Justia Antitrust & Trade Regulation Opinion SummariesArticles Posted in US Court of Appeals for the Seventh Circuit
Black Bear Sports Group, Inc. v. Amateur Hockey Association of Illinois, Inc.
U.S. organized amateur hockey leagues come under the purview of USA Hockey, Inc., which is subject to the Ted Stevens Olympic and Amateur Sports Act, 36 U.S.C. 220501–43. USA Hockey delegates most of its authority to state and regional affiliates. Since 1975, the Association has governed the sport in Illinois. Black Bear, which owns Illinois skating rinks, filed suit under the Sherman Antitrust Act, 15 U.S.C. 2, alleging that the Association is monopolizing the sport. Black Bear does not claim to have paid monopoly prices, nor does it seek an order dissolving the Association and allowing free competition. It asked the district judge to order the Association to admit it as a member and permit it to sponsor a club and to pay damages for business losses suffered until these things occur. The Seventh Circuit affirmed the dismissal of the suit for lack of jurisdiction. The Sherman Act cannot be used to regulate cartels’ membership and profit-sharing. Members and potential members can enforce (or contest) its rules as a matter of state law, though a private group receives considerable leeway in the interpretation and application of those rules. View "Black Bear Sports Group, Inc. v. Amateur Hockey Association of Illinois, Inc." on Justia Law
U.S. Futures Exchange, L.L.C. v. Board of Trade of the City of Chicago
USFE planned to offer an electronic-based futures trading platform that posed a competitive threat to exchanges using the more traditional floor-trading model, like CBOT. USFE targeted February 1, 2004, as its launch date to establish itself before several futures and options contracts expired, so that traders could transfer their business to USFE. In July 2003, USFE sought approval as a designated contract market by the Commodity Futures Trading Commission. The Commission solicited public comment. CBOT, another futures exchange (CME), and others raised objections. CBOT and CME successfully requested a postponement.USFE approached BOTCC to negotiate an agreement for clearing services that would have provided USFE with access to startup liquidity in the form of open interest created by market participants and held at BOTCC. CBOT also used BOTCC and proposed Rule 701.01. The Commission approved the rule, which compelled the transfer of CBOT’s open interest from BOTCC to its new, exclusive clearing partner. By draining its open contracts from BOTCC, CBOT deprived USFE of access to significant liquidity. The Commission approved USFE on February 4, 2004. USFE launched on February 8. The undertaking flopped. USFE sued under the Sherman Antitrust Act.The Seventh Circuit affirmed summary judgment for the defendants. The Noerr-Pennington doctrine shields the defendants’ petitioning from antitrust scrutiny and neither exception (fraud or sham lawsuit) applies. The Commission’s explicit approval of Rule 701.01 impliedly repeals the antitrust laws, immunizing defendants against USFE’s open interest claims. View "U.S. Futures Exchange, L.L.C. v. Board of Trade of the City of Chicago" on Justia Law
Marion HealthCare, LLC. v. Becton Dickinson & Co.
Healthcare providers often do not purchase medical devices directly from the manufacturer; they join group purchasing organizations (GPOs), which negotiate prices with manufacturers. The provider chooses a distributor to deliver the product. The distributor enters into contracts with the provider and the manufacturer, incorporating the price and other terms that the GPO negotiated, plus a markup for the distributor. A GPO negotiated with Becton (a manufacturer) on the plaintiff-providers’ behalf; a distributor delivered the devices.Had Becton acted alone, selling its products to an independent distributor, which then sold them to a provider, the Supreme Court’s 1977 “Illinois Brick” rule would bar the provider from suing Becton for any alleged monopoly overcharges. Only buyers who purchased products directly from the antitrust violator have a claim for treble damages. The plaintiffs alleged that Becton, the GPOs, and the distributors were in a conspiracy and engaged in various anti-competitive measures, including exclusive-dealing and penalty provisions. Under Brick's conspiracy exception, when a monopolist enters into a conspiracy with its distributors “the first buyer from a conspirator is the right party to sue.”The district court found the conspiracy rule inapplicable because this case did not involve vertical price-fixing. The Seventh Circuit vacated. The relationship between the buyer and the seller, not the nature of the alleged anticompetitive conduct, governs whether the buyer may sue under the antitrust laws. Remand was required because the Providers have failed adequately to allege the necessary conspiracy. View "Marion HealthCare, LLC. v. Becton Dickinson & Co." on Justia Law
Sharif Pharmacy Inc. v. Prime Therapeutics LLC
The plaintiffs (Sharif Pharmacy, J&S) were members of the Prime pharmacy network, which is owned, in part, by Blue Cross Blue Shield. Under Medicare, Medicaid, and private health insurance plans, many patients had significant financial incentives to buy their prescription drugs from pharmacies within the network. Prime terminated both plaintiffs from the network after audits uncovered invoicing irregularities. The plaintiffs claimed that their terminations from the Prime network violated the Sherman Act, 15 U.S.C. 1 and 2. Three customers joined the suit, having had to switch to different, less convenient pharmacies. The plaintiffs alleged that the audits were pretextual and that Prime really terminated their participation in its network to get rid of competition with Walgreens, with whom it had entered a joint venture. Prime sent letters to both pharmacies’ customers saying that Sharif and J&S would no longer accept their insurance and recommending that customers have their prescriptions filled at a nearby Walgreens. Prime also retained funds from both pharmacies as a result of the audits. The Seventh Circuit affirmed the dismissals of the cases by two district courts. The individual plaintiffs lacked standing. The pharmacy could not identify an appropriate geographic market where a defendant had or threatened to have monopoly power. View "Sharif Pharmacy Inc. v. Prime Therapeutics LLC" on Justia Law
Viamedia, Inc. v. Comcast Corp.
