Category: Collaboration & Joint Conduct

In a recently unsealed opinion, a court in the District of New Jersey has declined to certify a direct-purchaser class in In re Lamictal on numerosity grounds.  It joins the growing number of courts in recent years to have held that a putative class included too few members to warrant certification.  (We discussed those prior decisions in an article published in the Global Competition Review’s 2022 Annual Review, available here).

Two of the Department of Justice’s labor-market criminal antitrust prosecutions have seen interesting recent developments. In United States v. Patel, a district court denied a motion to dismiss the indictment from a group of indicted aerospace executives, who had argued that their alleged employee no-poach agreement was part of a vertical customer-supplier collaboration and thus not per se unreasonable. And, in United States v. Hee, the DOJ secured a pretrial diversion agreement with the last remaining defendant in the case, a regional manager at a healthcare staffing company, after previously obtaining a guilty plea from the company itself (resulting in the DOJ’s first labor-market antitrust conviction).

Last month, the first two trials arising from the DOJ’s recent push to criminally prosecute wage-fixing and employee non-solicitation agreements both ended in acquittals on the antitrust charges.  (Check here for our previous coverage of this prosecution trend.)  In United States v. Jindal, the defendants were acquitted on charges of price-fixing, while in United States v. DaVita Inc., DaVita and its CEO were acquitted on charges that they engaged in no-poach agreements with competitors.  Though the DOJ has publicly declared its intent to continue pursuing such prosecutions, these setbacks may affect how it approaches other alleged labor-market antitrust violations.

Yesterday we discussed 2019’s most significant developments in challenges to reverse-payment settlements.  Today we continue our analysis of recent trends in pharmaceutical antitrust actions with a discussion of cases addressing class certification requirements in the reverse-payment context.

In February 2019, the Second Circuit held that Connecticut’s “post-and-hold” alcohol pricing statute is not preempted by Section 1 of the Sherman Act.   In September 2019, following a petition for en banc review, the Second Circuit declined to reconsider the panel’s decision.  In a vigorous dissent from the decision declining en banc review, Judge Sullivan – joined by Judges Cabranes, Livingston, and Park – criticized the decision for “perpetuat[ing] a longstanding circuit split and continu[ing] to allow de facto state-sanctioned cartels of alcohol wholesalers to impose artificially high prices on consumers and retailers across all three states in our Circuit.” 

A court’s decision regarding the proper standard of review in a Sherman Act Section 1 case—whether to analyze the defendant’s conduct as a per se antitrust violation or under the “rule of reason”—is highly significant.  The rule of reason requires a plaintiff to show that the anticompetitive effects of the conduct are not outweighed by its procompetitive benefits—often, a factually intensive analysis.  But under the per se standard a plaintiff (and the court) may dispense with this balancing test; it is necessary only to prove that the conduct actually happened.

In a case of first impression, the Third Circuit recently held in In re Processed Egg Products Antitrust Litigation, No. 16-3795, 2018 U.S. App. LEXIS 2698 (3d Cir. Jan. 22, 2018), that a direct purchaser of a product, comprised partly (but not all) of price-fixed materials, has antitrust standing to pursue a claim against the product’s seller where the seller is a participant in the alleged price-fixing conspiracy, even if the product also includes some material supplied by a third-party non-conspirator.

In July of 2013, Danny Meyer, the CEO of the Union Square Hospitality Group, tweeted that he was considering eliminating tipping at his restaurants and solicited the opinion of other restaurant owners.  Meyer and others eventually followed through on this idea and eliminated tipping at some of their restaurants. Instead, they began charging service fees while also raising menu prices to account for the increase in wages needed to compensate previously tipped employees.  A newly filed putative class-action complaint alleges that these no-tipping policies, rather than being undertaken for largely equitable reasons, are in fact a massive antitrust conspiracy among restauranteurs to raise consumer prices.

On August 29, 2017, the D.C. Circuit affirmed the district court’s decision dismissing a suit filed by 2012 third-party presidential candidates Gary Johnson and Jill Stein, their running mates, their campaigns, and the parties they represented (together, “Plaintiffs”) against the Commission on Presidential Debates.  Plaintiffs alleged that Johnson and Stein were improperly excluded from nationally televised general-election presidential debates in violation of the Sherman Act.

On July 28, 2017, a group of plaintiffs filed a putative class action in the Northern District of California against BMW, Volkswagen, Audi, Porsche, Daimler, and Mercedes-Benz, as well as auto-parts manufacturer Robert Bosch. The suit alleges that, extending as far back as 1996, these five German car manufacturers colluded to suppress competition by agreeing to limit technological advancement, selecting favored suppliers, and exchanging confidential business information. The class-action suit follows recent publications reporting that European Union antitrust officials and the German Cartel Office are investigating allegations of a cartel among these manufacturers.

On Monday, just a few days after the Justices of the Supreme Court conferred on the cert petition in the Vitamin C price fixing antitrust case, the Court asked the Acting Solicitor General to file a brief “expressing the views of the United States.”  The cert petition comes after a Second Circuit decision reversing a $147 million jury award to vitamin C importers who successfully argued in the court below that two Chinese companies fixed the prices of vitamin C exported to the United States in violation of the Sherman Act.

Since we last reported on the state and federal government’s generic drug pricing investigations and litigations (click here to read more), the U.S. Department of Justice (“DOJ”) has obtained its first guilty pleas.  On January 9, 2017, Heritage Pharmaceutical Inc.’s former CEO and its former president (the defendants are brothers-in-law) pleaded guilty to manipulating the prices of and divvying up customers for an antibiotic, doxycycline hyclate, and a diabetes medicine, glyburide.  The defendants are scheduled to be sentenced on September 28, 2017, and they face up to ten years of imprisonment.  The government’s filings in other lawsuits make clear that the defendants’ sentencing was delayed until the defendants complete their cooperation with the government.

