ANTITRUST: A key question — when is it good for the consumer to collaborate?

 

A key antitrust question: When is it good for the consumer to collaborate?

This is a sidebar to a longer piece found at the Reynolds Journalism Institute website.


BY BILL DENSMORE

U.S. media executives may appropriately raise a question about the potential for illegal collusion when it is proposed that they consider working together.

An argument can be made that some types of collaboration could potentially involve competitors in a common affiliation. Such affiliations are actually commonplace — trade associations are a typical example. In general, legal precedents in the U.S. may find collaboration legal if its effect is unambiguously pro-consumer. An example might be setting standards that make for a more efficient – and more competitive – marketplace.

Being accused of violating antitrust laws impeded newspapers in the 1990s from talking about collaboration, recalls Martin Kaiser, retiring editor and senior VP-digital content at the Milwaukee Journal Sentinel.

“Until now there has been a reluctance of the news industry to do anything collaborative, except with Yahoo, because of antitrust concern,” agrees John Temple, president of Pierre Omidyar’s First Look Media and a former publisher of the Rocky Mountain News. “There were always antitrust concerns. But as print advertising collapses, these concerns are sort of going away because the reality is that newspapers are not as powerful today. Now it’s the ATTs and Verizons of the world.”

In the United States, antitrust law generally need not inhibit the formation of a standards or protocols group, says Todd Eskelsen, a Washington, D.C. attorney was central legal adviser in the organization of the BlueTooth Special Interest Group (SIG), Inc., a not-for-profit, non-stock corporation. The SIG owns the Bluetooth® trademarks and oversees development of the Bluetooth standard which allows computers, phones, car radios, ear buds and other electronic devices to “handshake” and work together wirelessly across short distances. The Bluetooth SIG does not make, manufacture or sell Bluetooth enabled products. It publishes Bluetooth specifications, administers a qualification program, protects Bluetooth trademarks and evangelizes Bluetooth wireless technology. It also manages licenses royalties for patent-holders of Bloothtooth technology.

“The Bluetooth people tried market their respective interactive products independently and couldn’t and then they came together and negotiated among themselves, starting with the largest folks,” Eskelsen explained. ““A new cooperative technology protocol was created with common standards that revolutionized communications and user interactivity with electronic devices, thereby empowering and enriching product manufacturers, software developers, service providers and individual users far above and beyond what could have been accomplished by any one of them individually or in traditional groups. The common Bluetooth standards have also created needs and uses that were not previously even dreamed of and that are still being developed, all to the profit and benefit of the different classes and types of interested users and society as a whole.”

Scholarly analysis

In June, 2010, the Reynolds Journalism Institute asked Thom Lambert, a University of Missouri law-school professor, to described the basis of U.S. antitrust law and enforcement, in the context of potential collaboration amount newspapers.

Lambert cited the key cases decided by the U.S. Supreme Court. Lambert addressed approximately 30 publishers, industry executives, researchers and academics on June 24, 2010, during the conference, “From Blueprint to Building: Making the Market for Digital Information,” at the Donald W. Reynolds Journalism Institute, at the Missouri School of Journalism. (see: http://www.infotrust.org)

In his talk, Lambert (LINK TO SLIDES AND AUDIO) said it is often considered within the law for competitors to agree upon technical standards which will facilitate market expansion where pricing and service options are not considered or shared. Standard-setting is usually pro-competition, he said, where it reduces transaction costs and increases choice for the public and were the total marketplace is more valuable to the public interest than the sum of its parts.

Lambert said a threshold question a court might consider is: Are the standards necessary to make the market work? Competitors need to be certain they do not seek to discuss or agree on anything that isn’t necessary to make the market work.

The AP News Registry letter

In 2009, The Associated Press sought guidance from the U.S. Justice Department when it lead the creation of on effort by news publishers to manage the use and sale of stories from a common database. The result was a “business review letter” made public by the Justice Department on April 1, 2010.

In the letter, the Justice Department said the effort “would consist of a centralized digital database containing news content from multiple content owners. It would allow content owners to register and list individual items of news content, specify the uses others may make of that content, and detail the terms on which such content may be licensed. The registry would enable content users to determine quickly the licensing and use terms applicable to a specific content owner or to individual items of registered content.”

The Justice Department, in a statement released with the letter, said:

“The registry would be a non-exclusive method of accessing, licensing and using content on the Internet. It would be open, on nondiscriminatory terms, to all owners and users of Internet news content. Content owners would be free to select which, if any, content to include in the registry. They would be allowed to offer registered news content outside of the registry. They would also be free to join other competing Internet registry services.

“Content owners, including the AP, would not set, formulate, benchmark or suggest any licensing terms for any other content owner’s news items listed in the registry. Each participating content owner would set unilaterally the licensing terms for its own content, without the involvement of either other owners or the AP.

“The AP also would institute and maintain firewalls to prevent the registry from being used to disseminate revenue, use, traffic and transactional information among participating content owners. In addition, the AP intends to limit public information sharing among competitors by allowing only registered content users to access public licensing terms.”
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