This Friday’s round up of antitrust-related news highlights current activity in a number of different areas of interest including the rise of niche microchip manufacturers, Intel’s continuing struggle to maintain dominance in the mobile device market, a move by airlines in Europe to placate fears of unfair business practices, and a drug company’s efforts to clear its name from the ranks of dastardly monopolists.
Intel – Semiconductor IP: lntel vs. ARM and Tessera’s Expiring Patent | Sramana Mitra
Intel and ARM are not the only players in the smart device chip game but are certainly among the major providers of System on a Chip (SoC) platforms. For an increasingly important variety of gadgets that require completely integrated functionality and low power consumption on one microchip, the market is currently big enough to support a handful of specialty chip manufacturers who are slowly chipping away at Intel’s (and ARM’s) dominance. Sramana Mitra has some excellent analysis of the current chip state-of-affairs in her topical blog post from late last week. She writes on a niche operator that is capitalizing on camera-based handsets:
Tessera is looking to cash in on the growing market for camera-based handsets. Recently, it announced that Samsung Electronics has integrated Tessera’s OptiML Focus solution in its notebooks. Tessera has been building out its imaging and optics portfolio with the help of five acquisitions since 2005: part of Shellcase, a wafer-level image sensor packaging technology provider; Digital Optics, a micro-optical solutions developer; Eyesquad, a smart optics technology supplier; part of Dblur Technologies, a software lens technology developer; and FotoNation, an embedded imaging solutions provider.
Mitra also points out the significant portion of the 3G market space owned by InterDigital, a company focused on “advanced digital wireless technologies” and holder of a number of key patents for cell phone technologies.
InterDigital, which has a 55% share in the 3G handset license market, reported a 20% increase in fiscal 2009 revenue of $297.4 million and net income of $87.3 million or $1.95 per share, more than triple its 2008 income. During 2009, the company repurchased shares for $25 million under the $100 million share repurchase program authorized in March 2009. It ended the year with $409 million in cash.
For a mostly unheard of company, InterDigital is doing quite well, thank you, while Intel continues to struggle to forge lucrative IP deals in the face of ARM’s smartphone product dominance. “Intel is welcome to the market, but at the moment, ARM rules the mobility market…” is how Mitra sums up the situation and with the numbers to back up her conclusion, she’s right on target. Be sure to check out the entire piece for more stock market figures and a few explanatory graphs to complete a well-crafted look at the mobile microchip business.
British Airlines et. al – BA, American, Iberia offer EU concessions | Yahoo! News UK
A number of international kingpins in the airline business are coming under close European Union scrutiny after rival airline, Virgin Atlantic, cried “Foul!” in reaction to the “U.S./EU ‘Open Skies’ agreement, which liberalizes trans-atlantic aviation” that ”would lead to higher prices for consumers.” Virgin’s superstar CEO, Sir Richard Branson, offers his thoughts on the European Commission’s decision to drop its investigation:
“I continue to question why the Commission is even considering these proposals to try and put right the consumer harm of this monster monopoly when it does not seem to have any evidence of concrete consumer benefits,” Richard Branson, president of Virgin Atlantic, said in a statement.
Branson, who met Competition Commissioner Joaquin Almunia this week to discuss the issue, said Virgin would attempt to show why the alliance should be stopped.
Branson might be barking up the wrong tree, as the airline industry has a long history of creating alliances in order to placate those who cry “Monopoly!” at the thought of increased route-sharing and profitability.
Alliances are seen as a lucrative alternative to mergers and large-scale investments.
The Commission said in a statement that the airlines had offered to give up some landing and take-off slots for routes from London to Dallas, London to Boston, London to Miami and possibly London to New York should competitive conditions change.
The carriers also proposed to allow access to their frequent flyer programs on those routes as well as London-Chicago and Madrid-Miami, and submit data on their cooperation.
The United States Department of Transportation (USDOT) is also in on the gig, with a tentative “All clear” given to the latest partnership but Branson would still have 45 days to lodge his complaint before receiving the final bad news. But not to worry, there will be other opportunites for Sir Richard’s Revenge: “The Commission is also probing proposed alliances between members of Star Alliance, and members of SkyTeam, both rivals of Oneworld.” Maybe they should just all join hands and form one mega-merger and bury the monopoly hatchet, once and for all.
Monsanto – Monsanto’s Seed Patents May Trump Antitrust Claims, Lawyers Say | Bloomberg News
Major food agribusiness leader Monsanto’s legal woes continue to stack up but there may be some relief in sight for the beleaguered seed seller. Jack Kaskey and William McQuillen offer up some excellent reporting on how the US Department of Justice might just be the company’s worst, and best friend, in its bid to continue what some are decrying as unfair, and monopolistic, business practices. They report:
Monsanto Co., facing antitrust probes into its genetically modified seeds, may benefit from previous court rulings in which intellectual property rights trumped competition concerns, antitrust lawyers say.
