Antitrust and Unfair Competition Law

E-Briefs, News and Notes: MAY 2024

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WELCOME to the MAY 2024 edition of E-Briefs, News and Notes.

This edition has a variety of content:

In SECTION NEWS, we feature:

  • MONTHLY SECTION MESSAGE:
    • Announcing two New Lawyers Summer Mixers!  Let’s Get the Party Started!
  • SECTION ANNOUNCEMENTS:
    • An update on the California Law Review Commission’s recent activities
    • Job Postings

E-BRIEFS features and a great mix of six significant decisions:  

  • First, an Eastern District of Virigina Judge dismissed a proposed class action against ship building companies for an alleged long-running agreement to not poach each other’s employees;
  • Second, the DC Circuit reversed the District Court’s order that granted the NAR petition challenging the DOJ’s subpoena based on a pre-existing settlement agreement and affirms the DOJ’s right to reopen investigations that have been settled so long as there is no express promise in the closing letter not to do so;
  • Third, California’s Sixth Appellate District affirmed the trial court’s decision granting demurrer in Apple’s favor in a purported class action brought by iOS device users who downloaded Fortnite and purchased digital goods or currency within the app;
  • Fourth, the Northern District of California dismissed antitrust and Unfair Competition Law claims premised on a pay-for-delay charge and other claims arising from assertion of intellectual property rights, in so doing crediting the defendant’s Noerr-Pennington defense, but allowing leave to amend;
  • Fifth, a Delaware District Court granted in part and denied in part summary judgment in an action filed by a construction equipment distributor using an on-line platform alleging a hub-and-spoke boycott; and
  • Finally, a Nevada District Court dismissed with prejudice Plaintiffs’ price-fixing claim against various hotel companies alleging a Section 1 violation based on a “hub-and-spoke” conspiracy to artificially inflate hotel room prices by using Defendants’ pricing algorithm software. 

ENFORCEMENT AGENCY PRESS RELEASES highlight the enforcement activities of the Antitrust Division, DOJ, FTC, and California AG’s office. This month, we also include a release from the EU Office in San Francisco. Reading the press release(s) is a quick way to keep on top of major developments.

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 and James Dallal.

Section News

Monthly Section Message

Let’s Get the Parties Started! Announcing Two New Lawyers Summer Mixers in San Francisco and Los Angeles!

Paul Riehle
Antitrust Lawyer Of the Year, Paul Riehle

This year again, the Antitrust and Unfair Competition Section is proud to host two New Lawyers Summer Mixers, one in San Francisco and the other in Los Angeles. We are also excited to announce that this year the San Francisco event will be preceded by a discussion with this year’s Antitrust Lawyer Of the Year, Paul Riehle, at Faegre Drinker Biddle & Reath LLP!

Designed as an event allowing law students and new lawyers with an interest in antitrust and/or consumer protection law to meet and connect with more senior attorneys and economists, they are a great opportunity to network with the most highly regarded and respected leaders in Antitrust and Unfair Competition Law.

They also are an ideal event for law firms, public agencies, law departments, or economic consulting firms looking for newer talents. 

Guests at the mixers will enjoy light bites and drinks. These mixers aim to introduce students to like-minded peers, as well as established members of the California antitrust and unfair competition bar and specialist economists in a fun and relaxing environment.

We are looking forward to seeing you all at either or both events!

Caeli A. Higney

Caeli A. Higney
New Lawyers Subcommittee, Antitrust & UCL Section, CLA

Anthony Leon

Anthony Leon
New Lawyers Subcommittee, Antitrust & UCL Section, CLA

Section Announcements

UPDATE on the California Law Revision Commission’s Study of Reform of California’s Antitrust Laws (ACR 95; Study B-750)

Cheryl Johnson
Cheryl Johnson

By Cheryl Johnson

In January 2024, the seven Working Groups of antitrust experts, practitioners and academics formed pursuant to ACR 95, submitted their reports on their assigned antitrust topics to the California Law Revision Commission (CLRC). These reports are posted on the CLRC website at  http://www.clrc.ca.gov/B750.html where any interested person may sign up for notifications about the CLRC’s antitrust study.  On May 2, 2024, the Working Groups on Single Firm Conduct and Concentration and Competition in California presented their reports to the CLRC which also heard numerous public presentations and comments. 

 The next CLRC meeting will be in Sacramento on June 20, 2024 at 10 am PT, at which time the Working Groups on Mergers and Acquisitions and Technology Platforms will present their reports. The meetings are being recorded and are available by zoom as well.  At the June 20 meeting, there will be public presentations following the two Working Group reports and Commission questioning.  Because of the timing and other CLRC matters, the CLRC currently plans to have no more than four public presentations on June 20, each limited to ten minutes.  The CLRC seeks a balance of speakers most directly addressing the content  of the two reports being presented that day.There will also be opportunities for short public comments after the public presentations. 

There will be a third CLRC session on August 15 which will address the Working Group reports on Consumer Welfare Standard, Enforcement and Immunities and Collusive Conduct.  Additionally, the CLRC welcomes any and all written commentary and evaluations of any of the Working Group reports (please send to Sharon Reilly at sreilly@clrc.ca.gov). These written materials will be posted on the CLRC website and be part of the record of the antitrust study.   If you have questions or comments on this study, please send an e-mail to Sharon Reilly at sreilly@clrc.ca.gov.

Job Postings

E-Briefs

Scharpf v. General Dynamics Corp. By Lee Berger and Travis West

By Lee Berger and Travis West

Lee F. Berger
Lee F. Berger
Travis West
Travis West

Judge Anthony Trenga in the Eastern District of Virginia recently dismissed a proposed class action against ship building companies who build the United States’ public fleet for an alleged long-running agreement to not poach each other’s employees, despite a scarcity of naval engineering talent. 

In the complaint, the plaintiffs alleged a violation of Sherman Act Section 1.  They argued that the defendants, who represented 75% of the relevant market, entered into an unwritten gentlemen’s agreement to not affirmatively recruit one another’s naval engineers or architects.  This agreement allegedly suppressed wages for naval engineers below competitive levels.  The plaintiffs alleged that the behavior extended beyond mere parallel action due to additional factors, such as pressure from government customers to keep costs low and a need to work with each other as subcontractors, all of which created an atmosphere which facilitated the conspiracy. 

Unfortunately, though, for the plaintiffs, the Sherman Act has a four-year statute of limitations and the two named plaintiffs had exited the relevant market in 2004 and 2013.  This was the rare case where a court could consider the affirmative defense of statute of limitations because the time bar was apparent on the face of the complaint.  Naturally, the plaintiffs pleaded fraudulent concealment to avoid this bar.

