JD Supra On Antitrust: Price-Fixing, Cooperation Agreements, Joint Operating Agreements, and More

Here’s a roundup of recent analysis and commentary on JD Supra, covering a broad range of anti-competition matters, including “most-favored nation” clauses, allocation of customers, attempted monopolization and more:

DOJ/FTC Ask if MFNs Are Anti-Competitive, and Get an Earful (Skadden, Arps, Slate, Meagher & Flom LLP):

“The United States antitrust enforcement agencies — Department of Justice, Antitrust Division (DOJ) and Federal Trade Commission (FTC) — held a joint workshop this week on most-favored nation clauses (MFNs). Through a series of panels, the workshop facilitated a dialogue between enforcers, economists, academics, in-house counsel and the private bar. While the DOJ has become increasingly suspicious of MFNs, the majority of the panelists pushed back on the DOJ premise that MFNs are a serious antitrust concern.” Read on>>

The Antitrust Agencies’ Latest Favorite Target: MFN Clauses Highlights from the Joint DOJ-FTC MFN Workshop (Mintz Levin):

“There are few, if any, cases fully litigated on the merits in which an MFN clause has been found to be anticompetitive. Until the mid-1990s, MFNs were generally viewed as procompetitive, or at least competitively neutral. Since that time, however, various private litigation and agency investigations have challenged the use of MFNs in different industries. Most recently, earlier this year the DOJ filed a lawsuit against Apple, Inc. and several large book publishers alleging a per se violation of Section 1 of the Sherman Act for conspiring to raise the retail price of e-books through various mechanisms, including MFN provisions.” Read on>>

Antitrust Compliance: A Fresh Look (Michael Volkov):

“Unlike anti-corruption compliance, companies have long had antitrust compliance programs. It has long been recognized that collusion between and among companies on prices, territories, and other market factors has a negative impact on consumers. A price-fixing conspiracy which results in a modest price increase in popular products can quickly add up to billions of dollars in damages, far outpacing some of the largest fraud schemes in US history.” Read on>>

Broadening Application Of The Filed Rate Doctrine (Zelle Hofmann Voelbel & Mason LLP):

“Ninety years ago Justice Brandeis delivered the opinion in Keogh v. Northwestern Railway Co., 260 U.S. 156 (1922), and based on four policy reasons, concluded that a rate filed and approved by the Interstate Commerce Commission (“ICC”) was not subject to collateral attack by way of a Sherman Act treble damages action. Historically, the filed rate doctrine has been limited to common carriers and utilities regulated by federal agencies under comprehensive statutes and regulations, which provide remedies for harmed consumers and require regulator rate-setting.” Read on>>

Can a Hospital Alliance Constitute a Single Entity for Antitrust Purposes? It Depends, Says One District Court (Mintz Levin):

“On August 30, 2012, the U.S. District Court for the Southern District of Ohio denied a motion to dismiss a complaint that alleged a per se group boycott by a managing agent and its affiliated hospitals in violation of Section 1 of the Sherman Act. The Court examined whether hospitals operating under a joint operating agreement (JOA) constitute a single entity — and therefore are incapable of a group boycott — and concluded that since it is a ‘factually driven issue,’ it, at least on this complaint, could not be resolved on a motion to dismiss.” Read on>>

UK’s Top Antitrust Regulator Issues New Fines Guidance: Penalties to Better Reflect the Impact of Relevant Conduct (McDermott Will & Emery):

“On 10 September 2012, following extensive consultation and in the wake of a number of judgments overturning fining decisions, the United Kingdom’s Office of Fair Trading (OFT) issued revised guidance on how it will set penalties for antitrust infringements. The revised guidance brings the UK approach into line with the fining policy of the European Commission and several other competition authorities. Deterrence of anticompetitive conduct is seen to be key under the revised OFT guidance, as is the objective of ensuring that the seriousness of a relevant infringement is reflected adequately but proportionately in the final value of any fine.” Read on>>

