The Supreme Court has ruled that when an oversight mechanism created by a State—here a State Board—is under the control of those it was supposed to be regulating (sometimes referred to by economists as “regulatory capture”), anticompetitive actions taken by the State Board on its own without further official government review or approval enjoy no immunity under the state action doctrine. North Carolina State Board of Dental Examiners v. Federal Trade Commission, 574 U.S.___, 135 S.Ct. 1101 (Feb. 25, 2015) (“N.C. State Board“). Continue Reading
On June 4, 2015, the Centers for Medicare & Medicaid Services issued final revisions to regulations governing accountable care organizations participating in the Medicare Shared Savings Program (“MSSP”). Among them is one explicitly requiring the formation of an ACO as a formal, separate legal entity for governance purposes whenever there are two or more ACO participants with unique tax identification numbers. In its revised state, CMS’ requirement now appears to be at odds with certain positions taken by the Federal Trade Commission and U.S. Department of Justice.
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On May 28, the Federal Trade Commission (“FTC”) announced it had reached a $1.2 billion settlement with Teva Pharmaceuticals, which acquired Cephalon in 2012, over reverse payment for its narcolepsy drug, Provigil. The Cephalon settlement also has non-monetary terms that bar Cephalon from entering agreements that include (i) payments to a generic filer and (ii) an agreement by a generic filer not to develop or market a drug within 30 days of a patent settlement that impedes generic entry. The FTC has lauded the outcome of Cephalon—its first settlement post-Actavis—with FTC Chairwoman Edith Ramirez hailing it as a “landmark settlement” and “an important step in the FTC’s ongoing effort to protect consumers from anticompetitive pay for delay settlements.” Continue Reading
On April 22, 2015, the Federal Trade Commission submitted a public letter to the New York State Department of Health (DOH) expressing “strong concerns” over state regulations offering to provide antitrust immunity to certain healthcare collaborations undertaken with DOH’s approval and supervision. This letter is consistent with the FTC’s continued opposition to grants of immunity from federal antitrust laws based on state action. The letter also presents a meaningful opportunity to re-evaluate the interplay between state and federal antitrust enforcement authority, and the related doctrine of state action immunity, particularly in the healthcare arena which has seen an unprecedented spike in collaborative arrangements following passage of the Affordable Care Act. Continue Reading
On May 7, 2015, the California Supreme Court issued its long-awaited decision in In re Cipro Cases I & II, Case No. S198616 (May 7, 2015) (Cipro). Cipro holds that reverse payment settlements can be challenged under California’s Cartwright Act, thereby reviving class actions filed by California indirect purchasers. The California Supreme Court, however, went further, by delineating a structured rule of reason analysis to be used in evaluating the legality of reverse payment settlements, something the U.S. Supreme Court had left up to future lower courts to develop. Continue Reading
In Oneok, Inc. v. Learjet, Inc., No. 13-271 (April 21, 2015), the U.S. Supreme Court held in a 7-2 opinion that state law antitrust claims against defendant natural gas pipeline companies did not fall within the field of matters preempted by the Natural Gas Act (the “NGA”), 15 U.S.C. § 717 et seq., even though the claims challenged industry practices bearing on the setting of wholesale natural gas rates—an area traditionally recognized as squarely within the NGA’s exclusive jurisdictional scope. This decision has implications reaching far beyond the litigation itself. Oneok opens the door to new, but yet unknown, state-level antitrust regulation of the wholesale natural gas market, and the uncertainty that will follow. As antitrust enforcement can vary by state, Oneok also subjects natural gas pipeline companies to potentially conflicting regulations and increased compliance costs. Continue Reading
The Eleventh Circuit recently affirmed a Federal Trade Commission finding that a manufacturer’s rebate program requiring exclusivity from its distributors was an unlawful maintenance of monopoly power under Section 5 of the FTC Act. McWane, Inc. v. Fed. Trade Comm., No. 14-11363 (11th Cir. April 15, 2015). The Court found that the rebate program’s practical effect was to make it economically infeasible for distributors to switch from defendant McWane to its only competitor, Star Pipe Products (“Star”). Unable to attract sales, Star was therefore incapable of generating enough revenue to become an efficient and effective competitor to challenge McWane’s near 100% monopoly over domestic water-pipe fittings. Continue Reading
So far in China there have not been any published decisions regarding price-fixing or other anti-competitive agreements based on concerted action by competitors. There is also no Chinese legal precedent for including potential competitors in the analysis of antitrust law compliance. But China’s antitrust enforcers are very much aware of how the U.S. and EC enforce antitrust laws. We may thus begin to see more cases where the Chinese enforcers enforce the Anti-Monopoly Law’s (“AML”) prohibition of anti-competitive agreements among competitors based on concerted action using the same approach as the EC, whose decision to fine banana suppliers for fixing the price of green and ripe bananas was recently upheld by the European Court of Justice (“Court”) in Dole Food and Dole Germany v. Commission, case number C‑286/13 P. While this is not the first time the EC has fined companies based on concerted action, it reinforces some of the broad sweeping concepts that make it easy to punish a company in an administrative process, such as in China, where the enforcer, investigator and judge are essentially the same body. This is particularly of concern in China given the discretionary power of the Chinese enforcement authorities. Continue Reading
A Matsushita “Quick Look” Analysis Demonstrates that While Plausible, No Evidence Supports An Actionable Conspiracy or Monopoly. Abraham & Veneklasen Joint Venture et al. v. Am. Quarter Horse Ass’n, 776 F.3d 321 (5th Cir. Jan. 14, 2015). Continue Reading
There are few aspects of U.S. antitrust law as seemingly well settled as Illinois Brick’s “indirect purchaser rule.” The rule itself — indirect purchasers may not recover damages under federal antitrust laws — is about as straightforward as they come; there are only a few exceptions, and courts have adhered to the U.S. Supreme Court’s instruction that these exceptions not be freely expanded or multiplied. If antitrust has any load-bearing doctrinal pillars, then Illinois Brick is surely among them.
But here is a not-entirely-settled question about Illinois Brick: To what extent does it apply to claims based on conduct occurring in foreign commerce? Part of the answer is easy: As an interpretation of the Clayton Act, Illinois Brick undisputedly applies to bar federal indirect purchaser claims based on foreign conduct. But does it also bar such claims when brought under state laws?
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