The Easy Way To Dodge An Antitrust Probe

Just implementing your company’s strategy is risky. Every day, it seems, there’s another antitrust lawsuit – the result of a company trying to do nothing more than generate returns or grow market share. So how can you help your company succeed without assuming more risk?

This is exactly the value a corporate secretary can bring to a company. You need a plan for growth that doesn’t run afoul of antitrust regulations. Thinking ahead can reduce merger and acquisition costs and strategy risk in the future.

‘The path a company takes to market dominance is rarely linear,’ says John McGuire, a partner focusing on corporate law matters at Ohio-based law firm Calfee, Halter & Griswold. ‘Along the way it will encounter the defensive strategies of competitors and restrictions imposed by the rules of the game.’

You can see this every day in the marketplace, including Google’s recent battle for Android dominance in South Korea and American Airlines’ suit against Orbitz for control over the skies, to name just two.

And what do they all have in common? In cases like these, the goal is to become an industry power player. One thing stands in the way, however: antitrust concerns. The risk that a power player could become the power player can put the breaks on a global strategy.

‘Antitrust, or competition law, as it’s known outside the US, prohibits monopolization, attempted monopolization or the abuse of a dominant position,’ says Spencer Waller, professor and director of Institute for Consumer Antitrust Studies at Chicago-based Loyola University.

But, it’s all about making the right moves. While it’s easy to see the gains associated with a monopolistic – or even industry-influencing – strategy or acquisition, the costs of running into an antitrust suit can be severe.

To make the whole situation even more difficult, it isn’t always easy to determine when you’re at risk, especially in a global marketplace. As Waller notes, ‘The way market power/dominant position is measured and the varying types of unlawful behaviour that can trigger liability varies from country to country and can be quite complex to figure out in advance.’

Furthermore, the antitrust expert says it boils down to conduct and strategy.

‘Firms operating in multiple markets outside the US should have a global antitrust quarterback somewhere internally or externally,’ advises Waller. ‘So practices that are lawful in one market are not the subject of investigation or litigation in other markets where the rules are different.’

Of course, the effort doesn’t stop there. ‘I would suggest a thorough review of all pricing, distributional, marketing, technology, joint ventures, acquisition plans and strategic goals as in-house estimates of market share begins to climb north of 20 per cent- 30 per cent,’ counsels Waller. ‘And then on a regular basis going forward.’

He also advises making room for the different ‘languages’ of business.

‘The way businesses, lawyers, economists and antitrust enforcers calculate market shares can differ greatly [and] a new entrant or a run of the mill competitor can become questionable when the firm’s market power begins to grow and it obtains the power to raise price, exclude competitors, and act independent of market forces.’

Overall, employing the right methods and proactively addressing antitrust concerns can lead to market leadership – in accordance with your strategy.

As McGuire stresses, ‘the winner is the one thinking several steps ahead, attacking here, retreating there, and perhaps even intentionally sacrificing pieces to create the opening needed to achieve the ultimate goal.’