The chairman of the House Judiciary Committee, Rep. John Conyers (D.-Mich.), has announced that the Committee will meet to consider H.R. 3190 (the “Discount Pricing Consumer Protection Act of 2009”) tomorrow.  The bill would reverse the effects of the Supreme Court’s decision in Leegin Creative Leather Products, Inc. v. PSKS, Inc., 551 U.S. 887 (2007).  Leegin overruled a 1911 Supreme Court decision holding that resale price maintenance was per se illegal.  Under Leegin, resale price maintenance would be judged under the rule of reason. 

The notice of the markup can be found here.

The Committee’s Subcommittee on Courts and Competition Policy passed the bill by voice vote on July 30, 2009. 

For further information on the legislative history of the bill, see our earlier post here.

The outlook for regulatory action seemed to improve last year when the regulatory climate in Washington changed.  It now appears that the improved outlook may only have been illusory as the Government Accounting Office proves just as adept at punting as Congress.

As part of the Credit Card Accountability Responsibility and Disclosure Act (or “Credit CARD Act”) of 2009, Congress directed the GAO to study the issue.  At the time, cynics schooled in the ways of Washington saw the GAO study as a way to defer and ultimately postpone any serious action on this issue.  Based on the GAO’s recently disclosed report, they were right. 

The report begins with the entirely antiseptic title — Rising Interchange Fees Have Increased Costs for Merchants, but Options for Reducing Fees Pose Challenges — and then manages to go downhill from there.  The GAO identifies the real reasons why Congress (or the Federal Reserve) should take action regarding interchange: that the system reflects Visa and MasterCard’s market power over merchants; that interchange is not tethered to any efficiency rationale; and that it regressively imposes a hidden tax on all consumers, including the cash customer, while subsidizing the more affluent customers and their use of rewards cards.  And then it punts by making no real attempt to analyze these issues or address the serious ways they can be fixed. 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 »

Congressional Democrats took another step today towards stripping the health insurance industry of the antitrust exemption it has enjoyed for more than six decades.

The House Judiciary Committee voted 20 to 9 to repeal the antitrust exemption health insurers have under the 1945 McCarran-Ferguson Act.  Democrats on the committee are seeking to include the repeal in the House health care reform bill that is now being put together.

Meanwhile, Senate Majority Leader Harry Reid announced plans today to include the partial McCarran-Ferguson repeal in the Senate version of the health care reform bill.  Democrats on the Senate Judiciary Committee conducted a hearing last week that was largely critical of the health insurers’ antitrust exemption. 

Democratic lawmakers have increased their scrutiny of the antitrust exemption following the health insurance industry’s criticism of health care reform efforts.

 If Congressional Democrats follow through with this effort, it is likely that the partial McCarran-Ferguson repeal will be included in the final health care package.

Democrats on the Senate Judiciary Committee are going after health and medical malpractice insurers after a leading industry group turned against the Senate Finance Committee’s version of health care reform… and the DOJ may not be far behind. 

Last Tuesday, America’s Health Insurance Plans (“AHIP”), a trade group for health insurers, released a PriceWaterhouseCoopers report indicating that the Senate Finance Committee bill would raise insurance premiums.  Shortly after release of the report, however, PWC blunted the impact of its own report by issuing a statement that it had only been asked to focus on certain sections of bill – and none of the cost-saving measures.

On Wednesday, Chairman Pat Leahy (D.-Vt.) of the Senate Judiciary Committee chaired a hearing on his legislation to repeal the McCarran-Ferguson Act’s exemption from the federal antitrust laws for health and medical malpractice insurers.  The hearing was scheduled prior to AHIP’s announcement, but the announcement clearly heightened the stakes at the hearing.  click here for more »

The United States Supreme Court in the last two years has given defendants in federal civil cases two key victories.  Now, a powerful Senator has joined with plaintiffs’ groups in introducing a bill to repeal those decisions. 