A New Chinese Policy Could Create Antitrust Issues (Sheppard Mullin Richter & Hampton LLP):

“Chinese companies should be careful not to interpret as carte blanche for anti-competitive behavior a recent policy statement by the Chinese government encouraging PRC companies to coordinate their activities and cooperate with each other while investing overseas. The statement also highlights the need for foreign companies to be on guard for possible anti-competitive conduct by their PRC business partners (and competitors).” Read on>>

U.S. Joins Global Antitrust Probe of Car Shipping Companies (McKenna Long & Aldridge LLP):

“International maritime shipping is central to global trade in a world of increasingly interdependent countries. Now, a key segment of this industry faces intense legal scrutiny. Late last week, top antitrust enforcers in Japan, Europe, and the United States launched investigations of international car shipping companies over concerns that the companies colluded to fix prices and allocate customers.” Read on>>

Does Amazon Engage in “Razor and Blade” Pricing? (Howard Ullman):

“Some people have suggested that Amazon’s pricing of products such as the Kindle e-reader is similar to the pricing strategies of razor manufacturers: sell the primary product cheaply (and maybe even at a loss), and make it up on the back end through the sale of complementary products (in the case of razors, razor blades; in the case of Kindles, e-books). The courts have not uniformly settled on an approach to this pricing strategy.” Read on>>

The European Antitrust Review – 2013: Serbia (Karanovic & Nikolic Law Office):

“The main piece of legislation concerning antitrust matters in Serbia is the Competition Law (2009). The law is modelled after the EU competition law, encompassing standard competition law institutes – restrictive agreements and practices, abuse of dominant position and merger control. It also sets out the mandate of the Commission for the Protection of Competition, and prescribes certain specific procedural rules.” Read on>>

The Implications of Private LIBOR Litigation (Michael Volkov):

“Like other major financial controversies, the London Interbank Offered Rate (“LIBOR”) case is spawning private litigation in the United States. The dangers of an antitrust violation include treble damages in private suits brought by persons directly harmed by an antitrust violation. Expensive class actions follow antitrust violations.” Read on>>

Court Approves DOJ Antitrust Settlement with Three E-Book Publishers (Howard Ullman):

“Last week the Southern District of New York approved the DOJ’s settlement with Hachette Book Group Inc., HarperCollins Publishers LLC, and Simon & Schuster, Inc… Under the Tunney Act, consent settlements with the DOJ are subject to court review and public comment. The three e-book publishers reached a settlement with the DOJ before the Department filed its antitrust suit.” Read on>>

WTO Panel Issues Report On China Electronic Payment Services (King & Spalding):

“A WTO Panel, in a final report issued in July, ruled in favor of several U.S. claims that China maintains measures that unfairly discriminate against foreign suppliers of electronic payment services by modifying conditions of competition in favor of China’s national bank card association, China UnionPay. The electronic payment services addressed in this dispute related to services for processing payment card transactions, including credit and debit card transactions.” Read on>>

Summary Judgment Dooms Attempted Monopolization Claim in Small Container Trash Hauling Market (Sheppard Mullin Richter & Hampton LLP):

In All Star Carts and Vehicles, Inc., et al. v. BFI Canada Income Fund, et al., the District Court for Eastern District of New York recently granted defendants’ motion for summary judgment on the grounds that the plaintiffs failed to establish the element of “dangerous probability” for an antitrust claim for attempted monopolization under Section 2 of the Sherman Act. Plaintiffs are members of a certified class consisting of “all persons and entities that have contracted with, and purchased small containerized waste disposal services in the relevant market directly from defendants.” Read on>>

Criminal Antitrust Update – August 2012 (Patton Boggs LLP):

“The U.S. Justice Department’s Antitrust Division (the Division) asked for a six-month jail sentence for Woo Jin Yang, a former Hitachi-LG Data Storage employee who pleaded guilty to Sherman Act violations in April. We previously reported that another former employee of the Hitachi/LG joint venture was sentenced to seven months in jail for his role in fixing prices of LCD screens, despite the Division’s request for a significantly longer sentence.” Read on>>

