Antitrust and Unfair Competition Law
e-Briefs, News and Notes: April 2023
WELCOME to the APRIL 2023 edition of E-Briefs, News and Notes.
This edition has a variety of content:
- In SECTION NEWS, we feature:
- Recap of Sixth Annual Celebrating Women in Competition Law in California held on March 9, 2023
- Remembering Terry Callan, former Section Chair, Executive Committee Member and Advisor, and 2012 Antitrust Lawyer of the Year
- E-BRIEFS features three interesting cases: motion to dismiss orders with mixed results in two cases analyzing monopolization claims in different industries and an opinion granting class certification in an antitrust action over sports broadcasts. Also featured is a review of the DOJ notice withdrawing healthcare antitrust policy statements it jointly issued with the Federal Trade Commission (FTC) in the 1990s and 2000s.
- IN CASE YOU MISSED IT re-posts numerous articles and other matters of interest to antitrust and unfair competition lawyers. Curated by Bob Connolly.
Thanks to all the contributors to this edition. If you have any suggestions for improvement, or an interest in contributing to E-Briefs, please contact Editors Betsy Manifold (Manifold@whafh.com) and James Dallal (JDallal@cpmlegal.com).
Section News
Recap of Sixth Annual Celebrating Women in Competition Law in California held on March 9, 2023
By James Dallal, Associate Editor
Braving the rain, members of the Section and guests gathered for the Sixth Annual Celebration of Women in Antitrust featuring elite female practitioners at the forefront of antitrust: Bonnie Lau, partner and co-head of the San Francisco litigation department at Morrison Foerster; Lin Chan, partner at Lieff Cabraser Heimann & Bernstein; Elizabeth Jensen, trial attorney with the U.S. Department of Justice Antitrust Division; and Leonor Velazquez Davila, Associate Director, Global Antitrust Compliance at Intel Corporation. The Honorable Jacqueline Scott Corley, District Judge of the United States District Court, Northern District of California, moderated the panel.
Judge Corley opened the discussion with a brief overview of her own very interesting career and path to the bench. After clerking in Massachusetts, Judge Corley worked as an associate at a firm for four years under attorney (now Senior District Judge) Charles Breyer, who became a judge while she was awaiting her second child. Faced with the challenges of raising two children with a husband with a very busy medical practice, Judge Corley worked out an arrangement where she could work for Judge Breyer and appear in the office three days per week. She pledged to stay four years and wound up staying for eleven and a half, balancing parental and work responsibilities, including through “power naps” and working late at night. After returning to private practice for several years, Judge Corley applied for a magistrate judge position and served for 11 years as a magistrate before her Article III appointment.
The panelists then discussed their own unique career paths.
Ms. Lau described her more linear path to partnership at Morrison Foerster, though her mother had hoped she would become a scientist. Her parents were immigrants and she was first in her family to attend a four-year college. Ms. Lau described making mistakes at first but found “amazing women” to whom she could pose questions. She recognized having had many mentors and was able to bring in a major case and take it to trial. That matter led to several young associates getting their first deposition work.
Ms. Chan’s passion is social justice and civil rights. She began her career as a union organizer, living out of suitcase, seeing the country, and observing firsthand the power of collective action and the power of strength in numbers. That perspective led her first to pursue labor and employment litigation as a career, but then “a few things happened,” Dukes v. Walmart not least among them. And so when her current firm Lieff Cabraser had an antitrust opening, she made the transition.
In college, Ms. Jensen pondered “What impact do I want to have?” The answers required completing law school along with courses in economics and antitrust. In her many antitrust seminar courses, Ms. Jensen was often the only woman enrolled, but encountered many “great men.” After a year in Japan she found herself at DOJ in a role responsible for Networks & Technology, and has swiftly risen to a position where she heads up an investigation and litigation against Google.
