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.
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.
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.
1. Higher Thresholds For HSR Filings
On January 15, 2015, the Federal Trade Commission announced revised, higher thresholds for premerger filings under the Hart-Scott-Rodino Antitrust Improvements Act of 1976. The filing thresholds are revised annually, based on the change in gross national product and will be effective thirty days after publication in the Federal Register. Publication is expected within a week, so the new thresholds will most likely become effective in late February 2015. Acquisitions that have not closed by the effective date will be subject to the new thresholds.
The Centers for Medicare & Medicaid Services (CMS) released proposed regulations to clarify and build on current regulatory requirements for Accountable Care Organizations (ACOs) that participate in the Medicare Shared Savings Program (MSSP). Among the changes is one addressing when an ACO must be formed as an independent legal entity, separate from any of its multiple participants. According to CMS, this proposed change is designed to clarify existing regulations and to ensure that ACO decision-making is governed by individuals with fiduciary duties to the ACO alone.
Allegations that a highly specialized designer line of wedding dresses lacks reasonable substitutes fail to support allegations of Sherman Act violations for price fixing and group boycott claims. House of Brides etc., v. Alfred Angelo, Inc., Case No. 1:11-cv-07834 (N.D. Ill., December 4, 2014).
Alfred Angelo, Inc. (“Angelo”) is a designer, manufacturer and retailer of wedding products. House of Brides was an authorized Angelo retail dealer for over 40 years. While strictly a designer and manufacturer for many years, Angelo eventually entered into the operation of its own retail stores. Thus, it was engaged in “dual distribution,” in competition with its dealers such as House of Brides.
In California v. Intelligender, LLC, the Ninth Circuit ruled that final judgment in a CAFA-compliant class settlement barred the State of California from seeking restitution on behalf of members of the settlement class for losses caused by Intelligender’s allegedly false advertising of its gender predictive test. The Ninth Circuit rejected Intelligender’s efforts to block other remedies sought by the State.
Developments in modern antitrust law have made it increasingly difficult for termination of vertical relationships between a supplier and a dealer to be actionable under the antitrust laws, particularly under a per se theory of liability. Suppliers contemplating termination of dealer agreements, however, may need to carefully consider laws beyond contracts and antitrust. That is, many states including California have statutes intended to afford greater substantive and procedural protections to dealers than may be found within the four corners of the dealer agreement. What’s more, California’s statute – the Fair Practices of Equipment Manufacturers, Distributors, Wholesalers and Dealers Act (commonly known as California’s Equipment Dealers Act or CEDA), Cal. Bus. & Prof. Code § 22900 et seq. – is relatively arcane, has broad applicability to all kinds of “equipment” dealers, may apply to dealers solely doing business outside of California, and has a dearth of case law.
In Medical Center at Elizabeth Place v. Premier Health Partners et. al, Case No. 12-cv-26 (S.D. Oh. Oct. 20, 2014), the Southern District of Ohio held that previously-competing health care systems who join together in a revenue-sharing arrangement are incapable of conspiring with each other under Section 1 of the Sherman Act. This is the latest decision to weigh in on the level of integration required among legally separate entities to be deemed a single economic actor for antitrust purposes, and particularly significant given the rapidly increasing number of collaborations within the health care industry following passage of the Affordable Care Act.
Pennsylvania District Court certifies five year ruling for interlocutory appeal, that mushroom cooperative is not immune from antitrust claims based upon “advice of counsel” argument. In Re Mushroom Direct Purchaser Antitrust Litigation, Case No. 2:06-cv-00620, (E.D. Pa. October 17, 2014.)
The multidistrict litigation over alleged price fixing in the mushroom market is one of many antitrust class actions pending against cooperatives in various agricultural industries throughout the United States. These include In Re Fresh & Processed Potatoes Antitrust Litigation, (MDL No. 2186 D. Idaho) and In Re Processed Egg Products Antitrust Litigation, MDL No. 2002 (E.D. Pa.) These cases involve the scope of immunity for agricultural cooperatives pursuant to the Capper-Volstead Act of 1922, 7 U.S.C. §291-292. The Capper-Volstead Act provides agricultural coops with a limited scope of immunity to agree to fix sales prices through “collectively processing, preparing for market, handling, and marketing.”