On June 23, 2008, the Supreme Court granted certiorari in Pacific Bell Telephone Co. v. Linkline Communications, No. 07-512, 2008 WL 2484729 (U.S. June 23, 2008). In a highly unusual public disagreement, the Antitrust Division had filed an amicus curiae supporting certiorari while the FTC had issued a statement opposing certiorari. More on this disagreement is set forth in the June 3, 2008 post.
Jun
24
Posted by : | On : June 24, 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.
Jun
15
Posted by : | On : June 15, 2008
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
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
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.