For the second time in as many years, antitrust enforcers have blocked a proposed deal between mining companies BHP Billiton Ltd. and Rio Tinto Ltd. to create the world’s largest iron-ore exporter.

The companies have announced that they will not proceed with a $10 billion joint venture of their ire ore operations in western Australia, due to objections from antitrust agencies in Australia, Germany, Japan, and Korea.  BHP Billiton and Rio Tinto are two of the world’s three largest producers of iron ore.  The joint venture would have combined mining and transportation assets in the Pilbara region of Australia.

Germany and Japan led the charge against the joint venture.  Both Japan and Germany, announced on Oct. 14, 2010, that they would prohibit the joint venture.  Further, the European Union was planning to begin its own investigation of the joint venture. 

In 2008, BHP sought to acquire Rio Tinto for $66 billion, but the EU blocked that deal as well.

The Ninth Circuit has affirmed class certification for an antitrust action against Apple, involving the length of time that iPhone users must use AT&T’s voice and data services.

Judges Diarmuid O’Scannlain and William Fletcher have issued a one-page summary affirmance of the certification, which Judge James Ware of the Northern District of California granted on July 8, 2010. The Ninth Circuit case is Holman v. Apple Inc., and the case in the district court is called Apple & AT&T Antitrust Litigation.

The class encompasses “All persons who purchased or acquired an iPhone in the United States and entered into a two-year agreement with Defendant AT&T Mobility, LLC for iPhone voice and data service anytime from June 29, 2007 to the present.”

Plaintiffs assert that Apple and AT&T violated Section 2 of the Sherman Act by agreeing to bind iPhones to AT&T’s network for five years, even though consumers who bought iPhones agreed to contracts with AT&T lasting only two years.

In His July 8 opinion, Judge Ware held that the plaintiffs satisfied the required class criteria of numerosity, commonality, typicality, and adequacy of representation. Judge Ware also held that the class could seek injunctive relief, despite the significant monetary damages that the plaintiffs sought.

The July 8 opinion also dismissed several of plaintiffs’ claims stemming from allegations that Apple intentionally disabled the iPhones of consumers who had installed unauthorized third-party software.

The 9th Circuit opinion is No. 10-80145, and the District Court case is No. C-07-05152 JW (available at 2010 WL 3521965).

A worldwide antitrust crackdown on scrap metal cartels has landed in Korea with the Korean Fair Trade Commission’s recent imposition of a $1.45 million fine against 25 scrap metal processors for price fixing.

Scrap metal processors purchase the scraps that are produced by the steel production process.  The processors in turn sort and clean the scrap metal and sell the final product to end users, frequently other steel mills.  Because of its enforcement action, the Korean Commission expects prices paid by end users to fall in the near future.

The scrap metal industry has also been the focus of antitrust claims in the United States. For example, the Court of Appeals for the Sixth Circuit upheld a $23 million jury award against three scrap metal processors in 2008.  Plaintiffs in that case, In re Scrap Metal Antitrust Litigation, accused the defendants of bid rigging and market allocation, among other charges.  The U.S. Department of Justice also brought criminal charges against two scrap metal dealers for price fixing, but the companies were acquitted in 2009.

Korea and the United States are not alone in closely scrutinizing the scrap metal industry.  Earlier this year, South Africa’s Competition Commission announced it was referring an investigation into 13 scrap metal processors to its Competition Tribunal.  The decision concerns various charges, including price fixing, market allocation, and bid rigging.  The referral followed a four-year investigation into the South African scrap metal industry.

Class action plaintiffs are breathing a little easier with last week’s decision by the U.S. Court of Appeals for the Eleventh Circuit to reverse its July decision that would have been the death knell for many class actions.

But the court still ruled against the individual plaintiff in the case before it.

In July, an Eleventh Circuit panel issued a surprising decision holding that CAFA – the Class Action Fairness Act of 2005 – required that in an original federal court action, at least one named plaintiff must meet the $75,000 damages threshold or face dismissal for lack of subject matter jurisdiction.  Cappuccitti v. DirecTV, Inc., 611 F.3d 1252 (11th Cir. July 19, 2010).

The decision was widely criticized.  One district court stayed proceedings in a CAFA matter to allow the appellate court time for rehearing, and the MDL court in the DirecTV matter declined to follow it.  See In re DirecTV Early Cancellation Litig., — F. Supp. 2d –, 2010 WL 3633079 (C.D. Cal. Sept. 7, 2010).

