April 24, 2012

Kolon Gets Tangled Up In Synthetic Fiber Case Against DuPont

A federal judge in Virginia has granted summary judgment to E.I. DuPont De Nemours and Co. on Kolon Industries’ antitrust claims against DuPont.

This marks the second loss to Kolon in the complex legal battle of Kolon Industries v. E.I. du Pont de Nemours, in the U.S. District Court for the Eastern District of Virginia.

The battle began when DuPont filed a suit against Kolon alleging that it stole highly confidential trade secrets relating to one of DuPont’s synthetic fibers.  Kolon fired back with a counterclaim alleging that DuPont had monopolized or attempted to monopolize the market for para-aramid synthetic fibers used in body armor. 

The cases were split and on September 14, 2011, DuPont won its trade secrets case.  The jury awarded nearly $920 million dollars in damages.

DuPont also filed a motion for injunctive relief asking that the court require Kolon to stop making or selling products using the allegedly stolen technology.  That motion, along with requests for sanctions and attorney’s fees, is still pending.

In the meantime, Kolon lost its second battle when U.S. District Judge Robert E. Payne dismissed its antitrust case with prejudice. 

Judge Payne held that DuPont did not monopolize or attempt to monopolize the market, and that there was no evidence that DuPont had foreclosed the market to Kolon.  Judge Payne found that, to the contrary, DuPont was actually unable to prevent “the rise of one of its major competitors.”

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Categories: Antitrust Law and Monopolies, Antitrust Litigation

    April 19, 2012

    Pacific Seafood Off The Hook In Fishermen Antitrust Litigation

    Commercial fishing vessel owners and fishermen have settled a $520 million claim for damages against Pacific Seafood Group just two months after Judge Owen M. Panner of the U.S. District Court for the District of Oregon granted class certification in Whaley et al. v. Pacific Seafood Group et al.

    Plaintiffs alleged that the defendants, Pacific Seafood Group and Ocean Gold Seafoods, Inc., fixed prices in buying fish, harming fishermen and consumers.  Plaintiffs also alleged that Pacific Seafood, the largest seafood-buying company in the United States, either monopolized or attempted to monopolize west coast markets for Pacific seafood.

    The settlement agreement does not require any damages to be paid or for Pacific Seafood to break up the company.  Instead, Pacific Seafood has agreed to adopt a series of procompetitive measures designed to increase transparency, fairness, and, most of all, competition in the seafood markets.  This series of procompetitive measures includes Pacific Seafood’s promise to end its relationship with co-defendant Ocean Gold Seafoods in 2016.

    Although nothing in the settlement agreement would prevent Pacific Seafood Group from entering a new contract with Ocean Gold, the settlement requires approval of any such contract by U.S. District Judge Michael Hogan, who mediated the settlement.   The settlement agreement will be effective for five years, at which point the plaintiffs may petition Judge Hogan for a five-year extension.

    In a press release, Judge Hogan commented, “this case could have gone on for years, including appeals.  The fishermen and the processors, especially Pacific Seafood Group, are to be commended for taking a statesmanlike approach to resolving this complicated case.”

    Attorneys for the plaintiff are expected to collect $2.9 million in fees and expenses to be paid by Pacific Seafood’s insurer.

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    Categories: Antitrust and Price Fixing, Antitrust Law and Monopolies, Antitrust Litigation

      April 17, 2012

      Indirect Purchasers’ Claims Undermined In Mineral Price-Fixing Litigation

      Judge Dickinson R. Debevoise of the U.S. District Court for the District of New Jersey has dismissed class action claims of price fixing brought by indirect purchasers against several magnesium oxide companies in the case of In re Magnesium Oxide Antitrust Litigation.

      The court also ruled, however, that the price fixing claims brought by the direct purchaser plaintiffs, Orangeburg Milling Company, Inc., Bar Ale, Inc., and Air Krete, Inc., could move forward. 

      Both indirect and direct purchasers alleged that the defendants, Premier Chemicals, LLC, Sumitomo Corporation of America and YAS, Inc., engaged in a conspiracy to fix prices and allocate shares of the domestic magnesium oxide market from January 2002 to the present.  Magnesium oxide is used to manufacture many products including fertilizer, animal feed and pharmaceuticals. 

      The direct purchasers filed their initial class action complaint in October 2010 alleging antitrust violations under both the Clayton and Sherman Acts.  The indirect purchaser consumers filed a similar suit a month later.

      Judge Debevoise dismissed both the indirect and direct purchasers’ claims on the grounds they were not timely under the four-year statute of limitations, but ruled that the plaintiffs could toll the statute with evidence that the defendants fraudulently concealed the alleged conspiracy.   Both classes filed amended complaints.

      The court was satisfied with the direct purchasers’ amended complaint, which alleged that misrepresentations by the defendants caused the plaintiffs to believe that price increases were due to normal competitive market forces. 

      The court dismissed the indirect purchasers’ amended complaint because they bought their products at local mills and never dealt directly with defendants.  The amended complaint failed to show that the indirect purchasers were aware of the price increase.  In addition, the products purchased contained too small an amount of magnesium oxide for any alleged price fixing to have a foreseeable effect on the price.