Ms. Velazquez began by expressing appreciation “that we’re taking the time to talk about journeys.” Her parents had only hoped she would attend college, but she had loved watching Perry Mason while growing up, and therefore after spending a year in France, she returned home to attend law school. She chose George Washington so she could also earn a master’s degree in international affairs, “just in case.” With a choice between the FTC and a clerkship, she picked the FTC and worked in Mexico City advising Mexico’s antitrust regulator, the Comisión Federal de Competencia Económica (Cofece). Ms. Velazquez loved her antitrust work including the opportunity to educate people through training. This passion inspired her to pursue in-house opportunities, and landed her a role at Intel. Ms. Velazquez enjoys having the opportunity to serve as a non-government advisor to the International Competition Network (ICN), a role which builds on her prior government work. She is committed to mentorship and wants to strengthen the pipeline, particularly for female and Latina talent. She notes the situation has gotten a little better in recent years but there is still room to improve.
Judge Corley then asked the panelists to comment on the difficulties women face in having their voices heard in their roles as lawyers, judges, and clients. Ms. Jensen offered that amplifying one’s voice can happen differently in conversations about process as opposed to ideas. “People will want to hear what you have to say if you have the answers they need.” Being heard on process, addressing a situation where something needs to happen by a certain time, is a matter of taking ownership. By contrast, conversations about ideas are more cyclical and amorphous, aspects which can lead to people not feeling heard. She would gain confidence when she heard others articulate what she had been thinking. A good way to begin is by “Yes-and-ing,” i.e., offering something further that operationalizes or adds to what has already been said.
Ms. Chan then invited Judge Corley to offer her thoughts on whether judges have a role to play in women being heard. Judge Corley answered Yes, and especially during settlement conferences, where she is intentional about calling on younger lawyers, often women, to share their thoughts. Judge Corley also believes in letting younger lawyers argue and praising their performance on the record. And she does not limit the number of lawyers who may speak on a matter, so that younger lawyers have a lower-risk chance to present that preserves the lead attorney’s ability to step in if necessary.
The Judge next asked the panelists to describe a gender-based obstacle they faced. Ms. Lau described a difficult situation during her partnership year when a senior partner with whom she had not worked since her second year submitted an unsolicited review, in an apparent act of sabotage. Another partner who had supported her let her know. She addressed the situation by inviting the senior partner out for coffee or lunch every month from then on, and eventually he apologized, explaining that he felt the firm had disrespected him and that he was being eclipsed by junior lawyers. Ms. Lau observed that an ability to manage relationships can often be more important than technical skills. Ms. Velazquez added that the story shows it’s essential to have a sponsor, as opposed to a mentor, especially in a practice area that has been male-dominated.
Judge Corley then asked Ms. Chan to offer thoughts on women competing for leadership positions in class actions. Ms. Chan noted there is a well-established repeat player problem, which she can confirm as an antitrust lawyer is also a major competition problem. But judges have more recently been recognizing the value of diversity among the advocates representing the class. Judge Corley noted that clients have largely driven the selection of women for lead roles on the defense side, and experience has shown that diversity among the lawyers just makes the level of representation better. Ms. Lau added that the same incumbency problem exists in the selection of expert witnesses. Ms. Chan noted as well that diversity can and should play a role in choosing vendors, including claims administrators.
Judge Corley next turned to Ms. Velazquez for thoughts on work-life balance and the rise of remote work during the pandemic. Ms. Velazquez recited the statistic that 46% of women have cited work-life balance as a factor in leaving a job. She works a full-time remote schedule and loves it, and she has advice for managing in-person work in a law firm context. She recommends prioritizing mental, physical, and emotional health, establishing good boundaries, and blocking out time to take a break. She advises lawyers to turn off alerts, and to communicate and be transparent about expectations. Faced with an overly burdensome request it is OK to answer “No, but . . .” and offer alternatives. Prioritize relationships; as there is a Harvard study that confirms the one factor that makes us happy and helps us live longer lives is positive relationships. Ms. Jensen added that an important aspect of the chief of staff role is staying aware of everyone’s bandwidth and what they are working on. Checking in to see if people really can complete tasks they are assigned helps retention and demonstrates a willingness to be supportive. Men need balance too, and it is a positive sign that more men are taking full paternity leave.
The session concluded with Judge Corley asking each panelist for one piece of advice. Ms. Chan offered, “find your joy”; lawyers should not struggle through their whole careers and what someone enjoys may change throughout his or her career. Ms. Lau advised, “Just ask.” It is worth asking for anything that you want. Ms. Jensen advised that lawyers make connections with people who are lateral, with superiors, and with people in support roles. Ms. Velazquez offered, “Don’t be afraid to take risks and try something new.” Also, look for mentors. Judge Corley then advised aspiring female attorneys, “I don’t think you can be too confident in court.” While men may be sometimes, the Judge has never seen it in a woman, perhaps because a woman will always have a voice in the back of her head holding her back. “Confidence can persuade,” and there is also power in concession; conceding where necessary displays confidence and adds credibility.
