Antitrust Lawyer Blog Commentary on Current Developments

Articles Posted in Civil Non-Merger Highlights

On July 14, SignatureMD, a concierge medicine provider, sued its competitor, MDVIP, in federal court over allegations that the latter’s business practices violated the Sherman Antitrust Act, as well as California’s antitrust and unfair competition statutes in the Cartwright Act.

According to the lawsuit, MDVIP, the largest provider of concierge medicine in the United States that boasts 200,000 members and 700 physicians, tied doctors with “evergreen” contracts that cost $1 million to terminate, prevented doctors from seeing any patients who are not MDVIP members, and even stops doctors from switching allegiance to different concierge medicine providers for at least two years after their contract with MDVIP expires.

SignatureMD claims that MDVIP enjoys a 70 percent share of the concierge medicine membership program market and a 65 percent to 100 percent share in major cities and local markets across the country. Combined with MDVIP’s restrictive practices, SignatureMD argues, rival concierge medicine providers can no longer compete with it effectively. SignatureMD is seeking an injunction, damages and costs from MDVIP.

On July 11, 2014, Germany’s association of booksellers announced that European Union (“EU”) officials contacted them regarding its dispute with The booksellers have already asked German antitrust authorities to investigate Amazon, alleging that the online retailer is delaying the shipment of one of its member, Bonnier AG’s books over a dispute on the price of the publisher’s e-books.

Amazon, in response, stated that Bonnier AG wanted Amazon to charge prices for its e-books that would have been higher than its hard-copy books. According to Amazon, their regular course of action is to charge lower prices for e-books compared to the hard copies. Amazon has been caught in similar disputes, including one with French publisher Hachette Book Group. Amazon is thought to be attempting to boost its margins in its e-books division by negotiating lower prices from publishers.

Similar cases may give prediction to Amazon’s course of action in the face of antitrust investigation. In 2012, Apple Inc. and four publishers changed the pricing model for e-books in Europe in the face of scrutiny from EU antitrust authorities. They were suspected to have conspired to keep Amazon from charging less for e-books.

On May 6, 2014, a gasoline price-fixing lawsuit brought by District of Columbia Attorney General Irving Nathan was thrown out of court by Judge Craig Iscoe, ruling the District of Columbia has no grounds to bring such an action.

The District of Columbia’s lawsuit challenged the exclusive dealing contracts (the so-called “jobbers”) that gas stations had with specific suppliers that are the norm in the District.  As much as 60% of the gas stations in Washington, D.C. have the same supplier.

The District of Columbia argued that these exclusive supply arrangements violated the Retail Service Station Act, D.C.  Code §§ 36-301.01 et seq. (the “RSSA”), which prohibits distributors from enforcing exclusive dealing contracts with gasoline retailers.  However, Judge Iscoe dismissed the case because he found that the Attorney General’s office did not have the power to sue on this matter. Judge Iscoe found that only those who are directly affected by the alleged cartel have the right to sue.

On May 30, 2014, the lawyers representing Donald Sterling, the controversial ex-owner of the National Basketball Association (“NBA”) franchise, the Los Angeles Clippers (“Clippers”), filed a complaint before the U.S. District Court in the Central District of California to fight an order by the NBA that would force him to divest his ownership in the Clippers, be banned for life from the NBA, as well as pay a $2.5 million fine.

The lawsuit names the NBA and its commissioner, Adam Silver, as the defendants.  The NBA and Silver slapped the punishments on Donald Sterling after a tape containing racist remarks made by the latter was made public.

The complaint alleges that the NBA violated California’s constitution, the NBA’s own constitution, and the Sherman Antitrust Act through its proscribed punishments against Mr. Sterling.  The complaint hinges on the fact that the cause of the entire controversy—and the sole reason behind the NBA’s decision to penalize Mr. Sterling—is the tape containing Mr. Sterling’s remarks, which, as the complaint pointed out, was illegally recorded without Mr. Sterling’s knowledge, is inadmissible in court, and violates Mr. Sterling’s rights under California’s Constitution. The NBA, as a result, had no legal reason to penalize Mr. Sterling.  Moreover, the complaint points out that the NBA and Commissioner Silver are not authorized to levy any of its punishments on Mr. Sterling per the NBA constitution or its by-laws, since Mr. Sterling’s comments did not violate any part of the NBA’s constitution or its by-laws. The complaint also noted that many other NBA franchise owners or players who made similar controversial comments have not been punished as severely as Mr. Sterling; some have not even been punished at all by the Association.

