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While franchising has traditionally enjoyed a “special relationship” status
in antitrust, other forms of business replication have not. The single
enterprise concept for exonerating what might otherwise be suspect as
conspiratorial conduct will be helpful defensively except where, as in
Topco,
the enterprise is seen to be merely a cover for horizontal conspiratorial
behavior.
Where the catalyst for business replication is the licensing of intellectual
property, notions of inherent market power owing to the exclusive rights
carried by protected intellectual property are now in flux. Sometimes
inherent power will be found to be present, influencing issues of potential
trade restraints resulting from any given replication model, and sometimes
not. Whether you are dealing with a patent portfolio or trademarks, for
example will weigh heavily, especially if in the trademark cases there is
substantial interbrand competition. The role of business method patents in
antitrust has not yet been defined, and many antitrust specialists
anticipate judicial hostility to business method patents. The role of the
Federal Circuit Court will also impact this issue, as that court is expected
to take different views in intellectual property cases than would the other
circuit courts, which is one of the main reasons for the establishment of
the Federal Circuit Court – IP expertise and the elimination of Circuit
Court splits on important IP issues.
The formats of business replication models present choices in which
antitrust will or will not play critical issue roles. The concentricity
aspects of the selected replication model will differentiate all concentric
models from horizontal replication models established by actual competitors.
While not a true concentric merger, the recent FTC action against Whole
Foods in its geographic market extension acquisition of Wild Oats
should be regarded as a harbinger of how business replication models may be
viewed by enforcement agencies in any kind of replication model situation.
It also suggests that the selection of less than fully integrated
replication models may have better luck, if only for the reason that there
are greater opportunities for less than dissolution remedies in resolving
the issues.
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