Antitrust Alert : International Antitrust Attorneys: McDermott Will & Emery Law Firm

by Philipp Werner and David Henry

The European Union’s top court rules that a national law which requires the consent of all parties before access to the file is given to third-party antitrust damages claimants is incompatible with EU law; a national court must be able to decide on disclosure weighing up the interests in doing so.

To read the full article, click here.

• Print
• Share Link

by Lionel Lesur, Martina Maier and Philipp Werner

On 11 June, the European Commission (“Commission”) published its long-awaited package of proposals on private antitrust litigation. The package is divided into three sets: (1) a Draft Directive on actions for damages (2) a Draft Recommendation on promoting group claims (3) and a Draft Communication and Draft Guidelines on estimating the amount of loss suffered by victims of cartels.

To read the full article, click here.

• Print
• Share Link

 by Martina Maier and Philipp Werner

The European Commission (Commission) is likely to open a formal EU State aid investigation into the German Renewable Energy Source Act. According to the Commission, the Act may have given unlawful advantages to renewable energy producers and energy-intensive companies (those producing chemicals or steel) in Germany. Producers and companies that benefited from the Act are therefore exposed to the risk of the alleged benefit being recovered, which is likely to amount to a figure in at least the tens of billions of Euros.

The European Commission is currently examining whether or not the German Renewable Energy Source Act infringes EU State aid law. The Commission is expected to reach a decision on whether or not to open a formal investigation procedure in autumn 2013, following its summer break.

The German Renewable Energy Source Act aims to support renewable energy by fixing the tariffs that electricity providers, such as E.ON, RWE, Vattenfall or EnBW, must pay for energy from renewable sources, e.g., solar panels or wind turbines. These tariffs are higher than those for energy from traditional sources. The Act also exempts energy-intensive companies, e.g., those producing chemicals or steel, from the EEG surcharge that electricity providers are entitled to charge their customers. These higher tariffs and the EEG exemption could be in breach of EU State aid law and are currently the subjects of a Commission examination.

Should the Commission come to the conclusion that they do infringe EU State aid law, it can order Germany to recover the advantages from the companies that benefitted from these rules. The potential State aid involved is likely to amount in total to a double-digit billion Euro figure.

In a separate but similar case, in March 2013 the Commission opened an in-depth investigation into the exemption of large electricity consumers from network charges in Germany, dating back to 2011. This exemption was financed by the final electricity consumers, who, since 2012, must pay a special surcharge. A German court, recently declared this exemption and the surcharge as unconstitutional and the legal provisions will be changed. The Commission may, however, still conclude that, up until the German court ruling, large electricity customers were benefitting from State aid. It could therefore order Germany to recover the past benefit from these customers, which is estimated at around Euro 300 million for 2012.

These investigations by the Commission expose renewable energy producers, energy-intensive companies and large electricity consumers in Germany to the significant risk of the recovery of the alleged benefit. Such companies are therefore strongly advised to co-operate with the Commission during this examination phase and if a full investigation is launched.

• Print
• Share Link

by Veronica Pinotti, Martino Sforza and Nicolò di Castelnuovo

The Italian Competition Authority has decided that the 2014 mandatory annual fee due by limited companies based in Italy, that have total revenues exceeding EUR 50 million, will have to be paid by July 31, 2014, while for the current year no payment is due.

Entities Subject to the Fee

• Limited liability companies (e.g., S.p.A. or S.r.l.) with total revenues—according to the latest financial statements (item A1 of the income statement)—exceeding EUR 50 million are subject to the fee.  
• For banks and financial institutions, the amount of revenue for the purposes of calculating the fee is one-tenth of the institution’s assets on its balance sheet.  
• The revenues of insurance companies are equal to the amount of premiums collected. Subsidiaries and associate companies belonging to a group must each pay the fee separately on the basis of the revenues set out in their financial statements.

