Antitrust Law Blog : Antitrust Lawyer & Attorney : Sheppard Mullin Law Firm : Antitrust Law Blog

On June 15, the European Commission ("Commission") announced that it had fined Anglo-Swedish pharmaceutical company, AstraZeneca, €60 million (approx. US$73 million) for misusing the patent system, and the procedures for marketing pharmaceuticals, to block or delay market entry for generic competitors to its ulcer drug Losec. The Commission decided that AstraZeneca's actions constituted serious abuses of its dominant market position in violation of the European Union's competition rules. The level of the fine took into account that some features of the abuses were considered novel by EU standards.

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In an unusual "predatory buying" case, the Ninth Circuit held that to succeed on a Sherman Act Section 2 claim, a plaintiff complaining of predatory buying need not meet the high standard of liability applicable to predatory pricing claims. Confederated Tribes of Siletz Indians of Oregon v. Weyerhaeuser Co., Nos. 03-35669, 03-35984, 2005 WL 1269668 (9th Cir. May 31, 2005). According to the Ninth Circuit, a plaintiff does not have to prove that the defendant operated at a loss and that a dangerous probability of the defendant's recoupment of those losses existed to establish antitrust liability for predatory buying.

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On June 13, the European Commission ("Commission") announced the launch of detailed antitrust investigations of the European Union's ("EU") financial services and energy markets. In particular, the Commission will focus on the retail banking and business insurance sectors, and the gas and electricity markets. The Commission is concerned with growing evidence suggesting that EU consumers are not benefiting from fully competitive and integrated financial markets, and the lack of genuinely competitive offers and significant price increases in the energy sector.

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Plaintiffs, promoters of "A" Hunter-Jumper Competitions on the Florida Winter Horse Show circuit, filed an action against USA Equestrian, Inc., ("USAE"), United States Equestrian Federation Inc. ("USEF"), an affiliate, and incumbent horse show promoters, granted exclusive rights to produce "A" horse shows within a 250 mile radius ("mileage rule"), of the incumbant venue. USEF is the successor of the American Horse Show Association.

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On May 25, 2005, United States District Judge, Central District of California, denied the defendant supermarkets' motion for summary judgment, and held that a revenue sharing agreement between three large supermarket chains, alleged to be ancillary to the promotion of employer solidarity within the structure of a multiemployer bargaining unit, was not subject to the nonstatutory labor exemption, and is not immune from scrutiny as a potential antitrust violation. State of California v. Safeway, Inc., United States District Court, Central District of California, CV04-0687-GHK (SSx), 52505.

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Conspiracy is a basic theory of antitrust liability. It is a theory favored by antitrust plaintiffs and the government, pled often by each, and can form the legal basis of private and public enforcement. Plaintiffs win or lose on its proof. Conspiracy rarely, if ever, enhances efficiency; and competition and consumer welfare often suffer in its presence. In June, the Ninth Circuit limited its use by broadening the circumstances under which two groups can be considered one entity, and therefore, incapable of forming a horizontal agreement. The court held that a national trade association was incapable of conspiring with its affiliated local groups to exclude competition because all parties shared a common unified interest. Only disparate, competing, independent entities with unique economic incentives, motives, and actions are able to unlawfully conspire. Jack Russell Network of Northern California v. American Kennel Club, Inc., 9th Cir., No. 02-17264.

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The Federal Trade Commission has proposed consent orders that will approve Chevron's acquisition of the voting securities of Unocal, which will then merge into a Chevron subsidiary, and continue as a single entity. In Re Chevron Corp., FTC, File No. 051 0125, 6/10/05. The consent orders require Chevron to release all of its patent rights to CARB reformulated gasoline, required in the California market.

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In a unanimous decision, the Supreme Court opened the door for generic drug manufacturers to conduct pre-clinical drug testing on patented drugs. Integra brought the case, Merck KGaA v. Integra Lifesciences I, Ltd., against Merck for using patented tripeptide sequences that show promise in combating certain types of cancer. Integra alleged that Merck's research of the patented compounds constituted patent infringement and sued Merck for damages. Integra prevailed both at trial and on appeal to the Federal Circuit by convincing the court that Merck had infringed Integra's patent when they conducted pre-clinical research. But the Supreme Court's opinion, which was widely supported by both the Bush Administration and the AARP, stated that Merck's use of patented material was protected by a statutory safe harbor that allows generic drug manufacturers to conduct research using patented information.

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The Antitrust Division continues to send a strong message to businesses, executives, and individuals engaged in potential bid rigging and price fixing schemes. Recent investigations of the ready mixed concrete industry, glyphosate industry, and roofing products industry have resulted in guilty pleas and indictments. The recent activity indicates that the Antitrust Division continues to make criminal enforcement a priority.

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