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The Department of Justice ("DOJ") and Federal Trade Commission ("FTC") have announced that they are seeking comments in connection with their proposed joint public hearings on the application of Section 2 of the Sherman Act to unilateral conduct.[1]  The Agencies’ joint hearings are scheduled to occur between June and September of this year, and comments are sought as soon as possible and due no later than the end of the last set of hearings.

The Agencies are seeking comments from "lawyers, economists, the business community, consumer groups, academics – including business historians – and other interested parties" on two fundamental topics:

• The legal and economic principles relevant to the application of Section 2 (including the ability of the agencies to administer current and potential antitrust rules for Section 2); and
• The types of business practices that the agencies should examine in the hearings (including examples of real-world conduct that potentially raise Section 2 issues).

In addition, the Agencies have identified a number of specific types of conduct that are of particular interest.  In particular, the Agencies seek comment on the business rationale for, and possible procompetitive and anticompetitive implications of, the following types of unilateral business conduct:

• Bundled loyalty discounts and market share discounts;
• Product tying and bundling;
• Exclusive dealing;
• Refusals to deal;
• Most-Favored-Nation clauses;
• Product design (i.e., exclusion of competitors based on product design definition); and
• Misleading or deceptive statements or conduct.

In connection with providing real-world examples of the types of conduct listed above, the Agencies would be interested in hearing about "the business reasons for the use of such conduct, the conduct’s actual or likely competitive effects, what types of analyses the firm performed in deciding whether to adopt and how to implement the practice, alternative practices that were considered and why they were rejected, and how implementation of the practice affected the firm’s costs, prices, risks, sales, shares, and profits."

Finally, the Agencies have provided a number of sample questions for commentators with respect to the conduct listed above.  For instance:

• How should the structure of a market and the market shares of participants be taken into account in analyzing the likely competitive effect and legality of various types of unilateral conduct?
• Would you expect such conduct to affect the likelihood of entry into the market?  If so, how and under what circumstances?
• What tests and standards should courts and enforcement agencies use in assessing whether particular types of unilateral conduct violate Section 2?

Comments, which should be captioned "Comments Regarding Section 2 Hearings, Project No. P062106," may be sent to:

Donald S. Clark
Office of the Secretary
Federal Trade Commission
Room H-135 (Annex Z)
600 Pennsylvania Avenue, NW
Washington, DC 20580