The Antitrust Division sued George’s Inc. seeking to undo its $3 million purchase of a chicken processing plant in the Shenandoah Valley from Tyson Foods. The transaction fell below the reporting thresholds and thus was consummated with antitrust agency review. The Division alleges that the plant sale will leave George’s with 43% of the chicken market and only one competitor that lacks the capacity to increase production were George’s to cut prices to local chicken farmers. The Assistant Attorney General stated that farmers have the right to competitive prices for their chickens. George’s and Tyson responded that the sale saved a failing facility and that George’s intended to increase production, which would benefit local farmers.
Antitrust Claims by Student Athletes Against EA Sports Game Maker Dismissed
June 1, 2011 – 8:01 am
California District Court Judge Claudia Wilken dismissed claims that the video game company EA sports joined in a conspiracy with the NCAA and The Collegiate Licensing Co. to deny student athletes royalties on the use of the players names and images in video games. The plaintiffs had argued that EA Sports interaction with the NCAA in licensing rights and developing the game were sufficient to support a conspiracy allegation. But the court disagreed, holding that the allegations were insufficient to support EA Sports joining in the anticompetitive aspects of any agreement. The case will proceed against the NCAA and its licensing arm based on antitrust and right of publicity theories. The plaintiffs also have the right to amend their allegations against EA Sports.
FTC Reports 60% Increase in Pay-for-Delay Generic Drug Deals
June 1, 2011 – 7:53 am
Since the courts began permitting branded drug companies to pay generic companies not to enter the market with a generic version of a popular drug, the number of pay-for-delay settlements has increased. That process accelerated in 2010 with the number increasing to 31 deals up from 19 the previous year. The FTC has argued that these deals violate the antitrust laws and cost drug consumers millions of dollars a year. The courts have held that the deals fall within the patent rights of the branded drug companies as long as they aren’t structured to discourage future competitors.
Sham Patent Infringement Claim Against Ocean Spray to Move Forward
May 31, 2011 – 4:37 pm
District of Massachusetts Judge Rya W. Zobel refused to dismiss Decas’s antitrust counter-clam against Ocean Spray. Ocean Spray asserted a patent infringement claim against Decas relating to a popular product after discussions about Ocean Spray purchasing Decas broke down. Decas argues that Ocean Spray filed the claim knowing that it was bogus in order to discourage other companies from purchasing Decas. Ocean Spray moved to dismiss the claim on the ground that because the infringement claim was not objectively groundless, its motivation could not support an antitrust claim.
Refusal to Sell Drug Needed to Obtain Approval for Generic Version to Move Forward
May 31, 2011 – 4:01 pm
Eastern District of Pennsylvania Timothy J. Savage denied Celgene’s motion to dismiss antitrust claims filed by Lannet Co. The complaint alleges that Celgene violated the antitrust laws by refusing to sell Thalomid pills so that it could conduct a bioequivalence study that is needed to obtain approval to sell a genetic version of the drug. The defendant argued that the antitrust laws do not impose a duty to deal with a competitor. The court did not explain its decision to deny summary judgment.
En Banc Federal Circuit Narrows Patent Misuse Defense
May 31, 2011 – 3:38 pm
Update May 2011: The U.S. Supreme Court has denied certiorari.
In a divided opinion, the en banc Federal Circuit has overturned a panel opinion that hadpermitted Princo to assert a patent misuse defense to a patent infringement action filed by Philips. Princo alleged that Philips had agreed with Sony not to license the relevant patent for non-standardized uses, reducing competition in the market. In a controversial decision that may lead to Supreme Court review, the Federal Circuit held that any anticompetitive effect was fully within the scope of the patent and thus could not constitute misuse.
Sirius/XM Merger Subject to Class Challenge
May 31, 2011 – 2:38 pm
Update May 2011: Sirius has agreed to settle the case by agreeing to maintain an FCC imposed price cap set to expire in July for an additional five months. The value of the settlement to Sirius 19 million customers is estimated to be $180 million. The settlement also included approximately $13 million in attorney’s fees.
Southern District of NY Judge Harold Baer Jr. certified a class of customer plaintiffs challenging the 2008 Sirus/XM satellite radio merger.
Titanium Dioxide Price Fixing Case to Move Forward
May 31, 2011 – 2:28 pm
District of Maryland Judge Richard D. Bennett has refused to dismiss a case alleging that DuPont, Huntsman International, Kronos Worldwide Inc., and Millennium Inorganic Chemicals Inc. conspired to increase the price of titanium dioxide. Lead plainiff Haley Paint Co. alleged that the four companies control 70% of the titanium dioxide market and used trade association meetings as cover for their price fixing agreement. The plaintiff pointed twoard lockstep increases to support its allegations. The defendants moved to dismiss on the ground that the allegations were insufficient under Twombly to show that the increases were the product of conspiracy rather than independent action. The court rejected the motion, commenting that “[w]hile the crux of plaintiffs’ complaint centers on parallel price increases implemented by defendants, they allege enough factual allegations, or ‘plus factors,’ to plausibly suggest an agreement in violation of the Sherman Act.”
Credit Card Foreign Purchase Fee Conspiracy Case Against AmEx to Move Forward
May 31, 2011 – 2:16 pm
Southern District of New York Judge William H. Pauley III denied AmEx’s motion for summary judgment in a case alleging that American Express (1) conspired with banks to increase foreign transaction fees for using the cards to purchase items priced in foreign currencies and (2) imposed improper arbitration clauses in its cardholder contracts. AmEx argued that the complaint failed to allege a conspiracy and that the plaintiffs lacked standing to challenge the arbitration agreements because they were not AmEx cardholders. The court refused to grant summary judgment, holding that evidence that AmEx increased its foreign transaction fees contemporaneously with the banks and that it communicated with the banks were sufficient to support the conspiracy allegation. As to the arbitration clauses, the court held that the cardholders were affected even though they were not AmEx customers because the alleged conduct reduced their marketplace options.
California Auto Insurer Parts Conspiracy Case to Move Forward
May 31, 2011 – 1:53 pm
Northern District of California Judge James Ware refused to dismiss a putative class action alleging that California auto insurers violated the Cartwright Act, California’s antitrust statute, by conspiring to require auto repair shops to use inferior replacement parts. The case had been twice dismissed and then revived by the 9th Circuit on standing and insurance exemption grounds. The motion to dismiss this time was based on Twombly, which requires allegations of facts sufficient to show that a conspiracy, rather than independent action, led to the allegedly offending conduct. The court found the complaint sufficient to meet this standard.