January 23, 2008. The FTC challenged anticompetitive behavior under Section 5 of the FTC Act that was not a violation of Section 1 or 2 of the Sherman Act. The FTC alleged that Negotiated Data (“N-Data”) reneged on its commitment to license its Ethernet technology to a standard-setting body on specificed terms. That commitment had induced that body to adopt N-Data’s technology as the standard. The FTC alleged that such conduct was both an “unfair method of competition” and an “unfair practice” in violation of Section 5. N-Data entered into a consent decree agreeing to abide by the licensing terms that it had originally offered. FTC Chair Majoras and Commissioner Kovacik dissented believing that Section 5 of the FTC Act does not reach such conduct. The FTC and Dissenting Statements and Analysis to Aid Public Comment are attached.FTC Statement (NData); ; Majoras Dissent (NData); Analysis to Aid Public Comment (NData)
Mar
03
Posted by : | On : March 3, 2008
February 13, 2008. The FTC sued Cephalon for exclusionary conduct that is preventing generic competition with its branded drug Provigil. The FTC alleged that Cephalon settled with four different generic manufacturers. These generic manufacturers dropped their patent challenges to Provigil in exchange for cash payments. Under the vagaries of the Hatch-Waxman Act, generic entry is not possible until 180 days after one of these generic manufacturers enters the Provigil — which because their patent challenges have settled, will not be until after Provigil’s patent expires in 2012. The FTC adopted a new litigation strategy in this case. In the past, the FTC challenged these types of settlements in administrative proceedings and claimed that the basis for the “unfair method of competition” was a contract in restraint of trade — a violation of Section 1 of the Sherman Act. However, in FTC v. Schering-Plough, 402 F.3d 1056 (11th Cir. 2005), the FTC’s administrative decision was reversed by the Eleventh Circuit on petition for review. The Eleventh Circuit held that a reverse patent settlement is not by itself a Section 1 violation.The FTC’s current litigation strategy avoids the implication of Schering-Plough in two respects. First, by avoiding administrative proceedings altogether and commencing the action in the United States District Court for the District of Columbia, the FTC avoids review by the 11th Circuit. Second, the FTC is proceeding under a different theory of liability. The alleges that Cephalon willfully maintained its monopoly over Provigil through the patent settlements in violation of Section 2 of the Sherman Act. Accordingly, Schering-Plough — a Section 1 case — is inapposite. The FTC Press Release and Complaint are attached. FTC Press Release (Cephalon), FTC Complaint (Cephalon)
Feb
27
Posted by : | On : February 27, 2008
February 27, 2008. Microsoft became the first company that the EU Competition Commission has fined (in its 50 year history) for non-compliance with an antitrust decree. The decree was based on the determination that Microsoft abused its dominant position. To remedy the violation, the decree required Microsoft to disclose interoperability information to developers of work group server operating servers (on reasonable terms) which would allow them to compete. The EU concluded that royalty rates which Microsoft imposed were unreasonable and therefore violated the antitrust decree. Below is a link to the proceedings against Microsoft in the EU. http://www.ec.europa.eu/comm/competition/antitrust/cases/microsoft/index.html
Feb
25
Posted by : | On : February 25, 2008
January 7, 2008. In Kentucky Speedway, LLC v. Nat’l Ass’n of Stock Car Auto Racing, Inc., Civil Action No. 05-138 (WOB), 2008 WL 113987 (E.D.K.y. Jan. 7, 2008), the district court granted summary judgment dismissing plaintiff’s Section 1 and 2 claims. Kentucky Speedway sued because NASCAR refused to sponsor a NEXTEL race at its track. The Court considered it a “jilted distributor” case. It found that Kentucky Speedway failed to come forward with sufficient proof of relevant product market — an essential of element of both its Section 1 and 2 claims. It rejected the proposed relevant markets of a sanctioning market for the NEXTEL race and a hosting market for the same race. It granted NASCAR’s Daubert motion to exclude Kentucky Speedway’s expert because he did no study to determine the cross-elasticity of demand between NEXTEL races and other potential substitutes such as sporting events in general. Rather, Kentucky Speedway’s expert assumed only that a Bush NASCAR race event was a potential substitute.
Feb
22
Posted by : | On : February 22, 2008
February 22, 2008. Two former Marsh executives (William Gilman and Edward McNenney) were convicted after a 10-month bench trial of bid rigging in violation of New York’s Donnolly Act. They were acquitted of grand larceny and engaging in schemes to defraud. These charges stem from Marsh’s scheme of steering business to insurers who paid Marsh the highest contingent commissions. The case was brought by the New York State Attorney General in New York State Supreme Court, New York County. In addition to agreeing to refrain from such conduct in the future, Marsh had paid $850 million to settle with the New York Attorney General. Another executive pleaded guilty to engaging in a scheme to defraud in 2005.