The City of San Jose, California, entered into an option contract to lease land to the Oakland A’s, a Major League Baseball (“MLB”) club, for the construction of a new stadium. The land was within the exclusive territory of another MLB club, the San Francisco Giants, who refused to waive their right under MLB’s Constitution to territorial exclusivity. The City sued MLB under the antitrust laws for not putting repeal of that constitutional provision up for a vote by all of the teams belonging to MLB, despite repeated demands by the City that it do so. City of San Jose v. Office of the Commissioner of Baseball, __ F.Supp.2d __, 2013 WL 5609346, Case No. C-13-02787 RMW (N.D. Cal., Oct. 11, 2013).
GULF STATES REORGANIZATION GROUP, INC. V. NUCOR CORP. (11th Cir. July 15, 2013) No. 11-14983.
In 1999, Gulf States Steel, Inc., a participant in a market described as “black hot rolled coil steel” filed a petition for bankruptcy. When reorganization efforts failed, and it filed a Chapter 7 petition, a group called Gulf States Reorganization Group (“GSRG”) negotiated with the Bankruptcy court to purchase and operate the “black hot rolled coil steel” assets. The Bankruptcy court issued an order requiring the sale of the assets to GSRG, unless another entity made a higher bid. In that eventuality, an auction would be held.
The current press is buzzing with news about the recent increase in antitrust investigations involving foreign companies with operations in China, and reports of foreign companies being told to expect higher fines if they “put up a fight” during investigations. At the same time, the Chinese enforcement agencies have started to make their decisions public. Putting these developments in perspective, the take-away is that antitrust in China should be taken seriously, the enforcement agencies are still in the development stage, and some progress is being made in transparency of decision-making.
The Federal District Court for the Central District of California, sitting in Santa Ana, recently dismissed antitrust claims in an action between competitors in a market described as the management and distribution of “photographs in rich media content for hotels.” As described in the first amended complaint, a hotel wishing to advertise or distribute visual or “rich content” through an online travel agency must use an intermediary, described as a “Global Distribution System” (“GDS”) or “Pegasus”. Plaintiff Pro Search alleges that defendant VFML violated Sections 1 and 2 of the Sherman Act by entering into exclusive dealing agreements with all of the GDS companies, as well as an exclusive dealing agreement with Pegasus. There are four GDS in the alleged geographic market. The contracts with GDS and Pegasus are alleged to constitute the “core of VFML’s monopoly.” Pro Search claims that it has been excluded from accessing the GDS and Pegasus, which are described as “essential intermediaries in the industry”. Pro Search alleges that VFML has a relevant market share of approximately 80%. The court dismissed the Sherman Act claims with leave to amend. Pro Search Plus, LLC v. VFM Leonardo, Inc., U.S.D.C., Central District of California, Case No. SACV 12-2102-JST (ANx), July 30, 2013.
On August 7, 2013, the National Development and Reform Commission (“NDRC”) fined six powdered milk companies – five foreign and one Hong Kong-based – RMB668 million (approximately US$109 million) for engaging in anti-competitive practices and illegal price-fixing, the largest fine ever for an Anti-Monopoly Law (“AML”) violation in China.
The Ninth Circuit Court of Appeals recently issued an opinion on a rare legal issue: buyer liability for violations of the Robinson-Patman Act. Gorlick Distribution Centers, LLC v. Car Sound Exhaust System, Inc., No. 10-36083 (9th Cir. July 19, 2013). The Gorlick court relied extensively on the Supreme Court’s opinion in Automatic Canteen Co. of America v. Federal Trade Commission, 346 U.S. 61 (1953) (Frankfurter, J.), which will be discussed first in this article, in affirming the grant of summary judgment dismissing plaintiff’s Robinson-Patman Act price discrimination claim. The court of appeals also affirmed dismissal of plaintiff’s Sherman Act section 1 claim, which reframed essentially the same facts as a conspiracy.
On August 2, 2013, District Judge Edward J. Davila denied a motion to dismiss antitrust claims brought by consumers of NFL apparel against Reebok and the NFL in Dang v. San Francisco Forty Niners, Case No. 5:12-CV-5481 (N.D. Cal.). Plaintiff seeks to represent a class of NFL apparel purchasers who were allegedly overcharged as a result of an agreement that gave Reebok the exclusive right to make and sell NFL apparel. Defendants — Rebook, the NFL, the NFL teams, and an NFL licensing entity — argued that plaintiff lacked standing and failed to adequately plead a relevant market. Judge Davila denied defendants’ motion to dismiss. The Court held that NFL apparel and NFL apparel licenses could be relevant markets because the NFL logos may be what consumers really want, in which case non-NFL apparel would not be a reasonable substitute. The Court also held that Dang had sufficiently pleaded standing in both markets, because he was present and injured in the retail market, and his injury was inextricably intertwined with the licensing market. The decision has potentially broad implications for similar licensing agreements throughout the professional and collegiate sports world, at least at the pleading stage.
On March 29, 2013, the Guangdong High People’s Court ruled that Tencent, Inc. (“Tencent”) did not violate China’s Anti-Monopoly Law (“AML”). In the first lawsuit of its kind, Beijing Qihoo Technology Co. Ltd. (“Qihoo”) sued Tencent under the AML, claiming Tencent was engaging in anti-competitive behavior. They sought ¥150 million in damages and an injunction against Tencent.
*This article was featured in SCOTUSBlog.
The Supreme Court on June 20 continued its recent trend of strictly enforcing the terms of arbitration agreements, holding that a contractual waiver of class arbitration is enforceable under the Federal Arbitration Act (FAA) even if the cost of proving an individual claim in arbitration exceeds the potential recovery. The Court’s opinion likely makes such class action waivers ironclad in the absence of specific legislation to the contrary or evidence – such as unconscionability under state law – that would establish “grounds . . . for the revocation of any contract” under the FAA’s savings clause, 9 U.S.C. § 2.
Conclusary allegations of parallel business conduct which are in the economic self-interest of the actor do not state an actionable antitrust claim. Duty Free Americas, Inc. v. The Estée Lauder Companies, Inc., Case O: 12-cv-60741-RNF (S.D. Fla. May 9, 2013).
Duty Free Americas, Inc. (DFA) is an operator of duty-free beauty products stores in airports. For a period of years, it purchased products from Estée Lauder Companies, Inc. (ELC). ELC is the largest manufacturer of beauty products sold in duty-free shops in US airports. According to a complaint filed by DFA in the U.S. District Court, Southern District of Florida, ELC’s marketshare is “approximately 50% or greater”.