Judge Trenga explained that, for defendants to have fraudulently concealed a conspiracy, the Fourth Circuit requires allegations more than defendants’ failure to admit the conspiracy.  Instead, plaintiffs need to plead “intermediate, affirmative acts” demonstrating concealment. 

Here, he found that the plaintiffs had failed to meet this requirement.  The plaintiffs had alleged that:

  • Defendants had agreed to keep the alleged agreement secret;
  • They had made general public and non-public representations that they offer “competitive” compensation and actively recruit employees;
  • They had made general statements that they comply with antitrust laws and are essentially law-abiding and ethical; and
  • They had included non-solicitation clauses in teaming agreements as “cover” for the unlawful no-poach scheme.

Judge Trenga rejected all four claims.  For the first three, he noted that the failure to affirmatively disclose the conspiracy or general statements not specifically concealing the conspiracy are not affirmative acts that prevented the conspiracy’s discovery.  For the sham non-solicitation clauses, the plaintiffs argued that they provided a cover for failure to engage in poaching of competitors’ employees.  The court, though, rejected this argument, noting that they served a valid purpose of preventing solicitation for the duration of a teaming agreement.  Further, Judge Trenga noted that there was no allegation that plaintiffs even knew about these provisions, and therefore the non-solicitation provisions could not have diverted plaintiffs away from litigation. Separate from the particulars of fraudulent concealment, the opinion highlights a potential circuit split between the Fourth and Seventh Circuit regarding whether a complaint can be dismissed based on failure to sufficiently allege facts that could defeat an affirmative defense.  In the Seventh Circuit’s recent Deslandes v. McDonald’s decision on the pleadings standard which dealt with the ancillary restraints defense (an affirmative defense), the Seventh Circuit found that “complaints need not anticipate and plead around defenses,” and reversed a lower court’s dismissal of the complaint based on that ancillary restraints defense.  But in Scharpf, Judge Tegna does exactly that: he dismisses the case because there are not allegations in the complaint sufficient to defeat an affirmative defense (the statute of limitations).  As Scharpf relies on Fourth Circuit precedent regarding “the sufficiency of factual allegations for the purpose of tolling based on fraudulent concealment,” there is tension between the Circuits on what triggers the requirement to plead around an affirmative defense.  Here, the statute of limitations was obvious on the face of the complaint but it is not difficult to imagine a complaint where it is reasonable but not entirely obvious to expect an affirmative defense. Under the Fourth Circuit’s precedent, that may trigger an obligation to plead around it, while the Seventh Circuit would not require that outcome.  It will be interesting to see if that will be an issue taken up on appeal.

DC Circuit finds DOJ’s investigative subpoena to National Association of Realtors allowed despite earlier settlement By Sam Smith
Sam Smith
Sam Smith

By Sam Smith

On April 5, 2024, the United States Court of Appeals for the District of Columbia in an opinion written by Judge Pan reversed the district court order that granted the National Association of Realtors (“NAR”)’s petition challenging the Antitrust Division of the United States Department of Justice (“DOJ”)’s subpoena based on a preexisting executed settlement agreement. National Ass’n of Realtors v. United States of America, 97 F.4th 951, 953, (D.C Cir. 2024). The Court of Appeals held that the DOJ’s “closing letter” did not bar all future investigations stemming from the investigation that it settled. Id. at 961.

The DOJ Antitrust Division opened up a civil investigation against certain NAR policies in 2018. Id. at 953.  Eventually two subpoenas, or Civil Investigative Demands (“CIDs”), were issued to the NAR, one in April 2019 and the other in June 2020, regarding the NARs “multi-listing services” (“MLSs”). Id. at 953-54. The April 2019 CID sought information about the NAR’s practices and procedures including its “Participation Rule.” Id. Essentially, the Participation Rule required listing brokers offer the same commission to all buyer-brokers when a property was listed on an MLS. The DOJ argued that this practice causes buyer-brokers to steer customers to higher-commission listings, restraining price competition. Id. The June 2020 CID sought information about the NAR’s “Clear Competition Cooperation Policy” that required listing brokers to post the property on an MLS within one day of when they market a property. Id. at 954-53. The DOJ believes that this rule restricts home-seller choices, thus, precluding new listing services from competing. Id. at 954.

The issue leading to the most recent opinion arose in July 2020 when the DOJ and NAR started to discuss possible resolutions. Id. The NAR asked the DOJ if they would refrain from investigating the Participation Rule for ten years and the DOJ refused, stating that they would never agree to a commitment to not bring challenges on NAR rules in the future. Id. The DOJ and NAR eventually came to an agreement to enter into a Proposed Consent Judgement that addressed four other NAR polices, but not the Participation Rule and Clear Cooperation Rule. Id. The Proposed Consent Judgment also included a “Reservation of Rights” clause that allowed the DOJ to bring later action against the NAR. Id. The NAR agreed to the closing letter on condition that the DOJ provide a closing letter that dealt with the pending Participation Rule and Clear Cooperation Policy investigation. Id.

On November 19, 2020, the DOJ filed the Proposed Consent Judgment and sent the closing letter to the NAR. Id. Though nothing in the DOJ’s complaint mentioned the Participation Rule or Clear Cooperation Policy, it alleged the other four policies subject to the Proposed Consent Judgement violated Section 1 of the Sherman Act and settlement terms. Id. at 955. It also provided that the United States was allowed to withdraw its consent before final judgement. Id.

The closing letter meanwhile read, “This letter is to inform you that the Antitrust Division has closed its investigation into [NAR’s] Clear Cooperation Policy and Participation Rule. Accordingly, NAR will have no obligation to respond to the CID Nos. 29935 and 30360 on April 12, 2019 and June, 2020, respectively. No Inference should be drawn, however, from the Division’s the Divisions decision to close its investigation into these rules, policies or practices not addressed by the consent decree.” Id.

In reaching its decision, the Court applied general contract law, determining that if the closing letter is unambiguous then that is the end of the analysis, and no extrinsic evidence needs to be considered. Id. at 957. When the DOJ closed the then-pending investigation, no express or implied statements could be interpreted from the letter that would restrain the DOJ from issuing new CIDs at a later date. Id. The Court refused to enforce an implied term that would take away the DOJ’s power to reopen investigations unless the government unmistakably were to waive that right, and here the DOJ had clearly inserted a “no inference” clause, confirming no additional terms were to be interpreted than those that were expressly stated. Id. at 958. In the past, the DOJ has closed and reopened cases numerous times. Id. Thus, the NAR had no reasonable basis for believing that the DOJ closing the case would mean it could never be reopened. Id.