Insurance Antitrust Legal News – September 2012 (Dickinson Wright):

“On July 17, the Sixth Circuit Court of Appeals issued its long awaited decision in Katz v. Fidelity National Title Insurance Company, a class action proceeding in which the plaintiffs alleged that a collection of title insurers had unlawfully conspired to set unreasonably high title insurance premiums. In ruling for the defendants and affirming the dismissal of plaintiffs’ claims, the court joins a host of other courts around the country that have found similar allegations defective as a matter of law.” Read on>>

Knockin’ on Your Association’s Door: What You Need to Know about Membership Restrictions and the Antitrust Laws (Venable LLP):

“Groucho Marx famously said, ‘I don’t care to belong to any club that will have me as a member.’ Associations frequently take this sentiment to heart by establishing membership restrictions and other limits on access to association services or events. These restrictions come in many shapes and sizes – limiting membership to a specific trade, profession, or market function; imposing geographic limitations; or requiring professional certification, state or federal licensure, or adherence to a code of ethics, to name just a few.” Read on>>

China Merger Control in August 2012: Wal-mart, e-Commerce and VIE Structure (Yiliang Dong):

“On 13 August 2012, the Chinese Ministry of Commerce (‘MOFCOM’) announced its conditional approval of an acquisition by the American company Wal-Mart Store Inc of control over a Chinese online supermarket Shanghai Yishiduo e-Commerce Co., Ltd. (‘Yishiduo’). In this transaction, Wal-Mart acquired through indirect share purchase the control over an offshore company which conducts the control over Yishiduo based on the contractual arrangement.” Read on>>

On the Way to the New Height: Walmart’s Acquisition of Yihaodian Cleared on Conditions in China (Steven Su):

“MOFCOM was notified of the deal for antitrust clearance on 16 December 2011. It did not, however, accept the notification until two months later. During the two months, the parties were required to supplement and complete their filing materials. MOFCOM’s review went through the three phases that are permitted by China’s Anti-Monopoly Law and used 177 days from the date of acceptance (180 days are the maximum time).” Read on>>

You Can’t Try to Monopolize a Market In Which You Don’t Compete (Howard Ullman):

“In Infostream, adult, ‘nontraditional’ online dating services objected to PayPal’s refusal to deal with them, and alleged that PayPal’s contractual excuse was pretextual because PayPal was dealing with competitors such as Ashley Madison.com and ArrangementFinders.com. Plaintiffs alleged that PayPal has a monopoly in the ‘Confidential Payment Services’ market and exercised its monopoly power in that market to injure competition in downstream markets, including the ‘Specialty Online Dating Services’ market in which plaintiffs compete.” Read on>>

Cartels and Dominance: New Risks and Opportunities for Companies in China (Orrick, Herrington & Sutcliffe LLP):

“China’s Supreme People’s Court recently provided guidance on procedural issues and important aspects of China’s Antimonopoly Law (AML) that will affect private enforcement of the law. The Supreme People’s Court Provisions on Several Issues concerning the Application of the Law in Trials of Civil Dispute Cases Arising from Monopolistic Acts (the SPC Provisions), which came into force on June 1, 2012, outlines recent significant changes to the rules regarding burden of proof in antitrust cases in China.” Read on>>

New York’s Highest Court Interprets Both State and Federal Antitrust Law and Limits Extraterritorial Application (Cadwalader):

Global Reinsurance Corp. v. Equitas Ltd., addresses the sufficiency and, more pertinent for our purposes, the extra-territorial reach of antitrust claims under New York’s antitrust statute, the Donnelly Act (NY Gen Bus. Law sec. 340, et seq.). In doing so, the High Court interpreted as well federal antitrust jurisprudence on extra-territoriality, a subject we have posted on as a matter of significance to the international practitioner.” Read on>>

