Industry: Consumer Products
Staples’ parent company recently announced plans for an attempt to buy all outstanding stock of Office Depot’s parent company (ODP) for $2.1 billion, stating that it will pursue an all-cash tender offer in March if the parties cannot reach an agreement by then.
Third Circuit Says “Umbrella Damages” Bar Does Not Preclude Antitrust Standing Where Product Is Partly Comprised of Materials Not Subject to the Alleged Conspiracy
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.
Eighth Circuit Applies Continuing Violation Doctrine to Extend Statute of Limitations for Sherman Act Claims
Recently in In re Pre-Filled Propane Tank Antitrust Litigation, an en banc panel of the Eighth Circuit clarified the application of the continuing violation exception to the statute of limitations for claims under the Sherman Act. The Court was closely divided, with a 5-to-4 split between the majority opinion and a sharply worded dissent. The majority held that, in an antitrust conspiracy suit, a continuing violation tolls the statute of limitations as long as there were unlawful acts (e.g., sales to the plaintiff) within the limitations period, even if the alleged conspiracy was hatched outside the four-year statute of limitations period. The dissent, however, argued that to avoid dismissal plaintiffs are required to show a live, ongoing conspiracy within the limitations period.
Last week, a Rhode Island Congressman published a letter he sent to the Chairman of the House Judiciary Committee requesting that the committee hold a hearing on the recently-announced Amazon-Whole Foods merger. This post explores when and why Congress holds hearings on particular mergers and what power Congress has to stop a merger.
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.
In the latest development in Woodman’s Food Market v. Clorox—the saga between Clorox and Woodman’s that last year generated a landmark Robinson-Patman Act (RP Act) decision by the Seventh Circuit—Clorox is asking the district court to dismiss Woodman’s remaining Sherman Act claims. If granted, the motion would bring an end to this suit.
Package Size Is Not a “Service” Under Section 2(e) of the Robinson-Patman Act, Says Seventh Circuit in Clorox
On August 12, the Seventh Circuit issued its decision in Woodman’s Food Market v. Clorox Co., an appeal that we have been watching closely. The Seventh Circuit’s ruling, which held that product package size is not a promotional “service,” is an important clarification of the scope of price discrimination liability under Section 2(e) of the Robinson-Patman Act (RP Act).
In another development in the ongoing cathode ray tube (CRT) multidistrict litigation, Judge Tigar of the Northern District of California ruled that Costco could not recover any damages it sustained as an indirect purchaser of price-fixed CRTs. Costco attempted to bring state law antitrust claims against the conspirators under California law, which allows indirect purchasers to recover damages. However, applying Washington choice-of-law principles (where Costco originally filed suit before the case was transferred to the MDL court), the court held that Washington law, which does not allow for recovery by indirect purchasers, governed Costco’s claims.
Freedom to Whiten: Teeth-Whitener’s Antitrust Suit Against Georgia Board of Dentistry Allowed to Proceed
Earlier this week, in Colindres v. Battle, et al., No. 15-CV-2843 (N.D. Ga.), the District Court for the Northern District of Georgia refused to dismiss antitrust claims brought by the owner of a teeth-whitening company against the members of Georgia’s Board of Dentistry. The plaintiffs, the owner and her company, allege that the Board has been sending agents to threaten her and her company with felony charges for unlicensed practice of dentistry, carrying a possible sentence of as much as five years in prison, though the Board has refused to take formal enforcement action or even put its complaints in writing.
After last month’s bench trial, Judge Emmet G. Sullivan has granted the FTC a preliminary injunction enjoining the merger between Staples and Office Depot. As a result, the companies have decided to end their efforts to merge. Judge Sullivan’s reasoning is not yet publicly available, but the court’s three-page order answers many of the questions that had been swirling around the trial.
A recent decision of the European Court of Justice (“ECJ”) regarding the sale of tobacco products highlights a long-standing tension between two sets of laws: antitrust/competition laws, which seek to keep products affordable and accessible to consumers, and consumer protection and public health laws, which can seek to steer consumers away from products that pose a risk to public health by making them less accessible.
A recent complaint charges PepsiCo Inc. with several antitrust violations, including price fixing and predatory pricing in violation of Section 1 of the Sherman Act, conspiracy and attempt to monopolize in violation of Section 2 of the Sherman Act, and price discrimination in violation of the Robinson-Patman Act.
Yesterday, Staples closed its defense in the case brought by the Federal Trade Commission (FTC) to block the Staples-Office Depot merger—without calling any witnesses. Judge Emmet Sullivan of the D.C. District Court stated that he “did not anticipate” this unusual move by Staples. The CEOs of both Staples and Office Depot were slated to testify; instead, Judge Sullivan began hearing closing arguments.