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      Categories: Antitrust and Price Fixing, Antitrust Litigation

        April 12, 2012

        Second Circuit Authorizes Magazine Wholesaler To Rewrite Antitrust Claims

        The U.S. Court of Appeals for the Second Circuit has revived a magazine wholesaler’s claims of an antitrust conspiracy in the magazine industry and granted permission to that plaintiff to file an amended complaint in Anderson News, L.L.C. v. American Media, Inc.

        The Second Circuit reversed the decision of Judge Paul A. Crotty of the Southern District of New York that applied heightened pleading standards in granting defendants’ motion to dismiss for failure to state a claim and denying leave to file an amended complaint.

        The plaintiff, Anderson News, was forced into liquidation proceedings in 2009, after being a wholesaler in the magazine industry since 1917.  Anderson purchased magazines from publishers and resold them to retailers.  Anderson’s complaint accused five magazine publishers, four magazine distributors, and one magazine wholesaler of conspiring in violation of Section 1 of the Sherman Act to eliminate Anderson as a wholesaler after Anderson imposed a surcharge of seven cents for each magazine that Anderson received and distributed.

        In granting the defendants’ motion to dismiss, the district court held that the complaint did not meet the heightened pleading standard set by the U.S. Supreme Court in Bell Atlantic Corp. v. Twombly.  The district court noted that the defendants’ different reactions to a surcharge that Anderson imposed in January 2009 undermined Anderson’s theory of conscious parallel conduct.  Despite the fact that Anderson had alleged a number of meetings and communications suggestive of a conspiracy, the district court held that the defendants’ decisions to stop doing business with Anderson – the key parallel conduct allegation – did not create an inference of collusion since such conduct was consistent with unilateral and competitive business strategies.

        The Second Circuit reversed and permitted Anderson to file an amended complaint, holding that the district court had misapplied Twombly’s plausibility standard.

        The appellate court held that to present a plausible claim at the pleading stage, the plaintiff need not show that its allegations suggesting an agreement are more likely than not true or that they rule out the possibility of independent action, and that the choice between two plausible inferences that may be drawn from factual allegations is not a choice to be made by the court on a motion to dismiss.  The question at the pleading stage, held the court, is whether there are sufficient factual allegations to make the complaint’s claim plausible, not whether there is a plausible alternative to the plaintiff’s theory.

        The Second Circuit held that in making its plausibility determination that the defendants had acted unilaterally, the district court had made a number of factual findings inappropriate at the pleading stage, such as determining that certain alleged statements by defendants were not suggestive of a “massive antitrust conspiracy.”  The appellate court also disagreed with the district court’s determination that the conspiracy was implausible because the defendants had a variety of reactions to Anderson’s announcement of the surcharge, noting that there is “nothing implausible about coconspirators starting out in disagreement as to how to deal conspiratorially with their common problem.”

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        Categories: Antitrust Litigation

          April 9, 2012

          French Competition Regulators Bring Pet Food Manufacturers To Heel

          The Autorite de la Concurrence, the French competition authority, has slapped fines on three leading French pet food manufacturers that restricted competition in premium dry dog and cat food sold in specialty outlets such as pet shops and veterinary offices. 

          The manufacturers are Nestle Purina Petcare France SAS, Royal Canin SAS (owned by Mars, Inc.), and Hill’s Pet Nutrition (owned by Colgate Palmolive Co.).  Collectively, they sold 70 percent of Frances’ premium dry pet food during the relevant period of 2004 to 2008.   

          Nestle Purina and Royal Canin sell their pet food to wholesale distributors, who then sell it to retailers, who in turn sell it to pet owners.  Their wholesaler agreements restricted resale territories and prices, and “set up distinct and impenetrable distribution systems” that “partition[ed] the markets . . . for some product ranges.”  The results were reduced choices and increased costs, which were passed on to consumers.

          Hill’s, which markets its pet food only through veterinary offices and specialty stores, prohibited its distributors from exporting its products outside France.  This prohibition had little or no impact, however, because it pertained only to veterinary offices and was never actually applied.  

          Nonetheless, the Autorite noted that on the whole, these agreements could cause significant damage because the price elasticity of demand for pet food is low.  The reason is that pet food “elicit[s] an emotional investment for end consumers, who are vulnerable to brand loyalty.”      

          Nestle Purina was fined 19.5 million euros, Royal Canin 11.6 million, and Hill’s 4.6 million, for a total of 35.3 million euros ($46.7 million).

          In setting these fines, the Autorite considered the duration of the restrictions and each company’s global reach and financial resources.  It also considered prior offenses – which probably hurt Royal Canin, which was sanctioned in 2005 for abusing its dominant position.  Hill’s, on the other hand, likely owes the comparatively small size of its fine to the minimal impact of its restriction.  Nestle Purina’s and Royal Canin’s fines also were reduced, by 18 and 20 percent respectively, because they declined to dispute the Autorite’s allegations and committed to reinforce their competition compliance programs.

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          Categories: Antitrust Enforcement, International Competition Issues

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