In Redbox Automated Retail LLC v. Universal Studios Home Entertainment LLC et al., Delaware District Court Judge Robert B. Kugler allowed Redbox Automated Retail LLC to proceed with its antitrust allegations against Universal Studios Home Entertainment LLC, while dismissing Redbox’s misuse of copyright and interference with contract allegations. Judge Kugler found that Redbox had sufficiently alleged that Universal orchestrated a vertical boycott to keep distributors from selling Universal’s DVDs for use in the low-cost rental units, which severely limited Redbox’s movie selection, increased prices, and reduced consumer choice in the marketplace.
Fourth Circuit Affirms that Maryland Liquor Regulation is Anticompetitive
August 20, 2009 – 4:07 pm
In TFWS Inc. v. Peter Franchot et al., 4th Circuit Court of Appeals refused to reverse its earlier decision that Maryland’s liquor and wine regulations involving 1) post-and-hold pricing system, which governs how and when liquor wholesalers may charge their prices; and 2) a volume discount ban, which prevents wholesalers from offering lower prices to large retailers, are a form of horizontal price fixing that runs afoul of federal antitrust law because these regulations are ineffective in furthering Maryland’s purported interest of promoting temperance. In rejecting Maryland’s argument that Leegin Creative Leather Products Inc. v. PSKS Inc. showed that resale price maintenance should not be subject to per se analysis, but must be judged under the rule-of-reason, the Court held that Maryland’s regulatory scheme is a form of horizontal price-fixing. Leegin involved vertical resale price maintenance, and thus is irrelevant.
Court Dismisses Lumber Cartel Complaint on Twombly Grounds
August 20, 2009 – 2:36 pm
In Bailey Lumber & Supply Co. et al. v. Georgia-Pacific Corp. et al., Southern District of Mississippi Judge Louis Guirola, Jr. has approved a bid by building products manufacturers Georgia-Pacific Co., Weyerhaeuser Co., and Louisiana-Pacific Corp., to dismiss claims of an antitrust conspiracy to fix prices for plywood. The plaintiffs, Bailey Lumber & Supply Co. and 84 Lumber Co., accuse the defendants of conspiring to fix prices of oriented strand board and plywood in violation of Section 1 of the Sherman Act. The Court held that in order to state a claim for violations of Section 1 of the Sherman Act under the standard articulated in Atlantic Corp. v. Twombly, plaintiffs must allege more than just evidence that companies engaged in similar behaviors, but facts that, if true, would indicate a plot was afoot, which plaintiffs in this case failed to do.
Previously, the court had granted building products distributor BlueLinx Corp.’s bid to be dismissed because the information sharing in which it was alleged to have participated could have no anticompetitive effect.
D.C. Circuit Remands Airline Antitrust Claims to DOT
August 20, 2009 – 2:34 pm
In Alaska Airlines Inc. et al. v. U.S. Department of Transportation, U.S. Circuit Court for the District of Columbia has ordered the U.S. Department of Transportation to reconsider antitrust allegations by Southwest Airlines Co., US Airways Group Inc. and other airlines that Los Angeles International Airport and the city of Los Angeles unfairly discriminated in hiking the maintenance fees and rents at two terminals while leaving the same costs untouched for airlines with longer leases. While ruling that LAX was within its rights to raise maintenance and occupancy fees for the airlines, the panel held that the DOT must explain on remand why the case does not present the “extraordinary situation” in which alleged monopoly power is relevant to a fee dispute. If it cannot, the court will go on to consider whether LAX had monopoly power in its geographic market. The panel also held that the DOT must 1) either justify or abandon its objection to the city’s considering non-aeronautical uses when setting terminal rents; and 2) consider the claims of airlines operating out of both terminals in question equally.
Small Local Telephone Providers Accuse AT&T of Predatory Pricing
August 18, 2009 – 5:43 pm
In a Northern District of Texas case, local telephone providers are accusing AT&T of seeking to drive them out of business by refusing to permit new customers of the competitors to receive the $50 rebate that AT&T provides to its own new customers. In the past, AT&T had made this rebate available to all new landline telephone customers whether they were direct AT&T customers or the customers of competitors who purchase service at wholesale from AT&T. The competitors allege that AT&T’s policy would force them to price below cost, which they cannot do.
Drug Wholesalers Sue Merck for Delaying Generic Singulair
August 18, 2009 – 5:33 pm
Drug wholesalers have sued Merck in the District of New Jersey alleging that it violated the antitrust laws in two ways. First, the complaint alleges that Merck obtained a patent for its Singulair asthma and allergy drug through fraud on the patent office, and in particular for failing to disclose its own prior art. Second, Merck filed a baseless patent infringement suit to delay FDA approval of Teva’s generic version of Singulair even though Merck knew that its patent was invalid. The complaint is said to mirror Teva’s counter-claim against Merck.
FTC Challenges Merger Between Heart Valve Device Makers
August 10, 2009 – 5:24 pm
The FTC has authorized a lawsuit to challenge Thoratec Corp.’s proposed $282 million takeover of rival medical device maker HeartWare International Inc.. The Commission claims that the merger would allow Thoratec to maintain its monopoly on the U.S. market of the left ventricular device (LVAD) used to keep patients suffering from end-stage heart failure alive while they await a donor heart, by eliminating HeartWare’s new LVAD, which is the “only significant threat” to Thoratec’s dominance.
Court Permits Patent Acquisition Antitrust Case to Proceed
August 10, 2009 – 5:05 pm
In Federal Trade Commission v. Ovation Pharmaceuticals Inc., and State of Minnesota v. Lundbeck Inc.,a Minnesota District Court Judge Joan N. Ericksen denied Lundbeck Inc.’s attempt to toss out the pair of suits launched by the FTC and the state of Minnesota, accusing the drug-maker of jacking up the price of NeoProfen, a drug used to treat a heart condition in premature infants, after cornering the market in 2006 by acquiring NeoProfen while it was awaiting U.S. Food and Drug Administration approval, while also holding the rights on Indocin, the only other drug to treat this specific heart condition. In denying Lundbeck’s motions, the court rejected Lundbeck’s arguments that 1) the two drugs are not in the same market because doctors recommend the drugs based on their clinical and safety attributes and not because of their price; and 2) genetic competition of the drugs is imminent, and held that a reasonable finder of fact can conclude that Lundbeck possessed monopoly power.
Ocean Spray Hit With Antitrust Claims in Patent Suit
August 7, 2009 – 2:07 pm
In Ocean Spray Cranberries Inc. v. Decas Cranberry Products Inc., Decas Cranberry Products Inc. filed a counterclaim in a patent infringement suit brought against it by Ocean Spray Cranberries Inc., alleging that Ocean Spray’s patent infringement suit was filed in “bad faith” in order to 1) scare away firms interested in purchasing Decas; and 2) to discount Decas’ asking price by driving down demand for the company in order for Ocean Spray to purchase the company for the lower asking price, and thereby illegally corner the market on dried cranberry products.
FCC to Investigate Apple over Google Exclusion
August 7, 2009 – 1:34 pm
The FTC will investigate Apple’s decision to block a Google voice application for the iPhone. The FTC is concerned that the decision may be an outgrowth of Apple’s exclusive agreement with AT&T to provide phone service with the iPhone, and thus Apple’s decision may be intended to prevent competition between Google and AT&T.