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Court Crier: Antitrust

In In Re: Processed Egg Products Antitrust Litigation, the United States Court of Appeals for the Third Circuit considered the appropriate standard of care under the Sherman Act when evaluating a conspiracy claim that egg producers conspired to inflate prices through three stratagems. The court held that the appropriate standard of care was the rule of reason, which considers whether, in light of all the circumstances in a case, the restraint in question is an unreasonable burden on competition. The court found that the alleged restraints on trade were not so manifestly anticompetitive as to apply the illegal per se standard, because there was no horizontal agreement among competitors to fix prices(June 22, 2020)

In In re: REMICADE, the United States Court of Appeals for the Third Circuit held that applicable state law generally governs the scope of an arbitration clause. Under New Jersey law, the Third Circuit held that a direct purchaser/wholesaler’s antitrust claims against a drug manufacturer over an allegedly price inflated distribution contract “arose out of” or “related to” the distribution contract, and therefore, required arbitration. The purchaser/wholesaler’s antitrust claim would not exist but for the distribution agreement and could not be adjudicated without reference and reliance upon it. (September 13, 2019)

In Spartan Concrete Products LLC v. Argos USVI Corporation, the United States Court of Appeals for the Third Circuit held that the plaintiff did not present enough evidence to support its antitrust price discrimination claim under the Robinson-Patman Act because it failed to provide sufficient proof of an antitrust injury under the Clayton Act. Here, a ready-mix concrete seller engaged in a price war with the only other ready-mix cement vendor on the island of St. Thomas, which resulted in a deal where the seller withdrew from St. Thomas. The seller then sued the bulk cement vendor on St. Thomas because it had given its competitor a 10% volume discount during the price war. The court held that the seller's antitrust injury evidence was insufficient because it was based on assumptions of lost business without any analysis to verify the assertions and because the seller failed to identify or provide any testimony from any lost customers. (July 5, 2019)

In Apple Inc. v. Pepper, the United States Supreme Court held that consumers who bought iPhones were direct purchasers under the Clayton Act who could sue for alleged monopolization by the manufacturer. Because the phone manufacturer restricted the owners to purchasing apps exclusively through its “app” store, the Court held that they qualified as direct purchasers from the manufacturer and, thus, could sue for antitrust violations for the manufacturer’s prevention of access to other app stores. (May 13, 2019)

In FTC v. Shire ViroPharma, the United States Court of Appeals for the Third Circuit addressed the limits of the Fair Trade Commission’s ability to seek injunctive relief against businesses who purportedly engage in unfair or deceptive acts or practices. The Federal Trade Commission Act authorizes the FTC to seek injunctive relief in federal court against anyone who “is violating, or is about to violate” a law enforced by the FTC. The court rejected the FTC’s argument that it had the authority to sue by showing a past violation and a reasonable likelihood of recurrent future conduct. (February 25, 2019)

In Federal Trade Commission v. Penn State Hershey Medical Center, the United States Court of Appeals for the Third Circuit addressed whether Pennsylvania could obtain attorneys’ fees on the basis that it substantially prevailed when the court temporarily enjoined a merger under the Federal Trade Commission (FTC) Act pending the outcome of the FTC’s administrative hearing. The court held the Commonwealth could not obtain attorneys’ fees because the injunction was issued based on the FTC Act, which does not allow for an award of attorneys’ fees, instead of the Clayton act. (January 23, 2019)

In LifeWatch Services, Inc. v. Highmark, Inc., the United States Court of Appeals for the Third Circuit addressed the viability of an antitrust claim under the Sherman Act related to the denial of insurance coverage for telemetry monitors. Because the court found that plaintiff adequately pleaded both an agreement among defendants to deny coverage and an unreasonable restraint of trade arising from that agreement, plaintiff’s antitrust claim was viable. It also found that plaintiff had standing because it properly alleged antitrust injury. However, the court remanded for determination of whether the McCarran-Ferguson Act – which provides that the Sherman Act does not apply to the business of state-regulated insurance – exempts defendants from antitrust liability. (August 28, 2018)