In addition, the Court also rejected the NAR’s attempted reliance on extrinsic evidence it had offered, stating that it would not even support their claim if it was to be considered. Id. at 959. The NAR argued the omission of the Participation Rule and Clear Cooperation Policy was a promise to never reopen the case, the DOJ’s Proposed Consent Judgment demonstrated an understanding on the part of the DOJ that it could not reopen, and the NAR would have never agreed without a future commitment to never reopen. Id. at 959-61. The court rejected these arguments as the DOJ explicitly declined earlier to accept any settlement that would restrict future investigations, the closing letter could remain enforceable after withdrawal of the Proposed Consent Judgment, and the NAR did not have to respond to the outstanding CIDs, that being the benefit the NAR obtained in the bargain. Id. at 960-61.

This decision affirms the DOJ’s right to reopen investigations that have been settled so long as they have not expressly promised not to do so in the closing letters. This is a significant victory for governmental enforcement powers. Notably, the Court did not in its opinion answer the question of whether the DOJ can reopen an investigation while still bound by the Proposed Consent Judgment. Id. at 958. In dissent, however, Judge Walker made it clear that this was in his view the real question at issue, basing his opinion on a consideration of whether the DOJ could have immediately reopened the closed investigations even before the DOJ withdrew the Proposed Consent Judgment. Id. at 962 (Walker, J., dissenting). Judge Walker answered that question in the negative, warning the public to be wary of negotiating with the Antitrust Division of the DOJ because of the possibility that the DOJ may not be required to live up to their portion of the deal, and ending the dissent with the statement, “Buyer Beware.” Id. at 962, 968.

CA Appellate Court Affirms Apple’s Demurrer which Dismissed Cartwright Act and UCL Claims By Wesley Sweger
Wesley Sweger
Wesley Sweger

By Wesley Sweger

On April 25, 2024, the Sixth Appellate District affirmed a trial court’s decision granting demurrer in Apple’s favor.

Plaintiffs are two individuals who brought this action on behalf of themselves and “a putative class of iOS device users who downloaded Fortnite (an app and game) onto their device and made purchases of digital goods or currency within the app using Apple’s purchase system.” (433).

For context, “[d]evelopers who wish to do business on the App Store must agree to a non-negotiable contract that requires them to use Apple’s in-app purchase system. Developers are also prohibited from ‘steering’ users to alternative payment methods outside of the app.” (p. 432.) Apple collects 30% of all sales of digital goods and currency made within apps. “Plaintiffs alleged that Apple’s restrictions on app distribution increased the prices developers charge iOS device users, and that Apple’s anti-steering restrictions ‘artificially increase’ Apple’s power within the market for mobile gaming transactions.” (p. 433.)

Plaintiffs asserted three causes of action. First, Plaintiffs alleged Apple violated the Cartwright Act “by leveraging ‘its market power to make developers and consumers accept unreasonable and anticompetitive terms in order to access the iOS marketplace.’” (Id.) Second, for violation of the “unlawful” prong of the Unfair Competition Law (UCL), based on the same conduct. Third, for violation of the “unfair” prong of the UCL by “‘threatening an incipient violation of an antitrust law by preventing an informed choice among users of the iOS platform by limited information regarding pricing and purchase option[s].’” (p. 434.) The trial court sustained Apple’s demurrer of Plaintiff’s Second Amended Complaint without leave to amend, finding “Plaintiffs did not state claims under the Cartwright Act or the ‘unlawful’ prong of the UCL as a matter of law because they alleged only unilateral conduct by Apple that was immunized from antitrust liability by the Colgate doctrine,” which California courts have adopted. (Id.) (The Colgate doctrine generally stands for the notion that a firm may announce in advance the circumstances under which it will refuse to deal without violating antitrust laws.) The trial court further found Plaintiffs’ third cause of action—the UCL’s “unfair” prong—was barred by Chavez v. Whirlpool Corp., 93 Cal. App. 4th 363 (2001). Plaintiffs appealed only the third cause of action, contending that the trial court wrongly relied on Chavez and “that Chavez was wrongly decided to the extent it held that a failed antitrust claim cannot be replead as an unfair business practice under the UCL.” (p. 434.)

“Under the UCL’s ‘unfair’ prong, ‘a practice may be deemed unfair even if not specifically proscribed by some other law,’” in this case, the Cartwright Act (which does not penalize unilateral conduct). (p. 435.) However, the court noted that Chavez held that “‘[i]f the same conduct is alleged to be both an antitrust violation and an “unfair” business act or practice for the same reason—because it unreasonably restrains competition and harms consumers—the determination that the conduct is not an unreasonable restraint of trade necessarily implies that the conduct is not “unfair” toward consumers,’” and thus cannot be a violation under the UCL’s “unfair” prong. (p. 438.) Plaintiffs argued that language from the California Supreme Court’s decision in Cel-Tech Commc’ns, Inc. v. Los Angeles Cellular Tel. Co., 20 Cal. 4th 163 (1999), renders the cited Chavez rule invalid. Specifically, the CA Supreme Court wrote in Cel-Tech that the “Legislature’s mere failure to prohibit an activity does not prevent a court from finding it unfair.” Cel-Tech, 20 Cal.4th at 184. “Plaintiffs theorize that because the Legislature has not enacted a statute or provision condoning conduct embraced by the Colgate doctrine as lawful, Cel-Tech establishes that such conduct may constitute a predicate ‘unfair’ practice for a UCL cause of action.” (pp. 439–40.) The court reasoned this “would permit plaintiffs to use the UCL to ‘assault’ the ‘absolute bar to relief’ established by the Colgate doctrine.” (p. 440.) The court also pointed to the related Ninth Circuit decision in Epic Games, Inc. v. Apple, Inc., 67 F.4th 946 (9th Cir. 2023) in which that court recognized “a ‘categorical legal bar’—as opposed to express statutory language—can also operate as a ‘safe harbor’ against UCL liability in the area of antitrust.” (p. 441.) Finally, the court found the same conduct—Apple’s restrictions on contacting and steering users of iOS devises to other app storefronts—underlay Plaintiffs’ antitrust and “unfair” UCL claim, so Chavez barred Plaintiffs’ third cause of action.

The court ended by noting “an ‘unfair’ business act or practice need not violate an antitrust law to be actionable under the UCL.” (p. 442.) “Instead, our decision is limited to situations typified by this case, where the same conduct found immune from antitrust liability by the Colgate doctrine is also alleged to violate the ‘unfair’ prong of the UCL.” (Id.)

Claims Over Patent Assertion Conduct Dismissed Based on Noerr-Pennington Defense By Cheryl Johnson

Realtek Semiconductor Corp. v. Mediatek, Inc., No. 23-cv-02774-PCP, 2024 WL 1975478 (N.D. Cal. May 3, 2024).

Cheryl Johnson-

By Cheryl Johnson

Plaintiff semiconductor company Realtek sued rival Mediatek  and Future Link for a “multifaceted” anticompetitive scheme that pursued meritless patent claims against Realtek, incentivized and funded patent litigation by a patent assertion entity, and harassed Realtek’s  customers.  Judge Casey Pitts dismissed Realtek’s 17200 and Sherman Act claims, finding the conduct protected by the Noerr-Pennington doctrine, while granting leave to amend. 2024 WL 1975478, at *1-3.