And on Friday, October 15, 2010, the panel admitted its error and reversed itself.  Cappuccitti v. DirecTV, Inc.,– F.3d –, 2010 WL 4027719, No. 09-14107 (11th Cir. Oct. 15, 2010).

The case involves a suit by a subscriber against DirecTV over a $420 cancellation fee – or rather, over the cancellation fees of an entire class of subscribers in the state of Georgia allegedly imposed in violation of state law.  The district court dismissed part of the complaint for failure to state a claim, but denied DirecTV’s motion to compel arbitration – finding the clause unconscionable because it denied a class action remedy – and allowed a claim for declaratory and injunctive relief to go forward. 

On interlocutory appeal of the arbitration ruling, the Eleventh Circuit sua sponte (apparently without briefing or hearing) dismissed the entire action, including the declaratory relief, because the plaintiff’s individual claim failed to meet the jurisdictional threshold of $75,000, even though the class exceeded the $5 million threshold required by CAFA.  Section 1332(D)(6) provides that “[i]n any class action, the claims of the individual class members shall be aggregated to determine whether the matter in controversy exceeds the sum or value of $5,000,000, exclusive of interest and costs,” but makes no mention of a $75,000 amount in controversy requirement.

Many pending class actions could not meet this individual damage requirement – and indeed, it does not appear in the statute.  In fact, Congress intended to expand federal jurisdiction over class actions in CAFA, which removed the $75,000 amount in controversy and complete diversity jurisdictional requirements of Section 1332.  The Eleventh Circuit conflated the requirements of mass actions, which under the statute are required to meet the $75,000 requirement, with class actions under CAFA.  In mass actions, Section 1332(d)(11)(B)(i), combined with Section 1332(a), requires at least one plaintiff with more than $75,000 in controversy – there are no corresponding sections for class actions.

One thing was consistent in Friday’s opinion – the panel still ruled for DirecTV.  The court granted DirecTV’s petition to compel arbitration, overturning the lower court’s finding that the arbitration clause was unconscionable under Georgia law.

The United Kingdom’s two antitrust agencies will be merged if a proposed consolidation that seeks to streamline the British regulatory process passes its own merger review by the government.

Currently, the U.K. employs two regulatory bodies to scrutinize competition activity, the Office of Fair Trading (“OFT”) and the Competition Commission.  The two bodies have slightly different roles, but work together in the clearance of mergers and in investigating allegedly anticompetitive conduct.

The U.K. government is considering merging the two bodies in the interest of enhancing efficiency and accountability in the scrutiny of merger deals, which can take longer to clear in the U.K. than in other jurisdictions.

The OFT has the authority to investigate cartels, while the Competition Commission leads investigations in alleged market dominance.  Typically, the OFT will conduct initial investigations in the scrutiny of merger deals in the U.K., and it will pass the investigation onto the Competition Commission if it has any concerns with the deal.

Unlike in the United States, where the antitrust regulators (the Federal Trade Commission and the Department of Justice) have to convince courts of the merits of blocking a merger, the U.K. grants its regulatory agencies the final word on merger clearance.

The U.K. has stated it will make a final decision on the proposed plan in 2011 after seeking public comments.

The idea of merging the agencies has drawn mixed reactions.  Some applaud the increased efficiency of having one agency conducting the merger process and competition oversight, while others fear that such an agency merger may undermine the quality of the oversight process. 

Alec Burnside, a competition partner at Linklaters LLP, cautioned that “[t]he challenge will be to make sure there is somehow still a ‘fresh pair of eyes.’”  He noted the possible danger of having one agency with all the antitrust power in that it might be “judge, jury, and executioner.”  However, he added that “the argument for a merger is compelling in its own way, and there may be other ways of ensuring the right checks and balances.”  Other competition lawyers in the U.K. have expressed the view that from cutting down the number of regulators will promote efficiency. 

The U.K. business community appears to favor the idea.  The Confederation of British Industry believes it would expedite the merger review and investigation processes, thus “reducing the time firms are left in limbo.”

While doctors and medical organizations have long had to navigate antitrust concerns in their practices, antitrust regulators will now have to consider health care reform in evaluating collective action by health care providers in groups known as care accountable care organizations (“ACOs”).

ACOs are health care provider groups responsible for the cost and quality of care delivered to a group of patients cared for by the groups’ doctors.  The Affordable Care Act of 2010 seeks to foster the growth of ACOs as a way to control costs and boost quality in healthcare with a direction to the Centers for Medicare and Medicaid Services (CMS) to create a national voluntary program for accountable care organizations (ACOs) by January 2012.

