Welcome to the April E-briefs, News and Notes. We have 7 E-Briefs covering a variety of subjects. The Agency Update section includes links to numerous DOJ/FTC press releases reflecting the aggressive posture of the Biden Administration on competition policy. In Section News, the main item is SAVE the DATE for the next Golden State Antitrust and Unfair Competition Law Institute and Antitrust Lawyer of the Year Reception and Dinner, May 5, 2022. Finally, the News and Notes section has been renamed In Case You Missed It. This section reposts numerous articles and other items related to matters of interest to antitrust and unfair competition lawyers. To the extent possible, items are reprinted that are not behind a paywall.
There is quite a lot in this E-brief. Thanks to all the contributors—please have a read.
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Ninth Circuit Finds Insufficient Evidence to Support Price-Fixing Conspiracy, By Wolf Haldenstein partner Thomas Burt and associate Lillian Grinnell
In its ruling affirming the dismissal granted in In re Dynamic Random Access Memory (DRAM) Indirect Purchaser Antitrust Litigation, No. 21-15125 (9th Cir. March 7, 2022), the Ninth Circuit ruled that plaintiffs failed to plead “some further factual enhancement” that would serve to satisfy the “plus” requirement of the so-called parallel plus test established by Bell Atl. Corp. v. Twombly, 550 U.S. 544, 557 (2007) that is required to bring a claim under Section 1 of the Sherman Act. But although the panel ultimately decided that the facts in this case were insufficient to establish such a claim, finding that they “could just as well be independent action” (Slip Op. at 22), the Court made clear that it was not adding extra hurdles to the standard set by Twombly – where “plus factors serve as the ‘something more’ to place parallel conduct ‘in a context that raises a suggestion of a preceding agreement’” (Slip Op. at 9, quoting Twombly, 550 U.S. at 557) – but rather that here, Plaintiffs had simply not offered enough evidence that would make it more likely than not that the parallel behavior at issue was unlawful.
Facts Alleged in the Complaint
Plaintiffs brought suit under Section 1 of the Sherman Act against three defendants, dynamic random access memory (“DRAM”) manufacturers that reduced their respective productions at the same time in 2016, thereby driving up prices in what plaintiffs alleged was an anticompetitive price-fixing conspiracy. The three defendants – Micron, SK Hynix, and Samsung – together control approximately 96% of the relevant market, with the latter holding approximately a 50% market share and the former two holding about a quarter each.
Before the parallel conduct at issue in this case took place, the three defendant manufacturers were faced with markedly lowered prices caused by a major oversupply in the market caused by their energetic competition with each other in the years prior. Samsung, the holder of the largest market share, tried to curtail this oversupply – and thus increase prices – by tamping down production twice, first in 2015, which proved unsuccessful, and secondly in 2016, where the other two defendants did follow suit, causing a sharp rise in both DRAM prices and company profits for all three manufacturers. This was followed by an investigation by China’s antitrust enforcement agency, the National Development and Reform Commission (“NDRC”) that resulted in a 2018 “Memorandum of Understanding” between the NDRC and Samsung to moderate DRAM prices – marking the end of the class period.
Plaintiffs offered eight separate “plus” factors to add to the parallel conduct described above: (1) the price signaling evidenced by Samsung’s 2015 attempt; (2) the contemporaneous decreases in capital investment by all three manufacturers; (3) the supply cuts against self-interest, argued to be irrational on Samsung’s part without knowledge that the other two companies would copy the behavior; (4) the companies’ public statements encouraging supply cuts; (5) changing conduct throughout the class period purportedly showing coordination with one another; (6) alleged information exchanges regarding supply and demand between the defendants; (7) the high market concentration evidenced by the defendants’ market share, resulting in high barriers to entry; and (8) historic price fixing behavior underscored by convictions of Samsung and SK Hynix in 2005 for a price-fixing conspiracy. Only this last factor was accepted by the Court, finding that it “circumstantially support[ed] Plaintiffs’ theory.” Slip Op. at 21. But, it went on to explain, “a single plausible plus factor allegation that weakly tips in the plaintiffs’ favor, without some further factual support, is not enough to open the floodgates to discovery in antitrust cases.” Slip Op. at 22.
Contemporaneous conduct done out in the open, so to speak, as was the case here, naturally requires a sufficient factual basis to demonstrate that the parallel conduct was not simply the normal consequence of the market conditions, like those seen in 2015 where prices for DRAM had dramatically lowered due to competition, or for that matter conscious parallelism. The Court indeed found the latter to be a natural explanation for the capital expenditure decreases, supply cuts, public statements, and changed conduct. It is not nefarious, for example, for public companies to make public statements to explain actions that, taken in isolation, would be irrational, or for those companies in the same market to react similarly to the same market conditions. See, e.g., In re Musical Instr. & Equip. Antitrust Litig., 798 F.3d 1186, 1196 (9th Cir. 2015). And the reduction in the manufacturers’ respective outputs can be distinguished quite clearly from a situation like that in In re Broiler Chicken Antitrust Litig., for example, where the specifics of production cuts – i.e., destroying livestock – rendered them difficult to reverse and therefore only rational in the presence of an agreement. 290 F. Supp. 3d 772, 779 (N.D. Ill. 2017). And Samsung could and did reverse its cuts in 2015 when the other two manufacturers did in fact fail to follow it.
The facts in this case strongly suggest that Samsung simply responded to market conditions in order to increase profits. It would go to reason, moreover, that if the three companies were in fact conspiring with one another, that Samsung would not intentionally decrease its market share in the first instance by being the only one of the three to decrease output. That its second attempt was successful could easily be explained by their status in the market acting as a large enough sign post that the other two companies would notice the behavior and the financial opportunity presented if they were to join in. Communication and/or explicit coordination between the three was therefore unnecessary for the parallel conduct to take place, meaning that under the Twombly test plaintiffs could not survive a motion to dismiss.
The law has not changed here. Rather, the facts alleged in this case simply displayed parallel conduct that was just as, if not more likely, to have been the result of natural competitive behavior rather than a coordinated conspiracy. DRAM is an example of the risk involved in filing a Section 1 claim based purely on a governmental investigation – here, that of the NDRC – whose ultimate findings are as of yet unknown and may end up yielding less than satisfactory plus factors.
Ninth Circuit Holds that Dental Board Not Entitled to “Free Pass” in SmileDirectClub Ruling, By Jeanifer Parsigian and Dana Cook-Milligan , Winston & Strawn
The Ninth Circuit has rejected the broad proposition that regulatory board members acting within their regulatory authority cannot engage in conspiratorial conduct. In a March 17, 2022 decision, the Ninth Circuit partially reversed a district court dismissal of an antitrust action brought by a tele-dentistry company called SmileDirectClub, LLC (“SmileDirect”) against members and employees of the Dental Board of California (the “Board”). The Ninth Circuit found that a regulatory board’s concerted action can be unreasonable, even where the action is exercised through valid regulatory authority, and that SmileDirect has adequately alleged that certain members of the Board have engaged in anticompetitive concerted action. However, a plaintiff must allege more than mere membership within a regulatory board to affix antitrust liability onto individual members. See SmileDirectClub LLC v. Tippins, No. 20-55735, 2022 WL 804146 at *7-8 (9th Cir. Mar. 17, 2022).
