Antitrust Law Daily Justice Department won’t challenge proposed online bidding platform for advertisers
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Friday, April 17, 2020

Justice Department won’t challenge proposed online bidding platform for advertisers

By Thomas G. Wolfe, J.D.

The Antitrust Division’s business review letter allows the AICP to proceed with its proposal to operate an online platform for advertisers to solicit bids from companies providing production services for commercial advertisements.

The Department of Justice Antitrust Division has determined that a proposal by the Association of Independent Commercial Producers to operate an online bidding platform does not warrant an antitrust challenge. The AICP plans on operating the online platform for advertisers to solicit bids from companies that provide production services for commercial advertisements. According to the Justice Department, while "exchanging price and other competitive information can facilitate anticompetitive coordination among competitors, the AICP has designed the proposed platform to prevent such information sharing." The AICP communicated that any submitted bids "would remain private to both the bidder and the advertiser," and after the advertiser has awarded the bids, "no bidding data would be retained or collected." Therefore, the Antitrust Division cleared the proposed conduct in an April 16 business review letter.

In November 2019, AICP transmitted to the Antitrust Division a formal request for a business review concerning the AICP’s proposal to "develop a competitive, online platform for advertisers to solicit, submit, and review bids from independent production and post-production companies." The request, which included information and representations in support of the AICP’s proposal, noted that the AICP "represents, exclusively, the interests of independent companies that specialize in the production and post-production (i.e., editing and special effects) of commercials in various media (e.g., film, video, digital media) for advertisers and advertising agencies." While AICP is a New York not-for-profit corporation, its wholly owned subsidiary, AICP Services, Inc. (ASI), is a Delaware for-profit corporation.

AICP proposal. According to the AICP proposal: (1) AICP, through ASI, would "own all of the equity interests in the proposed platform"; (2) each subscriber independently would set the terms for its bid specifications, and these bid specifications would include "an outline of the various phases of production comprising the commercial job, and, at the subscriber’s option, specific budget parameters for the production"; (3) once invited, the subscriber would have the option to disclose to the approved bidders the identities of the other bidders; (4) each approved bidder would only be able to access the specifications relevant to its proposed bid, and each responsive bid would remain private to the bidder and the subscriber: (5) "no bidder would be able to access another bidder’s submission and data"; (6) participation in the proposed bidding platform would be "voluntary and nonexclusive," and the platform would be available "on a nondiscriminatory basis" to AICP members as well as nonmembers; and (7) all subscribers and participating production and post-production companies would be "free to use other bidding platforms" or to otherwise compete with the proposed bidding platform.

Business review letter. In the business review letter, the Antitrust Division made clear that the Antitrust Division presently does not intend to challenge the AICP’s proposal. The letter notes that although the aggregation and exchange of price and other competitive information can "facilitate anticompetitive coordination among competitors," in the AICP case there does not appear to be "a substantial risk of that result because the proposed platform would not be used to compile, communicate, or disseminate pricing, transactional, bid, or other competitive information among subscribers, bidders, or third parties." For instance, "ASI will institute and maintain firewalls that would prevent participating subscribers, bidders, and third parties from accessing nonpublic competitive information," observed Assistant Attorney General Makan Delrahim of the Justice Department’s Antitrust Division.

At the same time, the business review letter emphasizes that ASI employees who work with the proposed platform "will be held to a strict standard of confidentiality," and that neither ASI nor the AICP "will access, compile, aggregate, or use any subscriber specification data or information or any bidding information or data submitted to the platform."

Business review letter process. The AICP’s request for the business review letter was handled pursuant to standard Antitrust Division procedures. In contrast to the Justice Department’s timeline for its deliberations for issuance of its business review letter to the AICP, which was issued several months after the AICP’s request for it, the Antitrust Division has announced expedited business review procedures for collaborations to address the COVID-19 pandemic. The Antitrust Division’s separate business review letter in early April to several medical supply distributors was issued on an expedited basis, only days after the initial request for it—given the different set of factual circumstances taken into consideration in connection with the COVID-19 pandemic emergency.

Attorneys: Makan Delrahim, U.S. Department of Justice. Robert L. Sacks (Kane Kessler, P.C.) for Association of Independent Commercial Producers.

Companies: Association of Independent Commercial Producers

MainStory: TopStory Advertising Antitrust AntitrustDivisionNews GCNNews

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