As ACOs grow in number and influence during the next few years, antitrust policy will have to take into account the goals of health care reform as antitrust regulators deal with the competing concerns of competition and cost containment.

These antitrust issues are explored by Constantine Cannon partners Axel Bernabe and Ankur Kapoor in a recent article that considers the antitrust implications of ACOs under the Affordable Care Act.

Although the American version of class actions may still be viewed as an unwelcome immigrant by businesses in Europe, the European Commission appears to be reviving efforts to fashion its own kinder, gentler, European version of class actions for antitrust violations.

Recent reports indicate that the European Commission has gone back to work on an initiative to allow collective actions for damages by parties injured by violations of EU antitrust law – just a year after killing a previous proposal for such actions.

The EU College of Commissioners reportedly met on October 12, 2010, to discuss the issue of antitrust damages actions. Three Commissioners – Competition Commissioner Joaquín Almunia, Consumer Policy Commissioner John Dalli and Commissioner for Justice Viviane Reding – prepared a briefing paper for their colleagues on the topic.

The European Commission’s previous efforts to allow collective antitrust actions for damages collapsed in dramatic fashion last year.

Under the helm of then Competition Commissioner Neelie Kroes, the Commission had been crafting a Directive which was to include provisions to that effect. But in October 2009, just days before a meeting of the College of Commissioners at which it was to be discussed, the Directive was shelved sine die.

Commission President José Manuel Barroso made the decision to kill the initiative under pressure from the European Parliament. Members of the Parliament complained that the Commission had failed to involve them in the process of drawing up the Directive, and claimed that the Commission’s proposed measures would expose businesses to abusive litigation.

The European Commission has been studying the possibility of collective redress for antitrust violations for a number of years. In December 2005, the Commission issued its Green Paper on Damages Actions for Breach of the EC Antitrust Rules, in which it noted that it was impractical, if not impossible, for individual purchasers with small claims to bring damages actions. Consideration should therefore be given to collective actions as a means to better protect consumer interests, and achieve time and cost efficient redress by consolidating small claims into a single action. click here for more »

The Second Circuit Court of Appeals has upheld a district court ruling that dismissed belated claims by Wells Fargo to participate in the groundbreaking settlements of the Visa Check/MasterMoney Antitrust Litigation. 

The settlements, finalized in 2005, involved payment of $3.05 billion by defendants Visa and MasterCard to a plaintiff class of millions of U.S. merchants afflicted by the defendants’ “Honor All Cards” policies – polices that illegally tied debit cards to credit cards and forced merchants to accept debit cards at supracompetitive prices.

The deadline for filing claims to the settlement funds expired on September 15, 2008, after a three-year window for filing claims.  After the deadline passed, Wells Fargo attempted to file claims on behalf of bankrupt merchants to whom Wells Fargo had provided loans.

On November 19, 2009, Judge John Gleeson of the U. S. District Court for the Eastern District of New York rejected Wells Fargo’s attempt to file late claims, finding that Wells Fargo did not provide an adequate explanation rising to the level of “excusable neglect” for why it failed to file its purported claims before the deadline.  Judge Gleeson noted that Wells Fargo knew about the settlements as early as 2006 when it participated in the claim of another merchant.  The Second Circuit affirmed Judge Gleeson’s decision less than two weeks after hearing oral argument.

According to Jeffrey Shinder of Constantine Cannon, counsel for the plaintiff class who opposed Wells Fargo’s appeal during oral argument, Judge Gleeson’s ruling and the Second Circuit’s timely affirmance will help wind up the administration of the settlement, a process that has involved multiple distributions to merchants totaling over $2.5 billion over the past five years.  One more distribution will be made to merchants this year, possibly the last distribution in the case (more information on this process is available at the case website).

The Visa Check/MasterMoney Antitrust Litigation, which also involved injunctive relief valued as much as $80 billion, is often credited with blazing the trail for similar litigation against the credit and debit card companies.  The most recent action was filed on October 4, 2010, by the Department of Justice and seven states against Visa, MasterCard, and American Express.  While Visa and MasterCard agreed to settlements, American Express has elected to litigate the lawsuit.

A group of Wisconsin consumers is asking the U.S. District Court in the Eastern District of Wisconsin to mash the alleged “OPEC of potatoes” in a class action alleging price fixing by a purported cartel of U.S. and Canadian potato growers and their co-conspirators, including leading agricultural technologist Bayer CropScience.