A lively and informative panel, from a truly inspiring set of speakers!
Terrence Aloysius Callan (September 20, 1939 – January 4, 2023)
By Bruce A. Ericson
Terry Callan died surrounded by his family on January 4, 2023, age 83.
Terry practiced at Pillsbury for 51 years, from 1964 to 2015. He was a leader of the firm’s Antitrust & Competition Practice Team, a mainstay of its antitrust practice, and had an extraordinary career as an antitrust attorney. Terry handled many antitrust cases and grand jury investigations over his career. He had prominent roles in many of the most significant antitrust cases of his era, including In re Brand Name Prescription Drugs, Carbon Fiber, Snack Foods, Synthroid Marketing, Fine Paper, High Fructose Corn Syrup, Thermal Fax Paper and Clayworth v. Pfizer.
Terry was extremely well known and admired within the antitrust bar. For many years he played a leading role in the State Bar of California’s Antitrust & Unfair Competition Law Section. Terry was the former Chair of the Section, a long-time member of its Executive Committee and, after his terms of office, continued as an Advisor to the Section. He was honored as Antitrust Lawyer of the Year in 2012.
The unanimous choice of Terry for this honor came as no surprise: Terry was legendary for his friendships. John Hansen, the former leader of Pillsbury’s Environmental Group, says: “I knew Terry as a friend, not so much as a lawyer, since we practiced in different fields. I of course knew Terry had an excellent practice and a wonderful reputation as an antitrust lawyer. He was very devoted to his profession and to Pillsbury, and a very hard worker. But what I can tell you most is that Terry was a wonderful friend, and an all-around great person to be around: a very gentle and kind man with a keen intellect, diverse interests, and a kind word and a big smile for those lucky enough to know him.”
Another of Terry’s former partners, Bill Miller, says “Terry was one of the most skillful, effective and yet likable litigators I have ever known. He had a real way about him.” His former partner Chuck Ragan says “Terry was a quiet man with a brilliant mind for competition issues and developing business who loved sports and his alma maters. A lovely soul.”
Terry’s former partner Jim Young, whose office was directly across the hall from Terry’s office for years, says “His door was always open, and I could run across to bounce ideas, discuss research or talk about anything. Always gracious and a great guy and attorney. His secretary (Ginger Cross) guarded his door, and he only got anxious about USF basketball.”
Former partner and retired federal district judge Vaughn Walker says Terry “was Irish with a bit of that distinctive accent that marked him as a home town kid. Terry was ready with a quick, if sometimes quiet, witty observation about any issue that popped up. Friendly and warm are adjectives that don’t quite do justice. An antitrust lawyer who stayed with that practice as it waxed and waned marked his professional steadfastness and exceeded only by the steadiness of his friendliness and warmth. A swell guy, indeed, he was.”
Former partner and former FTC Commissioner Terry Calvani says, “I never met anyone who didn’t like Terry. But there were two other qualities that contributed to his reputation as a very fine lawyer. First, he was able to work with even the most difficult clients. His personality was such that was able to smooth over very choppy waters. He would have been a very able diplomat. Second, he was able to represent his clients’ interests very well and at the same time deal with opposing counsel very effectively— always calmly and without rancor. He seemed to succeed with a smile where others failed when being ‘tough.’ Again a diplomat, but one who never lost sight of his clients’ interests.”
As Terry Calvani notes, the affection that his colleagues felt for Terry was shared by his opponents. Many of the giants of the plaintiffs’ antitrust bar – Joe Alioto, Guido and Richard Saveri, Fran Scarpulla – also were San Franciscans and some of them had known and liked Terry since their days at school and playing sports together. Collegiality was a way of life for Terry long before it (or the lack thereof) became an issue in our profession. Known as “The Negotiator,” Terry was particularly adept at settling cases on good terms but without making enemies doing so.