SmileDirect offers clear aligners, available through a direct-to-consumer online platform. Id. at *8. The platform has been offered as a disruptive alternative to the traditional wire-and-bracket braces. Id. Consumers can visit brick-and-mortar stores or receive impression kits in the mail that are returned for review by licensed dentists. Id. at *8-9. The Board is made up of fifteen members, including individuals who offer services in the teeth-straightening business, and it is tasked with regulating the practice of dentistry in California. Id. at *9. Upon receiving a complaint, the Board is empowered to undertake investigations relating to the issuance or revocation of dental licenses and permits. Id.; see also Cal. Bus. & Prof. Code §§ 1600-1621.
SmileDirect alleged that the Board, which included members who owned traditional orthodontic practices within blocks of SmileDirect locations, feared SmileDirect’s competition with traditional braces and other tele-dentistry available, and began what SmileDirect characterized as a “campaign of harassment and intimidation designed to drive the SmileDirect parties out of the market.” Id. at *9. The complaint alleged claims under federal and state law, including Section 1 of the Sherman Act, which “prohibits ‘[e]very contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce.’” Id. at *11 (quoting 15 U.S.C. § 1).
SmileDirect alleged the Board engaged in anticompetitive conduct such as “coordinated statewide raids; false statements; misconduct in front of consumers; and a retaliatory accusation filed in response to [this] lawsuit.” Id. at *10. SmileDirect’s complaint alleged that the Board viewed its model as a threat to “the dentist Board members’ ‘dental practices;’ that several Board members belong to powerful trade groups; and that they collectively have ‘an economic incentive’ to drive SmileDirect out of the market.” Id. at *14. Upon receipt of a dental trade association letter, which SmileDirect noted was not the kind of consumer complaint that would typically launch a Board investigation, SmileDirect alleged the Board’s investigators began a campaign of “aggressive and unreasonable ‘raids’ that were ‘designed to maximize . . . interference, disruption, and public spectacle.’” Id. at *17. Further, after SmileDirect filed suit, the Board then undertook what SmileDirect categorized as a retaliatory scheme to revoke one of SmileDirect’s affiliated dentist’s licenses. Id.
The Board moved to dismiss the complaint, based on an affirmative defense of state-action immunity, the doctrine established by the Supreme Court in Parker v. Brown, 317 U.S. 341 (1943), which grants antitrust immunity to restraints imposed by the state as an act of government. Id. at *16-17. On the first motion-to-dismiss round, the district court found such immunity did not apply as the Board could not establish active state supervision, but “in the same breath, appeared to hold that conduct within the Board’s regulatory authority cannot be anticompetitive.” Id. at *16-17. Because no per se violation was alleged, the lower court analyzed the antitrust claims under the rule of reason. Id. at *16 (citing Tanaka v. Univ. of S. Cal., 252 F.3d 1059, 1063 (9th Cir. 2001)).
Upon a second round of motion-to-dismiss briefing, the lower court found that the Board’s conduct was no more than an ordinary investigation pursuant to the Board’s authority. Id. at *17. Drawing on this conclusion, the lower court held that a regulatory board acting within the ordinary bounds of regulatory authority could not amount to unreasonable action and dismissed SmileDirect’s antitrust claims. Id. The district court dismissed SmileDirect’s federal claims, including its Sherman Act claim, and declined to exercise supplemental jurisdiction over its state law claims; thereafter, SmileDirect appealed. Id. at *10.
On appeal, the Ninth Circuit noted the unique posture of the case, as SmileDirect had sued not the Board itself, but rather various individual members and employees. Id. at *13. As such, this was not a case where the existence of a conspiracy can be inferred from the parallel conduct of otherwise independent actors. Id. Instead, the alleged conspiracy derived from the actions of the Board, which would then be imputed onto the Board’s individual members. Id. at *14. However, the Ninth Circuit did not agree that the Board’s actions could be imputed to all members named in SmileDirect’s complaint. Membership within the Board, on its own, is not enough to draw an inference that a member is engaging in an antitrust conspiracy. Id. at *15. A plaintiff must make either a direct or circumstantial showing that a member “actively participated in an individual capacity in the scheme.” Id.
Because the risk of anticompetitive conduct stems from allowing “active market participants” to “regulate their own markets free from antitrust accountability,” it follows that a plausible inference of active participation in the Board’s conduct can be imputed to those members directly engaged in SmileDirect’s market. Id. at *14. The Ninth Circuit held that the Board’s conduct could be “logically” imputed on the dentist members of the Board through their “close involvement in the alleged anticompetitive acts,” but not the non-dentist members who were not otherwise alleged to have directly participated. Id. The Court therefore dismissed the remaining non-dentist members, of whom SmileDirect had not alleged any such direct involvement beyond mere membership. Id.
The Ninth Circuit then addressed the applicability of state-action immunity, taking issue with the district court’s approach. Id. at *16-17. The Court opined that the district court’s blessing of the Board Actors’ conduct solely because it fell under the umbrella of the Board’s regulatory authority “effectively grants the Board Actors a free pass under the Sherman Act.” Id. It held that Supreme Court precedent and its own precedent clearly establishes that a regulatory board’s “concerted action can be unreasonable under the Sherman Act—even if they seek to achieve their anticompetitive aims through the exercise of valid regulatory authority.” Id. The Ninth Circuit emphasized the Supreme Court’s language in an analogous case, N.C. State Board of Dental Examiners v. FTC, “[t]he similarities between agencies controlled by active market participants and private trade associations are not eliminated simply because the former are given a formal designation by the State, vested with a measure of government power, and required to follow some procedural rules.” Id. (quoting N.C. State Bd. Dental Exam’rs v. FTC, 574 U.S. 494, 511 (2015)).
The Ninth Circuit found that SmileDirect’s complaint alleged more than just an “ordinary” investigation conducted by the Board Actors. SmileDirect alleged that the Board undertook the investigation in response not to a consumer complaint, but to a letter from a dental trade association, which itself had advocated against the direct-to-consumer model employed by SmileDirect. Id. at *18. Further, the Board Actors were alleged to have discussed with the trade association members what was supposed to be a confidential Board investigation. Id. And after commencement of the investigation, SmileDirect further alleged that the Board’s investigators began a retaliatory campaign of “aggressive and unreasonable ‘raids’ that were ‘designed to maximize . . . interference, disruption, and public spectacle.’” Id.
Even if it was possible that all of the above actions fell within the Board’s regulatory authority, the Ninth Circuit held that such acts could still be illegal if their anticompetitive effects outweighed any legitimate regulatory justifications under a rule of reason analysis. Id. Because the appeal derived from a dismissal order, the Ninth Circuit did not reach the question of whether the investigation was conducted by the book and the Board itself was screened off from the investigation. Id. Rather, it concluded that the lower court had erred in requiring SmileDirect to plead facts inconsistent with the Board’s regulatory purpose, because such standard is more appropriate at the summary judgment stage, and Rule 12 does not require plaintiffs to offer evidence that tends to “exclude the possibility of lawful independent conduct.” Id. at *19.
The Ninth Circuit also dismissed the lower court’s concerns that allowing SmileDirect’s complaint to proceed would open the floodgates for suits against individual board members. Id. at *19. The Court made it clear that its holding was not an open-ended declaration that a conspiracy could be inferred from any Board investigation; rather, it ultimately disagreed with the broad assertion that “members of regulatory bodies who conspire against competition are automatically immune from antitrust allegations even when the body does not meet the requirements for state-action immunity.” Id. at *19-20.
