Resale price maintenance liability remains alive even after Leegin Creative Leather Products v. PSKS, 127 S.Ct. 2705 (2007) (holding that rpm agreements are now subject to the rule of reason). On June 17, 2008, the Third Circuit held that a Mack truck franchisee raised a triable issue of fact under the rule of reason concerning an alleged resale price maintenance scheme. Toledo Mack Sales & Serv. v. Mack Trucks, No. 07-1811, 2008 WL 2420729 (3d Cir. June 17, 2008). In particular, the Court held that the plaintiff came forward with sufficient evidence to show that the existence of an agreement between the manufacturer and dealers to stop discounting and the agreement may have caused prices to increase violating the rule of reason. Relying on Monsanto v. Spray-Rite Serv., 465 U.S. 752 (1984), the dealers’ frequent input and complaints about discounting were sufficient to raise a triable question over the existence of an agreement. With respect to the showing under the rule of reason, the dealer established that the manufacturer had sufficient power in the engine placed in front of the cab and the low cab over engine truck markets to control prices in those markets. Accordingly, its efforts to reduce intrabrand competition could have affected interbrand competition and caused prices to increase in the relevant markets. The Third Circuit rejected the R-P- Act claim holding that the statute does not apply to custom made goods of the type that were at issue in this case. The Third Circuit also rejected the statute of limitations defense holding that the plaintiff could rely on evidence of overt acts that took place before the limitations period to prove the existence of the conspiracy during the limitations period. Counsel must be careful in advising their clients about resale price maintenance. In addition to liability that can arise as demonstrated by this decision, state attorneys general remain active in this area. See March 14 and May 23, 2008 Posts.
Jul
11
Posted by : | On : July 11, 2008
Jun
21
Posted by : | On : June 21, 2008
On June 9, 2008, the Sixth Circuit rejected a coach’s challenge to the NCAA’s disciplinary rules because he did not allege that the disciplinary rules implicated commercial activity or that he suffered antitrust injury. Bassett v. Nat’l Collegiate Athletic Ass’n, No. 06-5795, 2008 WL 2329755 (6th Cir. June 9, 2008). The Sixth Circuit held that to state a claim under Section 1 of the Sherman Act, “there must be a commercial activity implicated.” Id. at *5. The court further held that “the appropriate inquiry is whether the rule itself is commercial, not whether the entity promulgating the rule is commercial.” Id. (citations omitted). The court then rejected the challenge because the enforcement of disciplinary rules is not a commercial activity. The court also held that plaintiff did not allege antitrust injury. To satisfy this element, the plaintiff had to allege an “anticompetitive effect on the coaching market.” Id. at *7. The coach’s exclusion based on enforcement of the disciplinary rules was insufficient to establish an antitrust injury. It should be noted that the decision contains good dicta explaining when the rule of reason as opposed the per se analysis applies and the nature of the rule of reason analysis.
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
16
Posted by : | On : May 16, 2008
On May 14, 2008, the Fifth Circuit rejected North Texas Specialty Physicians’ petition for review of an order that found certain of its activities constituted price-fixing and therefore violated Section 1 of the Sherman Act and Section 5 of the FTC Act. North Texas Specialty Physicians v. FTC, No. 06-60023, 2008 WL 2043040 (5th Cir. May 14, 2008). The Fifth Circuit found that the agreement among the physicians met the commerce requirement because if successful, “the advantages of competition have been adversely affected for out-of-state employers and payors.” The court affirmed the FTC’s use of the “quick look” and the FTC’s holding that the fee setting provisions were unrelated to any of the organization’s procompetitive efficiencies. The court modified one provision in the FTC’s remedial order, however, that prohibited the NTSP from entering into an agreement with its members where they “deal[t with, refuse[d] to deal, or threaten[ed] to refuse to deal with any payor.” As the court observed, “it is difficult to see how the NTSP can both deal and refuse to deal with any payor.” The rest of the order was affirmed.
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).
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.