A fourth generation San Franciscan, Terry was born to Viola and Harold Callan on September 20, 1939, and grew up in the Lakeshore Park neighborhood in the Outer Sunset, near Lake Merced. He attended Abraham Lincoln High School in the Sunset and received his undergraduate degree from the University of San Francisco – which proved to be simply the opening act in his lifelong devotion to USF and its athletic teams. Terry had a deep love for USF and remained very active, chairing and serving on many boards and committees. In 2013, he received the university’s “Alumnus of the Year award.” It is said that Terry “bled green and gold” (the USF colors); he and his wife Gail proudly wore their green and gold scarves to USF basketball games and were affectionately known as the ‘Scarf People’. Terry’s affection for sports also extended to the Giants and the 49ers.
After college, Terry attended the University of California Hastings College of Law (recently renamed University of California College of the Law, San Francisco) where he was elected to the Thurston Honor Society, received the Order of the Coif and was the Articles editor of the Hastings Law Journal.
Terry started practicing at Pillsbury fresh out of law school. At first he worked full time at the Pacific Telephone & Telegraph Company. In those days, Pacific had no in-house lawyers of its own, but relied on Pillsbury for all of its legal work. Young litigators would start out by handling what were generically referred to as “cable damage” cases – often the aftermath of someone inadvertently cutting an underground phone line when digging a trench or something of that sort. In time Terry began his antitrust practice working with legends such as Bill Mussman and Francis Kirkham.
Early in his career, Terry met Gail Raine, the woman who was to become his wife, on a blind date in Sausalito. The two were married at Saint Mary’s Star of the Sea Catholic Church in Sausalito in 1968 and they lived in Sausalito for most of their married life. Their son, Ryan, was born in 1978; like his father and his grandfather, Ryan also graduated from USF.
A mass in Terry’s memory was celebrated on January 14, 2023, at Saint Mary’s Star of the Sea, with a number of Pillsbury lawyers and alumni in attendance – along with at least a few members of the plaintiffs’ bar. During the mass, the priest drew our attention to the stained glass window contributed by Terry and his family, urging us to take out our cellphones and take a picture of it. So I did. Rest in peace, Terry.
Donations in Terry’s memory may be made to ‘University of San Francisco Athletics’ DONATE or mailed to: USF Athletics, 2130 Fulton Street, San Francisco, CA 94117-1080.
e-Briefs
Connecticut Federal Judge Allows Antitrust Claims Against Hartford HealthCare to Proceed
By Margaret A. Webb, Morrison Foerster
By Margaret A. Webb, Morrison Foerster
On February 13, 2023, U.S. District Judge Sarala V. Nagala declined to throw out Saint Francis Hospital’s lawsuit accusing competitor Hartford HealthCare of monopolizing healthcare services in Hartford County. Saint Francis Hosp. & Med. Ctr., Inc. v. Hartford Healthcare Corp., No. 3:22-CV-50 (SVN), 2023 WL 1967133 (D. Conn. Feb. 13, 2023). Judge Nagala did eliminate one theory of liability from the complaint, holding that Saint Francis failed to adequately allege that Hartford HealthCare’s refusal to participate in certain cost-lowering insurance programs harmed competition.
The complaint alleged that Hartford HealthCare and its affiliates suppressed competition through two buckets of monopolistic conduct. First, Hartford HealthCare acquired the practices of physicians affiliated with competing hospitals through a “campaign of intimidation,” threatening to “crush” physicians that resisted and offering compensation well above fair market value. Hartford HealthCare also maintained control over physician referrals through threats and rewards, thereby keeping patients away from competitors. And Hartford HealthCare negotiated an exclusive agreement to buy innovative orthopedic surgical technology—precluding competitors from using the technology—which gave Hartford HealthCare an advantage in recruiting orthopedic surgeons. Second, Hartford HealthCare refused to participate in tiered networking programs that would increase competition and reduce prices.
Together, these anticompetitive practices have purportedly entrenched Hartford HealthCare’s monopoly power by enabling it to amass a significant share of Hartford County’s specialist physicians, none of whom can refer patients to Saint Francis. The lawsuit alleges that Hartford HealthCare holds significant leverage over managed care plans, making it difficult for them to refuse the high rates that Hartford HealthCare demands despite its lower quality services.