The Ninth Circuit’s holding makes it clear that a regulatory board cannot escape antitrust liability by merely relying on the fact that its actions facially fall within its regulatory authority. However, plaintiffs cannot impute blanket liability for a board’s actions, and must instead sufficiently plead either circumstantial or direct participation.
Lion Capital, Bumble Bee’s Parent, Found Properly Joined as Defendant Under Ninth Circuit’s Arandell Standard, By James Dallal, Cotchett, Pitre & McCarthy
James Dallal is a Senior Associate within the Antitrust and Global Competition group at Cotchett, Pitre & McCarthy, LLP and can be reached firstname.lastname@example.org.
In this nearly seven-year-old multidistrict litigation over allegations of price fixing in the market for canned tuna, the Judge granted the plaintiffs’ motion for reconsideration of an order issued two years earlier by the previously assigned Judge that had granted a Rule 12(b)(6) motion to dismiss with respect to a single foreign defendant, vacated that prior order, and denied the motion to dismiss, thereby reinstating antitrust claims against the previously dismissed defendant. In re Packaged Seafood Products Antitrust Litigation, Case No. 15-md-2670 DMS (MDD) (S.D. Cal. Mar. 21, 2022).
The Alleged Conspiracy
The case concerns global price-fixing claims brought by three sets of direct and indirect purchaser class plaintiffs, alongside a handful of direct action plaintiffs who have opted out of class treatment, against the three largest U.S. domestic producers of packaged tuna products. The U.S. DOJ Antitrust Division had in 2015 brought criminal price-fixing charges against three defendant companies—Tri-Union Seafoods LLC d/b/a Chicken of the Sea International (“Chicken of the Sea”); Bumble Bee Foods LLC (“Bumble Bee”); and StarKist Company (“StarKist”)—and certain of their senior executives, based on allegations that they conspired to prop prices up at a time when the global financial crisis, coupled with a preexisting trend of flagging demand for canned tuna, had created enormous downward pressure on pricing. DOJ obtained a conviction of Bumble Bee’s CEO after a jury trial, and the remaining charged defendants pleaded guilty.
The civil plaintiffs asserted antitrust claims against these same entities but also added as defendants the corporate parent companies that owned and controlled them. With respect to Bumble Bee, the civil plaintiffs named (1) Lion Capital; (2) Lion Capital (Americas), Inc. (“Lion Americas”); and (3) Big Catch Cayman LP (“Big Catch,” and together with Lion Capital and Lion Americas, the “Lion Entities”). The Lion Entities had moved to dismiss twice previously. Following both earlier rounds of briefing, the Court had sustained claims against Lion Americas but dismissed claims against Lion Capital and Big Catch. In the first of these orders the Court had also concluded that under the applicable standard Big Catch qualified as an alter ego of Lion Capital, and therefore the Court focused on the merits as they related to Lion Capital.
Motion for Reconsideration
The Court first discussed the standard movants must meet in seeking reconsideration, relying primarily on School District No. IJ, Multnomah County, Oregon v. ACandS, Inc., 5 F.3d 1255, 1263 (9th Cir. 1993). There the Ninth Circuit held “Reconsideration is appropriate if the district court (1) is presented with newly discovered evidence, (2) committed clear error or the initial decision was manifestly unjust, or (3) if there is an intervening change in controlling law.” The Court noted that plaintiffs were invoking options (1) and (2), the “newly discovered evidence” and “clear error” options. The Court ultimately decided based on a finding of clear error, though in somewhat oblique language perhaps because the decisions overturned this time around had emanated from the previously assigned Judge.
In reaching its finding of clear error, the Court credited the plaintiffs’ argument that the prior order had misapplied United States v. Bestfoods, 524 U.S. 51, 69 (1998), when it held the plaintiffs had not sufficiently alleged that acts by certain executives working both for Lion Capital and for Lion Americas could rightfully be attributed to Lion Capital. The Lion Entities had urged that the plaintiffs in opposing the prior motions to dismiss had never raised any issue about the proper reading of Bestfoods or contested the notion of a “Bestfoods presumption,” adopted in the earlier order, under which a dual agent of a parent corporation and its subsidiary are attributable only to the subsidiary. But the Court noted the Lion Entities had themselves only relied on this “Bestfoods presumption” for the first time in their reply briefing, and it therefore concluded the Rule 12 analysis should be reopened because the plaintiffs had been deprived of any opportunity to respond to the Lion Entities’ argument, citing Dietz v. Bouldin, 579 U.S. 40, 45-46.
Parent Entity Liability Under Arandell and Bestfoods
The Court then turned to the merits and the question of whether the plaintiffs’ allegations satisfied the pleading standard of Rule 8(a)(2). In testing the complaint’s sufficiency, all allegations of material fact are taken as true. As the Court had already declined to dismiss claims against Lion Americas, the primary issue remaining was “whether Plaintiffs also sufficiently alleged participation by Lion Americas’ parent entity Lion Capital.”
The plaintiffs sought to establish Lion Capital’s direct culpability for the pricing collusion by alleging facts indicating Lion Capital knew before it acquired Bumble Bee that the prices it charged could not be sustained in a market subject to ordinary competitive pressures, but it purchased Bumble Bee anyway. The plaintiffs alleged that Lion Capital executives met with the owners of Chicken of the Sea and StarKist before completing the acquisition, and that certain statements made at the meetings served as euphemisms for inter-competitor commitments on pricing. The Court also credited allegations that Lion Capital exercised near total control over the activities of Lion Americas and was actively involved in managing Bumble Bee and controlled three of the four seats on Bumble Bee’s board of directors.
In opposition, Lion Capital argued that under the Bestfoods presumption, the acts of certain individual executives who worked for both Lion Capital and Lion Americas should be attributed to Lion Americas if plaintiffs did not allege further facts tying the acts in question specifically to the parent company. The plaintiffs countered the Bestfoods argument by relying on Arandell v. CenterPoint Energy Services, 900 F.3d 623 (9th Cir. 2018) to propose that for purposes of liability for anticompetitive conduct in antitrust, Lion Capital and Lion Americas should be treated as a single enterprise, so it would be proper to treat the dual officers’ knowledge as “imputed to Lion Capital” to establish the latter’s liability.
The Court made clear that even under Arandell, the dispositive question is whether the alleged facts, taken as true, indicate that the entity seeking dismissal itself participated in the conspiracy. The Arandell litigation had presented the reverse scenario, wherein liability was extended to a subsidiary that had served as an instrument of and made effective collusion apparently orchestrated by its parent. But the linkage between the entities alone was not enough; rather, that linkage was probative of the subsidiary’s agreement to join in the anticompetitive scheme: As the Court explained, “[t]he plaintiffs’ showing in Arandell that the subsidiary sold gas at inflated prices and distributed profits to its parent was adequate circumstantial evidence to raise a genuine issue regarding the subsidiary’s own participation in the scheme. Accordingly, to state a claim against Lion Capital, Plaintiffs must allege Lion Capital’s knowledge or anticompetitive purpose. The state of mind can be either imputed from allegations of coordinated activity in furtherance of the conspiracy or alleged separately.”
The Court found that the plaintiffs’ allegations were sufficient to qualify via either of these avenues for defeating the motion to dismiss. Lion Capital’s awareness of Bumble Bee’s participation in the conspiracy and choice not to instruct Bumble Bee to desist, as alleged, sufficed to raise a reasonable inference that Lion Capital joined the conspiracy as well. In the alternative, allegations of statements by Lion Capital’s executive officer assuring the other two conspirators that Bumble Bee would adhere to the scheme, and ratification and encouragement of the scheme by Lion Capital’s general manager who was not himself a dual executive of Lion Americas, sufficed to establish Lion Capital’s direct participation. The Court therefore found the plaintiffs’ allegations overcame any presumption that the parent corporation should not face liability, vacated the prior order dismissing the claims, and denied the motion to dismiss Lion Capital and its alter ego Big Catch.
