The Second Circuit has extended the implied preclusion doctrine with its recent decision affirming the dismissal by the Southern District of New York of a Sherman Act class action in Electronic Trading Group, LLC v. Banc of America Securities LLC (“Short Sale”).

The Short Sale decision is based on the implied preclusion doctrine established by the Supreme Court in Credit Suisse Securities (USA) LLC v. Billing.  That doctrine asks four questions: (1) whether the regulations are located “within the heartland of securities regulations,” (2) whether the regulatory agency had “the authority to regulate,” (3) whether there is “ongoing” regulation, and (4) whether there is “conflict between the two regimes,” i.e., whether there is a conflict between the regulatory scheme and the antitrust laws.  

In Billing, the Supreme Court found that the regulatory scheme established by the securities laws precluded antitrust liability for IPO underwriters accused of, among other things, “laddering” (price discrimination as to bundled services) and tying. click here for more »

The DOJ’s Antitrust Division has sent the European Commission a holiday greeting that appears designed to mollify the EC after a DOJ statement last month that the EC viewed as a lump of coal in its Christmas stocking.

“The Department of Justice’s Antitrust Division commends the efforts of the European Commission …”  These were the opening words of a surprising statement issued by Assistant Attorney General for Antitrust Christine Varney on December 16.  

Ms. Varney was saluting the settlement agreement reached by Microsoft and the Commission in the internet browser tying case.  Microsoft was alleged to have abused its dominant position in the market for PC operating systems by tying its Internet Explorer browser to its Windows operating system.  In settling, Microsoft agreed to a five-year commitment to offer Windows users a ‘browser Choice Screen’ where they can choose to install one or more of the 12 most popular web browsers.    click here for more »

If coffee executives can’t sleep at night, it isn’t the coffee, it’s the antitrust issues.

Coffee companies around the world are working through the holiday season, contending with merger issues in the U.S. and price fixing in Europe.

In the U.S., Green Mountain Coffee Roasters Inc. has voluntarily withdrawn its filing with the FTC regarding its purchase of Diedrich Coffee Inc. after consultation with the antitrust regulators.  Green Mountain has stated it withdrew the filing to give the FTC more time to review the merger, and will refile the report on or before Tuesday.

Green Mountain – the manufacturer of Keurig coffeemakers – announced earlier this month that it had beaten Peet’s Coffee & Tea Inc. in a bidding contest for the purchase of Diedrich, the maker of K-cups –single-serve containers used in the Keurig coffeemakers.

In dropping out of the bidding for Diedrich, Peet’s charged that there were significant antitrust issues with Green Mountain’s successful bid.

click here for more »

While consideration of health care may be dominating the halls of Congress, state officials are reminding health insurers that the Feds don’t have a monopoly in regulation.

Connecticut Attorney General Richard Blumenthal has announced that his office is investigating the merger of UnitedHealthcare and Health Net Inc.

UnitedHealthcare agreed in July to pay approximately $510 million to buy Health Net’s northeastern licensed subsidiaries.  As part of the deal, UnitedHealthcare agreed to buy the rights from Health Net to acquire its commercial members as they renew their coverage.  The deal was recently approved  by Thomas Sullivan, the Connecticut State Insurance Commissioner.

Health Net provides health benefits to approximately 6.6 million individuals across the United States.  It serves 578,000 members in New York, New Jersey and Connecticut and it is estimated that Health Net’s northeast operations have generated $2.7 billion in revenues for 2009.  

UnitedHealthcare provides health care benefits to 25 million consumers and has contracts with 600,000 physicians and over 5,000 hospitals and 60,000 pharmacies throughout the United States.

Blumenthal released a statement that the deal could violate antitrust laws and that “one of our concerns is whether the merger will cause excessive concentration in some segments of the health insurance market and thereby unlawfully restrain competition.” click here for more »

A subscriber in Florida is suing Sirius XM Radio, challenging the 2008 merger of the two satellite radio services with allegations of deceptive and excessive pricing.

The private suit claims that despite the commitments Sirius and XM made to the Department of Justice and the Federal Communications Commission as a condition of merger approval, the combined firm has raised prices above competitive levels.

Both the DOJ and the FCC conducted reviews of the merger of XM and Sirius – the two companies licensed to provide satellite digital audio radio service under FCC licenses. The licenses originally prohibited the two companies from merging.

The DOJ ended its investigation on March 28, 2008, concluding that satellite radio service was not a relevant market such that the merger would create a monopoly. The DOJ noted that many people subscribed to XM or Sirius for programming that the other did not have, such as Major League Baseball and Howard Stern. For these customers, the two services were not close substitutes for each other. The DOJ also concluded that the merger would bring efficiencies, mostly in the form of cost savings. click here for more »

Microsoft and News Corporation (“News Corp.”) are reportedly in discussions for a deal where News Corp. would sell its online content to Microsoft for inclusion in its Bing Internet search engine.  As part of the deal, News Corp. would delist its articles from Google’s search engine and list them exclusively with Bing.

In a curious twist of fate, Microsoft’s exclusive with News Corp is likely pro-competitive.  Microsoft has slightly less than a ten percent share of the online search market, and this type of arrangement could enhance its ability to compete with Google.  Microsoft hopes to attract users to its Bing search engine by becoming the exclusive search destination for News Corp’s popular online publications including the Wall Street Journal, the New York Post, The Times of London and others.

