Update November 2010: The court has certified a class of direct purchasers.
Eastern District of Pennsylvania Judge Anita B. Brody rejected Glaxo-SmithKline’s (GSK) motion to dismiss a case alleging that it anticompetitively delayed the entry of generic Flonase into the market by filing citizens petitions before the FDA. GSK argued that its conduct was protected by the Noerr-PenningtonDoctrine, but plaintiff direct and indirect purchases argued that the conduct fell within the sham exception. Plaintiffs allege that just days before the FDA would have approves an abbreviated new drug application for generic Flonase, GSK filed citizen petitions that delayed approval of any ANDAs for Flonase until the agency established guidelines to determine the bioequivalency of nasal spray products. After the FDA rejected GSK’s petition and approved an ANDA for generic Flonase filed byRoxane, the company sued Roxane and the FDA in an effort to block the launch of a generic version of the nasal spray.
The Seventh Circuit has affirmed the district court’s grant of summary judgment in favor of Lake Forest Hospital in a Section 2 case filed by the Mercatus Group, which was attempting to open a competing health care facility. Lake Forest adopted a multi-pronged campaign to (1) lobby the local council not to grant Mercatus the relevant permits; (2) present a publicity campaign to encourage residents to similarly lobby the council; (3) urged medical groups to withdraw from tentative agreements with Mercatus; and (4) urged physicians not to practice in Mercatus’s facility. The campaign was successful and the competing facility was not approved. The court found that the lobbying activity, which included the publicity campaign, was protected by the Noerr-Pennington doctrine, even assuming that many statements made were false. The sham exception for fraudulent misrepresentations does not apply to legislative lobbying. Statements made directly to hospitals and competitors were not protected by Noerr, but were either protected speech or not predatory.
Update June 2011: The court denied the plaintiff’s motion to reconsider its decision.
Southern District of NY Judge Shira Scheindlin ruled that Plaintiff, Charles Simon, lacked standing to sue electric power supplier KeySpan and Morgan Stanley for allegedly manipulating the price of power sold to Simon’s utility, Con Edison. KeySpan paid $12 million to settle a Department of Justice antitrust claim.
Simon argued that although he was an indirect purchaser, he could nonetheless sue for damages because 100% of the overcharge was necessarily passed-on by Con-Ed. The court held that because Simon did not purchase through a fixed quantity cost-plus contract, the cost-plus exception to the Illinois Brick indirect purchaser rule did not apply. Moreover, Simon was precluded from obtaining relief in court by the filed rate doctrine, because Keyspan’s rates were filed with the Federal Energy Regulatory Commission.
The European Commission has opened two merger investigations involving hard disk drive manufacturers. The first transaction concerns Seagate Technology’s planned acquisition business of Samsung HDD business, and the second concerns Western Digital Corp.’s planned acquisition of Hitachi HDD business.
European Commission officials inspected container liner shipping companies concerning possible antitrust violations.
District of New Jersey Judge Freda L. Wolfson dismissed antitrust claims filed by Jersey Asparagus Farms Inc. against Rutgers University concerning patents for asparagus seeds. The plaintiff alleged that the patents were invalid on the ground that Rutgers failed to disclose prior art to the PTO. Recognizing that fraudulently obtaining a patent may violate the antitrust laws, the court held that the complaint failed to allege knowing fraud, a relevant market in which competition was restrained, or the plaintiff’s standing under the antitrust laws. The court granted the plaintiff the opportunity to amend its complaint to address these issues.
District of Washington Judge Lonny Suko refused to dismiss a conspiracy claim brought by ARC against AMH. ARC alleges that AMH made false statements about ARC, emailing more than dozen of its customers and falsely telling reporting that ARC had gone out of business. The email also asked the customers to loan AMH one of ARC’s welders, and a few months later, AMH announced at a trade show that it had tested ARC’s welder and found that it did not perform as advertised. ARC claims that both the email claiming that it had gone out of business and the statement that its welders do not perform as advertised are slanderous.
AMH moved to dismiss the conspiracy claim on the ground that the complaint failed to meet the Twombly standard of ruling out independent action. The court rejected that claim on the ground that AMH must have obtained an ARC welder to test from one of ARC’s customers. That likelihood was sufficient to support an inference of conspiracy.
The Antitrust Division has sued to block H&R Block’s acquisition of TaxACT, an on-line software provider. H&R and TaxACT are the number 2 and 3 providers of on-line tax prep software behind Intuit’s TurboTax. The Division explained that it uncovered H&R Block documents indicating that the purpose of the merger was to eliminate a competitor and allow it to increase prices. The parties offered not to increase TaxAct’s prices, but the Division remained concerned that H&R Block could reduce the quality of the TaxACT product, allowing it to raise the price of its own on-line tax prep software.
Judge Faith Hochberg, District of New Jersey, denied Pfizer’s motion to dismiss claims alleging that it unlawfully sought to monopolize the market for gabapentin products. Pharmacies purchasing the drugs argued that Pfizer violated the antitrust laws by, inter alia, manipulating the patent approval process and filing sham law suits. The court rejected Pfizer’s defenses that its actions were privileged or that certain claims were barred by the statute of limitations.
The Antitrust Division has sued to block of merger of VeriFone and Hypercom, manufacturers of point of sale credit and debit card reader. The two U.S. companies currently compete with French-based Ingenico in what is essentially a three competitor market. The Division alleges that the 3-2 merger would raise prices for retailers purchasing POS card readers. The merging parties have offered to divest Hypercom’s U.S. operations in a sale to Ingenico, but Assistant Attorney General Christine Varney commented that “[t]he proposed divestiture does not resolve the significant competitive concerns posed by the merger, and in some ways exacerbates them.” A few days later, the parties agreed to scrap the proposed sale to Ingenico and to seek another buyer for Hypercom’s U.S. operations.