Sutter Health Scores Win at Jury Trial and Defeats $411 Million Antitrust Class Action Lawsuit, By Amar S. Naik, Morgan Lewis
On March 11, 2022, a California federal jury found that defendant Sutter Health had not used restrictive contracts with insurance companies to unlawfully boost prices and overcharge millions of premium-paying employers and individuals in Northern California. (Sidibe et al. v. Sutter Health, Case No. 3:12-cv-04854 (N.D. Cal.)). This win comes just 30 months after Sutter agreed to pay $575 million to settle similar class action lawsuits brought by the California Attorney General and the UFCW & Employers Benefit Trust (“UEBT”) in state court.
Sutter owns and operates one of Northern California’s largest networks of hospitals and medical service providers. It currently runs 24 acute care hospitals and over 200 clinics in Northern California. Sutter also has approximately 55,000 employees and generates over $13 billion per year in operating revenue.
Plaintiffs are four persons who paid for health insurance plans and two companies who paid for health insurance plan premiums for their employees. The Plaintiffs represent a class of three million individuals and entities that allegedly paid anticompetitive overcharges for fully insured products from commercial health plans that included Sutter’s inpatient hospital services.
Plaintiffs alleged that Sutter imposed unlawful tying arrangements that forced five commercial health plans — Blue Shield, Anthem, Aetna, Health Net, and UnitedHealthcare — to pay supracompetitive prices for inpatient hospital services in certain geographic markets. Specifically, Plaintiffs alleged that Sutter allegedly used its monopoly or market power for inpatient services in eight Northern California geographic markets (the tying markets) to force health plans to include in their networks Sutter’s inpatient services at hospitals in four other Northern California geographic markets (the tied markets). Plaintiffs asserted that this “all or nothing” approach forced health plans to pay supracompetitive prices for inpatient hospital services in the tied markets. Plaintiffs further alleged that Sutter’s contract terms prevented plans from steering patients to lower-cost hospital networks or required plans to steer patients to Sutter’s higher-cost facilities.
Plaintiffs brought three sets of claims against Sutter: (1) unlawful tying and course of conduct in violation of section 1 of the Sherman Act and California’s Cartwright Act; (2) unlawful monopolization and attempted monopolization in violation of section 2 of the Sherman Act; and (3) unlawful business practices in violation of section 17200 of California’s Unfair Competition Law.
Although Plaintiffs initially filed suit on September 17, 2012, it took nearly ten years before the case reached trial. Not surprisingly, the case endured several twists and turns along the way. During the first few years of the case, the District Court repeatedly dismissed Plaintiffs’ claims. For example, on June 3, 2013, the court dismissed the case on the grounds that Plaintiffs did not plead sufficient facts showing predatory conduct or defining the relevant geographic markets. Nearly a year later, the court again threw out the case because of a failure by Plaintiffs to define to the relevant geographic markets. Ultimately, Plaintiffs filed an amended complaint that managed to survive the pleadings stage.
Around this same time, another set of plaintiffs began similar litigation in state court. On April 7, 2014, the UEBT filed a class action lawsuit alleging that some of Sutter’s other contracting practices led to supracompetitive prices and violated the Cartwright Act. (UEBT et al. v. Sutter Health, Case No. CGC 14-538451 (San Francisco Super. Ct.)). In March 2018, the California Attorney General filed a similar lawsuit that the court consolidated with the UEBT’s case. (People v. Sutter Health, Case No. CGC-18-565398 (San Francisco Super. Ct.)).
In October 2019, Sutter agreed to settle its case with the UEBT and California Attorney General. As part of the settlement, Sutter agreed to pay $575 million in damages. Sutter also agreed to some forms of “injunctive relief” regarding certain business practices. For example, it agreed to not restrict the ability of health plans to create narrow networks or steer, tier, or otherwise incentivize patients to choose non Sutter providers.
Despite this massive settlement in the state litigation, Sutter continued defending itself in the federal litigation. On July 30, 2020, the District Court granted class certification and excluded 2008–2010 from the relevant period, which lead to a more than $75 million reduction in potential damages. On March 9, 2021, the Court rejected most of Sutter’s motion for summary, but dismissed Plaintiffs’ monopolization and attempted monopolization claims, along with any claims based on conduct from 2008–2010.
After numerous delays, include some attributable to the emergence of COVID-19 variants, a four-week trial finally began on February 9, 2022.
Plaintiffs tried to show that Sutter’s practices were different from other providers in the Northern California market because Sutter wanted to take advantage of its alleged monopoly or market power in certain geographic markets. For example, executives from commercial health plans testified that they felt pressured to accept Sutter’s “all or nothing” contracts even if they had no commercial interests for certain geographic markets. The executives also testified that no other providers in Northern California engaged in this type of negotiation and that they had “no choice” but to accept Sutter’s contract terms.
Plaintiffs also tried to demonstrate that Sutter’s practices offered no consumer benefits. For example, a former official from the U.S. Department of Veterans Affairs testified that Sutter’s “restrictive contracting practices” were unique to Sutter and could not be justified by higher patient care. Other witnesses disputed Sutter’s claim that its contracts facilitated “clinical integration.” Finally, Plaintiffs presented economic evidence suggesting that Sutter’s practices led to higher insurance premiums and prices charged to consumers without any corresponding benefits.
Sutter rejected Plaintiffs’ characterizations of its contracts and emphasized that the contracts do not suggest the “all or nothing” approach alleged by Plaintiffs. For example, during cross-examination of the health plan executives, Sutter attempted to establish that some health plans had contracts with Sutter that were not “all or nothing” contracts. Sutter also sought to discredit the executives, noting that the health plans might be biased given the money at stake in the trial.
Sutter further tried to demonstrate that it lacked market power in the Northern California market. For example, Sutter’s economic expert presented evidence that between 2006 and 2019, Sutter’s market share in Northern California fell from 18% to 15% while Kaiser increased from 26% to 35%. Sutter’s economic expert and business executives rejected Plaintiffs’ assertion that Sutter does not compete against Kaiser because Kaiser uses a “closed system” healthcare model.
Sutter also presented alternative explanations for the motivation behind its business practices. For example, it presented evidence that because Sutter is the largest provider of Medi-Cal services in Northern California, it must find enough patients whose medical needs are not paid by government-sponsored programs with limited reimbursements to reach its financial targets. Sutter witnesses also rejected the idea that narrow networks are always more efficient, noting that narrow networks can frustrate consumers.
After closing arguments, the nine-member jury deliberated for two days before rendering a verdict. The jurors went through a verdict form that asked whether Sutter sold inpatient hospital services that were tied to the more expensive hospital facilities and whether Sutter forced the class health plans to agree to contracts that had terms that prevented the plans from steering patients to lower-cost options. The jury answered “no” to both questions, thereby meaning that Sutter owed no damages to the class.
The disparate outcomes between the federal litigation and the state cases demonstrate the risks that civil plaintiffs face at trial, particularly in complex healthcare antitrust cases. Although government enforcers and private litigants will continue to examine provider practices, this trial will likely serve as a key reference for any future trials in the space.
