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From Antitrust Law Daily, October 6, 2014

High Court refuses to consider airline merger challenges, monopoly claims against Microsoft

By Jeffrey May, J.D.

Today, the U.S. Supreme Court began a new term by denying two petitions, questioning Ninth Circuit decisions that upheld the dismissal of high-profile airline mergers challenges. In addition, the Court rejected a petition from MiniFrame, Ltd.—a developer of PC-sharing software—for review of a decision of the U.S. Court of Appeals in New York City, affirming the dismissal of its monopoly claims against Microsoft Corporation.

Merger challenges. The Court will not take up the appropriate standard for reviewing mergers and acquisitions in the context of the now-consummated $1.4 billion merger of Southwest Airlines and AirTran Airways. Direct purchasers of airline tickets from these low-cost carriers had filed a petition for certiorari in July, seeking review of a decision of the U.S. Court of Appeals in San Francisco that rejected their merger challenge. In affirming dismissal, the appellate court had ruled that there was no evidence of threatened or actual specific injuries to the plaintiffs themselves and there was no support for the generalized claims of injury to consumers and competition (Taleff v. Southwest Airlines Co., Dkt. No. 14-69).

Another Ninth Circuit decision rejecting a consumer challenge to an airline merger was undisturbed by the High Court today. This matter involved the 2010 combination of UAL Corporation's United Airlines and Continental Airlines. In their petition for certiorari, filed in June, airline ticket purchasers asked the Court to weigh in on the continuing validity of Supreme Court precedents in the merger area, as well as the Ninth Circuit’s relevant market analysis based on demand considerations and the use of standards for preliminary injunctive relief under Sec. 16 of the Clayton Act to subsequently bind a litigant in a claim for damages under Sec. 4 of the Clayton Act (Malaney v. UAL Corp., Dkt. 13-1494).

Monopoly suit against Microsoft. The Supreme Court also denied MiniFrame's petition for review of a December 2013 Second Circuit decision, rejecting its Sherman Act, Section 2 claims against Microsoft, over the software company's purported interference with MiniFrame’s efforts to market its SoftXpand PC-sharing computer program. According to MiniFrame’s petition for review, the appellate court's decision permitted Microsoft “to exploit its undeniable monopoly power in the market for operating systems used in personal computers (PCs) – that is, its Windows software programs – to completely exclude MiniFrame from offering a product in a separate market: a ‘PC-sharing’ software market” (MiniFrame, Ltd. v. Microsoft Corp., Dkt. 14-60).

Other pending matters. Despite the Court’s decision to deny review in these three antitrust matters, the Court will still take up cases involving antitrust issues this term and some antitrust petitions remain pending. Next Monday, the Court will hear arguments regarding the applicability of the state action immunity doctrine in an FTC action against the North Carolina State Board of Dental Examiners. At issue is a May 2013 decision of the U.S. Court of Appeals in Richmond, Virginia, upholding an FTC finding that the board was not immune under the state action doctrine for excluding non-dentist providers from the market for teeth whitening services in violation of Sec. 5 of the FTC Act (North Carolina State Board of Dental Examiners v. FTC, Dkt. 13-534).

During this term, the Court also will consider whether state-law antitrust claims are preempted by the Natural Gas Act (NGA). In July, the Court granted a petition for certiorari filed by natural gas companies, asking whether the NGA preempts state-law claims challenging industry practices that directly affect the wholesale natural gas market when those claims are asserted by litigants who purchased gas in retail transactions (In Re: Western States Wholesale Natural Gas Antitrust Litigation: Oneok, Inc. v. Learjet, Inc., Dkt. 13-271).

Attorneys: Joseph M. Alioto (Alioto Law Firm) for Wayne Taleff and Michael C. Malaney. James A. Keyte (Skadden, Arps, Slate, Meagher & Flom LLP) for Southwest Airlines Co. Stuart J. Baskin (Shearman & Sterling LLP) for UAL Corp. Robert W. Morris (Eckert Seamans Cherin & Mellott, LLC) for MiniFrame Ltd. Robert A. Rosenfeld (Orrick, Herrington & Sutcliffe LLP) for Microsoft Corp. Glen D. Nager (Jones Day) for North Carolina Board of Dental Examiners. Donald B. Verrilli Jr., Solicitor General, for FTC. Neal Kumar Katyal (Hogan Lovells US LLP) for Oneok, Inc. Jennifer Gille Bacon (Polsinelli PC) for Learjet, Inc.

Companies: Southwest Airlines Co.; UAL Corp.; Microsoft Corp.; MiniFrame Ltd. North Carolina Board of Dental Examiners; Learjet, Inc.; Oneok, Inc.

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