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Oct

29

41 State Attorneys General Ask Congress to Prohibit Resale Price Maintenance

Posted by : Matthew Wild | On : October 29, 2009

Category: Antitrust, New York Cases, Per Se Analysis, Resale Price Maintenance, Rule of Reason, Section 1 (Sherman Act), State Antitrust and Consumer Protection Claims, State Attorneys General

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In letters dated October 27, 2009 (State AG Letter re HR 3190; State AG Letter re S 148), 41 state attorneys general wrote to Congress asking them to overrule Leegin Creative Leather Product, Inc. v. PSKS, Inc., 551 U.S. 877 (2007).  In Leegin, the Supreme Court held that resale price maintenance — the practice in which a manufacturer requires a retailer to sell its products at a certain price — was subject to the rule of reason.  In doing so, the Court overruled Dr. Miles Medical Co. v. John D. Park & Sons, Co., 220 U.S. 373 (1911), which held that resale maintenance is a per se violation of section 1 of the Sherman Act.  The state attorneys general urge passage of H.R. 3190, which provides that “[a]ny contract, combination, conspiracy or agreement setting a minimum price below which a product or service cannot be sold by a retailer, wholesaler or distributor shall violate section 1 of the Sherman Act.”  As reported in the May 23, 2008 Post, 35 state attorneys general wrote to Congress on May 8, 2008 asking that it enact nearly identical legislation (S. 2261).

Practitioners should know that resale price maintenance can still be a per se violation of state antitrust laws.  As reported in the May 4, 2009 Post, Maryland enacted such a law.  And as reported in the March 31, 2008 Post, the New York, Michigan and Illinois attorneys general brought an action against Herman Miller in which they alleged that Herman Miller’s resale price maintenance program was a per se violation of their state antitrust laws.  Herman Miller entered into a consent decree.

Oct

26

Three Former Marsh Executives Acquitted of Donnelly Act Violations

Posted by : Matthew Wild | On : October 26, 2009

Category: Antitrust, Criminal, New York Cases, State Antitrust and Consumer Protection Claims, State Attorneys General

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Joseph Peiser, Greg Doherty and Kathleen Drake, former Marsh executives, were acquitted after an 11-month bench trial before Justice James Yates of violating New York’s antitrust law — the Donnelly Act.  They were acquitted of bid-rigging in connection with the sale of insurance policies.   As you may recall (and discussed in the February 22, 2008 Post), two Marsh executives were convicted of Donnelly Act violations after a 10-month bench trial.  These cases were brought by then New York Attorney General Elliot Spitzer.  Marsh paid $850 million to settle and another Marsh executive pleaded guilty.

Oct

13

The Remaining Apple/Google Common Director Resigns from Google’s Board

Posted by : Matthew Wild | On : October 13, 2009

Category: Antitrust, FTC Actions, Section 1 (Sherman Act)

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Google announced today that Arthur D. Levinson resigned from its board of directors.  However, Mr. Levinson remains on Apple’s board of directors.  Mr. Levinson was the remaining common director on the Google and Apple boards.  As reported in the June 3, 2009 Post, Eric D. Schmidt, Google’s CEO, resigned from Apple’s board amid antitrust concerns raised by the FTC.  The June 3 Post noted that it was unclear whether the FTC would require Mr. Levinson’s resignation from one of the boards.  Apparently, the FTC did just that as FTC Chariman Jon Leibowitz said, “Google, Apple and Mr. Levinson should be commended for recognizing that overlapping board members between competing companies raise serious antitrust issues, and for their willingness to resolve our concerns without the need for litigation.”  Chairman Leibowitz further warned, “[b]eyond this matter, we will continue to monitor companies that share board members and take enforcement actions where appropriate.”  It seems that the FTC is warning corporations that it plans to take an increased interest in enforcing section 8 of the Clayton Act, which prohibits interlocking directorates among competitors under some circumstances.  That statute has not been enforced with much frequency.  Nevertheless, antitrust practitioner always have to be concerned that the existence of common directors could be used as evidence of a conspiracy between the two corporations in violation of the Sherman Act because it provides an opportunity to conspire.  Accordingly, antitrust practitioners know to advise against such overlaps among corporations vulnerable to Sherman Act litigation without regard to section 8 of the Clayton Act.

