Recently, in a rarely considered question, the US District Court of Massachusetts held that the American Red Cross (ARC), a federally chartered corporation, is not subject to liability under the Sherman Antitrust Act (Sherman Act) because it is not an antitrust “person.” The court narrowly construed the Sherman Act to exclude a quasi-public entity like ARC, resulting in a broad interpretation of immunity for quasi-public entities under the antitrust laws.
ARC is the largest supplier of blood platelets in the United States and, until recently, sold “untreated” platelets to hospitals which then employed various services to mitigate the risk of platelets becoming infected. Verax Biomedical Inc. (Verax) manufactures one such mitigation service. After ARC announced its plan to begin using Cerus Corporation’s INTERCEPT Blood System on its platelet supply prior to sale – a system that is incompatible with Verax’s service – Verax sued ARC for allegedly leveraging its power in the market for platelets to monopolize the market for mitigation services.
The court found that, although Congress had clearly waived ARC’s sovereign immunity, it did not constitute a “person” under the Sherman Act in form or function because its public attributes outweighed its private ones.
- ARC is a federally chartered nonprofit corporation responsible for “provid[ing] volunteer aid in time of war to the sick and wounded of the Armed Forces.” 36 U.S.C. § 300102(1). It is also the largest supplier of blood platelets in the United States.
- Verax produces and sells US Food and Drug Administration (FDA)-cleared tests for detecting bacterial growth in platelets.
- In the past, ARC sold both “untreated” and “treated” platelets to hospitals. Untreated platelets require further treatment to ensure bacterial growth is controlled. Hospitals could choose which mitigation services to use, including Verax’s.
- In 2020, ARC announced its intention to stop selling untreated platelets and to begin treating all platelets with Cerus Corporation’s INTERCEPT Blood System prior to sale. Verax’s service cannot be used on platelets that have been treated with the INTERCEPT system, as the FDA has not endorsed the pairing of the two technologies.
- Verax filed suit against ARC, bringing three counts under the Sherman Act: tying, exclusive dealing and attempted monopolization.
- ARC moved to dismiss the lawsuit, arguing, in part, that ARC cannot be sued under the Sherman Act. Shortly after, the federal government filed a statement of interest arguing that ARC can be sued under the Sherman Act.
- The court concluded that, although it was a close question, ARC was not a “person” under the Sherman Act in either form or function and therefore dismissed the antitrust claims.
HOW THE DECISION WAS REACHED
- To determine whether the Sherman Act extends to ARC, the court applied the two-step analysis laid down by the US Supreme Court in FDIC v. Meyer and asked (1) whether there was a waiver of sovereign immunity for actions against ARC and (2) whether the substantive prohibitions of the Sherman Act apply to ARC.
- The [...]