Blue Cross Blue Shield Association Has Standing in Gilead HIV Suit, By Bob Connolly, Law Office of Robert Connolly
In Staley et al. v. Gilead Sciences, Inc. at al. 3:19-cv-02573, (N.D. Cal. March 14, 2022) EMC, the defendants moved to dismiss Blue Cross Blue Shield Association (“BCBSA”) as a plaintiff claiming that it did not have standing as a mere middleman passing on the federal government’s funds to pay Gilead. The Court denied defendants’ motion holding that “BCBSA has established a prima facie case that it, and not the Local Blues, pays for the drugs at issue and that it pays for the drugs out of its own funds as an initial matter (even if later reimbursed by OPM) and is subject to some insurance risk. It is not simply a financial intermediary.” The Court noted that this motion was based on the pleadings and found BCBSA had established standing “for now.”
This motion arose out of a class action lawsuit against Gilead Sciences Inc. and Janssen Pharmaceuticals alleging they conspired to keep cheaper HIV-related generic drugs off the market. According to BCBSA, it “purchased and/or provided reimbursement for some or all of the purchase price” for the drugs at issue “at supracompetitive prices during the Class Period” in a number of different states. Defendants claimed BCBSA lacked standing as a mere “financial intermediary” to bring claims because it is not a “true” purchaser—i.e., it did not use its own funds to buy any drugs and/or, even if it did, it was ultimately reimbursed for those purchases by the federal government.
The court noted that “a motion to dismiss for lack of standing is brought pursuant to Federal Rule of Civil Procedure 12(b)(1),” citing Chandler v. State Farm Mut. Auto. Ins. Co., 598 F.3d 1115, 1122 (9th Cir. 2010) (“[b]ecause standing and ripeness pertain to federal courts’ subject matter jurisdiction, they are properly raised in a Rule 12(b)(1) motion to dismiss”). Such a motion can be facial in nature or factual. See Pride v. Correa, 719 F.3d 1130, 1139 (9th Cir. 2013). Defendants launched a factual attack on BCBSA’s standing, meaning that defendants disputed the truth of the allegations that, by themselves, would otherwise invoke federal jurisdiction. The Court noted that where a factual motion to dismiss is made and only written materials are submitted for the court’s consideration (i.e., no full-on hearing is held), a plaintiff need only establish a prima facie case of jurisdiction” (citing Société de Conditionnement en Aluminum v. Hunter Eng’g Co., 655 F.2d 938, 942 (9th Cir. 1985).
The Court wrote that in resolving a factual attack on jurisdiction, the district court may review evidence beyond the complaint without converting the motion to dismiss into a motion for summary judgment. (citing Safe Air For Everyone v. Meyer, 373 F.3d 1035, 1039 (9th Cir. 2004). Where a factual motion to dismiss is made and only written materials are submitted for the court’s consideration (i.e., no full-on hearing is held), a plaintiff need only establish a prima facie case of jurisdiction. The Court noted that the Ninth Circuit has held that in the context of a motion to dismiss for lack of personal jurisdiction, “[w]here not directly controverted, plaintiff’s version of the facts is taken as true[;] [l]ikewise, ‘conflicts between the facts contained in the parties’ affidavits must be resolved in [plaintiffs’] favor for purposes of deciding whether a prima facie case for personal jurisdiction exists.’” Doe v. Unocal Corp., 248 F.3d 915, 922 (9th Cir. 2001); see also Dreier v. United States, 106 F.3d 844, 847 (9th Cir. 1996) (“consider[ing] items outside the pleading that were considered by the district court in ruling on the 12(b)(1) motion, but resolv[ing] all disputes of fact in favor of the non-movant”; adding that “the standard . . . is similar to the summary judgment standard”).
For Article III standing, a plaintiff must show: (1) an injury in fact, (2) a sufficient causal connection between the injury and the conduct complained of (i.e., traceability), and (3) a likelihood that the injury will be redressed by a favorable decision. See Lujan v. Defenders of Wildlife, 504 U.S. 555, 560-61 (1992). In this case BCBSA claimed past injury on the basis that it has, in the past, paid for the drugs at issue at supracompetitive prices.
Local Blues v. BCBSA
The Court outlined key factual disputes between the parties. The first factual dispute was “who pays for the drugs?” BCBSA submitted substantial sworn evidence that it is responsible for (i.e., administers and underwrites) pharmaceutical benefits whereas the Local Blues are responsible for medical benefits. BCBSA provided verified interrogatory responses to back up this claim. In response, Defendants argued that this is a litigation-crafted position, which is inconsistent with statements that BCBSA has taken in other proceedings as well as the Plan Participation Agreement. The Court found that given BCBSA’s verified interrogatory responses, BCBSA has, for purposes of this motion, laid out a prima facie case to support its position that it—and not the Local Blues—administers and underwrites the pharmaceutical benefits.
OPM v. BCBSA
Defendants also argued BCBSA was only an intermediary between OPM and the defendants and had always been reimbursed by the government for its payments. But the court found that BCBSA does bear some risk. The Court rejected the argument that entitlement to reimbursement negates the fact of injury for standing purposes. The Court cited Clayworth v. Pfizer, Inc., 49 Cal. 4th 758 (2010), where the California Supreme Court made the connection to standing more explicit:
While Manufacturers argue that ultimately Pharmacies suffered no compensable loss because they were able to mitigate fully any injury by passing on the overcharges, this argument conflates the issue of standing with the issue of the remedies to which a party may be entitled.
The Court denied defendants’ motion to dismiss for lack of standing finding that BCBSA established a prima facie case that it pays for the drugs at issue and is subject to some insurance risk.
Southern District of California’s Partial Grant of Summary Judgment on the Issue of Withdrawal in In re Packaged Seafood Products Antitrust Litigation, By Diana Yen, UCLA 2022 JD Candidate
In an opinion written by the Honorable Chief Judge Dana M. Sabraw, the Southern District of California in In re Packaged Seafood Products Antitrust Litigation, Case No. 15-MD-2670 (S.D. Cal. Mar. 1, 2022) granted in part and denied in part defendant Del Monte Corporation’s (“Del Monte”) motion for partial summary judgement. The court concluded that Del Monte was entitled to summary judgment based on a finding that it withdrew from the alleged conspiracy as of October 6, 2010, but was not entitled to summary judgment as of October 6, 2008, rejecting Del Monte’s argument that it had withdrawn at that time.
On December 20, 2002, Del Monte Foods Company (“DMFC”) acquired the StarKist brand from the H. J. Heinz Company (“Heinz”). The parties to the Merger Agreement were Heinz, DMFC, and SKF Foods Inc. When the transaction was completed, SKF Foods Inc. became the surviving corporation and a wholly-owned subsidiary of DMFC, with the name Del Monte. StarKist Foods, Inc. was a SKF Foods Inc. subsidiary that was also transferred in the transaction, and merged into Del Monte.
In 2007, Del Monte began exploring the sale of its tuna business. On June 29, 2008, Del Monte entered into an agreement with Dongwon Industries and StarKist for the sale of its packaged tuna assets. The transaction closed on October 6, 2008, after which ownership of the business was transferred to StarKist. StarKist retained Del Monte as a vendor post-close to provide certain services to its newly acquired seafood operations, including the tuna business. Del Monte and StarKist entered into a Transitions Services Agreement (“TSA”) and an Operating Services Agreement (“OSA”).
