Antitrust and Unfair Competition Law


Antitrust and Unfair Competition Law E-Brief:  January 2021 Edition


A.        Intel Corp. v. Fortress Inv. Grp. , No. 19-cv-07651-EMC (N.D. Cal. Jan. 6, 2021)

Second dismissal of Intel Corporation and Apple Inc.’s implausible antitrust claims against an investment group’s alleged patent aggregation.

By Anthony Leon  LinkedIn

In a recent order granting a motion to dismiss with a leave to amend, Judge Edward M. Chen of the United States District Court for the Northern District of California reminds the importance of well-pleaded facts in the definition of a product market and the anticompetitive effects.  Intel Corp., et al. v. Fortress Investment Group LLC, et al., No. 19-cv-07651-EMC (N. D. CA. 2021).

In late 2019, Intel Corporation and Apple Inc. brought antitrust claims against Fortress Investment Group LLC and its affiliates. Articulating their complaint under four causes of action, the Plaintiffs asserted in short that Defendants’ patent aggregation and patent assertion had anticompetitive effects in thirteen alleged markets and therefore violated antitrust laws—specifically arguing violations of § 1 of the Sherman Act, § 7 of the Clayton Act, and under § 17200 of the California Business & Professions Code.

Intel Corporation and Apple Inc.’s (Plaintiffs) complaint is based on two theories the Court summarized as such: the Patent Aggregation Theory and the Standard Essential Patents (“SEP”) Transfer Theory. Under the first one, Plaintiffs allege that Defendants have aggregated patents and then asserted or threatened to assert those patents against Plaintiffs, including through litigation. Under the second one, third parties transferred SEP to Defendants, which then asserted or threatened to assert those patents against Plaintiffs. Using both theories, Plaintiffs allege that the acquisition and aggregation of competing patents by a single investment-firm gives Defendants a certain market power allowing them to charge unreasonable royalties. Id. at 2.

Initially dismissed with leave to amend on July 15th, 2020, this order comes in response to a new motion to dismiss after Plaintiffs filed their amended complaint. Here, the Court dismissed with prejudice the antitrust claims in four product markets where Plaintiffs lacked standing, and without prejudice in nine other product markets where Plaintiffs may be able to correct the deficiencies.

The order granting Defendants’ motion to dismiss is based both on an insufficient definition of product markets and an implausible pleading of anticompetitive effects caused by Defendants’ conduct.

Plaintiffs failed to properly define product markets.

Quoting its prior order, the Court reminds that in every antitrust claim, a proper definition of the relevant market is required before discussing anticompetitive effects. Id. at 13. Here, Plaintiffs have defined not less than thirteen products market, each relating to patent technology, function, or substitute held by Defendants. Id. at 4.

For four of those thirteen markets, the Court held that Plaintiffs have failed to establish standing to assert antitrust claims absent imminent harm and actual threat. Indeed, Plaintiffs have declared that although Defendants “have not yet asserted patents” in those four markets, there is “an ongoing threat that [they] will assert such patents.” Id. at 15. Thus, the Court dismissed all antitrust claims for those four markets. Id. at 16.

On the nine remaining markets, the Court aligned with Defendants’ argument that Plaintiffs’ product market was not plausibly stated because it was still facially overbroad and insufficiently narrowed. Id. at 16. While stating that three of those nine markets were sufficiently pled, the Court hinted to prospective antitrust plaintiffs that a proper market definition should be narrowed to specific functions or techniques. A market defined as a general technical field is facially overbroad and therefore implausible. Id. at 16.

An implausible market definition is an antitrust claim’s deficiency sufficient for the Court to grant a motion to dismiss. Even if the markets were sufficiently defined, Plaintiffs’ pleadings about the patent aggregation’s anticompetitive effects were still insufficient.  

Plaintiffs failed to plausibly plead anticompetitive effects caused by defendants’ actions.

Because Plaintiffs have failed to plead plausible supracompetitive pricing, and/or that such pricing was attributable to the aggregation of patent substitutes, the Court held that the antitrust claims must fail. Id. at 27.

