On June 2, 2008, the Antitrust Division’s Criminal Section lost a four-day jury trial in the District of Columbia. In United States v. Keitt, 07-CR-041, the defendant was accused of paying a former associate director of the TSA in exchange for favorable treatment in overseeing and administering his company’s contract. The jury acquitted in less than one day. This is the fifth major blow to the Criminal Section within the last year. The March 15, 2008 post discusses the Criminal Section’s four other defeats within the last twelve months — three acquittals after trial and the denial of extradition by the U.K. House of Lords.
Jun
15
Posted by : | On : June 15, 2008
Jun
09
Posted by : | On : June 9, 2008
On June 6, 2008, Inova Health System announced that it is has abandoned its merger plans with Prince William Health Systems. The FTC had commenced an action in the United States District for the Eastern District of Virginia on May 12, 2008, in which it sought a preliminary injunction to block the merger during the pendency of its adminstrative proceeding. After the motion for a preliminary injunction had been submitted, the hospitals’ abandoned their merger plans. Abandoning merger plans after litigating through a preliminary injunction hearing is rare. The parties must have incurred millions of dollars in legal fees and a decision on the injunction was due in only a month. If the hospitals had prevailed in district court and merged, it is possible that the FTC would have dropped its administrative challenge. The administrative proceedings in this case also were unusual because the FTC appointed one of its Commissioners (Thomas Rosch) to act as the administrative judge.
Jun
06
Posted by : | On : June 6, 2008
On June 5, 2008, the Antitrust Division issued a press release advising that it was closing its investigation into the potential anticompetitve effects from a joint venture between SABMiller plc (Miller) and Molson Coors Brewing Company to combine their operations in the United States. Although it did not provide any quantitative data, the Antitrust Division stated that based on information it received during its eight-month investigation from a wide-range of industry participants, it concluded that no adverse effect on competition would arise from the combination. Indeed, the Antitrust Division credited the parties’ efficiencies claims — noting that they were “verifiable and specifically related to the transaction and include large reductions in variable costs that are likely to have a beneficial effect on prices.” Thus, they met criteria set forth in the Merger Guidelines. Clearance of a merger based in large part on efficiencies is unusual. As a general matter, efficiencies are used by the parties to explain that there is no anticompetitive motive for the merger. Here, the parties were able to obtain much more credit for their efficiencies. Where beer drinkers are concerned, however, Antitrust Division did not note whether there would be a decrease in quality. Indeed, it is possible that the beer companies might rationalize brands to obtain efficiencies. Do loyalists to, for example, Molson Dry, have anything to fear? The Antitrust Division’s press release is attached. DOJ Press Release (Miller/Coors)
Jun
04
Posted by : | On : June 4, 2008
On June 4, 2008, Electronic Arts (video game maker) gave the FTC an extension of time under the HSR Act to review the potential competitive effects of its $2 billion proposed acquisition of Take-Two (maker of Grand Theft Auto). Under the agreement, EA must give the FTC 45 days’ notice of its intention to close. Parties often grant the Antitrust Division and FTC more time to review their transactions with the hope of convincing the agencies not to challenge the merger or to allow them to negotiate a remedy.
