Yesterday, the Supreme Court granted cert in American Needle, Inc. v. National Football League, et al.  The issue in the case is whether or not the NFL, its teams and the Players Association functioned as a single entity.  In short, if they did function as a single entity, then there cannot be Section 1 liability.

Both the district court and the seventh circuit found that the defendants (i.e., the NFL entities) were a single entity.  AR coverage of the seventh circuit decision is here.

An interesting aspect of this case is that the Supreme Court asked the Solicitor General for her opinion and the Solicitor General recommended the Court deny cert.  Granting cert after the SG has weighed in to the contrary is extremely rare.

The Sports Law Blog has noted that the “NFL—and other professional sports leagues in the U.S.—have a tremendous amount to gain from the Supreme Court’s decision, but not much to lose.”  At the Antitrust & Competition Policy Blog, Chris Sagers has a lengthy (and passionate) post in which he speculates that “in short, there are probably four pretty solid votes for affirmance, one more (Kennedy) that seems only marginally less solid for defendants, and either of two (Breyer and Sotomayor) that might also sign on for affirmance.”

American Needle’s Cert Petition.

The NFL’s brief.

American Needle’s supplemental brief.

The Solicitor General’s brief.

Seventh Circuit opinion.

Yesterday, the FTC issued “Authorized Generics: An Interim Report,” which contains the “first set of results from a study conducted to examine the short-term and long-term effects of ‘authorized generics’ on competition in the prescription drug marketplace.”  The press release also notes that:

The Interim Report finds that drug prices are lower when authorized generics are marketed against a single generic drug than when they are not. With authorized generic competition during the 180-day marketing exclusivity period, retail drug prices are on average 4.2 percent lower than the pre-generic branded price, and wholesale drug prices are on average 6.5 percent lower than the pre-generic branded price.

Authorized generic entry during this time also substantially reduces the revenues of a first-filer generic firm, with declines ranging from 47 to 51 percent. As a result, because a generic can earn greater revenues if an authorized generic does not enter the market, a generic firm may be willing to agree to defer its market entry in return for a brand’s promise not to launch a competing authorized generic during the 180-day marketing exclusivity period. A review of patent settlement agreements, the Interim Report states, reveals that such agreements appear to be more common now than in the past.

(I personally wonder if a 4% decline can be accurately be termed “substantial”).

The report itself is available here.

It must be “reverse payment” week as FTC Chairman Leibowitz gave a speech this morning on the topic.  The FTC press release states that:

an internal FTC analysis projects that stopping collusive “pay-for-delay” settlements between brand and generic pharmaceutical firms would save consumers $3.5 billion a year and also reap significant savings for the federal government, which pays approximately one-third of all prescription drug costs.  Chairman Leibowitz urged Congress to pass pending legislation to ban or restrict such anticompetitive patent settlements, in which manufacturers of brand-name drugs pay potential generic competitors to stay out of the market, as a way to control prescription drug costs, restore the benefits of generic competition, and help pay for health care reform.

The full text of the speech is here.

Yesterday, the Supreme Court denied cert in Arkansas Carpenters Health and Welfare Fund v. Bayer AG, again refusing to consider a “reverse payment” case.  From Dow Jones:

The U.S. Supreme Court rejected a lawsuit challenging Bayer AG’s (BAYRY) deal with Barr Pharmaceuticals Inc. (BRL) to delay producing a generic version of Cipro, an antibiotic drug.

…

Separate litigation on the Cipro agreements brought by drug wholesalers and retailers is still pending in a lower court. The Obama administration intends to file a brief in that case, which is in the 2nd U.S. Circuit Court of Appeals in New York.

Bayer paid $398 millionto Barr and other generic drug makers in return for an agreement that they would not market a generic version of Cipro until Bayer’s patent on the drug expired. Drug purchasers and advocacy groups challenged the agreement as anticompetitive, saying it violated federal and state antitrust laws as well as state consumer protection laws.

The lawsuit was thrown out by a U.S. trial judge in New York in 2005. Last year the U.S. Court of Appeals for the Federal Circuit affirmed the rejection, agreeing that Bayer’s patent rights gave it the ability to enter into agreements limiting generic alternatives to its antibiotic.

The Washington Post is reporting that DOJ:

has launched an investigation into whether some of the nation’s largest technology companies violated antitrust laws by negotiating the recruiting and hiring of one another’s employees, according to two sources with knowledge of the review.