In a lengthy opinion, the court held that Saint Francis had sufficiently pled its first theory of liability based on Hartford HealthCare’s recruitment of physicians and control over referrals. In its motion to dismiss, Hartford HealthCare argued that hiring a competitor’s employees does not constitute an antitrust violation. But Judge Nagala said the complaint plausibly alleged that Hartford HealthCare engaged in vertical acquisitions of physician practices “for the purpose of concentrating [its] market power,” though she acknowledged that this was “a close question.” The court distinguished the allegations from the mere “hiring of rival talent,” which would be insufficient to state an antitrust claim. In fact, no-poach agreements violate the antitrust laws, so the court was likely keen to draw this distinction, particularly given the government enforcement agencies’ heightened scrutiny of antitrust conduct in labor markets over the past few years.
Judge Nagala also held that Saint Francis adequately alleged antitrust standing for its first liability theory. Hartford HealthCare argued that “Saint Francis would have suffered from the same injury if any hospital system had acquired the physicians at issue.” The court disagreed, noting that Saint Francis’s alleged harm resulted directly from Hartford HealthCare’s monopoly power and anticompetitive conduct. Hartford HealthCare’s acquisition of physicians has made competing hospitals, including Saint Francis, less attractive to patients and simultaneously given Hartford HealthCare increased bargaining power over managed care plans.
However, the court held that Saint Francis’s second theory of liability fell short. The complaint alleged that participation in tiered networking would “stimulate price competition between providers” and “significantly reduce health care costs” by requiring hospital systems to compete to be selected by the managed care plans as preferred providers. But Judge Nagala concluded that Saint Francis failed to “articulate a factual or legal theory under which [Hartford HealthCare’s] refusal to participate in tiered networking programs violates antitrust law.” The complaint also failed to identify any actual harm that Saint Francis suffered from that conduct.
Finally, the court held that Saint Francis defined a plausible relevant market, an essential element of its claim. The complaint alleged a relevant market of “adult acute inpatient healthcare services and adult professional specialist healthcare services provided to commercially insured patients in Hartford County.” The court rejected Hartford HealthCare’s contention that the complaint artificially limited the product market to commercially insured patients, finding that the allegations justified excluding patients insured by government programs.
Rule 23(b)(3) and (b)(2) Class Certified in the NFL Sunday Ticket Antitrust Action
By Michael L. Levine, Law Offices of Michael Levine
By Michael L. Levine, Law Offices of Michael Levine (Levinelawhelp@gmail.com}
In In re NFL’s Sunday Ticket Antitrust Litig., ML 15-2668, 2023 U.S. Dist. LEXIS 21752, 2023 WL 1813530 (C.D. Cal. Feb. 7, 2023), Judge Gutierrez denied motions to exclude experts reasoning that the challenges by both the defendants and the plaintiffs to the expert opinions on a class certification motion raised issues addressed to the weight to be ascribed to the evidence by the jury, not its admissibility. Judge Gutierrez then certified a Rule 23(b)(3) damages class and (b)(2) injunctive class in an antitrust action brought under §§ 1 and 2 of the Sherman Act.
Facts
This is an antitrust action in which plaintiffs claim defendants used interlocking agreements to suppress competition for the sale of professional football game telecasts in violation of Sections 1 and 2 of the Sherman Act. Acting on behalf of the 32 individual NFL teams, through a pooled-rights agreement, the NFL entered into two licensing agreements: one to create a single telecast every Sunday; and another allowing DirecTV to obtain all of the live telecasts produced by CBS and Fox and bundle them into a subscription package called NFL Sunday Ticket. Football fans who are not Sunday Ticket subscribers can view only a limited number of local games each Sunday afternoon, but Sunday Ticket subscribers can view both local and out-of-market games. Plaintiffs’ antitrust action alleges that absent the anticompetitive agreements, the telecasts solely available on Sunday Ticket would be available through other means, which would result in a greater number of telecasts of NFL games that would be more accessible to more viewers at lower prices.
Daubert Motions
Plaintiffs and defendants filed motions to exclude the expert opinions or disqualify the experts proffered by the opposing party. Judge Gutierrez explained that under Daubert, District Courts are required to “ensur[e] that an expert’s testimony both rests on a reliable foundation and is relevant to the task at hand.” Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579, 597 (1993). Under this standard, expert opinion testimony is relevant if the knowledge underlying it has a valid connection to the pertinent inquiry and is reliable if the knowledge underlying it has a reliable basis in the knowledge and experience of the relevant discipline. Thus, the test under Daubert is not the correctness of the expert’s conclusions but the soundness of his or her methodology.
