The U.S. Department of Justice has opened an antitrust investigation into the market for pressure pumping services used in hydraulic fracturing. Pressure pumping is the process of pumping water and other fluids into a well to break up rock formations and increase the well’s oil or gas production. Two of the companies that received civil investigative demands from the DOJ in connection with this probe are Baker Hughes Inc. and Halliburton Co. DOJ’s spokeswoman confirmed the investigation, saying DOJ’s antitrust division is investigating the possibility of anti-competitive practices involving pressure pumping services performed on oil and gas wells.
Bayer Settles Cipro Pay-For-Delay Suit for $74 Million
July 31, 2013 – 1:41 pm
In In re: Cipro Cases I & II, Bayer Corp. has agreed to pay $74 million to settle a California consumer class action over its alleged pay-for-delay patent deals for the antibiotic Cipro. The deal dismisses Bayer from a long-running antitrust suit over the nearly $400 million Bayer paid out in 1997 to end the generic-drug challenges to the Cipro patent. Although Bayer has settled out of the case, the plaintiffs’ case against Barr Pharmaceuticals Inc. and several other generics companies will continue in the California Supreme Court, which is weighing whether the Hatch-Waxman Act settlements can be challenged under California’s antitrust law. The settlement notes that the $74 million Bayer had to pay is only a partial payment of the plaintiffs’ claims and if the plaintiffs end up with at least $227 million in settlements from all defendants (including Bayer), by December 31, 2013, Bayer will have to pay out another $8 million.
Non-profit Antitrust Organization Requested Increase of Fines for Antitrust Violations
July 31, 2013 – 11:51 am
An independent nonprofit education, research and advocacy organization, the American Antitrust Institute (AAI), sent a letter to the United States Sentencing Commission, asking the Commission to amend a key portion of the formula it uses to calculate fines for antitrust offenses. AAI requested that the Commission increase the standard presumption of illegal overcharge it uses to calculate fines from ten percent to twenty percent. If adopted, this increase would at least double the current fines for illegal price fixing and similar collusion offenses.
Proposed Class Action Accuses Popular Restaurants of Illegally Fixing Tip Rates
July 31, 2013 – 11:19 am
In Diamond et al. v. Darden Restaurants, Inc. et al., plaintiff Ted Diamond filed a proposed class action suit against the owners of several popular restaurant chains, such as Red Lobster, Olive Garden, Applebee’s, and Ruby Tuesday, accusing the restaurants of fixing prices at locations in New York City’s Times Square for automatic gratuities and deceiving customers about their tipping policies. In his suit, plaintiff alleges that the restaurants conspired to illegally charge automatic gratuities for parties of seven or fewer guests and excessive automatic gratuities for parties of any size. The suit seeks statutory, compensatory, and punitive damages, as well as treble damages and fees and an order finding the restaurants violated New York’s consumer protection laws.
EC Accuses Banks of Blocking CDS Exchange Trading
July 30, 2013 – 4:54 pm
After a nearly two-year investigation, the European Trade Commission accused 13 of the world’s largest banks as well as International Swaps and Derivatives Association Inc. (ISDA) and Markit Group Ltd. of colluding to block two exchanges from establishing credit-default swap exchanges by denying them the necessary licenses to operate the trading platforms. According to the Commission, as part of their conspiracy, the banks told ISDA and Markit to only license Deutsche Boerse AG and the Chicago Mercantile Exchange Inc. for over-the-counter derivative trading. This allowed the banks to maintain their spot as middlemen for over-the-counter derivatives trading inEurope, the commission said. The banks also used other tactics to shut out the competition, including coordinating their choices of preferred clearinghouses for CDS transactions, as the Commission pointed out.
Bar on Non-Dentists Offering Teeth Whiting Not Immune from Antitrust Challenge
July 12, 2013 – 4:15 pm
In North Carolina State Board of Dental Examiners v. Federal Trade Commission, the U.S. Court of Appeals for the Fourth Circuit rejected the North Carolina dental board’s assertion of state action immunity for cease-and-desist letters that it sent to non-dentists providing teeth-whitening services. The court held that the state did not sufficiently supervise the ban.
