Germany’s Federal Cartel Office (FCO) has published two documents summarizing its activities for the public: a more detailed “Activities Report” for the years 2015 and 2016 and the high-level “Annual Report 2016.” These documents confirm that the FCO continues to be a highly active operator in the area of competition law enforcement in Europe.
On May 31, 2017, the FTC filed an administrative complaint alleging that the Louisiana Real Estate Appraisers Board (“Board”), a state agency controlled by real estate appraisers, violated Section 5 of the FTC Act by fixing real estate appraisal fees paid by appraisal management companies (“AMCs”). AMCs act as agents for lenders in arranging real estate appraisals and are licensed and regulated by the Board. The FTC alleges that the Board required AMCs to pay appraisal fees that are equal to or exceed the median fees identified in survey reports commissioned and published by the Board. This action represents the FTC’s first enforcement action against a state agency since its victory in North Carolina State Board of Dental Examiners v. FTC, 135 S.Ct. 1101 (2015). An administrative trial is scheduled to begin on January 30, 2018.
On March 16, 2017, the European Commission (“EC”) introduced a new tool to make it easier for individuals to alert the EC about competition law violations, mainly secret cartels, while maintaining the anonymity of the whistle-blowers.
The EC presented the objectives of the new tool (I) and how it works (II); this tool, which is not new in Europe, leaves several questions unanswered (III).
Regulations implementing EU Directive 2014/104 (the “Damages Directive”) have come into force in the UK. The Claims in respect of Loss or Damage arising from Competition Infringements (Competition Act 1998 and Other Enactments (Amendment)) Regulations 2017 (SI 2017/385) (the “Regulations”) entered into force on 9 March 2017 and were published on 14 March 2017. The Regulations amend the UK Competition Act 1998 by adding a new section 47F and new Schedule 8A.
In Sullivan v. Barclays PLC, Judge P. Kevin Castel, of the Southern District of New York, raised an interesting point regarding the relationship between the viability of antitrust claims subject to the Foreign Trade Antitrust Improvement Act (FTAIA) and constitutional requirements for personal jurisdiction: The FTAIA “arguably may apply a less-exacting standard than the due process threshold to exercise personal jurisdiction over a foreign defendant.” In other words, even though the standard for the FTAIA might be met to allow an antitrust claim to proceed against a foreign defendant, the court nonetheless might not be able to assert personal jurisdiction. The question whether the FTAIA should be read more strictly than has been the case to conform to due process requirements, or that foreign defendants should be more diligent in challenging personal jurisdiction, are interesting ones that warrant further analysis.
On January 12, 2017, the Court of Justice of the European Union (“CJEU”) dismissed Roullier group’s appeal and thereby confirmed a fine of €59,850,000 imposed by the European Commission (“EC”) in the phosphates cartel case. This blog post summarizes the decision and discusses the CJEU’s reasoning, which provides valuable guidance to a firm in a cartel investigation that is evaluating a settlement proposal from the EC. In particular, the firm must weigh the fact that, pursuant to the CJEU’s decision, the EC may ultimately impose fines greater than those it proposed in a rejected settlement offer, even if it determines that the firm’s cartel participation was significantly less than it thought at the time of settlement discussions.
Last September, we discussed the U.S. Court of Appeals for the Second Circuit’s opinion in In re Vitamin C Antitrust Litigation vacating a $147 million judgment against Chinese vitamin C manufacturers based on the doctrine of international comity. That case stemmed from allegations that the defendants illegally fixed the price and output levels of vitamin C that they exported to the United States. In reversing the district court’s decision to deny the defendants’ motion to dismiss, the Second Circuit held that the district court should have deferred to the Chinese government’s explanation that Chinese law compelled the defendants to coordinate the price and output of vitamin C.
Judge Katherine Forrest of the Southern District of New York recently dismissed another set of complaints in what she described as “the next chapter in the saga” of the In re Aluminum Warehousing Antitrust Litigation cases, No. 13-md-024710-KBF (S.D.N.Y. Nov. 30, 2016). Referring to her previous October 5, 2016 ruling, which dismissed claims asserted by certain first-level purchasers of aluminum products, Judge Forrest found (in a ruling dated November 30, 2016) that the remaining complaints by additional first-level purchasers were equally defective because they too failed to establish antitrust injury. The October 5, 2016 ruling, in turn, substantially relied on the Second Circuit’s August 9, 2016 opinion, which affirmed dismissal of claims brought by indirect purchasers of aluminum or aluminum products. Broadly, the various complaints alleged that aluminum futures traders, banks, and others conspired to manipulate the warehouse storage costs of aluminum, resulting in higher prices in the market for physical aluminum.
The Competition and Markets Authority (“CMA”) has today announced that it has secured the first disqualification of a director of a company which has infringed competition law. Under the Company Directors Disqualification Act 1986 (as amended by the Enterprise Act 2002), the CMA can apply to the court for a disqualification order to be made against a director in cases where a company has breached competition law and the director’s conduct makes him or her “unfit to be concerned in the management of a company”. This is the first time that the CMA has utilised this power.