As we have previously reported, (click, here, here, here, and here to read more), generic drug manufacturers have recently come under intense scrutiny from state and federal regulators for their price hikes.  Last week, the Department of Justice and twenty state attorneys general instituted criminal and civil proceedings in connection with alleged generic drug price manipulation.

The Southern District of New York recently denied motions to dismiss filed by several banks that allegedly conspired to manipulate the price of gold and silver.  Only defendant UBS was successful in convincing the court that the allegations against it failed to state a plausible antitrust claim.

On August 23, 2016, the District Court for the Eastern District of Missouri allowed claims by a compounding pharmacy to proceed, denying a motion to dismiss filed by the defendant pharmacy benefit manager (“PBM”).  In Precision Rx Compounding LLC, et al. v. Express Scripts Holding Co., et al., No. 16-cv-0069 (E.D. Mo.), the plaintiff Precision Rx is a compounding pharmacy and the defendant, Express Scripts, is a  PBM  that contracts with health plan administrators and insurance payors to manage pharmacy benefit plans.  

Antitrust standing is one of the most beguiling concepts in antitrust law, but it is a hurdle that a plaintiff must negotiate if its claim can proceed.  This week, the Second Circuit provided some clarity to the doctrine when it affirmed a district court decision dismissing the antitrust claims of end users of aluminum for lack of antitrust standing in In re Aluminum Warehousing Antitrust Litigation.

As our loyal readers know, on May 23, 2016, the Second Circuit issued a decision in the In re: LIBOR-Based Financial Instruments Antitrust Litigation vacating the District Court’s prior decision dismissing one case in this consolidated action.  Our analysis of that decision is available here.  Notably, however, the Second Circuit declined to rule on whether the plaintiffs (the “Plaintiffs”) are “efficient enforcers” of the antitrust laws and remanded that question for the District Court’s consideration.

Certifying a class of direct purchasers of sheet metal parts alleging claims under section 1 of the Sherman Act, Judge Lynn Adelman of the United States District Court for the Eastern District of Wisconsin focused on what it means for common questions to predominate in an antitrust class action.  

It is plausible that Uber’s CEO, Travis Kalanick, may have violated antitrust law by fixing prices charged to Uber passengers, a judge in the United States District Court for the Southern District of New York concluded last week in denying Kalanick’s motion to dismiss.  The lawsuit, Meyer v. Kalanick, is a putative class action initiated by Spencer Meyer, a resident of Connecticut, on behalf of people who, like him, have used Uber car services.  The complaint also names a subclass of people who have been charged according to Uber’s “surge pricing” model.

Courts continue to evaluate the degree to which “reverse payments” are permitted post-Actavis.  In the latest of these decisions, issued on February 22, 2016, the First Circuit held that non-cash payments may run afoul of the antitrust laws.

In the wake of Major League Baseball’s settlement of antitrust claims on the eve of trial, the central question from the lawsuit remains:  are sports leagues’ exclusive broadcasting territories for live games an antitrust violation?  Although suits against the MLB and National Hockey League have both settled, analogous antitrust claims are pending against the National Football League, leaving open the possibility that these issues may be finally resolved in the court room.

On November 17, 2015, the FTC submitted an amicus brief to the Third Circuit Court of Appeals in In re Effexor XR Antitrust Litigation, where the district court had dismissed the plaintiffs’ claims of antitrust violations based on an alleged reverse payment under FTC v. Actavis, Inc., 133 S. Ct. 2223 (2013). In its brief, the FTC argues that its failure to object to a pharmaceutical patent settlement should play no role whatsoever in evaluating the legality of alleged reverse payments, and urged the Third Circuit to reverse the district court’s decision to the extent it relied on such considerations.

On September 23, the Hong Kong Competition Commission (HKCC) released a draft of its “Leniency Policy for Undertakings Engaged in Cartel Conduct.”  The draft specifies when the HKCC will refrain from pursuing monetary penalties against an entity in exchange for that entity’s cooperation.  The HKCC was created when Hong Kong’s Legislative Council passed a competition ordinance in 2012.  The Competition Ordinance applies to any agreement that has the object or effect of preventing, restricting, or distorting competition in Hong Kong, even if the parties and concerted activity are outside of Hong Kong.  Over the past three years, the HKCC has slowly released guidelines related to the implementation of the Ordinance.  With the release of the leniency policy, the HKCC is on track to begin enforcing the Competition Ordinance in mid-December 2015.

Earlier this month, Apple signaled its intention to petition for writ of certiorari after the Second Circuit upheld Judge Cote’s decision to apply per se liability in analyzing the firm’s conduct with respect to e-books in United States v. Apple Inc.  We have previously reported on the decisions below where both the Second Circuit and the Southern District of New York concluded that per se liability applies because, even though Apple’s contracts with publishers were vertical agreements (and thus would usually require the rule of reason analysis per the Supreme Court’s Leegin decision), Apple’s organization of competing e-book  publishers to raise e-book prices created a horizontal agreement.

Our Antitrust practice group recently co-authored a series of articles in Inside Counsel discussing major antitrust issues facing in-house counsel today.  Our articles expand on topics that we have covered in this blog, including the Actavis litigation, the change in the competition landscape across the globe and antitrust reforms in Europe and Asia, antitrust enforcement in e-commerce, the implications of the Supreme Court’s decision in North Carolina State Board of Dental Examiners on antitrust liability for professional boards, and the Department of Justice’s recent guidance on antitrust compliance programs.