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DOJ and FTC Issue Final Vertical Merger Guidelines

DOJ and FTC Issue Final Vertical Merger Guidelines

On June 30, 2020, the Department of Justice (DOJ) and the Federal Trade Commission (FTC) finalized their much-anticipated Vertical Merger Guidelines. The new Guidelines, which were last updated in 1984, seek to increase transparency around the analytical techniques, practices, and enforcement policies that U.S. antitrust authorities use to regulate mergers between firms at different stages of the supply chain (e.g., a furniture maker that acquires a producer of timber). Vertical mergers generally raise fewer anticompetitive concerns than horizontal mergers between direct competitors. This, in part, is because consolidation along the supply chain tends to result in lower prices, as distributors and finished goods manufacturers can source inputs at cost rather than at the markup they would pay to a third-party supplier. But, as the Guidelines make clear, vertical mergers “are not invariably innocuous”: a merged firm could raise the price for – and even withhold – a necessary input from its rivals or exploit sensitive business information about rivals that it obtains as part of the merger. These so-called unilateral effects threaten harm to competition in the relevant market if rivals wind up abandoning the market, leaving consumers with higher prices and less innovation as a result. Per the Guidelines,...

Antitrust Law and the COVID-19 Pandemic

Antitrust Law and the COVID-19 Pandemic

The coronavirus pandemic is having repercussions in all sectors of the legal community, as illustrated in the prior entries in our “The Coronavirus Pandemic and Your Business: How We Can Help” client alert series. Antitrust law is no exception. The Bureau of Competition of the Federal Trade Commission (FTC) and the Antitrust Division of the Department of Justice (DOJ) have put out two joint statements in response to COVID-19, one on March 24 and another just last week. Both contain reminders and useful guidance concerning cooperation among market participants during these unprecedented times. Recognizing that meeting the challenges posed by the pandemic will require collaborative efforts to address pressing health and safety needs, FTC and DOJ highlighted in their March 24 statement certain types of coordinated activity that the antitrust laws generally permit – because they lead to outcomes that are efficiency-enhancing and pro-competitive. These include: Collaboration on research and development, as may be the case with R&D for developing a potential vaccine. Sharing of information regarding technical know-how as opposed to firm-specific data on prices and outputs. Standard setting designed to assist healthcare providers in clinical decision-making. Joint purchasing arrangements among medical providers that aid procurement, perhaps of PPE,...

Wrap-Up of United States Supreme Court’s 2017-2018 Term

Wrap-Up of United States Supreme Court’s 2017-2018 Term

With the close of the United States Supreme Court’s 2017-18 term, we offer this wrap-up, focusing on decisions of special interest from the business and commercial perspective (excluding patent cases): In a much talked-about decision in the antitrust field, the Court held in Ohio v. American Express Co. that American Express’s anti-steering provisions in its merchant contracts, which generally preclude merchants from encouraging customers to use credit cards other than American Express, are not anticompetitive and therefore do not violate Section 1 of the Sherman Act. In so holding, the Court found that credit card networks are two-sided transaction platforms, one side being the merchant and the other side being the merchant’s customer. Thus, when assessing whether the anti-steering agreements are anticompetitive, the effects on both sides of the platform must be considered. The plaintiffs’ proof that American Express had increased its merchant fees over a period of time was insufficient to show an anticompetitive effect because it neglected the customer side of the platform, where consumers have received the benefit of ever-increasing rewards from credit card companies and other improvements in services that those higher merchant fees enable. Bringing an end to a fight that New Jersey had been waging...

No Harm to Competition: Third Circuit Upholds Decision for Uber in Antitrust Challenge by Philadelphia Taxicab Drivers

No Harm to Competition: Third Circuit Upholds Decision for Uber in Antitrust Challenge by Philadelphia Taxicab Drivers

The Third Circuit’s newly-issued precedential opinion in Philadelphia Taxi Association v. Uber Technologies, Inc. is a classic reminder that the antitrust laws protect against harm to competition – not harm to competitors. In 2016, a group of Philadelphia taxicab drivers sued Uber in federal district court, alleging that the ride-sharing service was unlawfully attempting to monopolize the vehicle-for-hire market in Philadelphia. Plaintiffs pointed to the fact that, in October 2014, just prior to Uber’s entry into Philadelphia, there were 7,000 taxi drivers, and each of the city’s 1,610 taxicab medallions was valued at an average of $545,000. Two years later, 1,200 medallion taxi drivers had fled to Uber, those still driving taxis saw a thirty percent decline in their earnings, and the value of a medallion plummeted to just $80,000. The district court dismissed the complaint, holding that the plaintiffs had not pled antitrust injury – i.e., harm that the antitrust laws are designed to prevent – and thus did not have antitrust standing to maintain their suit. This appeal followed. The Third Circuit affirmed the dismissal but, unlike the district court, did so first based on plaintiffs’ failure to plausibly allege the elements of their attempted monopolization claim – i.e.,...