On Monday, Staples and the Federal Trade Commission began presenting arguments in the D.C. District Court on whether the FTC should be entitled to a preliminary injunction to halt a potential merger between Staples and Office Depot. We previously reported on the Staples-Office Depot merger here and here. Judge Emmet G. Sullivan, who is overseeing the bench trial, presided over a similar hearing just a few months ago related to the DOJ’s attempt to stop General Electric from selling its appliances division to Electrolux, a transaction that GE eventually abandoned.
Out of Luck: Second Circuit Dismisses Antitrust Suit Brought by Catskills “Racino” Developers on Market Definition Grounds
On March 18, 2016, the Second Circuit Court of Appeals affirmed the dismissal of an antitrust lawsuit brought by the prospective developers of a racing track and casino in the Catskills region of New York against their one-time collaborators in the venture. In Concord Assocs. v. Entm’t Props. Tr., 2d Cir., No. 13-3933-cv, the appellate court dismissed the complaint without leave to amend because the plaintiffs’ case had a fatal flaw: there is nothing special about the Catskills that renders the region a unique geographic market to people nearby who want to gamble.
Yesterday, the Seventh Circuit heard argument in the Woodman’s Food Market v. Clorox Co. appeal. As members of our team have previously reported, this case concerns whether a plaintiff can state a claim under Section 2(e) of the Robinson Patman Act based on the size of the package offered for sale.
We will soon know whether the Supreme Court will grant Apple’s cert petition asking the Court to review and reverse its antitrust violation for conspiring with publishers to fix the prices of e-books. The Court will consider the petition at its next conference on February 19. As we previously reported here and here, a divided Second Circuit panel affirmed the district court’s findings that the per se rule applied to Apple’s conduct and that Apple violated Section 1 of the Sherman Act.
MLB Settles, Leaving Unanswered Questions: Do Sports Leagues’ Regional Blackout Agreements Violate 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.
Defendants Summary Judgment Motion in In re Cathode Ray Tube Antitrust Litigation May Illuminate Policy Justifications Behind Ownership or Control Exception
Earlier this month, defendants in the In re Cathode Ray Tube Antitrust Litigation moved to challenge the standing of major retailers to pursue damages claims under the Supreme Court’s 1977 Illinois Brick decision.
On December 14, 2015 Judge Yvonne Gonzalez Rogers heard oral argument on a motion to dismiss filed by Apple in an antitrust action brought against the company in connection with its 2007 deal to sell iPhones exclusively to AT&T Mobility. The next day, Judge Rogers denied Apple’s motion. The lawsuit, one of several arising from the Apple-AT&T agreement, raises interesting questions about how to define a relevant product market using an “aftermarket” theory.
As we previously reported here, the FTC recently filed suit to challenge Staples’ $6.3 billion bid for Office Depot. In response to the FTC’s challenge, Staples offered to divest up to $1.25 billion in commercial contracts to ease concerns about reduced competition and higher prices in the market to service the office supply needs of large companies. The FTC rejected this concession without making a counteroffer. While Judge Emmet G. Sullivan, who is overseeing the case, said he was “frustrated” by the FTC’s refusal to negotiate, the parties are now inching closer to their May 10, 2016 trial date.
In yet another high-profile enforcement action, last week EU Competition Commissioner Margrethe Vestager announced charges against Qualcomm Inc., a world leader in 3G, 4G, and next-generation wireless technologies and the world’s largest supplier of baseband chipsets, for allegedly abusing its dominant position in the baseband chipset market. The Commission preliminarily concluded that Qualcomm illegally paid a major customer to exclusively use Qualcomm chipsets, and also engaged in predatory pricing by selling chipsets below cost with the aim of forcing a competitor out of the market.
The Federal Trade Commission (FTC) last week challenged Staples' $6.3 billion bid for Office Depot, claiming that the proposed merger would significantly reduce competition nationwide in the market for office supplies to large companies. Large companies rely on competition between the two suppliers to hold down the cost of items such as pens, pencils, notepads, sticky notes, file folders, paper clips, and paper used for printers and copy machines, the FTC said.
Last week the Federal Trade Commission, in an amicus brief before the Seventh Circuit in Woodman’s Food Market, Inc. v. Clorox Co., rejected two decades-old FTC decisions applying Section 2(e) of the Robinson-Patman Act.
Two of the most prominent manufacturers of portable fitness trackers—Fitbit Inc. and AliphCom (the maker of Jawbone)—are engaged in no fewer than six separate litigations pending in state court, federal court, and before the U.S. International Trade Commission. Last week, the litigations took an antitrust turn when Jawbone countersued, Fitbit in the Northern District of California for monopolization in violation of Section 2 of the Sherman Act.