Judge Gutierrez applied these standards to each of the challenges and found the opinions and models offered by Dr. Israel, Dr. Yurukoglu, Sarah Butler, Dr. Zona, and Dr. Rascher were admissible for consideration in determining whether class certification was appropriate. The Court went on to explain to under Alaska Rent-A-Car, Inc. v. Avis Budget Group, Inc., 738 F.3d 960 (9th Cir. 2013) the challenges to each of the experts went to the weight the jury should ascribe to the evidence and indeed may be sufficient to give the jury reason for rejecting the testimony. Nevertheless, the expert evidence was sufficiently relevant and reliable to be considered on class certification.
Class Certification
Plaintiffs sought to certify two proposed classes: a Commercial class and a Residential class comprised of DirecTV commercial and residential subscribers that purchased NFL Sunday Ticket from DirecTV. Plaintiffs seek damages for the overcharges they paid DirecTV, and an injunction restraining the NFL Defendants from continuing their anti-competitive conduct.
Judge Gutierrez focused his certification analysis on predominance and superiority under Rule 23(b)(3). With respect to predominance, the Court focused on whether the evidence established that a common question predominated that was capable of class-wide resolution, not whether the evidence in fact established that plaintiffs would prevail at trial. Ultimately, the Judge determined that to prevail plaintiffs would be required to show (1) a violation of antitrust law, (2) antitrust injury or impact flowing from the violation, and (3) measurable damages, which were each subject to common proof. With respect to superiority, Judge Gutierrez found class treatment is the only realistic way for class members to obtain relief from defendants’ purported anticompetitive conduct due to the costs and complexities of prosecuting individual antitrust claims. Defendants challenged certification of a Rule 23(b)(2) injunctive class on mootness grounds, claiming the issue would be moot before trial due to the expiration of the interlocking agreements. The Court rejected this argument as “myopic,” finding “Defendants’ conduct is likely to continue, albeit with a new home for Sunday Ticket, the entire class is likely to continue to be subjected to Defendants’ anticompetitive restraints on telecasts.”
The Court concluded its analysis and articulated the basis for finding that he class satisfied each of the Rule 23(a) requirements of numerosity, commonality, typicality, and adequacy.
Retail Investor Class Action against Charles Schwab Survives Motion to Dismiss
By Lillian Grinnell, Wolf Haldenstein
In a ruling from the Eastern District of Texas, Charles Schwab’s motion to dismiss against a group of retail investors’ putative class action was denied. The retail investors had alleged that when Schwab merged with TD Ameritrade, they violated § 7 of the Clayton Act in creating a monopoly in the “Retail Order Flow” market. In its motion to dismiss, Schwab argued that plaintiffs failed to state a claim under the Clayton Act by not defining a relevant product market or alleging that the merger substantially lessened competition in that relevant market; that plaintiffs failed to allege any antitrust injury; and lastly that the request for equitable relief failed as a matter of law. Judge Mazzant denied the motion on all three grounds.
Facts
Here, the plaintiffs’ product market definition rested on the assertion that retail brokerages are a distinct submarket from the broader brokerage industry, as defined by so-called “practical indicia” described by the Supreme Court in Brown Shoe Co. v. United States, 370 U.S. 294, 325 (1962). Plaintiffs explained that the financial services industry views it as a distinct subset within the larger market when it comes to securities and options orders, and also alleged that market participants also recognize it as such. In addition, they described the Retail Order Flow Market as having “unique characteristics” of smaller order sizes and lesser sophistication in its individual investors, especially as compared to institutional order flow. Defendant Schwab contended that this product market was conceived and overly narrow, not accounting for other kinds of business models. Finally, the prices available to retail investors are very distinguishable from those marketed to institutional investors, which tend to be more commission-based.
