Posted by : Matthew Wild | On : October 13, 2009

Google announced today that Arthur D. Levinson resigned from its board of directors.  However, Mr. Levinson remains on Apple’s board of directors.  Mr. Levinson was the remaining common director on the Google and Apple boards.  As reported in the June 3, 2009 Post, Eric D. Schmidt, Google’s CEO, resigned from Apple’s board amid antitrust concerns raised by the FTC.  The June 3 Post noted that it was unclear whether the FTC would require Mr. Levinson’s resignation from one of the boards.  Apparently, the FTC did just that as FTC Chariman Jon Leibowitz said, “Google, Apple and Mr. Levinson should be commended for recognizing that overlapping board members between competing companies raise serious antitrust issues, and for their willingness to resolve our concerns without the need for litigation.”  Chairman Leibowitz further warned, “[b]eyond this matter, we will continue to monitor companies that share board members and take enforcement actions where appropriate.”  It seems that the FTC is warning corporations that it plans to take an increased interest in enforcing section 8 of the Clayton Act, which prohibits interlocking directorates among competitors under some circumstances.  That statute has not been enforced with much frequency.  Nevertheless, antitrust practitioner always have to be concerned that the existence of common directors could be used as evidence of a conspiracy between the two corporations in violation of the Sherman Act because it provides an opportunity to conspire.  Accordingly, antitrust practitioners know to advise against such overlaps among corporations vulnerable to Sherman Act litigation without regard to section 8 of the Clayton Act.



Posted by : Matthew Wild | On : August 3, 2009

Eric Schmidt, Google’s CEO, resigned today from Apple’s board of directors because the increased competition between Google and Apple raised conflicts for him that precluded his participation in many of Apple’s business decisions.  It is unclear whether his resignation was in response to an inquiry by the FTC into Google’s and Apple’s interlocking directorates first reported on May 5, 2009 by the New York Times.  Section 8 of the Clayton Act forbids competitors from having common directors and has been interpreted broadly.  Nevertheless, it is a toothless statute that is rarely enforced and imposes no penalties for violations.  The offending director must simply resign from one board.  In this case, it is unclear whether the FTC has undertaken to enforce the statute as Arthur Levison remains on the boards of Google and Apple.  His presence on both boards would seem to violate Section 8.  It should be noted, however, that the genuine issue that can arise from interlocking directorates is that it can provide circumstantial proof of a conspiracy in violation of Section 1 of the Sherman Act.  If the two firms engage in parallael conduct, for example, plaintiffs might allege that the companies had an opportunity to conspire through the common directors.  Thus, antitrust practitioners advise companies to avoid interlocking directorates where meaningful competition between the two companies exists.



Posted by : Matthew Wild | On : November 5, 2008

On July 2, 2008, this blawg reported that the Antitrust Division issued civil investigative demands to investigate the potential competitive effects from an agreement between Google and Yahoo that would allow Google to post advertisements on Yahoo in exchange for part of the revenue.  Google announced today that it has withdrawn from the transaction in response to concerns from antitrust regulators.



Posted by : Matthew Wild | On : July 2, 2008

According to Reuters, the Antitrust Division has opened an investigation into the proposed revenue sharing agreement between Yahoo and Google. Under the agreement, Yahoo will allow Google to put advertisements on its site in exchange for a share of the revenue. Google and Yahoo are reported to have shares of about 80% and 16% respectively of online advertising revenue. The obvious concern is whether the agreement will reduce the incentives for Google and Yahoo to compete and therefore, violate Section 1 of the Sherman Act. Yahoo may have an incentive to raise its prices knowing that under the agreement, it will share in any lost business to Google. The Antitrust Division reportedly has issued civil investigative demands not just to Google and Yahoo but to many other players in the industry. Although not required to do so, Google and Yahoo agreed not to go forward with their collaboration until the Antitrust Division has an opportunity to review the potential effects on competition. The parties have attempted to shrug-off the investigation as expected. But it certainly is not routine. The Antitrust Division does not take issuance of CIDs lightly.



Posted by : Matthew Wild | On : March 11, 2008

Dismissing complaints from Microsoft and Yahoo, the EU Competition Commission cleared Google’s acquisition of DoubleClick. The Antitrust Division (U.S. Department of Justice) had done so after completing its Hart-Scott-Rodino Act review in December 2007. According to the Associated Press, the EU noted that Microsoft, Yahoo and AOL would discipline any attempt by Google/DoubleClick to raise the prices for web-placed advertisements post-merger.