Articles Posted in Antitrust & Trade Regulation

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The consolidated appeals involve allegations that the companies holding the patents for Lipitor and Effexor XR delayed entry into the market by generic versions of those drugs by engaging in an overarching monopolistic scheme that involved fraudulently procuring and enforcing the underlying patents and then entering into a reverse-payment settlement agreement with a generic manufacturer. In 2013, the Supreme Court recognized that reverse payment schemes can violate antitrust laws and that it is normally not necessary to litigate patent validity to answer the antitrust question. The district judge dismissed most of plaintiffs’ claims. The Third Circuit remanded after rejecting an argument that plaintiffs’ allegations required transfer of the appeals to the Federal Circuit, which has exclusive jurisdiction over appeals from civil actions “arising under” patent law, 28 U.S.C. 1295(a)(1). Not all cases presenting questions of patent law necessarily arise under patent law; here, patent law neither creates plaintiffs’ cause of action nor is a necessary element to any of plaintiffs’ well-pleaded claims. The court remanded one of the Lipitor appeals, brought by a group of California pharmacists and involving claims solely under California law, for jurisdictional discovery and determination of whether remand to state court was appropriate. View "In re: Lipitor Antitrust Litigation" on Justia Law

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Edinboro, a Pennsylvania public university, collaborated with Edinboro University Foundation, a nonprofit entity, to construct new dormitories. In 2008, the Foundation amended its Articles of Incorporation to authorize borrowing funds “to acquire, lease, construct, develop and/or manage real or personal property.” The University leased property to the Foundation in a favorable location; the Foundation issued bonds to raise the funds and completed construction. Since 1989, the University required non-commuting first-year and transfer students to reside on-campus for two consecutive semesters. Two and one-half years after the first phase of the new dormitories opened, the University amended its policy to require certain students to reside on-campus for four consecutive semesters. Businesses that provide off-campus housing sued, asserting that the University and the Foundation conspired to monopolize the student housing market in violation of the Sherman Act, 15 U.S.C. 2. Plaintiffs did not sue the University, conceding that it is an arm of the state subject to Eleventh Amendment immunity. The Third Circuit affirmed dismissal. The University’s actions are not categorically “sovereign” for purposes of “Parker” immunity, so the court employed heightened scrutiny, citing the Supreme Court’s decision in Town of Hallie v. City of Eau Claire, (1985), which requires anticompetitive conduct to conform to a clearly articulated state policy. The University’s conduct withstands Hallie scrutiny. The Foundation’s actions were directed by the University, so the Foundation is also immune. View "Edinboro College Park Apartments v. Edinboro University Foundation" on Justia Law

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Plaintiffs used ocean common carriers to transport vehicles between foreign countries and the United States. Direct purchaser plaintiffs made arrangements with and received vehicles directly from the carriers, while indirect purchaser plaintiffs obtained the benefit of the carrier services by ultimately receiving vehicles transported from abroad. In 2012, law enforcement raided the offices of Defendants, ocean common carriers, in connection with antitrust investigations. Several Defendants pleaded pleaded guilty to antitrust violations based on price-fixing, allocating customers, and rigging bids for vehicle carrier services. Plaintiffs filed suit, alleging that Defendants entered into agreements to fix prices and reduce capacity in violation of federal antitrust laws and state laws. The Third Circuit affirmed dismissal of the case. Defendants allegedly engaged in acts prohibited by the Shipping Act of 1984, 46 U.S.C. 40101, which both precludes private plaintiffs from seeking relief under the federal antitrust laws for such conduct and preempts the state law claims under circumstances like those at issue. The Act responds to “the need to foster a regulatory environment in which U.S.-flag liner operators are not placed at a competitive disadvantage vis-a-vis their foreign-flag competitors.” The Federal Maritime Commission has regulatory authority displacing private suits. View "In re: Vehicle Carrier Services Antitrust Litigations" on Justia Law