In Ohio v. American Express Company, the United States Supreme Court held that the “anti-steering” provisions in a credit card provider’s merchant contracts did not violate the Sherman Antitrust Act. The business model of the credit card company requires them to charge higher fees for transactions. The cost of these fees is borne by the merchants. To prevent merchants from attempting to dissuade customers from using their credit cards, the credit card provider’s contract contains anti-steering provisions. Steering is any act by a merchant intended to dissuade a customer from using a particular credit card in favor of another, usually done by the merchant to avoid higher transaction fees. The Court found that there was no evidence that the anti-steering provisions stifle competition or are an unreasonable restraint on trade(June 25, 2018)

In Philadelphia Taxi Association, Inc. v. Uber Technologies, Inc. the United States Court of Appeals for the Third Circuit analyzed the sufficiency of a complaint filed by the Philadelphia Taxi Association, along with 80 taxicab companies, alleging that Uber Technologies, Inc., violated Section 2 of the Sherman Act, 15 U.S.C. § 2, by attempting to monopolize the Philadelphia taxicab market. The court held that the complaint failed to plead the elements of attempted monopolization, including anticompetitive conduct and an intent by the defendant to monopolize the market. (March 27, 2018)

In In re Processed Egg Products Antitrust Litigation, the United States Court of Appeals for the Third Circuit addressed the novel issue of whether a direct purchaser of a product has antitrust standing to pursue a claim against the supplier where a component of the supplier’s product is comprised of both price-fixed input from the supplier and input supplied by a third-party non-conspirator. The plaintiffs are purchasers of processed egg products and asserted claims against the defendant suppliers of the product for allegedly conspiring to reduce the supply of eggs in order to artificially inflate the price of egg products. A significant proportion of the eggs used in the egg products purchased by the plaintiffs had come from suppliers who were neither defendants nor price-fixing conspirators. The court held that the plaintiffs had antitrust standing to pursue the overcharge damages from the defendants from whom they purchased egg products, regardless of whether those egg products were made with the suppliers’ eggs, non-conspirator eggs, or both, because the plaintiffs were in a direct relationship with the alleged antitrust violators and sought to recover for higher prices set by those violators and paid to them by the purchasers. (February 2, 2018)

In In Re Flonase Antitrust Litigation, the United States Court of Appeal for the Third Circuit addressed whether GlaxoSmithKline’s court-approved settlement of a class action enjoined all members of the class, including the State of Louisiana, from bringing released claims against it. In refusing to enforce the agreement against the State of Louisiana, the court held that the District Court lacked jurisdiction over the state under the Eleventh Amendment when it approved the settlement agreement(December 22, 2017)

In In Re Lipitor Antitrust Litigation, the United States Court of Appeals for the Third Circuit addressed whether an appeal of a dismissed lawsuit alleging a pay-for-delay scheme between a pharmaceutical company holding the patent on the drug Lipitor and the manufacturer of a generic version of the drug properly belonged in the Court of Appeals for the Federal Circuit. The court determined that the appeal did not require transfer to the Federal Circuit as the end-payor plaintiffs’ allegations of fraudulent procurement and enforcement of the patents did not “arise under” federal patent law, 28 U.S.C. § 1295(a)(1), thus taking the appeal out of the exclusive jurisdiction of the Federal Circuit. (April 13, 2017)

In Edinboro College Park Apartments v. Edinboro University Foundation, the United States Court of Appeals for the Third Circuit considered whether a public university and its nonprofit collaborator are entitled to immunity under the Sherman Act. The court held that a public university’s actions are not categorically “sovereign,” but rather, the proper standard is whether anticompetitive conduct confirms to a clearly articulated state policy. The court held that mandating on-campus residency complies with a clearly articulated state policy as a foreseeable consequence of the legislative mandate to provide appropriate student living facilities. (March 9, 2017)

In Amphastar Pharmaceuticals, Inc. v. Momenta Pharmaceuticals, Inc., the United States Court of Appeals for the First Circuit addressed whether a pharmaceutical company committed antitrust violations by filing an infringement suit against a competitor, resulting in a temporary restraining order and a loss of profits for the company. The court held that the district court misapplied the Noerr-Pennington doctrine (which provides that an antitrust violation cannot be based upon attempts to influence the enforcement of laws). Therefore, the dismissal of the pharmaceutical company’s complaint was unwarranted. (March 6, 2017)