Jun
03
Posted by : | On : June 3, 2008
On May 23, 2008, the FTC issued a statement explaining its reasons for its decision not to join the DOJ’s brief that seeks Supreme Court review of LinkLine Comm’n v. Pacific Bell Telephone Co., 503 F.3d 876 (9th Cir. 2007). The FTC “disagree[d] with DOJ’s analysis, and … [believed that] this case does not appear to be worthy of review at this time.” FTC Statement at 1. The FTC recognized that “[t]he Ninth Circuit is unquestionably correct: … claims of a predatory price squeeze in a partially regulated industry remain viable.” Id., at 3. The FTC also believed that because the Ninth Circuit’s decision resolved a motion to dismiss, it was premature for Supreme Court review. The lower court had yet to decide the appropriate measure of cost for the input. Therefore, the Supreme Court could not opine on this issue and any decision would be of limited value. The FTC Statement is attached. FTC Statement (linkLine)
May
30
Posted by : | On : May 30, 2008
On May 27, 2008, the Ninth Circuit in Gerlinger v. Amazon.com, Inc., No. 05-178328, 2008 WL 2169401 (9th Cir. May 27, 2008), affirmed dismissal of a customer’s challenge to the arrangement between Amazon and Borders whereby Amazon took over operation of Borders’ internet bookstore. Amazon submitted affidavits showing that the prices paid by plaintiff were the same or lower since the arrangement with Borders. The Ninth Circuit held that Plaintiff did not suffer any injury and therefore lacked Article 3 standing to pursue his antitrust claim. This case marks the second time in about one month that an appellate court has addressed the Article 3 standing of an antitrust plaintiff. The May 16, 2008 post discusses Ross v. Bank of Am., N.A., No. 06-4755, 2008 WL 1836640 (2d Cir. Apr. 25, 2008), where the Second Circuit found that the antitrust plaintiffs had Article 3 standing. Although the Ross plaintiffs had not instituted arbitration proceedings or otherwise had a dispute with their credit card issuers, plaintiffs nevertheless had challenged the arbitration provisions in credit card agreements claiming that these provisions were inserted in the agreements as a result of a conspiracy among certain credit card issuers. According to the Second Circuit, the existence of the offending provisions alone were sufficient to confer standing.
May
23
Posted by : | On : May 23, 2008
The state attorneys general continue to be hostile to the Supreme Court’s decision in Leegin Creative Leather Products, Inc. v. PSKS, Inc., 127 S.Ct. 2705 (2007), which overruled Dr. Miles Medical Co. v. John D. Parke & Sons. Co., 220 U.S. 373 (1911), and made resale price maintenance subject to the rule of reason under Section 1 of the Sherman Act. 35 state attorneys general have written to Congress asking that it pass S. 2261 which would make resale price maintenance a per se violation of Section 1. State Attorney General Letter; S. 2261. The March 31, 2008 post reported that the New York, Michigan and Illinois attorneys general obtained a consent decree under state law against Herman Miller for its resale price maintenance scheme. The May 8,2008 post reported that although the FTC modified Nine West’s consent decree that had prohibited resale price maintenance, the FTC reminded Nine West that it was still subject to state restrictions. This most recent letter further confirms that counselors must be cognizant of state law when they advise clients about the legality of resale price maintenance. It would be prudent for clients to act unilaterally and follow the Colgate doctrine rather than rely on Leegin.
May
20
Posted by : | On : May 20, 2008
On May 2, 2008, the Eastern District of Pennsylvania granted class certification in In re Wellbutrin SR Direct Purchaser Antitrust Litig., No. 04-5525, 2008 WL 1946858 (E.D. Penn. May 2, 2008). Plaintiffs claim that GlaxoSmithKline unlawfully extended its monopoly over Wellbutrin SR through fraud on the patent office and sham litigation against potential generic entrants. Defendant argued that a conflict exists among class members because national wholesalers benefit from the lack of generic competition — generic manufacturers often bypass wholesalers. The court rejected this argument because as generic Wellbutrin SR has been available since 2004, no theoretical conflict could still exist. Plaintiffs met the other requirements for class certification. Notably, plaintiffs offered a “colorable method” to prove common impact. Plaintiffs’ expert plans to examine the impact of generic entry on brand name pharmaceuticals through an analysis of public data collected on the dispensation and purchases of prescription drugs. In this case, class certification was straightforward. It can become more difficult when, for example, prices are negotiated on an individual basis. See, e.g., Blades v. Monsanto Co., 400 F.3d 562, 569 (8th Cir. 2005) (denying class certification because, inter alia, “the market for seeds is highly individualized, requiring particularized evidence to determine the competitive price that would have prevailed”).