On October 14, 2014, Bruce Colbath  and Sheppard Mullin presented the ABA Antitrust Section, Consumer  Protection SubCommittee September 2014 Monthly Consumer Protection Update.  Bruce is the Vice-Chair of the ABA
Continue Reading ABA Antitrust Section, Consumer Protection Subcommittee September 2014 Monthly Consumer Protection Update

Bundled discount programs have received significant antitrust scrutiny over the past decade, even though these marketing programs may benefit both consumers and competition. Typically, bundled discounts have been evaluated as either exclusive dealing or tying arrangements under Section 1 of the Sherman Act (and Section 3 of the Clayton Act in the case of a tying claim), or under Section 2 of the Sherman Act questioning whether such marketing plans result in unlawful monopolization.  While the appropriate legal analysis under these doctrines has continued to confound the courts, one consistent prerequisite to a finding of liability has been the existence of market or monopoly power, or in the case of an exclusive dealing arrangement, that the arrangement caused substantial foreclosure from the market.  A recent decision by a Pennsylvania district court, Schuylkill Health Systems v. Cardinal Health, Inc., et al.[1], has further confused the analysis of the lawfulness of bundled discounts by allowing a bundling claim to proceed under Section 1 of the Sherman Act (challenged as an exclusive dealing claim) and Section 3 of the Clayton Act (as a tying claim), even though it found that the defendants lacked market power and the discount programs failed to foreclose a sufficient portion of the relevant market.
Continue Reading Bundled Discounts Subject to Section 1/Clayton 3 Scrutiny In the Absence of Market Power and Substantial Foreclosure?

On Tuesday, July 29, the United States Court of Appeals for the Second Circuit “clarified certain aspects of [its] false advertising jurisprudence” and held that, where literal falsity and deliberate deception have been proved in a market with only two players, it is appropriate to use legal presumptions of consumer confusion and injury for the purposes of finding liability in a false advertising case brought under the Lanham Act.[1]
Continue Reading Second Circuit Clarifies the Use of Legal Presumptions of Consumer Confusion and Injury in Certain Lanham Act Cases

On July 28, 2014, the Federal Trade Commission accepted, subject to final approval, settlements with InstantUPCCodes.com (“Instant”) and Nationwide Barcode (“Nationwide”), two of the leading barcode resellers, and their principals, Jacob Alifraghis and Philip Peretz, who operate Instant and Nationwide, respectively.  In its complaints, the FTC alleged that the settling respondents violated Section 5 of the FTC Act by inviting certain competitors in the sale of barcodes to join together in a collusive scheme to raise prices.
Continue Reading Two UPC Resellers Settle FTC Invitation to Collude Investigation

On May 1, the Federal Trade Commission issued a press release concerning the antitrust risks involved in trade association activity and cautioned such groups that the Commission continues to maintain an active antitrust enforcement focus on trade association activity.  Interestingly, the release does not appear to have been the result of any specific enforcement action, but, instead appears designed to communicate the FTC’s continued interest, and perhaps a particular focus, on trade association activity.
Continue Reading FTC Targeting Trade Associations?

In a recent (March 20, 2014) letter, the Federal Trade Commission (FTC) offered guidance as to the factors to consider in evaluating whether entry into a contest on a social media site is a form of material connection requiring disclosure under the FTC Endorsement Guidelines.  At issue before the FTC was a promotional contest held by Cole Haan on Pinterest.  The letter is one of the first instances in which the FTC has offered guidance as to the applicability of the Endorsement Guidelines to contests conducted on social media sites.
Continue Reading FTC Offers Guidance on Social Media Contests

This past November and December, the US Department of Justice (“DOJ”) and European Commission (“EC”) cleared Microsoft Corporation’s (“Microsoft”) acquisition of the bulk of the devices and services business of Nokia Corporation of Finland (“Nokia”) without any conditions. In contrast, on April 8, 2014, the Chinese Ministry of Commerce (“MOFCOM”) approved the acquisition subject to conditions that include an intellectual property issue that is still to be resolved in the US, EU and other countries: whether holders of standard essential patents (“SEPs”) who make licensing commitments under fair, reasonable and nondiscriminatory (“FRAND”) terms should be barred from seeking injunctive relief against alleged infringers of their patents.  MOFCOM’s conditional approval is not controversial for this specific transaction, but raises the question of how MOFCOM’s treatment of this issue will be interpreted in future merger reviews and whether this will affect investigations related to anticompetitive conduct.
Continue Reading Microsoft-Nokia: China’s MOFCOM Quietly Slips Into the Debate about Injunctive Relief for FRAND-encumbered SEPs

This January, Consumer Reports, an independent product testing organization, released a report entitled “Caramel Color:  The health risk that may be in your soda” detailing its investigation of the presence of 4-methylimidazole (“4-MeI”), an impurity and potential carcinogen created during the manufacturing of caramel coloring, in various soft drinks.  Because 4-MeI is a potential carginogen, and identified as such under California’s Proposition 65 law, any food or beverage sold in the state that exposes consumers to more than 29 micrograms of 4-MeI per day is supposed to carry the Proposition 65 warning.  The investigation by Consumer Reports concluded that varying amounts of MeI were found in a variety of soft drinks, including Coca-Cola, Diet Coke, Dr. Pepper, Brisk Ice Tea, and A&W Root Beer; and found levels of 4-MeI that purportedly exceeded the Proposition 65 threshold in 365 EveryDay Value Dr. Snap, Pepsi, Diet Pepsi, Pepsi One and Malta Goya.  These latter products did not carry the Proposition 65 warning language.
Continue Reading California Proposition 65 Caramel Coloring Suits

On March 25, 2014, the U.S. Supreme Court ruled that Static Control Components, Inc. had the right to sue Lexmark International Inc. under the Lanham Act’s false advertising prong.  In doing so, the Court established a new Lanham Act standing test, rejecting several different tests circuit courts have used to evaluate standing under the Lanham act’s false advertising provisions.
Continue Reading U.S. Supreme Court Settles Lanham Act Standing Conflict