July 1, 2015

Antitrust Enforcers Sue Four Hospitals For Carving Up South-Central Michigan

By Rosa M. Morales

The Antitrust Division of the U.S. Department of Justice and the Michigan Attorney General’s Office are suing four Michigan hospital systems for allegedly engaging in antitrust violations by agreeing to refrain from advertising in each other’s territories, to the detriment of patient choice and health care benefits for patients and physicians alike.

The complaint in United States & Michigan v. Hillsdale Community Health Ctr. et. al, asks the U.S. District Court for the Eastern District of Michigan to find that the hospitals’ agreements to limit marketing for competing healthcare services in south-central Michigan were per se unlawful under Section 1 of the Sherman Act.  Each of the four hospital systems operates the “only general acute-care hospital or hospitals” in its county.

While three of the hospital systems being sued—Hillsdale Community Health Center (“Hillsdale”), Community Health Center of Branch County, Michigan (“Branch”), and ProMedica Health Center System Inc. (“ProMedica”)—have agreed to settle the charges, the fourth hospital— W.A. Foote Memorial Hospital d/b/a Allegiance Health (“Allegiance”)—has chosen to litigate.

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Categories: Antitrust Litigation

    June 30, 2015

    Sysco Scraps US Foods Merger After FTC Victory In Court

    By Allison F. Sheedy

    Sysco Corp. announced yesterday that it is abandoning its plans to acquire food service rival US Foods Inc., following last week’s setback to the deal in federal court.

    In an opinion that closely tracked the FTC/DOJ Merger Guidelines, Judge Amit Mehta of the U.S. District Court for the District of Columbia granted the Federal Trade Commission a preliminary injunction to halt the proposed merger of nation’s two largest distributors of food and related supplies to restaurants and other foodservice establishments.  Sysco’s announcement that it was abandoning its plans to acquire its rival is no surprise, given the substantial hurdle imposed on the deal by the FTC’s victory in court.

    The 18-month-old proposed deal encountered regulatory scrutiny from the start.  Last February, Sysco and US Foods proposed a divestiture of 11 US Foods distribution facilities to a smaller competing foodservice company, Performance Food Group (“PFG”), as a “fix-it-first” remedy designed to allay the FTC’s concerns.  The FTC was not swayed, however, and decided to sue Sysco and Us Foods to block the deal.

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    Categories: Antitrust Litigation, Antitrust Policy

      June 29, 2015

      The Antitrust Week In Review

      Here are some of the developments in antitrust news this past week that we found interesting and are following.

      Judge Halts Sysco’s Proposed Merger With US Foods.  A federal judge has ordered a preliminary injunction to block Sysco’s proposed merger with US Foods, dealing a potentially fatal blow to what would be a union of the two biggest food distribution companies in the United States.  The injunction is a victory for the Federal Trade Commission, which sued in February to block the deal on the grounds that it would lead to higher prices and worse service for customers like restaurants and schools.

      Anthem confident, but experts see antitrust hurdles to Cigna deal.  U.S. health insurer Anthem is dismissing concerns that buying smaller competitor Cigna would be considered anticompetitive, despite the view of antitrust experts that the combination would earn regulatory scrutiny.  Any merger could require asset sales and would be complicated by potential deals among other insurers.

      Getty Images takes Google grievance to EU antitrust regulators.  Getty Images has become the latest company to take its grievances with Google to European Union antitrust regulators as it accused the world’s largest Internet search engine of favoring its own images service at the expense of rivals.  The complaint comes as the European Commission waits for Google to respond to charges of abusing its market power in a dozen EU countries since 2007 by distorting search results to favor its shopping service.

      U.S. gov’t settles antitrust charges with three Michigan hospitals.  Although three Michigan hospital systems have settled charges by the U.S. Department of Justice that they violated antitrust law by agreeing not to advertise in each other’s areas, a fourth will fight the allegations.  Michigan’s Hillsdale Community Health Center, Community Health Center of Branch County, Michigan, and ProMedica Health System Inc, which has two hospitals in the area, are settling the charges.

