September 19, 2013 – 2:50 pm
In In re: TFT-LCD (Flat Panel) Antitrust Litigation, Northern District of California jury awarded Best Buy Co. $75 million in damages against HannStar Display Corp., finding that HannStar participated in an Asia-based conspiracy to fix prices on LCD panels. The jury’s award is a fraction of the $770 million Best Buy sought in its suit because in calculating damages the jury sided with the defense, finding that Best Buy passed 93 percent of the added price-fixed costs along to its consumers. As part of its ruling, the jury also found that co-defendant Toshiba Corp. did not participate in the same conspiracy. Finally, the jury rejected Best Buy’s claims that the defendants violated Minnesota antitrust laws by also selling it products containing price-fixed LCD panels from other companies.
Best Buy, Toshiba and HannStar were the last remaining parties in the sprawling MDL launched in 2006 following an investigation by the DOJ and European, Japanese and South Korean antitrust regulators that ended with criminal penalties for the Japanese, South Korean and Taiwanese LCD makers.
September 19, 2013 – 1:44 pm
In Hannah’s Boutique Inc. v. Surdej et al., Northern District of Illinois Judge Amy J. St. Eve denied dress seller Peaches Boutique’s motion to dismiss a multimillion dollar suit against it. In this suit, an upstart dress seller Hannah’s Boutique Inc. accused Peaches of violating U.S. antitrust laws by using its dominant position in the Chicago area and contracting with dress designers to push Hannah’s out of the market. In its motion to dismiss the suit, Peaches argued that Hannah’s complaint fails to allege that Peaches had a large enough share of the local dress market to put pressure on its competitors. The court rejected this argument, holding that at this early stage of the litigation, Hannah’s has made enough specific allegations to plead a plausible antitrust case against Peaches.
September 19, 2013 – 1:25 pm
In Pilgrim’s Pride Corp. v. Agerton et al., Fifth Circuit Court of Appeals struck down a $25 million judgment against Pilgrim’s Pride Corp., holding that the chicken producer did not violate the U.S. antitrust laws when it decided to shut down its Arkansas plant in order to increase poultry prices. In 2011, Texas federal judge found Pilgrim’s Pride liable under the Packers and Stockyards Act, and issued the $25 million fine against it. In overturning the lower court’s decision, the Fifth Circuit held that Pilgrim’s Pride’s decision to shut down its Arkansas facility was a legitimate response of a rational market participant to changes in the dynamic market. Pilgrim’s Pride was producing more chicken than the market demanded, so it “wisely” chose to scale back production to try to increase prices on poultry by reducing demand, and save its business, according to the court. This unilateral attempt to raise prices, by itself, is not a violation of the law, the ruling said.
September 8, 2013 – 11:46 am
In In the Matter of Certain Electronic Digital Media Devices and Components Thereof, the U.S. International Trade Commission staff has found that Samsung Electronics Co. Ltd. failed to provide sufficient evidence to establish that banning imports of its smartphones and tablets that infringed Apple’s patents would harm consumers.
Last October, Administrative Law Judge Thomas B. Pender ruled that Samsung imported tablets and smartphones that infringed Apple’s patents. Samsung argued that an ITC ban on importing its phones would create a shortage. ITC staff concluded, however, that Samsung did not present convincing evidence that its competitors were incapable of adequately ramping up production. Samsung’s identifying “potential issues that may allegedly negatively impact production,” the staff reasoned, “is [in]sufficient to preclude relief in the investigation.”
The ITC continues to review the decision, and the parties are briefing the remedy issue should the decision be affirmed.
In a related matter, the ITC banned the importation of Apple products allegedly infringing a Samsung wireless standard essential patent. The ITC’s for the first time excluded products from the US market for infringing a standard essential patent that was required to be licensed on fair, reasonable and nondiscriminatory (FRAND) terms.
The Antitrust Division, the FTC, and the USPTO all urged the ITC use its mandate to consider the public interest as a means to factor in the competitive harm that could result if the owner of a standard essential patent could seek an import ban if it did not receive a royalty that it deemed appropriate. The ITC, however, did not believe that potential consumer harm was sufficient to forestall the import ban.
Because of the apparent disagreement between these agencies and the ITC, Congress may take action.
September 8, 2013 – 11:43 am
The European Commission fined Lundbeck $125.6 million for paying its competitors, Merk KGaA, Ranbaxy Laboratories, and Xellia Pharmaceuticals, in 2002 to delay entering the market with generic versions of Lundbeck’s antidepressant citalopram.
Joaquin Almunia, EC vice president for competition policy, explained that the Commission could not accept “that a company pays off its competitors to stay out of its market and delay the entry of cheaper medicines.” He explained that “[a]greements of this type directly harm patients and national health systems, which are already under tight budgetary constraints.”
September 8, 2013 – 11:40 am
In FTC v. Actavis, the U.S. Supreme Court held that a settlement in a patent infringement case in which the patent holder pays money to the alleged infringer not to introduce its product into the market could violate the antitrust laws under the Rule of Reason. The Court rejected the scope-of-the-patent doctrine that had been adopted by most circuit courts, which held that reverse payment settlements were lawful so long as they did not restrain competition beyond the scope of the presumptively valid patent.
