August 28, 2012

Simon Says Mall Monopolization Claims Should Be Tossed

Shopping mall giant Simon Property Group, Inc. on Friday asked a federal court in Indiana to dismiss antitrust claims brought by competitor Gumwood HP Shopping Partners, claiming that a magistrate judge misapplied federal antitrust law in recommending that Simon’s motion to dismiss be denied.

Simon claims that Magistrate Judge Christopher A. Nuechterlein of the U.S. District Court for the Northern District of Indiana erred in finding that Gumwood had sufficiently pled that Simon had “partially excluded” it from the shopping center market in Mishawaka, Indiana, in violation of the Sherman Act.  Simon is now asking presiding Judge Jon E. DeGuilio to toss the complaint.

Gumwood’s complaint in Gumwood HP Shopping Partners LP v. Simon Property Group Inc. alleges that Simon, the largest public real estate company in the United States, and a major force in shopping malls, violated the Sherman Act’s prohibitions against monopolization and unreasonable restraints of trade.   According to the complaint, which was filed in June 2011, Simon used threats, bullying and other “anti-competitive tactics” against tenants to stop them from leasing space from competitors such as Gumwood.

Gumwood alleges that Simon interfered with Gumwood’s negotiations with retail tenant Ann Taylor LOFT by pressuring Ann Taylor not to open its store at Heritage Square, Gumwood’s one mall.  Gumwood alleges that this interference caused multiple tenants to cease their dealings with Heritage Square.  Gumwood further alleges that Simon Property engaged in false representations and other anticompetitive tactics with other actual and potential Heritage Square tenants including Layne Bryant, Coldwater Creek, Eddie Bauer, and Acorn.

Simon argues that the Sherman Act claims should be dismissed because Gumwood failed to allege a relevant product market, substantial market foreclosure, competitive harm, or anticompetitive conduct.

Magistrate Judge Nuechterlein was not persuaded by Simon’s arguments, and concluded that Gumwood properly alleged that Simon’s actions restrained trade in retail shopping centers by inducing retail tenants to cease business dealings with Simon’s competitor.  As a result, Magistrate Judge Nuechterlein decided that Gumwood had properly pled claims under sections 1 and 2 of the Sherman Act, and recommended that Simon’s motion to dismiss be denied.

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Categories: Antitrust Law and Monopolies, Antitrust Litigation

    August 21, 2012

    Pool Corp. Asks Court To Throw Antitrust Claims Into The Deep End

    Pool Corp., the largest distributor of swimming pool supplies in the U.S., has filed a motion in the U.S. District Court for the Eastern District of Louisiana to dismiss class action antitrust claims, arguing that the complaint fails to state a claim.

    Plaintiffs allege that Pool Corp. entered into illegal agreements with three different manufacturers: Pentair Water Pool and Spa, Hayward Industries, and Zodiac Pool Systems. These agreements were allegedly designed to keep new distributors of swimming pool supplies from entering the market.

    Pool Corp. is seeking to dismiss the claims of two different purported classes – direct purchasers (such as pool supply stores, golf courses and hotels) and indirect purchasers. The plaintiffs allege that Pool Corp. sought to suppress competition by buying out 13 competitors in five regions of the U.S. over the course of 14 years, and that new pool supply distributors closed at a rate of 40 percent because of Pool Corp.’s dominance.

    The motion to dismiss is partially based on the fact that similar complaints of anticompetitive conduct were already investigated and resolved by the Federal Trade Commission in November 2011. Pool Corp. settled the investigation and agreed to FTC recommendations, including training staff members about antitrust laws.

    FTC Commissioner J. Thomas Rosch had argued the FTC investigation should have been closed due to a lack of evidence that the Pool Corp.’s actions actually harmed competitors or consumers.

    In addition to relying on its settlement of the FTC investigation, Pool Corp. argues that the case should be dismissed because the plaintiffs fail to satisfy the elements of a claim under Section 1 of the Sherman Act. According to Pool Corp., the plaintiffs failed to adequately allege that the agreements with the manufacturers existed or that these agreements were made with the specific goal of restricting trade.

    Pool Corp. also asked the Court to consider whether or not “nationwide” is a specific enough geographic market to support a monopolization claim.