Viamedia sued Comcast under the Sherman Act, 15 U.S.C. 2, for using its monopoly power in one service market (Interconnect) to exclude competition and gain monopoly power in another service market (advertising representation) in the Chicago, Detroit, and Hartford geographic markets. Interconnect services are cooperative selling arrangements for advertising through an “Interconnect” that enables retail cable television service providers to sell advertising targeted efficiently at regional audiences. Advertising representation services assist those providers with the sale and delivery of national, regional, and local advertising slots. Viamedia’s evidence indicated Comcast used its monopoly power over the Interconnect to force its smaller retail cable television competitors to stop doing business with Viamedia; Viamedia’s customers for advertising representation (Comcast’s retail cable competitors) switched to Comcast because Comcast presented a choice: either start buying advertising representation services from us and regain access to the Interconnect or keep buying services from Viamedia and stay cut off from the Interconnect they needed to compete effectively. The strategy cost Comcast millions of dollars in the short run but eventually gave it monopoly power in these local markets for advertising representation services.The Seventh Circuit reversed the dismissal of Viamedia’s case. Giving Viamedia the benefit of its allegations and evidence, this is not a case in which Section 2 is being misused to protect weaker competitors rather than competition more generally. Viamedia has also adequately stated a claim that Comcast has unlawfully refused to deal with Viamedia and any cable competitor that bought advertising representation from Viamedia. View "Viamedia, Inc. v. Comcast Corp." on Justia Law
Chicago Studio Rental, Inc. v. Illinois Department of Commerce & Economic Opportunity
For nearly 30 years, Chicago Studio operated the only film studio in Chicago. In 2010, Cinespace opened a new studio. Cinespace rapidly expanded its studio to include 26 more stages and 24 times more floor space than Chicago Studio’s facility. Chicago Studio subsequently failed to attract business and stopped making a profit. Chicago Studio sued the Illinois Department of Commerce and Economic Opportunity, Illinois Film Office, and Steinberg (state actors responsible for promoting the Illinois film industry), alleging that the Defendants unlawfully steered state incentives and business to Cinespace in violation of the Sherman Act and equal protection and due process protections. The Seventh Circuit affirmed the rejection of those claims. The Sherman Act claim was properly dismissed because Chicago Studio failed to adequately plead an antitrust injury but merely alleged injuries to Chicago Studio, not to competition. The complaint does not plausibly allege that Defendants conspired to monopolize or attempted to monopolize the Chicago market for operating film studios. The district court properly granted summary judgment on the equal protection claim. Chicago Studio and Cinespace are not similarly situated, and there was a rational basis for Steinberg’s conduct. Cinespace consistently reached out to Steinberg for marketing support; Chicago Studio rarely did and it was rational for Steinberg to promote the studios based on production needs. View "Chicago Studio Rental, Inc. v. Illinois Department of Commerce & Economic Opportunity" on Justia Law
Mountain Crest SRL, LLC v. Anheuser-Busch InBev SA/NV
Mountain Crest filed suit alleging that Anheuser-Busch and Molson Coors had conspired to damage Mountain Crest's beer exports in violation of the Sherman Antitrust Act. Mountain Crest also alleged that defendants were enriched unjustly in violation of Wisconsin law. At issue was an agreement in 2000 between two Canadian entities, BRI and LCBO, and another agreement in 2015 between defendants, BRI, LCBO, and the government of Ontario. The district court ruled that the act of state doctrine required dismissal of the federal claims and granted defendants' motion to dismiss the complaint under Federal Rule of Civil Procedure 12(b)(6).The Seventh Circuit held that the first prong of the act of state doctrine analysis was met because the agreements establishing the six-pack rule were acts of state for the purposes of the doctrine. The court also held that to the extent Mountain Crest attacks the six-pack rule under Section 1 of the Sherman Act, the act of state doctrine was applicable. Furthermore, to the extent Mountain Crest seeks relief under Section 2 of the Sherman Act predicated solely on the six-pack rule, the act of state doctrine clearly precludes the action. However, the Second Amended Complaint also sets out allegations that Anheuser-Busch and Molson Coors, acting through their officers and employees, violated the same provisions of the Sherman Act by conspiring to bring about the Ontario government's approval of the six-pack rule. The court held that these allegations did not implicate the act of state doctrine. The court affirmed in part, vacated in part, and remanded for the district court to further consider issues it has not addressed. View "Mountain Crest SRL, LLC v. Anheuser-Busch InBev SA/NV" on Justia Law
McGarry & McGarry, LLC v. Bankruptcy Management Solutions, Inc.