Fee Amount 

For 2014, the amount of the fee is equal to 0.06 percent of the revenues set out in the latest financial statements.  The fee cannot exceed EUR 300,000.

• Print
• Share Link

by Daniel Powers

In a recent speech, Federal Trade Commission (FTC) Commissioner Joshua Wright jumped into the debate over the proper approach for analyzing the potential anticompetitive effects of loyalty discount programs.  Commissioner Wright signaled his strong preference for an approach based on exclusive dealing law rather than a framework rooted in a predatory pricing analysis.  Wright contended that recent FTC cases appeared to apply such an approach, and he asserted his belief that the Commission should consistently adopt this analytical approach in future cases.

The proper analytical approach to apply in loyalty discount cases has drawn attention recently as a result of the Third Circuit’s opinion in ZF Meritor, LLC v. Eaton Corp., 696 F.3d 254 (3d Circuit 2012).  In that case, ZF Meritor brought a monopolization claim against Eaton related to Eaton’s contracts in the heavy-duty truck transmissions market.  In the late 1980s, Meritor first entered the market; Eaton had been the sole supplier for more than 30 years.  Within a decade, Meritor had gained approximately 17 percent share and had plans for further expansion tied to a joint venture with a German company that offered a transmission product not previously sold in the North American market. Eaton responded by entering into “long-term agreements” with the four direct purchasers of heavy-duty truck transmissions.  These agreements provided loyalty rebates to buyers that were conditioned on obtaining a certain specified share of the buyer’s needs – ranging from 70 to more than 90 percent – from Eaton.  ZF Meritor watched its market share drop dramatically following the conclusion of these agreements and ultimately exited the market after concluding that it would be unable to obtain and maintain the minimum market share necessary for viability.  The company’s monopolization suit against Eaton claimed that its competitive efforts were undermined by Eaton’s loyalty discount programs.

Eaton characterized ZF Meritor’s claim as one involving discounted pricing and contended that the proper test to assess any potential anticompetitive effect of this activity was the one elaborated by the Supreme Court in Brooke Grp. Ltd. v. Brown & Williamson Tobacco Corp., 509 U.S. 209 (1993).  According to Eaton, the Brooke Group standard required ZF Meritor to show that Eaton’s prices were below a relevant measure of Eaton’s costs.  The Third Circuit surprised many when it refused to apply the Brooke Group test.  The court stated that Brooke Group was appropriate where “pricing itself operat[es] as the exclusionary tool,” but it was not the proper standard where, in this case, price was not the predominant exclusionary mechanism. 696 F.3d at 275.  The Supreme Court chose not to hear Eaton’s appeal of the Third Circuit’s decision. 

Commissioner Wright approved of the Third Circuit’s approach, indicating that he believes an exclusive dealing approach focused on how the challenged activities operate to raise rivals’ costs better accords with current economic research.  Not all economists agree.  A large group of economists submitted an amicus brief to the Supreme Court urging it to review the Third Circuit’s decision in ZF Meritor.  Commissioner Wright said, however, that he believed that the arguments in favor of applying a price-cost test in the loyalty discount setting were either overstated or incorrect: “[T]he choice in this context is between a simple legal test based upon the wrong economic model and a legal test – albeit a more complex rule of reason analysis – based upon a more accurate set of economic models.”  According to the Commission, the FTC’s most recent cases in this area demonstrate that the agency is open to pursuing an exclusive dealing approach. 

Moving forward, this is an area of the law that bears watching, particularly for companies with especially large market shares.  Commissioner Wright’s speech signals this is an area of interest for him and one in which he will urge the FTC to adopt an approach consistent with that employed in the ZF Meritor case.  Companies with large market shares may wish to consider carefully how they respond to new market entry, and specifically whether loyalty or rebate programs are a proper response given the particular conditions of the markets in which they operate.  If Commissioner Wright finds allies on the Commission on this issue, clients should be warned that the relatively bright-line rule of the price-cost test may eventually give way to a less certain rule-of-reason analysis based on estimated foreclosure effects.

