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Summary

The Supreme Court has delivered its much anticipated[1] decision in Leegin v. PSKS, Inc.[2] and overruled the 96 year-old rule established in Dr. Miles Medical Co. v. John D. Park & Sons Co.[3] that made agreements between manufacturers and their distributors on the minimum resale price of the manufacturer's products, "per se" or automatically unlawful.  The Court held that the appropriate standard for testing the lawfulness of minimum resale price agreements, also known as resale price maintenance or RPM, is the rule of reason, not the per se standard.  Under the rule of reason, the courts evaluate the effects of a trade restraint on competition in the relevant antitrust market.  If a restraint's effects benefit competition between rival firms more than they injure competition, the restraint will be upheld.  Thus, the Leegin decision means that courts will now review RPM practices on a case-by-case basis.  Federal and state law enforcers and private plaintiffs will have the burden of proving that a RPM practice is anticompetitive, while manufacturers and distributors will need to show that their RPM practice is procompetitive.

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Introduction

On June 18, 2007, the United States Supreme Court ruled in a 7-1 decision that investment banks are immune from antitrust scrutiny in connection with syndication and marketing techniques employed in underwriting initial public offerings, Credit Suisse Securities (USA) LLC v. Billing  (No. 05-1157) 127 S.Ct. 2383, 2007 U.S. LEXIS 7724.  Finding that "permitting plaintiffs to dress what is essentially a securities complaint in antitrust clothing" would pose a "serious conflict between, on the one hand, application of the antitrust laws and, on the other, proper enforcement of the securities law," the Court held that federal securities laws and regulation impliedly preclude the application of antitrust laws to the underwriting activities at issue.  Id. at *35.  Writing for the majority, Justice Breyer emphasized that there is a fine, complex line separating activities permitted and forbidden under the securities laws, and that the Securities and Exchange Commission is far better qualified to determine the legality of such conduct than judge and juries in antitrust cases.  Id. at *27-34.

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DOJ Obtains Consent Degree forcing Divestiture in Monsanto/Delta & Pine Land

On May 31, the Department of Justice Antitrust Division announced that it had reached a settlement with Monsanto, resolving the objections that the Division had with Monsanto's purchase of Delta & Pine Land ("Delta").  Numerous interest groups had watched the merger closely, as it involved the vertical integration of the largest producer of cotton seed traits (favorable growing characteristics that are introduced into cotton seeds via genetic engineering) with the largest producer of cottonseeds, and the horizontal integration of two cottonseed producers.

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