Sep

30

FTC and DOJ Urge Reversal in American Needle v. NFL

Posted by : Matthew Wild | On : September 30, 2009

Category: Antitrust, FTC Actions, Immunity, Rule of Reason, Section 1 (Sherman Act), U.S. Department of Justice (Antitrust Division)

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As noted in the June 29, 2009 Post, the Supreme Court granted certiorari to review the Seventh Circuit’s decision in American Needle v. Nat’l Football League.  As explained in the September 4, 2008 Post, American Needle applied the Copperweld doctrine to a sports league’s joint licensing scheme for the first time. In so doing, it affirmed summary judgment in favor of the NFL, its teams and Reebok in an antitrust challenge to an exclusive license of team names and logos to Reebok for use on headwear.  (The decision is linked to the September 4 Post).  As explained in Wild, et al., “Private Equity Groups Under Common Legal Control Constitute a Single Enterprise Under the Antitrust Laws,” 3 NYU Journal of Law and Business 231, 237 and n.31 (attached under articles above), that doctrine treats two or more firms that are under common ownership or have a unity of interest in a common course of action as a single firm incapable of conspiring or otherwise acting collectively under the antitrust laws.

In their amici curiae brief, the government urges reversal.  It argues that the Seventh Circuit extended the Copperweld doctrine in a manner inconsistent with prior precedent — e.g., Texaco Inc. v. Dagher, 547 U.S. 1 (2006), in which the Supreme Court applied the rule of reason to a price-setting joint venture and NCAA v. Board of Regents, 468 U.S. 85 (1984), in which the Supreme Court applied a “quick look” to a NCAA restriction on each individual college’s right to broadcast their football games.  While the government conceded that the league should be entitled to Copperweld immunity under circumstances in which the teams need to cooperate such as to produce games, the licensing of NFL team logos is not one of them.  Indeed, the government observed that the NFL joint licensing scheme was similar to the type of scheme under review in Broadcast Music, Inc. v. CBS, 441 U.S. 1 (1979).  In BMI, the Supreme Court applied the rule of reason to a joint venture in which composers created a clearinghouse to sell a blanket license to works by more than one of them.   The American Antitrust Institute and Consumer Federation of America also filed a brief as amici curiae urging reversal.  Their brief and the government’s brief are linked below.  DOJ and FTC Brief;  AAI Brief

Aug

12

MLB Grants Exclusive License for Baseball Cards to Topps

Posted by : Matthew Wild | On : August 12, 2009

Category: Antitrust, Immunity, Intellectual Property, Rule of Reason, Section 1 (Sherman Act)

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On August 6, 2009, the New York Times reported that Major League Baseball granted an exclusive license to Topps for baseball cards.  To justify its legality under the antitrust laws, the MLB Executive Vice President is quoted as having relied on the recent Seventh Circuit decision in American Needle v. NFL, under review by the Supreme Court, which upheld a similar licensing scheme implemented by the NFL with respect to headwear (see September 4, 2008, February 24, 2009 and June 29, 2009 Posts).  In that case, the Seventh Circuit held that the NFL was shielded from liability under the Copperweld doctrine.  The Court reasoned that because “the teams share a vital economic interest in collectively promoting all of NFL football,” they could not conspire within the meaning of the antitrust laws when jointly marketing a license that no one time could sell by itself.  MLB’s reliance on American Needle might be unnecessary, however, in light of the Second Circuit’s decision in Major League Baseball Properties, Inc. v. Salvino, Inc., No. 06-1867 (2d Cir. Sept. 12, 2008) (see October 6, 2008 Post).  In that case, the Second Circuit upheld MLB’s exclusive licensing of team logos under the rule of reason.  Although it would be easier to obtain immunity under the Copperweld doctrine than litigate a full blown rule of reason case, the MLB should take comfort in the fact that two circuits would uphold the licensing scheme regardless of which rationale is applied.

Aug

03

Google Director Resigns from Apple Board Because of Competition Concerns

Posted by : Matthew Wild | On : August 3, 2009

Category: Antitrust, FTC Actions, Section 1 (Sherman Act)

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Eric Schmidt, Google’s CEO, resigned today from Apple’s board of directors because the increased competition between Google and Apple raised conflicts for him that precluded his participation in many of Apple’s business decisions.  It is unclear whether his resignation was in response to an inquiry by the FTC into Google’s and Apple’s interlocking directorates first reported on May 5, 2009 by the New York Times.  Section 8 of the Clayton Act forbids competitors from having common directors and has been interpreted broadly.  Nevertheless, it is a toothless statute that is rarely enforced and imposes no penalties for violations.  The offending director must simply resign from one board.  In this case, it is unclear whether the FTC has undertaken to enforce the statute as Arthur Levison remains on the boards of Google and Apple.  His presence on both boards would seem to violate Section 8.  It should be noted, however, that the genuine issue that can arise from interlocking directorates is that it can provide circumstantial proof of a conspiracy in violation of Section 1 of the Sherman Act.  If the two firms engage in parallael conduct, for example, plaintiffs might allege that the companies had an opportunity to conspire through the common directors.  Thus, antitrust practitioners advise companies to avoid interlocking directorates where meaningful competition between the two companies exists.

