District of New Jersey Judge Susan D. Wigenton denied LendingTree’s motion to dismiss BanxCorp’s antitrust claims against it, finding that BanxCorp’s complaint contained sufficiently detailed factual allegations regarding a 2007 partnership between LendingTree and Bankrate Inc. BanxCorp, a bank-rate website company, alleged that LendingTree conspired with Bankrate to fix prices and control the online bank-rate market. Media defendants that displayed the bank-rate information, including Dow Jones & Co. Inc., the New York Times Co., CNBC Inc., Cable News Network Inc., MSNBC Interactive News LLC, Fox News Network LLC, AOL Inc., and Move Inc. were dismissed from the suit. BanxCorp’s complaint did not meet the plausibility pleading standard by simply alleging that the media defendants acted as a cartel regarding horizontal market division.
April 15, 2011 – 1:32 pm
The Fifth Circuit panel of Judges E. Grady Jolly, Jacques L. Wiener Jr., and Carl E. Stewart upheld a dismissal of two class action cases alleging that oil companies owned by foreign governments in the Organization of Petroleum Exporting Countries (“OPEC”) violated U.S. antitrust law. The classes, U.S. gasoline retailers and oil purchasers, claimed that OPEC-controlled companies openly conspired to limit production and fix prices. Numerous amici briefs were filed regarding the harmful impact on America’s oil supply should foreign-owned oil companies be held liable under U.S. antitrust law.
The Fifth Circuit found that the political question doctrine precluded the judicial branch from interfering with policy decisions constitutionally left to the executive or legislative branches. Here, interaction with OPEC controlled companies and foreign nations should be left to executive diplomacy rather than private litigation. Similarly, the court found that it was precluded from considering the validity of the actions of foreign states within their own territories.
The FTC Rules that NC Dental Board is Subject to Antitrust Law
April 15, 2011 – 1:21 pm
The Federal Trade Commission denied a motion to dismiss their administrative suit against the North Carolina State Board of Dental Examiners (the “Board”), finding that the state-action doctrine does not render the Board immune from the administrative antitrust proceeding. The FTC alleged that the Board violated the Sherman Act when they required that teeth whitening services can only be performed by practicing dentists. The Board claims the FTC action interferes with a legitimate state interest, and matters that have traditionally been left to the state. But the FTC concluded that because the Board is made up almost entirely of practicing dentists, without “active supervision” by an independent state actor, the Board does not qualify for state-action immunity.
DOJ Settles Antitrust Disgorgement Case
April 15, 2011 – 1:19 pm
Southern District of New York Judge William H. Pauley III approved a $12 million profit disgorgement antitrust settlement between KeySpan Corp. and the U.S. Department of Justice. The DOJ alleged that KeySpan kept electricity prices artificially high in New York City by obtaining a financial stake in one of its competitors. Its financial stake in Astoria Generating Co. allowed KeySpan to forego competitive bidding. Because the anticompetitive conduct had ceased and the Federal Energy Regulatory Commission cleared KeySpan of wrongdoing in February 2008, traditional remedies of monetary damages or injunction were likely unavailable through a class action lawsuit. But thinking outside of the box, the DOJ, for the first time ever, sought disgorgement of profits as a remedy for the alleged Sherman Act violation.
Plavix Purchasers’ Class Action Dismissed
April 15, 2011 – 1:11 pm
Southern District of Ohio Judge Michael Watson dismissed several class actions brought by purchasers of Plavix, holding that the classes failed to allege antitrust injury because a valid patent restricted the sale of generic Plavix. The plaintiffs alleged that they had to pay more for the name brand drug because Sanofi-Aventis SA and Bristol-Meyers Squibb Co., patent holders for Plavix, conspired with Apotex Corp, a generic drug maker, to keep generic Plavix off the market.
The claims arose out of a patent infringement case between the patent holders of Plavix and Apotex Corp. in which the parties attempted to enter into an unfair settlement agreement. After the settlement was rejected by the FTC an injunction remained in place prohibiting the sale of generic Plavix. Judge Watson ruled that competition is lawfully excluded where a valid patent exists. He further stated that “The alleged ‘injury’ is from the lawful patent and Apotex’s lack of access to it. Such ‘injury’ is not of the type the antitrust laws were intended to prevent.”
