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

One of the key factors in the Antitrust Division's recent string of high-profile successes in criminal cartel enforcement undoubtedly has been its Corporate Leniency Program.  Under this program, a corporation and its cooperating executives can receive complete immunity from criminal prosecution if, among other things, they are the first to report valuable information regarding criminal antitrust activity.  In Stolt-Nielsen, S.A. v. United States, 2006 U.S. App. LEXIS 7203 (3^rd Cir. March 23, 2006), a two-judge panel of the Third Circuit (the third judge, now Justice, Alito was elevated to the Supreme Court after argument) reversed a January 2005 district court decision that had permanently enjoined the government from indicting Stolt-Nielsen, S.A., a leading supplier of parcel tanker shipping services, as well as its subsidiary and an individual corporate executive, following the DOJ's revocation of an amnesty agreement with the company under the Corporate Leniency Program.  In holding that federal courts generally cannot enforce immunity agreements pre-indictment, the Third Circuit helped clarify the procedures for enforcing amnesty contracts, but it dodged the question at the heart of the case and decided by the district court, i.e., whether Stolt-Nielsen breached its obligations under its immunity agreement with the DOJ.

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Eminent domain has become a very hot topic in a wake of recent Supreme Court decisions affirming the rights of municipalities to seize private property through condemnation to benefit commercial developers.  But as far as federal antitrust law is concerned, the Supreme Court held many years ago in Parker v. Brown, 317 U.S. 341 (1943), that states acting in their sovereign capacity were immune from attack under federal antitrust laws, even if they were acting in an overtly anticompetitive fashion.  This state immunity from antitrust exposure has come to be known as "the state action doctrine."  In Commonwealth of Pennsylvania v. Susquehanna Regional, M.D.Pa., No. 1:05-CD-1814 (3/21/06), a federal District Court judge in Pennsylvania was confronted with a collision between eminent domain and state action immunity prompted not by a challenge from a private party, but from the Attorney General of the Commonwealth of Pennsylvania.  The Attorney General alleged that the Susquehanna Area Regional Airport Authority ("SARAA") had violated federal antitrust law by using eminent domain to condemn the site of the only private parking lot servicing Harrison International Airport, thereby eliminating the only competitor to the airport parking operation also run by SARAA.

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California's unfair competition law ("UCL") generally prohibits any "unlawful, unfair or fraudulent" conduct.  Bus. & Prof. Code 17200, et seq. While its liability coverage is quite broad, damages are not available in private actions and remedies in such actions are limited injunctive relief and restitution. For many years, however, some believed that the restitution remedy included disgorgement of profits, whether by reason of the fluid recovery¹ available in California class actions or otherwise. In Kraus v. Trinity Management Services, Inc., 23 Cal. 4^th 116 (2000), however, the California Supreme Court held that fluid recovery was not available to obtain disgorgement in the now defunct UCL nonclass representative actions.² Three years later, the same court held that disgorgement was not an available remedy in UCL individual actions and the only monetary relief available to a private plaintiff was restitution of funds in which the plaintiff had a prior ownership interest.  Korea Supply v. Lockheed Martin, 29 Cal. 4^th 1134 (2003).

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Under the Colgate doctrine, a "preannouncement" of unilateral terms and conditions on which a manufacturer will deal and the circumstances under which it will refuse to deal does not involve the element of "agreement" essential under Section 1 of the Sherman Act.  United States v. Colgate & Co., 250 U.S. 300 (1919).  One term and condition may be that the price at which the goods are resold to consumers be no less than a price designated by the manufacturer.  By contrast, an agreement between a manufacturer and a distributor that fixes the minimum resale price to consumers, constitutes illegal minimum resale price fixing, a "per se" or automatic violation of federal and state antitrust laws.

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Under the Noerr-Pennington doctrine, those who petition the government for redress are immune from antitrust liability for that petitioning activity. Protected petitioning activity includes the institution and maintenance of lawsuits. Under the "sham litigation" exception to Noerr-Pennington, however, immunity does not apply to a suit if it: (1) is objectively baseless in the sense that no reasonable litigant could realistically expect success on the merits and (2) conceals an attempt to interfere directly with the business relationships of a competitor, through the use of the litigation process itself, as opposed to the outcome of that process, as an anticompetitive weapon. In a rarity, the Eastern District of Pennsylvania, in In re Wellbutrin SR Antitrust Litg., Nos. 04-5525, 04-5898, 05-396 (E.D.Pa. March 9, 2006), found that patent infringement suits instituted by GlaxoSmithKline ("GSK") were not protected by Noerr-Pennington because they came within the scope of the sham litigation exception.

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On February 22, the European Commission (the "Commission") published on its website a series of documents setting out a number of proposed amendments to its 2002 Notice on immunity from fines and reduction of fines in cartel cases ("Leniency Notice").¹  The amendments reflect concern about the risk of discovery of corporate statements made to the Commission in the context of its leniency program during civil damages actions in third country jurisdictions.<br><br> Continue Reading...

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