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A large communications equipment manufacturer, Avaya, and its dealer and service provider, TLI had a falling out. Avaya subsequently aggressively acted to block TLI from providing independent maintenance services for Avaya equipment. Meanwhile, the newly-independent TLI took various “legally dubious actions” to gain access to Avaya communications systems used by clients the parties once shared. Avaya filed suit, alleging several business torts and breach of contract; TLI counter-sued for antitrust violations. After years of pre-trial litigation, and in the midst of a months-long trial, the district court granted TLI’s motion for judgment as a matter of law on all of Avaya’s affirmative claims. The court later instructed the jury that none of TLI’s actions could be considered unlawful. The jury found Avaya liable for two antitrust violations and awarded substantial damages. The Third Circuit vacated. Given how intertwined the two sides’ claims are, and given that Avaya’s antitrust defense relied in large part on justifying Avaya’s conduct as a response to TLI’s conduct, the erroneous Rule 50 judgment infected the jury’s verdict. View "Avaya Inc v. Telecom Labs Inc" on Justia Law

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Generic drug manufacturers (plaintiffs) originally sued name-brand drug companies (defendants) that manufacture and sell “Doryx,” the delayed-release doxycycline hyclate, an oral antibiotic of the tetracycline class used to treat severe acne. Tetracyclines are a broad category of antibiotics, the most common being doxycycline monohydrate and minocycline, which vary in their use and efficacy. Plaintiffs claimed that defendants conspired to protect their position in the market through “product hopping,” by making four critical changes to Doryx, all of which required generics to go through a cumbersome regulatory approval process if they wanted to continue to benefit from state substitution laws. Several plaintiffs settled their cases and the district court rejected, on summary judgment, remaining claims of unlawful monopoly and attempted monopolization under section 2 of the Sherman Act; agreement in restraint of trade under section 1 of the Sherman Act; and tortious interference with prospective contractual relationships under Pennsylvania law. The Third Circuit affirmed, finding that defendants’ conduct was not anticompetitive, and that, even if it was, it was not established that defendants had the requisite market power in the relevant product market. Adoption of plaintiffs’ theory of “anticompetitive product redesign” could have adverse, unintended consequences, including slowing innovation. View "Mylan Pharma. Inc v. Warner Chilcott Pub. Ltd. Co." on Justia Law

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Penn State Hershey Medical Center is a leading academic medical center, with 551 beds and more than 800 physicians. Hershey offers all levels of care, but specializes in more complex, specialized services, unavailable at most other hospitals. Hershey draws patients from a broad area. PinnacleHealth System has three hospital campuses, two in Harrisburg, and another in Mechanicsburg, focusing on cost-effective primary and secondary services, with only a limited range of more complex services. It employs fewer than 300 physicians and provides 646 beds. In 2014, Hershey and Pinnacle signed a letter of intent for a proposed merger. Their respective boards subsequently approved the merger; the Hospitals notified the Federal Trade Commission (FTC), and, in 2015, executed a “Strategic Affiliation Agreement.” The FTC opposed the merger and filed suit under the Clayton Act and the FTC Act. The district court denied a preliminary injunction pending the FTC’s adjudication on the merits, finding that the opponents of the merger did not properly define the relevant geographic market, a necessary prerequisite to determining whether a proposed combination is sufficiently likely to be anticompetitive as to warrant injunctive relief. The Third Circuit reversed after determining the government’s likelihood of success and weighing the equities, finding that a preliminary injunction would be in the public interest. The Hospitals did not rebut the government’s prima facie case that the merger is likely to be anticompetitive. View "Fed. Trade Comm'n v. Penn State Hershey Med. Ctr." on Justia Law

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Eaton manufactures truck transmissions for sale to Original Equipment Manufacturers (OEMs), which offer “data books,” listing the options for truck parts. Customer choose among the options; the OEM sources the parts from the manufacturers and uses them to build custom trucks then sold to that customer. Eaton was a near-monopolist in supplying Class 8 truck transmissions. In 1989, ZF emerged as a competitor. Eaton allegedly sought to retain its market share by entering agreements with the OEMs, with increasingly large rebates on Eaton transmissions based on the percentage of transmissions a given OEM purchased from Eaton as opposed to ZF. ZF closed in 2003. In 2006, ZF successfully sued Eaton for antitrust violations. Separately, indirect purchasers who bought trucks from OEMs’ immediate customers brought a class action; that case was dismissed. In this case, Tauro attempt to represent direct purchasers in an antitrust suit was rejected because Tauro never directly purchased a Class 8 truck from the OEMs, but rather purchased trucks from R&R, a direct customer that expressly assigned Tauro its direct purchaser antitrust claims. The Third Circuit reversed. An antitrust claim assignment need not be supported by bargained-for consideration in order to confer direct purchaser standing on an indirect purchaser; it need only be express. That requirement was met. The presumption that a motion to intervene by a proposed class representative is timely if filed before the class opt-out date applies in this pre-certification context. View "Wallach v. Eaton Corp" on Justia Law

