Justia Antitrust & Trade Regulation Opinion Summaries

In March 2015, the Boards of Penn State Hershey Medical Center and PinnacleHealth formally approved a plan to merge. They had announced the proposal a year earlier; the Commonwealth of Pennsylvania and the Federal Trade Commission (FTC) were already investigating the impact of the proposed merger. This joint probe resulted in the FTC filing an administrative complaint alleging that the merger violated Section 7 of the Clayton Act, 15 U.S.C. 18. The FTC scheduled an administrative hearing for May 2016. The Commonwealth and the FTC jointly sued Hershey and Pinnacle under Section 16 of the Clayton Act, and Section 13(b) of the FTC Act, 15 U.S.C. 53(b) seeking a preliminary injunction. In September 2016, the Third CIrcuit reversed the district court and directed it to preliminarily enjoin the merger “pending the outcome of the FTC’s administrative adjudication.” Hershey and Pinnacle terminated their Agreement. The Commonwealth then moved for attorneys’ fees and costs, asserting that it “substantially prevailed” under Section 16 of the Clayton Act. The district court denied the motion, finding the Commonwealth had not “substantially prevailed” under Section 16. The Third Circuit affirmed, reasoning that it had ordered the injunction based on Section 13(b) of the FTC Act, not Section 16 of the Clayton Act. View "Federal Trade Commission v. Penn State Hershey Medical Center" on Justia Law

LifeWatch is one of the two largest sellers of telemetry monitors, a type of outpatient cardiac monitoring devices used to diagnose and treat heart arrhythmias, which may signal or lead to more serious medical complications. An arrhythmia can be without noticeable symptoms. Other outpatient cardiac monitors also record the electrical activity of a patient’s heart to catch any instance of an arrhythmia but they vary in price, method of data capture, and mechanism by which the data are transmitted for diagnosis. LifeWatch sued the Blue Cross Blue Shield Association and five of its member insurance plan administrators under the Sherman Act, 15 U.S.C. 1, claiming they impermissibly conspired to deny coverage of telemetry monitors as “not medically necessary” or “investigational,” although the medical community, other insurers, and independent arbiters viewed it as befitting the standard of care. The Third Circuit reversed the dismissal of the complaint. LifeWatch plausibly stated a claim and has antitrust standing. That so many sophisticated third parties allegedly view telemetry monitors as medically necessary or meeting the standard of care undercuts Blue Cross’s theory that nearly three dozen Plans independently made the opposite determination for 10 consecutive years. Read in the light most favorable to LifeWatch, the complaint alleges competition among all outpatient cardiac monitors such that they are plausibly within the same product market. LifeWatch has alleged actual anticompetitive effects in the relevant market. View "Lifewatch Services Inc. v. Highmark, Inc." on Justia Law

Philadelphia taxicabs were required to have a medallion and a certificate of public convenience, which required that vehicles be insured and in proper condition, and mandated that drivers be paid the prevailing minimum wage, be proficient in English, and have appropriate drivers’ licenses. In 2014, 1610 medallions were each worth about $545,000. Uber began operating in Philadelphia without securing medallions or certificates, providing an app to schedule and pay for a ride. Uber does not own or assume responsibility for the vehicles, nor does it hire drivers. A 2016 Pennsylvania law approved Transportation Network Companies (TNCs) using digital apps. TNCs must obtain licenses and comply with insurance and safety standards but set their own fares. Medallion taxicab companies comply with established rates, minimum wages, and have a limited number of vehicles. Nearly 1200 Philadelphia medallion taxicab drivers left their companies to drive for Uber. Medallion taxi rides reduced by about 30 percent. The value of each medallion dropped to approximately $80,000. Taxicab drivers sued under the Sherman Act, 15 U.S.C. 2. The Third Circuit affirmed the dismissal of the complaint. Inundating the market with Uber vehicles, even if it eliminated competitors, was not anticompetitive; it bolstered competition by offering customers lower prices, more availability, and a high-tech alternative to customary practices. Uber’s ability to operate at a lower cost is not anticompetitive. Uber’s business model does not reflect specific intent to monopolize. Plaintiffs also failed to allege antitrust standing. View "Philadelphia Taxi Association, Inc. v. Uber Technologies Inc" on Justia Law