In this case, poster supplier Trod breached competition law by agreeing with a competitor that they would not undercut each other’s prices for posters and frames sold online, with the agreement between the competitors being implemented using automated re-pricing software. The company received a fine of £163,371 for this behaviour.
The Seventh Circuit’s decision in Motorola Mobility v. AU Optronics–which blocked a U.S. parent’s Sherman Act claim based on its foreign subsidiary’s purchases of a price-fixed product–continues to reverberate throughout federal district courts. A district court in the Sixth Circuit recently followed Motorola Mobility to dismiss a U.S. company’s price-fixing claims based on its foreign subsidiary’s purchases of allegedly price-fixed components that were incorporated abroad into finished goods that the subsidiary then shipped to the United States. In re Refrigerant Compressors Antitrust Litigation, No. 2:09-md-02042, 2016 WL 6138600 (E.D. Mich. Oct. 21, 2016). The district court’s decision demonstrates that, post-Motorola Mobility, defendants have strong arguments in some circuits under the Foreign Trade Antitrust Improvements Act (“FTAIA”) and Illinois Brick to defeat a U.S. parent’s price-fixing claims based on purchases by its overseas subsidiary, especially where that subsidiary is not wholly-owned.
In an October surprise, the DOJ and FTC (collectively, the “Agencies”) released guidance for HR professionals on the application of the antitrust laws to employee hiring and compensation. The Agencies’ October 20, 2016 release, Antitrust Guidance for Human Resource Professionals, announced that “naked” agreements among employers not to poach each other’s employees and to fix wages and other terms of employment are per se illegal. Critically, for the first time, the Agencies warn that such agreements could result in criminal prosecution against individual HR professionals, other company executives, as well as the company. This Guidance, coupled with repeated requests to approach the Agencies to report such agreements, signals a significant shift in enforcement focus for the Agencies, including a further move to individual prosecutions, particularly when taken together with last year’s DOJ Yates Memorandum calling for more emphasis on individual executive liability.
On August 9, 2016, the Second Circuit affirmed a district court’s dismissal of claims asserted by two groups of self-proclaimed “indirect purchasers” of aluminum products who alleged that three aluminum futures traders, which had acquired operators of warehouses for aluminum, manipulated a price component for aluminum (warehouse storage costs). The Second Circuit concluded that these “indirect purchasers” did not suffer antitrust injury because they were not participants in the aluminum warehousing market. In re Aluminum Warehousing Antitrust Litig., Nos. 14-3574, 14-3581(2d Cir. Aug. 9, 2016). In the district court, Judge Katherine Forrest recently applied the Second Circuit’s analysis to dismiss similar claims brought by the purported “direct purchasers” of the aluminum because they, too, were not participants in the aluminum warehousing market. In re Aluminum Warehousing Antitrust Litig., No. 13-2481 (S.D.N.Y. Oct. 5, 2016). These two decisions (assuming the district court’s decision is affirmed) should help defendants attack plaintiffs’ efforts to establish antitrust standing in other cases by trying to thread the “inextricably intertwined” needle for market participants that the Supreme Court established in Blue Shield of Virginia v. McCready, 457 U.S. 465 (1982).
Although China and Japan have very different histories regarding their antitrust laws, antitrust enforcement officials from the two countries have recently taken steps to open a formal dialogue. This is a welcome development for Chinese and Japanese companies, as well as for foreign companies that do business in China and Japan, and it continues the trend of increased communication, cooperation and coordination among national enforcement agencies. There remains an open question, however, as to how convergence among Asian antitrust enforcement agencies will affect possible convergence with agencies in the United States, the European Union and the rest of the world.
On September 20, 2016, the U.S. Court of Appeals for the Second Circuit issued an opinion in In re Vitamin C Antitrust Litigation, reversing the district court’s eight year-old decision not to grant a motion to dismiss the case, based on international comity. The Second Circuit vacated the $147 million judgment against the two defendants that took the case to trial in 2013, and remanded with instructions to dismiss the complaint with prejudice. The court did not opine on the defendants’ other grounds for dismissal – the foreign sovereign compulsion, act of state, and political question doctrines. In re Vitamin C Antitrust Litig., No. 13-4791 (2d Cir. Sept. 20, 2016).
In 2005, the plaintiffs brought several class action complaints against the major Chinese vitamin C manufacturers, alleging that the manufacturers illegally fixed the price and output levels of vitamin C that they exported to the United States. The cases, which were consolidated in the Eastern District of New York, marked the first time that Chinese companies had been sued in a U.S. court for violation of the Sherman Act.
On September 7, 2016, the Third Circuit ruled that a district court erred in granting a Fed. R. Civ. P. 12(b)(1) motion to dismiss federal antitrust claims for lack of subject matter jurisdiction, because the court conflated the analyses for Article III standing and antitrust standing. Hartig Drug Co. Inc. v. Senju Pharmaceutical Co. Ltd., No. 15-3289 (3d Cir. Sept. 7, 2016).