In In re Vehicle Carrier Services Antitrust Litigation, the United States Court of Appeals for the Third Circuit addressed whether purchasers of vehicles who utilized ocean common carriers could pursue state and federal antitrust claims when the ocean common carriers engaged in price fixing and other prohibited antitrust activities. The court held that the Shipping Act precluded the purchasers from seeking relief under the Clayton Act and that the Supremacy Clause preempts any state law claims since these activities are covered by the Shipping Act. (January 26, 2017)

In Mylan Pharmaceuticals, Inc. v. Warner Chilcott Public Limited Company, the United States Court of Appeals for the Third Circuit examined whether the parties engaged in anticompetitive behavior under the Sherman Act. The court held that in order to make a claim under the Sherman Act, a party needed to show anticompetitive conduct in addition to monopoly power, and did not find that “product hopping,” or a process that makes insignificant modifications to a drug to keep generic competitors out of the market and forcing them to re-enter a burdensome regulatory approval process, constituted anticompetitive conduct in this circumstance. (September 28, 2016)

In Wallach v. Eaton Corporation, the United States Court of Appeals for the Third Circuit examined the assignment of federal antitrust claims and timeliness for motions to intervene as a representative of a class in a consumer class action antitrust matter. The court determined that federal common law does not require bargained-for consideration for a valid, express, written assignment of a federal antitrust claim from a direct purchaser to an indirect buyer in order for the indirect buyer to obtain standing in the antitrust litigation. The court also held that the presumption, that a motion to intervene by a proposed class representative is timely if filed before the class opt-out date, applies not only when a class is certified, but also in the pre-certification context. (September 14, 2016)

In Hartig Drug Company v. Senju Pharmaceutical Company, LTD, the United States Court of Appeals for the Third Circuit addressed whether the plaintiff had standing to file suit alleging antitrust violations involving medicated eye drops because of an assignment of rights from a direct purchaser of the eye drops. The court concluded that antitrust standing is not an Article III jurisdictional issue, but rather, a merits issue, and should be resolved under F.R.C.P. 12(b)(6) and not 12(b)(1). (September 7, 2016)

In Deborah Heart & Lung Center v. Virtua Health Inc., the United States Court of Appeals for the Third Circuit addressed the evidence required to establish market interference under the Sherman Act. The court held that a hospital, who asserts actual anticompetitive effects to prove a violation of Section 1 of the Sherman Act, must, absent evidence of market power possessed by the defendants, show anti-competitive effects on the market as a whole. Where a hospital showed that a cardiology group’s referral policy affected only a small subset of that market and made no attempt to show broader effects, the hospital could not meet the requirements of showing anti-competitive effects to support an antitrust claim. (August 17, 2016)

In Evergreen Partnering Group, Inc. v. Pactiv Corporation, the United States Court of Appeals for the First Circuit addressed whether a polystyrene recycling company had presented sufficient evidence to show Sherman Act violations by the five largest converters of polystyrene products, insofar as they allegedly refused in concert to deal with the recycler in order to prevent recycling from becoming viable and maintaining their respective market positions. The court held that the recycler’s claim failed where it had no evidence tending to exclude the possibility that the polystyrene converters independently chose not to partner with the recycler. (August 2, 2016)

In Eisai, Inc. v. Sanofi Aventis U.S., LLC, the United States Court of Appeals for the Third Circuit addressed whether the seller of Lovenox, an anticoagulant drug, violated antitrust laws by (1) offering a substantial discount to medical care provider customers if 75% of the anticoagulant medication it purchased was Lovenox, and (2) including contractual provisions proscribing customers from favoring competing anticoagulants. The court held the seller’s practices did not constitute a substantial foreclosure ofanticoagulants because Lovenox customers did not risk penalties or supply shortages if the customer did not obtain the 75% market share threshold to qualify for the substantial discount, or, if the customer did not comply with the contractual provisions that favored Lovenox over other anticoagulants. If a customer failed to meet these requirements, it may still purchase Lovenox at the wholesale price. (May 4, 2016)

In Flovac, Inc. v. Airvac, Inc., the United States Court of Appeals for the First Circuit rejected a vacuum sewer system fabricator’s claim that its competitor held the threshold degree of market power such that it violated the Sherman Act. The court held that the relevant product market was not limited solely to vacuum sewer systems, but all products (including non-vacuum sewer systems) that were “reasonably interchangeable by consumers for the same purposes,” including substitutes that a consumer might employ and products that consumers might choose in response to a price change in another product. (April 7, 2016)

