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Antitrust Lessons from Oil Giants’ Proposed Merger

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.”

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Staples Closes Defense, Calls No Witnesses in Merger Trial Brought by FTC

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.

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District Court Finds Uber CEO, by Driving for Uber, May be Liable for Driving Up Prices

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.

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FTC Launches First-Ever Attack on “No-AG Commitment” Pay-for-Delay Settlements

    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.

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Three Things to Watch after One Week of the Staples-Office Depot Merger Trial

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.

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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.

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Merrick Garland on Efficiencies

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.

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DOJ to Executives: We’re Watching You

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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Seventh Circuit Hears Argument in Clorox Appeal

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.

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Generic Price-Hike Investigations Expand to Include Turing

Generic drug manufacturers have come under scrutiny from state and federal regulators for recent generic drug price hikes.  These investigations have expanded to include Turing Pharmaceuticals and its former CEO, Martin Shkreli.

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Publishers close the book on one e-books case; Supreme Court decides whether to reopen another

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.

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Schneiderman Seeks to Sack NFL’s Minimum Ticket Resale Prices

New York Attorney General Eric Schneiderman is reportedly investigating the National Football League for antitrust violations in connection with its imposition of “price floors” on tickets for resale.  In a 40-page report released last week, the NYAG’s office outlined numerous concerns about the market for event tickets.  Among those concerns is the practice, by some NFL teams and the New York Yankees, of imposing minimum pricing requirements (typically prohibiting sale for less than face value) on their “official” online resale platforms.  According to the NYAG, such “price floors” make it “easy for buyers to be fooled into believing what they are paying is the market price for a ticket, when in fact the buyer is paying a price artificially inflated by a price floor.”

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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.

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MLB Pitches Around Consumers by Settling Suit, Avoiding Further Litigation on the Scope of Its Longstanding Antitrust Exemption

We’ve previously written about litigation involving the scope of Major League Baseball’s long-standing antitrust exemption.  Earlier this week, on the eve of trial, MLB settled Garber v. Office of the Commissioner of Baseball, a class action lawsuit challenging its territorial broadcasting policy.  The lead plaintiff Marc Lerner is a Mississippi resident and New York Yankee fan who was allegedly charged supracompetitive prices to watch the Yankees due to MLB’s territorial broadcast policies.  Under MLB’s policy of territorially restricting television broadcasts, consumers could only watch “out-of-market” games subject to certain limitations, including a requirement to purchase every out-of-market game, even if the consumer was only interested in following a single team.  By avoiding the bench trial, MLB avoided having to further litigate the scope of its unique “antitrust exemption” in front of Judge Scheindlin of the U.S. District Court for the Southern District of New York, who had previously expressed skepticism about the continuing viability of the exemption.

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In re Capacitors Antitrust Class Action Update: Claims Slightly Narrowed, Parties Continue Discovery

When we last wrote in June 2015 about In re Capacitors Antitrust Litig., No. 14-03264-JD, consolidated putative class actions pending before Judge James Donato in the Northern District of California, the plaintiffs had just largely survived a motion to dismiss.  That blog post, which describes the background of the case and the first round of motions to dismiss, is available here.  Recently, on December 30, 2015, the court ruled on several additional motions to dismiss based on plaintiffs’ amended complaints.

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Polar Air Cargo Settles Antitrust Claims for $100 Million

A settlement agreement last week in the long-running U.S. Cargo Antitrust Class Action brought the settlement fund in that case to over $1.1. billion. Polar Air Cargo, Polar Air Cargo Worldwide, and Atlas Air Worldwide Holdings agreed to pay $100 million in three installments. The settlement is the second-largest so far in this case, after Korean Air Lines's agreement in December 2013 to pay $115 million. It is subject to approval by the U.S. District Court for the Eastern District of New York, where the case is pending.

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Second Bite at the Apple in AT & T Aftermarket Case?

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. 

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Breaking News: FTC Rejects Staples’ Proposed Divestiture in Office Depot Merger

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.

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EU Competition Commissioner Levels Charges Against Qualcomm

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.  

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FTC Moves to Halt Merger Between Staples and Office Depot

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. 

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Fifth Circuit Considers Independent Conduct in Vertical Agreements to Facilitate Horizontal Conspiracy

On November 25, 2015, the Court of Appeals for the Fifth Circuit affirmed the $156 million antitrust judgment in MM Steel, L.P. v. JSW Steel (USA) Incorporated; Nucor Corporation, upholding a jury verdict that found one defendant steel manufacturer (JSW Steel) liable for participation in an illegal conspiracy to block distributor MM Steel from entering the market.  The Court of Appeals reversed the jury verdict as to defendant Nucor, another steel manufacturer.  In so doing, the Fifth Circuit identified evidence that does—and does not—tend to exclude the possibility of independent conduct for purposes of finding a violation of § 1 of the Sherman Act.  The court also underscored that per se liability (and not the rule of reason) attaches to horizontal conspirators’ use of vertical agreements to shut competitors out of the market.

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What Does the Yates Memo Mean for Antitrust Cases?

Just over two months ago, the United States Department of Justice made waves when a memorandum from Deputy Attorney General Sally Quillian Yates (the “Yates Memo”) announced an increased focus on individual accountability to combat corporate misconduct.  The Yates Memo explains DOJ’s view that individual accountability is important because it deters future illegal activity, incentivizes changes in corporate behavior, ensures the proper parties are held responsible for their actions, and promotes the public’s confidence in the justice system. 

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FTC Asserts That Its Failure to Object to a “Reverse Payment” Settlement Should Not Be Interpreted as Approval

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.