Before making such a finding, the Court noted that Plaintiffs did not show evidence of Defendants’ market power but only identified fewer than ten patents by market. Id. at 19. Plaintiffs argued that they did not have to show market power because their claim relies on direct evidence instead of indirect evidence.  Defendants argued that market power shall be shown either way and that a direct evidence theory is anyhow not viable for § 7 claims. The Court, recognizing this as an unanswered question of law, refused to rule on this issue and assumed in Plaintiffs’ favor that the same analysis should apply both for § 1 and § 7 claims. Id. at 21.

Regardless, Plaintiffs’ antitrust claim still fail because they have not been able to plausibly show, as required in Twombly and Iqbal, that Defendants have extracted supracompetitive royalties as a result of their aggregation. Id. at 24, citing Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 556 (2007) and Ashcroft v. Iqbal, 556 U.S. 662, 663 (2009).

The Court provides six reasons why Plaintiffs’ did not make a plausible showing. First,  Plaintiffs only made a conclusory allegation that the companies who previously licensed the patents paid supracompetitive prices without providing information about how much was paid in settlement of the litigation. Intel at 24. Second, to prove the prior value, Plaintiffs only made assertions that prior owners could not assert the patents due to competitive restraints, though it does not mean that they were worthless at that time. Id. at 24. Third, Plaintiffs cannot compare the royalties in this case to the ones prior owners were charging for other patents in the same field, absent indications that those other patents were fair comparators for the patents at issue. Id. at 24. Fourth, using the damages that one of the Defendants demanded in another litigation as evidence of anticompetitive effects is of limited probative value. Id. at 25. Fifth, because only one of the five patents at issue was not owned by the Defendants before the aggregation, Plaintiffs should have made it evident for the Court that the addition of that patent improved Defendants’ market power. By failing to do so, Plaintiffs did not show that the supracompetitive royalties, if any, were based on the aggregation. Id. at 25. Finally, the Court notes that Plaintiffs do not show how many substitute patents are available on the market. Therefore the Court cannot consider whether those patents “represent the ‘crown jewels’ of the field or just a small portion of a large field of substitutes.” Id. at 25.

Considering all of these deficiencies applied to all the other markets defined, the Court dismisses the antitrust claims. 


The Court dismissed all the antitrust claims pled in Plaintiffs’ amended complaint. The claim failed first because of an insufficient definition of the product markets. Plaintiffs should have narrowly defined the markets to specific functions and techniques instead of using general fields. The claim then also failed because Plaintiffs have not been able to make a plausible showing that there was supracompetitive pricing and/or that such pricing was attributable to the aggregation of patent substitutes.

The Court also dismissed Apple’s non-antitrust § 17200 claim based on SEP Transfer Theory for lack of merit, reminding that “a breach of a [standard-setting organization] commitment does not rise to the level of an antitrust claim.” Id. at 27, quoting FTC v. Qualcomm Inc., 969 F.3d 974, 997 (9th Cir. 2020).

Plaintiffs are allowed to file a new amended complaint, offering them an opportunity to cure the deficiencies identified by the Court.  


By Kerry C. Klein, Farmer Brownstein Jaeger Goldstein & Klein LLP, LinkedIn

In an unpublished opinion, the Ninth Circuit partially revived a securities fraud suit against generic drug maker Impax Laboratories, Inc. (“Impax”) and individual defendants alleging fraud claims based on price fixing and price erosion that led to reductions in the company’s stock price.  The Ninth Circuit’s unpublished opinion on appeal of the district court’s order dismissing the Second Amended Complaint for failure to state a claim turned on the adequacy of Plaintiffs’ allegations under the heightened standard of Rule 9(b) that requires plaintiffs to plead fraud with particularity.


Lead Plaintiff New York Hotel Trades Council & Hotel Association of New York City, Inc.  Pension Fund brought suit for violations of Sections 10(b) and 20(a) of the Exchange Act, 15 U.S.C. § 78j(b) and Rule 10b-5 against Impax, George Wilkinson, Larry Hsu, Bryan Reasons, and Carole Ben-Maimon (collectively, “Defendants”).  A first amended complaint (“FAC”) raised these claims on behalf of others similarly situated who purchased or otherwise acquired publicly-traded Impax securities between February 20, 2014 and January 11, 2017.  The FAC alleged securities fraud claims based on two theories: (1) price fixing; and (2) price erosion.   Regarding the former theory, Plaintiffs alleged Defendants agreed with co-conspirators to fix prices of generic drugs and strategically cede market share to new market participants.  Under the latter price erosion theory, Plaintiffs alleged several instances of alleged misrepresentations and omissions concerning two specific drugs—diclofenac and budesonide—that allegedly led to drops in Impax’s stock price.

