Russia’s head antitrust agency, the Russian Federal Antimonopoly Service (“FAS”), has signed a Memorandum of Understanding (“MOU”) with the United States Department of Justice and Federal Trade Commission to promote greater cooperation between the two governments on antitrust issues.

FAS Head Igor Artemyev, FTC Chairman Jon Leibowitz, and Assistant Attorney General for Antitrust Christine Varney signed the MOU in Washington, D.C., earlier this month.

The MOU provides that the two countries will inform each other of basic activities of the two antitrust agencies, exchange their views on options for development of bilateral cooperation in competition enforcement, and exchange materials on their areas of authority and expertise.  Chairman Leibowitz stated with regard to the agreement between the two countries, “We are delighted to enter into this antitrust Memorandum of Understanding with the Russian Federal Antimonopoly Service.  It will enable us to enhance our cooperation, provide a framework for technical cooperation, and facilitate consultation on policy and enforcement matters with our counterpart in this important jurisdiction.” click here for more »

 JPMorgan Chase bank, one of the world’s largest issuers of credit cards, has announced that it will abandon the controversial practice of mandatory arbitration of cardholder disputes.  The move is part of a settlement reached between Chase and consumers in an antitrust class action challenging the use of such clauses.

Like many card issuers, Chase includes language in its cardholders’ contracts that requires the parties to use private arbitration, not the courts, to resolve disputes.  That has meant that cardholders with grievances lose benefits that courts offer, including the class action mechanism.  Consumer advocates argue that the inability to bring class actions effectively meant that most cardholders could bring no action at all.  The legal fees for bringing a complaint via arbitration often exceed the total amount that may be at stake.

Chase and other issuers defend the use of arbitration clauses by arguing that they keep the issuers’ legal fees down.  Arbitration is far cheaper than litigation in court, and the less issuers spend on litigation in court, the less they must subsidize those costs by increasing fees or interest rates to cardholders. click here for more »

General Electric’s attempt to arrange a marriage for its 80-percent owned subsidiary NBC Universal is hitting a snag as NBC’s other parent, Vivendi, demands a greater dowry before it consents to Comcast’s proposal.

Even if the marriage of these media giants is arranged, consummation of the deal will still be dependent on review by federal agencies, which will confront such issues as combined control over media content and distribution, and “net neutrality,” the principle that Internet service providers should not block or prioritize traffic based on content.

G.E. has been negotiating for weeks with French media conglomerate Vivendi over buying its 20 percent share of NBC and then selling a majority interest in NBC to Comcast. G.E. and Comcast have reached an agreement in principle that would transfer 51 percent of NBC to Comcast.  Comcast is reported to be contributing its cable networks and between $4 billion and $6 billion in cash to the deal. click here for more »

The outlook for Oracle’s proposed acquisition of Sun Microsystems is only partly cloudy now that federal antitrust enforcers have announced that they will not be joining their European counterparts in opposing the acquisition.

The Antitrust Division of the United States Department of Justice issued a statement on November 9, 2009, concluding that Oracle’s proposed acquisition of Sun is unlikely to be anticompetitive.  This announcement came on the heels of the European Commission’s objection to the proposed $7.4 billion transaction.

After an investigation that included gathering statements from a number of industry participants and reviewing Oracle’s and Sun’s internal business documents, the DOJ based its determination on a number of factors.

For example, the DOJ concluded that there are many open-source and proprietary database competitors who offer consumers a variety of well established and widely accepted data products, and thus the proposed acquisition would be unlikely to harm consumers.  The DOJ also determined that there exists a large community of developers and users of Sun’s open source database with significant expertise in maintaining and improving the software, and who could support a derivative version of it.

Still, Oracle must find a way to convince the European Commission that the proposed transaction is not anticompetitive.  Oracle has expressed confidence that it can do so.  The company stated that “[g]iven the lack of any credible theory or evidence of competitive harm, we are confident we will ultimately obtain unconditional clearance of the transaction.”

The completed CVS-Caremark merger may be the first fruit to be plucked by federal antitrust enforcers who have indicated a willingness to take second bites at the apple of merger review.

Antitrust enforcers in the new administration have expressed an interest in re-examining previously approved mergers to ensure that competition was not compromised.  Christine A. Varney, Assistant Attorney General in charge of Antitrust at the Department of Justice, has stated that she is “absolutely” open to reviewing the effects of mergers approved under the previous administration.  No statute of limitations exists on mergers.  The DOJ under the most recent Bush administration filed suit against a company, Microsemi, seeking to undo its acquisition of competitor Semicoa Inc, and it seems likely that there will be more to come under the current administration.