We reported earlier today that the jury began deliberations this past Monday in the antitrust class action lawsuit against Cox Communications brought by its premium services subscribers. The jury returned its verdict today in favor of the plaintiffs and found that Cox had violated the Sherman Act by illegally tying its premium cable services to rentals of its set-top boxes. The jury awarded the plaintiffs $6.31 million in damages, which will be trebled to $19 million. The jury awarded damages based on one aspect of the plaintiffs’ claims for fees from set-top box rentals but declined to award damages based on the plaintiffs’ DVR fees. Thus, the damages award came back much lower than the $49 million figure the plaintiffs were seeking.
After a near two-week trial in the consumer class action lawsuit against Cox Communications, the jury began deliberations this past Monday to decide whether Cox’s alleged practice of tying premium cable services to rentals of its cable boxes violated the Sherman Act by harming competition in the set-top box market.
Ties that Bind: Trial Date Nears for Cox Communications on the Legality of Linking Access to Premium Cable Services and Proprietary Set-Top Boxes
Trial is set for October 13th on an antitrust class action lawsuit alleging that Cox Communications used its monopoly power over premium cable services in Oklahoma City to force consumers to rent its set-top box. The trial will be conducted before Judge Robin J. Cauthron of the Western District of Oklahoma. The plaintiff, Richard Healy, is seeking nearly $49 million in damages on behalf of Oklahoma City cable subscribers who paid Cox to rent a set-top box from February 1, 2005 through January 9, 2014.
Yesterday, the Ninth Circuit ruled in the long awaited O’Bannon v. NCAA case, which challenged NCAA rules that bar student-athletes from “being paid for the use of their names, images, and likenesses” (NILs) – part of the so-called “amateurism rules.” The Court upheld the district court’s decision finding the NCAA amateurism rules to be an unlawful restraint of trade in violation of the Sherman Act and upheld part of the district court’s remedy which permanently enjoined the NCAA from prohibiting its member schools from giving student-athletes scholarships up to the full cost of attendance at their respective schools. The Ninth Circuit struck down, however, the district court’s second remedy which would have permanently enjoined the NCAA from prohibiting its member schools from giving student-athletes up to $5,000 per year in deferred compensation.
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.
Last week, a divided three-judge panel of the Fourth Circuit issued a significant decision in a boycott conspiracy case, SD3, LLC v. Black & Decker, No. 14-1746 (4th Cir. Sept. 15, 2015). The suit, at its heart, turns on the interpretation of the Twombly plausibility standard and the application of the Supreme Court’s precedent on pleading standards to antitrust actions at early stages of litigation.
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.
Yesterday, the Ninth Circuit issued an opinion affirming the dismissal of plaintiffs’ consolidated complaint in In re Musical Instruments and Equipment Antitrust Litigation. In addressing plaintiffs’ allegations of a hub-and-spoke conspiracy, the Ninth Circuit reiterated that each component of such a conspiracy (both vertical and horizontal) must be evaluated separately.
On July 9, 2015, the Southern District of New York heard oral argument on Keurig Green Mountain’s motions to dismiss the three complaints filed by the following plaintiffs: Keurig’s competitors (Treehouse Foods, Inc., Bay Valley Foods, LLC, and Sturm Foods, Inc.); Keurig’s direct purchasers; and Keurig’s indirect purchasers.
The U.S. Department of Justice’s Antitrust Division has filed a civil suit to block the acquisition of General Electric’s appliance business by Electrolux. According to the complaint, the U.S. market for cooking appliances—specifically ovens, cooktops, and ranges—is dominated by GE, Electrolux (which manufactures the Frigidaire brand), and Whirlpool.
We have previously posted about United States v. Apple, Inc., a blockbuster trial that ended with Judge Denise Cote of the Southern District of New York concluding that Apple had conspired with five publishing companies to raise the price of e-books. At oral argument before the Second Circuit, the panel hearing Apple’s appeal seemed particularly interested in whether the district court had erred in applying the relatively lenient per se standard rather than the rule of reason, under which the plaintiffs would have had to prove that the anti-competitive injury caused by Apple outweighed any pro-competitive benefits of its conduct.
As we previously reported, the FTC sought a preliminary injunction to block a merger between Sysco and U.S. Foods pending the outcome of its administrative trial challenging the deal. Yesterday, Judge Amit Mehta of the federal district court for the District of Columbia granted the agency’s request, finding that “there is a reasonable probability that the proposed merger will substantially impair competition in the national customer and local broadline markets and that the equities weigh in favor of injunctive relief.”