Northern District of California Judge Haywood Gilliam dismissed the FAC with leave to amend.  Plaintiffs then filed a second amended complaint (“SAC”) asserting the same claims, and Defendants again moved to dismiss.


The district court dismissed all claims in the SAC, this time without granting Plaintiffs leave to amend.  Judge Gilliam dismissed the claims based on the price fixing theory because Plaintiffs failed to adequately allege loss causation.  New York Hotel Trade Council & Hotel Ass’n of New York City v. Impax Labs., Inc., No. 16-cv-06557-HSG, 2019 U.S. Dist. LEXIS 135825, at *6-9 (N.D. Cal. Aug. 12, 2019).   In particular, the district court found that Plaintiffs failed to identify a corrective disclosure by Defendants that is linked to both the alleged misstatements and omissions, and a decrease in Impax’s stock prices.  Id. at *6-7.  Rather, the court found that the negative market reaction merely reflected reported financial losses relating to the entrance of new market competitors.  Id. at *7.

With respect to the claims based on price erosion for diclofenac and budesonide, Judge Gilliam found that the SAC failed to allege: (1) a materially false or misleading statement; and (2) scienter.  Id. at *9.   As to the alleged allegations of misleading statements concerning Diclofenac’s sales, price and market share, the district court found that Plaintiffs failed to sufficiently plead falsity as to those statements.  Id. at *10-15.    Similarly, the district court dismissed the claims based on price erosion of budesonide because plaintiffs failed to adequately allege scienter.  Id. at *16.  The court therefore did not reach the question of falsity with respect to the misstatements regarding budesonide.  Id.  Finally, because the court had previously granted plaintiffs leave to amend when it dismissed the FAC, the court determined that granting leave to amend a second time was unwarranted.


On appeal from the district court’s order of dismissal, the Ninth Circuit affirmed in part, reversed in part, and remanded to the district court for further proceedings.  New York Hotel Trades Council v. Impax Labs., Inc., No. 19-16744, 2021 U.S. App. LEXIS 604, at *1 (9th Cir. Jan. 11, 2021).  Noting the requirement to plead fraud claims with particularity, the panel found that the district court erred by ruling that: (1) Plaintiffs failed to allege loss causation on their price fixing theory; (2) Plaintiffs failed to allege falsity regarding Defendants’ statements about diclofenac’s past performance and Defendants’ forward-looking earnings projections; (3) Plaintiffs failed to allege the forward-looking revenue guidance was made with actual knowledge of falsity.

With respect to the first finding of error, the Court of Appeals explained that the SAC alleged that although Defendants attributed earnings misses to “the impact of additional competition,” Defendants’ earnings misses were actually due to the concession of market share pursuant to the price fixing conspiracy.  Id. at *2-3.  The Ninth Circuit held that these allegations suffice to trace the loss back to the very facts about which the Defendants’ lied, i.e., the anticompetitive market and price fixing scheme.  Id. at *3.  

With respect to the second finding of error, Plaintiffs alleged that the statement made on an earnings call that “overall price decline [of diclofenac] . . . was around 10%” was false and misleading because Impax’s overall portfolio had experienced a price decline of 21%, and Defendants suggested diclofenac and one other generic drug accounted for about 50% of the price decline.  Id. at *5.  As a result, because the overall price decline was more than double the amounts Defendants disclosed, the price decline of diclofenac in particular was also more than double the amount Defendants stated.  Id.  The Ninth Circuit concluded those allegations were sufficient to meet the heighted pleading standard applicable to Plaintiffs’ claims.  Id.  

Finally, the Ninth Circuit assigned error to the district court’s ruling that Plaintiffs failed to allege the forward-looking revenue guidance was made with actual knowledge of falsity, because the guidance was premised in part upon false and misleading statements about diclofenac’s past performance, and was made by an individual Defendant with knowledge of Impax’s pricing strategy, models and forecasts.  Id. at *5-6.  Consequently, the panel held that Plaintiffs adequately alleged the revenue guidance was made with actual knowledge of its falsity.  Id. at *6. 

