Posted by : Matthew Wild | 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.



Posted by : Matthew Wild | 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.



Posted by : Matthew Wild | On : April 18, 2008

Today, an Italian executive agreed to plead guilty for his involvement in the Marine Hose Cartel. His plea agreement includes incarceration of one year and one day and a $20,000 fine. In addition, a Long Island defense contractor agreed to plead guilty to bid rigging and a conspiracy to commit wire fraud for his participation in a conspiracy to rig bids on Navy contracts for straps which are used to secure munitions. His sentence was left entirely to the Court’s discretion. Most criminal cases brought by the Antitrust Divisions are resolved by plea agreements. As discussed in the March 15, 2008 Post, the trial record of the Criminal Section (Antitrust Division) has been spotty. It has lost three trials within the last year.



Posted by : Matthew Wild | 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”).



Posted by : Matthew Wild | On : March 31, 2008

On March 21, 2008, Herman Miller, Inc. entered into a consent decree with the attorneys general for New York, Michigan and Illinois to resolve allegations of resale price maintenance over its Aeron chair — an ergonomic desk chair. Filed in the United States District Court for the Southern District of New York, the Complaint alleged that Herman Miller used its Suggested Retail Price policy to enforce a resale price maintenance scheme over the Aeron chairs. According to the Complaint, Herman Miller coerced retailers to agree not to advertise or discount Aeron chairs below Herman Miller’s Suggested Resale Price or a pre-determined discount set by Herman Miller. The states alleged violations of Section 1 of the Sherman Act and the New York, Illinois and Michigan antitrust statutes. Although this action was brought after the Supreme Court in Leegin Creative Leather Prods., Inc. v. PSKS, Inc., 127 S.Ct. 2705 (2007), held that resale price maintenance was subject to analysis under the rule of reason (and no longer a per se violation of Section 1), the Complaint pled only a per se violation. The consent decree requires Herman Miller to refrain from resale price maintenance and enforcement of its Suggested Retail Price policy for all of its products. Herman Miller also was required to pay a $750,000 fine. This case serves as a cautionary tale to manufacturers who take too much comfort from Leegin. With aggressive enforcement by state attorneys general and potential litigation by terminated retailers under more stringent state laws, manufacturers would be well advised to act unilaterally under the Colgate doctrine. They are free to terminate discounters unilaterally but should not require retailers to agree to adhere to resale prices as a condition of receiving shipments. Similarly, to reduce the chance that any termination of a discounter could be considered the product of a conspiracy between the manufacturer and other retailers, manufacturers should refuse to listen to complaints from retailers about discounting. The Herman Miller Complaint and Consent Decree are attached. Herman Miller Complaint; Herman Miller Consent Decree



Posted by : Matthew Wild | 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



Posted by : Matthew Wild | 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.