In Louisiana Wholesale Drug Co. Inc. v. Becton Dickinson & Co. Inc., Beckton Dickinson & Co. Inc. has reached a $45 million settlement with direct purchasers in five antitrust suits accusing the medical device maker of monopolizing the market for hypodermic products by providing incentives and paying kickbacks to GPOs in return for selling BD products under exclusive contracts with pharmacies and hospitals. The settlement has not yet been approved by the court and does not include claims filed by indirect purchasers, who alleged in their suit that 1) they purchased the products from distributors who did not independently set prices for those products; 2) the wholesalers were forced to sell BD products to pharmacies and hospitals based on contracts negotiated by GPOs, which were involved in a conspiratorial relationship with BD excluding competitors from selling to specific pharmacies and hospitals; and 3) BD bid for contracts by offering to bundle its products, often including substantial financial incentives to hospitals and other customers that agreed to purchase the vast majority of the products they needed from those bundles.
Robinson-Patman Violation in Food Service Industry
May 2, 2009 – 2:46 pm
In Feesers Inc. v. Michael Foods Inc. et al., Middle District of Pennsylvania Judge Sylvia H. Rambo found that Michael Foods Inc., an egg and potato product supplier and Sodexo Inc., a food services giant, violated the Robinson-Patman Act by engaging in unlawful price discrimination, where Michael Foods was selling supplies to Sodexo at a lower price than to the plaintiff, Feesers Inc., a regional food distributor. In enjoining the defendants from continuing the price discrimination against Feesers, the court found that 1) the Robinson-Patman Act requires a showing of “competitive injury,” which is “established prima facie by proof of ‘a substantial price disctimination between competing purchasers over time'”; and 2) “defendants have failed to meet their burden of rebutting the inference of competitive injury by showing that there is no casual connection between the price discrimination and competitive injury to Feesers.” This decision was based on the August 2007 Third Circuit Court of Appeals decision, finding that Sodexo, which both procures products for and operates food services facilities, competes with Feesers, which produces products for food service facilities but does not operate them.
Sister Pipeline Companies Can’t Conspire Despite Regulatory Duty to Operate Separately
April 28, 2009 – 1:34 pm
Judge Robert Chambers, Southern District of West Virginia, has held that sister gas pipeline companies are a single entity, incapable of conspiring under Section 1 of the Sherman Act. The plaintiffs alleged that the companies conspired to park gas in the pipeline during periods when prices were low, and that under federal energy regulations, the two pipeline companies were required to operate independently despite their common parent. The court held that a regulatory duty to operate independently did not affect the antitrust analysis.
DOJ Confirms Investigation of Blood Reagent Industry
April 27, 2009 – 3:28 pm
A DOJ Antitrust Division spokesperson confirmed that the Division had opened the investigation. According to published reports, Immunological diagnostic medical device manufacturer Immucor confirmed receiving a subpoena.
Sherman Act Challenge in Pittsburgh Health Care Market
April 27, 2009 – 3:22 pm
West Penn Allegheny Health Systems filed suit in Western Pennsylvania District Court, against Pittsburgh’s dominant hospital system, UPMC, and Highmark Inc., the city’s dominant health insurer, accusing both defendants of violating Sections 1 and 2 of the Sherman Act, by conspiring to monopolize and an attempting to monopolize Pittsburgh’s healthcare market. According to the complaint, since at least 2002, the defendants have been conspiring to 1) stifle competition; 2) hike up prices; and 3) drive West Penn Allegheny, a UPMC competitor, out of business. According to the complaint, UPMC and Highmarket agreed the UPMC would not offer reasonable contract terms with own health insurance affiliate to any competing health insurer, and Highmark agreed to shutter its low-cost Community Blue product and pay inflated reimbursement rates to UPMC while depressing rates for UPMC’s competitors. In its prayer for relief, besides demanding an unspecified amount of damages, plaintiff also sought the following orders: 1) directing Highmark to contract with plaintiff on “fair and equitable” terms, and 2) directing UPMC to divest its own health insurance affiliate and discontinue its joint ventures with independent community hospitals.
Criminal Big Rigging Case Filed Against Refuse Cart Repair Company Executives
April 27, 2009 – 2:39 pm
In U.S. v. Steven Fenzl and Douglas Ritter, a Northern Disctrict of Illinois grand jury indicted two executives from an Illinois garbage cart repair company on charges of conspiracy, mail fraid and wire fraud for conspiring to rig the city of Chicago’s competitive bidding process that enlists private companies to fix roll-out refuse carts. DOJ claims that the two executives thwarted the city’s bidding process by arranging for the submission of bids from three companies other than their own, then submitting bids from their own company undercutting the other companies’ bids. Under the indictments, each executive faces a fine of $250,000 per count, which could be increased to twice the amount of money they gained from the crime or twice the amount lost by the victims, and a maximum jail sentence of 20 years.