The Ninth Circuit found no error in two of the district court’s rulings.  First, the Ninth Circuit found that the district court did not err in determining that Plaintiffs failed to allege loss causation regarding the November 2016 and January 2017 losses.  These losses allegedly were the result of: (1) speculation about whether the Department of Justice (“DOJ”) would indict Defendants as a result of its investigation into price fixing in the generic drug market; and (2) DOJ’s intervention in a civil suit involving Impax.  Id. at *3-4.  The panel concluded that any share price decreases after these events can be attributed only to market speculation that price fixing was pervasive in the generic drug industry.  Id. at *4.  Second, the Ninth Circuit found no error in the district court’s ruling that Plaintiffs failed to allege falsity with respect to the statements that “Impax had managed [its] portfolio fairly efficiently,” and had “defended share.”  Id. at *6-7.  The panel found these statements provided nothing concrete upon which Plaintiffs could reasonably rely, and cannot be true or false on an objective standard.  Id. at *7. 


James S. Dugan  Zelle LLP    LinkedIn


A recent order in Persian Gulf, Inc. v. BP West Coast Products, Inc.—an antitrust suit in which plaintiffs allege that defendants engaged in price-fixing in the California oil industry—has tossed $4.6 billion worth of diesel-fuel allegations from the case. No. 15-CV-1749-TWR-AGS, 2020 WL 7427057, at *1 (S.D. Cal. Dec. 17, 2020). Perhaps more surprising than the December 17, 2020 order striking billions in damages is that they were at issue to begin with. As stated in the order’s opening sentences, “Plaintiffs have long claimed that defendants conspired to fix gasoline prices. But neither plaintiffs’ complaints nor their discovery responses ever suggested that defendants conspired to fix prices for diesel fuel.” Instead, the diesel allegations arose for the first time in an expert report—years after the litigation had commenced.


Plaintiffs in Persian Gulf filed suit broadly alleging that defendants engaged in price-fixing in the California oil industry. As the case progressed, one of plaintiffs’ damages experts, Dr. Paul Hanouna, calculated damages of around $15 billion—a number which included a purported $4.6 billion worth of damages in the diesel-fuel market. Defendants jointly moved to strike portions of the expert report, including those which pertained to the diesel-fuel damages. Plaintiffs did not contest that gasoline and diesel were different products, instead insisting that “defendants had fair notice that diesel was always embraced by their claims.”

Having previously denied the bulk of defendants’ motion, the Court’s order sought to resolve a single question: “By including diesel-fuel damages in Dr. Hanouna’s report, did plaintiffs improperly introduce a new theory of liability without fair notice?”


“If diesel fuel is part of this case, that should be apparent from the complaints.”

The Court began its analysis by citing A.J. Oliver v. Ralphs Grocery Company, 654 F.3d 903, 908 (9th Cir. 2011), for the proposition that FRCP 8 precludes consideration of portions of an expert report which contain claims not included in the complaint. Noting that “unlike Dr. Hanouna’s report, the detailed complaints in both cases map out a conspiracy to fix prices for gasoline, not diesel fuel,” the Court pointed to how various fundamental portions of the complaints focused on and referred only to gasoline. For instance, the opening paragraph of the amended complaint defined the conspiracy by referring to “gasoline” and “gas,” and all three individual counts focused on gasoline, not diesel fuel. Further, plaintiffs’ definition of the putative class in each complaint referred only to gasoline: “All persons or entities that purchased gasoline direct from a defendant . . . and were damaged thereby.” This was found to be a consistent theme. Compared to the 514 times in which “gas” or “gasoline” appeared within the two complaints, the word “diesel” appeared only once, in passing. As such, the Court concluded that “[e]ven after scouring the complaints, the Court finds no indication of a conspiracy regarding diesel-fuel prices.”

Plaintiffs attempted to justify the dearth of references to diesel by arguing that “gasoline and diesel are both petroleum products, with intertwined markets” and noting that their complaints identified refineries in which both gasoline and diesel are processed. To this the Court stated, “Defendants aren’t required to divine plaintiffs’ claims by researching the markets of other unspecified commodities. Nor must they track down every product processed at the referenced refineries. A complaint is a roadmap of the case, not a scavenger hunt.”