The full text of Commissioner Wright’s speech is available on the FTC website at http://www.ftc.gov/speeches/wright/130603bateswhite.pdf.

• Print
• Share Link

by Daniel Powers

On May 31, the Federal Trade Commission (FTC) recorded yet another victory in its continuing efforts to limit the scope and application of antitrust immunity under the state action doctrine.  The Fourth Circuit ruled that the North Carolina State Board of Dental Examiners’ efforts to block non-dentists from providing teeth-whitening services was not entitled to antitrust immunity because the Board’s activities were not actively supervised by the state.  North Carolina State Board of Dental Examiners v. Federal Trade Commission, Case No. 12-1172 (4th Cir. May 31, 2013).

The case focused on the activities of the North Carolina state agency, which is composed of several practicing dentists, a dental hygienist and a consumer representative.  The Board licenses dentists in the state and is otherwise empowered to take disciplinary measures against licensees.  Beginning in approximately 2003, in response to complaints from dentists practicing in the state, the Board opened numerous investigations into teeth-whitening services provided by non-dentists.  As a result of these investigations, the Board issued dozens of cease-and-desist letters to such service providers and sought to restrict the market to licensed dentists by other means. 

The Board’s activity attracted the attention of the FTC, which issued an administrative complaint in 2010 charging that the Board violated the FTC Act by acting to exclude non-dentist teeth whiteners from the market in North Carolina.  A trial on the merits before an administrative law judge found the Board had violated the Act.  On appeal, the FTC affirmed and entered a final order enjoining the Board from, among other things, continuing to unilaterally issue extra-judicial orders to teeth-whitening services in North Carolina.  The Fourth Circuit’s decision came in response to the Board’s petition for review of the FTC’s order.  

The Board maintained that it was a state entity created to regulate the practice of dentistry, which encompassed the teeth-whitening services.  Under the state action doctrine, private parties may claim immunity from the antitrust laws if they act according to a “clearly articulated and affirmatively expresses state policy,” and their behavior is “actively supervised by the State itself.”  California Retail Liquor Dealers Ass’n v. Midcal Aluminum, Inc. (445 U.S. 97, 105 (1980).  Municipalities and sub-state entities benefit from a less restrictive test.  Such entities must act pursuant to a “state policy to displace competition with regulation or monopoly public service.”  FTC v. Phoebe Putney Health System, Inc., 133 S. Ct. 1003, 1010 (2013).  These entities are not required to demonstrate the “active state supervision” required under the two-prong Midcal test because with such entities there is little danger that their activities involve a private anti-competitive activities. Town of Hallie v. City of Eau Claire, 471 U.S. 34, 47 (1985).

Relying on its status as a state entity, the Board maintained that it was not subject to the “active supervision” prong required under Midcal.  The FTC countered that entities like the Board, regulatory bodies made up of market participants, were subject to the stricter Midcal test.  The FTC focused on the need to assure that such an “entity’s decision-making process was sufficiently independent from the interests of those being regulated.”  Interlocutory Order In re North Carolina State Bd. Of Dental Exam’rs, 151 F.T.C. 607, 619 (FTC February 3, 2011).  Because in this case, a large majority of the Board (six of eight members) was elected by North Carolina dentists, the FTC said the Board must demonstrate that it operated pursuant to active state supervision in order to justify state action immunity.

The Fourth Circuit agreed, holding that state agencies “in which a decisive coalition (usually a majority) is made up of participants in the regulated market, who are chosen by and accountable to their fellow market participants,” are private actors subject to the Midcal test.  Slip. Op. at 15.  The court found that the Board was unable to meet this test.  Id. at 18-19.  The “generic” oversight that the Board relied upon was not substitute for the required review and approval of the acts challenged by the FTC. Id.