Del Monte alleges that it withdrew from any alleged conspiracy when it sold its packaged tuna assets to Dongwon Industries and StarKist on October 6, 2008, or by the latest, on October 6, 2010, when the OSA and TSA expired. Plaintiffs do not dispute that Del Monte withdrew from the alleged conspiracy as of October 6, 2010, when the OSA and TSA expired. Plaintiffs dispute that Del Monte withdrew as of October 6, 2008, the date of Del Monte’s sale of its packaged tuna assets to Dongwon Industries and StarKist.
Both the OSA and the TSA had terms of 24 months, or until October 6, 2010, at which time both Agreements expired. Pursuant to these agreements, Del Monte provided a host of services to StarKist related to the tuna business, including sales support, management of brokerage relationships, use of dedicated retail brokerage support, shelf resets, payment of brokerage fees, and use of Del Monte’s customer teams. Del Monte also provided StarKist with customer service and financial services that required Del Monte to communicate with StarKist’s customers, process sample requests, initiate customer billings for product shipments, manage trade accounts receivable, validate and clear trade promotion deductions, and seek recovery of invalid customer deductions.
Withdrawal Legal Standard
Corporations participating in an antitrust conspiracy are jointly and severally liable for all actions in furtherance of the conspiracy “until the objectives of the conspiracy are completed or the defendant withdraws.” In re Cathode Ray Tube (CRT) Antitrust Litig., No. C-07-5944 JST, 2016 WL 8669891, at *2 (N.D. Cal. Aug. 22, 2016). “Withdrawal negates the element of agreement to the conspiracy’s unlawful objective because ‘it marks [the] conspirator’s disavowal or abandonment of the conspiratorial agreement.’” United States v. Lothian, 976 F.2d 1257, 1261 (9th Cir. 1992) (quoting United States v. Read, 658 F.2d 1225, 1232 (7th Cir. 1981)).
Withdrawal is an affirmative defense, meaning the defendant bears the burden of proof. To satisfy that burden, “a defendant must either disavow the unlawful goal of the conspiracy, affirmatively act to defeat the purpose of the conspiracy, or take ‘definitive, decisive, and positive steps to show that the [defendant’s] disassociation from the conspiracy is sufficient.’” Lothian, 976 F.2d at 1261 (quoting United States v. Loya, 807 F.2d 1483, 1493 (9th Cir. 1987)) (quotation marks omitted). Stated differently, the defendant must make a “full exit from an industry [ ] to establish a prima facie case of withdrawal.” In re Optical Disk Drive Antitrust Litig., 2017 WL 6503743, at *7.
The Court’s Analysis
The court held that Del Monte is entitled to summary judgment finding that it withdrew from the alleged conspiracy as of October 6, 2010, but is not entitled to summary judgment that it withdrew as of October 6, 2008. In particular, Del Monte did not carry its burden to show withdrawal as of October 6, 2008. Del Monte admits that on October 6, 2008, it entered into the OSA and TSA with StarKist, pursuant to which Del Monte provided a host of services to StarKist related to the tuna business. However, Del Monte’s argument relied on the sale of its tuna business to StarKist. The court found Del Monte’s contention unpersuasive, noting that the sale of an operating business does not automatically establish withdrawal, citing In re CRT Antitrust Litig., 2010 WL 9543295, at *12 (N.D. Cal. Feb. 5, 2010).
Additionally, the court found that emails subsequent to the sale also raised a genuine issue of material fact about whether Del Monte withdrew from the conspiracy as of the sale date. In particular, on October 9, 2008, three days after the sale, Steve Hodge, who was then employed by Del Monte, sent an email to Donald Binotto, who was then CEO of StarKist, conveying information about Bumble Bee and Chicken of the Sea (“COSI”) matching albacore prices. Hodge later moved to StarKist and subsequently pleaded guilty to participating in the tuna pricing conspiracy during his tenure there. StarKist also identified Hodge as “the only StarKist employee with personal knowledge related to” StarKist’s agreements with Bumble Bee and COSI concerning national list prices during the first half of 2012.
Withdrawal may be effectuated in many ways and there is no set list of affirmative acts sufficient to establish withdrawal. The court, citing In re CRT Antitrust Litig., 2016 WL 8669891, at *3, notes that courts have been willing to grant summary judgment where the defendant: (1) severed all ties to the conspiracy, (2) severed all ties with the business through which it participated in the conspiracy, and (3) either communicated its withdrawal in a manner reasonably calculated to give notice to coconspirators or took affirmative acts inconsistent with the object of the conspiracy. Pertinent here, however, the court writes that there is “one point of overlap, namely, that there is no withdrawal unless the defendant severs all ties with the business through which it participated in the conspiracy.” In re Packaged Seafood Products Antitrust Litig. at *7 (emphasis added).
Court Rejects Proposed Class Action Objector Settlement as Setting Bad Precedent, By Bob Connolly , Law Office of Robert Connolly
In this decision in the near decade old Lithium Ion Battery litigation, the Court rejected a proposed settlement payment in the amount of $25,000 to a class action settlement objector. In re Lithium-Ion Batteries Antitrust Litigation, case no. 13-md-02420-YGR (N.D. Cal. March 24, 2022), Dkt. 2745. The rejected agreement had been reached by class counsel, whereby the objector would withdraw his objections and dismiss his appeal in return of $25,000 to be paid directly by class counsel. No part of the payment would come from the settlement fund or class counsel’s award of attorneys’ fees in this action.
Rule 23(e)(5) permits class members to object to proposed class action settlements and requires court approval of any payment in connection with “forgoing, dismissing, or abandoning an appeal from a judgment approving” a settlement. In reviewing the proposed settlement, the Court framed the issue as follows: “At the heart of the pending motion is the concept of ‘objector blackmail’ and whether it exists under the facts of this case. No authority provided in connection with the pending motion, let alone any Ninth Circuit authority, definitively resolves the issue.” Noting that Rule 23(e)(5)(B) does not prohibit objector settlements outright, the Court sought a standard to apply and quoted from the Advisory Committee notes:
But some objectors may be seeking only personal gain, and using objections to obtain benefits for themselves rather than assisting in the settlement-review process. At least in some instances, it seems that objectors—or their counsel—have sought to obtain consideration for withdrawing their objections or dismissing appeals from judgments approving class settlements. And class counsel sometimes may feel that avoiding the delay produced by an appeal justifies providing payment or other consideration to these objectors. Although the payment may advance class interests in a particular case, allowing payment perpetuates a system that can encourage objections advanced for improper purposes.
The Court noted that several factors weighed in favor of approving the settlement: the settlement agreement was being paid by class counsel; the settlement agreement was pending public scrutiny and approval before the Court; the settlement agreement appears to have been reached at an arms-length; the settlement agreement is a de minimis amount in comparison to the $44 million settlement fund; and, the class derives a benefit from the settlement in avoiding further delay.
The factors weighing against settlement were: lack of documentation by counsel of hours expended; prior rulings in the case that would make an appeal by objector’s counsel frivolous; the $25,000 is not de minimis compared to the $10,000 service awards provided to the other individual class representatives in this case; and, most importantly, such a high award would set precedent that distribution could be tied up by appeals that are very likely to fail in exchange for consideration.
The Court rejected the settlement principally on the amount being greater than that awarded to other individual class representatives and the appearance that the agreement was the result of “objector blackmail.” The Court concluded, however, that “the Court cannot say that no amount would be fair or reasonable given the particular circumstances of this case concerning a pro se objector. For the foregoing reasons, the motion for settlement is denied without prejudice. A renewed motion for settlement may be submitted within twenty-eight (28) days of this order.”