“Litigants have an ongoing duty to timely ‘supplement or correct’ discovery responses”

The Court also found cause to strike the diesel-related damages by reviewing plaintiffs’ discovery responses. It reasoned that the expert report would “inappropriately amend” interrogatory responses after the close of fact discovery in violation of FRCP 37(c)(1), which prevents a party from supplying “evidence on a motion” that was not included in supplemental or corrected discovery responses. The Court acknowledged that, unlike the complaints, diesel was mentioned throughout depositions and discovery responses. However, it found most of the references to diesel to be “irrelevant asides” or otherwise appearing “in documents concerning gasoline refinement or sale.” Further, none of them “fairly put the defense on notice that plaintiffs were seeking damages for diesel price-fixing.” To this point, the Court stated, “[I]f plaintiffs truly had a multibillion-dollar diesel claim lurking in their complaint, one might expect them to trumpet this when the defense demanded to know why they wanted diesel-trader communications.” However, Plaintiffs’ response was merely that “such communications might offer insights into defendants’ gasoline-market activity.”

The Court continued by pointing to a specific interrogatory that “asked plaintiffs to identify the critical price-fixing agreement(s) between defendants.” In a ten-and-a-half-page response, the word “diesel” was not used once. Instead, the agreement was defined as one “to fix, maintain, or make artificial prices for gasoline sold in California.” Moreover, plaintiffs’ description of how the agreement was executed referenced only gasoline. Calling it their “greatest challenge,” the Court concluded that plaintiffs were bound by this response: “Because they never sought to correct or supplement their responses to include diesel before the close of fact discovery, plaintiffs may not do so now through an expert report.” As such, the diesel price-fixing allegations were struck from the Expert Report under Rule 37.


In short, the Court was simply unwilling to allow an additional $4.6 billion in damages to be added to the case via references in an expert report. “Diesel price-fixing was not among the allegations in the complaints.” Further, diesel was not mentioned in response to “contention interrogatories demanding a description of the price-fixing conspiracy.” As such, the Court found multiple justifications for striking the diesel portions of the expert report, and thus discarding the diesel-fuel damages from the case itself.

D.        JUDGE AWARDS $34 MILLION IN ATTORNEYS’ FEES IN BATTERY PRICE FIXING MDL In re: Lithium Batteries Antitrust Litigation, Case No. 4:13-md-02420,      Dkt. No. 2681 (N.D. Cal. Dec. 10, 2020).

Caroline Corbitt, Pritzker Levine LLP           LinkedIn

Judge Yvonne Gonzalez Rogers recently awarded approximately $34 million in fees and $6.75 million in expenses to Indirect Purchaser Plaintiffs’ counsel in In re: Lithium Batteries Antitrust Litigation, Case No. 4:13-md-02420, Dkt. No. 2681 (N.D. Cal. Dec. 10, 2020). The fee award requested by IPP counsel and awarded by Judge Rogers amounted to just under 30 percent of the total settlement fund.


The lawsuit was brought on behalf of indirect purchasers of products containing lithium-ion cylindrical batteries, such as portable computers, power tools, camcorders, and other products (including the purchase of replacement batteries). Counsel for IPPs reached settlements with multiple battery manufacturers over a span of four years.

In its December 10, 2020 order, the Court disposed of multiple pending matters, including renewed motions for final approval and for attorneys’ fees, expenses, and service awards as well as a plan for a revised settlement distribution. (Order at 2.) The renewed motions and revisions to the distribution plan followed the Ninth Circuit’s directive to Judge Rogers to reconsider the pro rata distribution plan proposed by IPP counsel for portions of the settlement fund in light of substantial differences in state law applying to different class members. (Id. at 8.) IPP counsel then moved to allocate 90% of settlement funds to class members from Illinois Brick repealer states and 10% of settlement funds to class members from non-repealer states. (Id. at 8-9.) The Court approved the revised plan of distribution. (Id. at 27.)

Fee Award

In considering the reasonableness of the fee sought, the Court first employed the common fund method of analysis; while courts have discretion to employ either the percentage of the fund or the lodestar methodology, courts in the Ninth Circuit typically employ the former. (Orderat 32, citing In re Bluetooth Headset Prods. Liab. Litig., 654 F.3d 935, 942 (9th Cir. 2011) and Vizcaino v. Microsoft Corp., 290 F.3d 1043, 1050 & n.5 (9th Cir. 2002).)

