Antitrust Law Blog

Introduction

On May 21, 2007, the United States Supreme Court issued a significant 7-2 decision tightening the requirements for pleading antitrust conspiracies under Sherman Act § 1, Bell Atlantic Corp. v. Twombly (No. 05-1126) 2007 U.S. LEXIS 5901.  The Court held that to satisfy the pleading requirements of FRCP 8 and survive a motion to dismiss pursuant to FRCP 12(b)(6), allegations of parallel conduct and bare assertions of conspiracy will not suffice.  Id. at *23 ("Without more, parallel conduct does not suggest conspiracy, and a conclusory allegation of agreement at some unidentified point does not supply facts adequate to show illegality.")  Thus, the Court found, when allegations of parallel conduct are set out as the basis of a Section 1 claim, "they must be placed in a context that raises a suggestion of a preceding agreement, not merely parallel conduct that could just as well be independent action."  Id. at *24.

In reaching this conclusion, the Supreme Court explicitly rejected the longstanding formulation for deciding motions to dismiss set forth in Conley v. Gibson, 355 U.S. 41 at 45-46 (1957) – "that a complaint should not be dismissed for failure to state a claim unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief."  See Twombly, 2007 U.S. LEXIS 5901 at *31-35.  Now, under Twombly, a Section 1 plaintiff may not rely on the possibility that she might later establish some "some set of undisclosed facts to support recovery," but instead must plead "enough facts to state a claim to relief that is plausible on its face," and not merely "conceivable."  Id. at *33, *47.

On March 13, 2007, United States District Court Chief Judge Vaughn Walker decided summary judgment motions in a complex group boycott case arising out of alleged efforts by Federated Department Stores (“Federated”), May Department Stores (“May”), Lenox Incorporated (“Lenox”) and Waterford Wedgwood (“Waterford”) to boycott Bed Bath & Beyond, a competitor of May and Federated.  In Re: Tableware Antitrust Litigation (No. 04-3514 VRW, N.D. Cal.).  Judge Walker's typically painstaking opinion provides a textbook quality overview of an area of antitrust law not currently known for its clarity: the interplay between horizontal group boycott allegations, the per se rule and application of the Matsushita standard for analyzing summary judgment where no direct evidence of the horizontal group boycott exists.

On May 22, the European Commission (EC) approved the proposed acquisition of the music publishing business of Bertelsmann Music Group (BMG) of Germany by the US-based Universal.  The EC held that the proposed merger, as initially notified, raised serious doubts as regards adverse effects on competition in the market for music publishing rights for online applications.  However, following an in-depth investigation, the EC held that its concerns would be removed by the remedies package proposed by the parties concerning the divestiture of a number of publishing catalogues.  In the light of these commitments, the EC concluded that the proposed operation would not significantly impede effective competition in the European Economic Area (EEA) or any substantial part of it.  EC Competition Commissioner, Neelie Kroes, stated, "Digital music has the potential to change the face of the music industry in Europe. I am satisfied that the significant remedies will keep these markets competitive and ensure that consumers will not be harmed by the merger".

Subject to the restrictions on technology monopoly as set forth under Article 329 of the Contract Law of the PRC, a covenant not to sue clause (“CNS”) in a Software Development Agreement is feasible under the current laws and regulations of the People’s Republic of China (“the PRC”).

The air in a taxicab company's Sherman Act Section 1 challenge to an exclusive operating agreement between an airport authority and a competing taxicab company went flat when the U.S. District court for the Middle District of Pennsylvania held the company failed to state a claim.  Capital City Cab Service, Inc. v. Susquehanna Area Regional Airport Authority, No. 1:06-CV-671 (M.D. Pa. filed Apr. 18, 2007).

A jury examining a series of giant trades in the mid-1990s copper derivatives market might reasonably conclude that one of the country's biggest banks, which financed the trades, conspired with its customer to manipulate the market, a U.S. district judge has ruled in rejecting a summary judgment motion by defendants J.P. Morgan Chase & Co. and Morgan Guaranty Trust Company of New York in Southwire Co. v. J.P. Morgan Chase & Co., MDL Docket No. 1303 (W.D. Wis. April 24, 2007).

If you are interested in the latest court decisions and developments regarding California's antitrust and unfair competition laws, please visit Sheppard Mullin Publications.