After a creditor in a closed Chapter 7 bankruptcy case tried for a third time to bring a price-fixing claim against BMS, the district court granted BMS's motion to dismiss. The Seventh Circuit affirmed, holding that the creditor did not participate in the market for bankruptcy software services in any way that would make it a proper plaintiff to bring an antitrust claim against a firm that provides those services to bankruptcy trustees. Therefore, the creditor's injury was entirely derivative of the estate's injury and merely derivative injuries sustained by creditors of an injured company did not constitute antitrust injury sufficient to confer antitrust standing. View "McGarry & McGarry, LLC v. Bankruptcy Management Solutions, Inc." on Justia Law
Paramount Media Group, Inc. v. Village of Bellwood
In 2005 Paramount leased a parcel of highway-adjacent property in Bellwood, Illinois, planning to erect a billboard. Paramount never applied for a local permit. When Bellwood enacted a ban on new billboard permits in 2009, Paramount lost the opportunity to build its sign. Paramount later sought to take advantage of an exception to the ban for village-owned property, offering to lease a different parcel of highway-adjacent property directly from Bellwood. Bellwood accepted an offer from Image, one of Paramount’s competitors. Paramount sued Bellwood and Image, alleging First Amendment, equal-protection, due-process, Sherman Act, and state-law violations. The Seventh Circuit affirmed summary judgment in favor of the defendants. Paramount lost its lease while the suit was pending, which mooted its claim for injunctive relief from the sign ban. The claim for damages was time-barred, except for an alleged equal-protection violation. That claim failed because Paramount was not similarly situated to Image; Paramount offered Bellwood $1,140,000 in increasing installments over 40 years while Image offered a lump sum of $800,000. Bellwood and Image are immune from Paramount’s antitrust claims. The court did not consider whether a market-participant exception to that immunity exists because Paramount failed to support its antitrust claims. View "Paramount Media Group, Inc. v. Village of Bellwood" on Justia Law
Alarm Detection Systems, Inc. v. Village of Schaumburg
Schaumburg’s 2016 ordinance requires commercial buildings to send fire‐alarm signals directly to the local 911 dispatch center, NWCDS, which has an exclusive arrangement with Tyco. To send signals to NWCDS, local buildings must use Tyco equipment. Schaumburg’s notice of the ordinance referred to connection through Tyco and stated that accounts would be charged $81 per month to rent Tyco’s radio transmitters and for the monitoring service. Tyco pays NWCDS an administrative fee of $23 per month for each account it connects to the NWCDS equipment. Tyco’s competitors filed suit charging violations of constitutional, antitrust, and state tort law. The district court dismissed the case. The Seventh Circuit reversed the dismissal of the Contracts Clause claim against Schaumburg. The complaint alleges a potentially significant impairment, the early cancellation of the competitors’ contracts, and Schaumburg’s self‐interest, $300,000 it stands to gain. The court otherwise affirmed, noting that entities not alleged to have taken legislative action cannot be liable under the Contracts Clause. WIth respect to constitutional claims, the court noted the government’s important interest in fire safety. Rejecting antitrust claims, the court stated that the complaint did not allege a prohibited agreement, as opposed to an independent, legislative decision. View "Alarm Detection Systems, Inc. v. Village of Schaumburg" on Justia Law