The Court recognized the Ninth Circuit’s benchmark of 25% of the common fund, but noted that this benchmark may not be appropriate if it would result in an award “either too small or too large in light of the hours devoted to the case or other relevant factors.” (Order at 32, quoting Six (6) Mexican Workers v. Ariz. Citrus Growers, 904 F.2d 1301, 1311 (9th Cir. 1990).) Accordingly, the Court employed a lodestar cross check on the IPP counsel’s requested fee award of slightly below 30% of the $113.45 million settlement fund, which resulted in a negative multiplier of 0.82. (Id. at 32-33.)

Additional factors considered by the Court included “(1) the market rate for the particular field of law; (2) whether counsel achieved exceptional results for the class; (3) whether the case was risky for class counsel; (4) whether the case was handled on a contingency basis; and (5) the burdens class counsel experienced while litigating the case.” (Id. at 33, citing Online DVD, 779 F.3d at 955.) The Court also considered the “contingent nature of the fee and the risk counsel assumed.” (Id., citing In re Wash. Pub. Power Supply Sys. Sec. Litig., 19 F.3d 1291, 1299 (9th Cir. 1994).)

The Court found the IPP counsel’s $33,829,176 fee request to be fair and reasonable in light of the “excellent” result they achieved for the class. (Id. at 33, 38.) In so finding, the Court recognized that counsel had shouldered substantial risk and cost, all on a contingency basis, for seven years—and applauded counsel for achieving a settlement equal to 11.7% of the potential damages for a nationwide class. (Id. at 33.) Judge Rogers also recognized that multiple Northern District courts in similar antitrust litigation had awarded fees of around 30 percent of the settlement fund, in keeping with the 30% request before her. (Id. at 38.)

The Court also awarded counsel a proportional share of interest earned on the settlement funds until the funds are dispersed. (Id.)

Litigation Funding and Division of Labor Between Counsel

The Court discussed two additional issues relevant to the plaintiffs’ bar: the use of litigation funding and the division of work between lead counsel and additional counsel.

Judge Rogers expressed her concern regarding the rising role of litigation funders, and noted that she met with Class Counsel to ensure that they were financing the litigation themselves, without the involvement of funders. (Id. at 33.)

She also discussed the division of labor between the lead counsel firms and other plaintiffs’ counsel. She observed that lead counsel’s hours compromised 70% of the total hours submitted, and that the largest percentage of hours attributable to additional counsel came from those firms “primarily engaged in managing class representative discovery, high-level document translation and foreign-language document analysis.” (Id.) Moreover, she noted that her initial order appointing interim leadership did not “preclude payment of attorneys’ fees to counsel for the classes alleged in the member cases in this multi-district litigation.” (Id. at 38.)

Expenses and Service Awards

The Court approved counsel’s request for $6,751,735.84 in unreimbursed expenses, finding the expenses to be reasonably incurred. (Id. at 39.) She further noted that class counsel are not limited to recovering taxable costs. (Id.)

Service awards totaling $10,000 for each individual class representative and $25,000 for governmental entity class representatives were also approved, in light of the duration of the litigation and the substantial time and effort of the class representatives. (Id. at 40.)

Objections and Appeal

Three objections to the attorneys’ fee award were submitted. (Id. at 34.) Two objectors contended that the fee award should be limited or adjusted in accordance with the fee bid submitted by one of the lead counsel firms when it applied for interim leadership. (Id. at 34, 37.) The Court rejected the objection, noting that the firm was not appointed based on a competitive fee bidding process, but rather was appointed as one of three lead firms following the Court’s determination of the needs of the case. (Id. at 35.)

A third objector raised concerns regarding the size of the fee award to counsel, block billing, billing by non-lead counsel, and additional aspects of the settlement. (Id. at 37-38.) The Court found the objections to be without merit. (Id.) The objector has appealed pro se, Case No. 21-15138.

II.        A Deeper Dive–Can I Blow the Whistle on an Antitrust Violation?

by Robert E. Connolly  LinkedIn

On Dec. 23, 2020, the Criminal Antitrust Anti-Retaliation Act (the “Act”), finally became law.  The legislation had passed in the Senate several times previously but until this last  Congress, had never been brought up for a vote in the House.  The Act prohibits employers from retaliating against certain individuals who report criminal antitrust violations.  It allows an individual to file a retaliation complaint with the Secretary of Labor it they are retaliated against for reporting to the federal government information about what they believe to be criminal violation of the antitrust laws.  The remedies include reinstatement, back pay and special damages including litigation costs, expert witness fees and reasonable attorney fees.  This  is a positive piece of  legislation.  As discussed below, however, without the potential of a financial reward for being a whistleblower, this legislation alone is unlikely to encourage anyone to come forward.  But, the Act shows that Congress understands the power of whistleblowing, including on criminal antitrust violations, and further legislation will hopefully follow.