Merck Asks Supreme Court to Review Third Circuit K–Dur Decision (McDonnell Boehnen Hulbert & Berghoff LLP):

Last month, the Federal Trade Commission accomplished a decade-long goal: getting a Federal Circuit Court of Appeal (the 3rd Circuit) to support its position that so-called ‘reverse payments’ (also known as ‘pay-for-delay’ arrangements) between innovator pharmaceutical companies and generic drugmakers in ANDA litigation brought under 35 U.S.C. § 271(e)(2) are anticompetitve and barred by Federal antitrust law, in In re K-Dur Antitrust Litigation.” Read on>>

Drug Makers Win Summary Judgment on De Minimis Price Discrimination Claim (Howard Ullman):

“A recent case reminds us that price discrimination under the Robinson-Patman Act may be so de minimis that it is not actionable. In Drug Mart Pharmacy Corp. v. American Home Products Corp. (a so-called secondary line discrimination case involving disfavored retailers), retail pharmacies brought a Robinson-Patman Act price discrimination claim against various drug manufacturers, alleging that the manufacturers had effectively given price breaks to hospitals, HMOs, and mail order pharmacies but not to the smaller retailers.” Read on>>

The LIBOR Scandal Unraveled (Michael Volkov):

“The LIBOR ‘scandal’ could have far-reaching implications for financial institutions in the United States and global markets. It is hard to know exactly how the issue will play out. The Department of Justice is definitely gearing up to lead or play a significant role in a wide-ranging criminal and civil investigation. The investigation focuses on traditional antitrust and fraud violations. The implications for follow-on civil litigation are mind-boggling, especially when you consider potential treble damage suits for antitrust violations.” Read on>>

Ethical Conflicts Dooms Fee Claim in a Major Antitrust Class Action (Barger & Wolen):

“In Rodriguez v. Disner, the United States Court of Appeals for the Ninth Circuit decided a novel attorney fee case implicating the rules of ethics in a class action context. The case implicated the propriety of ‘incentive agreements’ between the plaintiffs’ class action lawyers and the five named plaintiffs in a massive antitrust class action.” Read on>>

Do iPads or Tablet Computers Constitute Their Own Product Market? (Howard Ullman):

“David Golden has an interesting article in Law360 this week entitled “Interchangeability in the Tablet Product Market.” … Why does this issue matter? Because the smaller the relevant market, the higher the participants’ market shares. At the extremes, you may end up with a monopolist (or several monopolists in different markets). Monopolists are subject to special rules of dealing that do not apply to other firms.” Read on>>

European Commission Probes Microsoft Again: Failure to Comply With Commitments Will Not be Tolerated (McDermott Will & Emery):

“The European Commission (Commission) has made clear that it is pursuing a broader policy objective of ensuring swift finality to cases in dynamic markets through settlements and commitments. The Commission believes that this serves the consumer better than fining decisions after years of investigations. Such a policy can only be effective, however, if the commitments are properly observed by the companies involved and monitored by the authorities. The Commission is clearly willing to step up monitoring efforts.” Read on>>

An Ounce of Prevention: An Effective Antitrust Compliance Program (Ingram Yuzek Gainen Carroll & Bertolotti, LLP):

“Those who think antitrust is relevant only for big business should think again. Failing to recognize antitrust risk is costly. Violations of the federal antitrust laws may result in penalties for individuals of up to $1 million and 10 years’ imprisonment and for corporations of up to $100 million. The average federal prison sentence in FY2011 for an antitrust violation is almost 17 months. There is no parole from federal sentences.” Read on>>

Also watch:

The European crisis has created significant opportunities for U.S. purchasers and others looking to acquire assets in Europe, but international investors need to be aware of the differences between laws and regulations in their own countries and those governing European mergers and acquisitions before deciding whether to pursue these transactions.

[Link: Cross-Border M&A: Opportunities and Dealbreakers in Europe (Dechert LLP)]

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