The two decisions – 2007’s Bell Atlantic Corp. v. Twombly, 550 U.S. 544, and this year’s Ashcroft v. Iqbal, 129 S.Ct. 1937 – concern the level of detail that a plaintiff must allege to survive a motion to dismiss.  Twombly held that while a complaint need not allege “detailed” facts, it must include “enough facts to state a claim to relief that is plausible on its face.”  “Naked assertions” of fact are not enough.  Iqbal clarified that Twombly, an antitrust case, applied to all civil lawsuits.  Iqbal may have also raised the standard even higher with its direction to courts to “draw on [their] experience and common sense” in assessing a complaint’s plausibility. 

Plaintiffs’ groups now seek a legislative repeal of Twombly and Iqbal.  They say that Twombly and Iqbal go too far because wronged persons with legitimate claims sometimes do not have access to specific facts before they sue.  In an employment discrimination case, for example, a plaintiff may observe discriminatory behavior, but the defendant alone may have the revealing employment records. click here for more »

The chairmen of the House and Senate antitrust subcommittees are just saying no to the Supreme Court’s decision in Leegin Creative Leather Products, Inc. v. PSKS, Inc., 551 U.S. 887 (2007).  Leegin overturned the Supreme Court’s 1911 Dr. Miles decision holding that resale price maintenance was per se illegal.  Both bills seek to reinstitute the per se rule by statute.

On January 6, 2009, Chairman Herb Kohl (D-Wis.) of the Senate Judiciary Committee’s Subcommittee on Antitrust, Competition Policy and Consumer Rights introduced S. 148, the “Discount Pricing Consumer Protection Act.”  The Committee held a hearing on the bill on May 19, but it has not taken further action.  click here for more »

The Chairmen of the House and Senate Judiciary Committees have joined forces to open a new – antitrust – front in the war for healthcare reform.  The two leading Democrats are seeking to boost healthcare reform with a partial repeal of an antitrust exemption that’s about as old as Democrats’ efforts to enact universal healthcare.

On September 17, 2009, Chairman John Conyers (D.-Mich.) of the House Judiciary Committee and Chairman Pat Leahy (D.-Vt.) of the Senate Judiciary Committee introduced legislation to repeal the McCarran-Ferguson Act’s exemption from the federal antitrust laws for health and medical malpractice insurers.  The Act dates back to 1945, the same year that President Harry Truman asked Congress to enact a national health insurance program.   click here for more »

Just how weak does a company have to be to rely on a weakened firm defense in a merger analysis?  While the case law is sparse, courts have found such a defense compelling when one of the parties to a merger has been too weak to be a competitive threat.

In United States v. General Dynamics Corp., 415 U.S. 486 (1974), the Supreme Court approved a merger between coal producers who together had a high market share in a concentrated industry, finding that market share and concentration were “not conclusive indicators of anticompetitive effects.”  Id. at 498.  In that case, one party to the merger was unable to compete for new customers because it did not have uncommitted coal reserves.  Id. at 504-506.  In other words, it had a competitive weakness – a structural barrier – that prevented it from becoming a competitive threat.

The Supreme Court stressed that it was important to consider all relevant facts, including a firm’s weakness, in cases in which the market or industry is unpredictable or instable.  Id.  The court found that where a firm lacks resources to engage in new competition, its acquisition would not substantially lessen competition.  Id. at 510-11.

Five years ago this month, a new federal law aimed at encouraging standard-setting activities took effect – the Standards Development Organization Advancement Act (SDOAA) of 2004.  Why did Congress pass it?  And five years later, how has it fared?

In many industries, non-profit “standards development organizations” (SDOs) collaborate with businesses to develop industry-wide standards – from common light bulb sizes to uniform tests of concrete strength.  This work is generally procompetitive, as it tends to foster innovation and lower prices.  But because the work involves collaboration between competitors, it can raise antitrust issues and invite lawsuits. click here for more »