman Act and

(2) whether deceptive conduct that distorts the competitive process in a market, with the effect of avoiding the imposition of pricing constraints that would otherwise exist because of that process, is anticompetitive under Section 2 of the Sherman Act.

The Commission vote authorizing the Office of General Counsel to file the petition with the Supreme Court was 4-0.

A news release on the development appears here on the FTC website. The petition in FTC v. Rambus Inc. appears here. Further details will appear at CCH Trade Regulation Reporter ¶60,021.

1 comment:

Rolv E. Heggenhougen said...

The USSC should not hear this case but rely upon the lower courts who have dealt with this issue several times.
In a unanimous decision in April of this year, the CADC determined the FTC failed to demonstrate that Rambus harmed competition. In March of this year, a Federal District Court jury found that Rambus did not engage in anticompetitive conduct and did not commit fraud, mislead or make misrepresentations to JEDEC.

The FTC brought antitrust charges against Rambus in 2002. A three-month trial was held in the spring of 2003 before Chief Administrative Law Judge Stephen McGuire, who issued his initial decision exonerating Rambus with over 1,600 findings of fact in its favor in early 2004. The FTC's own Complaint Counsel appealed the decision of the fact-finder to the full Commission, which reversed the ALJ and found Rambus liable for violating Section 2 of the Sherman Act.