NOERR PENNINGTON.  The Noerr-Pennington doctrine which immunizes participation in litigation as a method of government petitioning has been extended by the Ninth Circuit to conduct incidental to litigation including pre-suit demand letters and third-party litigation funding. Id. at *5. The court declined to treat Mediatek’s license and its million dollar incentive for a suit against Realtek as a reverse payment agreement or otherwise outside this Ninth Circuit precedent. Id. at *6.  Mediatek’s purportedly anticompetitive communications with third parties were deemed “related” to the petitioning conduct,  but even if “they were too peripheral” to the litigation, the court ruled the allegations were too “sparse” to state a claim for relief.  Id.

SHAM EXCEPTION. The conduct did not fall within the sham exception to the Noerr-Pennington doctrine for a series of lawsuits, as the required “policy of starting legal proceedings  without regard to  their merit” was not adequately established. Id. at *7.  The court cited several factors, including that the litigation bounty was triggered by filing of a single suit, that the four patent suits involved three patents and might not be considered a “series,” and that Realtek had not alleged the suits imposed a “crushing burden” or interfered with its business. Id. at *8.  However, the court granted leave for the plaintiff to identify “specific ways in which the defendants used the litigation itself—rather than the relief sought therein—as an ‘anticompetitive weapon’”.  Id. at *8.

ANTI-SLAPP.  The court declined to rule on the defendants’ motion to strike the complaint under California’s anti-SLAPP statute that requires a showing of likely merit for any cause in furtherance of a plaintiff’s right to petition. It was deferred because ruling  upon an anti-SLAPP motion before an amended complaint was filed in a federal court proceeding would directly collide with the FRCP’s policy favoring liberal amendment. Id. at *9.

Delaware District Court applies per se analysis to Section 1 claim based on a hub-and-spoke conspiracy involving distribution of construction equipment and denies summary judgment By David Lerch
David Lerch
David Lerch

By David Lerch

On April 15, 2024, the Delaware District Court entered an order denying in part and granting in part a motion for summary judgment by Caterpillar in an action including Sherman Act claims filed by a construction equipment distributor using an online platform in International Construction Products, LLC v. Caterpillar, et al., Case No. 1:15-cv-00108-RGA-SRF (D. Del. April 15, 2024).  The court concluded that per se analysis applied to the hub-and-spoke boycott that the Plaintiffs alleged and that the other distributors had a motive to conspire to increase their leverage.   The court, however, rejected ICP’s alternative rule of reason analysis because it did not allege a geographic product market (relying on online distribution instead) and the court also rejected Caterpillar’s antitrust injury and damages arguments, in particular Caterpillar’s argument that because ICP’s imports from China do not comply with EPA regulations, ICP would have been unable to sell any equipment in the United States and so antitrust injury was lacking.

Factual Background

In 2013-14, Caterpillar was the world’s leading manufacturer of construction and mining equipment, diesel and natural gas engines, industrial gas turbines, and diesel-electric locomotives, with 2013 sales and revenue totaling $56 billion (Order at 3).  Caterpillar made 25-30% of the wheel loader and excavator sales nationally. Rather than sell directly to end-user customers, Caterpillar sold its new heavy equipment to a network of independently owned dealers (Order at 3).  These dealers sold to end-users and offered them service and parts. In 2014, Ring Power was one of Caterpillar’s largest dealers, with headquarters and locations in Florida (Order at 3).

IronPlanet operated an exclusively online platform for selling and auctioning used heavy construction equipment.  Distributor ICP imported equipment from LonKing, a Chinese manufacturer, and sold the equipment directly to consumers using an online platform (Order at 4).  The Chinese wheel loaders were priced 30-40% lower and excavators 15-20% lower than Caterpillar’s wheel loaders and excavators (Order at 4).  Manufacturers had previously only sold through local dealers (Order at 4). In October 2013, ICP contacted IronPlanet about the possibility of IronPlanet assisting ICP (Order at 4).  Because ICP was a new entrant in the heavy construction equipment market and did not have an established network of equipment dealers, IronPlanet’s online sales platform was critical to ICP’s business (Order at 4).  In March 2014, ICP and IronPlanet signed a Hosted Store Agreement in which IronPlanet agreed to develop, operate, and maintain a section of its website offering ICP’s equipment for sale directly to customers and announced their partnership at a trade show (Order at 4).  Executives at Ring Power and Caterpillar then exchanged phone calls and emails about the new distribution channel and RingPower contacted IronPlanet (Order at 6-7).  The next day, IronPlanet’s head of development sent an email noting that ICP items were no longer visible on IronPlanet, but still could be purchased via ICPDirect.com (Order at 7).  Several days later, IronPlanet informed ICP it was terminating their agreement (Order at 7).

Refusal to Deal

Caterpillar argued that regardless of whether per se analysis or rule of reason analysis applies, the Court should grant summary judgment because there was no refusal to deal (Order at 12-13).  Caterpillar argued that because ICP, not IronPlanet, decided to end the business relationship, there is no refusal to deal and thus ICP has no antitrust claim (Order at 13).  Caterpillar contends that in May 2014, IronPlanet was still willing to conduct business with ICP because it signed an agreement (the Listing Agreement) to sell four pieces of ICP’s equipment on its website (Order at 13).  Caterpillar argues it was ICP who refused to conduct business with Caterpillar because ICP backed out of the agreement in June 2014 (Order at 13).  However, the Court noted that the Listing Agreement was a one-time agreement between IronPlanet and ICP to sell four pieces of LonKing equipment ICP had imported for ConExpo (Order at 15-16).  The court concluded that the fact that ICP rejected the option to sell four pieces of equipment does not mean that ICP failed to establish a refusal to deal, because “the relevant question is whether the purported boycott limited supply to the extent that [Plaintiff’s] competitiveness was diminished, not whether [Plaintiff] was absolutely deprived of supply.O.E.M Glass Network, Inc. v. Mygrant Glass Co., Inc., 2023 WL 2563689, at *9 (E.D.N.Y. Mar. 17, 2023) (Order at 16).