The review, which is said to be in its preliminary stages, is focused on the search engine giant Google; its competitor Yahoo; Apple, maker of the popular iPhone; and the biotech firm Genentech, among others, according to the sources, who spoke on condition of anonymity because the investigation is ongoing.

…

The sources said the review includes other tech companies and is “industry-wide.” By agreeing not to hire away top talent, the companies could be stifling competition and trying to maintain their market power unfairly, antitrust experts said.

During her tenure on the United States Court of Appeals for the Second Circuit, Judge Sotomayor has been involved in a several antitrust decisions.

Her most famous antitrust case is certainly Clarett v. Nat’l Football League, 369 F.3d 124 (2d Cir. 2004) in which she upheld the NFL’s eligibility rules that require a prospective player to wait at least three full football seasons after his high school graduation to be eligible for the player draft.  She so ruled because the rules are immune from antitrust scrutiny under the non-statutory labor exemption.

She wrote the decision affirming the district court’s certification of a class challenging credit card associations’ rules requiring acceptance of their debit cards if any merchant accepts their credit cards.  In re Visa Check/MasterMoney Antitrust Litigation, 280 F.3d 124 (2d Cir. 2001).

She wrote a decision reversing the district’s court’s dismissal of a class action alleging that a company and its competitors allegedly shared information on compensation to nonunion managerial, professional, and technical employees and used this information in setting salaries at an artificially low level.  Todd v. Exxon Corp., 275 F.3d 191 (2nd Cir. 2001).

She wrote the opinion in Information Resources, Inc. v. Dun and Bradstreet Corp., 294 F.3d 447 (2d Cir. 2002).  While the case might appear to concern just standing, it touches upon antitrust issues as the question involved, in part, whether the plaintiff lacked standing to sue for injuries suffered in foreign markets if the alleged injury was actually suffered by its subsidiaries and joint ventures.

She wrote an opinion in a Robinson-Patman Act price discrimination case.  Innomed Labs, LLC v. ALZA Corp., 368 F.3d 148 (2d Cir. 2004).  She found that the trial court was wrong to instruct the jury that RPA “would not apply to the Distribution Agreement if the jury determined that the agreement was primarily a contract for the right to distribute a patented product” but that such an error did not warrant a new trial.

These are the only antitrust opinions authored by Judge Sotomayor that I could find.  If you know of any others, email us or leave it in the comments.

Update (6/3): Judge Sotomayor wrote a concuring opinion in Major Leauge Baseball Properities, Inc. v. Salvino, Inc., 542 F.3d 290 (2d Cir. 2008).  The case involved licensing, or lack thereof, to a manufacturer of “stuffed plush animals” by MLB Properties which is the exclusive marketing agent for Major League Baseball Clubs.  The core of her opinion is that she “believe[s] the ancillary restraints framework is a superior method for analyzing the challenged restraints here because it effectively isolates when an exclusive arrangement should be reviewed under the rule of reason, as a reasonably necessary part of a joint venture, and when it should be reviewed as a naked restraint.”  Thanks to reader A.G. for bringing this case to our attention.

Yesterday, the U.S. Court of Appeals for the District of Columbia upheldthe FCC’s ruling that prohibited exclusivity agreements between cable companies and owners of apartment buildings and other multi-unit developments.   More of an administrative law/communications law decision than an antitrust decision.  But it is worth reading.  The opinion begins:

Finding that exclusivity agreements between cable companies and owners of apartment buildings and other multi-unit developments have an anti-competitive effect on the cable market, the Federal Communications Commission banned such contracts. The Commission believes that these deals—which involve a cable company exchanging a valuable service like wiring a building for the exclusive right to provide service to the residents—may be regulated under section 628 of the Communications Act as cable company practices that significantly impair the ability of their competitors to deliver programming to consumers. The Commission thus forbade cable operators not only from entering into new exclusivity contracts, but also from enforcing old ones. Petitioners, associations representing cable operators and apartment building owners, argue that the Commission exceeded its statutory authority, arbitrarily departed from precedent, and otherwise violated the Administrative Procedure Act. Having carefully considered the parties’ excellent submissions, we disagree and conclude that the Commission acted well within the bounds of both section 628 and general administrative law.

The New York Times has an article suggesting that DOJ is targeting Google.