Jun

30

Scrap Metal Dealers Acquitted of Price-Fixing

Posted by : Matthew Wild | On : June 30, 2009

Category: Antitrust, Criminal, Section 1 (Sherman Act), U.S. Department of Justice (Antitrust Division)

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In another blow to the Antitrust Division’s criminal section, two scrap metal dealers were acquitted of price-fixing on June 25, 2009.  The jury returned its verdict in less than four hours.  As reported in the November 16 and March 15, 2008 Posts, the Antitrust Division has lost a number of high profile price-fixing trials including in the magazine paper, DRAM and marine hose cartels.  The trials involving the magazine paper and marine hose cartels likewise resulted in quick acquittals with the jury returning not guilty verdicts in both cases in less than two hours.  It should be noted, however, that the class action on behalf of victims of the scrap metal cartel resulted in a $20 million damages verdict, which was affirmed on appeal.  (See May 16, 2008 Post).

Jun

29

Supreme Grants Certiorari to Review NFL’s Licensing Program in American Needle

Posted by : Matthew Wild | On : June 29, 2009

Category: Antitrust, Immunity, Intellectual Property, Section 1 (Sherman Act), Section 2 (Sherman Act)

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The Supreme Court granted certiorari to review American Needle Inc. v. Nat’l Football League, No. 07-4006, 2008 WL 3822782 (7th Cir. Aug. 18, 2008). As explained in the September 4, 2008 Post, that case applied the Copperweld doctrine to a sports league for the first time. In so doing, it affirmed summary judgment in favor of the NFL, its teams and Reebok in an antitrust challenge to an exclusive license of team names and logos to Reebok for use on headwear.  (The decision is linked to the September 4 Post).  This case’s journey to the Supreme Court was unusual.  As explained in the February 24, 2009 Post, the NFL — the prevailing party — also sought review because it wanted an authoritative decision on the scope of its antitrust liability for league activity.  And the Supreme Court requested the Solicitor General’s view about whether to grant certiorari.  The Supreme Court ultimately disagreed with the Solicitor General’s view and granted certiorari.

May

15

A Robinson-Patman Act Claim Succeeds at Trial

Posted by : Matthew Wild | On : May 15, 2009

Category: Antitrust, Antitrust Injury, Robinson-Patman Act

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On April 27, 2009, a district judge ruled in favor of a Robinson-Patman Act plaintiff and granted injunctive relief.  Feesers, Inc. v. Michael Foods, Inc., 2009 WL 1138126 (M.D. Penn. Apr. 27, 2009).  On remand after the Third Circuit (498 F.3d 206 (3d Cir. 2007)) reversed summary judgment in favor of the defendants Michael Foods (the seller) and Sodexho (the favored purchaser), the district court held after trial that plaintiff demonstrated competitive injury because it competed with Sodexho for the same institutional customers and that Sodexho received prices that were “massive[ly]” lower than plaintiffs.  The court rejected defendants’ meeting competition defense because Sodexho never provide Michael Foods with competing offers nor did Michael Foods investigate the same.  The court also held Sodexho liable for knowingly inducing price discrimination.  This case should remind practitioners that the Robinson-Patman Act is alive and well.  Clients should exercise caution before offering discounts to competing customers and carefully document the basis for their meeting competition defense.

May

04

Maryland Enacts the First Leegin Repealer Statute

Posted by : Matthew Wild | On : May 4, 2009

Category: Antitrust, Resale Price Maintenance, Rule of Reason, Section 1 (Sherman Act), State Antitrust and Consumer Protection Claims, State Attorneys General

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Maryland has amended its antitrust law to make resale price maintenance agreements per se illegal, thus overruling Leegin Creative Leather Products v. PSKS, 127 S.Ct. 2705 (2007).  In Leegin, the Supreme Court overruled Dr. Miles Medical Co. v. John D. Park & Sons Co., 220 U. S. 373 (1911), and held that a resale price maintenance agreement in which the manufacturer requires a reseller to sell at a certain price is no longer a per se violation of Section 1 of the Sherman Act but instead is subject to rule of reason analysis.  Application of the rule of reason creates a burden on plaintiffs because they have to show that the restraint had an adverse effect on the relevant market and not just the price of the manufacturer’s goods that were subject to restraint.  This abrupt change in the law has been poorly received by state antitrust authorities.  As reported in the May 23, 2008 Post, 35  state attorneys general petitioned Congress to amend the Sherman Act to overrule Leegin.  And as reported in the March 31, 2009 Post, the state attorneys general of New York, Illinois and Michigan obtained a consent decree against Herman Miller in the United States District Court for the Southern District of New York for resale price maintenance involving the Aeron chair.  Their position was that their state antitrust law do not recognize the departure by Leegin and still provide that resale price maintenance is a per se offense.