Polygram Holding, Inc. v. Federal Trade Commission case brief
Polygram Holding, Inc. v. Federal Trade Commission case brief summary
FACTS Polygram and Warner agreed to jointly distribute a recording of “The Three Tenors” 1998 concert outside the U.S., sharing the worldwide profit or loss and the costs for all marketing and promotional activities jointly. Each had previously distributed (and held the rights for) a previous recording by the tenors. In order to prevent competition to sell the previous albums, they agreed to and, with some trouble, carried out an “advertising moratorium” with regard to the previous two recordings around the release of the 1998 album. C.J.
HOLDING Ginsburg noted the increasing use of a “quick look” rule of reason approach by the Supreme Court that does not focus on categorizing particular restraints, but makes whether the challenged restrain harms or enhances competition the primary inquiry. The Court approved the FTC’s legal framework and condemned the advertising moratorium.
Ginsburg is actually a serious
antitrust expert, who has worked for the DOJ’s Antitrust Bureau
and has a great deal of experience.
The Polygram-Warner agreement to
restrict advertising and refrain from price cutting looks
“suspiciously like a naked price fixing agreement between
Ginsburg compares the new
recording to simply producing a new SUV; it may create some
additional demand for old SUVs, but if the market does not want
the new SUV without price restraints on old SUVs, the new SUV
should fail. Although it may be beneficial for a product not to
have competition, that is not a cognizable benefit under the
Emphasizes that the per se
rules, quick look rules, and the full-blown rule of reason are
all part of the same analysis—an inquiry into whether the
challenged restrain harms or enhances competition.
The FTC’s quick look to
Π must bring evidence to show
that it is obvious from the nature of the challenged restraint
that it is “inherently suspect”—the rebuttable
presumption of illegality arises from a close resemblance to a
per se violation or other restraint already
shown to be harmful to competition.
Δ may refute the presumption
with plausible and legally cognizable competitive
justifications, including explanations why generally
condemnable practices are not harmful in the specific industry
or will likely benefit consumers.
Π may attempt to persuade,
without evidence, that restraint very likely harmed consumers.
Π may produce
sufficient evidence to show that anticompetitive effects are in fact
Δ must produce evidence to
show the restraint does not in fact harm consumers or has
“precompetitive virtues” that outweigh its burden upon
Polygram never fulfills its Step 2
requirements to rebut the initial presumption, consequently if fails
under the quick look to condemn analysis of the FTC.
This case is responsive to the
Court’s opinion in California DentalAss’n v. FTC
(1999) at 187 (acknowledging the existence of an intermediate
quick look analysis, but requiring more from the lower court’s
analysis of relative anticompetitive tendencies in the instant case
prior to condemnation).
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