In Princeton Insurance Agency Inc. et al. v. Erie Insurance Co. et al., West Virgina Supreme Court of Appeals overturned a $4.2 million jury verdict against Erie Indemnity Co., ruling that the decision by Erie and its subsidiaries to terminate a contract with Princeton Insurance Agency did not constitute restraint of trade under the Sherman Act. The only parties Erie conspired with were its own subsidiaries, which are considered by common law to be part of the same entity. The court held that “when presented with cases in which there is less than 100 percent control over a subsidiary, federal courts have looked to the amount of control the parent company has over its subsidiary, examining … whether there is a unity of purpose which essentially forecloses the risk of anticompetitive conspiracy.” As an indication of the unity of purpose of itself and its subsidiary, Erie cited: 1) the fact that all of its corporate employees are employed by Erie Indemnity; 2) the issuance of a single termination letter to Princeton to end their relationship, indicating that a “unitary corporate decision was made”; and 3) that none of its companies compete with each other concerning sales. The high court held that the trial court erred by not examining Erie’s corporate structure. The court further held that Princeton would not have been able to prove sufficient injury under the antitrust laws because even though it can show that it was injured by Erie’s conduct, it would not have been able to show injury to competition as a whole.
Unity Of Purpose Saves Parent Company From A Verdict Of Conspiracy With Subsidiaries
December 2, 2009 – 10:18 am
EC Objects to S&P Licensing Fees for Securities ID Numbers
December 2, 2009 – 10:15 am
The European Commission has formally objected to Standard & Poor’s Financial Services LLC’s required licensing fees for its securities identification numbers, bringing to light the first public results of an investigation it kicked off in January. According to EC’s preliminary findings, S&P, the sole-appointed National Numbering Agency for U.S. securities, is abusing its monopoly position by requiring financial institutions and information service providers to pay licensing fees for the use of international securities identification numbers in their own databases. The EC considers this an unfair pricing practice. S&P does not incur any costs for the distribution of U.S. identification numbers to financial service providers because the latter do not receive the numbers from S&P but from the information service providers such as Thompson Reuters or Bloomberg.
Federal Court Certifies Classes in SRAM Price Fixing Case
December 2, 2009 – 9:58 am
A federal antitrust investigation of the SRAM chip manufacturing industry has led to a multi-class consolidated multi-district litigation in the Northern District of California. The case alleges price fixing from 1996 through 2006. Judge Claudia Wilken has certified nationwide classes of direct and indirect purchasers as well as state classes.
Air Travel Price Fixing Case Dismissed For Lack Of Anti-Competitive Effect
December 1, 2009 – 4:14 pm
In McLafferty v. Deutsche Lufthansa AG et al., Eastern District of Pennsylvania Judge Louis H. Pollack dismissed a putative class action brought by an American who accused four foreign airlines, including Deutsche Lufthansa AG and Air France, of conspiring to fix price of air travel between Europe and Japan. The court ruled that the Foreign Trade Antitrust Improvements Act of 1982 – an amendment to the Sherman Act – excluded the case from the subject matter jurisdiction of the federal courts. In dismissing the complaint, the Court rejected plaintiff’s argument that because she was in the United States at the time the defendants sold her the tickets, the defendants imported ticket-selling services, and held that a ticket to fly between Europe and Japan, even if purchased from, and then delivered to, the United States, does not properly qualify as an import or good, because the ticket has no value apart from the service it entitles its bearer. Therefore, the alleged misconduct involved trade or commerce, other than import trade or import commerce, with foreign nations, and did not have a direct, substantial or reasonably foreseeable anti-competitive effect on U.S. commerce.
Pricing Case Against Home Depot Dismissed
December 1, 2009 – 4:12 pm
In Andrea Spiegler et al. v. Home Depot USA Inc. et al., the Ninth Circuit Court of Appeals affirmed the dismissal of a putative class action accusing Home Depot USA Inc. of breaching a contract and violating competition laws by overcharging customers for cabinet resurfacing work. The court found that contracts between Home Depot and its customers were fixed-price, and therefore did not imply a quantity term, so the lead plaintiffs failed to state a claim upon which relief can be granted. According to the order, Home Depot based its pricing on an initial calculation made by a sales representative, but then based the sales representative’s commission on a lower, allegedly more accurate calculation made by a Home Depot measurement technician who visited the customer’s home. In dismissing the suit, the court held that 1) this difference in calculations did not give rise to any claims; and 2) there is no allegation that defendants deviated from any pre-existing price schedule in calculating these prices, instead, the difference in pricing appeared to be due to variations in the estimated time and materials needed to complete the job.