In In re Loestrin 24, the United States Court of Appeals for the First Circuit considered whether patent settlement agreements not involving cash settlements are subject to federal antitrust scrutiny under the United States Supreme Court decision FTC v. Actavis. Typically, these settlement agreements involve reverse payments, where the name-brand drug manufacturer pays the generic manufacturer to delay entry into the market, but here, the generic manufacturer was given non-cash incentives. Noting that limiting Actavis’ application to only cash settlements would give drug manufacturers carte blanch to negotiate anti-competitive non-cash settlements, the court held that antitrust scrutiny attaches to other forms of reverse payment settlements, and not purely cash payments. (February 22, 2016)

In Hanover 3201 Realty, LLC, v. Village Supermarkets, Inc., the United States Court of Appeals for the Third Circuit addressed the issue of antitrust standing where a realtor who was working on behalf of a supermarket chain attempted to bring an antitrust suit against a rival supermarket company. The court held that the realtor could establish antitrust injury by showing that its injury was “inextricably intertwined” with the rival chain’s anticompetitive conduct. The court, however, did not find the realtor had standing for the claim of attempted monopolization of the market for supermarket-related rental space because the realtor was not a participant in the particular market and therefore was not in competition with the supermarket chain. (November 12, 2015)

In King Drug Company of Florence v. Smithkline Beecham Corp., the United States Court of Appeals for the Third Circuit addressed whether purchasers of brand name drugs stated a claim for antitrust violations by patentee and generic drug manufacturers. In exchange for the generic manufacturer dropping the patent validity litigation against the patentee (“no-AG agreement”), the patentee agreed to give up its right to produce its own authorized generic to compete with the generic manufacturer’s guaranteed 180 days of market exclusivity under the Hatch-Waxman Act. The court held that a claim had been stated because the settlements were anticompetitive by improperly delaying competition in the market beyond that provided by the initial patent. Although the agreement did not involve a prohibited direct transfer of cash from patentee to the generic manufacturer (“reverse payment”), it had a similar effect because the generic would earn significant revenue and have a monopoly on prices during its period of market exclusivity. The court further held that no-AG agreements had a chilling effect on patent validity and/or infringement litigation. (June 26, 2015)

In L.J. Zucca, Inc. v. Allen Bros. Wholesale Distributors, Inc., the Superior Court of New Jersey addressed the standard of proof required for an alleged violation of New Jersey’s Unfair Cigarette Sales Act. The court found that a plaintiff must first prove that it has standing to seek relief under the Act – i.e., that it was injured by the alleged violations. Second, a plaintiff must show that a defendant has priced its cigarettes below its own costs for those products. Finally, a plaintiff must prove an intent to injure competitors, but not a predatory intent as that term is construed in federal antitrust law. (January 9, 2014)

In Federal Trade Commission v. Actavis, Inc., the United States Supreme Court addressed whether a “reverse payment” settlement agreement, where a branded drug manufacturer offers patent settlements that pay generic companies not to bring lower-cost alternatives to the market, unreasonably diminishes competition in violation of antitrust laws. The Court opined that the likelihood of a “reverse payment” bringing about anticompetitive effects depends upon “its size, its scale in relation to the payor’s anticipated future litigation costs, its independence from other services for which it might represent payment, and the lack of any other convincing justification.” Based upon these complexities, the Court held that the Federal Trade Commission must prove its case by applying a “rule-of-reason” approach. (June 17, 2013)

In Comcast Corporation v. Behrend, the United States Supreme Court addressed whether cable television subscribers, who brought an antitrust class action against Comcast alleging anticompetitive activity in violation of the Sherman Act and 15 U.S.C. Sections 1 and 2, presented evidence that they suffered damages on a class-wide basis. The Court held that the cable television subscribers could not sue as a group under Federal Rule of Civil Procedure 23(b)(3) because the expert of the putative class was unable to explain how to calculate damages based on the specific economic theory of the case. (March 27, 2013)

In Federal Trade Commission v. Phoebe Putney Health System, the United States Supreme Court addressed whether state and local governments are immune from federal antitrust law for acts done by a proxy. The Court held that, for state action immunity to apply, the state must have “foreseen and implicitly endorsed the anti-competitive effects as consistent with its policy goals.” (February 19, 2013)