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      Categories: Antitrust Enforcement, Antitrust Litigation, General, International Competition Issues

        June 23, 2015

        Supreme Court Cites Spiderman In Ruling Against Post-Expiration Patent Royalties

        By Robert S. Schwartz

        Spiderman swung through the halls of the U.S. Supreme Court yesterday as Justice Elena Kagan liberally relied on the comic book superhero in the Court’s decision in Kimble v. Marvel Enterprises, Inc., reaffirming the Court’s 51-year-old rule precluding patent owners from collecting patent royalties on expired patents.

        In 1964 the U.S. Supreme Court ruled in Brulotte v. Thys Co. that the statutory limit on patent terms precludes patent licensors from enforcing any contract to receive royalties for exploitation of the patent after its term had expired.  The Court accepted the Kimble case explicitly to consider whether, in light of subsequent antitrust law and economics scholarship, this precedent should be overruled.  On Monday, the Court, adhering to principles of stare decisis, declined to do so in a six to three opinion by Justice Kagan.  The majority held that, assuming that the antitrust economics criticisms of Brulotte are correct, it would be up to Congress to revise the law in order to change this long-standing interpretation of the Patent Act.

        Kimble, which patented a toy that shot “webbing” like Spiderman, successfully sued Marvel for infringement in 1997.  The parties, both ignorant of Brulotte, settled the case by agreeing Marvel would purchase Kimble’s patent for a lump sum payment and a running three percent royalty on all future sales.  More than a decade later, Marvel, as Justice Kagan put it, “stumbled across Brulotte,” and filed for a declaratory judgment to release its royalty obligation.  After the district court granted the relief, the U.S. Court of Appeals for the Ninth Circuit affirmed, but, per Justice Kagan, was “none too happy about doing so.”  The Supreme Court accepted the case “to decide whether, as some courts and commentators have suggested, we should overrule Brulotte.”

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        Categories: Antitrust and Intellectual Property Law, Antitrust Litigation

          June 22, 2015

          The Antitrust Week In Review

          Here are some of the developments in antitrust news this past week that we found interesting and are following.

          Anthem Makes $47 Billion Offer for Rival Cigna.  One of the biggest health insurers in the United States, Anthem, has revealed that it is offering to buy rival Cigna for more than $47 billion in cash and stock.  The move is the latest step toward an expected consolidation among health insurance companies.  Last month, Humana, another competing health insurer, was reported to be exploring a sale of itself.

          European Regulators Lay Out Demands and Fines in Google Antitrust Case.  European Union antitrust regulators are threatening to impose significant fines on Google’s operations in Europe if the company does not give rivals greater prominence in some search results across the 28-member bloc.  The move — outlined in a statement of objections that was sent to Google in April and on Thursday to a number of companies that have balked at Google’s activities in Europe — is the latest step in the five-year antitrust case brought by European officials.

          Senators reintroduce bill to protect antitrust whistleblowers.  The ranking Democrats and Republicans on the Senate Judiciary Committee have joined forces to reintroduce a bill aimed at protecting whistleblowers who aid the U.S. Department of Justice in investigating criminal antitrust cases.  A similar bill passed the Senate in late 2013, but was not taken up by the U.S. House of Representatives.

          News Corp must face Dial, Heinz ad monopoly class action – judge.  U.S. District Judge William Pauley has ordered News Corp to face a class action lawsuit accusing it of monopolizing the market for in-store promotions at some 52,500 retail stores in the United States.  The federal judge in Manhattan said consumer packaged goods companies such as Dial Corp, H.J. Heinz Co and Smithfield Foods Inc may pursue their antitrust claims as a group, potentially boosting overall damages.

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          Categories: Antitrust Enforcement, Antitrust Litigation

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