Rule of Reason and Quick Look Analysis

The Court concluded that ICP could not set forth a claim under Section 1 under the rule of reason (Order at 16-19).  Caterpillar argued first that ICP did not define a relevant geographic or product market and second, that Caterpillar did not have market power in any relevant market (Order at 16).  The Court reasoned that the inquiry into market power and market definition is needed for vertical restraints on trade if a plaintiff chooses to prove anticompetitive effect through indirect evidence (Order at 17).  Therefore, the court concluded that ICP was required to define the relevant market to show anticompetitive effects (Order at 17).  ICP did not dispute that it failed to define a relevant geographic or product market (Order at 19).  ICP also did not dispute that none of its experts provided testimony regarding a geographic or product market (Order at 19).  The Court stated that it had previously noted that there are no allegations in the complaint regarding the geographic confines in which a potential buyer of new heavy construction equipment rationally looks for that equipment (Order at 18).  The court noted that, “The geographic market is not comprised of the region in which the seller attempts to sell its product, but rather is comprised of the area where his customers would look to buy such a product.” Tunis Bros. Co. v. Ford Motor Co., 952 F.2d 715, 726 (3d Cir. 1991) (Order at 18). Accordingly, the Court did not reach the question of market power because ICP did not meet its burden of defining the relevant market (Order at 19).  The court also rejected applying quick look analysis if per se analysis was inapplicable, stating that if the jury does not find there is a hub-and-spoke conspiracy, then the resulting conspiracy would be one or more independent agreements: one between Caterpillar and Thompson, and one between Caterpillar and Ring Power and this conspiracy would be a vertical conspiracy, which would be subject to the rule of reason (Order at 27).

Per Se Analysis

The court concluded that a reasonable jury could find that the phone calls between Ring Power and Thompson combined with their motive to conspire is enough to establish that agreement and thus to establish a hub-and-spoke group boycott (Order at 24-25).   The court specifically pointed to evidence that Ring Power’s Fowler called Thompson’s used equipment buyer and Thompson’s used equipment manager just before IronPlanet took ICP’s products off its online platform (Order at 25).  The court explained that a reasonable jury could find Ring Power and Thompson had motive to conspire because on their own, they lacked the leverage to influence IronPlanet (Order at 25).  The court concluded that there was some evidence to support a horizontal conspiracy between Ring Power and Thompson and that it was for the jury to determine whether there is enough to convince it that there was a horizontal conspiracy with Ring Power and Thompson such that there was a hub-and-spoke conspiracy (Order at 26).

Antitrust Injury

Caterpillar argues that ICP has not shown harm to competition because U.S. sales of wheel loaders and excavators were competitive before, during, and after IronPlanet terminated the HSA with ICP, arguing that Caterpillar’s share of the market was 25-30% and declining, there were multiple new entrants to a market comprised of over two dozen companies that sold wheel loaders and excavators, and Caterpillar reduced its prices and invested in improved emissions control (Order at 28).  ICP argues that the conspiracy harmed prices in the heavy construction equipment industry because ICP’s wheel loaders were priced 30-40% lower and the excavators were priced 15-20% lower than Caterpillar’s competing new products (Order at 28).  ICP cites to internal Caterpillar documents to argue that Caterpillar viewed ICP as a threat to its business and price levels (Order at 28). ICP argues that an expert explained that ICP would have disrupted the market by allowing new entrants to compete without their own dealer networks (Order at 28). The Court agreed with ICP’s argument that Caterpillar’s relatively low market share disregards that the boycott of ICP prevented more significant competition and there would have been more significant competition in the market but for unlawful action on Caterpillar’s part (Order at 28-29). The court concluded that the impact of preventing ICP from being able to sell its equipment, priced up to 40% lower than current new options on the market, was that consumers lost the option of being able to purchase ICP’s lower priced equipment (Order at 29).

Caterpillar also cited PharmacyChecker. com v. Nat’l Ass’n of Boards of Pharmacy for the proposition that “several courts around the country have found that a plaintiff cannot suffer an antitrust injury if its asserted harm is based in illegal conduct” PharmacyChecker.com, 2023 WL 2973038, at *13 (S.D.N.Y. Mar. 28, 2023) (Order at 30). Caterpillar contended that there is no antitrust injury if the harm is “caused by the federal statutory and regulatory scheme adopted by the United States government, not by the conduct of the defendants.” In re Canadian Imp. Antitrust Litig., 470 F.3d 785, 791 (8th Cir. 2006) (Order at 30). Caterpillar argues that it cannot be the cause of any harm to sales ICP suffered from equipment it could not legally import or sell in the United States and so there is no antitrust injury (Order at 30-31).  Caterpillar argues that because ICP did not establish any evidence that it or LonKing complied with EPA regulatory requirements, there is no antitrust injury (Order at 31). 

ICP argues that there is evidence ICP could have complied with EPA regulations and that it would have sold EPA compliant machines (Order at 31-32).  Caterpillar also argues that it had nothing to do with LonKing’s significant quality issues and shipping delays, ICP’s engagement with investors or customers, or ICP’s merger with LSI (Order at 31).  The court found a dispute of material fact whether ICP and/or LonKing could have complied with the EPA regulations and whether LonKing’ s quality issues caused ICP’s injuries, and so it denied summary judgment (Order at 32).

Speculative Damages Caterpillar argues ICP’s damages are too speculative (Order at 32). The court stated that damages in antitrust cases “are rarely susceptible of the kind of concrete, detailed proof of injury which is available in other contexts.” Texaco Inc. v. Hasbrouck, 496 U.S. 543, 573 n.31 (1990) (Order at 32). The court rejected arguments that ICP’s damages model is unreliable because it ignores that ICP, not IronPlanet, terminated the business relationship, that damages are unreliable and speculative because the expert did not, based his calculation on the on underlying data, using sales projections instead (Order at 32-33).  The court concluded that the jury would hear testimony they can use to assess reliability, such as ICP’s industry expert, who may use his experience in the heavy construction industry to explain why he thinks the sales projections are reasonable and that fact witnesses were also expected to testify about the reasonableness of the projections and the reasonableness of the ICP sales projections is a question of fact for the jury (Order at 33).  Finally, Caterpillar also argued that ICP’s injuries are too remote, arguing that Plaintiffs injuries are once-removed from any conduct of the defendant and instead caused by an entity that is not joined as a defendant (Order at 33).  However, the court concluded that this case did not involve passing on an overcharge, and instead the conspiracy alleged is that Caterpillar, IronPlanet, Ring Power, and Thompson all conspired together to boycott ICP and so ICP’s theory of damages is about lost sales, not an intermediary passing on increased charges (Order at 34). 

