The Connecticut Supreme Court recently held that the Connecticut Attorney General may pursue “damages to its general economy caused by violations of the Connecticut Antitrust Act.” State of Connecticut v. Marsh and Mclennan Companies, Inc., SC 17861 (Ct. Apr. 15, 2008). In Marsh, the Connecticut Attorney General claimed that the bid rigging scheme orchestrated by Marsh — in which Marsh decided which insurance companies should win individual contracts and which should submit high bids — caused far reaching harm to the entire Connecticut general economy. Insurance companies that did not comply with Marsh’s demands would be cut-off from all of Marsh’s customers. The Connecticut Attorney General argued that Connecticut was particularly vulnerable to Marsh’s scheme as Connecticut is home to many insurance companies. While the Court recognized that its decision conflicted with Hawaii v. Standard Oil Co. of California, 405 U.S. 251 (1972) (holding that Clayton Act does not confer standing for general economic harm), the Court observed that the relevant language of the Connecticut Antitrust Act differed from the Clayton Act. The Court noted that unlike the Clayton Act, the Connecticut Antitrust Act provides specifically that the attorney general may bring an action as parens patriae “with respect to damages to the general economy of the state or any political subdivision thereof.” The Court recognized that although the state may have difficulty proving those damages, it would be improper to grant a motion to dismiss the Complaint on that basis. A copy of the opinion is attached.
Apr
14
Posted by : | On : April 14, 2008
Apr
10
Posted by : | On : April 10, 2008
In Madison Square Garden, L.P. v. Nat’l Hockey League, No. 07-4927-CV, 2008 WL 746524 (2d Cir. Mar. 19, 2008), the Second Circuit denied Madison Square Garden — owner of the Rangers — a preliminary injunction against threatened fines for non-compliance with the NHL’s internet policy. That policy requires that all team websites had to be migrated to a common technology platform managed by the NHL and linked to the NHL’s website. When threatened, MSG brought suit seeking preliminary and permanent injunctive relief based on alleged violations of Section 1 of the Sherman Act and the Donnelly Act. The Southern District of New York denied MSG’s motion for a preliminary injunction and the Second Circuit affirmed holding that “MSG failed to establish a likelihood of success on the merits or sufficiently serious questions” on the merits. Id. at *2. The Second Circuit refused to apply a “quick look” because “the likelihood of anticompetitive effects is not] so obvious that ‘an observed with even a rudimentary understanding of economics could conclude that the arrangements in question would have an anticompetitive effect on customers and markets.'” Id. (citations omitted). In applying the rule of reason, the Second Circuit held that “MSG did not show that the NHL’s website ban has had an actual adverse effect on competition in the relevant market. Nor did MSG demonstrate that the many procompetitive benefits of the NHL’s restriction could be achieved through an alternative means that is less restrictive of competition. While there will certainly be substantive issues for the district court to address on the merits-for example, how the antitrust laws apply to the NHL as a sports league, and what the relevant market is in this case-the district court’s conclusion that preliminary injunctive relief was unwarranted falls well within the range of permissible decisions, and did not constitute an abuse of discretion.” Id. This case illustrates the difficulty of a sports team’s ability to challenge league action which benefits the league collectively. It should be noted, however, that NHL is unlikely to receive immunity under the Copperweld doctrine. See, e.g., Nat’l Hockey League Players Ass’n v. Plymouth Whalers Hockey Club, 419 F.3d 462 (6th Cir. 2005) (“courts considering the actions of professional sports leagues have found the leagues to be joint ventures whose members act in concert (i.e., agree ) to promulgate league rules, rather than one solitary acting unit”).
Apr
08
Posted by : | On : April 8, 2008
On March 24, 2008, the United States District Court for the Northern District of California granted partial summary judgment and dismissed plaintiffs’ challenge to the Star Network’s fixed interchanges fees that was based on a per se violation of Section 1 of the Sherman Act. See In re ATM Fee Antitrust Litig., No. C 04-02676 CRB, 2008 WL 793876 (N.D. Cal. Mar. 24, 2008). This action challenges the fixed fee that the Star Network (through its members) pays to the owner of the ATM used by the cardholder. The court applied the rule of reason because the fixed fee is “reasonably necessary to the legitimate cooperative aspects of the venture.” Id. at *10 (citation omitted). The court concluded that fixed nature of “the fee promotes cooperation between the venture’s members and cannot be set individually. Under the circumstances, that is all Defendants must show to avoid a per se analysis.” Id. The court, however, certified the question for interlocutory appeal because there is “serious doctrinal confusion over the proper analysis of cooperative arrangements among competitors.” Id. at 12 (citation omitted).
