Tagged: Antitrust

DOJ and FTC Issue Final Vertical Merger Guidelines

On June 30, 2020, the Department of Justice (DOJ) and the Federal Trade Commission (FTC) finalized their much-anticipated Vertical Merger Guidelines. The new Guidelines, which were last updated in 1984, seek to increase transparency around the analytical techniques, practices, and enforcement policies that U.S. antitrust authorities use to regulate mergers between firms at different stages of the supply chain (e.g., a furniture maker that acquires a producer of timber). Vertical mergers generally raise fewer anticompetitive concerns than horizontal mergers between direct competitors. This, in part, is because consolidation along the supply chain tends to result in lower prices, as distributors and finished goods manufacturers can source inputs at cost rather than at the markup they would pay to a third-party supplier. But, as the Guidelines make clear, vertical mergers “are not invariably innocuous”: a merged firm could raise the price for – and even withhold – a necessary input from its rivals or exploit sensitive business information about rivals that it obtains as part of the merger. These so-called unilateral effects threaten harm to competition in the relevant market if rivals wind up abandoning the market, leaving consumers with higher prices and less innovation as a result. Per the Guidelines, DOJ and FTC evaluate the extent to which a vertical merger will raise rivals’ costs...

Third Circuit Reverses Class Certification in In re Lamictal Direct Purchaser & Antitrust Consumer Litig.; Next up, In re Suboxone

On April 22, 2020, the Third Circuit in In re Lamictal Direct Purchaser & Antitrust Consumer Litig., reversed class certification, concluding that the evidence did not establish that common proofs could be used to prove class-wide injury. The circuit court faulted the district court’s predominance analysis for failing to resolve factual disputes, weigh competing expert evidence, and make a prediction as to how these issues would play out at trial. Central to the ruling was the issue of antitrust impact. After brand and generic pharmaceutical manufacturers of the prescription drug Lamictal, or generic lamotrigine, settled a patent litigation, direct purchasers of these drugs sued claiming the settlement violated the antitrust laws as an impermissible “reverse payment agreement.” The brand manufacturer was alleged to have “paid” the generic to stay out of the market by promising not to launch an authorized generic (“AG”). The direct payor plaintiffs argued that they paid more for the drugs than they would have otherwise based on the theory that, on average, the price of a generic is lower when there are two generics rather than just one. The Third Circuit granted the manufacturer-defendants’ petition for leave to appeal under Rule 23(f). First, the Third Circuit rejected direct purchasers’ argument that certification was controlled by a comment in Tyson Foods v....

Antitrust Law and the COVID-19 Pandemic

The coronavirus pandemic is having repercussions in all sectors of the legal community, as illustrated in the prior entries in our “The Coronavirus Pandemic and Your Business: How We Can Help” client alert series. Antitrust law is no exception. The Bureau of Competition of the Federal Trade Commission (FTC) and the Antitrust Division of the Department of Justice (DOJ) have put out two joint statements in response to COVID-19, one on March 24 and another just last week. Both contain reminders and useful guidance concerning cooperation among market participants during these unprecedented times. Recognizing that meeting the challenges posed by the pandemic will require collaborative efforts to address pressing health and safety needs, FTC and DOJ highlighted in their March 24 statement certain types of coordinated activity that the antitrust laws generally permit – because they lead to outcomes that are efficiency-enhancing and pro-competitive. These include: Collaboration on research and development, as may be the case with R&D for developing a potential vaccine. Sharing of information regarding technical know-how as opposed to firm-specific data on prices and outputs. Standard setting designed to assist healthcare providers in clinical decision-making. Joint purchasing arrangements among medical providers that aid procurement, perhaps of PPE, and reduce transaction costs. Lobbying of the federal government regarding the passage and enforcement of...

Wrap-Up of United States Supreme Court’s 2017-2018 Term

With the close of the United States Supreme Court’s 2017-18 term, we offer this wrap-up, focusing on decisions of special interest from the business and commercial perspective (excluding patent cases): In a much talked-about decision in the antitrust field, the Court held in Ohio v. American Express Co. that American Express’s anti-steering provisions in its merchant contracts, which generally preclude merchants from encouraging customers to use credit cards other than American Express, are not anticompetitive and therefore do not violate Section 1 of the Sherman Act. In so holding, the Court found that credit card networks are two-sided transaction platforms, one side being the merchant and the other side being the merchant’s customer. Thus, when assessing whether the anti-steering agreements are anticompetitive, the effects on both sides of the platform must be considered. The plaintiffs’ proof that American Express had increased its merchant fees over a period of time was insufficient to show an anticompetitive effect because it neglected the customer side of the platform, where consumers have received the benefit of ever-increasing rewards from credit card companies and other improvements in services that those higher merchant fees enable. Bringing an end to a fight that New Jersey had been waging against the NCAA and professional sports leagues since 2012, the Court paved the way for...