In the wake of the Supreme Court’s recent decision in Phoebe Putney and this decision, state entities may face greater uncertainty that their activities can benefit from antitrust immunity.  Judge Barbara Milano Keenan issued a concurring opinion in the case, however, to emphasize that not every state agency must always meet the active supervision test.  Id. at 33.  She highlighted that the differentiating factor in this case was that the members of the Board who were market participants are elected by other private participants in the market.  Id. at 33-34.  Had they been appointed or elected by state government officials, the case for applying the Midcal test would have been much weaker. 

A lesson from this case therefore may be for regulatory boards to do more to insulate their market participant members from the interests of those they regulate.  One method may be to change the method by which members are selected as the concurring opinion suggests.  Another may be to diversify the board membership such that these market participants no longer for a ”decisive” majority of the board.

• Print
• Share Link

by Carrie Amezcua

The next step of the on-going Phoebe Putney litigation is completed.  On Wednesday, April 15, the district court for the Middle District of Georgia granted the Federal Trade Commission's (FTC) motion for a Temporary Restraining Order (TRO) in Federal Trade Commission v. Phoebe Putney Health System, Inc., No. 1:11-cv-58 (M.D. Ga.).  In its order, the court stated that the FTC "carried its burden of persuasion to establish the need for the imposition of the 'extraordinary and drastic remedy' of a TRO pending the outcome of the court’s decision on the [Preliminary Injunction] Motion."  The TRO prohibits Phoebe Putney Memorial Inc. from taking further steps to consolidate with Palmyra Park Hospital.  Further, the court stated "In response to Plaintiff’s request that the Court order Defendants to refrain from instituting any price changes, the Court ordered that Defendants are prohibited from making any price changes to existing contracts; however, said prohibition does not extend to the formation of any new contracts."  Richard A. Feinstein, Director of the FTC's Bureau of Competition issued a brief statement on the district court's ruling saying "We are pleased that the Court has issued a Temporary Restraining Order prohibiting any further steps to consolidate the two hospitals in Albany, and prohibiting any price changes to existing health-plan contracts, pending our Motion for Preliminary Injunction." 

The district court had granted a TRO the FTC filed in 2011 to stop the acquisition, but dissolved that TRO upon the district court's finding that the transaction was exempt under the state action immunity doctrine.  The 11th Circuit affirmed, but in February of this year, the Supreme Court reversed holding that Georgia's enabling statute did not clearly articulate an affirmatively expressed policy for displacing competition.    

The district court's grant of the TRO is another victory for the FTC in this long litigation.  Now that the Supreme Court ruled the transaction is not exempt from the antitrust laws, the hospitals will have to defend what the FTC calls a merger to monopoly.  The TRO will stay in place until a hearing on the motion for Preliminary Injunction, which is scheduled for June 14, 2013.  The FTC has a successful track record in getting preliminary injunctions granted in hospital mergers, so it would not be surprising if the district court also granted the Motion for Preliminary Injunction.  This case is further evidence of the high priority the FTC places on challenging health care mergers it views as anticompetitive and shows the FTC is willing to commit resources over an extended period of time to challenge such mergers.

The administrative hearing is scheduled to begin July 15, 2013.  More information on the district court and adjudicative proceedings can be found at http://www.ftc.gov/os/caselist/1110067/index.shtm and http://www.ftc.gov/os/adjpro/d9348/index.shtm.

• Print
• Share Link

by Paul Devinsky, Cynthia Chen and Lincoln Mayer

The Supreme Court in Bowman v. Monsanto Co. ruled unanimously that a farmer’s replanting of harvested seeds constituted making new infringing articles. While the case is important for agricultural industries, the Supreme Court cautioned that its decision is limited to the facts of the Bowman case and is not a pronouncement regarding all self-replicating products.

To read the full article, click here.

