This post was written by Professor Josh Wright. Wright is a professor at George Mason University Law School, but is visiting this semester at the University of Texas Law School in Austin. This post was originally published on the blog Truth on the Market.
As noted, the FTC has exercised its right under 15 USC 56(a)(3) to petition for a writ of certiorari to review the judgment of the D.C. Circuit in its FTC v. Rambus. The FTC press release is here. The petition is here. The questions presented, as framed by the Commission are:
1. Whether deceptive conduct that significantly contributes to a defendant’s acquisition of monopoly power violates Section 2 of the Sherman Act.
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.
I do not believe the FTC has presented a convincing case for granting cert. Further, I don’t think the Supreme Court should grant cert in Rambus for reasons I’ll discuss in the post. For a more detailed exposition on some of the issues touched upon by this post, see my article with Bruce Kobayashi, Federalism, Substantive Preemption and Limits on Antitrust: An Application to Patent Holdup (forthcoming in the Journal of Competition Law and Economics).
The FTC lists what I count as five separate reasons to grant the petition:
(1) the D.C. Circuit applied an overly restrictive “but-for” causation standard that would require the Commission to show that Rambus’s conduct was anticompetitive (”the court of appeals erred in supposing that a Section 2 tribunal must identify a particular anticompetitive effect in order to find liability”);
(2) the court erred in its application of NYNEX v. Discon, Inc. to Rambus to conclude that the loss of an opportunity for the SSO (JEDEC) to obtain a RAND commitment from Rambus was not an anticompetitive effect under the antitrust laws;
(3) the Supreme Court should grant the petition to clarify “the governing standards of causation in Section 2 cases”;
(4) the D.C. Circuit decision is at odds with the Third Circuit’s Broadcom decision which held that the loss of a RAND commitment due to deception is a proper basis for Section 2 liability; and
(5) the set “inconsistent set of rules” creates a conflict that “threatens confusion regarding the conduct of participants in industry-wide standard setting,” “will discourage participation in standard setting proceedings,” and “ultimately harm consumers.”
I want to examine some of those issues more closely, sketching out reasons why I do not believe that they warrant cert, and also highlight some issues the FTC did not but should have addressed in its brief to make the case more compelling. All of that below the fold.