The U.S. antitrust laws are designed to protect the fundamental functioning of our economy and all of the companies operating within it. However, since most high-profile antitrust cases involve breaking up big companies or challenging major mergers, many businesses (or, in antitrust parlance, “market participants”) mistakenly believe that the antitrust laws only apply to sprawling companies and vast mergers. In truth, the antitrust laws regulate the activities of all market participants in order to promote robust competition so that every company has a fair shot at establishing and growing its business, which in turn fosters innovation and lower prices.
Higher Stakes for Startups & Small Businesses
Smaller companies may actually face more dire anticompetitive threats than larger enterprises because they are typically unable to withstand the lower margins caused by antitrust violations. An ongoing suit brought by video game developers – many of which are startups and SME companies – highlights the struggles that smaller companies can face when operating in markets occupied by large, established companies.
In Wolfire Games, LLC v. Valve Corporation, a group of video game developers argue that Valve - through its online gaming platform, Steam - suppresses competition by mandating that every company selling its games through Steam must not only pay Steam 30% of its game sales, but also must agree that it will never offer to sell its games anywhere else at a lower price. Even though Steam's policies eat away at a substantial share of a developer's potential profits, developers are forced to accept these terms because Steam controls a vast portion of the PC game consumer market, and refusing to sell on Steam would effectively cut a developer off from a significant share of customers. Importantly, the suit highlights how anticompetitive policies can disproportionately threaten smaller companies: in this case, Steam reduces its 30% fee for companies selling over $10 million in games on its platform annually.
Assessing Anticompetitive Pressure
If your small enterprise is facing similar anticompetitive pressure, it may be worthwhile to explore your options under the antitrust laws by asking the following questions:
- Are there a lack of “options” in choosing business partners?
- Is there a constant downward pressure on my margins (not caused by my own pricing policies)?
- Do I consistently make concessions to larger market players (often distributors) in order to stay in business?
Antitrust Remedies
Based on this assessment, if you suspect that your business is being squeezed by anticompetitive forces, it is important that you explore, and if necessary, challenge anticompetitive practices in a timely manner in order to preserve your rights under the antitrust laws, which include:
- obtaining an injunction to halt anticompetitive practices;
- recovering damages incurred by your company (in some cases, triple damages, meaning that for every dollar that the anticompetitive practices cost you, you are entitled to recover three dollars in damages); or
- resolving the anticompetitive situation in a more expeditious fashion by settling your antitrust suit – whether originally filed in court or in an alternative dispute resolution forum.
Protecting your startup or small business from anticompetitive threats may feel like a herculean task. At Scale, we are often able to commence investigating antitrust claims on a contingency basis – at no charge to you. In many cases, we are able to prosecute an entire case on such a basis. If you suspect you are being affected by anticompetitive practices, or if you have general questions about the antitrust laws, please contact Joe Kiefer at jkiefer@scalefirm.com. And even setting aside the availability of a contingency relationship, it is worth noting that Scale’s unique structure allows its attorneys to provide top-quality advocacy at lower hourly rates.
—-----------------
Joe Kiefer is a seasoned commercial litigator and trial lawyer specializing in antitrust law and complex commercial litigation. He has represented both individual companies and classes in some of the most prominent antitrust cases in the country over the past decade. Joe was recognized in the 2022 edition of The Best Lawyers in America as a “One to Watch” in the field of Antitrust Law.
.jpeg)
.jpeg)