The picture facing a potential whistleblower for an antitrust violation is confusing. In the broad sense of “whistleblowing” anyone can make a complaint to the Antitrust Division about what they think might be anticompetitive conduct.  The Antitrust Division has a “Report Violations” page on its website (“Your e-mails, letters and phone call could be our first alert to a possible violations of the antitrust laws and may provide the initial evidence need to begin an investigation.”).  But when it comes to possible whistleblower rewards (i.e. a financial reward  for a successful outcome resulting from the whistleblower’s information), there are several statutes at play.  There is a serious hole in the law because whether a whistleblower can receive financial compensation for reporting a criminal antitrust violation) price fixing bid rigging, market allocation) depends upon whether the victim of the fraudulent scheme was a government entity (i.e. tax dollars) or private individuals. 

There is no statute comparable to Dodd-Frank Wall Street Reform and Consumer Protection Act which allows whistleblowers who come forward to the SEC to share between 10 and 30 percent of the government’s total monetary recovery, if any. The results have exceeded expectations in terms a flood of  new fraud cases brought to the SEC by individuals willing to stick there neck in return for the possibility of financial incentives offsetting the risks of being a whistleblower.  See SEC Whistleblower Program Ends Record-Setting Fiscal Year With Four Additional Awards, SEC Press Release, September 30, 2020.  The just passed Criminal Antirust Anti-Retaliation Act does not provide the possibility for the whistleblower to reap any monetary benefit if the Antitrust Division successfully brings criminal prosecution and fines are imposed.  If, however, the federal government is the victim of a criminal antitrust violation, an individual (whistleblower) can file a False Claims Act case (qui tam) if false claims for payment are knowingly filed with the federal government.  If the government recovers money as a result of this suit the whistleblower is entitled to a portion of that recovery.  The Department of Justice has a primer that explains the False Claims Act in more detailed (here).  Claims for payment made to the government on contracts that were rigged are “false claims” and accordingly if a whistleblower is aware of a bid rigging scheme against the federal government, she can file a False Claims Act case and potentially receive significant financial reward (15 to 30% of the government recovery).  On the other hand, if the government is not the victim of the price fixing scheme (the auto parts cartel, for example) a potential whistleblower can of course still blow the whistle but she will not realize any financial reward for doing so.

This anomaly is best shown through the Antitrust Division’s criminal cases against South Korean fuel oil dealer who rigged bids on  DOD contracts in South Korea.  On November 19, 2018 the Antitrust Division announced that three South Korean oil refiners had agreed to plead guilty and to enter into civil settlements for rigging bids on United States Department of Defense Fuel Supply Contracts (here).  The investigation was started by a whistleblower filing a False Claims Act case.  The DOJ press release noted, “The United States’ False Claims Act civil investigation resulted from a whistleblower lawsuit filed under the qui tam provisions of the False Claims Act.  Those provisions allow for private parties to sue on behalf of the United States and to share in any recovery.” Bid rigging schemes, where the bids are let by the federal government, can be prosecuted  as 18 U.S.C. §371, Conspiracy to Defraud the United States, and constitute the basis for a False Claims Act case.  The government has entered into civil settlements of $205 million.  DOJ  Press  Release April 8, 2020 DOJ Agrees to Civil Settlement with Additional Firm Involved in Bid Rigging and Fraud Targeting Defense Department Fuel Supply Contracts for U.S. Military Bases in South KoreaWhile the amount awarded to the whistleblower[s] who initiated the investigation is not known, at 15-25% of the total recovery, there was ample reward for coming forward and exposing the scheme.

Suppose, however, the fuel oil dealers fixed prices on contracts to commercial buildings in the United States.  While this would be a criminal price fixing violation of the Sherman Act, there would beno ability for a whistleblower to collect a reward for coming forward.  While we can’t be sure, being a whistleblower in many circumstances can be a career killing act of public service. The decision to be a whistleblower can be a life altering event–and not in a good way. See Cartel Capers, A Potential Whistleblower Story (Hypothetical), September 25, 2018.  It  is likely No Potential Reward = No Whistleblower. 