Application of Fifth Circuit and Brown Shoe Framework
In his opinion, Judge Mazzant explained that in the Fifth Circuit, dismissal on the pleadings for failure to allege a product market would require either “(1) failed attempts to limit a product market to a single brand, franchise, institution, or comparable entity or (2) failure even to attempt a plausible explanation as to why a market should be limited in a particular way.” Slip op. at 7. Here, because Plaintiffs achieved more than this in their pleadings, especially by relying specifically on the Brown Shoe framework, this product market definition became “facially plausible” and the issue became a question of fact that would be inappropriate to determine at the motion to dismiss stage.
In addition, Judge Mazzant cited F.T.C. v. Staples, Inc., 970 F. Supp. 1066, 1075 (D.D.C. 1997), where office superstores were successfully alleged to be a relevant product market, as opposed to the broader market of the overall sale of office supplies, as the Staples defendants contended. This case was parallel to the one at hand, as office superstores did not compete with other kind of outlets selling office supplies, and had a unique customer base – like retail investors.
Next, turning to Schwab’s attempt to dismiss on the basis of a lack of antitrust injury, the Court noted that because “the adequacy of a plaintiff’s contentions regarding a transaction’s effect on competition is often a fact-intensive inquiry that requires discovery” “the adequacy of a plaintiff’s contentions regarding the effect on competition is typically resolved after discovery, either on summary judgment or after trial” (slip op. at 11) (quoting TravelPass Group, LLC v. Caesars Entm’t Corp., No. 5:18-CV-00153, 2019 WL 5691996, at *22 n.25 (E.D. Tex. Aug. 29, 2019), R. & R. adopted, No. 5:18-CV-00153, 2019 WL 4727425 (E.D. Tex. Sept.
27, 2019). And when “assessing whether a plaintiff has adequately alleged an antitrust injury, the Court must assume that an antitrust violation has occurred.” Slip op. at 12. Noting that while the Fifth Circuit had a “narrow conception” of an antitrust injury, the higher transaction costs and diminished consumer choices alleged by the plaintiffs were, the Court ruled, satisfactorily pleaded anticompetitive effects – and therefore, by extension, an antitrust injury.
Lastly, Schwab objected to Plaintiffs’ seeking of equitable relief to divest it of its TD Ameritrade assets or to otherwise segregate the Schwab and TD Ameritrade businesses. Noting that equitable relief is available under the Clayton Act, and that private plaintiffs can in certain cases seek divestiture, the question of its appropriateness was also a question of fact that would not warrant dismissal at this stage. Schwab had argued both that this claim was inadequately pleaded and that it was barred by the doctrine of laches, but both of these assertions were deemed to be premature prior as the facts underlying the laches defense could not be decided until discovery.
The DOJ’s Withdrawal of Three “Outdated” Healthcare Antitrust Enforcement Policy Statements
By Lee F. Berger and Sean Aasen, Steptoe & Johnson LLP
In February 2023, the U.S. Department of Justice Antitrust Division (DOJ) announced the withdrawal of several healthcare antitrust policy statements it jointly issued with the Federal Trade Commission (FTC) in the 1990s and 2000s. These statements provided guidance to healthcare providers and insurers regarding collaborations and mergers that may affect competition, including establishing safe harbors for information sharing and joint purchasing agreements. Companies in all industries relied on the safe harbors in the withdrawn policy statements, and the DOJ’s action leads to greater uncertainty for those evaluating the competitive impact of their conduct.
Taken together, the three withdrawn policy statements provided guidance to healthcare providers on a variety of subjects, including hospital mergers and joint ventures, physicians providing information to purchasers of healthcare services, price and cost information exchanges, joint purchasing arrangements, Medicare Accountable Care Organizations, and physician joint ventures.
Of particular note, the statements created two important “safety zones.” The first created a safe harbor for information sharing arrangements where: (1) the collection is managed by a third party; (2) any information shared is more than three months old; and (3) the data are aggregated and anonymized, and based on at least five participants (where no one participant accounts for more than 25% of the input into any statistic). The second created a safe harbor for joint purchasing agreements where: (1) the purchasers account for less than 35 percent of the total sales of the purchasers’ product; and (2) the cost of the products and services jointly purchased accounts for less than 20 percent of total revenues of each competing participant.
