In 2007, the Cleveland Cavaliers basketball team and Ticketmater rival Flash Seats LLC filed an antitrust action against Ticketmaster. The complaint alleged that Ticketmaster used its substantial market power to unlawfully restrain competition by enforcing its exclusive contract with the Cavaliers to block the basketball team for using Flash Seats as a ticket reseller. Last September, Ticketmaster obtained an injunction blocking the Cavaliers from using Flash Seats. The terms of the settlement of the antitrust case are undisclosed, but it will permit the Cavaliers to go foward with Flash Seats as a ticket reseller.
Whole Foods Merger: Market Definition & Marginal Consumers
June 1, 2009 – 2:50 pm
Update June 2009: The FTC has granted final approval to the proposed settlement.
Update March 2009: The parties have reached a settlement allowing the merger to move forward with Whole Foods agreeing to divest the intellectual property in the Wild Oats brand, 13 stores, and the leases and assests of 19 closed stores. A divestiture trustee will supervise the sale. The divested stores are in Arizona, Colorado, Connecticut, Missouri, New Mexico, Nevada, Oregon, and Utah.
Update Janary 2009: Whole Foods added an equal protection claim in an attempt to strength the district court’s jurisdiction, but subsequently agreed to consent to DC Circuit jurisdiction, the Circuit court then dismissed the case saying Wholefoods had failed to show any right to a hearing prior to FTC proceedings. The count alleges that the statutory system that allocates some merger supervision to the administrative determination of the FTC, while others are reviewed by DOJ and subject to challenge in federal court, unconstitutionally treats similarly situated defendants differently. Wholefoods has vowed to re-file in the district court or find some other avenue to assert its claims.
Update December 2008: Whole Foods has filed a case in the Distict Court for the District of Columbia arguing that the FTC would violate Whole Foods due process rights by proceeding against the merger administratively. The FTC has moved to dismiss the case or have it transferred to the DC Circuit, which has exclusive jurisdiction to review FTC proceedings.
Update: November 2008: The DC Circuit has denied Whole Foods request for en banc review in the FTC prosecution. Trial is set for February.
Update: A consumer action has been filed in the District of Columbia district court arguing that Whole Foods has raised prices since consumating the merger and that its large market share works to prevent traditional supermarkets from entering the primium foods market.
In a decision that could have substantial impact on market definition, a divided panel of the D.C. Circuit ruled that the district court erred in denying the FTC’s request for a preliminary injunction in the Whole Foods/Wild Oats merger. The FTC argued that the merging firms competed in a premium natural and organic supermarket (“PNOS”) market that was distinct from standard supermarkets and groceries. The district court held that the FTC could not prove such a market because of evidence that marginal consumers would switch to standard supermarkets if prices increase.
The Court of Appeals held that market definition cannot focus exclusively on marginal consumers. “In sum,” Judge Brown wrote, “the district court believed the antitrust laws are addressed only to marginal consumers. This was an error of law, because in some situations core consumers, demanding exclusively a particular product or package of products, distinguish a submarket. The FTC described the core PNOS customers, explained how PNOS cater to these customers, and showed these customers provided the bulk of PNOS’s business. The FTC put forward economic evidence-which the district court ignored-showing directly how PNOS discriminate on price between their core and marginal customers, thus treating the former as a distinct market. Therefore, we cannot agree with the district court that the FTC would never be able to prove a PNOS submarket.”
California Title Insurance Price-Fixing Case Dismissed
May 22, 2009 – 1:59 pm
In Lynn Barton et al. v. Fidelity National Financial Inc. et al., the Northern District of California Judge Jeffrey S. White has dismissed without prejudice, the consolidated class action alleging price-fixing in the California title insurance industry. Guided by the U.S. Supreme Court decision in Atlantic Corp. v. Twombly and rejecting plaintiffs’ argument that Twombly’s plausibility standard is inapplicable because the allegations regarding the rate-setting organizations amount to a direct agreement to fix prices, Judge White held that plaintiffs’ allegations that the title insurance companies may have set rates collectively with legitimate rate setting organizations, are not enough to automatically amount to a price-fixing conspiracy. According to the opinion, “[p]articipation in the rate setting organizations may have provided defendants the opportunity to discuss setting rates in California, but opportunity, without more, is not a plausible basis to suggest a conspiracy.”
Heavy-duty Transmission Monopolization Case Goes Forward
May 22, 2009 – 1:56 pm
In ZF Meritor LLC et al. v. Eaton Corp., the Delaware District Court Judge Sue L. Robinson denied Eaton’s motion for summary judgment, holding that plaintiffs may proceed with their antitrust claims accusing Eaton of monopolizing the market for heavy-duty transmissions in North America. The Court held that given the defendants’ “undisputed monopoly power in the market,” there remained a genuine issue of material fact regarding whether Eaton of used its dominant position in the marketplace anticompetitive to force heavy-duty truck manufacturers to enter into exclusive dealing contracts that foreclosed ZF Meritor from more than 90 percent of heavy-duty transmission sales.