Settlement of MMA & Acrylic Cartel Litigation
April 27, 2009 – 2:22 pm
In In re: Methyl Methacrylate (MMA) Antitrust Litigation, plaintiffs filed a motion with the Eastern District of Pennsylvania Court seeking approval of four separate settlement agreements totalling $15.1 million to settle a long-running class action against four chemical companies. The suit sought damages and injunctive relief against the defendants for an alleged conspiacy to jack up the prices of MMA and acrylic in the U.S. Under the settlement agreement, direct purchasers of MMA and acrylic would be able to reclaim some or all of the money paid for purchases made from January 1, 1995 to December 19, 2007. Despite entering into the settlement, defendant Arkema denied any involvement in the price-fixing scheme. If the settlement is approved, the money will go into escrow and purchasers will be able to recover between 4% and 100% of their purchase costs, depending on which chemical they bought and when.
Claim Buying Firm Launches Follow-on Suit in the Hydrogen Peroxide Cartel Litigation
April 27, 2009 – 2:19 pm
A Brussels-based private group and arm of the Belgian CDC that seeks private damages for cartel victims in Europe – Cartel Damage Claims Hydrogen Peroxide SA (CDC) – has launched a suit in regional court of first instance for Dusseldorf, Germany, against six alleged members of an international hydrogen peroxide cartel that has already been the targetof landmark fines from the European Commission and multimillion dollar class action settlements in the U.S. Five of the six defendants of the present suit were fined in 2006 for their involvement in a price-fixing and market-allocating cartel for hydrogen peroxide and sodium perborbate. The sixth defendant received full immunity from the fines for providing information about the cartel under EC’s leniency program. The same companies also faced a large number of suits in the U.S. over the alleged price-fixing cartel, which have either settled or are awaiting settlement approval. In order to bring the current suit, CDC bought the rights to private damage claims, worth over € 430 million ($561 million), from 32 companies for hydrogen peroxide that they bought from the defendants during the cartel period. The claim-buying approach allows CDC to take on all the cost and risk of litigation.
Liquid Crystal Display Screen Producers Plead Guilty to Price Fixing
April 26, 2009 – 7:52 pm
Update April 2009: An LG executive has agreed to plead guilty, serve a 1 year prison sentence, and pay a $30,000 fine for his role in the LCD cartel.
Update March 2009: Hitachi has agreed to pay a $31 million fine and cooperate in the investigation.
LG, Sharp, and Chunghwa Picture Tubes all pled guilty to fixing the price of LCD displays between 2001 and 2006. The fines assessed were $400 million, $120 million, and $65 million respectively. Private multi-district litigation is on-going in the Northern District of California under the caption TFT-LCD (Flat Panel) Antitrust Litigation.
Fifth Circuit Dismisses Group Boycott Claim on Statute of Limitations Grounds
April 24, 2009 – 10:47 am
Rx.com, an internet drug supplier, argued that wholesalers engaged in an anticompetitive group boycott to exclude internet suppliers that would pose competition to their mail order businesses. The alleged boycott began in 2000, but the case was not filed until 2004, more than the 4 yeat statute of limitations period. The court held that the statute ordinarily begins to run when the violation occurs and impacts the plaintiff, not when the plaintiff assembles a legal theory. Quoating the U.S. Supreme Court in Rotella v. Wade, the Fifth Circuit explained: “in applying a discovery accrual rule, we have been at pains to explain that discovery of the injury, not discovery of the other elements of a claim, is what starts the clock.”
Rx.com argued that the statute was tolled by fraudulent concealment and because the violation was on-going. The court rejected the first theory on the ground that it requires more than silence and denial of wrong-doing. A plaintiff must show affirmative efforts to conceal, and Rx.com failed to do so. Moreover, the evidence demonstrated that Rx.com was aware of the allegedly anticompetitive behavior in February 2000 when it complained to the FTC.
With respect to the continuing violation allegation, the Court recognized that a new example of anticompetitive conduct does trigger a new statute of limitations. But Rx.com failed to allege subsequent refusals to deal within the statutory period.
Finally, Rx.com argued that the court should have equitably tolled the statute because for much of the time it operated under receivership and without officers or a board of directors. The court held that these circumstances did not support equitable tolling because a shareholder or the receiver could have instituted the litigation.