US Trade Court Hold First Sale Doctrine Inapplicable to Foreign Books
December 1, 2009 – 4:11 pm
In John Wiley & Sons Inc. v. Supap Kirtsaeng et al., U.S. Court of International Trade Judge Donald C. Pogue handed down an opinion prohibiting defendant Supap Kurtsaeng from raising the first-sale-doctrine defense in an upcoming jury trial. Publisher John Wiley & Sons Inc.’s accused Kurtsaeng of unlawfully importing and reselling textbooks in violation of various intellectual property and New York unfair competition laws. Kurtsaeng had argued that the U.S. Supreme Court’s landmark ruling in Quality King Distributors Inc. v. L’Anza Research International – that once a U.S. copyright holder sells his goods, the first sale doctrine protects the subsequent owner from copyright infringement claims – should be extended to cover foreign-manufactured goods. The court rejected this argument, holding that the first sale doctrine was not applicable to the foreign-printed textbooks at issue, based on the text of the Quality King ruling.
Second Circuit Permits Generic Drug Price Fixing Case to Move Forward
December 1, 2009 – 4:07 pm
In In re: DDAVP Direct Purchaser Antitrust Litigation, the Second Circuit Court of Appeals has overturned a lower court’s dismissal of an antitrust case alleging that Ferring Pharmaceuticals Inc. and Aventis Pharmaceuticals Inc. conspired to keep generic drugs off the shelves by fraudulently acquiring a patent for diabetes drug DDVAP. The court held that the plaintiffs have antitrust standing and have adequately stated a claim upon which relief can be granted. At this stage of the lawsuit, direct purchaser plaintiffs must merely make a plausible claim of monopolization, which they had done by claiming that the lack of competing, generic versions of DDVAP injured them by forcing them to pay monopolistic prices for the drug.
FCC Rejects Challenge to Time Warner/Comcast Failure to Carry a Small Channel
December 1, 2009 – 4:05 pm
In Herring Broadcasting Inc. d/b/a/ WealthTV v. Time Warner Cable Inc., et al., family-owned network WealthTV accused Time Warner Cable Inc. and Comcast Corp. of violating the Communitactions Act by refusing to carry its channels in favor of MOJO, a WealthTV competitor that is affiliated with the two cable giants. FCC Chief Administrative Law Judge Richard Sippel has found that WealthTV failed to produce evidence backing its claims that 1) the cable companies had failed to negotiate with it in good faith and had given preferential treatment to MOJO; and 2) the companies unreasonably restrained its ability to fairly compete. In siding with the cable companies, Judge Sippel rejected WealthTV’s claim that MOJO’s programming was “strikingly similar” and that the networks targeted the same demographic. According to the opinion, the companies’ decision not to carry WealthTV was based not only on an evaluation of WealthTV’s programming but on a view that it lacked an established brand with a proven record of appeal to subscribers; that its owners were inexperienced; that the network lacked outside financing; and other factors, which are all “legitimate, non-discriminatory business purposes.”
FTC Green Lights Panasonic/Sanyo Merger with Agreed Divestitures
December 1, 2009 – 3:30 pm
The FTC has agreed to permit the Panasonic/Sanyo merger to move forward pursuant to an agreement to sell Sanyo’s nickel hydride battery business, a type of rechargeable battery, to Fujitsu subsidiary FDK. Sanyo had previously agreed to sell other portions of its battery making business to the company. The divesitures resolved the FTC’s concern that the merger could lessen competition in rechargeable battery markets.
EC Fines Heat Stabilizer Manufacturers
December 1, 2009 – 2:24 pm
The EC has issued fines totally $259 million on 24 companies that produce chemicals used to enhance the heat resistant properties of PVC pipe and to enhance the quality of PVC in other ways. The companies were found to have engaged in price fixing, allocated markets and customers, and exchanged sensitive competitive information from 1987 through 2000.