Gibson v. Cendyn Grp., LLC, No. 2:23-cv-00140, 2024 WL 2060260 (D. Nev. May 8, 2024) (“Gibson”) By Eric A. Rivas at Latham & Watkins LLP
Eric Rivas
Eric Rivas

By Eric A. Rivas at Latham & Watkins LLP

On May 8, 2024, Chief Judge Miranda M. Due (D. Nev.) dismissed with prejudice a price-fixing claim premised on a novel theory of algorithmic pricing coordination.  The plaintiffs, Richard Gibson and Roberto Manzo, alleged that the defendants, including Cendyn Group, LLC (Cendyn) and various hotel companies, violated Section 1 of the Sherman Antitrust Act by engaging in a “hub-and-spoke” conspiracy to artificially inflate hotel room prices by using Cendyn’s pricing algorithm software.  Id. at *1.  The decision supports the notion that there are at least three “alternative and determinative” factors that can fatally undermine a theory of algorithmic price-fixing: (1) gaps in time between the alleged conspirators’ decisionmaking to use the algorithm; (2) a lack of direct or indirect exchange of confidential information; and (3) absence of an agreement to be bound by the algorithm’s pricing recommendations.  Id. at *3.

Procedural Background

The plaintiffs’ original complaint, filed in January 2023, alleged that operators of hotels on the Las Vegas Strip violated Section 1 of the Sherman Act by using Cendyn’s pricing algorithm software to set artificially high prices for hotel rooms.  The court dismissed the original complaint because the plaintiffs failed to plausibly allege an agreement among the defendant hotels to use the same software or to exchange confidential information via the software; however, the court allowed the plaintiffs to amend the complaint and attempt to cure the deficiencies.  The plaintiffs subsequently filed the First Amended Complaint (FAC), adding allegations related to the same purported “hub-and-spoke” conspiracy claim and a second Section 1 claim challenging a set of vertical agreements between Cendyn and each of the hotel defendants.  Id. at *1.  The defendants moved to dismiss the FAC with prejudice, a motion the court granted in the May 8, 2024 decision.

Factual Background

The plaintiffs accused Cendyn, a software company, and several hotel operators on the Las Vegas Strip of conspiring to inflate hotel room prices through the use of Cendyn’s pricing algorithm software, GuestRev and GroupRev.  Id.  The plaintiffs alleged that these products recommend artificially inflated hotel room prices to the defendant hotels.  Id.  The plaintiffs further alleged that in 2015, Cendyn integrated into the products a feature called RevCaster, which collects public pricing information, in order to easily incorporate competitor pricing into pricing decisions.  Id.  The plaintiffs argued that the alleged conduct led to higher hotel room prices and harmed consumers that stayed with the hotel defendants on the Last Vegas Strip.  Id.

Discussion

Hub-and-Spoke Claim

The court’s analysis focused on whether the plaintiffs had plausibly alleged a tacit agreement among the hotel defendants to use Cendyn’s pricing algorithm software products.  The court identified “three key deficiencies” that serve as “alternative and determinative reasons why Plaintiffs have not plausibly alleged a tacit agreement in the FAC[.]”  Id. at *3.

Gaps Between Licensing Decisions

First, the court agreed with the defendants that plaintiffs still had not alleged the hotel defendants began using Cendyn’s pricing algorithm software “around the same time.”  Id.  The court also rejected the plaintiffs’ argument that the hotel defendants’ parallel use began in 2015 when GuestRev integrated public competitor prices from RevCaster for the first time, and that the hotel defendants’ parallel conduct is shown “each year when they continue to renew their licensing agreements with Cendyn for GuestRev.”  Id.  Rather, the court found the fact that the hotel defendants began licensing the software “at different times over an approximately 10-year period” “renders a tacit agreement among them implausible.”  Id. at *3-4.

No Alleged Exchange of Nonpublic Information

Second, the court found that plaintiffs failed to “plausibly allege the exchange of confidential information from one of the [hotel] spokes to the other through the hub’s algorithms”—”another fatal defect” with the hub-and-spoke conspiracy claim.  Id. at *5.  The court distinguished In re RealPage, Inc., Rental Software Antitrust Litig. (No. II) because that case involved “allegations of competitors pooling their confidential or proprietary information in the dataset that the pertinent algorithm runs on[.]”  Id. at *4, n.7 (citing Case No. 3:23-MD-03071, ––– F.Supp.3d ––––, 2023 WL 9004806, at *17 (M.D. Tenn. Dec. 28, 2023)).  In Gibson, however, the plaintiffs did not similarly allege an “exchange of otherwise confidential information between competitors through the algorithm[.]”  Id. at *4.  The court also reaffirmed its finding in its prior motion to dismiss order that “consulting your competitors’ public rates to determine how to price your hotel—without more—does not violate the Sherman Act.”  Id. at*5.

The court rejected the plaintiffs’ “machine learning” theory that “the algorithms improved over time by running on confidential information provided by each Hotel Defendant.”  Id.  The court found that the theory does not “does not plausibly suggest that Hotel Defendants tacitly agreed to fix prices by licensing GuestRev or GroupRev[,]” but instead “merely suggests GuestRev or GroupRev might be compelling to a Hotel Defendant because it offers better pricing recommendations than it used to.”  Id. at *6.

No Alleged Agreement To Be Bound By Pricing Recommendations

Third, the court rejected plaintiffs’ theory that the hotel defendants all delegated their “decisionmaking on price to Cendyn” and thus violated Section 1.  Id. at *7.  The court found that the plaintiffs had not actually alleged such a delegation because the FAC was devoid of an allegation that the hotel defendants are bound to accept the software’s pricing recommendations.  Id. at *7-8.  To the contrary, the FAC alleged that the hotel defendants can and do override recommendations, and it was not sufficient that the FAC also alleged certain GuestRev marketing materials state that pricing recommendations are accepted 90% of the time.  Id.

Vertical Agreements Claim

The court rejected the plaintiffs’ Section 1 claim that the hotel defendants’ respective vertical agreements with Cendyn unreasonably restrained trade based on the prior finding that the FAC failed to allege the hotel defendants were required to accept the software’s recommended prices.  Id. at 9.  Based on this finding, the court held that “[i]t accordingly cannot be that the vertical agreements between Cendyn and Hotel Defendants to license GuestRev and GroupRev restrain trade.”  Id. at *9. 

On May 8, 2024, Chief Judge Miranda M. Due (D. Nev.) dismissed with prejudice a price-fixing claim premised on a novel theory of algorithmic pricing coordination.  The plaintiffs, Richard Gibson and Roberto Manzo, alleged that the defendants, including Cendyn Group, LLC (Cendyn) and various hotel companies, violated Section 1 of the Sherman Antitrust Act by engaging in a “hub-and-spoke” conspiracy to artificially inflate hotel room prices by using Cendyn’s pricing algorithm software.  Id. at *1.  The decision supports the notion that there are at least three “alternative and determinative” factors that can fatally undermine a theory of algorithmic price-fixing: (1) gaps in time between the alleged conspirators’ decisionmaking to use the algorithm; (2) a lack of direct or indirect exchange of confidential information; and (3) absence of an agreement to be bound by the algorithm’s pricing recommendations.  Id. at *3.

