The trial over Aetna and Humana's $37 billion proposed merger kicked off today in a Washington, D.C. federal court.
It has been over three years since the Supreme Court’s Actavis decision. Since then, numerous putative class actions alleging harm to competition as a result of “reverse-payment” settlements have flooded the courts. The complexity of these cases, along with the vague guidance provided by the Supreme Court, has given rise to intricate questions about how courts should apply Actavis and scrutinize settlements of Hatch-Waxman litigation.
The Department of Justice (DOJ) and the Federal Trade Commission (FTC) last week issued antitrust guidelines for human resources (HR) professionals. The guidelines highlight the most common antitrust violations, based on a review of cases in which federal antitrust agencies have taken enforcement actions against employers. There are three main takeaways from this guidance.
PinnacleHealth System and Penn State Hershey Medical Center have abandoned their merger plans following a Third Circuit defeat last month. The announcement underscores the uncertainty faced by hospitals considering consolidation as a way to keep costs down and promote a value-based system of payment.
As we’ve written, Uber, the popular app-based car service, has been on the antitrust defensive, facing allegations that its algorithm for calculating prices restricts price competition. In Wallen v. St. Louis Metropolitan Taxicab Commission, No. 15-cv-01432 (E.D. Mo.), however, it’s on offense, joining forces with some of its riders and drivers in a claim that the St. Louis Metropolitan Taxicab Commission’s refusal to allow it and other ridesharing companies to operate in St. Louis is an antitrust violation. The plaintiffs allege that the Commission, composed of active market participants, is precluding competition by denying ridesharing services the ability to operate. The complaint also names as defendants the cab companies with which the Commission’s members are affiliated. The Commission and its members moved to dismiss on the basis that they are immune from antitrust liability, and the cab companies moved to dismiss for failure to state a claim. On October 7, 2016, the court denied the Commission defendants’ motion to dismiss and granted the cab companies motion to dismiss, with leave to replead.
On September 27, the U.S. Court of Appeals for the Third Circuit handed the Federal Trade Commission a big win, overturning the Middle District of Pennsylvania’s denial of an injunction to block the proposed merger of Penn State Hershey Medical Center and PinnacleHealth System, two major healthcare providers in central Pennsylvania.
Second Circuit Issues Blockbuster Ruling in Amex, Holding Anti-Steering Rules Do Not Violate Antitrust Law
Last week the U.S. Court of Appeals for the Second Circuit issued a major win for American Express in a landmark decision in United States v. American Express Co. In that case the government filed an antitrust suit against American Express challenging Amex’s nondiscriminatory provisions (“NDPs,” or “anti-steering” rules), which bar merchants from offering discounts or incentives to customers to encourage them to use non-Amex credit cards.
How explicitly must a complaint sounding in antitrust allege causation? At oral argument last week, the Court of Appeals for the Second Circuit evaluated the sufficiency of the plaintiffs’ allegations that certain Takeda entities, in their representations to the FDA, falsely described patents for the antidiabetic drug ACTOS in order to delay the entry of generic competitors into the market—specifically, whether the plaintiffs had pleaded enough facts to show that these representations plausibly caused the delay.
It is not every day that antitrust plaintiff classes fail to win certification due to lack of numerosity under Federal Rule of Civil Procedure 23(a)(1). Yet this week, absence of numerosity was the reason a Third Circuit panel reversed an order from the Eastern District of Pennsylvania certifying a class of 22 plaintiffs. The putative class included direct purchasers allegedly injured by reverse-payment agreements between Cephalon and four generic manufacturers of Cephalon’s narcolepsy drug Provigil.
On Monday, Australia’s Federal Government released new draft legislation after a panel conducted a review of Australia’s competition laws last year. The proposed revisions consolidate power and discretion with the Australian Competition and Consumer Commission (the “Commission”) and harmonize some laws with EU competition laws.
