Source: https://www.pbwt.com/jonathan-h-hatch/antitrust-update-blog-2/
Timestamp: 2019-04-22 02:51:14+00:00

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As we discussed in a previous post, a new school of thought about antitrust law (or, rather, a new application of old antitrust principles) has received increasing attention in recent months. The so-called “New Brandeis” approach seeks to shift the focus of antitrust law from consumer welfare alone to include the competitive structure of markets. Recent attention to these arguments is often traced to the publication of Lina Khan’s Yale Law Journal article "Amazon's Antitrust Paradox." (Khan, who previously served as an advisor to FTC Commissioner Rohit Chopra, was just hired as counsel for the House Judiciary Committee’s Subcommittee on Antitrust, Commercial and Administrative Law.) Indeed, as we discussed last week, the Senate Judiciary Committee held hearings focusing on potential changes to the consumer welfare standard currently used by federal courts in evaluating antitrust claims.
The purpose and goals of United States antitrust policy have not remained static over time. Since 1979, the Supreme Court has focused on a “consumer welfare” theory of antitrust law. See Reiter v. Sonotone Corp., 442 U.S. 330, 343 (1979) (The floor debates “suggest that Congress designed the Sherman Act as a ‘consumer welfare prescription.’” (citation omitted)). Under the consumer welfare standard, an act is deemed anticompetitive “only when it harms both allocative efficiency and raises the prices of goods above competitive levels or diminishes their quality,” Rebel Oil Co. v. Atlantic Richfield Co., 51 F.3d 1421, 1433 (9th Cir. 1995); whether an action or policy is found to be anticompetitive depends ultimately on whether consumers pay higher prices. The consumer welfare theory has the advantage of focusing on the impact to consumers through the application of economic theory, but doesn’t always have much to say about firms that occupy a dominant position in an industry while continuing to provide services to consumers cheaply (or without any fee at all)—a hallmark of many modern tech companies.
Economists are endemic to antitrust litigation. Their expertise is often necessary to explain why the conduct or merger at issue will have no impact (or a huge impact!) on competition in a market. Typically the opinions of economists are presented through the expert witnesses each party calls. Sometimes, though, economists who are not officially retained to opine on the issues will weigh in through the filing of an amicus brief, and sometimes such briefs can have a demonstrable impact.
In a case of first impression, the Third Circuit recently held in In re Processed Egg Products Antitrust Litigation, No. 16-3795, 2018 U.S. App. LEXIS 2698 (3d Cir. Jan. 22, 2018), that a direct purchaser of a product, comprised partly (but not all) of price-fixed materials, has antitrust standing to pursue a claim against the product’s seller where the seller is a participant in the alleged price-fixing conspiracy, even if the product also includes some material supplied by a third-party non-conspirator.
On January 10, 2018, in In re Lantus Direct Purchaser Antitrust Litig., the District Court for the District of Massachusetts dismissed the antitrust case against Sanofi-Aventis U.S. LLC (“Sanofi”), the manufacturer of Lantus and Lantus SoloSTAR, which use the insulin product glargine to treat Type I and Type II diabetes. The plaintiffs in the multi-district litigation, a group of purchasers of the Lantus products, alleged that Sanofi unlawfully prolonged its monopoly for the glargine products after the expiration of the relevant patent in two ways. First, the plaintiffs alleged that Sanofi improperly listed six patents in the FDA’s Approved Drug Products with Therapeutic Equivalence Evaluations (the “Orange Book”). Second, the plaintiffs alleged that Sanofi pursued sham litigation against Eli Lilly in which Sanofi asserted claims of patent infringement without any reasonable basis. That litigation was settled by Sanofi and Lilly shortly before trial.
On November 15, 2017, the United States Senate passed the Criminal Antitrust Anti-Retaliation Act of 2017 (“CAARA”). This Act would amend the Antitrust Criminal Penalty Enhancement and Reform Act of 2004 (“ACPERA”), and would provide a civil remedy to persons fired or otherwise discriminated against for reporting potential criminal violations of the antitrust laws.
Outlet malls are popular destinations for consumers seeking a bargain, even if not everyone agrees that the deals are as good as advertised. But although the prices may seem low, a common provision in lease agreements between the operators of outlet malls and retailers may have reduced competition and raised the prices consumers paid. This week, the operator of the most popular outlet mall in the New York City metropolitan area reached a settlement with the New York Attorney General that may lead to increased competition in the outlet mall space in New York and beyond.
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.
Last Friday, in the latest development in the massive auto parts antitrust litigation, the State of California settled with Sumitomo Electric Industries, Ltd. and related companies regarding their sale of wire harness systems and heater control panels at allegedly supracompetitive prices. (For prior posts on this case, see here and here.) Sumitomo did not admit to any wrongdoing, but agreed to pay California over $800,000 and cooperate with California’s litigation efforts against the many other defendants in the case. Sumitomo and its related entities are the only auto parts defendants named in the State of California’s complaint.
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.
Antitrust standing is one of the most beguiling concepts in antitrust law, but it is a hurdle that a plaintiff must negotiate if its claim can proceed. This week, the Second Circuit provided some clarity to the doctrine when it affirmed a district court decision dismissing the antitrust claims of end users of aluminum for lack of antitrust standing in In re Aluminum Warehousing Antitrust Litigation.
On July 5, 2016, investors filed a federal class action [add link to pdf] in the Southern District of New York alleging defendant banks had manipulated the Singapore Interbank Offered Rate (SIBOR) “and/or” Singapore Swap Offer Rate (SOR) market, forcing investors to pay artificial prices for financial derivative transactions based on these benchmarks. This lawsuit follows on the heels of the Second Circuit’s decision in In re: LIBOR-Based Financial Instruments Antitrust Litigation, which allowed the case to proceed.
Earlier this month, defendants in the In re Cathode Ray Tube Antitrust Litigation moved to challenge the standing of major retailers to pursue damages claims under the Supreme Court’s 1977 Illinois Brick decision.
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.
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.
Yesterday, the Ninth Circuit issued an opinion affirming the dismissal of plaintiffs’ consolidated complaint in In re Musical Instruments and Equipment Antitrust Litigation. In addressing plaintiffs’ allegations of a hub-and-spoke conspiracy, the Ninth Circuit reiterated that each component of such a conspiracy (both vertical and horizontal) must be evaluated separately.

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