AmEx Denied Summary Judgment in Price Fixing Class Action
April 15, 2011 – 1:08 pm
Southern District of New York Judge William H. Pauley III denied American Express Co.’s motion for summary judgment on antitrust class action claims. Class members are users of Visa and MasterCard credit cards charged foreign transaction fees for purchases made in a foreign currency. In its claim filed in 2004, the class alleged that AmEx conspired with various other banks to fix foreign currency conversion rates and to impose arbitration clauses in cardholder agreements.
The class presented evidence that several similar banks raised their foreign transaction fees by up to 3 percent around the same time that AmEx raised its foreign transaction fees by 1 percent. Judge Pauley found that a reasonable jury could conclude that AmEx’s price raise was parallel conduct, which could potentially prove the alleged conspiracy. AmEx’s motion was denied regarding the arbitration issue because, even though class members were not AmEx customers, the class has standing to the extent it can show antitrust injury from having fewer choices on the market due to the alleged conspiracy.
DOJ to Investigate Google Book Deal
April 1, 2011 – 3:08 pm
Update March 2011: Southern District of NY Judge Denny Chin rejected a class action settlement between plaintiff publishers and Google that would have permitted Google to publish orphan works on an opt out basis. The Department of Justice and potential competitors such as Microsoft and Amazon argued that the settlement would allow Google to monopolize the market for orphan works. The court also expressed concern that the settlement would allow Google to usurp copyrights to unclaimed works. Judge Chin suggested that the settlement be revised to require authors to opt in to the digital publishing scheme. Such a structure may not work, however, because orphan works by definition have unclear copyright histories, making the identification of a copyright holder difficult and expensive. Google may be unwilling to invest in the project if the number of works is drastically limited, and publishers may be less willing to support a deal that does not establish a single publishing entity that can maintain desirable price levels.
Update November 2009: Google has agreed to amend the settlement with the Author’s Guild to limit the publication of foreign works, i.e. those not published or registered with the U.S. copyright office or published in the UK, Canada or Australia before January 5, 2009. Google also agreed to withhold display of any book Google deems “not commercially available” until 60 days after the designation and to permit authors to block display if they believe that the book is commercially available. Finally, Google agreed to limit its print on demand functionally to books not commercially available.
Update July 2009: The DOJ has opened a formal investigation, announcing that its initial inquiries created enough antitrust concern to justify going forward. The judge overseeing the class action settlement has asked the Division to file any comments by mid-September. The EC also confirmed that it was also talking to interested parties.
The massive settlement between Google and copyright holders to enable Google to scan and post millions of books on the Internet has sparked a DOJ investigation. Although the DOJ has not identified its concerns, they are believed to stem from the provision that allows Google to publish orphan works, that is those covered by copyright but whose owners are unknown or cannot be located. Under the terms of the settlement, the authors of works in this category must opt out. If they do not, Google may publish the work without fear of liability. The concern is that smaller competitors would be unable to duplicate such a deal.
Challenges to South Carolina MLS’s to Move Forward
March 27, 2011 – 3:41 pm
District of South Carolina Judge Sol Blatt Jr. let stand antitrust claims against two real estate multi-listing services. The defendants argued that the services and their members constituted a single entity incapable of conspiring under the antitrust laws. Rejecting that defense, the court held that the defendants were capable to conspiring to restrain competition.
US Supreme Court Declines to Review Dismissal of Leegin Price Fixing Case
February 19, 2011 – 12:39 pm
Update February 2011: The U.S. Supreme Court denied the plaintiff’s petition for certioari without comment.
The Fifth Circuit affirmed the dismissal of an amended complaint that sought to cast what were originally vertical price fixing allegations has horizontal price fixing. The case brought by a discount retailer originally alleged that Leegin imposed vertical minimum resell price maintenance that prohibited retailers from discounting the price of Leegin goods. The case went to the U.S. Supreme Court, which overturned the century old rule that vertical price fixing was per se illegal, subjecting the practice to review under the Rule of Reason. Because the plaintiff could not establisha relevant market in which Leegin had market power, the vertical price fixing claim was dismissed. The plaintiff attempted to revive the case by arguing that because Leegin itself sells at retail, the prohibition on price cutting amounts to a per se illegal horizontal agreement. According to the court, the plaintiff’s failure to allege that Leegin’s other retailers were responsible for the price restraint doomed its horizontal case.