Last week, the Obama administration declared a sharp break with the Bush years, vowing to toughen antitrust enforcement, especially for dominant companies. The approach is closer to that of the European Union, where regulators last week fined Intel $1.45 billion for abusing its power in the chip market.

In this new climate, the stakes appear to be highest for Google, the rising power of the Internet economy.

The new antitrust leadership, legal experts say, is likely to scrutinize networks — technology platforms that become so dominant that everyone feels the need to plug into them. The advantages to the companies that control such networks snowball as they attract more users, advertisers or software developers.

There is one small problem with going after Google via the antitrust laws as the article mentions at the very end:

In her speech last week, Christine A. Varney, head of the Justice Department’s antitrust division, said the touchstone of antitrust policy should be “the protection of consumer welfare.”

By that standard, Google seems an elusive target for antitrust enforcers, since most of its services are free. And in the new markets it is entering, including cellphone software and online alternatives to desktop programs, Google is an insurgent going up against large, well-heeled rivals, notably Microsoft.

On Thursday, the FTC formally dismissed its case against Rambus.  The press release, in its entirety, read:

The Federal Trade Commission has formally dismissed the complaint in the Rambus matter. “While we remain disappointed by the decision of the Court of Appeals, we of course respect the Court’s opinion and will move forward,” said Richard A. Feinstein, Director of the Bureau of Competition. “The standard-setting issues that were at the heart of this case remain important, both as a matter of antitrust policy, and in order to protect consumers, and we will remain vigilant in this area.”

That is three whole sentences for those you keeping track at home.

The order, and the other pleadings in the matter, can be found here.

Reuters, via the New York Times, reports that the European Commission has fined Intel$1.45 billion.

The European Commission fined Intel a record €1.06 billion on Wednesday for abusing its dominance in the computer chip market to exclude its only serious rival, Advanced Micro Devices.

The European Union’s competition commissioner, Neelie Kroes, said the penalty against Intel, the equivalent of $1.45 billion, was justified because the company had skewed competition and denied consumers a choice for chips.

Ms. Kroes said Intel had “used illegal anticompetitive practices to exclude its only competitor and reduce consumers’ choice — and the whole story is about consumers. ” She said Intel’s practices had “undermined innovation.”

…

Paul Otellini, chief executive of Intel, said the company would appeal.

“We believe the decision is wrong and ignores the reality of a highly competitive microprocessor marketplace,” Mr. Otellini said. “There has been absolutely zero harm to consumers.”

Giuliano Meroni, president of A.M.D.’s operations in Europe, said the decision would “shift the power from an abusive monopolist to computer makers, retailers and above all PC consumers.”

Ms. Kroes said Intel had pursued a strategy aimed mainly at excluding A.M.D. by paying computer makers and retailers to postpone, cancel or avoid A.M.D. products entirely.

The European Commission, which is the E.U.’s executive arm, also found that Intel “went to great lengths to cover up its anticompetitive actions,” Ms. Kroes added.

Today’s New York Times has a front page article about a speech that new DOJ Assistant Attorney General for Antitrust Christine Varney will give today (and again tomorrow).  The speech is not (yet) on the DOJ webpage and the article only provides a general sense of what will be in the speech:

[DOJ] plans to restore an aggressive enforcement policy against corporations that use their market dominance to elbow out competitors or to keep them from gaining market share. … Ms. Varney is expected to say that the administration rejects the impulse to go easy on antitrust enforcement during weak economic times. She will assert instead that severe recessions can provide dangerous incentives for large and dominating companies to engage in predatory behavior that harms consumers and weakens competition. The announcement is aimed at making sure that no court or party to a lawsuit can cite the Bush administration policy as the government’s official view in any pending cases. In the speeches, Ms. Varney is expected to explicitly warn judges and litigants in antitrust lawsuits not involving the government to ignore the Bush administration’s policies, which were formally outlined in a report by the Justice Department last year. The report applied legal standards that made it difficult to bring new cases involving monopoly and predatory practices.

“The report” referenced in the article is presumably the Section 2 report issued by DOJ last fall.

Update: DOJ has issued a press release announcing the formal withdrawal of the Section 2 report:

Christine A. Varney, Assistant Attorney General in charge of the Department’s Antitrust Division, today announced that the Department is withdrawing, effective immediately, a report relating to monopolization offenses under the antitrust laws that was issued in September 2008. As of today, the Section 2 report will no longer be Department of Justice policy. Consumers, businesses, courts and antitrust practitioners should not rely on it as Department of Justice antitrust enforcement policy.