Apr
03
Posted by : | On : April 3, 2008
On March 28, 2008, the United States Court of Appeals for the First Circuit reversed the grant of class certification in In re New Motor Vehicles Canadian Export Antitrust Litigation, Nos. 07-2257, 07-2258, 07-2259, 2008 WL (1st Cir. Mar. 28, 2008). In that case, plaintiffs alleged a conspiracy among car manufacturers — a violation of Section 1 of the Sherman Act — to discourage U.S. customers from purchasing cars in Canada — which were cheaper at the time due to favorable exchange rates — for their use in the U.S. The manufacturers allegedly used a variety of mechanisms to discourage this customer practice such as refusing to honor warranties on Canadian cars. The United States District Court for the District of Maine certified two classes — (1) injunctive relief class under Section 16 of the Clayton Act and (2) damages class under various state antitrust and consumer protection laws. Defendants argued that plaintiffs’ claim for injunctive relief was moot because there is no longer a “realistic threat” of future harm. As a result of the weak dollar, there is no longer a realistic threat that manufacturers will conspire to keep consumers from importing cars from Canada. The Third Circuit agreed and reversed class certification on the injunctive relief claim with instructions to dismiss that claim. The Third Circuit also agreed with the District Court’s treatment of the damages class — that plaintiffs should have more time to develop their theories to support class certification. The Third Circuit, nevertheless, vacated the preliminary grant of class certification because it was concerned that subject matter jurisdiction no longer existed. With the federal claim now dismissed, there would have to be an independent basis for federal subject matter jurisdiction over the damages claims under state law. The District Court was instructed to determine if jurisdiction existed.
Mar
30
Posted by : | On : March 30, 2008
In United Magazine Co., Inc. v. Curtis Circulation Co., 06-3212 (2d Cir., Mar. 25, 2008), the Court affirmed summary judgment dismissing plaintiffs’ Robinson-Patman Act claims against certain defendants. This decision is significant in that it shows the difficulty for Robinson-Patman Act plaintiffs to meet the injury-to-competition requirement under Volvo Trucks N. Am., Inc. v. Reeder-Simco GMC, Inc., 546 U.S. 164, 180 (2006). In United Magazine, plaintiffs came forward with proof that defendants sold magazines to one customer on better terms than to plaintiffs. The Second Circuit held that even accepting plaintiffs’ proof as true, plaintiffs’ proof of injury was insufficient for two independent reasons. Plaintiffs failed to show that they competed head-to-head for any bids with the favored customer. Second, plaintiffs failed to show that “‘any price discrimination between’ [them] and the favored customer] was ‘of such magnitude as to affect substantially competition between’ the two competitors.” Id. at 6 (quoting Volvo Trucks, 546 U.S. at 180). The Second Circuit’s decision is attached. United Magazine v. Curtis Circulation
Mar
26
Posted by : | On : March 26, 2008
March 24, 2008. The Antitrust Division cleared the merger between XM Satellite Holdings and Sirius Satellite Radio — the only satellite radio providers. In its closing statement, the Antitrust Division concluded that it would be unlikely that the parties could raise prices post-merger. The Antitrust Division noted that the parties do not compete for current customers because the costs of equipment makes switching to the other provider impractical. The Antitrust Division concluded that relevant market for new customers would have to include alternative sources for audio entertainment in addition to satellite radio. The Antitrust Division further noted that future technology would only increase the competition faced by the parties. With respect to competition for sole source contracts with major auto manufacturers, those contracts are locked-in and there is unlikely to be any competition for those contracts for many years. Finally, the Antitrust Division noted that the transaction would result in substantial efficiencies (and cost savings) which further supported its conclusion that the transaction would not harm competition.
Mar
15
Posted by : | On : March 15, 2008
In March 2008, the Antitrust division (Criminal Section) lost two price-fixing cases. On March 7, 2008, after an 11-day trial, Judge Phyllis Hamilton of the United States District Court for the Northern District of California declared a mistrial in United States v. Swanson because of a hung jury (which voted 10-2 for acquittal). The Antitrust Division has decided not to re-try Swanson. Charles Swanson, a former U.S. executive of Hynix Semiconductor, was the only defendant to go to trial in the cartel prosecutions of DRAM manufacturers. Four corporations (Samsung, Hynix, Infineon and Elpida Memory) and 16 individuals pleaded guilty. Fines exceeded $730 million and individual prison sentences ranged from 3 to 10 months. John Barthko of Barthko Zankel Tarrant & Miller represented Swanson. On March 12, 2008, the U.K. House of Lords declined to extradite Ian Norris, the former CEO of Morgan Crucible who the Antitrust Division (Criminal Section) had indicted for price-fixing in connection with electrical carbon cartel. Price-fixing was not a crime in the U.K. at the time that Norris was indicted and, therefore, Norris was not subject to extradition for the offense. To avoid that obstacle, the Antitrust Division also charged Norris with obstruction of justice and sought his extradition on that charge. Norris is subject to further proceedings and potential extradition on the obstruction charge. He was represented by Lawrence Byrne (Linklaters LLP) in the United States and Alistair Graham (White & Case LLP) in the U.K. This is the fourth recent blow to the Antitrust Division’s Criminal Section. On November 30, 2007, the United States District Court for the District of Delaware dismissed a price-fixing indictment against Stolt-Nielsen holding that the Antitrust Division breached its amnesty agreement. See United States v. Stolt-Nielsen S.A., 524 F. Supp. 2d 609 (E.D. Penn 2007). Solt was represented by Mark Gidley and Chris Curran (White & Case LLP). On July 19, 2007, Stora Enso North America was acquitted of price-fixing in the United States District Court for the District of Connecticut. The jury returned its verdict in less than two hours.
Mar
11
Posted by : | On : March 11, 2008
Dismissing complaints from Microsoft and Yahoo, the EU Competition Commission cleared Google’s acquisition of DoubleClick. The Antitrust Division (U.S. Department of Justice) had done so after completing its Hart-Scott-Rodino Act review in December 2007. According to the Associated Press, the EU noted that Microsoft, Yahoo and AOL would discipline any attempt by Google/DoubleClick to raise the prices for web-placed advertisements post-merger.