Jonathan H. Hatch, Counsel

As we noted last month, the FTC has recently been voicing concerns about potentially anticompetitive actions of state professional licensing boards.  Our post also discussed the scope of such boards’ immunity from antitrust liability under the Supreme Court’s caselaw.

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.

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 month, the FTC staff sent a letter warning North Carolina’s General Assembly that a pending bill regarding the state’s real estate appraisal board could run afoul of competitive principles.  The staff notes that it is prepared to investigate and recommend challenges to potentially anticompetitive actions by state appraisal boards.  However, in light of Supreme Court precedent on state sovereign immunity, it is not certain that the FTC could successfully challenge state board actions with which it disagrees.

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.

A new book was recently released about the events surrounding the alleged LIBOR fixing conspiracy.  Authored by Wall Street Journal reporter David Enrich, The Spider Network: The Wild Story of a Math Genius, a Gang of Backstabbing Bankers, and One of the Greatest Scams in Financial History tackles the issues from a unique perspective, focusing on one of the main bankers involved, Tom Hayes.  Hayes, formerly a trader at UBS and Citigroup, was prosecuted by the U.K. Serious Fraud Office in 2015.  He was convicted of conspiracy to defraud for his role in fixing LIBOR and is serving an 11-year prison sentence.

European competition authorities announced this week an investigation into Aspen Pharmacare’s recent price hikes of five cancer drugs. The European Commission said in a press release that it had “information indicating that Aspen has imposed very significant and unjustified price increases of up to several hundred percent.” The Commission is also looking into reports that the South African-based generic drug-maker withdrew or threatened to withdraw the drugs from countries that would not accept these price hikes. If the investigation demonstrates that Aspen abused its alleged dominant market position to increase prices, the Commission could order fines of up to 10 percent of the company’s yearly revenue.

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.

Last Monday Sanofi brought an antitrust suit against Mylan, alleging that Mylan engaged in illegal conduct to suppress competition in the epinephrine auto-injector (“EAI”) market, which is dominated by Mylan’s billion-dollar EpiPen® product. In particular, Sanofi alleges that Mylan has had a virtual monopoly in the EAI market, but felt threatened when Sanofi entered the market in 2013 with its Auvi-Q® product, which Sanofi touted for its smaller size and voice instructions (as opposed to EpiPen®’s written instructions).

For the third straight legislative session, the House Judiciary Committee has voted in favor of a bill—the Standard Merger and Acquisition Reviews Through Equal Rules (“SMARTER”) Act—that would amend the Clayton Act and Federal Trade Commission Act to align the standards and processes for the Federal Trade Commission’s (FTC) and Department of Justice’s (DOJ) review of proposed mergers and acquisitions.  The SMARTER Act aims to eliminate the current differences in merger review that companies may face depending on whether the proposed merger is reviewed by the DOJ or the FTC.

Media outlets have reported that the U.S. Department of Justice raided the maritime industry’s “Box Club” meeting, which is more formally known as the meeting of the International Council of Containership Operators.  Box Club meetings include the CEOs of all major container lines, and even though the meeting locations are not publicly disclosed, the DOJ managed to serve subpoenas in mid-March at the San Francisco meeting, including top executives at A.P. Moller-Maersk, Evergreen, the Orient Overseas Container Line, and Hapag Lloyd.  Notably, the subpoena recipients are not U.S.-based companies—the DOJ may have used the Box Club meeting as an opportunity to exercise its subpoena power over foreign entities.

In a recent decision, the Third Circuit held that a public university and its non-profit partner were immune from antitrust liability after the university enacted a student residency policy that benefitted on-campus dormitories at the expense of off campus housing.  Absent evidence that a university is controlled by participants in the housing market, it is entitled to a presumption that is acting in the public interest and therefore enjoys more deference than a state board composed of active market participants.  The takeaway is that state universities seeking immunity from alleged anti-competitive actions must show that their conduct complies with a clearly articulated state policy but need not show active supervision of the university by the state.

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.

In the past month, the DOJ and several state governments scored two trial wins in their challenges to mergers among some of the country’s largest health insurers.  First, Judge Bates of the District of Columbia blocked the combination of Aetna and Humana, finding that the “proffered efficiencies do not offset the anticompetitive effects of the merger.”  Weeks later, Judge Jackson of the same district scuttled a deal between Anthem and Cigna, which she found “likely to lessen competition substantially” in the relevant market. 

President Donald Trump last week designated Maureen K. Ohlhausen as acting chair of the U.S. Federal Trade Commission (“FTC”). Ohlhausen is a vocal critic of government involvement in the market, suggesting the FTC under her leadership will employ a lighter touch with regard to enforcement and regulatory actions.

In a significant Illinois Brick decision, the Ninth Circuit recently issued an opinion concluding that consumers who purchase apps from Apple’s “app store” directly purchase those apps from Apple, which acts as a distributor.  The purchasers therefore have antitrust standing to sue Apple for alleged monopolization of the iPhone app market.  The decision could make it easier for consumers to bring antitrust claims against sellers in e-commerce.

In a recent decision denying the defendant’s motion to dismiss, Judge Mitchell Goldberg of the Eastern District of Pennsylvania allowed the manufacturer of a generic version of Suboxone to proceed upon an interesting theory of attempted monopolization by the brand-name manufacturer Indivior (formerly, Reckitt).  Amneal, the generic manufacturer, alleges that Indivior purposefully delayed what was supposed to be a joint effort to develop a combined risk management strategy for all versions of Suboxone.

In a December 2, 2016 decision, Retractable Technologies, Inc. v. Becton Dickinson & Company, the Fifth Circuit opined on when false advertising can lead to liability under the Sherman Act. The Fifth Circuit’s answer: Very rarely.

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.

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.

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.

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.

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.