Procedural Background

The plaintiffs’ original complaint, filed in January 2023, alleged that operators of hotels on the Las Vegas Strip violated Section 1 of the Sherman Act by using Cendyn’s pricing algorithm software to set artificially high prices for hotel rooms.  The court dismissed the original complaint because the plaintiffs failed to plausibly allege an agreement among the defendant hotels to use the same software or to exchange confidential information via the software; however, the court allowed the plaintiffs to amend the complaint and attempt to cure the deficiencies.  The plaintiffs subsequently filed the First Amended Complaint (FAC), adding allegations related to the same purported “hub-and-spoke” conspiracy claim and a second Section 1 claim challenging a set of vertical agreements between Cendyn and each of the hotel defendants.  Id. at *1.  The defendants moved to dismiss the FAC with prejudice, a motion the court granted in the May 8, 2024 decision.

Factual Background

The plaintiffs accused Cendyn, a software company, and several hotel operators on the Las Vegas Strip of conspiring to inflate hotel room prices through the use of Cendyn’s pricing algorithm software, GuestRev and GroupRev.  Id.  The plaintiffs alleged that these products recommend artificially inflated hotel room prices to the defendant hotels.  Id.  The plaintiffs further alleged that in 2015, Cendyn integrated into the products a feature called RevCaster, which collects public pricing information, in order to easily incorporate competitor pricing into pricing decisions.  Id.  The plaintiffs argued that the alleged conduct led to higher hotel room prices and harmed consumers that stayed with the hotel defendants on the Last Vegas Strip.  Id.

Discussion

Hub-and-Spoke Claim

The court’s analysis focused on whether the plaintiffs had plausibly alleged a tacit agreement among the hotel defendants to use Cendyn’s pricing algorithm software products.  The court identified “three key deficiencies” that serve as “alternative and determinative reasons why Plaintiffs have not plausibly alleged a tacit agreement in the FAC[.]”  Id. at *3.

Gaps Between Licensing Decisions

First, the court agreed with the defendants that plaintiffs still had not alleged the hotel defendants began using Cendyn’s pricing algorithm software “around the same time.”  Id.  The court also rejected the plaintiffs’ argument that the hotel defendants’ parallel use began in 2015 when GuestRev integrated public competitor prices from RevCaster for the first time, and that the hotel defendants’ parallel conduct is shown “each year when they continue to renew their licensing agreements with Cendyn for GuestRev.”  Id.  Rather, the court found the fact that the hotel defendants began licensing the software “at different times over an approximately 10-year period” “renders a tacit agreement among them implausible.”  Id. at *3-4.

No Alleged Exchange of Nonpublic Information

Second, the court found that plaintiffs failed to “plausibly allege the exchange of confidential information from one of the [hotel] spokes to the other through the hub’s algorithms”—”another fatal defect” with the hub-and-spoke conspiracy claim.  Id. at *5.  The court distinguished In re RealPage, Inc., Rental Software Antitrust Litig. (No. II) because that case involved “allegations of competitors pooling their confidential or proprietary information in the dataset that the pertinent algorithm runs on[.]”  Id. at *4, n.7 (citing Case No. 3:23-MD-03071, ––– F.Supp.3d ––––, 2023 WL 9004806, at *17 (M.D. Tenn. Dec. 28, 2023)).  In Gibson, however, the plaintiffs did not similarly allege an “exchange of otherwise confidential information between competitors through the algorithm[.]”  Id. at *4.  The court also reaffirmed its finding in its prior motion to dismiss order that “consulting your competitors’ public rates to determine how to price your hotel—without more—does not violate the Sherman Act.”  Id. at*5.

The court rejected the plaintiffs’ “machine learning” theory that “the algorithms improved over time by running on confidential information provided by each Hotel Defendant.”  Id.  The court found that the theory does not “does not plausibly suggest that Hotel Defendants tacitly agreed to fix prices by licensing GuestRev or GroupRev[,]” but instead “merely suggests GuestRev or GroupRev might be compelling to a Hotel Defendant because it offers better pricing recommendations than it used to.”  Id. at *6.

No Alleged Agreement To Be Bound By Pricing Recommendations

Third, the court rejected plaintiffs’ theory that the hotel defendants all delegated their “decisionmaking on price to Cendyn” and thus violated Section 1.  Id. at *7.  The court found that the plaintiffs had not actually alleged such a delegation because the FAC was devoid of an allegation that the hotel defendants are bound to accept the software’s pricing recommendations.  Id. at *7-8.  To the contrary, the FAC alleged that the hotel defendants can and do override recommendations, and it was not sufficient that the FAC also alleged certain GuestRev marketing materials state that pricing recommendations are accepted 90% of the time.  Id.

Vertical Agreements Claim The court rejected the plaintiffs’ Section 1 claim that the hotel defendants’ respective vertical agreements with Cendyn unreasonably restrained trade based on the prior finding that the FAC failed to allege the hotel defendants were required to accept the software’s recommended prices.  Id. at 9.  Based on this finding, the court held that “[i]t accordingly cannot be that the vertical agreements between Cendyn and Hotel Defendants to license GuestRev and GroupRev restrain trade.”  Id. at *9.

Agency Updates

This feature includes excerpts from selected press releases issued by the Antitrust Division, US DOJ, 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

https://www.justice.gov/atr/press-releases. Highlights include the following:

Justice Department Along With 30 States Sues Live Nation-Ticketmaster for Monopolizing Markets Across the Live Concert Industry

On May 23, 2024, the Justice Department, along with 30 state, including California, and district attorneys general, filed a civil antitrust lawsuit against Live Nation Entertainment Inc. and its wholly-owned subsidiary, Ticketmaster LLC (Live Nation-Ticketmaster) for monopolization and other unlawful conduct that thwarts competition in markets across the live entertainment industry.

The complaint, filed in the U.S. District Court for the Southern District of New York, alleges that Live Nation-Ticketmaster unlawfully exercises its monopoly power in violation of Section 2 of the Sherman Act.  Specifically, the complaint alleges Live Nation-Ticketmaster unlawfully maintained monopolies in concert promotions and primary ticketing markets, while engaging in other exclusionary conduct affecting live concert venues.

The complaint further alleges that Live Nation-Ticketmaster’s exclusionary practices fortify and protect what it refers to as its “flywheel,” the companies’ self-reinforcing business model that captures fees and revenue from concert fans and sponsorship, uses that revenue to lock up artists to exclusive promotion deals, and then uses its powerful cache of live content to sign venues into long term exclusive ticketing deals, thereby starting the cycle all over again. Live Nation-Ticketmaster’s anticompetitive conduct creates even more barriers for rivals to compete on the merits. Specifically, Live Nation-Ticketmaster engaged in a variety of tactics to eliminate competition and monopolize markets

The lawsuit includes a request for structural relief, seeks to restore competition in the live concert industry, provide better choices at lower prices for fans, and open venue doors for working musicians and other performance artists.