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Third Circuit Provides Clarity to “Inextricably Intertwined” Basis of Antitrust Injury in Partially Reinstating Claims Against ShopRite

On November 12, 2015, the Third Circuit Court of Appeals issued an opinion partially reversing the dismissal of the plaintiff’s claims in Hanover 3201 Realty, LLC v. Village Supermarkets, Inc., finding that plaintiff Hanover Realty had successfully pleaded antitrust standing with regard to certain of its claims. The Third Circuit clarified—and potentially expanded the scope of—its prior interpretations of the Supreme Court’s seminal standing decision in Blue Shield of Va. v. McCready, 457 U.S. 465 (1982), which held that a plaintiff did not necessarily need to be a consumer or a competitor of a defendant to establish antitrust injury, if it could show that its injury was “inextricably intertwined” with the injury to intended victims of an antitrust conspiracy.

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Breaking News: $6 Million Cox Communications Cable Box Jury Verdict Overturned

As we previously reported (click here, to read more), last month, a jury returned a $6 million verdict for a class plaintiff in a suit alleging that Cox Communications had illegally tied its premium cable services to rentals of its set-top boxes.  Yesterday, the court granted Cox’s renewed motion for judgment as a matter of law, overturned the jury’s verdict, and entered judgment for Cox.

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DOJ Files Lawsuit to Prevent United Airlines from Extracting a Higher Premium at Newark Airport

United Airlines has come under increased antitrust scrutiny during the latter half of 2015.  As we previously reported the U.S. Department of Justice (“DOJ”) is investigating an alleged passenger-capacity conspiracy between United and three other airlines, and the Department of Transportation is investigating whether United and others engaged in price gouging after a Spring 2015 Amtrak derailment.

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The Fitbit And Jawbone Litigations Take An Antitrust Turn

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.

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Jury Returns Verdict in Cable Box Antitrust Suit in Favor of Cox Subscribers

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.

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Cox Communications Tying Class Action Goes to the Jury

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.  

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FTC Provides Guidance on State Regulatory Board Antitrust Liability Following Supreme Court Decision

Earlier this year, we covered the Supreme Court’s decision in North Carolina State Board of Dental Examiners v. FTC, which held that a state regulatory board composed of “active market participants” was not immune to federal antitrust laws unless the state “actively supervised” the board.  We noted that the Court left open what level of active supervision would be required for a state board to enjoy antitrust immunity.

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Turing, Daraprim, and Refusals to Deal with Generic Manufacturers

Drug company Turing Pharmaceuticals made headlines recently when it reportedly raised the price of Daraprim, used commonly by AIDS patients to fight life-threatening infections, from $13.50 to $750 per tablet. Amidst vociferous protest, the company agreed to reduce the price. But the attention garnered by media reports has led to some allegations that Turing may have run afoul of antitrust laws through a less-publicized aspect of its marketing of Daraprim: the elimination of certain distribution channels, including wholesalers and retailers.

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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. 

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Better Early than Never: SDNY Dismisses Lawsuit over Patent Settlement where Generics were Granted Early-Entry Licenses with Acceleration Clauses

On September 22, Judge Ronnie Abrams of the Southern District of New York dismissed an antitrust lawsuit against Takeda Pharmaceuticals and three generic drug manufacturers based on settlements they had reached regarding a patent dispute over the drug ACTOS.  The court held that the settlements were not illicit “reverse payments” warranting scrutiny under the Sherman Act because there was no plausible basis for holding that the settlements reduced competition for the drug.  In the settlements, the generics did not receive any cash payments and primarily gained early entry licenses with acceleration clauses.

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Hong Kong Competition Commission Releases Leniency Guidelines

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.

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Ninth Circuit Disallows Additional Compensation for College Athletes

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. 

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Apple Signals It Will Seek Supreme Court Reversal on E-Book Decision

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.

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How the FTC Analyzes Efficiencies Claims

In a recent speech, FTC Bureau of Competition Director Deborah Feinstein discussed the FTC’s approach to analyzing claims by merging parties that a merger will benefit consumers by creating efficiencies.

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Divided Fourth Circuit Panel Slices Up Twombly in Table Saw Boycott Suit

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.

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Antitrust Inside Counsel Article Series

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.

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FTC Provides New Guidance for Merger Investigations

The FTC’s Bureau of Competition recently issued new “Best Practices” guidance for parties involved in merger investigations.  This is the Commission’s first guidance on the merger review process since the Merger Process Reforms were issued in 2006.  As the Commission explains, it issued the updated guidance because parties rarely have been invoking the Merger Process Reforms and also have been relying on the “withdraw and refile” process in the initial review period of Hart-Scott-Rodino filings. 

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Seventh Circuit Affirms in Favor of Cheese Maker in Milk Price Fixing Case

This past Tuesday, the Seventh Circuit upheld the decision of Judge Robert M. Dow Jr. of the U.S. District Court for the Northern District of Illinois granting cheese manufacturer Schreiber Foods Inc.’s motion for summary judgment in an antitrust class action.  The Seventh Circuit agreed with the District Court that the plaintiffs, led by a cheese distributor and a dairy farmer and milk futures trader, lacked evidence to support their claims that Schreiber conspired with Dairy Farmers of America, a dairy marketing cooperative, to increase the price of raw milk.

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"Airline Collusion" Private Class Actions

Last week, we discussed public reports of an investigation by the DOJ of four major airlines (American, Delta, Southwest, and United) regarding possible collusion. Over the past two months, a number of consumers have filed class action complaints against the airlines, putting forward their own theories regarding collusion.

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