September 18, 2012 – 3:24 pm
In Fond Du Lac Bumper Exchange Inc. v. Jui Li Enterprise Co. Ltd. et al., and Arkansas Transit et al. v. Jui Li Enterprise Co. Ltd. et al., Eastern District of Wisconsin Judge Lynn Adelman denied defendants’ motion to dismiss a consolidated proposed class action alleging price fixing by Taiwanese aftermarket (AM) sheet metal auto parts makers. Plaintiffs, individuals and businesses that purchased the AM parts, are accusing defendants of violating the Sherman Act and several states’ consumer protection laws by participating in secret price-fixing meetings and strategic alliances that allowed them to share resources, divide up the market, and distribute the AM parts in theU.S. at unlawfully established prices. Defendants filed a motion to dismiss, arguing that plaintiffs’ Sherman Act claim that direct purchasers pass price increases on to end users, was too speculative, and that plaintiffs’ Sherman Act claim was time barred.
The court denied defendants’ motion, holding that since AM parts travel down the chain of distribution substantially unchanged, the price charged by the manufacturer will largely determine the price paid by the end user, and if defendants control over 95 percent of the U.S. AM parts market, it is easy for a direct purchaser to pass a price increase on to its customers because the majority of distributors are paying the same inflated price for AM parts. Therefore, because the manufacturers don’t have to worry about being undercut by a lower-cost competitor, the plaintiffs’ claim that they are being injured as a result of defendants’ alleged conspiracy is plausible. The court also held that because plaintiffs allege that defendants’ price fixing conspiracy was ongoing at the time the complaint was filed, it is not clear from the face of the complaint that the plaintiffs’ federal claim is untimely.
September 17, 2012 – 9:40 am
In It’s My Party Inc. et al. v. Live Nation Inc., District of Maryland Judge J. Frederick Motz denied the defendant’s motion for summary judgment in a case in which a concert promoter is alleging that Live Nation monopolized the concert market and entered anticompetitively tying its promotional services for artists to the use of its venues and venue services. Judge Motz explained that the decision was without prejudice and thus the defendant could renew the motion after additional discovery is completed.
September 17, 2012 – 9:39 am
A class of plaintiffs have filed an antitrust action in the Northern District of California captioned Turik et al. v. Expedia Inc. et al., and alleging that online travel reservation firms and hotels have conspired to fix prices for hotel accommodations. The complaint alleges that the so-called “price-match guarantee” is really a means to fix prices and that discount websites have been unable to offer discounted prices because of the anticompetitive agreement.
Although the DOJ passed on investigating after a preliminary inquiry, the UK Office of Fair Trading issued a statement of objection against Expedia and Priceline.
September 11, 2012 – 10:36 am
The Federal Trade Commission has proposed a rule requiring drug companies to report transactions in which a drug company licenses another to exclusively market and sell a drug while retaining the right to manufacture it. Historically, the sale of a patent was a reportable transaction under the Hart-Scott-Rodino Pre-merger Notification Act, which requires the reporting of mergers and acquisition exceeding certain dollar thresholds. But exclusively licenses to market and sell were not deemed reportable. If the FTC’s rule is accepted, exclusive licenses will have to be brought to the regulators attention.
This proposal is part of a broader effort by the FTC to keep closer tabs on the drug industry.
September 11, 2012 – 10:35 am
In Apple Inc. v. Motorola Mobility Inc., Western District of Wisconsin Judge Barbara B. Crabb granted summary judgment against Apple on antitrust claims, but allowed its contract claims to stand, in a case alleging that Motorola Mobility refused to license its standard-essential patents on fair, reasonable and nondiscriminatory terms.
Although Motorola’s commitments to standard-setting organizations are contractually binding and Apple is a third-party beneficiary entitled to enforce the contract, the court held that the Noerr-Pennington doctrine, which exempts from the antitrust laws most efforts to enforce intellectual property rights, barred Apple’s antitrust claims because they were premised on Motorola’s patent infringement litigation.
“Apple has produced no evidence,” the court explained, that it suffered injury from Motorola’s demand for royalties. It did not allege that it “change[d] its product, delay[ed] the release of the iPhone, suffer[ed] from increased costs, or los[t] any customers or market share.” Judge Crabb concluded that “the only injury Apple suffered as a result of Motorola’s alleged antitrust violation was the attorney fees and costs that it has incurred responding to the patent litigation initiated by Motorola.”
September 9, 2012 – 10:53 am
In Carlin et al. v. DairyAmerica Inc. et al., , the Ninth Circuit reversed the lower court and held that the filed-rate doctrine did not bar dairy farmers from challenging a buyers’ coalition that allegedly skewed prices by providing lowball rates to a milk pricing overseer. The decision reinstated a series of cases that in 2009 were consolidated in California.
The filed-rate doctrine generally prohibits an antitrust challenge to a rate that has been filed with a price regulator. In the dairy industry, the US Department of Agriculture regulates milk prices. The court held that an exception was appropriate in this case, because the policy underlying the doctrine did not apply. This was true because “the federal agency itself determined that the . . . prices were incorrect.”