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    Categories: Antitrust Law and Monopolies, Antitrust Litigation, Uncategorized

      August 17, 2012

      Federal Judge Hangs Up On Apple’s Smartphone Antitrust Claims

      Judge Barbara B. Crabb of the Western District of Wisconsin has granted Motorola Mobility Inc. partial summary judgment on antitrust counterclaims that Apple Inc. has been asserting against Motorola in the patent infringement case of Apple Inc. v. Motorola Mobility Inc.

      The case stems from Apple’s release of the iPhone in 2005 without first seeking a license for the use of 3G technology developed and patented by Motorola.  Motorola proposed a patent license but, according to Apple, a high royalty rate kept Apple from signing an agreement.  

      Motorola also terminated agreements it made with Qualcomm Inc., the company providing Apple with chipsets used to connect iPhones to cellular networks.  When Apple continued to sell those phones, Motorola filed the patent infringement lawsuit.

      In response, Apple claimed Motorola’s actions were a violation of the Sherman Act.  According to Apple, Motorola’s high license fees and alleged interference with the Qualcomm agreement prevented fair and timely use of the 3G technology.

      Apple said Motorola’s actions were especially of concern because the technology in Motorola’s patents has been deemed essential to set standards for other companies industry wide, by the European Telecommunications Standards Institute.

      Judge Crabb rejected the antitrust claims because Apple – which continued to sell its popular iPhones – never suffered from an increase in costs or loss of its market share, indicating that it had not suffered any antitrust injury.

      The court also reasoned that Motorola did not violate antitrust law by bringing a patent infringement action against Apple because Motorola has a First Amendment right to petition the courts for relief and the litigation was not objectively baseless.

      Although the ruling removes the threat of antitrust liability, Motorola still faces Apple’s counterclaims that Motorola failed to grant patent licenses for 3G smartphone technology in a timely and nondiscriminatory manner in violation of its obligation to offer licensing under “Fair, Reasonable and Nondiscriminatory” terms (“FRAND”).   Judge Crabb agreed that Apple benefits from Motorola’s essential patents and therefore has a stake in enforcing Motorola’s promise to abide by ETSI’s intellectual property licensing rules which “protect companies that need to obtain licenses in order to practice the standards adopted by the organizations.”

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      Categories: Antitrust and Intellectual Property Law, Antitrust Litigation

        August 8, 2012

        Variable Prices Save Wholesale Retailers From Grocers’ Class Action Claims

        Finding pricing issues too variable for common treatment, a federal court has denied grocery stores’ motion for class certification of their customer allocation claims against wholesale retailers SUPERVALU and C&S.

        The plaintiffs in the In re: Wholesale Grocery Products Antitrust Litigation are retail grocers who allege that defendants SUPERVALU and C&S – two of the largest grocery product wholesalers in the U.S. – conspired to allocate territory and customers through an Asset Exchange Agreement.  The plaintiffs had asked the U.S. District Court for the District of Minnesota to certify two classes of retail grocers, in New England and the Midwest.

        Throughout the 1990s and early 2000s, SUPERVALU’s wholesale business was mainly located in the Midwest but began expanding into New England.  A threatened C&S, whose market was mainly in New England, was forced to expand into states such as Ohio and Wisconsin.

        In 2003, the two companies signed the Asset Exchange Agreement, pursuant to which SUPERVALU took over C&S locations in the Midwest, and C&S took over SUPERVALU’s distribution centers in New England.

        Grocery stores in 13 different states claim that the effect of the SUPERVALU and C&S Asset Exchange Agreement was to implement an allocation of territories and customers that was anticompetitive in light of the bankruptcy of a third competitor, Fleming Companies, Inc.  

        Judge Ann D. Montgomery denied the class certification motion, finding that plaintiffs had failed to show that common issues predominated with respect to impact. 

        The court noted that the plaintiffs’ attempt to show common impact through imposition of supracompetitive prices was complicated by the fact that “prices vary by customer.”

        Although the grocery stores’ evidence showed prices were higher, that evidence also indicated that price varies based on many factors, such as the distance between a SUPERVALU or C&S distribution center and each grocery store.

        “Plaintiffs merely assume that C&S did in fact raise prices in response to the absence of SuperValu as a competitor,” wrote Judge Montgomery.  The court summed up by noting that “all evidence of record suggests that the nature of the wholesale grocery pricing is individual negotiation.”

        The court concluded that such “pricing cannot provide common evidence to establish a prima facie case of class impact,” and denied plaintiffs’ motion for class certification.

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        Categories: Antitrust Litigation

           






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