Robert P. LoBue, Retired Partner

In a recent decision decided on May 13, 2019, the Supreme Court allowed an antitrust suit to move forward against Apple.  Consumers brought suit based on Apple’s operation of its App Store – which serves as the exclusive electronic marketplace through which iPhone owners may purchase iPhone applications (“apps”).  Independent app developers create these apps, and then contract with Apple in order to make the apps available for purchase to iPhone owners in the App Store.  Apple allows app developers to set the retail price, but charges a 30% commission on every app sale.  The plaintiffs allege that Apple has unlawfully monopolized the retail market for app sales, and used its market dominance to force iPhone owners into purchasing apps exclusively from Apple while paying Apple’s 30% commission.  Apple moved to dismiss, arguing that Illinois Brick’s direct-purchaser rule bars the plaintiffs from suing Apple under the antitrust laws. 

On January 7, 2019, in Green Sols. Recycling, LLC v. Reno Disposal Co., No. 3:16-cv-00334-MMD-CBC, 2019 BL 4611 (D. Nev. Jan. 07, 2019), the District Court for the District of Nevada granted summary judgment on plaintiff’s antitrust claim in favor of defendants Reno Disposal Company, Inc. (“Reno Disposal”), and Waste Management of Nevada, Inc. (“WMON”), on the basis of the doctrine of state-action immunity.  The litigation arose out of the City of Reno’s entry into an exclusive franchise agreement with Reno Disposal, which provided Reno Disposal with the exclusive right to collect and dispose of waste and certain recyclable materials.  The plaintiff challenged the City of Reno’s authority to grant a monopoly for the collection and disposal of garbage and recyclable materials as an unlawful restraint of trade in violation of Section 1 of the Sherman Act.  The defendants argued that they were entitled to summary judgment under the doctrine of state-action immunity. 

After two hearings over the last week, Judge Richard J. Leon of the District Court for the District of Columbia seems to have put the brakes on the well-publicized merger between health care giants CVS and Aetna.  The merger obtained conditional approval from the DOJ’s Antitrust Division on October 10, 2018, and the parties seemed poised for court approval when they appeared before Judge Leon on November 29, 2018.

Hollywood and the antitrust laws go way back.  Indeed, antitrust suits have resulted not only some of the most significant cases in the evolution of American antitrust law, but many of the most consequential developments in the history of the movie industry.  Chief among these is United States v. Paramount Pictures, Inc., 334 U.S. 131 (1948), which held unlawful the then-existing vertical integration of production studios, distributors, and exhibitors (i.e., theaters); it also held various prevailing practices—“block booking” (bundling movie licenses and strong-arming theaters into accepting all of a studio’s movies); “circuit dealing” (obtaining mass licenses for entire theater chains, instead of for individual theaters and films); overbroad “clearances” (selling exclusive exhibition licenses for certain geographical areas); and setting minimum movie-ticket prices—to be impermissibly anticompetitive.  By effectively abolishing the so-called “studio system” and requiring the studios to divest themselves of their theater chains, the Paramount case and the resulting consent decrees fundamentally altered the relationships among producers, distributors, and exhibitors, and led to the industry structure that has survived to date.

On February 28, 2018, the Puerto Rico Telephone Company, Inc. (PRTC) filed a petition for a writ of certiorari after its antitrust claims against San Juan Cable LLC (OneLink) were dismissed by the First Circuit Court of Appeals at the summary judgment phase.  In its petition, PRTC asks the Supreme Court to delineate a clearer boundary between the right to petition the government (whether through lobbying, litigation, or participation in administrative proceedings) and the antitrust laws’ imposition of liability on activity that unfairly restricts competition.  Specifically, when does petitioning activity that is usually protected from antitrust liability under the Noerr-Pennington doctrine cross the line into illegal antitrust behavior?

A federal judge has granted preliminary approval of Southwest Airlines Co.’s settlement with a class of plaintiffs alleging antitrust violations against Southwest, American Airlines, Inc., Delta Air Lines, Inc., and United Airlines, Inc.

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.

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.

Last week, the FTC filed a complaint against Qualcomm, a manufacturer of baseband processors, which are chips included in cell phones and other products with cellular connectivity that allow the devices to connect to cell networks.  Qualcomm holds patents to technologies incorporated in the standards that allow all cell phones to communicate with one another, referred to as standard-essential patents or SEPs.  Qualcomm’s patents mostly relate to older, 3G-CDMA cellular technologies, which are still necessary for modern cell phones to work as consumers expect.  As a condition of declaring its patents standard-essential, Qualcomm committed to the telecommunications industry’s standard-setting organizations that it would license its patents on a “fair, reasonable, and non-discriminatory” (FRAND) basis.

The trial over Aetna and Humana's $37 billion proposed merger kicked off today in a Washington, D.C. federal court. 
 

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 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. 

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.

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.

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.  

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.

We recently wrote about the Second Circuit’s June 30, 2015 decision affirming Judge Denise Cote’s decision that Apple conspired with five publishing companies to raise the price of e-books. As we explained in that post, Judge Dennis Jacobs—who dissented from the opinion—wrote that he would reverse the District Court’s decision because, inter alia, its rule-of-reason analysis failed to consider Apple as a horizontal competitor of Amazon and because Apple’s conduct was “unambiguously and overwhelmingly pro-competitive” in reducing Amazon’s monopoly power in the e-book market.

Portions of a reverse payment suit against Endo Pharmaceuticals and others were recently dismissed by Judge William H. Orrick of the Northern District of California.  The case  was brought by plaintiffs who allege that a settlement agreement resolving a patent dispute over the drug Lidoderm illegally delayed the release of a generic version.

Last Thursday, American Express appealed the District Court for the Eastern District of New York’s February ruling that its anti-steering rules violated Section 1 of the Sherman Act.  The court entered a permanent injunction in April requiring American Express to change its anti-steering rules and allow merchants to steer customers to use other credit cards or other forms of payment.  

The European Court of Justice recently announced that it will issue a decision in Genentech Inc. v. Hoechst GmbH, in response to a request from the Paris Court of Appeals for clarification on whether European antitrust law precludes payment of royalties on a patent licensing agreement after the invalidation of the patent. This case could have important implications for European antitrust law, particularly if the ECJ determines that the EU’s antitrust laws must be interpreted as curbing enforcement of private licensing agreements.  

On February 19, 2015, the District Court for the Eastern District of New York issued its ruling on liability in United States v. American Express. Following a seven-week trial, the Court found that American Express violated Section 1 of the Sherman Act by imposing certain restrictions on merchants that prevent the merchants from offering their customers incentives to use competing credit cards with lower retail charges. 

In July of this year, the European Commission imposed fines on French pharmaceutical company Servier and five generic drug makers, including Lupin Ltd., totaling €427.7 million. The fines were the result of a five-year investigation into alleged anticompetitive agreements that prevented generic versions of perindopril, Servier’s best-selling blood pressure medication, from entering the market.