The Department of Justice ("DOJ") sued this week to stop Deere & Co.'s acquisition of Monsanto Co.'s Precision Planting, explaining that the deal would harm farmers. The companies make high-speed precision planting systems, which allow farmers to plant uniformly spaced crops at double the speed of conventional planters. The deal would give Deere at least 86 percent of the market for this planting technology, the DOJ said.
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.
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).
On August 8, the District of Connecticut issued a noteworthy ruling on how to approach defining the relevant market definition in a pay-for-delay suit.
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.
It is probably safe to say that most voters in the 2016 presidential election do not view antitrust policy as a key campaign issue. Accordingly, the candidates’ and their parties’ views on competition policy were scarcely, if at all, mentioned during the recent party conventions. However, the parties’ official platforms suggest how the candidates, once in office, would handle competition policy.
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.
The Department of Justice and attorneys general from multiple states last week sued to halt two health insurance mergers, each worth billions of dollars.
The challenged deals are Anthem's planned merger with Cigna and Aetna's proposed acquisition of Humana. The deals would whittle down the number of top competitors in the health insurance industry from five to just three: an Anthem-Cigna entity, an Aetna-Humana entity, and the current industry giant UnitedHealth Group. Each would have revenue of more than $100 billion a year.
The European Commission on Tuesday announced its decision finding truck makers MAN, Volvo/Renault, Daimler, Iveco, and DAF liable for violating EU antitrust rules. The companies acknowledged that for 14 years they colluded in setting truck prices, settling the case for a record total of €2.93 billion. Competition commissioner Margrethe Vestager reported that the five-company cartel “account[s] for around 9 out of every 10 medium and heavy trucks produced in Europe.” Vestager also said that the unprecedented fines send a “clear message to companies that cartels are not accepted.”
After Favorable LIBOR Ruling from the Second Circuit, Investors Now Allege Anticompetitive SIBOR Manipulation
On July 5, 2016, investors filed a federal class action [add link to pdf] in the Southern District of New York alleging defendant banks had manipulated the Singapore Interbank Offered Rate (SIBOR) “and/or” Singapore Swap Offer Rate (SOR) market, forcing investors to pay artificial prices for financial derivative transactions based on these benchmarks. This lawsuit follows on the heels of the Second Circuit’s decision in In re: LIBOR-Based Financial Instruments Antitrust Litigation, which allowed the case to proceed.
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.
On June 21, 2016, the United Kingdom Competition Appeal Tribunal (the “Tribunal”) published notice of an application to commence collective proceedings under Section 47B of the UK’s competition act. If this action continues, it will be the first opt-out collective (class action) competition claims to be heard by the Competition Appeal Tribunal.
Procompetitive Effects of Business Associations in the Balance?: Business Association Membership and the Sufficiency of Sherman Act Allegations
What facts beyond mere membership in a trade association trigger Sherman Act liability? Next term, the Supreme Court will hear an antitrust case testing the requirements for pleading the conspiracy element of a claim brought under the Sherman Act—namely, whether the allegation that defendants belong to an association is sufficient for a Section 1 claim.
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.
The Federal Trade Commission has made clear that it considers the regulation of competition in health care markets one of its top priorities, but in recent weeks the FTC has been dealt a string of tough losses in its healthcare merger challenges. Here, we examine some of the key takeaways from the FTC’s recent defeats in this area.
Monsanto's Indian joint venture has come under fire anew for allegedly anti-competitive behavior.
On June 14, 2016, in FTC v. Advocate Health Care et al., No. 15-cv-11473, the District Court for the Northern District of Illinois denied the Federal Trade Commission’s attempt to stop the merger of Advocate Health Care Network and NorthShore University HealthSystem.
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.
The Antitrust Division recently issued its 2016 annual spring update. Taking advantage of modern technology, Bill Baer—now the Acting Associate Attorney General serving in the DOJ’s third-highest ranking position—prepared video remarks for your viewing pleasure. (Still, most of the Division’s updates were included in written commentary.) Renata B. Hesse now serves as the Principal Deputy Assistant Attorney General responsible for overseeing the Antitrust Division.