No Harm to Competition: Third Circuit Upholds Decision for Uber in Antitrust Challenge by Philadelphia Taxicab Drivers

The Third Circuit’s newly-issued precedential opinion in Philadelphia Taxi Association v. Uber Technologies, Inc. is a classic reminder that the antitrust laws protect against harm to competition – not harm to competitors. In 2016, a group of Philadelphia taxicab drivers sued Uber in federal district court, alleging that the ride-sharing service was unlawfully attempting to monopolize the vehicle-for-hire market in Philadelphia. Plaintiffs pointed to the fact that, in October 2014, just prior to Uber’s entry into Philadelphia, there were 7,000 taxi drivers, and each of the city’s 1,610 taxicab medallions was valued at an average of $545,000. Two years later, 1,200 medallion taxi drivers had fled to Uber, those still driving taxis saw a thirty percent decline in their earnings, and the value of a medallion plummeted to just $80,000. The district court dismissed the complaint, holding that the plaintiffs had not pled antitrust injury – i.e., harm that the antitrust laws are designed to prevent – and thus did not have antitrust standing to maintain their suit. This appeal followed. The Third Circuit affirmed the dismissal but, unlike the district court, did so first based on plaintiffs’ failure to plausibly allege the elements of their attempted monopolization claim – i.e., that Uber (1) engaged in anticompetitive conduct with a (2) specific intent to monopolize and...

Wide of the Goal: Second Circuit Says No to Soccer League’s Request for Preliminary Injunction in Antitrust Suit

Coming, coincidentally, just days before the start of the 2018 Major League Soccer season, the recent Second Circuit decision in North American Soccer League, LLC v. United States Soccer Federation, Inc. has key takeaways for antitrust and injunction law practitioners. As the governing body for soccer in the U.S. and Canada, the United States Soccer Federation (U.S. Soccer) promulgates Standards, tied to the number and location of a league’s teams, that it uses to designate leagues as Division I, II, or III each year. Major League Soccer (MLS) has been the only D-I men’s soccer league since it began play in 1995, while the North American Soccer League (NASL), despite aspirations to compete directly against MLS, has operated since 2011 as a D-II league. Last year, U.S. Soccer rejected NASL’s application for a D-II designation for the 2018 season. Rather than filing instead for D-III status, NASL sued U.S. Soccer in federal court in Brooklyn, alleging that U.S. Soccer violates Section 1 of the Sherman Antitrust Act by selectively applying its Standards to restrain competition among top-tier U.S. men’s professional soccer leagues. As part of its lawsuit, NASL sought a preliminary injunction requiring U.S. Soccer to grant it D-II status for 2018. Because NASL wanted a D-II designation without going through the usual application process, the...

Getting in on the Action: FTC Files Its First Pay-for-Delay Lawsuit

In the increasingly crowded field of pay-for-delay litigation, the FTC blazed a new trail last week when – for the first time – it sued a branded drug maker for agreeing not to launch its own “authorized generic” in competition with a generic competitor. The so-called “no-AG commitment” was part of a deal struck by Endo Pharmaceuticals Inc. in exchange for a promise by Impax Laboratories to postpone by 2½ years its release of a lower-cost generic version of Endo’s lucrative Opana ER painkiller. That deal, according to the Complaint filed on March 30 in federal court in the Eastern District of Pennsylvania, let Endo prolong its alleged monopoly and, with it, the supracompetitive profits it earned from Opana. Meanwhile, the lower prices that come with the entry of a generic were delayed.

Third Circuit Finds Waiver of Right to Arbitrate After Ten Months of Litigation

In its recent opinion in In re: Pharmacy Benefit Managers Antitrust Litigation, the Third Circuit held that a defendant waived its right to arbitration after “actively” and “aggressively” litigating an antitrust dispute for ten months, even though no discovery had taken place. Emphasizing that no one factor is determinative, the Third Circuit’s holding is somewhat of a departure from prior cases finding waiver, which “uniformly featured significant discovery activity in the District Court.”

Supreme Court to Examine Pay-For-Delay Settlements

The battle between the pharmaceutical industry and the Federal Trade Commission (“FTC”) over so-called “pay-for-delay” settlements will finally be examined and decided by the Supreme Court. Last Friday, the Court granted certiorari in Federal Trade Commission v. Watson Pharmaceuticals, Inc., one of two cases with filed certiorari petitions involving Hatch Waxman reverse payment settlements. The petition in the other case, In re K-Dur Antitrust Litigation, is still pending.

District of New Jersey Stays Pay-For-Delay Cases Pending High Court’s Decision in K-Dur

Defendants in reverse-payment actions pending in the Third Circuit (New Jersey, Pennsylvania, and Delaware) take note: in In re Effexor XR Antitrust Litigation the Honorable Joel A. Pisano, U.S.D.J., of the District of New Jersey has stayed several class-action litigations challenging the legality of certain reverse-payment settlement agreements between Wyeth and generic drug manufacturer Teva Pharmaceuticals, pursuant to which Wyeth allegedly paid Teva to delay its marketing of a generic counterpart to Wyeth’s Effexor XR drug.