Purchasers of egg products accused suppliers of conspiring to reduce the supply of eggs and increase the price for egg products in violation of the Sherman Act, 15 U.S.C. 1. Plaintiffs alleged that the producers conspired to reduce the population of egg-laying hens, resulting in a reduced supply of eggs and, given the inelasticity of demand, supra-competitive prices. A trade association coordinated a certification program under which participants had to increase their cage sizes and not replace hens that died. Plaintiffs alleged that the proffered animal welfare rationale was a pretext to reduce supply. The district court, citing a bar on indirect purchaser actions, concluded that the purchaser-plaintiffs lacked standing. The Third Circuit reversed. As a matter of first impression, a direct purchaser of a product that includes a price-fixed input has antitrust standing to pursue a claim against the party that sold the product to the purchaser, where the seller is a participant in the price-fixing conspiracy, but the product also includes some price-fixed input supplied by a third-party non-conspirator. The direct relationship between the purchasers and their suppliers and the fact that the suppliers are alleged price-fixing conspirators, not merely competitors of those conspirators, are key factors. Regardless of who collected the overcharge, the purchasers’ econometric analysis purports to show the “difference between the actual [supracompetitive] price and the presumed competitive price” of the egg products they purchased. This purported difference, and the purchasers’ resulting injury, was allegedly a direct and intended result of the suppliers’ conspiracy. View "In Re: Processed Egg Products Antitrust Litigation" on Justia Law

Titanium dioxide is a commodity-like product with no substitutes, the market is dominated by a few firms, and there are substantial barriers to entry. Valspar, a large-scale titanium dioxide purchaser, alleges that suppliers conspired to increase prices, beginning when DuPont—the largest American supplier—joined the Titanium Dioxide Manufacturers Association (TDMA) in 2002. DuPont then announced a price increase. Within two weeks, DuPont’s price increase was matched by other suppliers. During the next 12 years, the alleged conspirators announced price increases 31 times. Because Valspar claims it was overcharged by $176 million. In 2010, a class of titanium dioxide purchasers filed a price-fixing action. Valspar opted out of that class action, which settled. Valspar then filed its own claim and settled except against DuPont. The Third Circuit affirmed the summary judgment in favor of DuPont. Valspar’s characterization of the suppliers’ price announcements “neglects the theory of conscious parallelism” and is contrary to the doctrine that in an oligopoly “any rational decision must take into account the anticipated reaction of the other . . . firms.” Price movement in an oligopoly is interdependent and frequently will lead to successive price increases, because oligopolists may “conclude that the industry as a whole would be better off by raising prices.” Valspar did not show that the suppliers’ parallel pricing went “beyond mere interdependence [and was] so unusual that in the absence of advance agreement, no reasonable firm would have engaged in it.” View "Valspar Corp v. E I Du Pont De Nemours & Co" on Justia Law

Consolidated appeals involve allegations that the patent-holders for Lipitor and Effexor XR delayed entry into the market by generic versions of those drugs by engaging in a monopolistic scheme that involved fraudulently procuring and enforcing the underlying patents, then entering into a reverse-payment settlement agreement with a generic manufacturer. In 2013, the Supreme Court recognized that reverse payment schemes can violate antitrust laws and that it is normally not necessary to litigate patent validity to answer the antitrust question. The district judge dismissed several claims. The Third Circuit remanded after rejecting an argument that plaintiffs’ allegations required transfer of the appeals to the Federal Circuit, which has exclusive jurisdiction over appeals from civil actions “arising under” patent law, 28 U.S.C. 1295(a)(1). Not all cases presenting questions of patent law necessarily arise under patent law; here, patent law neither creates plaintiffs’ cause of action nor is a necessary element to any of plaintiffs’ claims. Plaintiffs plausibly allege the existence of agreements between the patent holders and the generic manufacturers. The court remanded one of the Lipitor appeals, brought by California pharmacists, and involving claims solely under California law, for determination of whether remand to state court was appropriate. The Lipitor plaintiffs made plausible allegations of fraudulent patent procurement and enforcement, and other related misconduct. View "In re: Lipitor Antitrust Litigation" on Justia Law

Direct purchasers of Wellbutrin XL, a drug for treating depression, sued, alleging that GSK violated the Sherman Antitrust Act by entering into an unlawful conspiracy with Biovail, GSK’s partner in the development of Wellbutrin XL, to delay the launch of generic versions of the drug. Indirect-purchasers asserted similar theories under state law. The purchasers claim that GSK delayed the launch of generic versions by supporting baseless patent infringement suits and a baseless FDA Citizen Petition aimed at generic drug companies and by entering into an unlawful reverse payment settlement agreement with potential competitors. The district court granted GSK summary judgment, finding insufficient evidence that GSK’s patent litigation was a sham or that the settlement delayed the launch of generic Wellbutrin XL. The court granted GSK’s Daubert motion to exclude the testimony of the purchasers’ economic expert; decertified the indirect-purchaser class for lack of ascertainability; dismissed the indirect-purchaser claims brought under the laws of states that were not the home of a named class representative; and denied Aetna’s motion to intervene. The Third Circuit affirmed. After considering the Supreme Court’s 2013 decision, FTC v. Actavis, the court concluded that the purchasers failed to establish a genuine dispute of fact either as to whether GSK engaged in sham litigation or whether GSK’s actions delayed the launch of generic Wellbutrin XL. View "In re: Wellbutrin XL Antitrust Litigation" on Justia Law