• Print
• Share Link

by Carla A. R. Hine

Earlier this week, the Federal Trade Commission (FTC) issued its Hart-Scott-Rodino (HSR) report for fiscal year 2012 (FY2012), which summarizes enforcement actions and key statistics regarding number of filings, second requests and challenges.  The press release and a link to the report can be found here.

Filings were relatively flat from 2011 to 2012.  There were fewer second requests and there wasn't a remarkable difference in the overall percentage of filings resulting in second requests (3.9 percent in 2011; 3.5 percent in 2012).  In 2012, the FTC issued more second requests than the U.S. Department of Justice (DOJ).  However, when looking at the number of second requests each agency issued as a percentage of the filings each agency was "cleared" to investigate, the FTC only issued second requests in 14.8 percent of the filings it was cleared to investigate, whereas the DOJ issued second requests in 40.8 percent of filings the agency was cleared to investigate.  Overall, it is hard to read too much into these statistics other than reportable transactions remain steady and there do not seem to be any wild swings in enforcement trends.

The report also notes that of 60 corrective filings (i.e., filings where the parties closed the transaction and later realized they should have filed), two resulted in enforcement actions with civil penalties ($500,000 and $850,000).

• Print
• Share Link

by Nick Grimmer and Stefan Meisner

Last week in Microsoft v. Motorola, the U.S. District Court Western District of Washington became the first U.S. court to set fair, reasonable, and non-discriminatory (FRAND or RAND) royalty rates and range for standard-essential patents (SEPs).  See Findings of Fact and Conclusions of Law, Microsoft v. Motorola, 2:10-cv-01823-JLR (W.D. Wash. Apr. 25, 2013). The suit stems from Microsoft’s allegation that Motorola’s offers to license certain Wi-Fi and video compression SEPs was too high and therefore violated Motorola’s contractual RAND commitments.   This issue is arising with greater frequency in antitrust/IP matters when patent licensing is involved with licensors who are standards setting organizations as well.

Microsoft v. Motorola is important because it is the first thoroughly reasoned decision by a U.S. federal district court that developed a framework for courts to assess FRAND terms for SEPs.  In setting forth the basic principles at issue, the court stated that “a RAND commitment should be interpreted to limit a patent holder to a reasonable royalty on the economic value of its patented technology itself, apart from the value associated with incorporation of the patented technology into the standard.” Id. at 25-26.  So, the court focused its analysis on its conclusion that “the parties in a hypothetical negotiation would set RAND royalty rates by looking at the importance of the SEPs to the standard and the importance of the standard and the SEPs to the products at issue.” Id. at 7.  The court’s analysis employed a modified-version of the Georgia-Pacific factors, which courts use to calculate “reasonable royalty” damages in patent infringement actions.  Of note, the court modified the first Georgia-Pacific factor (the royalties received by the patentee for the patent(s) at issue) to include consideration only of certain types of royalties, i.e., those “comparable to RAND licensing circumstances,” including both “license agreements where the parties clearly understood the RAND obligation, and … patent pools.” Id. at 35-36 (emphasis added).  Another of the court’s noteworthy modifications to the Georgia-Pacific factors is that the fourth factor (the licensor’s policy and marketing program to maintain its patent monopoly via selective licensing), “is inapplicable in the RAND context because the licensor has made a commitment to license on RAND terms and may no longer maintain a patent monopoly by not licensing to others.”  Id. at 36.  Finally, as relates to the final factor (a hypothetical negotiation), the court concluded that “reasonable parties in search of a reasonable royalty rate under the RAND commitment would consider the fact that, to induce the creation of valuable standards, the RAND commitment must guarantee that holders of valuable intellectual property will receive reasonable royalties on that property.” Id. at 40.

Concluding that several of Motorola’s patents provided only minimal contribution to the standards and played only minor importance in the overall functionality of some of Microsoft’s products, and that the characteristics of a similar patent pool (of which Microsoft and Google, Motorola’s parent, are members) “closely align with all of the purposes of the RAND commitment,” id. at 166, the court set RAND royalty rates far lower than Motorola requested and only slightly higher than Microsoft’s proposed rates.  The case is slated to proceed to trial later this year on the issue of whether Motorola’s offer violated its RAND obligations. 

