September 18, 2014

Regulators Prescribing Higher Dose Of Pharmaceutical Antitrust Enforcement

By Ankur Kapoor

Antitrust enforcers returned to their offices after Labor Day, refreshed and ready to tackle what they view to be anticompetitive practices by pharmaceutical companies to delay entry of lower-priced generic drugs.

In addition to recent enforcement efforts by antitrust regulators, two federal courts have issued opinions supporting the theory underlying the enforcers’ new efforts to police so-called “reverse payments.”

On September 8, 2014, the Federal Trade Commission (FTC) filed an antitrust complaint in the U.S. District Court for the Eastern District of Pennsylvania against AbbVie Inc. (a spinoff of Abbott Laboratories’ portfolio of proprietary pharmaceutical and biologic drugs) and generic giant Teva Pharmaceuticals. FTC v. AbbVie Inc. is the FTC’s first action against “reverse-payment” or “pay-for-delay” agreements between patent-holders and generic competitors since the FTC’s 2013 Supreme Court victory in FTC v. Actavis, Inc., which held that such agreements could run afoul of the antitrust laws under certain circumstances.

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Categories: Antitrust Enforcement, Antitrust Litigation

    September 9, 2014

    European Commission Slaps Smart Card Chips Cartel With Fines

    A View from Constantine Cannon’s London Office

    By Irene Fraile

    The European Commission has imposed fines totaling 138 million euros on smart card chips producers Infineon, Philips and Samsung for breaching European Union antitrust laws that prohibit cartels.

    According to the Commission, from September 2003 to September 2005, the companies engaged in a cartel to restrain competition relating to the smart card chips used in mobile telephone SIM cards, bank cards, identity cards, passports, pay TV cards, and various other applications.  The cartel used a network of bilateral contacts in order to coordinate responses to customers’ requests to lower prices and, ultimately, keep prices up.  The companies discussed and exchanged sensitive commercial information on pricing, customers, contract negotiations and production capacity, thereby damaging competition by reducing uncertainty concerning future behavior in the market.

    Although some of the cartelists took measures to conceal the collusion, one of them – Renesas (a joint venture between Hitachi and Mitsubishi) – finally blew the whistle and revealed the existence of the cartel to the antitrust authorities under the Commission’s Leniency Programme.  As a result, Renesas received full immunity and avoided a fine of more than 51 million euros.  Samsung, which also cooperated with the investigation, received a 30 percent reduction in the level of its fine in return for its cooperation.

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    Categories: Antitrust Enforcement, International Competition Issues

      September 8, 2014

      Credit Default Swap Class Action Clears Motions To Dismiss And Proceeds To Discovery

      By David Golden

      On Thursday, Judge Denise Cote of the U.S. District Court for the Southern District of New York refused to dismiss a class-action antitrust lawsuit involving the $21 trillion credit default swap (“CDS”) market, permitting the case to proceed to discovery.

      The plaintiffs in In re Credit Default Swaps Antitrust Litigation allege that some of the largest investment banks in the United States – including Bank of America, Citibank, Goldman Sachs, JPMorgan and Morgan Stanley – conspired to prevent price transparency and competition in the CDS market.  The individual plaintiffs are groups of CDS investors, including several public pension funds.

      A CDS is a financial tool to hedge credit risk.  The buyer of a CDS purchases the seller’s promise to pay if a “credit event,” such as a credit default, occurs during a specified time period.  In effect, a CDS is an insurance policy.

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      Categories: Antitrust Litigation

        September 4, 2014

        MFNs Becoming A Battleground In FCC’s Review Of Comcast/Time Warner Deal

        By Allison F. Sheedy

        The biggest regulatory review of the year—the Federal Communications Commission’s examination of Comcast Corp.’s proposed acquisition of Time Warner, Inc.—has taken an interesting foray into analyzing competitive tactics, with the FCC’s invitation to media companies to confidentially raise concerns about Comcast’s use of most favored nation (“MFN”) provisions in its contracts to purchase content.

        The Wall Street Journal reported yesterday that the FCC has invited companies, including Discovery Communications, to offer feedback about Comcast’s MFNs to aid its evaluation of the proposed take-over.  The FCC also publicly released a request for information to Comcast that included (among many other items) details about each agreement in which Comcast has used an MFN.

        In a typical form, an MFN is a contractual promise obtained by a buyer from a seller that the seller will not give a better price to any other purchaser.  A buyer usually seeks an MFN clause as a form of protection to ensure that its competitors do not get cost or other advantages.

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        Categories: Antitrust Enforcement, Antitrust Litigation, Antitrust Policy

          August 19, 2014

          Appeals Court Upholds Dismissal Of Multi-Billion-Dollar Infringement Claims Against Visa And MasterCard Over Smart Card Technology

          By Owen Glist

          The U.S. Court of Appeals for the Federal Circuit has upheld summary judgment against SmartMetric, a maker of biometric smart cards, affirming dismissal of its claims that Visa and MasterCard infringed its patent for credit and debit card technology.

          After a previous unsuccessful suit against Visa, MasterCard, and American Express over the same patent relating to “contactless” cards (see SmartMetric Inc. v. Am. Express Co., 476 F. App’x 742 (Fed. Cir. Apr. 11, 2012)), SmartMetric again sought damages in excess of $13 billion in this suit over “contact” cards embedded with chips.  The gravamen of SmartMetric’s claim was that the Visa and MasterCard networks infringed a patent for a system to access a database of local network service providers for a given payment card transaction.

          The district court granted summary judgment on several alternative grounds, including SmartMetric’s unexcused failure to properly disclose its experts and expert reports and to show sufficient “direct” control by Visa and MasterCard over users of the allegedly infringing system — i.e., banks, merchants, and cardholders.  But the court’s primary ground was that SmartMetric failed to provide any reliable evidence that defendants’ systems actually functioned the way SmartMetric alleged.

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