2nd Circuit OKs LG-Samsung-eSmart Merger

By Annie Dike, Esq.

As if it wasn’t facing enough heat in the highly-publicized Apple iLock debate, the DOJ decided to strike up another fire by initiating an antitrust suit against a new fruit on the iVine, so to speak. Rising from the union of two developers, formerly with Samsung and LG, the Manhattan based company, eSmart, is an admitted newcomer to the smart device party. As CEO Newt Techati notes, “We call it an ePhone because it is not just intelligent; it is exceptional.” When Techati began talks with executives at Samsung and LG about merging the three companies ─ a transaction they dubbed the “Three C’s” ─ under the eSmart name to increase production of the ePhone, the government sensed an unfair domination of the smartphone market and stepped in to thwart the merger.

The Second Circuit, in an astounding ruling released this week, sided with the phone producers, stating that the two phones were sufficiently diverse - in essence, allowing a merger of Samsung, LG, & eSmart (the three ePhone producers), stating “There can be no competition where the two do not compete.”

When commenting on the differences between the ePhone and the iPhone, Techati said, “We can all agree the iPhone came first, but this is the next generation. The iPhone is our predecessor, not our competitor.” In the filings, eSmart points out that the ePhone doesn’t intuit at all. There is no auto-population, no search or pattern recall, no storage of commonly-accessed information. Every search is new. “It keeps the mind fresh and the user’s options open and without bias,” Techati notes. Also, the Siri-like personality on the ePhone is programmed to be the voice of your mother, piping up at full volume any time the mood strikes her. “Most importantly, the ePhone can be completely unlocked by anyone who files a Freedom of Information Act request with eSmart’s offices, because “Safety Trumps Secrecy,” or so the eSmart ad claims. Further distinguishing the two phones, the ePhone uses the internet of things to tap into your household appliances and make your coffee, re-order groceries, and cook you dinner. In short, the capabilities of the ePhone are exponentially greater. It does all of the things you wish your iPhone could do.

While the DOJ acknowledged some differences between the technologies in the “i” that came before the “e,” “that will not be the case after Three C’s,” stated the Attorney General in the days before the ruling. “If the merger goes through, the ePhone will be first and foremost in the smartphone market, leaving no room for fair competition.”

With sound arguments on both sides, it was debatable which way the court would lean, but the opinion released this week made it very clear the Second Circuit found the two devices different enough that the merger would not create an anti-competitive market. A clerk from the court reported Judge Stulte, while working on the majority opinion, was often found walking around the court offices, holding the two phones side-by-side attempting to pit them against each other to see which might win.

 

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Maggie Tamburro

Maggie Tamburro is an attorney and writer who holds a Juris Doctor from The John Marshall Law School and a Bachelor of Arts from the University of Texas. She was admitted to the Illinois Bar in 1994 and Florida Bar in 1999 and has significant experience in legal research, editing, and writing. Maggie is active her in local community, holding various publicly appointed civic board positions.

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