A copy of the Complaint can be found at:  file_stamp_lne_complaint_0.pdf (justice.gov)

DOJ Press Release: Office of Public Affairs | Justice Department Sues Live Nation-Ticketmaster for Monopolizing Markets Across the Live Concert Industry | United States Department of Justice

California Attorney General Press release:Attorney General Bonta Files Lawsuit Against Live Nation, Ticketmaster | State of California – Department of Justice – Office of the Attorney General

Justice Department and Stanford University to Cohost Workshop “Promoting Competition in Artificial Intelligence

On May 21, 2024, the Justice Department issued a press release announcing the Justice Department’s Antitrust Division, Stanford Graduate School of Business and Stanford Institute for Economic Policy Research will cohost the free full-day workshop to discuss competition and AI industry structure, including competition in AI models, semiconductors, the cloud and AI applications. The workshop will be livestreamed from 9 a.m. PT to 6:00 p.m. PT. Notably, a recording of the workshop will be available on Stanford’s event page after the workshop. An agenda and a list of speakers will be available in the near future on the Antitrust Division’s event page and Stanford’s event page. Members of the public should register on Stanford’s event page and members of the press should send a copy of their registration confirmation to Julia.Hartnett@usdoj.gov on their registration email.

DOJ Press Release: Office of Public Affairs | Justice Department and Stanford University to Cohost Workshop “Promoting Competition in Artificial Intelligence” | United States Department of Justice

Health Care Monopolies and Collusion Task Force

On May 9, 2024, the Justice Department today announced the formation of the Antitrust Division’s Task Force on Health Care Monopolies and Collusion (HCMC). The task force is designed to identify and root out monopolies and collusive practices that increase costs, decrease quality and create single points of failure in the health care industry.

The HCMC will consider widespread competition concerns shared by patients, health care professionals, businesses and entrepreneurs, including issues regarding payer-provider consolidation, serial acquisitions, labor and quality of care, medical billing, health care IT services, access to and misuse of health care data and more.

The Antitrust Division welcomes input and information from the public, including from practitioners, patients, researchers, business owners and others who have direct insight into competition concerns in the health care industry.

Justice Department Press Release: Office of Public Affairs | Assistant Attorney General Jonathan Kanter Announces Task Force on Health Care Monopolies and Collusion | United States Department of Justice

Federal Trade Commission

https://www.ftc.gov/news-events/news/press-releases   Highlights include the following:

FTC and DOJ Seek Info on Serial Acquisitions, Roll-Up Strategies Across U.S. Economy

On May 23, 2024, the FTC issued a press release announcing that the FTC and DOJ Antitrust Division launched a public inquiry to identify serial acquisitions, roll-up strategies that have harmed competition, consumers, workers, and innovation.  The agencies are seeking information from the public on serial acquisitions and roll-up strategies, which are corporate consolidation strategies that occur when a company becomes larger—and potentially dominant—by buying several smaller firms in the same or related business sectors or industries.

Corporate actors, including private equity firms, engage in these types of acquisitions across a wide array of markets and industries. Often, businesses do not have to report these deals to the federal antitrust agencies, allowing firms to amass significant control over key products, services, or labor markets without government scrutiny. Nevertheless, these types of transactions can harm competition to the detriment of consumers, workers, and innovation across an entire industry or business sector.

The FTC and DOJ are seeking input from a wide range of stakeholders including consumers, workers, businesses, advocacy organizations, professional and trade associations, local, state, and federal elected officials, academics, and others.

Acquisitions have the potential to violate the antitrust laws. The FTC’s Section 5 policy statement also makes clear that serial mergers, acquisitions or joint ventures can be anticompetitive.

FTC Press Release: FTC and DOJ Seek Info on Serial Acquisitions, Roll-Up Strategies Across U.S. Economy | Federal Trade Commission

California Department Of Justice

https://oag.ca.gov/media/news     Highlights include:

Wireless Carrier Settlement

On May 9, 2024 the California Attorney General, along with a bipartisan, multistate coalition, announced a $10.25 million settlement with major U.S wireless carriers after an industry-wide investigation of misleading advertising practices. The settlement, which is still subject to court approval, resolves the allegations that the carriers violated the Unfair Competition Law and False Advertising Law by engaging in deceptive and misleading advertising with regards to free or unlimited data. Today’s settlement provides strong, industry-wide injunctive relief that applies to all major wireless carriers and includes a payment of $10.25 million to the states, with $1.2 million going to California. 

The settlement provides industry-wide injunctive relief, which addresses all of the common misleading advertising practices committed by major wireless carriers with respect to claims of unlimited data, so called switch-and-save offers, discounted services claims; and claims of free or discounted devices; and claims with respect to leased devices.

 A copy of the Complaint can be found at: AT&T Complaint.pdf (ca.gov)

California Attorney General Press Release: Attorney General Bonta Announces $10.25 Million Settlement Against AT&T, Verizon, and T-Mobile for Misleading Advertising Practices | State of California – Department of Justice – Office of the Attorney General

Service Corporation International, Nation’s Largest Funeral Service Provider, to Pay $23 Million Penalty and Consumer Restitution for Consumer Protection Law Violations

On May 1, 2024, the California Attorney General, along with the District Attorneys of Alameda and Marin counties, and city and county of San Francisco, announced a settlement with Service Corporation International (SCI), the nation’s largest funeral service provider, which does business in California as the Neptune Society and the Trident Society. The settlement, which is subject to court approval, resolves the People’s enforcement action alleging that Texas-based SCI violated the Unfair Competition Law (UCL) and False Advertising Law (FAL) by engaging in false advertising and unlawful and deceptive acts in its marketing and sale of pre-need cremation packages. The proposed settlement, in the form of a stipulated judgment, provides full restitution to consumers, comprehensive injunctive relief, and $23 million in civil penalties.

The lawsuit alleges that SCI deceptively marketed its products in a variety of ways, including by misleading consumers about its trusting practices, refund policy, and veterans’ burial benefits and cremation. Among other things, SCI routinely informed customers that they had 30 days to cancel their plans and receive a full refund, which is deceptive because pre-need customers are entitled to cancel and receive a full refund at any time before services are provided.

Under the settlement, SCI will pay a $23 million civil penalty, pay full restitution to the consumers who cancelled their plans but did not get a full refund, and be subject to strong injunctive terms which provide meaningful protections for California consumers.

A Copy of the Stipulated Judgment:  Stipulation_Judgment_Execution_Final_.pdf (ca.gov)

California Attorney General Press release: Attorney General Bonta Announces Service Corporation International, Nation’s Largest Funeral Service Provider, to Pay $23 Million Penalty and Consumer Restitution for Consumer Protection Law Violations | State of California – Department of Justice – Office of the Attorney General


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