31st Annual Antitrust and Unfair Competition Law Institute (GSI) and Reception and Dinner Honoring Daniel Wall As Lawyer of the Year | May 5, 2022
Location: Julia Morgan Ballroom, 465 California St San Francisco, CA 94104
Earn 3.00 Hours MCLE Credit; Includes 1.0 Hour Elimination of Bias.
- $250 – Dinner and Registration
- $125 – Government Employee Dinner and Registration
The deadline to register is Thursday, April 28, 2022. No Institute Only Tickets.
Space is limited. All details.
- Big Stakes Antitrust Trial: In re Capacitors Antitrust Litigation (N.D. Cal.)
- Diversity in the Antitrust Bar: Is It Truly a Pipeline Problem?
- Judges Panel: Managing Complex Litigation in California State Court
CLA Membership Pricing
New Options: CLA introduces two new membership offerings for 2022! More information here.
Visit the CLA Career Center
Post a Job; Find a job. More information here.
Students Can Join the Section for Free
Law students can join up to three sections of the California Lawyers’ Association (CLA) for free? We’d love to have you. Find more information here.
Students can also receive a deeply discounted ticket to the GSI discussed above. More information will be available when the registration from is published.
This feature includes excerpts from selected press releases issued by the Antitrust Division, USDOJ, the Federal Trade Commission and the California Attorney General’s Office. It does not include all press releases issued by those offices. This appears to be a truly transitional time in antitrust enforcement and reading the press releases can be very helpful to stay on top of changes.
Antitrust Division, US Department of Justice
To link to all Antitrust Division, DOJ press releases, click here.
- Shipping Equipment Giants Cargotec and Konecranes Abandon Merger After Justice Department Threatens to Sue
March 29, 2022
Deal Would Have Eliminated Competition for Shipping Container Handling Equipment and Harmed the Global Supply Chain
Cargotec Corporation (Cargotec) confirmed today that it has abandoned its intended merger of equals with Konecranes Plc (Konecranes) one day after the Justice Department’s Antitrust Division informed the parties that the settlement proposal was not sufficient to address concerns that the proposed combination would eliminate important competition in four types of shipping container handling equipment used by port customers to move goods in the global supply chain.
- Two Individuals and Four Companies Indicted for Price Fixing DVDs and Blu-Ray Discs Sold on the Amazon Marketplace
March 18, 2022
A federal grand jury in Knoxville, Tennessee, returned an indictment charging two individuals and four companies with participating in a conspiracy to fix prices of DVDs and Blu-Ray Discs sold on the Amazon Marketplace.
- Contractors Indicted for Rigging Bids on Subcontract Work and Defrauding U.S. Military Bases in South Korea
March 17, 2022
A federal grand jury in the Western District of Texas returned an indictment charging two South Korean nationals for their roles in a conspiracy to restrain trade and a scheme to defraud the United States in connection with operation and maintenance work for U.S. military installations in South Korea.
March 17, 2022
Forums to Focus on Markets Commonly Impacted by Mergers: Food and Agriculture, Health Care, Media and Entertainment, and Technology
The Department of Justice and Federal Trade Commission (FTC) will host a series of listening forums to hear from those who have experienced firsthand the effects of mergers and acquisitions beyond antitrust experts, including consumers, workers, entrepreneurs, start-ups, farmers, investors and independent businesses. The four forums will be held virtually over the next three months and helmed by Assistant Attorney General Jonathan Kanter of the Antitrust Division and FTC Chair Lina M. Khan.
March 17, 2022
Acquisition Would Combine the Two Largest Producers of Pebbled FRP Wall Panels, Allowing Verzatec to Eliminate its Rival, Monopolize the Market and Harm American Businesses
The Department of Justice filed a civil lawsuit today to stop Grupo Verzatec S.A. de C.V. (Verzatec) from acquiring its biggest competitor, Crane Composites (Crane), a wholly-owned subsidiary of Crane Co. The complaint, filed in the U.S. District Court for the Northern District of Illinois, alleges that the proposed $360 million transaction would harm competition in production and sale of pebbled fiberglass reinforced plastic (FRP) wall panels, whose product and performance characteristics make it the wall covering of choice for many restaurants, grocery stores, hospitals and convenience stores across the United States.
- Justice Department and FTC Extend Deadline for Public Comment on Ways to Strengthen Enforcement Against Illegal Mergers
March 15, 2022
Today, the Department of Justice and Federal Trade Commission (FTC) are extending by one month the deadline to submit comments as part of the enforcement agencies’ process to modernize the merger guidelines to better detect and prevent anticompetitive deals. The new deadline is April 21.
March 10, 2022
The Agencies Will Enhance Enforcement Efforts Through Greater Coordination and Information Sharing, Cross-Agency Training and Outreach
The Justice Department’s Antitrust Division and the Labor Department signed a memorandum of understanding (MOU) today to strengthen the partnership between the two agencies to protect workers from employer collusion, ensure compliance with the labor laws and promote competitive labor markets and worker mobility. The objectives of the President’s Executive Order on Promoting Competition in the American Economy will be supported by this continued partnership.
March 10, 2022
Second Charge Filed for Long-Running Conspiracy that Targeted Local Governments and Public Schools in Minnesota
A federal grand jury returned an indictment charging Kamida Inc., a Minnesota-based concrete repair and construction corporation, and its CEO, Steven Dornsbach, with participating in a conspiracy to rig bids for public concrete repair and construction contracts in the state of Minnesota.
March 3, 2022
A German national pleaded guilty in the Eastern District of Michigan to leading a price-fixing conspiracy from 2007 to 2012 and was sentenced to time served.
Volker Hohensee, a German national and onetime Canadian resident who served as President of Espar Inc., a parking heater manufacturing company located in the United States and Canada, was indicted by a grand jury in December 2015. Hohensee fled Canada and remained a fugitive for five years. In December 2020, Hohensee was arrested while attempting to enter the Canary Islands and remained incarcerated in a Spanish facility until his plea today.
Federal Trade Commission
To link to all FTC press releases, click here.
- FTC Requires ENCAP to Sell Off EP Energy Corp.’s Entire Utah Oil Business amid Concerns that Deal would Increase Pain at the Pump
March 25, 2022
Agency Seeks to Prevent Private Equity Fund from Eliminating Significant Competitor in Utah Waxy Crude Oil
The Federal Trade Commission will require the divestiture of energy producer EP Energy Corp.’s entire business and assets in Utah. The divestiture will resolve the agency’s allegations that EnCap Energy Capital Fund XI, L.P.’s proposed $1.445 billion acquisition of EP Energy Corp. would eliminate head-to-head competition between two of only four significant producers and otherwise harm competition for the sale of Uinta Basin waxy crude oil to Salt Lake City refiners.
- Statement of Federal Trade Commission Bureau of Competition Deputy Director John M. Newman on Federal Appeals Court Ruling Affirming Preliminary Injunction to Halt Merger of New Jersey Hospital Networks
March 22, 2022
Federal Trade Commission Bureau of Competition Deputy Director John M. Newman issued this statement regarding the U.S. Court of Appeals for the Third Circuit decision affirming the district court’s August 2021 decision to grant a preliminary injunction against Hackensack Meridian Health, Inc.’s proposed acquisition of Englewood Healthcare Foundation.