Hartig Drug Company Inc. (“Hartig”), an Iowa-based drug store chain, sued pharmaceutical manufacturers alleging that they suppressed competition for medicated eyedrops through a variety of means, which resulted in higher prices for the eyedrops. Hartig purchased the eyedrops from a distributor, AmerisourceBergen Drug Corporation (“Amerisource”), which purchased the eyedrops from the manufacturers. Hartig’s claim as an indirect purchaser from the defendant manufacturers was barred by Illinois Brick v. Illinois, 431 U.S. 720 (1977), so it alleged that Amerisource had assigned its claim to Hartwig, which enable Hartwig to sue as a direct purchaser.
The manufacturers filed a Rule 12(b)(1) motion to dismiss for lack of subject matter jurisdiction, and also a Rule 12(b)(6) motion to dismiss for failure to state a claim. For the Rule 12(b)(1) motion, defendants submitted Amerisource’s Distribution Services Agreement (“DSA”) with one of the manufacturers—which was not mentioned in Hartwig’s complaint—to argue that an anti-assignment clause in the DSA prohibited Amerisource from assigning its claim without the defendant’s consent. The District Court accepted that argument and granted the Rule 12(b)(1) motion on the ground that Hartig was actually suing as an indirect purchaser and not as a direct purchaser because the assignment was invalid.
On appeal, several retailers filed an amicus brief arguing that defendant’s anti-assignment argument reached only the issue of antitrust standing, which is different from Article III standing, and the district court erred in ruling that it did not have subject matter jurisdiction. The Third Circuit agreed.
Proving once again that antitrust law protects competition, not competitors, on August 18, 2016 the Sixth Circuit affirmed a decision from the Eastern District of Michigan dismissing a plaintiff’s Sherman Act § 1 predatory pricing complaint for failure to state a claim. The case, Energy Conversion Devices Liquidated Trust et al. v. Trina Solar Ltd. et al., involved allegations by a US-based solar panel manufacturer that its Chinese competitors had conspired to lower their prices in the US to below cost in order to drive the plaintiff out of business.
Energy Conversion conceded that a predatory pricing claim under § 2 of the Sherman Act requires the plaintiff to plead and prove both that the defendant charged below-cost prices, and that the defendant had a reasonable prospect of recouping its investment. But it maintained that for a claim brought under § 1, the second element—recoupment—was not required.
On 29 July 2016, the High Court of England and Wales delivered its judgment dismissing the applications of two defendants to strike out a follow-on damages case in which the claimant, iiyama, asserts that it suffered losses as a result of the defendants’ alleged participation in the LCD cartel. Iiyama v Samsung  EWHC 1980 (Ch).
The claim follows on from the European Commission’s decision of 8 December 2010, which found that six LCD panel producers had entered into a world-wide price fixing cartel and had implemented that cartel within the EU. The Commission had been satisfied that the agreement related to direct and indirect sales of LCD panels to companies in the EU. It also found that the participants in the cartel had sought to implement the cartel within the EU, even if price negotiations took place outside the EU.
Over the past decade, the Japan Fair Trade Commission (JFTC) has increased its criminal enforcement of Japan’s antitrust law, the “Act on Prohibition of Private Monopoly and Maintenance of Fair Trade,” commonly known as the Anti-Monopoly Act. This trend is likely to continue because last month Japan’s Diet amended the Code of Criminal Procedure to introduce a plea bargaining system that creates an incentive to report antitrust violations committed by others. The new plea bargaining system, which applies to crimes such as antitrust, fraud, bribery and tax evasion, will be implemented in Japan within 2 years.
For the past several years, plaintiffs and defendants in international price-fixing cases have battled over the extraterritorial application of the Sherman Act in light of the Foreign Trade Antitrust Improvements Act of 1982 (“FTAIA”), 15 U.S.C. § 6a, and the U.S. Supreme Court’s seminal decision in F. Hoffman-LaRoche Ltd. v. Empagran, S.A., 542 U.S. 155 (2004). Although the Supreme Court passed on an opportunity to clarify the scope of the FTAIA when it denied petitions for certiorari following decisions in Hsuing v. United States, 778 F.3d 738 (9th Cir. 2014), as amended (Jan. 30, 2015), and Motorola Mobility LLC v. AU Optronics Corp., 775 F.3d 816 (7th Cir. 2014), as amended (Jan. 12, 2015), the Court’s decision in RJR Nabisco v. European Community—which addresses the extraterritorial application of the federal RICO statute—may provide some insight into how it views antitrust claims based on foreign injuries under the FTAIA.
Courts in the Northern District of California, which have been handling price-fixing class actions in the electronics industry for more than a decade, are continuing to develop ground rules about whether defendants in a price-fixing case are entitled to know the amount for which an opt-out Direct Action Plaintiff (DAP) settles its cases against other defendants. On May 27, 2016, Judge Jon S. Tigar overruled objections to a Special Master’s Report and Recommendation compelling two DAPs to disclose settlement amounts in the Cathode Ray Tube (CRT) Antitrust Litigation, No. 3:07-cv-5944 (N.D. Cal.). Judge Tigar compelled both companies to provide that information to a Special Master so he can determine whether the information should be provided to other defendants to facilitate settlements—even though both companies had already settled all of their claims against all defendants. ECF 4661.