State Regulatory Scheme Offering Antitrust Immunity to Healthcare Collaborations Creates Tension Between Federal and State Antitrust Enforcement

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

California Supreme Court Delineates a Structured Rule of Reason Analysis for Evaluating Reverse Payment or Pay-for-Delay Settlements

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.[1]  Continue Reading

U.S. Supreme Court Lets Natural Gas Act Preemption Seep Away

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

Eleventh Circuit Affirms FTC Finding that Rebate Program Served to Unlawfully Maintain Monopoly Power

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

China Ripe For Enforcing AML Based On Concerted Action

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

When Illinois Brick Goes Abroad

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?

Click here to read the original as published by Law360.

 

Revised “Fred Meyer Guides” Leave Treatment of Key Robinson-Patman Act Provisions Unchanged

While hardly ever enforced in modern times by government enforcement agencies, and rarely the subject of antitrust treble damage actions, Sections 2(d) and (e) of the Robinson Patman Act (15 U.S.C. §§ 13(d) and (e)) have had a colorful heritage.  In response to the Supreme Court’s decision in FTC v. Fred Meyer, Inc., 390 U.S. 341 (1968), the Federal Trade Commission issued its Guides for Advertising Allowances and Other Merchandising Payments and Services, codified at 16 CFR, Part 240 (1969).  The “Fred Meyer Guides”, as they are generally referred to, were revised in 1990, and most recently in November 2014.  In the wake of efforts through the years to better equate the aims and goals of Robinson-Patman enforcement with those of the other antitrust laws, there has been a vigorous debate over modifications.  These included proffered amendments suggested by the American Bar Association Section of Antitrust Law, the Antitrust Law Institute, and others.

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In Highly-Anticipated Decision, Ninth Circuit Affirms That Hospital-Physician Group Merger in St. Luke’s Violated Section 7 And Casts Serious Doubt on Viability of Efficiencies Defense

On February 10, 2015, the Ninth Circuit issued its highly-anticipated decision at the intersection of health care and antitrust, affirming the lower court’s finding that a hospital-physician group merger completed nearly three years ago violated Section 7 of the Clayton Act.  St. Alphonsus Med. Ctr. – Nampa Inc. v. St. Luke’s Health Sys., Ltd., No. 14-35173 (9th Cir. Feb. 10, 2015) (“St. Luke’s”).  The significance of St. Luke’s cannot be overstated.  It is the first challenge of a hospital-physician group merger by the Federal Trade Commission that proceeded to trial.  And, the Ninth Circuit’s opinion includes significant judicial guidance for future health care mergers, casting serious doubt on the viability of a “post-merger efficiencies defense” to a prima facie case of a Section 7 violation and declaring that proof of “extraordinary efficiencies” that are “merger-specific” is required to successfully offset anticompetitive concerns in highly concentrated markets.

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Antitrust Enforcement in China: Understanding the Framework of the Anti-Monopoly Law

China’s adoption of the Anti-Monopoly Law (“AML”) is a landmark in the evolution of China’s economic transformation. The AML was a carefully thought-out, negotiated, strategic development dictated by the central government, and the culmination of a process that started almost twenty years ago. China has moved from a centrally planned command economy to one that is largely a free market economy, despite the existence of state-owned enterprises as major players.  The AML is the ultimate recognition on the part of the Chinese government that free and fair competition in the market place is in the essential interest of the Chinese people.

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