March 17, 2022
Forums to focus on markets commonly impacted by mergers: food and agriculture, health care, media and entertainment, and technology.
The Federal Trade Commission and U.S. Department of Justice will host a series of listening forums to hear from those who have experienced firsthand the effects of mergers and acquisitions beyond antitrust experts, including consumers, workers, entrepreneurs, start-ups, farmers, investors, and independent businesses. The four forums will be held virtually over the next three months and helmed by FTC Chair Lina M. Khan and Assistant Attorney General Jonathan Kanter of the Antitrust Division.
- FTC and DOJ Extend Deadline for Public Comment on Ways to Strengthen Enforcement Against Illegal Mergers
March 15, 2022
Today, the Federal Trade Commission and U.S. Department of Justice are extending by one month the deadline to submit comments as part of the enforcement agencies’ process to modernize the merger guidelines to better detect and prevent anticompetitive deals. The new deadline is April 21, 2022.
California Department of Justice
For a complete list of California AG press releases click here.
March 31, 2022
Urges Ninth Circuit to recognize broad protections for fair competition under California’s Unfair Competition Law
California Attorney General Rob Bonta today filed an amicus brief in the Ninth Circuit Court of Appeals in Epic Games v. Apple, arguing in support of the broad protections for fair competition under the state’s Unfair Competition Law. Last year, a district court found that Apple’s anti-steering policy — which prohibits app developers from informing consumers about other, potentially cheaper ways to pay for their apps — violated the Unfair Competition Law. In today’s brief, Attorney General Bonta explains the importance of the Unfair Competition Law to antitrust enforcement and fair competition in California.
March 18, 2022
As gas prices in California continue to rise precipitously, California Attorney General Rob Bonta today sent a letter to refineries active in the California market warning them against illegal market manipulation and other violations of state antitrust laws.
- Attorney General Bonta Reminds Employers and Workers That Noncompete Agreements Are Not Enforceable Under California Law
March 15, 2022
California Attorney General Rob Bonta issued an alert reminding employers and workers that noncompete agreements are not enforceable in California. Noncompete agreements generally require workers to refrain from accepting new employment opportunities in a similar line of work or establishing a competing business, usually for a specified period of time and within a geographic area.
In Case You Missed It
Below are headlines from various news reports with a short except from the article. The article is hyperlinked so you can read it in its entirety.
Jon Swartz, MarketWatch
April 1, 2022
Attorney General files brief in appeals case explaining law that federal judge used in only beneficial ruling for ‘Fortnite’ maker, suggests case be transferred to California Supreme Court if justices are uncertain that the law was applied correctly
California Attorney General Rob Bonta filed a legal brief in federal appeals court late Thursday arguing for fair competition under state law in Epic Games Inc.’s landmark antitrust lawsuit against Apple Inc.
The 36-page brief does not take a side in the dispute, but does say that if the federal appeals court “is uncertain about whether the district court correctly applied” the California law, it should certify the case to the California Supreme Court. California’s Unfair Competition Law, or UCL, imposes “broad” and “sweeping” prohibitions against unfair, unlawful or fraudulent business acts or practices.
March 31, 2022
The U.S. Justice Department asked a federal court in Denver on Thursday to drop price-fixing charges filed against five executives of chicken producing companies after two mistrials in the case focused on competition in the $65 billion poultry sector.
The department, however, did not drop charges against five other defendants. Judge Philip Brimmer of the U.S. District Court for the District of Colorado ordered Jonathan Kanter, the head of the U.S. Justice Department Antitrust Division, to appear before him and explain why the case should be retried.
March 30, 2022
The U.S. Justice Department has tried and failed twice to prove price-fixing in the chicken industry. Now, before it tries for a third time, a federal judge in Denver is demanding an explanation.
“I am going to order that the head of the antitrust division come in here within the next week and look me in the eye and explain to me why the government is going to retry this case,” U.S. District Judge Philip Brimmer said Tuesday.
European Parliament News, Press Release
March 24, 2022
Parliament and Council negotiators agreed new EU rules to limit the market power of big online platforms. The Digital Markets Act (DMA) will blacklist certain practices used by large platforms acting as “gatekeepers” and enable the Commission to carry out market investigations and sanction non-compliant behaviour.
Nate Raymond, Reuters
March 24, 2022
A federal judge on Thursday tossed a lawsuit by the U.S. Federal Trade Commission accusing Endo International Plc and Impax Laboratories of violating antitrust laws by striking a deal that stifled competition in the market for an opioid pain medication.
The reasons for U.S. District Judge Royce Lamberth’s decision were not immediately clear, as the Washington, D.C.-based judge filed his opinion under seal to allow the parties five days to address whether anything should be redacted.
Olafimihan Oshin, The Hill
March 24, 2022
Sen. Bernie Sanders (I-Vt.) has introduced a bill that would target Major League Baseball’s (MLB) antitrust exemption. Sanders announced the legislation, called the “Save American Baseball Act,” on Tuesday during an appearance on HBO’s “Real Sports with Bryant Gumbel.”
Barbara Grzincic, Reuters
March 23, 2022
The Federal Trade Commission offered more than enough evidence to temporarily block New Jersey’s largest hospital system from buying a smaller competitor, a federal appeals court held Tuesday.
Jonathan Stempel, Reuters
March 22, 2022
U.S. District Judge Jeffrey White said AliveCor Inc, whose SmartRhythm app alerts users to irregular heartbeats, could try to prove that Apple violated federal antitrust law based on its alleged “complete control” over the market for such apps. “AliveCor alleges that Apple made changes to the heart rate algorithm that made it effectively impossible for third parties to inform a user when to take an ECG,” or electrocardiogram, White wrote. “Plaintiff’s allegations plausibly establish that Apple’s conduct was anticompetitive.”
Ayana Archie, NPR
March 22, 2022
The District of Columbia is suing food delivery company Grubhub in a lawsuit filed Monday, in which it accuses the business of “deceptive trade practices,” such as excessive fees, out-of-date restaurant prices and false advertising. D.C.’s Attorney General Karl Racine said in the complaint that Grubhub often misrepresents what’s offered on the app and website.
Emma Roth, The Verge
March 19, 2022
DC Superior Court Judge Hiram Puig-Lugo granted Amazon’s motion to dismiss the lawsuit, which accuses the e-commerce giant of anticompetitive behavior by preventing third-party sellers from offering lower prices for their products on other platforms, including their own websites.
David Reichenberg, Forbes
March 14, 2022
Criminal Monopolization Charges?: On March 2, 2022, Richard Powers, the deputy assistant attorney general of the Antitrust Division of the US Department of Justice, said that the division is prepared – for the first time in decades – to bring criminal charges under Section 2 of the Sherman Act, which prohibits monopolists or attempted monopolists from engaging in certain exclusionary conduct.
Speaking on a panel at the American Bar Association’s National Institute on White Collar Crime, Powers was asked whether the DOJ was committed to prosecuting monopolization cases, and whether this meant the Antitrust Division was prepared to bring criminal charges under Section 2 of the Sherman Act. Powers responded that he was not “making any announcements,” but that the short answer was “yes, absolutely.”
Joy Wildermuth, CBS MarketWatch
March 12, 2022
[Suzanne] Shank, the firm’s chief executive and president, recently talked with MarketWatch for The Value Gap about her journey to the top of Wall Street, including her recent work helping Fortune 500 companies SPX, +0.51% look inward at injustices that can act as a barrier to financial, social and career success, and ensure their workplaces are diverse, equitable and inclusive.