The Criminal Antitrust Anti-Retaliation Act is a welcome start towards protecting criminal antitrust whistleblowers.  Congress recognizes the value of whistleblowers. Further reform is needed to mirror the financial incentives provided by Dodd-Frank for securities violations and the False Claim Act where the government is the victim of fraudulent schemes.   

Why should there be financial incentives for whistleblowing if the federal government is the victim of bid rigging, but not if private entities are the target?  There shouldn’t be. 

Most States have a False Claims Act that largely mirrors the federal statute.  The California False Claims Act’s qui tam provision permits a whistleblower to file an action to enforce the Act. Such lawsuits have resulted in some of the most significant recoveries to date under the Act. Like the federal statute, the law is applicable when false claims are submitted to the government. California has a False Claims Unit website with further information.

            Note:   The topic of whistleblowing on criminal antitrust violations and the need for a criminal antitrust whistleblower statute that  mirrors the SEC’s enforcement whistleblower incentives was covered more thoroughly  the Section’s Competition Journal: Robert E. Connolly  and  Kimberly A. Justice, WHISTLEBLOWING AND CRIMINAL ANTITRUST CARTELS: A PRIMER AND CALL FOR REFORM, Competition:  Fall 2019,Vol 29, No. 2.

 III.      Competition Agency News and Notes

US Department of Justice Antitrust Division

            January 19, 2021  The companies entered into Deferred Prosecution Agreements with the DOJ.  DPA’s, which once were rare, have been used frequently recently by the Antitrust Division to resolve criminal cases.

            In addition to the press release, see also, DOJ statement in the Eleventh Circuit “advis[ing] the Court that, on January 13, 2021, the Competitive Health Insurance Reform Act of 2020 (the Act) (Attachment A) became law. The Act reapplies the antitrust laws to the business of health insurance, providing that the McCarran-Ferguson Act (the MFA) does not “modify, impair, or supersede the operation of any of the antitrust laws with respect to the business of health insurance.” Oscar Insurance Co. of Florida v. Blue Cross & Blue Shield of Florida., No. 19-14096 (11th Cir. Jan. 15, 2021).

            January 12, 2021  Visa Inc. and Plaid Inc. abandoned their planned $5.3 billion merger after the DOJ filed a civil antitrust lawsuit on Nov. 5, 2020, to stop the merger.  The challenge was based on the allegation that Plaid was an innovative and nascent competitor that would have been eliminated before it had a chance to succeed.  

Federal Trade Commission

            January 5, 2021.  Like the  DOJ challenge to the Visa/Plaid merger above, this was a  challenge to a nascent competitor:   The FTC charged that the acquisition would allow Procter & Gamble, the market-leading supplier of both women’s and men’s wet shave razors, to eliminate growing competition from Billie.

            December 22, 2020  The FTC’s commentary provides greater transparency to the public regarding its analysis of vertical mergers.

California Attorney General’s Office

            December 11, 2020  California Department of Justice moved to join the U.S. Department of Justice in a landmark lawsuit alleging that Google violated federal antitrust laws by entering into exclusionary business agreements that shut out competitors and suppressed innovation.  California’s motion to join the lawsuit is available here.

IV.       News and Notes

Sarah Thomas will be the first  woman to officiate in a Super  Bowl.   Troy Vincent  the NFL’s Executive Vice-President of football operations aid:  “Sarah Thomas has made history again as the first female Super Bowl official. Her elite performance and commitment to excellence has earned her the right to officiate the Super Bowl. Congratulations to Sarah on this well-deserved honor.”

On the other hand, with seven of eight NFL head coaching jobs filled at the time of this writing, there have been no minority hirings.  See Lack of Diversity Looms Over Hires, Judy Battista, January 19, 2020.

Merrick B. Garland, nominated Attorney General of the United States.  D.C. Circuit Chief Judge Merrick B. Garland has a long-standing interest and scholarly bona fides in antitrust law.  He , taught antitrust law at Harvard Law School and published scholarly work on state action immunity from antitrust liability before joining the D.C. Circuit in 1997.

Price-Gouging. California’s  SB 1196  expands the crime of price gouging to capture sellers who only began offering a product immediately after an emergency was declared.


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