In Ethypharm S.A. France v. Abbott Laboratories, the United States Court of Appeals for the Third Circuit addressed “antitrust standing.” Acknowledging several factors to be considered when deciding whether a complainant has antitrust standing, as set forth by the Supreme Court in Associated General Contractors of California, Inc. v. California State Council of Carpenters, the court focused on the second factor, “antitrust injury,” and found that it “is limited to consumers and competitors in the restrained market and to those whose injuries are the means by which the defendants seek to achieve their anticompetitive ends.” The court held that a foreign pharmaceutical company did not suffer antitrust injury because it does not and cannot compete in the United States market, unless and until it acquires the required FDA approval to do so. (January 23, 2013)

In In Re: K-Dur Antitrust Litigation, the United States Court of Appeals for the Third Circuit addressed the antitrust implications of an agreement by a manufacturer of a generic drug that, in return for a payment by the patent holder, agrees to drop its challenge to the patent and refrain from entering the market for a specified period of time. The court held that a payment from a patent holder to a generic patent challenger who agrees to delay entry into the market is prima facie evidence of unreasonable restraint of trade. (July 16, 2012)

In In re: New Jersey Title Insurance Litigation, the United States Court of Appeals for the Third Circuit addressed whether the district court properly dismissed a class of plaintiffs’ state and federal antitrust claims against numerous New Jersey title insurance companies, claiming that defendants collectively fixed title insurance rates in violation of the Sherman Act and the New Jersey Antitrust Act. The court affirmed that the dismissal is affirmed because: 1) plaintiffs do not have standing because they have failed to allege any impending injury; and 2) plaintiffs lack standing to assert their injunctive relief claims specifically because there is no imminent threat that the New Jersey Land Title Insurance Rating Bureau will file future rates. (June 14, 2012)

In McCray v. Fidelity National Title Insurance Company, the United States Court of Appeals for the Third Circuit addressed whether the district court properly dismissed a class of plaintiffs’ state and federal antitrust claims against numerous Delaware title insurance companies, claiming that defendants engaged in collective price-fixing in violation of Section 1 of the Sherman Act. The Court affirmed in accordance with In Re: New Jersey Title Insurance Litigation. (June 14, 2012)

In Race Tires America, Inc. v. Hoosier Racing Tire Corp., the United States Court of Appeals for the Third Circuit addressed, among other things, whether the Sherman Act prohibits sport-related organizations from adopting exclusive equipment requirements. The court held that organizations can adopt exclusive equipment requirements as long as such organizations otherwise possess, in good faith, sufficient pro-competitive or business justifications for their actions. The court further held that there is no antitrust injury to a supplier when it loses the competitive battle to be the exclusive supplier for an organization and that any injury when it loses a bid is the inevitable result of competition for exclusive contracts. (July 23, 2010)

In Byers v. Intuit Inc., the United States Court of Appeals for the Third Circuit addressed whether a class of taxpayers could bring claims against the Free File Alliance (FFA) alleging violations of the Independent Officers Appropriations Act (IOAA) and the Sherman Anti-Trust Act. The FFA, a consortium of companies, has an agreement with the Internal Revenue Service (IRS) to offer free electronic filing services to a certain percentage of the tax-paying population pursuant to the IRS Restructuring and Reform Act (RRA). The RRA authorized the IRS to enter into its agreement with the FFA. The United States District Court for the Eastern District of Pennsylvania granted the FFA's motions to dismiss the plaintiffs' IOAA and Sherman Anti Trust Act claims, holding that the IOAA does not apply to the FFA because it is not a government agency or private entity charged with the task of performing an agency's statutory duty, and the FFA’s members are entitled to conduct-based implied antitrust immunity under the Sherman Anti-Trust Act since their anti-competitive behavior was required by the FFA’s agreement with the IRS. The Third Circuit affirmed. The Third Circuit’s opinion indicates, however, that if a plaintiff properly alleges facts showing that the FFA insists on anti-competitive restrictions and those restrictions hinder the government, then, pursuant to the Otter Tail exception to the Sherman Anti-Trust Act, the FFA may be subject to an antitrust claim. (March 3, 2009) 

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