Although News Corp. would benefit by earning revenue for its Internet listings, most analysts view the venture as risky and do not believe News Corp. will consummate the deal.  News Corp. would be isolating its content from Google’s sixty-five percent share of all search inquiries which would likely lead to a drop in viewers of its web content. Google alone accounts for 26.3% of the Wall Street Journal’s traffic, according to data tracker Experian Hitwise. 

Negotiating fees from search engines may be a new strategy for content providers due to the weak online advertising environment.  Google currently pays publishers for content but only on a limited basis. For example, Google pays The Associated Press to publish the text of its articles.  The Microsoft overture could be Rupert Murdoch’s way of pressuring Google for a deal or at least to start a bidding war between Google and Microsoft. click here for more »

Last month, the British Columbia Court of Appeal, in Pro-Sys Consultants Ltd. v Infineon Technologies AG, granted an appeal and certified a class of combined direct and indirect purchasers of “DRAMs” (semiconductor memory chips also known as “dynamic random access memory”) in class proceedings against DRAM manufacturers.  This appellate court decision is the second significant antitrust class certification decision coming from Canadian courts in recent months.  Click here for a related post.

The class proceedings at issue were brought by the purchaser of a laptop computer containing DRAMs who alleged that the manufacturers controlled the vast majority of the market for DRAM in British Columbia, they engaged in an international cartel to fix prices of DRAM during the class period, and that, as a result, it paid more for the computer than it would have but for the illegal price-fixing.  The action was brought on behalf of all persons in British Columbia who, during the class period, purchased DRAM or products containing DRAM either directly from the manufacturers or indirectly from intermediate purchasers.  The manufacturers had pleaded guilty in the United States of America to criminal charges arising out of an international conspiracy to fix prices of DRAM during the period April 1, 1999 to June 30, 2002 (the “class period”).  They had paid agreed-upon fines totaling $731 million (USD) and a number of their executive officers paid fines and served prison terms for their related criminal conduct. click here for more »

It is well known in the antitrust community that the Justice Department is searching for cases to bring against dominant firms that have violated the antitrust laws.  One such firm may be Monsanto.  In fact, the prices of patented seeds sold by agribusiness giant Monsanto, which make up a majority of the seed market for some staple crops, have roughly doubled in the past decade, leading to new scrutiny by the Justice Department’s Antitrust Division.  Given the importance of those crops to the food supply, government antitrust proceedings against Monsanto could potentially have a huge impact.  Most immediately, farmers, biotech firms, and agribusiness competitors of Monsanto such as the Dow Chemical Company, DuPont, BASF or Syngenta AG, may be impacted by any decision made by the Justice Department. 

The specific issue of concern is that Monsanto’s “Roundup Ready” soybean and corn seeds, which produce plants that can survive treatment with the company’s popular weed-killer Roundup, comprise 93% and 80% of their respective markets.  Prices for these seeds have reportedly increased faster than the crop yields that the seed technology enables.  Monsanto confirmed that the Antitrust Division has recently asked the company for information, mostly relating to an antitrust claim leveled at Monsanto by its competitor DuPont in a patent infringement suit. click here for more »

On December 3, the House of Representatives passed a 5-year extension of the compulsory copyright license for satellite television providers.  The bill passed by a vote of 394-11.  The current license is scheduled to expire on December 31, 2009. 

Chairman John Conyers (D.-Mich.) of the House Judiciary Committee described the other major changes the bill makes:   

In addition to simply reauthorizing the license, the bill ambitiously tackles several other issues for consumers, for content owners, and for cable and satellite companies as well. For example, this bill restores the section 119 license to DISH Satellite Network if they serve every market in the United States, even neglected rural markets. The bill also resolves the phantom signal problem that has caused instability and confusion for the cable and content industries, to the detriment of consumers.

In addition, the bill provides an audit right to content owners so they can be sure that they are being fairly compensated for the use of their intellectual property. It significantly increases penalties for copyright infringement under the licenses and updates the licenses to reflect the national digital television transition.

You can find the full text of the House debate here.

You can find the text of the bill as passed by the House here.

The Senate has not yet considered the bill, but it is expected to do so before it adjourns for the year.

Yesterday, Constantine Cannon LLP, Lead Counsel for the Class of U.S. merchants in the case captioned In re Visa Check/MasterMoney Antitrust Litigation, announced that Class Members nationwide will be mailed checks this week totaling approximately $1.1 billion as part of a landmark antitrust settlement with Visa and MasterCard over practices related to their signature debit cards.

This distribution represents the final large-scale disbursement of a $3.4 billion settlement with Visa and MasterCard in the Visa Check/MasterMoney litigation that was negotiated in 2003 by Constantine Cannon (formerly Constantine & Partners) after a seven-year litigation battle.  This week’s payments accelerate a payment schedule that was not set to end until 2012.

Checks are being mailed this week to approximately 634,000 merchants in the United States who filed approved claims, and will provide a unique boost to profits in the midst of an especially difficult holiday retail season.  With retail operating margins for most retailers averaging less than 5 percent, the $1.1 billion payment is equivalent to a $22 billion increase in merchants’ overall holiday revenue.

To view the press release in its entirety, click here.

UPDATE 12/10/09:  To view CNBC’s Report on this development, click here:  Billion Dollar Gift for Retailers.

UPDATE 12/18/09:  See related article from the Seattle Times:  Starbucks, Amazon.com, other Seattle firms receive $16.8M in Visa, MasterCard settlement

click here for more »