On June 30, 2008, the First Circuit held that leasees of motor vehicles could not recover under Section 4 of the Clayton Act because they were indirect purchasers of the vehicles. In re New Motor Vehicles Canadian Export Antitrust Litig., No. 07-1990, 2008 WL 2568457 (1st Cir. June 30, 2008). In Illinois Brick Co. v. Illinois, 431 U.S. 720 (1977), the Supreme Court held that only plaintiffs that purchased a product directly from a co-conspirator can recover treble damages under Section 4 of the Clayton Act for a violation of the antitrust laws. In an action brought by leasees of motor vehicles who claimed that the motor vehicle manufacturers had conspired to prevent the sale of motor vehicles in Canada to U.S. consumers for export into the U.S., the First Circuit held that the dealers and not the leasing companies or leasees were the direct purchasers under Illinois Brick. The Court held that because the dealers negotiate the terms of the sale in response to rates set by the leasing companies, the dealers were the direct victims of an antitrust violation by the manufacturers. An interesting question is whether consumers in this case have remedies under state antitrust laws if their claims are based on purchases in Canada. Followers of this litigation are directed to the April 14, 2008 Post discussing the First Circuit’s treatment of class certification.
Jul
08
Posted by : | On : July 8, 2008
Jul
07
Posted by : | On : July 7, 2008
On July 1, 2008, the Antitrust Division announced that VISA agreed to rescind a rule that required merchants to give VISA debit cards superior treatment than non-VISA debit transactions from VISA branded cards. Under the rule, VISA allowed merchants to waive the signature and PIN requirements for transactions of less than $25 on VISA debit cards but required the entry of a PIN or a signature on a VISA branded card for a non-VISA debit transaction. With a 70% share of the debit card market, this hurdle may have given VISA an unfair competitive advantage. This practice had become the subject of investigations by the Antitrust Division and the District of Columbia, New York and Ohio attorneys general. It is not surprising that VISA is gun-shy in light of its multi-billion settlements in private antitrust litigation. The Antitrust Division’s press release is attached. DOJ Press Release (VISA)
Jul
02
Posted by : | On : July 2, 2008
According to Reuters, the Antitrust Division has opened an investigation into the proposed revenue sharing agreement between Yahoo and Google. Under the agreement, Yahoo will allow Google to put advertisements on its site in exchange for a share of the revenue. Google and Yahoo are reported to have shares of about 80% and 16% respectively of online advertising revenue. The obvious concern is whether the agreement will reduce the incentives for Google and Yahoo to compete and therefore, violate Section 1 of the Sherman Act. Yahoo may have an incentive to raise its prices knowing that under the agreement, it will share in any lost business to Google. The Antitrust Division reportedly has issued civil investigative demands not just to Google and Yahoo but to many other players in the industry. Although not required to do so, Google and Yahoo agreed not to go forward with their collaboration until the Antitrust Division has an opportunity to review the potential effects on competition. The parties have attempted to shrug-off the investigation as expected. But it certainly is not routine. The Antitrust Division does not take issuance of CIDs lightly.
Jun
26
Posted by : | On : June 26, 2008
On June 26, 2008, the Antitrust Division announced that Air France (and KLM Royal Dutch Airlines), Cathay Pacific, Martinair Holland and SAS Cargo Group entered into plea agreements for their participation in the cartel to fix air cargo rates. They agreed to fines of more than $504 million. Air France-KLM agreed to pay $350 million — the second largest fine for an antitrust conviction in U.S. history. Cathay agreed to a $60 million fine; Martinair agreed to a $42 million fine; and SAS agreed to a $52 million fine. So far, the Antitrust Division has obtained $1.27 billion in fines from guilty pleas by cartel participants. This is the largest amount of fines ever imposed as a result of a criminal antitrust investigation. The Antitrust Division’s press release is attached. DOJ Press Release (International Cargo Cartel)
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
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
16
Second Circuit Finds Article 3 Standing in Antitrust Challenge to Credit Card Arbitration Provisions
Posted by : | On : May 16, 2008
In Ross v. Bank of Am., N.A., No. 06-4755, 2008 WL 1836640 (2d Cir. Apr. 25, 2008), plaintiffs had alleged that the standard arbitration clauses in their credit card agreements with several issuers was the product of a conspiracy in violation of the Section 1 of the Sherman Act. The district court held that plaintiffs had no Article 3 standing because they had not yet initiated a dispute that triggered arbitration. The Second Circuit reversed holding that the provision in their agreements alone was sufficient to confer standing.
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.