The Department of Justice and seven state attorneys general are investigating whether the world’s largest seed company is using gene licenses to keep competing technologies off the market. At issue is how the St. Louis-based company sells and licenses its patented trait that allows farmers to kill weeds with Roundup herbicide while leaving crops unharmed. The company’s Roundup Ready gene was in 93 percent of U.S. soybeans last year.
DuPont Chemical, a competing firm in the agribusiness marketplace, is hoping for some relief in their struggle to knock Monsanto off the top of the modified seed sales mountain.
“When you have that sort of monopoly power, it can lead to abuse, which is what we’ve been experiencing over the past several years,” said Thomas L. Sager, DuPont’s general counsel.
Wilmington, Delaware-based DuPont claims Monsanto protects its lead in biotech seeds, including the Roundup Ready seeds sold since 1996, by controlling whether competitors can add their own genetics.
Monsanto also has begun switching seedmakers and growers from Roundup Ready soybeans to the newer Roundup Ready 2 Yield version in advance of the original’s patent expiration in 2014. DuPont says Monsanto is using incentives and penalties to switch the industry to the new product in a way that unlawfully extends the Roundup Ready monopoly.
Whether Monsanto’s cleverly-contrived plans to offer incentive and penalties that unfairly compressed seed sales into their hands is worthy of being called anticompetitive remains to be seen, but one thing is sure, at 93% of all soybean stock showing the presence of Monsanto’s Round Up Ready genetic alterations, a true monopoly is only a few percentage points away.
Google/Microsoft – EC antitrust probe is latest clash in Google-Microsoft war | IT World
Microsoft is redoubling its efforts to make sure Google feels the pain of the antitrust “hurt locker” that is so well known by the Redmond, Washington software giant. Sharon Gaudin has some pertinent bits and pieces on this increasingly acerbic and serious game of IP brinkmanship for the constant reader to consider:
The EC announced late last month that it had initiated an antitrust probe into Google based on complaints from three European companies, two with connections to Microsoft.
Microsoft CEO Steve Ballmer last week acknowledged his company’s role in pushing government regulators to pursue such investigations.
“We’re not being silent; we’re expressing some of the issues and frustrations we see. Certainly, sometimes that is unsolicited, but oftentimes, it’s because we’ve been asked,” Ballmer told an audience at the Search Marketing Expo in Santa Clara, Calif.
Microsoft’s complaints to the EC are just the latest skirmish in an escalating battle between Google and Microsoft on several fronts, including the operating systems and enterprise apps markets, and the online search business in particular.
Indeed, Google is the dominant presence in the global Internet search market but sees a bit of thinly-veiled collusion in Microsoft’s continued assault on its position. Microsoft hasn’t helped matters much with its own attempts at pretending that it is just an innocent witness to the Google imbroglio.
Julia Holtz, Google’s top antitrust lawyer, questioned Microsoft’s motives in seeking an antitrust probe via complaints made to the EC by Ciao GmbH, a Munich-based company acquired by Microsoft in 2008, and Foundem, a Bracknell, England-based price comparison site and a member of the iComp trade group, which is largely funded by Microsoft.”
I wonder if Google used some of its excellent search algorithms to sniff out Microsoft’s relationship to Ciao and Foundem? And yes, Microsoft deflects some of the unwanted attention from its sly purchase with this rejoinder by Dave Heiner, vice president and deputy general counsel at Microsoft: “Ultimately, what’s important is not who is complaining, but whether or not the challenged practices are anticompetitive.”
Pfizer – Pfizer Still Dealing With Antitrust Issues | The Motley Fool
Well-known big pharma company Pfizer has successfully completed its acquisition of rival drug manufacturer Wyeth but continues to strive to placate European Union officials’ concerns of monopolistic practices. Motley Fool Brian Orelli has a some words of insight to help shed light on Pfizer’s sell-off of some less-desirable businesses:
Pfizer’s (NYSE: PFE) acquisition of Wyeth has been done for months, but the pharma giant’s still making moves to satisfy regulators. In order to keep the European Commission happy, today the company sold off some of its animal-health products marketed in the EU to Eli Lilly (NYSE: LLY). The terms of the deal weren’t disclosed, but Eli Lilly did say that the products will come with a manufacturing plant to help make them.
This move should help Pfizer rebuff additional concerns over its ginormous market presence although it could also cost the company dearly with the loss of significant amounts of pet-centered product lines. Here’s Orelli’s take on what potential Pfizer stockholders should keep in mind:
…[I]nvestors shouldn’t ignore animal-health products either. Added together, Pfizer’s animal products contributed over $2.7 billion to its coffers last year and Eli Lilly’s animal health division added $1.2 billion.
Good stuff, people. Have a great weekend, and see you again next week: same ACT time, same ACT place.
Bonus antitrust-related piece o’ the week: Intel – Intel digs in to fight FTC lawsuit over chip competition| USAToday