On May 23, 2016, the Second Circuit issued a long-awaited decision in the In re: LIBOR‐Based Financial Instruments Antitrust Litigation, vacating the District Court’s (Buchwald, J.) prior decision dismissing one case in this consolidated action.
The Penn State Hershey–Pinnacle Merger: A Turning Point in FTC’s Enforcement Authority, or Just a Temporary Setback?
As we have reported previously, the Federal Trade Commission recently has taken an aggressive stance in regulating mergers in the healthcare sector. The Commission has racked up a string of victories, but last week the Middle District of Pennsylvania dealt a blow to that track record by denying the Commission’s request for a preliminary injunction to block a merger of two major healthcare providers in central Pennsylvania: Penn State Hershey Medical Center and PinnacleHealth Systems. The FTC is pursuing an emergency appeal to the Third Circuit, but this loss could signal a waning in the FTC’s enforcement authority in the healthcare sector.
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.
The District Court for the Northern District of California granted defendant SanDisk’s motion for summary judgment yesterday in Giuliano, et al v. SanDisk Corp., et al, 4:10-cv-02787 (N.D. Cal. June 25, 2010).
Earlier today, the Third Circuit Court of Appeals upheld the decision of the District of New Jersey trial court dismissing the antitrust claims lobbed against Sanofi-Aventis by its rival pharmaceutical company Eisai.
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.
The Department of Justice ("DOJ") announced this week that Hitachi Chemical Co. will plead guilty to a criminal charge for conspiring with competitors to fix the prices of electrolytic capacitors sold in the United States and elsewhere. The Tokyo-based company will pay an undisclosed fine and has agreed to cooperate with the DOJ's investigation.
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.
In perhaps an unsurprising move, last week the U.S. Department of Justice filed a civil antitrust lawsuit challenging the merger of Halliburton and Baker Hughes, the first and third largest oilfield services companies in the United States and the world. The DOJ alleges the transaction would threaten to “eliminate competition, raise prices and reduce innovation in the oilfield services industry.”
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.
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.
Today the FTC filed a complaint in the U.S. District Court for the Eastern District of Pennsylvania against Endo Pharmaceuticals for entering into “pay-for-delay” agreements with two different generic manufacturers that restricted generic competition for two of its patented drugs, Opana ER and Lidoderm. The FTC alleges that Endo paid Impax, a generic drug manufacturer, $40 million to keep a generic version of Opana ER off the market for over 2 years, and that Endo and its partner Teikoku gave Watson (now Allergan) Lidoderm patches worth hundreds of millions of dollars “at no cost” for Watson to sell through its distribution subsidiary in exchange for abandoning its patent challenge.
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.
Judge Merrick Garland, if he is confirmed, may become one of the Supreme Court’s foremost authorities in antitrust law. He taught antitrust law at Harvard, and he has published on the subject, so it’s fair to expect him to seek a role in shaping antitrust jurisprudence and perhaps voting to hear more antitrust cases than currently end up on the Court’s docket.
Bad Basketball at High Prices? Timberwolves Season Ticket Holders Seek to Enjoin the Team’s “Draconian” Resale Policies
Minnesota Timberwolves season ticket holders unhappy with the team’s 20-45 record and hoping to resell their tickets have filed a putative class-action lawsuit over the team’s “draconian” ticketing policy.
New York District Court Allows Monopolization Claims Alleging Manipulation of Electricity Prices to Proceed Against Barclays
Last week, Judge Victor Marrero of the U.S. District Court for the Southern District of New York partially granted Barclays PLC’s motion to dismiss antitrust and unfair enrichment claims brought against it by Merced Irrigation District.
Direct and indirect purchasers of Nexium recently appealed District of Massachusetts Judge William Young’s denial of a request for a new trial in In re: Nexium to the First Circuit.
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.
We’ve previously written about how the Yates Memo announced an increased focus on individual accountability, and that the DOJ’s broader focus on individual accountability would likely encourage the Antitrust Division to increase its efforts to prosecute individuals for antitrust violations.
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