Microsoft v. Motorola is precedential only in the Western District of Washington, but at 207 thorough and well-reasoned pages, it provides a valuable roadmap and will likely be quite influential in future RAND cases in other U.S. and foreign jurisdictions.  However, it might not always be licensee-favorable.  This case presented substantial and potentially-unique evidence, for instance, of patent pools relating to the standards at issue, that the SEPs at issue were not particularly valuable as compared to other patents essential to the standards (particularly for the uses at issue), and of similar (low) valuation analyses commissioned by the patent holder.

In any event, both licensors and licensees of SEPs should take serious note of Microsoft v. Motorola.

• Print
• Share Link

by Jeffrey Brennan and Carrie Amezcua

On Tuesday, the North Carolina legislature has enacted into law, pending the governor's signature, a prohibition on the use of most favored nations (MFN) clauses in contracts between commercial health insurers and providers. 

The two-page bill, titled “Freedom to Negotiate Health Care Rates,” lists "prohibited contract provisions related to reimbursement rates."  The bill prevents a commercial health insurer from prohibiting a health care provider with which it contracts from entering into a contract with another insurer at equal or lower rates.  In addition, insurers are not permitted to require a provider to accept a lower rate from the contracting insurer, or to require a renegotiation of rates, in the event that the provider agrees to provide equal or lower rates to another commercial health insurer.  Next, the bill prohibits an insurer from terminating a provider that agrees to provide services at lower rates to another insurer.  An insurer is also prevented from requiring that a provider charge another commercial health insurer a higher rate.  Finally, insurers can no longer require that providers disclose the provider's contractual rate with another health insurer.  

MFN clauses have been attracting attention in recent years, particularly in the health care field.  North Carolina's bill follows closely on the heels of Michigan's ban on MFN clauses passed in March 2013.  That action led the Department of Justice (DOJ) to file a motion asking the court to dismiss an antitrust suit against Blue Cross Blue Shield of Michigan (BCBSM), in which the DOJ alleged the MFN clauses in BCBSM's contracts with hospitals stifled competition, raised health care costs and harmed consumers.  Ohio has a similar ban on MFN clauses. 

Last year, the DOJ and the Federal Trade Commission (FTC) held a public workshop specifically to discuss the competitive effects of MFN clauses.  The workshop featured panels discussing economic theories concerning MFN clauses and why they are used, and the legal treatment of and industry experiences with MFN clauses, among other topics. 

MFN clauses are evaluated under the antitrust law rule of reason, because, depending on the applicable facts and circumstances, such provisions have been found to have procompetitive or anticompetitive effects.  A recognized procompetitive feature of MFN clauses is lower transaction costs, which provides price stability over time and ensures that a buyer is not treated any worse than its rivals.  The DOJ argued in the BCBSM case, on the other hand, that the MFN clauses there reduced incentives to lower prices, facilitated coordination and prevented entry. 

Health care clients using or considering the use of MFN clauses should consult antitrust counsel to assess their legal risks in light of these developments.    

• Print
• Share Link

by Hillary Webber

In remarks made this week at the International Competition Network annual conference, Federal Trade Commission (FTC) Chairwoman Edith Ramirez stated that health care will continue to be a top priority for the FTC.   Referring to health care and hospital mergers in particular, she said that the Commission will "guard[] against what we consider to be consolidation that may end up having adverse consequences for consumers."  The Chairwoman's comments indicate that the recent leadership change at the FTC from former Chairman Jon Leibowitz to Chairwoman Ramirez has not altered the Commission's priorities.