Update 2: Both of her speechs are now up (one, two).

Yesterday, the House Judiciary’s Subcommittee on the Courts and Competition Policy and the Internet held a hearing on a possible antitrust exemption for newspapers.  The Department of Justice said “We do not believe any new exemptions for newspapers are necessary.”

The witness statements can be found here, and Dana Milbank of the Washington Post has a humorous take here.

Yesterday, the FTC announced it was seeking public comments on its proposed revised rule “that would prohibit market manipulation in the petroleum industry.”  According to the FTC:

The revised proposed rule in the RNPRM announced today retains the anti-fraud approach of the August 2008 proposed rule. The revised proposed rule would prohibit fraudulent and deceptive conduct that could harm wholesale petroleum markets. Specific examples of prohibited conduct include false public announcements of planned pricing or output decisions, false statistical or data reporting, and wash sales intended to disguise the actual liquidity or price of a particular product or market for that product. The revised proposed rule also would prohibit material omissions from a statement that, although otherwise literally true, are misleading under the circumstances.

Specifically, the revised proposed rule would prohibit anyone, directly or indirectly, in connection with the purchase or sale of crude oil, gasoline, or petroleum distillates at wholesale, from (a) knowingly engaging in any act, practice, or course of business – including the making of any untrue statement of material fact – that operates or would operate as a fraud or deceit upon any person, or (b) intentionally failing to state a material fact that under the circumstances renders a statement made by such person misleading, provided that such omission distorts or tends to distort market conditions for any such product.

The revised proposed rule would not impose any affirmative duties, obligations, or record-keeping requirements. Anyone violating an FTC rule promulgated under EISA, such as the revised proposed rule, if adopted, may face civil penalties of up to $1 million per violation per day, in addition to any relief available to the Commission under the FTC Act.

The proposed revised rule can be found here.

On Wednesday, Rep. Bobby Rush (D-Ill.) introduced H.R. 1706, the “Protecting Consumer Access to Generic Drugs Act of 2009.”  The Bill is very similar to S. 369, ”The Preserve Access to Affordable Generics Act” introduced in the Senate in February (Antitrust Review analysis of that bill is here).

There are some minor differences.  For example, the Senate bill proposes that:

‘(a) It shall be unlawful under this Act for any person, in connection with the sale of a drug product, to directly or indirectly be a party to any agreement resolving or settling a patent infringement claim in which–

The House bill is same except paragraph (2) reads “the ANDA filer agrees not to research, develop, manufacture, market, or sell, for any period of time, the drug that is to be manufactured under the ANDA involved and is the subject of the patent infringement claim.”

Another difference is that the Senate bill defines agreement as “means anything that would constitute an agreement under section 1 of the Sherman Act (15 U.S.C. 1) or section 5 of the Federal Trade Commission Act (15 U.S.C. 45).”  The House bill drops “under section 1 of the Sherman Act (15 U.S.C. 1)” from its definition.

These, and other differences, however, should not obscure the fact that the bills are substantively the same.

Last week, China rejected on antitrust ground Coca-Cola’s acquisition of the China Huiyuan Juice Company.  Today, the AP (via the NY Times) reports:

In its first detailed explanation of the March 18 ruling, the commerce ministry said it looked at China’s beverage market and concluded that Coca-Cola’s dominance in carbonated drinks could be used to promote sales of Huiyuan Juice Group, stifling competition and leading to higher prices.

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“Whether Huiyuan is a national brand is not a factor that needs to be considered in an antimonopoly investigation and has nothing to do with the commerce ministry’s rejection of this acquisition,” a ministry spokesman, Yao Jian, said in statement on its Web site.

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Coca-Cola’s “dominant position in the carbonated beverage market could be transferred to the fruit juice market,” Mr. Yao said. “This would seriously cripple or deprive other fruit juice producers of the ability to compete. It would harm competition in the fruit juice market, forcing customers to accept higher prices and fewer products.”

He said Coca-Cola might have used its carbonated beverage brands to promote Huiyuan or bundle products together for sale.

…

The company [Coca-Cola] has a 16 percent share of China’s soft drink market — which also includes fruit and vegetable juices, bottled teas and sports drinks — and adding Huiyuan would have raised that to 18 percent, according to the consulting firm Euromonitor.