On May 27, 2014, the attorneys of Japanese auto part companies filed a motion in a federal court in Michigan, indicating they will appeal to the Sixth Circuit Court of Appeals a ruling made by U.S. District Judge Marianne Battani that established a premise that an industry-wide cartel conspiracies existed among Japanese auto part makers.

A flurry of cases have been filed against most Japanese auto part companies, including companies previously uninvolved in cartel allegations, after Judge Battani’s ruling.

The mood in the plaintiff camp is bullish despite the appeal and attempts by the defendant side to block plaintiff’s motions to better coordinate the various civil suits. In particular, the plaintiff’s attorneys pointed out that many defendants have already made guilty pleas, making it more difficult for defendants to convince an appellate court to dismiss the case. Others noted that “courts try not to dismiss anything at this early stage unless there’s really nothing there.”

On May 6, 2014, the Bureau of Competition (“BC”) of the Federal Trade Commission (“FTC”) announced several personnel changes in its management.

There are two new Deputy Assistant Directors for the Anticompetitive Practices Division, which handles the BC’s enforcement efforts against anticompetitive conduct in industries other than health care. Descriptions of experience by the FTC:

  • Barbara Blank. “Barbara joined ACP in 2007, and has worked on a number of cases involving anticompetitive agreements as well as unilateral conduct. Her experience includes acting as lead staff attorney in the Commission’s investigation of Google’s search practices, and negotiating a settlement of charges against the National Association of Music Merchants involving improper information sharing by the trade association.”

On April 29, 2014, the European Commission (“EC”) announced that it has reached a legally-binding agreement with Samsung on standard essential patent (“SEP”) injunctions. According to the terms of the agreement, Samsung “will not seek injunctions” in the EU on the basis of its SEPs for smartphones and tablets against licensees who sign up to a specified licensing framework.

The reason the EC reached this agreement with Samsung is because SEPs give their owners significant market power, since it is not possible to manufacture products that comply with a certain standard without obtaining licensing for the SEPs. As a result, the EU requires SEP owners to issue licenses based on fair, reasonable and non-discriminatory (“FRAND”) terms. An SEP owner, such as Samsung, can use injunctions to stop other companies from gaining access to the SEP and thus restricting competition, so the EC is interested to limiting injunctions only to instances where companies seeking SEP licenses is unwilling to do so on FRAND terms.

Samsung agreed to the following terms in this agreement with the EC:

On April 25, 2014, the FTC announced that it had relocated its Premerger Notification Office (“PNO”) to 400 South 7 Street, SW, from its old location at the corner of 7th and D Streets SW in Washington D.C.

The New Address, which goes into effect on April 28, 2014, is:

Premerger Notification Office

On March 17, 2014, sports labor attorney, Jeffrey Kessler, filed suit against the NCAA and five power conferences, alleging that capping player compensation at the cost of a scholarship is an antitrust violation.  The lawsuit argues that limiting player compensation amounts to “price-fixing,” and should be considered a violation of existing antitrust laws.  Unlike previous suits, this one does not seek damages.  The goal of the lawsuit is to change the entire NCAA system and to require a system where players are fairly compensated.

The suit names the NCAA, the ACC, the Big 12, the Big Ten, The Pac-12, and the SEC as defendants.  The plaintiffs are Rutgers basketball player, J.J. Moore; Clemson football player, Martin Jenkins; UTEP football player, Kevin Perry; and University of California football player, William Tyndall; though as a class action claim, the lawsuit hopes to represent all FBS football players and D-I basketball players.

NCAA and the commissioners of the power five college conferences are concerned that this lawsuit may bring down the NCAA’s model of player amateurism.  If players were paid market value, then they would be given the same power as their coaches, who negotiate multi-million dollar contracts with their employers.

A recently-appointed Federal Trade Commission (“FTC”) official has reportedly responded to criticism that the Affordable Care Act (“ACA”) is in conflict with federal antitrust law, writing a letter to the New York Times earlier this week to defend the interaction of the legislative areas.

Martin Gaynor of the FTC Bureau of Economics wrote a letter declaring that the FTC does “not stand in the way of providers’ finding new ways of coordinating and improving care” and that “there are many ways for providers to effectively coordinate care that do not require merger or acquisition or cause for competitive concerns.”

Reports say the editorial was in response to an article in the Times earlier this month that covered a federal judge’s decision to back the FTC in ordering the reversal of a merger between Idaho’s largest healthcare provider and its largest physician practice.  Supporters of the deal argue that the ACA and healthcare law reform led to the deal, which involved St. Luke’s Health System and Saltzer Meical group.

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