RealNetworks Files Antitrust Counter-claim re: DVD Copying
May 22, 2009 – 1:53 pm
In RealNetworks Inc. et al. v. DVD Copy Control Association Inc et al. and Universal City Studios LLP et al. v. Real Networks Inc. et al., RealNetworks filed a counterclaim against the movie studios accusing them of violating the Sherman Act by 1) forming an illegal cartel with fellow defendant, the DVD Copy Control Associaion Inc., to block RealNetworks’ program in favor of their own and force consumers to pay twice to make movie copies; and 2) collectively agreeing not to negotiate individual licenses for their content with any potential competitor, thereby creating an illegal scheme between horizontal competitors to eliminate a competitive threat and increase prices.
TV Stations Sues Neilsen for Excluding Competition in Ratings Services
May 22, 2009 – 11:46 am
In Sunbeam Television Corp. v. Neilsen Media Research Inc., the plaintiff, a Florida television station operator, sued Neilsen Media Research Inc., alleging that Nielsen violated Section 2 of the Sherman Act, and the Florida equivalent, by abusing its monopoly in the television ratings industry. Specifically, Sunbeam alleged that Nielsen discouraged potential competitors from entering the television ratings market, and then sharply increased its prices to TV stations for ratings services and forced them to use a flawed data collection system. Sunbeam further alleged that Nielsen thwarted whould-be competitors by 1) requiring customers to sign up for contracts lasting for four to seven years or face steep fines; and 2) staggering the termination dates of its major client service contracts to prevent competitors from signing up multiple new customers at once.
Unionization Does Not Bar Nurses Wage Fixing Claims
May 21, 2009 – 2:55 pm
Update May 2009: The plaintiffs have settled with Oakwood Healthcare for $7.2 and a agreement not to fix nurses salaries in the future. The deal is currently pending court approval. Oakwood did not admit liability, and the settlement includes a provision that would reduce the amount if the plaintiffs settle for less than 2% of nurses wages with any other provider other than St. Johns Health Partners or Bon Secours Cottage Health. Also, if more than 50 class members opt out, then Oakwood may void the settlement.
Update April 2009: St. Johns Health Partners, one of the hospital defendants, has agreed to settle the claims against it for $13.58 million without admitting liability.
In Pat Cason-Merendo et al. v. Detroit Medical Center et al. Eastern District of Michigan Judge Gerald E. Rosen denied Mount Clemens General Hospital Inc.’s motion for summary judgment in a putative class action suit brought by registered nurses employed by Detroit hospitals. The complaint alleges that 6 Detroit hospitals and other unnamed co-conspirators agreed not to compete with each other with respect to nurses’ wages by 1) paying nurses similar wages; 2) jointly recruiting new hires; and 3)routinely exchanging nonpublic information about nurses’ wages. In its motion for summary judgment, Mount Clemens claimed that since the majority of the nurses were unionized and their wages were set through collective bargaining and not through competition, the nurses were protected from the alleged conspiracy and thus were not “injured” under the antitrust law. Rejecting the hospital’s argument, the court held that the presence of the union did not change the nature of the wage-fixing scheme and defendants’ collusion, and at most, mitigates the impact of the defendant’s anti-competitive conduct.
Indirect Purchasers Seek to Join I-Pod Antitrust Litigation
May 21, 2009 – 1:48 pm
Update: May 2009: A Northern District of California Judge dismissed the claim that Apple improperly tied I-pods to its itunes music software. The court found that the company did not link the sale of the two products and that either could be used without the other.
A class of plaintiffs that have purchased I-Pods from retailers other than Apple itself are seeking to join an on-going class action alleging that Apple violated the antitrust laws by limiting its itunes music and video distribution system to function only with I-Pod portable music and video players. Plaintiffs allege that as a result of this practice, Apple is able to charge supra-competitive prices for I-Pods and exclude competitors. The Northern District of California Court is currently considering the original direct-purchaser plaintiffs’ motion for class certification.
DOJ Proposes Settlement with SC Realtors
May 8, 2009 – 1:42 pm
In May 2008, the DOJ sued the Consolidated Multiple Listing Service of Columbia, S.C., alleging that the operators of the service violated Section 1 of the Sherman Act by 1) requiring applicants for membership to discuss the nature of their businesses with a committee of incumbent members who had the power to deny membership to brokers who competed too aggressively; and 2) stabilized the price of brokerage services by fostering brokers to provide a full range of services regardless of the client’s needs. Access to multi-listing services, which are a database of properties available for sale in a given area, are essential to a real estate broker’s ability to compete. As a result, access to them has often been used to stifle competition among brokers. The settlement would require the CMLS to permit any licensed broker to become a member and use the MLS service regardless of the broker’s business model. In addition, it requires the CMLS to repeal rules that prohibited brokers from performing only specific services at a lower cost than the seller would otherwise pay a traditional, full-service broker.
NFL Players Can’t Block Provision of Fantasy Football
May 2, 2009 – 3:16 pm
A Minnesota Federal District Court, following a recent 8th Circuit case involving fantasy baseball, held that NFL football players did not have property rights in their statistics sufficient to permit them to block a company from providing fantasy football league services.