The complaint alleges that the improper pricing of nonfat dry milk, or NFDM, which is used as an ingredient in manufactured dairy products such as butter and cheese. Defendant DairyAmerica, plaintiffs contend, provided incorrect pricing information for NFDM that lowered the rate and disadvantaged farmers. “Where the statute allows the agency to decide that a published tariff is unreasonable under controlling law,” the appellate court explained, “the filed-rate doctrine will not bar a plaintiff from seeking reparation from the imposition of the unreasonable rate.”
September 9, 2012 – 10:52 am
In QSGI Inc. v. IBM Global Financing et al., Southern District of Florida Judge Kenneth L. Ryskamp dismissed computer reseller QSGI Inc.’s claim that IBM’s monopolistic conduct bankrupted it. The court held that the fatal flaw in QSGI complaint was the lack of injury to competition, as opposed to the company itself. As a result, the complaint failed to establish antitrust injury under Florida’s state antitrust act.
QSGI, which purchases and resells mainframe computers, alleged that in 2007, IBM instituted the so-called “six-month rule,” cutting off sales of the parts and microcode that QSGI needed to modify mainframes until six months after the installation of the used mainframe. Under this system, QSGI could not compete, but IBM affiliate and co-defendant IBM Global Financing, which was exempted from the rule, could. And absent competition, QSGI alleged, was able to increase its prices to supra-competitive levels.
The court held that no injury to competition was alleged because the complaint acknowledge “eight competitors, all of which are still in business,” and none of which had “lost market share as a result of the six-month rule.” The allegations that purchasers paid higher prices from IBM Global Financing were insufficient the court held because the customer specific nature of mainframe installations made it difficult to compare prices.
September 7, 2012 – 12:36 pm
In Corr Wireless Communications, LLC et al. v. AT&T Inc. et al., Northern District of Mississippi Judge Sharion Aycock dismissed allegations that AT&T Inc., Motorola Mobility Inc., and Qualcomm Inc. conspired to push smaller wireless carriers, like Cellular South Inc., out of the market. The suit claimed that AT&T and the others rigged the 3rd Generation Partnership Project (3GPP) standards by purposefully separating its own swath of spectrum licenses from its smaller competitors’, and then made sure the two were incompatible. As a result, most phones that worked on AT&T dominant national network, didn’t work on smaller, competing networks, like Cellular South’s. Defendants moved to dismiss Cellular South’s complaint, arguing that the case failed to show how AT&T had somehow manipulated the 3GPP meetings. The court agreed with defendants and dismissed the suit, holding that the case failed to meet the factual pleading standards established by the U.S. Supreme Court’s Bell Atlantic v. Twombly ruling. The court criticized Cellular South’s reliance on the larger companies’ motives as evidence that they manipulated the standards-setting process, holding that accusations of a motive do not establish a Sherman Act violation, and plaintiffs did not provide any factual allegations to plausibly show the existence of an agreement.
September 7, 2012 – 11:52 am
The day after the U.S. Department of Justice announced that 3M Co. scrapped its $550 million purchase of rival Avery Dennison Corp.’s sticky note business over antitrust concerns, the companies vowed to clear regulatory obstacles and finalize the deal. After the DOJ threatened to sue to block the deal on the grounds that the transaction would give 3M a more than 80 percent share of the U.S. label and sticky note markets, the companies withdrew forms filed with antitrust regulators. However, a day later, the companies announced that they have not terminated the purchase agreement governing the transaction, and are working together to explore options to address the DOJ’s concerns, obtain regulatory approval, and complete the transaction. The all-cash acquisition, announced in January, covers the bulk of Avery Dennison’s sticky note and label segment. Even though the terms specifically exclude a portion of Avery Dennison’s assets, the DOJ claims the proposed deal would substantially cut competition in the label and sticky note sectors. If it goes through, the deal will be the latest in a string of acquisitions by 3M. In the past year, it acquired Advanced Chemistry & Technology Inc., the maker of aerospace sealants, the tape-related assets of Alpha Beta Enterprise Co. Ltd., and Federal Technologies Group, an electronic toll collection and parking management services firm.
September 6, 2012 – 4:12 pm
In In re: Publication Paper Antitrust Litigation, the Second Circuit held that a reasonable jury could find that FStora Enso OYJ North American affiliate conspired to fix the price of coated paper used in magazines and other printed material. The court thus overturned Judge Stefan R. Underhill grant of summary judgment in favor of the defendant in multidistrict litigation.
The direct purchasers of coated paper, the Second Circuit recognized, have presented enough evidence to enable a jury to find conspiratorial activity in 2002 and 2003 in the form of concerted increased list prices on certain types of the paper that “mirrored each other in amount and occurred in close succession.” “A jury could reasonably find,” the Court concluded, “that [competing coated paper producers agreed] to raise the price of publication paper, and that, as implemented, this agreement damaged plaintiffs.”
The case follows on a DOJ investigation that led to criminal charges, but no convictions.