Recent months have seen a flurry of FTC activity in the courts related to health care.  For example, two FTC cases came before the U.S. Supreme Court this term -- the FTC's challenge to Phoebe Putney's acquisition of Palmyra Park Hospital in Georgia and the FTC's challenge to "pay-for-delay" patent infringement litigation settlements between branded and generic pharmaceutical manufacturers. 

In February, the Supreme Court ruled that the state action doctrine did not immunize Phoebe Putney's hospital transaction from federal antitrust scrutiny, and the FTC has subsequently filed renewed motions in federal district court to stop further integration of the two hospitals even as it prepares for a full administrative hearing on the merits that will begin in August. 

A decision on the "pay-for-delay" case is expected in June.  The Supreme Court’s ruling may have a large impact on further FTC efforts against what it perceives as anticompetitive efforts to delay generic drug entry.

Health care clients considering acquisitions are advised to consult antitrust counsel early in the transaction process.  Given the FTC and DOJ's close scrutiny of health care transactions, early advocacy before the antitrust agencies is often critical to a deal closing on schedule.  

• Print
• Share Link

by Jon B. Dubrow and Cerissa Cafasso

On Monday, April 22, 2013, after rejecting the initial settlement agreement, Judge Richard Matsch (D. Colo.) approved a revised settlement of a suit brought by the U.S. Department of Justice (DOJ) against two energy companies for conspiring not to compete for mineral rights leases.  Gunnison Energy Corp. (GEC) and SG Interests I Ltd. and SG Interests VII Ltd. (collectively "SGI”) will each pay a fine of $275,000 to the DOJ to settle allegations of agreeing not to bid against each other in violation of antitrust law for natural gas leases on government land in western Colorado.  These fines are in addition to those related to alleged False Claims Act violations, for which SGI and GEC paid government fines of $206,250 and $245,000 respectively.  The new settlement is twice the amount of the fines in the original settlement.

McDermott Will & Emery wrote an article in February 2012 analyzing the DOJ's initial complaint against the parties, and the competitive implications of joint bidding.  At the time, the parties had agreed to pay a total of $550,000 in fines.  The court rejected the settlement in December 2012 finding that it was not in the public interest.  "There is no basis for saying that the approval of these settlements would act as a deterrence to these defendants and others in the industry, particularly as GEC considers 'joint bidding' to be common in the industry."  Further, the settlement amount was "nothing more than the nuisance value of [the] litigation."  Additionally, as reflected in the newly approved deal, the court wanted the alleged Sherman Act violations and False Claims Act violations settled separately, with a payment for the Sherman Act claims separate from, and in addition to, any amount due under the False Claims Act.  At heart, it appears Judge Matsch wanted any settlement he approved to be meaningful enough to have a deterrent effect on future agreements.

This was the DOJ's first challenge to an anti-competitive bidding agreement for mineral rights leases, but it is just one of the recent cases in which joint bidding activities have become the focus of antitrust scrutiny.  In Summer 2012, the DOJ opened an investigation into Chesapeake Energy's acquisition of oil and gas properties in Michigan and the possibility that Chesapeake conspired with Encana Corp. to allocate bids on those properties.  In 2006, the DOJ began investigating the joint bidding practices of private equity firms in connection with leveraged buyouts.  That investigation led to class action suits against private equity firms.  One of those suits survived a motion for summary judgment last month.

It is important to note that the DOJ is paying attention to joint bidding practices and taking action.  As noted in the SGI/GEC matter, while joint bidding may in fact be common practice in the energy field, it is not necessarily lawful.  Each arrangement should be evaluated for potential anticompetitive effects.

• Print
• Share Link

by Henry Chen, Frank Schoneveld and Alex An

China’s Ministry of Commerce recently issued two new draft regulations.  The first provides a wider range of potential remedies to obtain the clearance of a concentration (e.g., a merger, acquisition, joint venture, etc.); the other defines the standards for “simple” merger cases that are eligible for a “fast-track” clearance procedure.

To read the full article, click here.

• Print
• Share Link