Antitrust Law Case Study

This assignment presents a case study involving the band 'Rash' and three record labels (Echo, Hemispheres, and Syrinx). The case explores various scenarios concerning the distribution of Rash's music and the solo works of its members, analyzing their compliance with antitrust laws. Different options are evaluated, including forming a new record company, a joint venture, or assigning exclusive regional distribution rights. The analysis focuses on potential violations of competition laws, such as creating monopolies or engaging in price discrimination. A second question examines a proposal to address piracy by focusing on a specific geographical area and paying reduced streaming royalties. The final question involves a potential lawsuit from a wholesaler (YYZ) alleging price discrimination. The solutions provided assess each scenario's legality under antitrust laws, specifically referencing sections of the Clayton Act and discussing the implications of intellectual property rights in international licensing agreements.

Ques1
Ans1.
(a) The members would terminate their solo careers and would agree to use Nod, rather than
Winkin or Blinkin, as the producer for Rash records.
Ans. This alternate is not the best alternative to be selected as it is a violation of the competition
laws which seeks to promote market competition . According to the competition laws as under the
antitrust laws, anti-competitive conduct by companies need to be regulated. Here, by choosing this
option, the three musicians of our case law namely, Alex, Geddy, and Neil are cutting the
competition internationally as their solo performance records which are currently distributed by
Echo Records, Hemispheres Records, and Syrinx Records in Canada, Europe, and the United States
respectively will now, after choosing this option, would not be sold in all the three states. Thus,
cutting the competition and also it promotes monopoly. Also, it violates Section 3 of the Clayton Act
where merger that curbs competition is not allowed.
(b) The rash would form and fund a new record company called 2112 Productions and use 2112 to
distribute Rash's music.
Ans. This option is the best option to be chosen as it does not infringe the right of ant person and
also do not cut the competition as all the three musicians will be producing their solo records to be
sold in different countries around the world and will now be producing combined records.
(c) Echo, Hemispheres, and Syrinx would form a joint venture to distribute Rash's music. The joint
venture would have rights in Rash albums, but each joint venture partner would retain the
rights it already had in the respective members' solo works. Relative to (A), this proposal
would allow the record labels to coordinate the release of new material with the distribution
of material from each player's solo career. When a new Rash album was about to be released,
the respective joint venture partners could hit the pause button on marketing and promotion
of solo works.
Ans. This option is good but not the best as though it is not cutting the competition and also does
not infringe the right to intellectual property of all the three musicians, still it somewhere creates
the situation of monopoly in the market for the three partners to the joint venture will have the
right to pause button on promotion of solo works thereby hindering free competition.
(d) Echo, Hemispheres, and Syrinx would form a new corporation, which they own in equal
shares, to distribute Rash's music. Each record company would assign its rights in the
members' solo works to this company. This proposal would allow for coordination of the
release of new material, as in (B), and also would allow for the release of new albums that
mixed solo material with a new Rash material.
Ans. No, this is also not a suitable option to be selected in terms of antitrust laws as through this all
the three record companies are thereby creating a situation of monopoly as they are all giving their
individual rights to the solo performance of the three musicians and thereby cutting the competition
and promoting monopoly.

(e) Echo, Hemispheres, and Syrinx would sign contracts with Rash pursuant to which each
company would have the exclusive right to distribute Rash music in a particular region-- Echo
in Canada, Hemispheres in Europe, and Syrinx in the United States. In addition, each company
would agree not to distribute Rash music or the members’ solo records in any other territory.
Ans. This option is suitable in terms of not creating a monopoly, but by adding a condition added
that no record company would be selling the solo records in a territory other than their respective
territory, the record companies are cutting free competition in all the three territories.
Ques2.
Ans. The proposal suggested by Geddy is not the appropriate proposal as per the situation that the
company is dealing with currently. Since the margins of the company are suffered due to piracy,
focusing only on a particular geographical area would not solve the purpose as the Rash records are
marketed worldwide (though especially in the three main territories), so the measures are also
required to be adopted must also be applied worldwide to overcome the situation. Moreover,
paying a pittance to the copyright holders in return for their streaming rights, is a valid move as per
the antitrust laws as here it does not only protects the rights of the copyright holders but also allows
them for independent creation, that is, their records would be streamed online for which they will
be paid pittance, and they are free to sell their solo records as before in the other markets. As a
general rule of antitrust laws, the intellectual property is treated as any other form of property.
Intellectual property law gives the owners of intellectual property certain rights to exclude others.
The principles of antitrust analysis apply equally to domestic and international licensing
arrangements.
Ques3.
Ans. A lawsuit from YYZ should be allowed to proceed in terms of antitrust laws as it is a violation of
Section 2 of the Clayton Act which does not allow for price discrimination. The only excuse
acceptable is the price difference which is due to the cost differences, or the price difference is a
strategy to meeting the prevailing competition
Section 3 of the Clayton Act prohibits following:
 Tying (where one good must be bought to buy the other).
 Requirements Tying (buyer is asked to buy all his requirements only from the seller).
 Exclusive Dealing (buyer is asked to deal only with a particular seller).
 Exclusive Territories (buyer is asked to operate only in a particular area).
 Resale Price Maintenance (buyer is asked to pay a minimum resale price).
 Predatory Pricing (pricing is done even below the cost price to eliminate competitor).

Here in the given case, it was clearly mentioned that in the case of absence of any agreement,
the wholesalers should pay a price of $7 per record. But YYZ is asked to pay $ 10 per record even
though no agreement was entered into by it.