EU Competition Commissioner Unveils Investigation into Amazon, Continuing Probe into the Tech Giants
On Thursday, the European Commissioner for Competition announced a formal investigation into whether Amazon, the largest distributor of e-books in Europe, has abused its dominance in the market for e-books. The investigation deals with specific clauses in Amazon’s contracts with publishers, which require the publishers to inform Amazon of more favorable or alternative terms offered to competitors and to offer similar terms to Amazon.
AlarMax Distributors Inc. may pursue price discrimination claims under the Robinson-Patman Act (RPA) against Honeywell International Inc., a federal judge in Pennsylvania ruled last week. Fire and security product distributor AlarMax alleges that Honeywell violated a decade-old settlement and supply agreement by engaging in unlawful pricing activity.
Today the United States Supreme Court denied certiorari in two cases, Motorola Mobility LLC v. AU Optronics et al. and Hsiung and AU Optronics Corp. America Inc. v. United States, declining to resolve a closely watched circuit split on the applicability of the Foreign Trade Antitrust Improvements Act (“FTAIA”) in regulating foreign conduct.
AU Optronics Corp. (“AUO”) filed a petition for a writ of certiori in Hui Hsiung, et al. v. United States of America on March 16, 2015, seeking Supreme Court review of the Ninth Circuit’s 2014 decision that upheld the convictions of AUO and its former executives for their participation in a global cartel to fix the price of liquid crystal display (“LCD”) panels. The United States Department of Justice, Antitrust Division, which had tried AUO and its former executives in the district court in San Francisco, filed its brief in opposition to the petition on May 15, 2015, and petitioners filed a reply on May 22, 2015.
In a long line of European regulators taking aggressive stances against American tech companies, Margrethe Vestager, the European Union’s (EU) antitrust chief, is determined to pursue antitrust claims against Google. In addition to bringing formal charges against Google for allegedly abusing its dominance in web searches, Vestager has opened a formal investigation into Google’s practice of “pre-installing its apps and services onto Android smartphones,” presumably based on the theory that doing so gives Google’s software preferential treatment compared to its competitors.
In what it is calling the Antitrust Division’s “first criminal prosecution against a conspiracy specifically targeting e-commerce,” the Department of Justice has announced that an individual has agreed to plead guilty to charges that he conspired to fix the prices of wall posters sold online through Amazon Marketplace. The matter is United States v. Topkins, No. 15 Cr. 201 (N.D. Cal.).
A federal judge in Washington, DC ruled last week that the FTC must disclose the names of the individuals it relied on in its bid to block a proposed $3.5 billion merger between Sysco and US Foods. The FTC attached under seal 92 declarations and an exhibit list identifying the names and affiliations of the declarants to its motion for a preliminary injunction halting the merger.
In In re Lipitor Antitrust Litigation, No. 12 Civ. 2389 (D.N.J.), U.S. District Judge Peter G. Sheridan has confirmed his prior ruling that under the Supreme Court’s decisions in Twombly, Iqbal, and FTC v. Actavis, Inc., 133 S. Ct. 2223 (2013), plaintiffs claiming an antitrust violation based on a non-monetary settlement must allege the value of the settlement to survive dismissal of their complaint.
The Supreme Court has been urged to resolve a circuit split concerning the reach of the Foreign Trade Antitrust Improvements Act (FTAIA) to foreign conduct that may affect U.S. commerce. Motorola this week filed a petition for certiorari in a Seventh Circuit case interpreting the FTAIA as barring Sherman Act claims arising out of the foreign conduct of an alleged liquid crystal display (LCD) panel cartel.
The Federal Trade Commission (FTC) went head-to-head last week with Sysco Corp. and US Foods Inc. over whether to make public the names of the declarants relied on by the FTC in its preliminary injunction to block Sysco and US Foods’ merger. Sysco and US Foods filed a motion in a Washington, D.C. federal district court on March 6 asking the judge to publicize the names, which the FTC quickly opposed.
On Friday the Solicitor General filed an amicus brief in Kimble v. Marvel Enterprises. As we previously noted, in Kimble, the Supreme Court will consider whether to overturn Brulotte v. Thys Co., a 50-year-old precedent holding that “a patentee’s use of a royalty agreement that projects beyond the expiration date of the patent is unlawful per se.”
This past Wednesday, Judge Amit Mehta of the U.S. District Court for the District of Columbia set a hearing from May 5 through May 8, with up to three additional days if necessary, to consider the FTC’s request for a preliminary injunction to block Sysco Corp. and U.S. Foods, Inc. from merging prior to the conclusion of the FTC’s administrative trial.
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