This case – Rizzo, et al. v. United Potato Growers of America, Inc. et al. – is the third putative class action filed against the alleged cartel. Similar cases have also been filed in federal courts in the District of Idaho (Brigiotta’s Farmland Produce and Garden Center Inc.  v. United States Potato Growers of Idaho Inc., et al., No. 10-CV-307-BLW) and the Northern District of California (Marvilla v. United Potato Growers of Idaho, Inc. et al., No. 10-CV-3954).

Defendants in all of the cases include United Potato Growers of America, United Potato Growers of Idaho (UPGI), other regional and national organizations and their members, as well as General Mills, Dole Food and Bayer CropScience.  (General Mills is not named in the Wisconsin case, and Dole is named only in the Idaho case.)   

Plaintiffs are all purchasers of potatoes – indirect in Wisconsin and California (e.g., consumers and retailers) and direct in Idaho (e.g., wholesalers).  They claim that potatoes are “the most important vegetable in the diet of United States consumers,” and comprise a “multi-billion dollar” market.  Plaintiffs allege that defendants control 80% of that market (by acreage of production).

The Wisconsin complaint paints a picture of potato farming that is far from the potato farmers painted by Van Gogh.  Plaintiffs allege egregious conduct, including “brib[ing], threaten[ing] and coerc[ing],” “satellite imagery [and] fly-overs,” and “punish[ing] violators’ of the cartel’s directives.”  

Plaintiffs claim that the cartel attempts to shield its actions behind the Capper-Volstead Act (7 U.S.C. § 291), a 1922 federal statute that exempts certain agricultural associations from antitrust scrutiny.  However, plaintiffs say, defendants may enjoy no such exemption.  First, they are not “genuine cooperatives,” and second, their illegal acts “have stripped them of any immunity.”

All three cases may soon be in the U.S. District Court in Idaho.  The Judicial Panel on Multidistrict Litigation is considering an unopposed motion to centralize them there.  On October 6, 2010, Judge B. Lynn Winmill of the federal court in Idaho appointed an executive committee of interim class counsel including Labaton Sucharow LLP and Spector Roseman Kodroff & Willis PC, with Hausfeld LLP as its chair, although class certification has not yet been decided.

The U.S. Supreme Court has declined to review Feesers, Inc. v. Michael Foods, Inc., 591 F.3d 191 (3d Cir. 2010), cert. denied, No. 09-1499, a competitor price-discrimination action brought under the Robinson-Patman Act, after the Court of Appeals for the Third Circuit instructed the district court to enter judgment as a matter of law for the defendants.

If adopted by other circuits, the legal standard articulated by the Third Circuit for price-discrimination claims brought by allegedly disfavored competitors would greatly limit such claims and make them more difficult to prove.

Feesers claimed that Michael Foods sold egg and potato products at a discounted price to Sodexo, allegedly Feesers’s competitor in the institutional food service industry, in violation of the Robinson-Patman Act because the discounted price was not made available to Feesers.  Feesers and Sodexo competed for food service contracts by submitting bids in response to requests for proposals by potential institutions for food supply and/or service. 

The Third Circuit held that Feesers’s claim failed, as a matter of law, to satisfy the Robinson-Patman Act requirement that the plaintiff suffer a “competitive injury” as a “competing purchaser,” because Feesers and Sodexo were not “each directly after the same dollar” of institutional sales at the time the allegedly discriminatory purchases from Michaels took place.  Because the institutional food service industry is a bid market, competition between Feesers and Sodexo for customers’ business occurred when the bids were submitted and before Feesers and Sodexo purchased egg and potato products from Michaels.  The court held that “[t]he relevant market at the time of the sale of Michaels’s products will have already been narrowed to one – the company that won the [customer’s] business.”  Accordingly, Feesers was unable to establish the competitive injury requirement.

This requirement that the competing parties be “going after the same dollar” at the time of the allegedly discriminatory act requires competitors suing under the Robinson-Patman Act to establish an unbroken causal chain from the allegedly unlawful price differential to the favored purchaser’s winning a specific sale because of that differential.  

Moreover, the Third Circuit noted the Supreme Court’s trend of narrowly construing the Robinson-Patman Act, and cited testimony by Seventh Circuit Judge Posner that, in practice, broad exercise of the Robinson-Patman Act often results in “‘anticompetitive’ effects that ‘promote rather than . . . prevent monopolistic pricing practices.’”