In Hexcel Corp. v. Ineos Polymers Inc., Central District of California Judge Mariana Pfaelzer denied carbon fiber manufacturer Ineo Polymers Inc.’s motion to dismiss a price-fixing suit brought by rival Hexcel Corp., rejecting Ineos’ claims that Hexcel lacked standing to bring the suit and that Hexcel’s claims were time-barred. The court held that although the standing issue in this case is a novel issue for the court, no authority holds that a direct purchaser like Hexcel is not prohibited from recovering overcharges, even if it competed in the same price-fixed marked in which it bought. The court further held that Hexcel’s suit could not be dismissed based on Ineos’ assertions that its rival’s claims were barred by the statute of limitations because although the company filed suit a mere 10 days after the time limit would have worn out, the suit should not be dismissed at this stage.
Second Circuit Urges En Banc Review While Upholding Reverse Payment Drug Settlement
March 7, 2010 – 10:20 am
Update March 2011: The U.S. Supreme Court has denied certiorari without explanation.
Update: The Second Circuit has denied drug purchasers request for en banc review of the decision upholding a reverse payment settlement between a patented drug manufacturer and a generic drug manufacturer.
The Second Circuit in Ciprofloxacin Hydrochloride Antitrust Litigation held that it was bound by prior circuit law to rule that the settlement did not violate the antitrust laws. The court urged the plaintiffs to seek reconsideration en banc, however, siting several factors. First, the Department of Justice has urged the court to reconsider prior law. Second, the number of reverse payment settlements has increased dramatically since the earlier case, and a sponsor of the Hatch-Waxman Act, Senator Orrin Hatch, criticized the earlier decision. Finally, the panel admitted that its earlier ruling rested in relevant part on the mistaken belief that subsequent filers for approval of generic drugs would be granted 180 day exclusivity periods.
AT&T Exclusive Phone, TV, Internet Deals with Apartment Buildings Not Anticompetitive
February 27, 2010 – 9:57 pm
The Fifth Circuit has rejected a class challenge to AT&T exclusive dealing agreements with buildings to provide a so-called Triple Play of telephone, internet, and television services. The court rejected the claim on the ground that the plaintiffs allegation that a single apartment building could constitute a relevant geographic market was too narrow. Although plaintiffs living in the affected building had no choice of service, the court held that sufficient competition exists to prohibit a finding that a single building could be economically significant. Buildings compete for tenants and communications service providers compete to serve buildings. “[G]iven the highly mobile nature of today’s society,” the Court held, sufficient competition exists in a broader market to protect consumer interests.
Georgia Federal Court Upholds Reverse Payment Drug Patent Settlement
February 27, 2010 – 9:54 pm
In a multi-district consolidation, Judge Thrash, Northern District of Georgia, ruled that reverse payment settlements between Solvay Pharmaceuticals and generic drug makers involving the testosterone supplement AndroGel were legal. The Federal Trade Commission and private plaintiffs had alleged that the settlements were anticompetitive because they constituted payments in exchange for keeping generic competition off the market until 2015. The court held otherwise on the ground that because the settlement did not extend Solvay’s patent beyond its 2020 expiration, they could not be anticompetitive.
Despite the setback, the FTC has vowed to continue to challenge reverse payments.
The court did permit a sham litigation challenge to continue. That claim, by direct purchasers of the drug, argued that Solvay filed objectively baseless patent infringement suits to slow the entry of competitors. The plaintiffs argued that the litigation was objectively baseless because of a mistake in a Solvay patent, which Solvay admits. Whether the suits were in fact baseless remains to be determined.
DOJ Permits Ticketmaster/Live Nation Merger to Move Forward With Divestitures
February 26, 2010 – 12:19 pm
Update February 2010: The UK enforcement authorities have withdraw their prior approval and are reconsidering the merger.
The Department of Justice agreed not to challenge the Ticketmaster/Live Nation merger upon the condition that Ticketmaster would license ticketing software to AEG, enabling that company to offer a competitive ticketing alternative and provides the incentive for it to compete in promotion and venue management. The merged entity is also required to divest the ticketing business Paciolan, Inc. to Comcast-Spectacor (or another company). The agreement also prohibits the merged entity from retaliating against any venue that uses another company’s ticketing or promotion services, and it requires them to permit any customer that takes its ticketing business to a competitor to access its own ticketing data. The merged entity must also set up a firewall, preventing it from using any information garnered in the ticketing business for its promotion business. Assistant Attorney General for the Antitrust Division Christine Varney commented that Ticketmaster is required to divest more ticketing than it gained through he merger.
Second Circuit Dismisses Title Insurance Price Fixing Case
February 12, 2010 – 4:32 pm
The Second Circuit has affirmed the dismissal of a putative class action alleging price fixing among title insurers. The plaintiffs alleged that the insurers manipulated the states-rate setting process to include agency commissions in their insurance rates. Relying on the filed rate doctrine, the Second Circuit held that the state regulators were sufficiently active to prevent antitrust scrutiny.
EC Investigates Freight Forwarding Industry
February 10, 2010 – 10:40 am
The European Commission issued a Statement of Objections to air freight forwarding companies concerning their alleged participation in price-fixing cartels. These companies transport goods and provide related services such as customs clearance, warehousing and ground services. The companies involved were not identified.
Urethane Class Action Suits Can Move Forward
February 8, 2010 – 6:40 pm
In Carpenter Co. et al. v. BASF SE et al.; and Woodbridge Foam Corp. et al. v. BASF SE et al., Kansas District Court Judge John W. Lungstrum has allowed chemical companies that opted out of a class certification in a larger class action to proceed with their own two putative class actions accusing BASF SE, the Dow Chemical Co. and Huntsman International LLC of price-fixing in the urethane market. However the court rejected plaintiffs’ claims based on European law, due to on lack of subject matter jurisdiction, and against two BASF executives, due to the running of the statute of limitations. The court did allow plaintiffs to maintain 1) their conspiracy actions, stating that plaintiffs only had to allege enough facts to support a plausible claim of the existence of a conspiracy that does not merely rest on purely conclusional allegations, which plaintiffs did; and 2) their fraudulent concealment allegations, stating that plaintiffs have sufficiently alleged that defendants affirmatively acted to make sure that their meetings and communications were not discovered and their agreements remained concealed.
Court Rejects Attempt to Dismiss Novir Antitrust Suit
February 8, 2010 – 5:51 pm
Update September 2010: The Ninth Circuit has denied Abbott’s petition for writ of mandamus seeking the dismissal of the antitrust claims against it.
In Rite Aid Corp. et al. v. Abbott Laboratories; and Safeway Inc. et al. v. Abbott Laboratories, Northern California District Judge Claudia Wilken denied Abbott’s omnibus motion to dismiss plaintiffs’ claims based on John Doe 1 v. Abbott Laboratories, arguing that the drugmaker’s actions did not amount to exclusionary conduct. In John Doe 1, just like in the present cases, plaintiffs claimed that Abbott drastically raised the price of its HIV drug Novir while keeping the price of the drug Kaletra at the same level. The court held that the present cases involve different theories than the John Doe 1 case, therefore the John Doe 1 case does not control the outcome in the present cases. In its holding the court stated that “given Doe’s narrow focus on viability of a monopoly leveraging claim absent allegations of a refusal to deal, Doe does not foreclose direct purchasers’ and [SmithKline’s] antitrust theories.”