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Hartig filed a putative class action, alleging antitrust violations involving medicated eyedrops manufactured by the Defendants. Hartig claimed that the Defendants’ wrongful suppression of generic competition resulted in supracompetitive pricing of those eyedrops. Although not a direct purchaser of the medications, Hartig claimed it had standing to sue because of an assignment of rights from Amerisource, a direct purchaser. The district court dismissed for lack of subject matter jurisdiction, finding that an anti-assignment clause in a distribution agreement between Allergan (the assignee of the named inventors) and Amerisource barred any assignment of antitrust claims from Amerisource to Hartig. The Third Circuit vacated; the district court erred in treating antitrust standing as an issue of subject-matter jurisdiction. The court distinguished between Article III standing and antitrust standing and stated that, when the correct procedures are followed, the court may consider the impact of the anti-assignment clause. View "Hartig Drug Co., Inc v. Senju Pharma. Co., Ltd" on Justia Law

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Deborah is a New Jersey charity hospital. CGPA is a group of New Jersey cardiologists. Because no CGPA physician could perform advanced cardiac interventional procedures (ACI) procedures, in 1992, CGPA and Deborah began a relationship that resulted in the transfer of numerous ACI patients to Deborah. In 2005, the CGPA doctors entered into an exclusive agreement to provide Virtua Hospital with cardiovascular services. Referrals to Deborah dropped off significantly. In 2006, CGPA hired a doctor who had previously worked at Deborah and was capable of performing some ACIs. CGPA terminated its agreement with Deborah. In 2007, CGPA signed agreements with doctors who worked primarily at Penn Presbyterian Hospital. Virtua is not mentioned in those contracts, but Deborah alleges that Virtua was an unnamed participant in negotiations and that the goal was to drive Deborah out of business. Deborah sued, asserting that this arrangement constituted an illegal restraint on trade and resulted in harm to competition, in violation of the Sherman Act. The district court granted Virtua and CGPA summary judgment, holding that Deborah did not introduce sufficient evidence to show injury to competition in the designated market. The Third Circuit affirmed, noting that Deborah identified the “products” and i the market at issue. Virtua did not challenge Deborah’s market definitions in the district court. Having set the parameters for the dispute, Deborah failed to meet its self-imposed burden. View "Deborah Heart & Lung Center v. Virtua Health Inc" on Justia Law

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Sanofi has sold Lovenox, an anticoagulant drug, in the U.S. since 1993. Fragmin, a competing injectable, sold only abroad until 2005, when Eisai obtained a U.S. license. Some Fragmin indications overlap Lovenox’s indications. The relevant product market also includes two other injectable anticoagulant drugs. In 2005-2010, Lovenox had the most indications of the four drugs, the largest sales force, and a market share of 81.5% to 92.3%. Fragmin had the second largest market share at 4.3-8.2%. In 2005-2010, Sanofi offered the “Lovenox Acute Contract Value Program.” Eisai alleged anticompetitive conduct by: market share and volume discounts, a restrictive formulary access clause, and aggressive sales tactics in marketing the Program. The Third Circuit affirmed summary judgment in favor of Sanofi. What Eisai called “payoffs” were only discounts Sanofi offered its customers; what Eisai called “agreements with hospitals to block access” were actually provisions proscribing customers from favoring competing drugs over Lovenox. What Eisai called “a campaign of ‘fear, uncertainty, and doubt’” was simply Sanofi’s marketing. Under the rule of reason, there was no evidence that Sanofi’s actions caused broad harm to the competitive nature of the anticoagulant market. If Sanofi’s conduct caused damage to its competitors, that is not a harm for which Congress has prescribed a remedy. View "Eisai Inc v. Sanofi Aventis U.S. LLC" on Justia Law