December 22, 2010

EC Pulls The Plug On LCD Manufacturers’ Price Fixing Conspiracy

The European Commission has fined five manufacturers of liquid crystal display (“LCD”) panels a total of 649 million euros (approximately US$ 860 million) for participating in a price-fixing conspiracy between October 2001 and February 2006.

LCD panels are the main component of the flat screens used in televisions, laptop computers and desktop computer monitors. 

In a press release, the Commission stated that the LCD panel manufacturers operated a cartel which not only agreed on prices but also exchanged information on future production planning, capacity utilization, and commercial conditions.  They were found to have violated Article 101 of the EU treaty, which prohibits price-fixing and other restrictions of competition. 

Four of the firms fined by the Commission are Taiwanese corporations: Chimei InnoLux (300 million euros), AU Optronics (117 million euros), Chunghwa Picture Tubes (9 million euros), and HannStar Display (8 million euros).

The South Korean based Samsung Electronics was found to have participated in the conspiracy but escaped being fined.  The company received full immunity under the Commission’s leniency program for having brought the cartel to the Commission’s attention and helping prove the infringement.

LG Display, also of South Korea, was ordered to pay 215 million euros.  However, LG escaped a significantly greater fine.  Its fine for the 2001-2005 period was reduced by 50% because it was “second in the door” in applying to the Commission for leniency.  In addition, it was not fined for 2006 because it was the first to inform the Commission that the cartel had continued after 2005.   click here for more »

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Categories: Antitrust and Price Fixing, Antitrust Enforcement, International Competition Issues

    December 20, 2010

    District Judge Puts iPhone Plaintiffs On Hold

    Just weeks after the Ninth Circuit agreed to certify a class of plaintiffs suing Apple and AT&T for antitrust violations related to iPhone contracts, the district court judge presiding over the case has put the plaintiffs’ case on hold.

    Judge James Ware of the Northern District of California wants to let the Supreme Court decide a different case concerning arbitration before he proceeds with In re Apple & ATTM Antitrust Litigation

    The plaintiffs in the California case allege that Apple and AT&T violated Section 2 of the Sherman Act by agreeing to bind iPhones to AT&T’s network for five years, even though consumers who bought iPhones agreed to contracts with AT&T lasting only two years.  Judge Ware in July certified a class of “All persons who purchased or acquired an iPhone in the United States and entered into a two-year agreement with Defendant AT&T Mobility, LLC for iPhone voice and data service anytime from June 29, 2007 to the present.”  The Ninth Circuit affirmed in October.

    On remand, Judge Ware told the parties not to proceed with their case management conference.  The Supreme Court, he wrote, is considering another case against AT&T – AT&T Mobility  v. Concepcion – that was argued in early November.  That case concerns whether California’s consumer protection law trumps a contract that mandates arbitration between AT&T Mobility and the consumers suing it, but bars the consumers from suing together as a class.

    According to Judge Ware, “a stay in this case will also simplify the legal issues and conserve judicial resources,” and “any prejudice against the plaintiffs as a result of delay was outweighed by the potential prejudice against defendants in requiring further litigation of claims that may be subject to arbitration.”  Judge Ware added that seven other courts had stayed proceedings against AT&T Mobility and Verizon pending a decision in Concepcion.  Judge Ware instructed the parties to file a joint status report within 14 days of when the Supreme Court decides the Concepcion case.

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    Categories: Antitrust Litigation

      December 9, 2010

      No Payoff For Plaintiffs Seeking To Reinstate ATM Fee Antitrust Litigation

      The United States District Court for the Northern District of California has denied plaintiffs’ motion to reconsider its September 16 2010, ruling that plaintiffs in the ATM Fee Antitrust Litigation have no standing to pursue their price fixing claims against an ATM network and a group of banks.  The District Court dismissed plaintiffs’ claims under the rule of Illinois Brick Co. v. Illinois, 431 U.S. 720 (1977), that generally only direct purchasers may recover antitrust damages.    

      Plaintiffs, a putative class of bank customers, brought an action against the STAR ATM Network and several large banks including Bank of America, N.A., JPMorgan Chase Bank, N.A., Citibank, N.A., Suntrust, and Wells Fargo Bank, N.A./Wachovia, alleging that they conspired to illegally fix interchange fees, which the card-issuer banks pay to ATM owners for each ATM transaction.  Plaintiffs alleged that after paying inflated interchange fees, the issuing banks pass on the overcharges to bank customers through increased “foreign ATM fees” – which are paid by customers when they use an ATM owned by another bank or an independent ATM operator.  