The FTC argued that in the context of drug patents, being challenged by generic drug manufacturers pursuant to the Hatch-Waxman Act, reverse payment settlements should be presumptively illegal. The parties, according to the Commission, should be required to demonstrate the pro-competitive nature of the settlement to survive an antitrust challenge. The Court refused to go that far. But it did allow plaintiffs to use the size of the payment as proof of anticompetitive effect. Moreover, the opinion is sufficiently vague that lower courts may adopt relatively light initial burdens for the plaintiff to show a prima facie case that a reverse payment settlement is anticompetitive. “As in other areas of law,” Justice Breyer wrote for the five-member majority, “trial courts can structure antitrust litigation so as to avoid, on the one hand, the use of antitrust theories too abbreviated to permit proper analysis, and, on the other, consideration of every possible fact or theory irrespective of the minimal light it may shed on the basic question—that of the presence of significant unjustified anti-competitive consequences.”
August 21, 2013 – 1:07 pm
In John Rock v. National Collegiate Athletic Association, Southern District of Indiana Judge Jane Magnus-Stinson refused to dismiss former Gardner-Webb University quarterback John Rock’s antitrust class action over the NCAA’s scholarship cap, holding that plaintiff’s amended complaint sufficiently defined a relevant market. Rock sued NCAA, alleging that NCAA’s former ban on multiyear scholarships and the “artificial” cap on scholarships constitute a concerted effort to thwart competition.
Judge Magnus-Stinson previously dismissed plaintiff’s complaint, holding that plaintiff’s definition of the relevant market was incomplete because it did not address scholarship opportunities for student athletes at non-NCAA colleges. Plaintiff thereafter amended his complaint to narrow the scope of the proposed class from NCAA student athletes who have been negatively affected by the association’s allegedly anti-competitive scholarship policies to Division I football players who have been negatively affected. The court held that the amended version of the complaint is now valid because the complaint narrowed the market to one sport with one division of the NCAA.
August 21, 2013 – 12:45 pm
U.S. Department of Justice, and attorneys general for six states and the District of Columbia sued to block the $11 billion merger of U.S. Airways and American Airlines, potentially disrupting a deal that shareholders, creditors, and European officials have already approved. The DOJ and the attorneys general claim the merger would create the world’s largest airline by passenger volume and would curb competition in key U.S. hubs, such as Washington’s Reagan National Airport, and lead to higher fares. Although only 13 of American and U.S. Airways’ routes compete on direct service, and many hubs support the idea of an airline with more consumer options, Reagan National is one of the trouble spots. According to the DOJ, the potential merged airline would control 69 percent of takeoff and landing slots at Reagan National, which would give it a virtual stranglehold on service to and from that airport.
August 21, 2013 – 12:16 pm
In In Re Neurontin Antitrust Litigation, New Jersey District Court Judge Faith S. Hochberg denied both parties’ motions for summary judgment, saying there are many factual disputes that must be resolved. In this multidistrict suit, direct purchaser plaintiffs, including CVS Pharmacy Inc., Rite Aid Corp., Louisiana Wholesale Drug Co. Inc., and Meijer Inc., accuse Pfizer Inc. of conspiring to bar competition for its epilepsy treatment Neurontin and promoting off-label uses through “sham” patent infringement suits and other schemes.
The court denied Pfizer’s motion because there are disputes of fact regarding whether Pfizer had monopoly power. The court denied plaintiffs summary judgment on the issue of whether Pfizer had monopoly power because the parties dispute the boundaries of the relevant market. The judge also denied plaintiffs’ summary judgment motion on the anti-competitive conduct claims and their request that the court bar Pfizer from denying facts determined against them in previous cases, including a 2004 criminal guilty plea. According to the court, summary judgment is not proper on these issues because there are disputes as to what Pfizer pled guilty to, and whether the other suits are proof of Pfizer’s sham litigation. Finally, as part of the ruling, Judge Hochberg held that Pfizer can use evidence of settlements it reached with generic manufacturers in other cases as a defense to show that those infringement suits had merit.
August 20, 2013 – 3:18 pm
In Suture Express Inc. v. Cardinal Health Inc. et al., Kansas District Court Judge Richard D. Rogers dismissed portions of Suture Express Inc.’s $200 million antitrust suit against units of Cardinal Health Inc. and Owens & Minor Inc. In its suit, plaintiff accused the defendants of predatory pricing and tying, in their sale of wound closure products. As part of his order, Judge Rogers held that circumstantial evidence of prior agreement between the defendants to aid each other against their own individual interests, is not enough to plead conspiracy. The court also dismissed Suture Express’ Sherman Act monopolization claim, because plaintiff failed to support it.
The judge did, however, allow Suture Express’ Sherman Act and state-law tying, as well as bundling claims to proceed, ruling that it made plausible claims for these allegations to go forward. The court also kept plaintiff’s state-law restraint of trade and Clayton Act exclusive dealing claims, stating that Suture Express made a reasonable allegation about the effect of the defendants’ discount programs on the wound closure product market.