The March 2007 merger of CVS drugstores with pharmacy benefits manager Caremark RX has been criticized by both lawmakers and various public interest groups.  In July 2009, various US Senators wrote to FTC Chairman John Leibowitz requesting the FTC to reexamine the merger of CVS and Caremark to determine whether the combined entity has engaged in anticompetitive practices.  (Letters are available here and here).  The National Community Pharmacists Association issued a statement that prices are higher under the combined company.  The FTC is conducting a “non-public investigation” into CVS, which has revealed in a recent SEC filing that it is producing documents and other information in compliance with that investigation. click here for more »

Since her confirmation as the new Assistant Attorney General of the Antitrust Division in April 2009, Christine Varney has delivered a series of speeches that has made clear that the Department of Justice intends to step up antitrust enforcement.

One of the areas under increased scrutiny is industry-specific exemptions from the antitrust laws, including the health care insurance industry.  With the heated debate over health care reform legislation now underway, any enforcement efforts related to health care would draw considerable attention.

Before enforcement could occur, however, the insurance industry’s long-standing exemption from the antitrust laws under the McCarran-Ferguson Act would have to be repealed.  Health insurers’ antitrust exemption would be repealed under the health care reform bill that passed the U.S. House of Representatives on November 7, 2009.

Ms. Varney supports repeal of the exemption, and testified before a Senate Judiciary Committee hearing in October in favor of ending the insurance industry’s exemption from price fixing, bid rigging and market allocation claims. click here for more »

Three Democrats in the House of Representatives are pushing to roll back heightened pleading standards adopted by the Supreme Court that have led to thousands of antitrust and other cases being dismissed at the pleading stage.

The legislators are taking aim at two recent Supreme Court decisions that make it more difficult for plaintiffs to have their civil cases heard in federal court.  In an antitrust case, the Court in Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007) held that to survive a motion to dismiss, a complaint must include “enough facts to state a claim to relief that is plausible on its face.”  The Court went one step further in Ashcroft v. Iqbal, 129 S. Ct. 1937 (2009), by holding that Twombly’s “plausible” pleading standard applied to all civil cases.      

Congressmen Jerrold Nadler (D-NY), John Conyers (D-MI), and Henry Johnson (D-GA) are currently working on a bill that would override the Iqbal decision to make it easier for plaintiffs to survive a motion to dismiss by relaxing the “plausibility” standard.  They seek to restore the standard to the precedent followed by federal courts for 50 years after the Supreme Court’s decision in Conley v. Gibson, 355 U.S. 41 (1957).  The accepted rule under Conley was that “a complaint should not be dismissed for failure to state a claim unless it appears beyond a doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief.”  355 U.S. at 45-46. click here for more »

 Two recent antitrust cases in China indicate that country may be inching its way toward fulfilling its potential as a modern economy by embracing competition law.

It was only in August 2008 that the world’s third largest economy joined the ranks of countries with private competition law regimes with China’s adoption of its new Anti-Monopoly Law (AML).

The AML generally resembles the basic framework of the American and European antitrust regimes, in the sense that it sets forth broad guidelines for dominant-firm conduct, collusion and mergers and acquisitions.  And it allows private parties – not just the government – to enforce the law through lawsuits.  Recent outcomes in two such cases suggest that private litigation under the AML will be robust, giving Chinese lawyers no shortage of work.

The Shanda-Sursen case, decided on October 23, 2009, produced the first court decision interpreting the AML’s dominant-firm provisions. click here for more »

The Second Circuit’s recent decision in In re DDAVP Antitrust Litigation marks a significant development in the intersection of antitrust and patent law.  Consumers now have greater standing to assert antitrust claims involving unenforceable patents.

The Court vacated and remanded a lower court’s dismissal of a purchaser’s antitrust claim against manufacturers for conspiring to keep generic versions of a drug unavailable to consumers.  The plaintiffs were supported in their appeal by many entities that filed amicus briefs including the FTC and the National Association of Attorney Generals on behalf of several states.  While the plaintiffs would not have had standing to challenge the underlying patent, the fact that the patent was already determined to be unenforceable allowed the Walker Process analysis to proceed. click here for more »

Merck’s acquisition of Schering-Plough is plowing ahead as the companies addresses competitive concerns raised by antitrust enforcers.

 In an October 29, 2009, Consent Order, the FTC is permitting the acquisition – which would result in the one of the world’s largest prescription drug companies – to go forward provided the two companies divest of certain assets.  The European Union granted a smooth approval to the companies’ merger just a week earlier.

 The divestitures required by the FTC are already well underway.  As discussed in an earlier post, the anticipation and remedying of potential objections by regulators has allowed the Merck and Schering-Plough deal to progress.  In addition to the EU, Canadian and Swiss antitrust authorities have also given the green-light for this acquisition to continue.  The transaction still needs to obtain approval from other regulators, including Mexico and China before its anticipated close in the fourth quarter of 2009. 

 The main hurdle for FTC clearance was the concern regarding the parties’ animal health operations, but, as discussed earlier, Merck has already taken steps to divest itself of its shares in Merial, its animal health joint venture with Sanofi-Aventis.  This approval signifies that Merck and Schering-Plough have satisfied the issues raised in the FTC’s June 22, 2009, second request.

 The successful merger of the two companies would result in the world’s second largest prescription drug companies – behind only Pfizer, Inc.