      As the court determined in September, plaintiffs were not the ones who paid the allegedly inflated interchange fees – their banks did.  Thus, the plaintiffs were not directly harmed.  Also, plaintiffs did not allege that defendants conspired to illegally fix the “foreign ATM fees” – the fees plaintiffs did directly pay.  As such, plaintiffs were indirect purchasers to whom the direct purchaser banks passed on all or a part of the allegedly fixed fees, and their claims were barred by the Illinois Brick indirect purchaser rule.  The Court also determined that none of the exceptions to that indirect purchaser rule applied.

      Plaintiffs’ last-ditch attempt to vacate the decision was shot down.  The Court found that plaintiffs did not “present new evidence or raise an intervening change in the law” justifying vacating the decision.

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      Categories: Antitrust and Price Fixing, Antitrust Litigation

        December 2, 2010

        American Antitrust Institute Asks FTC To “Proceed Forcefully” Against CVS Caremark

        As CVS Caremark is learning, even an approved merger does not protect a company from later being accused of anti-competitive behavior as a result of the merger.  As we wrote in an earlier post, the Federal Trade Commission began investigating CVS Caremark Corp., which has been accused of anti-competitive practices, in spite of the fact that the FTC approved its merger several years ago.  The 2007 merger—worth $27 billion—combined CVS, a drugstore chain, and Caremark, a pharmacy benefits manager, and proceeded with the FTC’s blessing after a review under Hart-Scott-Rodino Antitrust Improvements Act.

        Although the FTC has already confirmed that it is conducting an investigation—and in June FTC Chairman Jon Leibowitz confirmed that he had met with CVS Caremark officials and that the agency was in the process of receiving documents from them—the American Antitrust Institute is urging the FTC to aggressively pursue the possible antitrust violations at CVS Caremark.

        The AAI claims that CVS Caremark is engaging in anti-competitive practices designed to force consumers to use CVS pharmacies.  According to Albert Foer, the AAI president, “evidence that this conduct is now occurring would clearly establish that the merger did in fact enable and incent the combined firm to engage in this conduct.”  The AAI claims that this conduct includes misusing information from the Caremark side of the business, including private patient information, to force consumers to use CVS over rival pharmacies.  In addition, the AAI claims that CVS Caremark is using its “maintenance choice” program to force consumers to use CVS.  The “maintenance choice” program allows consumers to only get prescriptions by mail or at CVS, and the company has been accused of enrolling consumers without their permission.

        The AAI is not the only entity urging the FTC to take another close look at the CVS Caremark merger.  Eight members of Congress (four Democrats and four Republicans), asked the FTC to do exactly that in a September 2009 letter.  Should the FTC heed the congressmen and the AAI, a possible outcome could be divestiture.

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        Categories: Antitrust Enforcement, Antitrust Policy

          December 1, 2010

          Stop The Presses!: Predatory Pricing Verdict Against San Francisco Weekly Upheld

          The California Supreme Court, in Bay Guardian Co. v. New Times Media LLC, No. S186497 (Cal. Nov. 23, 2010), has declined to review rulings from the California Superior trial court and California Court of Appeal upholding a $21 million antitrust damages verdict against the San Francisco Weekly.  The SF Weekly and its parent, Village Voice Media Holdings, were accused by the plaintiff, the Bay Guardian, of trying to drive the plaintiff out of business by selling advertisements below cost.  The defendants had argued unsuccessfully that the SF Weekly’s pricing strategy was procompetitive in that it kept prices lower for advertising customers.  Both newspapers are free for readers and depend on advertisements for revenue.

          A San Francisco jury in March 2008 awarded $6.2 million in damages against the defendants under California’s Unfair Competition Act, an award that was tripled by Superior Court Judge Marla Miller.  The California Court of Appeal on August 11, 2010, upheld the verdict, which has since been accumulating interest.  The California Supreme Court voted 6-1 against granting a hearing for the case on appeal, with Justice Joyce Kennard being the only voice in favor of review.

          Michael Lacey, the executive editor of Village Voice Media Holdings, stated that “[n]either judges with gavels nor editors with martinis (or delusions fueled by martinis) can tell people which website or newspaper to read. … As journalists, we will continue the fight in San Francisco.”  Andy Van De Voorde, another observer sympathetic to the defendants, added:

          For more than a century, the California Supreme Court has interpreted antitrust law as protecting consumers from high prices, not protecting the profits of entrenched market leaders who fear competition. The Supreme Court’s refusal … to follow Justice Joyce Kennard’s wishes and hear this appeal turns a century of pro-consumer California antitrust law on its ear.

          He further opined that “[t]his is a sad day for consumers who deserve the lower prices that only aggressive competition provides.”  The Bay Guardian, on the other hand, had contended that the SF Weekly intended to drive it out of business in order to become the “only game in town,” which would be detrimental to consumers.

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          Categories: Antitrust Litigation


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