March 17, 2014

Former West Virginia Running Back Seeks To Block “Fixed” NCAA Scholarships

By David Scupp

Shawne Alston, a former running back at West Virginia University, has filed an antitrust class action alleging the fixing of scholarship amounts by the NCAA and its five football “Power Conferences” – the ACC, Big Ten, Big 12, Pac 12, and SEC conferences.

Alston claims that the NCAA and these Power Conferences conspired to fix the amounts of athletic scholarships, formally known as the grant-in-aid (“GIA”), at a level below a student’s true cost of attending college.  Alston alleges that GIA shortfall is often several thousands of dollars.  The result, Alston alleges, is that “players cannot even make ends meet while the schools make tens of millions.”

Alston notes that although the NCAA’s Board of Governors recently approved a proposal to allow stipends to cover the gap between the GIA and the true cost of attendance, the NCAA’s members shot it down.  Their rationale, claims Alston, was an anticompetitive desire to control costs.

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Categories: Antitrust Litigation

    March 13, 2014

    Show Me The Money Or Go Home: Federal Courts Wrestle With Addressing Reverse-Payment Settlements After Supreme Court’s Actavis Decision

    By Ankur Kapoor and Rosa M. Morales

    Nearly a year after the Supreme Court held in FTC v. Actavis that reverse-payment settlement agreements between branded and generic pharmaceutical companies are subject to antitrust scrutiny under the rule of reason, federal district courts are struggling with the thorny issue of whether plaintiffs need to show them the money.

    More specifically, district courts remain confounded by what constitutes a “payment” for purposes of antitrust challenges to settlements of Hatch-Waxman pharmaceutical patent infringement litigation, and whether a monetary transfer from the patent holder to the alleged infringer, i.e., a “reverse payment,” is necessary to state an antitrust claim attacking the competitive effects of the settlement.  Before embarking on a rule-of-reason analysis in such cases, some district court judges seem reluctant or unwilling to say “go” before they see the green. 

    As discussed in a previous post – “Are Bright-Line Rules The Right Prescription For Reverse-Payment Cases?” – in January the U.S. District Court for the District of New Jersey dismissed the antitrust challenge to a reverse-payment settlement in In re Lamictal Direct Purchaser Antitrust Litigation because there was no cash payment from the patent holder to the would-be generic competitor, and narrowly interpreted Actavis as imposing a “bright-line” requirement of a cash payment.  The court therefore held that it was unnecessary to engage in the requisite full-blown rule-of-reason analysis to determine the settlement’s anticompetitive effects (if any).     click here for more »

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    Categories: Antitrust and Intellectual Property Law, Antitrust Litigation, Antitrust Policy

      March 12, 2014

      DOJ’s Justification Of American Airlines-US Airways Settlement Identifies Competitive Benefits But Leaves Some Questions Unanswered

      By Ankur Kapoor

      The Antitrust Division of the U.S. Department of Justice (the “DOJ”) is highlighting the competitive benefits to the settlement of its challenge of the American Airlines-US Airways merger in the DOJ’s Response to Public Comments on the Proposed Final Judgment filed on Monday in the United States District Court for the District of Columbia.

      The DOJ’s Response heralds the Proposed Final Judgment as “a major victory for American consumers” because “[i]t will enable Low Cost Carriers (‘LCCs’)” such as JetBlue, Southwest, and Virgin America “to fly millions of new passengers per year to destinations throughout the country” and because, by requiring divestiture of 104 slots at Ronald Reagan Washington National Airport to these three LCCs, it “fully addresses the harm that would have resulted from New American’s control of nearly 70% of the limited takeoff and landing slots” at Reagan National. 

      The DOJ’s Response also highlights that the proposed judgment requires divestiture of 34 slots to Southwest and Virgin America at New York LaGuardia International Airport and divestiture of fewer, other rights and interests at five other airports.  To support its claim of victory, the DOJ points to its conditioning the United-Continental merger in 2010 on the divestiture of 36 slots to Southwest at Newark Liberty International Airport and the fact that, since then, prices for certain nonstop routes from Newark have decreased substantially. click here for more »

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      Categories: Antitrust Enforcement, Antitrust Litigation

        March 11, 2014

        Apple Doubles Down On Its Bet Against E-Books Judge

        By Allison F. Sheedy

        Apple has upped the ante in the e-books case with two court filings in recent weeks that seek to prevent Judge Denise Cote of the U.S. District Court for the Southern District of New York from presiding over the upcoming jury trial on damages.

        While the two-pronged attack – which argues not only lack of jurisdiction but also bias by the judge – is fairly aggressive, it is hardly surprising.  Although motions for recusal based on a judge’s lack of impartiality are rarely made – and even more rarely granted – Apple’s litigation tactics over the past few months have telegraphed that it was likely to seek the removal of Judge Cote from the case.

        The e-books case encompasses several actions brought by the U.S. Department of Justice (“DOJ”), Attorneys General of various states and class action plaintiffs, which alleged that Apple’s contractual agreements with book publishers violated state and federal antitrust laws.  After the publishers settled the case, Judge Cote found in a bench trial that the DOJ and the states had proved that Apple violated Section 1 of the Sherman Act and related state antitrust laws by conspiring with the publishers to raise e-book prices.  The trial focused solely on liability, and the only relief sought was an injunction.

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        Categories: Antitrust Enforcement, Antitrust Litigation

          March 5, 2014

          Are Bright-Line Rules The Right Prescription For Reverse-Payment Cases?

          By Jeffrey I. Shinder and Ankur Kapoor

          As antitrust law evolves to address new problems posed by ever-shifting dynamics in industries both old and new, two schools of thought are vying for control of challenges to reverse-payment settlement agreements that resolve patent infringement litigation brought by pharmaceutical manufacturers against potential generic competition.

          One school favors the establishment of bright-line rules to give firms and courts predictability in the law.  The Supreme Court’s still controversial Illinois Brick decision, which generally limits damages recoverable under federal antitrust law to direct purchasers, is one example of this approach.  (Expressing the contrary view on whether indirect purchasers should have standing to recover their damages are the many state antitrust laws allowing indirect-purchaser recovery and the Supreme Court of Canada’s rejection of the Illinois Brick doctrine.)

          Another school of thought emphasizes that, in antitrust law, substance and economic reality should trump form because rigid, bright-line rules inevitably encounter cases in which application of a rigid rule leads to undesirable results, or, worse, give firms with market power a roadmap on how to exclude competition without fear of antitrust scrutiny.  This school of thought is grounded in the recognition that, because restraints often arise in factual and legal contexts as complex as the industries in which they arise, they cannot properly be evaluated without assessing and balancing their anticompetitive and procompetitive effects.   While this inquiry can sometimes be taxing, it is often necessary to reach a result that promotes unrestrained competition and markets – which generally are valued by all schools of thought.  The Supreme Court reaffirmed this principle in 2010 with its decision in American Needle v. NFL, which held that the National Football League could be considered a “combination” or “conspiracy” subject to Section 1 of the Sherman Act, depending on the specific factual and economic circumstances of the NFL’s member football teams’ conduct at issue.

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          Categories: Antitrust and Intellectual Property Law, Antitrust Litigation

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