Wide of the Goal: Second Circuit Says No to Soccer League’s Request for Preliminary Injunction in Antitrust Suit

Wide of the Goal: Second Circuit Says No to Soccer League’s Request for Preliminary Injunction in Antitrust Suit

Coming, coincidentally, just days before the start of the 2018 Major League Soccer season, the recent Second Circuit decision in North American Soccer League, LLC v. United States Soccer Federation, Inc. has key takeaways for antitrust and injunction law practitioners. As the governing body for soccer in the U.S. and Canada, the United States Soccer Federation (U.S. Soccer) promulgates Standards, tied to the number and location of a league’s teams, that it uses to designate leagues as Division I, II, or III each year. Major League Soccer (MLS) has been the only D-I men’s soccer league since it began play in 1995, while the North American Soccer League (NASL), despite aspirations to compete directly against MLS, has operated since 2011 as a D-II league. Last year, U.S. Soccer rejected NASL’s application for a D-II designation for the 2018 season. Rather than filing instead for D-III status, NASL sued U.S. Soccer in federal court in Brooklyn, alleging that U.S. Soccer violates Section 1 of the Sherman Antitrust Act by selectively applying its Standards to restrain competition among top-tier U.S. men’s professional soccer leagues. As part of its lawsuit, NASL sought a preliminary injunction requiring U.S. Soccer to grant it D-II status for...

Getting in on the Action: FTC Files Its First Pay-for-Delay Lawsuit 0

Getting in on the Action: FTC Files Its First Pay-for-Delay Lawsuit

In the increasingly crowded field of pay-for-delay litigation, the FTC blazed a new trail last week when – for the first time – it sued a branded drug maker for agreeing not to launch its own “authorized generic” in competition with a generic competitor. The so-called “no-AG commitment” was part of a deal struck by Endo Pharmaceuticals Inc. in exchange for a promise by Impax Laboratories to postpone by 2½ years its release of a lower-cost generic version of Endo’s lucrative Opana ER painkiller. That deal, according to the Complaint filed on March 30 in federal court in the Eastern District of Pennsylvania, let Endo prolong its alleged monopoly and, with it, the supracompetitive profits it earned from Opana. Meanwhile, the lower prices that come with the entry of a generic were delayed.

Recent DGCL Sections Facilitate Ratification, Validation of Defective Corporate Acts; Minimal Reported Court Activity To Date But More Expected 0

Recent DGCL Sections Facilitate Ratification, Validation of Defective Corporate Acts; Minimal Reported Court Activity To Date But More Expected

It’s been more than a year since the Delaware General Corporation Law added sections 204 and 205, allowing boards of directors to ratify, or the Court of Chancery to validate, defective corporate acts, including the issuance of stock that did not fully comply with corporate formalities. The Delaware General Assembly’s unanimous adoption of sections 204 and 205 elevated substance over form by giving effect to corporate action that at all times was treated as validly authorized, even if the action was technically deficient.

Opinion Holds That Non-Monetary Reverse Payments Trigger Actavis Antitrust Scrutiny, Creating Split Within D.N.J. 0

Opinion Holds That Non-Monetary Reverse Payments Trigger Actavis Antitrust Scrutiny, Creating Split Within D.N.J.

An opinion issued on October 6, 2014, by Judge Sheridan of the United States District Court for the District of New Jersey further muddied the legal waters as to what type of “reverse payments” made by makers of brand-name pharmaceuticals to their generic competitors to settle patent litigation are subject to antitrust scrutiny under the Supreme Court’s decision in FTC v. Actavis. Judge Sheridan held that Actavis applies to non-monetary payments, such as a promise by the brand-name manufacturer in exchange for which the generic agrees to delay entry. Importantly, however, a non-monetary payment must be capable of being reliably converted to a monetary value so that it can be evaluated against the Actavis factors. Judge Sheridan’s holding runs counter to Judge Walls’s decision earlier this year in In re Lamictal Direct Purchaser Antitrust Litigation, which limited Actavis to reverse payments involving an exchange of cash and was the subject of a prior blog post.

Delaware Enacts Legislation Authorizing 20-Year Statute of Limitations for Certain Breach of Contract Actions 0

Delaware Enacts Legislation Authorizing 20-Year Statute of Limitations for Certain Breach of Contract Actions

Delaware has recently enacted legislation authorizing parties to a written contract involving at least $100,000 to agree to a statute of limitations of up to 20 years for actions based on that contract. The amendment to 10 Del. C. § 8106, embodied in new subsection (c), gives parties to a written contract the freedom to agree to a limitations period longer than the typical three or four years from accrual of the cause of action, without the need to resort to Delaware’s technical requirements for a contract under seal. The synopsis to the legislation explains that examples of the limitations period to be stated in the contract include, without limitation, (i) a specific period of time, (ii) a period of time defined by reference to the occurrence of another event, another document or agreement or another statutory period, and (iii) an indefinite period of time.

Recent D.N.J. Opinion Offers Roadmap to Practitioners Defending Antitrust Claims 0

Recent D.N.J. Opinion Offers Roadmap to Practitioners Defending Antitrust Claims

A recent opinion from the District of New Jersey illustrates the breadth of defenses available to an entity accused of violating the antitrust laws. World Phone Internet Services, Pvt. Ltd., a provider of VoIP services in India, and its majority shareholder, TI Investment Services, LLC, sued Microsoft (owner of Skype), alleging that Microsoft’s intentional failure to abide by the requirements of India’s licensing regime for VoIP service providers allowed it to undercut World Phone’s pricing, which advantage Microsoft supposedly used to quash its competitors. In granting Microsoft’s motion to dismiss the complaint in TI Investment Services, LLC v. Microsoft Corp., the Court relied on four independent grounds to decide that plaintiffs’ claims of monopolization and collusion did not pass muster under the Sherman Act.