While the DOJ’s withdrawal announcement simply said that “the statements are overly permissive on certain subjects, such as information sharing, and no longer serve their intended purpose of providing encompassing guidance to the public,” Principal Deputy Assistant Attorney General Doha Mekki delivered public remarks stating that the information sharing safety zone was “overly formalistic,” and has been “misinterpreted” and “misapplied to other contexts or industries that were never contemplated by the guidance.”
While the DOJ has not replaced the withdrawn policy statements with specific updated guidance, it has warned that the old statements were too permissive, especially as it pertained to information sharing. The DOJ stated that “[r]ecent enforcement actions and competition advocacy in healthcare provide guidance to the public, and a case-by-case enforcement approach will allow the Division to better evaluate mergers and conduct in healthcare markets that may harm competition.”
In the absence of the safe harbor, all information sharing agreements will be governed by existing case law. The FTC and the DOJ have historically recognized that participating in price or wage surveys can sometimes be lawful and procompetitive, but in other circumstances, information exchanges can have an anticompetitive effect, or even be evidence of per se illegal price fixing agreements. When considering information sharing agreements under the rule of reason, which weighs procompetitive and anticompetitive effects, the primary factors are the nature of the information exchanged, the degree of concentration in the industry, the relative freshness of the information, and the extent to which the data have been aggregated and anonymized.
The DOJ’s withdrawal has impacts beyond the healthcare industry. It is consistent with the DOJ and FTC’s recent focus on information sharing arrangements, and suggests the potential demise of the Antitrust Guidance for Human Resources Professionals and the Antitrust Guidelines for Collaborations Among Competitors, which contain similar information-sharing safe harbors and expressly reference the now-withdrawn healthcare policy statements. Furthermore, while not explicitly mentioned in the DOJ’s announcement, the DOJ also withdrew the statements establishing a joint purchasing safe harbor, meaning that businesses can no longer rely on the certainty of safe harbors in structuring their joint purchasing agreements. Further, it appears that the FTC has not withdrawn these healthcare statements, creating more confusion as the two agencies may apply different standards.
Expect more aggressive enforcement as the DOJ seeks to develop new standards case-by-case, particularly in the industries on which it is placing primary focus. Additional withdrawals of bright-line safe harbors are possible, as the DOJ and FTC continue to scrutinize existing guidance and rescind or revise those statements that conflict with their ambitious antitrust enforcement agenda.
In Case You Missed It
Curated by Bob Connolly
Judge denies effort by Google to move antitrust suit out of Virginia.
By Erica Werner, Washington Post March 10, 2023
A judge on Friday denied an effort by Google to move an antitrust lawsuit out of federal court in Virginia. Google had sought to move the litigation over its advertising business to New York, where related cases pending against the company have already been consolidated. The Justice Department objected, arguing that moving the matter to New York would risk a quick resolution of the case in question, which alleges that Google’s core advertising business should be broken up.
Brown students sue Ivy League over athletic scholarship policy
By Julia Vaz, March 9, 2023 The Brown Daily Herald
Lawsuit claims Ivy League violates antitrust laws by denying athletic scholarships, compensation for student athletes.
U.S. Senators push RealPage investigation
By TRD Staff, March 9, 2023 The Real Deal
A contingent of Democrats in the Senate, including Elizabeth Warren, Tina Smith, Bernie Sanders and Ed Markey, sent a March 2 letter to Assistant Attorney General Jonathan Kanter with concerns regarding the role such algorithmic softwares play in rental prices, the Dallas Morning News reported. The letter is the latest in a number of lawsuits and investigations into how RealPage’s software may be influencing landlords to set prices.
Sysco sues litigation funder Burford, blasts Boies Schiller over $140 million soured deal
By Alison Frankel, Reuters, March 9, 2023
Critics of the multibillion-dollar litigation finance industry could hardly have dreamed up a more vivid illustration of its purported perils than a lawsuit filed on Wednesday by the gigantic restaurant food distributor Sysco Corp against subsidiaries of Burford Capital Limited, the biggest litigation funder in the world.
Analysis: JetBlue faces ‘uphill battle’ in merger fight with government
By Diane Bartz and Mike Scarcella, Reuters, March 9, 2023
The U.S. Justice Department’s complaint aimed at stopping JetBlue Airways Corp (JBLU.O) from buying rival discount carrier Spirit Airlines Inc (SAVE.N) will force the companies to explain why very high market shares on some routes will not mean higher prices for consumers.