The European Court of Justice has upheld a lower court’s reversal of a European Commission decision to prohibit Glaxo-SmithKline from restricting parallel trading of drugs among countries within the EU. Following a policy of open parallel trading the Commission rejected Glaxo-SmithKline’s attempt to sell a number of drugs into the Spanish market at lower prices, but with restrictions on re-sale outside of Spain. The ECJ ordered the Commission to consider the evidence supporting Glaxo-SmithKline’s argument that restrictions on parallel trading helped support research and development that is critical to the drug industry.
European Court of Justice Orders EC to Consider Pro-Competitive Justifications for Limiting Parallel Trading
October 15, 2009 – 12:45 pm
Market Definition Issue Prevent Summary Judgment in Radiology Case
October 15, 2009 – 12:34 pm
In Park West Radiology P.C. et al. v. CareCore National LLC et al., Southern District of New York Judge Victor Marrero held that multiple issues of law and fact are relevant to CareCore National LLC’s market share; whether it possesses sufficient market power to affect pricing; and whether the plaintiffs have sustained antitrust injury. As a result summary judgment would be inappropriate pending the development of more evidence at the trial, which is scheduled to begin November 30.
Price Discrimination Case Against Citgo to Move Forward
October 15, 2009 – 12:32 pm
In Stephenson Oil Co. et al. v. Citgo Petroleum Corp., Northern District of Oklahoma Judge Terence Kern has rejected a request by Citgo Petroleum Corp. to dismiss a putative class action brought by gasoline distributors alleging that the oil giant offered secret discounted rates to certain distributors. In their suit, Plaintiffs alleged that Citgo lured business its way by lowering wholesale prices to certain distributors, and concealing its price reduction to benefit from added sales volume without tipping competitors off to its lower prices. In its motion to dismiss Citgo relied on prior case law supporting companies’ right to charge different rates to different distributors in different markets, and claimed that plaintiffs were not overcharged, but rather that they paid the posted price, which was not unreasonable and fell within the UCC’s safe harbor provision. In denying Citgo’s motion, Judge Kern rejected both of those arguments, holding that 1) the cases cited by Citgo are distinguishable because the courts considered an evidentiary record, which generally included testimony from industry experts, in determining whether a pricing scheme was discriminatory; and 2) safe harbor rules are thrown out when a seller engaged in activities constituting an “abnormal” case such as price discrimination.
Insurance Fee Setting Protected by Filed Rate Doctrine
October 15, 2009 – 12:27 pm
In In Re: New Jersey Title Insurance Litigation, New Jersey District Court Judge Garrett E. Brown Jr. has tossed an antitrust action that accused more than a dozen major title insurers of conspiring with a New Jersey rating bureau to fix prices. In urging dismissal the defendants maintained that the plaintiffs’ claims were barred by the filed rate doctrine, under which rates submitted to a regulatory agency, including title insurance rates, are considered per se reasonable even assuming anti-competitive behavior. However, plaintiffs argued that the doctrine should not forbid their antitrust claims because the Department of Banking and Insurance did not conduct a meaningful review of the defendants’ proposed rates. In dismissing the complaint with leave to amend, Judge Brown found plaintiffs’ argument lacking, because the “application of the filed rate doctrine does not depend upon meaningful agency review of filed rates, and there is no fraud exception to the filed rate doctrine.”
Airline Commission Conspiracy Case Dismissed
October 15, 2009 – 12:25 pm
Update March 2010: The travel agents have petitioned for certiorari in the U.S. Supreme Court.
In In re: Travel Agent Commission Antitrust Litigation, 6th Circuit Court of Appeals has upheld a dismissal of a suit for failure to state a claim under Section 1 of the Sherman Act, brought by travel agents accusing major airlines including Delta Airlines Inc., United Airlines and American Airlines Inc. of fixing commission prices. The plaintiffs, owners of 49 travel agencies, alleged that 1) they received commissions known as “base commissions” from airlines that were commonly a percentage of the ticket price; and 2) the airlines acted in conspiracy to impose uniform cuts on their base commissions over a seven-year period, evidenced by several specific meetings where the airlines had an opportunity to conspire and agree to set commissions. In affirming the dismissal of the suit, the appeals court found that these allegations did not raise sufficient expectations that discovery would reveal evidence of illegal agreements.
EU High Court Rejects Appeal of Fines Imposed on Banking Cartel
October 15, 2009 – 12:09 pm
In Erste Bank et al. v. Commission of the European Communities, Europe’s highest court has rejected an appeal from four Austrian banks that sought a reduction of €160 million ($155 million) in fines that were imposed on them by European regulators over antitrust violations. The fines stemmed from an Austrian political party’s complaint lodged against the banks with the EC, alleging that the institutions violated EU’s Article 81by coordinating their interests and various fees and charges through a network of banking activities, after this previous long-standing tradition was repealed in 1994. The decision of the highest court went against a March advisory opinion written by one of the court’s advocate generals, which suggested that the EC, which first levied the fines, reduce the total fines by more than half because it improperly assessed the banks’ market shares.
Price Discrimination Case Against Snapple Dismissed
October 15, 2009 – 12:07 pm
In Camarda v. Snapple Distributors Inc., 2nd Circuit Court of Appeals has ruled that local drivers who distribute Snapple Beverage Corp. drinks failed to establish injury under the Robinson-Patman Act in price discrimination suits accusing Snapple of letting other distributors horn in on their territory and undersell them. According to the lawsuit, a local distributor paid “significant consideration” to get a local delivery route and had to abide by Snapple’s various restrictions and requirements, however from 1999 Snapple allowed larger “trans-shippers” to sell the drinks in his exclusive route, without paying the same consideration and without having to abide by the same restrictions and requirements. In affirming the lower court’s dismissal of the Robinson-Patman Act allegations, the Second Circuit held that “the existence of a ‘trans-shipping problem’ … does not establish a causal connection between plaintiffs’ claimed injuries and the defendants’ alleged price discrimination,” but factors unrelated to the defendants’ pricing of the Snapple products – including “the willingness of trans-shippers to sell at a lower price for less profit” – could have led to plaintiffs’ losing business to trans-shippers.
Monopolization Claim in Eyelash Market Dismissed
October 15, 2009 – 11:52 am
In Allergan Inc. v. Photomedex Inc. et al., Central District of California Judge James V. Selna partly dismissed Athena Cosmetics Inc.’s allegations accusing rival Allergan Inc. of monopolizing the relevant market in ongoing litigation that arose from a patent related to eyelash enhancement products. The judge tossed Athena’s counterclaims of unfair competition and monopolization as they related to the nonprescription market for eyelash enhancement products because Allergan has no market share in that area market and “the weight of authority holds that a company that does not, and here by definition, cannot, compete in relevant market cannot possess ‘monopoly power,’ or the ‘dangerous probability’ of achieving monopoly power in that market.” Judge Selna, however upheld some of Athena’s allegations, finding that Athena’s counterclaims sufficiently alleged substantial barriers, such as 1) large sunk costs; 2) the “lock in” effect; 3) high setup and switching costs; and 4) the difficulties and high costs associated with procuring the constituent chemical compounds. The presence of these barriers is a factor in monopoly power, therefore, there is a nexus between price and anti-competitive conduct.