Update April 2009: The plaintiffs have proposed settlements with all defendants. Interestingly, one defendant settled for zero dollars with a pledge to help the plaintiff secure settlements against the other defendants.
In In re: Hydrogen Peroxide Antitrust Litigation, the Third Circuit remanded a decision certifying the class, instructing the district court to conduct a more thorough inquiry. The court held that although the district court has discretion to decide whether to certify a class, it erred in three ways:
1) in holding that a plaintiff need only make a threshold showing the group claims predominate;
2) in holding that the importance of private antitrust enforcement suggested that when in doubt a court should favor class certification; and
3) in failing to assess the credibility of the expert testimony on class certification issues.
In Stanislaus Food Products Co. v. USS-Posco Industries, tomato packer Stanislaus Food Products Co., accused steelmaker USS-Posco Industries (UPI) of engaging in a vertical price fixing scheme with Silgan – a can manufacturer, to restrain the steel and tin trade. The complaint filed in the Northern District of California alleges that 1) Silgan, who is not named in the complaint, along with UPI used their sales meetings to mount a clandestine conspiracy against Stanislaus, as a result of which the price Stanislaus paid for cans went up depite the prices of steel going down; and 2) UPI conspired with its parent companies to corner the market for tin-plate and to illegally jack up the price. In its motion to dismiss UPI contends that it cannot conspire with its parent company under the Copperweld single entity doctrine.
In In re: Aftermarket Filters Antitrust Litigation, Florida’s attorney general launched an action alleging violaitons of federal and state antitrust laws, against nine of the biggest manufacturers of automotive filters in the U.S, including Honeywell International, alleging that through numeous secret meetings among its top executives, the defendant companies schemed to maintain inflated prices for oil, air, fuel, and transmission filters by conspiring to 1) fix prices; 2) allocate customers; 3) eliminate competition in the auto filter market; and 4) issue misleading letters to justify their price hikes. This Northern Disrict of Illinois suit is the first of its kind since the federal government’s 2008 probe of the automotive filter market, which was triggered by private actions on behalf of direct purchaser retailers and consumers.
Teva, owner of patents covering the active ingredient in the drug Coreg, and Glenmark, which had sought to introduce a generic version of the drug have settled their differences and submitted a stipulation of dismissal in their District of New Jersey case. When the primary patent on Coreg expired in 2007, a number of companies sought FDA approval to introduce generic versions. Teva, however, began a campaign to prevent the introduction of generic Coreg alleging that it held patents on the active agreement. Teva filed this suit alleging that Glenmark’s effort to introduce a generic version of Coreg qualified as willful infringement of Teva patents justifying treble damage liability. Glenmark responded with an antitrust counter-claim alleging that Teva obtained the patents by fraud on the patent office and had engaged in sham litigation. Interestingly, Glenmark had argued that “Teva demonstrates a pattern of enforcing these questionable patents . . . by threatening and instituting suit and then offering royalty rates with a Teva API supply agreement in violation of the Sherman Act to restrict genetic competition . . . .”
Any thought that the financial crisis might lead to lax antitrust enforcement appears to have been quashed by recent DOJ activity. The Antitrust Division has collected nearly $1 Billion in criminal fines in the first four months of 2009, one of the highest totals ever. And in 2008, the average prison sentence for American offenders reached 25 months. The average for foreign nationals was 18 months. Moreover, in a mid-April posting on its website, the Division expresses concern that stimulous spending may increase collusion. “The potential risk of fraud and collusion increases dramatically,” the Division contended, “when large blocks of funds, such as those associated with the Recovery Act are quickly disbursed.” The leading antitrust law firm, Akin Gump, is advising its clisents that “[t]o avoid an investigation or enforcement action, any company competing for projects funded by the Recovery Act mus avoid all appearance of collusion or other anti-competitive actions. Most importantly, companies must avoid any actions that might lead to inferences of bid-rigging, market allocation, price-fixing or other anti-competitive behavior.”
The EC has launched an investigation into the Netherland’s loaning tens of billions of euros to Fortis Bank Nederland, because of concerns that the low interest rates would distort competition across the EU. The EU Competition Commissioner Neelie Kroes stated that even though the Dutch state could intervene to prevent the bankruptcy of Fortis Bank Nederland, “the commission has to ensure that the rescue aid was limited to the minimum necessary and did not create undue distortions of competition liable to cause problems for banks in other member states.” As part of the investigation, the Commission will also examine the Netherlands’ decision to buy ABN’s Dutch retail for an amount that may have exceeded the market value of its assets, which may have effectively recapitalized FBN without meeting the Commission’s conditions for such an action.
The EC has opened two investigations seeking to determine whether cooperation among airlines on transatlantic routes constitutes restrictive business practices. The first investigation focuses on existing and planned cooperation among four current or prospective members of the Star Alliance – Air Canada, Continental, Lufthansa and United. The second will examine proposed cooperation between three members of the Oneworld alliance – American Airlines, British Airways and Iberia.
In March 2009, Judge Christopher Connor, M.D. P.A., denied defendants’ motion to dismiss price fixing allegations against leading chocolate makers. The court held that the complaint sufficient alleged a conspiracy under Twombly. Defendants requested that the court certify the question for appeal. The court has now agreed to do so, explaining that its conclusion that Twombly permits an inference of conspiracy from the “collective effect of repeated parallel price increases, avernments of anti-competitive activity in closely related foreign markets, transnational management of corporate subsidiaries, opportunity for collusion, and descriptions of anti-competitive conduct that are economically in light of mature market characteristics” is a debatable interpretation of that case. Given that continuing uncertainty surrounding the relatively new standard, and that a reversal could end the case before the parties undertake substantial discovery, the court believed that an interlocutory appeal is warranted.
In Sun Microsystems Inc. v. Hynx Semiconductor Inc. et al., Northern District of California Judge Phyllis J. Hamilton denied defendants’ motion for summary judgment, allowing the case of price manipulation of dynamic random access memory to go forward on the plaintiff’s Sherman Act claims. In their summary judgment motion defendants argued that plaintiff did not show that Hynx’s actions affected Sun. Although calling defendants’ efforts “valiant,” the court denied their motion, holding that plaintiff presented “sufficient circumstantial and expert evidence to create a triable issue of fact as to whether defendants’ conduct affected benchmark prices for DRAM, which in turn raised prices industrywide.” The court did, however, strike certain claims from Sun’s suit, including claims related to conspiracy against Mitsubishi Electric Corp., holding that plaintiff did not present sufficient evidence tying conspiratorial activity to any particular Mitsubishi entity.
In William O. Gilley Enterprises Inc. et al. v. Atlantic Richfield Co. et al., a divided 9th Circuit panel found that plaintiffs’ argument – that 44 individual bilateral agreements among the oil companies had the same aggregate anti-competitive effect as a conspiracy – was enough to establish a claim under Section 1 of the Sherman Act. The majority found that 1) because the exchange agreements between the oil companies to raise prices by controlling supply of CARB gas are considered contracts under federal antitrust law, each agreement, “even without intent to control prices, provides an agreement that meets the first element of a [section]1 Sherman Act claim”; and 2) plaintiffs could establish market power and anti-competitive effects by examining the “cumulative effect of a single defendant’s exchange agreement” even though each individual agreement only affected a small portion of CARB gas in the state. The court pointed out that aggregation need not be found only where contracts have “a clear purpose and an identifiable effect”; if a defendant restrains trade by an obvious pattern and practice of entering into individual contracts, such “defendant should not be allowed to do piecemeal what he would be prohibited from doing all at once.”