The defendants argued that the state need not supervise the conduct of its agencies, just as municipal conduct does not require state supervision. The Fourth Circuit rejected that argument, explaining that all agencies are not created equal. An agency consisting of public actors charged to further the public interest may not need additional state supervision. “[W]here the ‘state agency’ is composed entirely of private market participants,” the court explained, the state action exemption does not apply unless the anticompetitive conduct is actively supervised by public actors.
Here, the dental board consisted mostly of dentists elected by their peers. The state action exemption is not triggered, the court held, when anticompetitive decisions are made by competitors with a financial interest in the market. In this case, the court found that the board consisted of “a decisive coalition (usually a majority) . . . of participants in the regulated market,’ who are chosen by and accountable to their fellow market participants.”
The court also rejected the argument that the cease and desist letters were the unilateral action of the board, rather than pursuant to a conspiracy. “As American Needle made clear,” Judge Shedd explained for the court, the “concerted action [requirement] is satisfied when an agreement exists between ‘separate economic actors’ such that any agreement ‘deprives the marketplace of independent centers of decision making.'” Allowing “the board’s status as a single entity” to prevent a conspiracy finding, the court explained, would have improperly allowed competitor dentists to forestall antitrust liability by acting “through a third-party intermediary or joint venture.”‘
Indirect Purchaser Claims Dismissed/Direct Purchaser Claims to Move Forward in Multi-District Auto Parts Antitrust Litigation
July 3, 2013 – 11:14 am
In In re: Automotive Parts Antitrust Litigation, Eastern District of Michigan Judge Marianne Batani dismissed some indirect purchaser claims, but retained direct purchaser claims, in multidistrict litigation in which the plaintiffs accuse auto parts makers of rigging bids and fixing prices on automotive wiring harnesses.
The court found sufficient allegations of a conspiracy with respect to wiring harnesses (the multi-district litigation also involves other parts), but held that indirect purchasers could not sue under federal or certain applicable state law.
Allegations that Copyright Owners Conspired to Restrain Competition Dismissed
July 3, 2013 – 11:11 am
In Metropolitan Regional Information Systems Inc. v. American Home Realty Network Inc. et al., District of Maryland Alexander Williams Jr. dismissed antitrust claims arising in a copyright infringement case. The court held that the defendant real estate referral service did not plausibly allege that the plaintiff conspired to file sham copyright infringement suits intended to restrain competition.
The court explained that the counter-claimant failed “to plead the time, place and contours of any anti-competitive agreement.” An allegation that copyright owners agreed to enforce their intellectual property rights, the court explained, is not sufficient to allege a conspiracy harming competition.
The court provided the defendant with an opportunity to amend its antitrust claim to satisfy the pleading problems.
Court Dismisses Medical Testing Labs’ Monopoly Suit Against Health Insurers
June 27, 2013 – 5:36 pm
In Rheumatology Diagnostics Laboratory Inc. et al. v. Aetna Inc., et al, Northern District of California Judge Jon Tigar dismissed medical testing labs’ antitrust suit alleging that Quest Diagnostics improperly offered insurers incentives so that they would refuse to deal with its competitors. The suit accused Quest of offering predatory discounts to health insurance companies for lab work in return for the insurers’ refusal to negotiate with Quest’s rivals or include them within their networks.
In dismissing plaintiffs’ suit, Judge Tigar held that the complaint had not demonstrated how the challenged agreements affected labs that were not parties and thus failed to show substantial foreclosure of the market. He also found no evidence of a horizontal agreement among insurers or that Quest influenced Blue Cross & Blue Shield’s trademark licensing decisions that allegedly drove individual states’ Blue Plans to enter nearly exclusive arrangements with Quest.