Robert P. LoBue, Partner

Though the merger of CVS and Aetna received conditional approval from the DOJ’s Antitrust Division back in October, the road to final approval has been rocky as the court’s exasperation with the parties appears to grow.  Last week, Judge Richard J. Leon of the District Court for the District of Columbia ordered the Antitrust Division to respond to public comment on the merger by February 15, 2019—notwithstanding the fact that appropriations to the Antitrust Division lapsed on January 4, leaving the Division without funding.

On June 11, 2018, the U.S. Supreme Court issued its opinion in China Agritech, Inc. v. Resh, 138 S. Ct. 1800 (2018).  The China Agritech decision resolved a circuit split, finding that the statute of limitations for a follow-on class action is not tolled under American Pipe.  Currently, a related circuit split exists on the question whether class action tolling is available for litigants that file opt-out lawsuits prior to a decision on class certification.  Currently, the Second Circuit permits tolling in those circumstances, while the Sixth Circuit does not.

As the Supreme Court prepares to hear Apple Inc. v. Pepper, a major case involving antitrust standing, interested parties across the political spectrum are weighing in with their ideas of how the case should be resolved.  As we previously reported, the Supreme Court decided to review the Ninth Circuit’s decision that because Apple sold iPhone apps directly to consumers, consumers are direct purchasers that have standing to sue Apple for alleged monopolization of the market for iPhone apps.  Apple contends that the app developers – not Apple – are the sellers of apps to consumers because the app developers set prices; Apple contends that it sells only distribution services, and sells those services to the app developers, not to consumers.

This blog has discussed some of the dynamics created by the Supreme Court’s Hanover Shoe and Illinois Brick decisions and state “repealer” laws that attempt to undo their effect.  As it turns out, repealer states aren’t the only ones skeptical of these twin cases that in general prevent indirect purchasers from asserting antitrust damages claims and defendants from relying on a “pass-on” defense.

We have previously discussed antitrust implications of pharmaceutical companies’ efforts to maximize patent protection for their drugs.  Consumers and generic drug makers, for instance, have alleged antitrust violations based on “product hopping” and “pay-for-delay” settlements.  Recently, a patent owner’s creative technique to avoid possible invalidation of its patent by the Patent and Trademark Office has drawn sharp criticism from lawmakers and one district court.

Last week, Sabre filed its principal brief on appeal to the Second Circuit Court of Appeals, seeking to overturn the jury’s verdict of $15 million and find for Sabre or, in the alternative, grant a new trial in US Airways Inc. v. Sabre Holdings Corp.  Its primary argument on appeal is that its case should have been governed by United States v. American Express Co., in which the Second Circuit reversed the district court’s finding of anticompetitive harm in a one-sided market because the proper analysis was whether there was anticompetitive harm in a two-sided market.

Tying is a chameleon in antitrust law.  Courts can condemn tying arrangements as either per se violations or as unlawful under the rule of reason.  For a per se tying violation, plaintiff must show that the defendant had economic power in the market for the tying item sufficient to enable it to restrain trade in the tied product market.  But a rule of reason analysis also requires consideration of the defendant’s economic power in the tying market, since a seller with no power whatsoever will not be able to coerce purchasers to buy the tied product.  Thus, in tying cases, the per se and rule of reason analyses tend to bleed together, leaving courts and litigants without a clear analytical pathway.

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.

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 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.  

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.

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.

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.

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.  

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.

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.

This is our fourth post on the DOJ’s expanding investigation into possible price fixing by generic drug manufacturers.  Since our last update, the DOJ has subpoenaed Allergan Plc’s Actavis unit.  In its August 6, 2015, 8-K, Allergan disclosed that it had received a subpoena from the DOJ “seeking information relating to the marketing and pricing of certain of the Company’s generic products and communications with competitors about such products.”  As the fourth largest distributor of pharmaceuticals in the U.S., Allergan is the largest company that has been targeted by the DOJ.

This spring, the UK Competition and Markets Authority (the “CMA”) published a study on UK businesses’ awareness and understanding of competition law, understanding of anti-competitive behaviors, and penalties for any violations. The study included interviews of more than one thousand senior personnel with responsibility for sales at private sector businesses in the UK. Among other questions, they were asked to answer a series of 10 true/false questions to evaluate their understanding of competition law. 

Yesterday, the FTC announced that it reached a settlement in its pay-for-delay lawsuit, FTC v. Cephalon Inc. in the U.S. District Court for the Eastern District of Pennsylvania, with Teva Pharmaceuticals Industries, Ltd., which acquired Cephalon in 2012.  This case is the first FTC case to be resolved since the Supreme Court’s 2013 decision in FTC v. Actavis, in which the Court announced that reverse-payment patent settlements could be subject to antitrust challenges.

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.”  

Since we last reported on state and federal investigations into recent generic drug price increases, the investigations have moved forward against Philadelphia-based Lannett Co. On November 20, a Senate healthcare subcommittee convened a hearing to address why the prices of certain generic drugs had skyrocketed. 

On February 16, American Needle Inc. reached an agreement in principle with the National Football League to settle its claims.  A settlement between the parties would mark the end of an antitrust litigation that has been pending since 2004.

We’ve previously discussed antitrust claims related to “product hopping”—allegations that pharmaceutical manufacturers have reformulated or otherwise altered their products to prevent automatic generic substitution. Earlier this week, the district court for the Eastern District of Pennsylvania in In re Suboxone Antitrust Litigation denied a motion to dismiss similar allegations regarding the drug Suboxone, which is used to treat opioid dependence. 

On the day before Thanksgiving—less than two weeks after oral argument—the Seventh Circuit issued its ruling on Motorola’s interlocutory appeal in Motorola Mobility LLC v. AU Optronics Corp., affirming dismissal of the vast majority of Motorola’s claims regarding LCD panels.