Category Archives: Antitrust Monitor by GeyerGorey LLP

CCC: Seventh Circuit Rules (Again) in Motorola Mobility

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December 1, 2014 by Leave a Comment

The Seventh Circuit issued its opinion in Motorola Mobility on November 26.   Motorola Mobility LLC v. AU Optronics Corp., 14-8003. In the opinion, written by Judge Posner, the Seventh Circuit panel ruled that the Foreign Trade Antitrust Improvements Act, (FTAIA) barred Motorola’s lawsuit because the harm was incurred by its foreign subsidiaries and not the parent company itself. The most critical fact in the case was this: “Motorola says that it “purchased over $5 billion worth of LCD panels from cartel members [i.e., the defendants] for use in its mobile devices.” That’s a critical misstatement. All but 1 percent of the purchases were made by Motorola’s foreign subsidiaries.” This key fact led to Motorola’s downfall:

What trips up Motorola’s suit is the statutory requirement that the effect of anticompetitive conduct on domestic U.S. commerce give rise to an antitrust cause of action. 15 U.S.C. § 6a(2). The conduct increased the cost to Motorola of the cellphones that it bought from its foreign subsidiaries, but the cartel-engendered price increase in the components and in the price of cellphones that incorporated them occurred entirely in foreign commerce.

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CCC: “Congratulations to Nezida Davis on Her Retirement”

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Congratulations to Nezida S. Davis who retired from the Antitrust Division last week. Nezida was the former Chief of the Atlanta office until it got whacked in early 2013 (along with Cleveland, Dallas and Philadelphia). Nezida had a long and distinguished career in public service with the Division. She joined the Division in 1984 as a trial attorney after serving a clerkship with U.S. District Court Judge Horace T. Ward. Nezida, a graduate of Columbia Law School, was named Assistant Chief of the Atlanta office in 1995 and Chief in 2002.

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3C’s: From India “Of Price Bulletins and Dawn Raids”

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Guest Post From India: “Of Price Bulletins and Dawn Raids”

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This post below is from guest contributor Avinash Amarnath.  Avinash practices in New Delhi, India and advises clients across various sectors such as automobiles, financial services, pharmaceuticals, steel, private equity, petrochemicals and electronic lab equipment on Indian competition law.

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Hello to all readers! Trade associations seem to be the flavor of the day for the CCI these days. Less than 4 days after passing an order fining the Chemists and Druggists Association, Goa, the Competition Commission of India (the “CCI”) has imposed penalties on the Indian Jute Mills Association (“IJMA”), the Gunny Trade Association (“GTA”) and the individuals responsible for their running for indulging in:

a) price fixing of jute packaging material through circulation of daily price bulletins amongst themselves; and

b) limiting and controlling the supply of jute packaging material.

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CCC: Greimel’s “Confessions of a Price Fixer”

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I am posting and recommending an excellent article by Hans Greimel, Asia Editor,Automotive News titled: Confessions of a Price Fixer.

The article discusses some of the “facts of life” known to cartel practitioners, but rarely discussed in print.  The Antitrust Division will give often huge discounts from corporate fines totaling millions of dollars in return for a corporate plea and “complete, continuing cooperation.” That cooperation comes largely in the form of the company’s executives, some of whom are required to plead guilty and serve prison time in the US.  Some highlights from the article:

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Is the Antitrust Division Starting a Broad Investigation of Price Fixing in the Generic Pharmaceuticals Market?

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Ed. Note:  This post is by Joan Marshall, a partner at GeyerGorey and a former Antitrust Division prosecutor who worked on the global vitamin cartel prosecutions.

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Last month, Elijah E. Cummings, the [then] ranking member of the House Committee on Oversight and Government Reform, and Senator Bernard Sanders, [then] chairman of the Senate Subcommittee on Primary Health and Aging, asked 14 generic drug makers to provide data concerning escalating prices charged for generic pharmaceuticals. (here)  Several recent articles, and filings with the SEC, report that the Antitrust Division is also taking a hard look at the generic pharmaceutical industry (here);(here);(here).

A recent analysis found that half of all generic drugs sold through retailers became more expensive over the past 12 months and the prices paid by pharmacies more than doubled for one out of 11 generics (here)(here). The FDA reports that nearly 8 in 10 prescriptions are filled with generic pharmaceuticals. Americans spent about $325.8 billion on prescription medicines in 2012 (here).  Generics now account for 28 percent of pharmaceutical spending (here).

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McLaughlin at BloomBerg: Banks Get December Deadline to Come Clean on FX Rigging

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Banks Get December Deadline to Come Clean on FX Rigging

By David McLaughlin

The U.S. Justice Department has given banks about a month to come clean about wrongdoing as it moves closer to wrapping up an investigation into the rigging of currency benchmarks, a person familiar with the probe said.

The banks have met with officials in recent weeks to lay out how they see their liability, said the person, who asked not to be identified because the discussions are confidential. Prosecutors have demanded a full accounting of any misconduct by mid-December, the person said.

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Investigations by authorities on three continents are proceeding after six banks, including Citigroup Inc. (C), JPMorgan Chase & Co. (JPM) and UBS AG (UBSN), agreed to pay $4.3 billion to regulators in Europe and the U.S. Nov. 12 to settle claims that traders colluded with counterparts at other firms in an attempt to manipulate currency rates.

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CCC: Audio of Seventh Circuit Motorola Mobility

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Audio of Seventh Circuit Motorola Mobility Oral Argument is Available Online

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The Seventh Circuit heard oral arguments in Motorola Mobility v. AU Optronics, on Wednesday, November 12, 2014. The panel was U.S. Circuit Judges Richard A. Posner, Ilana Diamond Rovner and Michael S. Kanne.  There is such a strong interest in this case, and the Foreign Trade Antitrust Improvements Act (“FTAIA”) generally, that I thought I’d share the link to the publicly available audio recording before adding a few quick thoughts of my own. The argument can be heard here.

Before you Listen

I have read many FTAIA cases and articles (and written a few) and I’m not ashamed to admit that I always go back and re-read this confusing statute before re-engaging with the FTAIA. In 1982 Congress sought to limit and define the extraterritorial application of the Sherman Act. The FTAIA says:

 “Sections 1 to 7 of this title [the Sherman Act] shall not apply to conduct involving trade or commerce (other than import trade or import commerce) with foreign nations unless —

 

 

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Brazil’s Associative Contract Conundrum

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Robert Connolly’s Cartel Capers:

Today’s guest post is from Mauro Grinberg, a former Cade Commissioner in Brazil.  Mr Grinberg heads the law firm Grinberg e Cordovil Advogados.

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Do you know what an associative contract is? Can you find a good definition for it? No? Do not worry, in Brazil a lot of people are trying to do it, and we still have more questions than answers. In the meantime we have to deal with a law in force that requests merger control for such kind of agreements.

Going a little back, the well-known Brazilian antitrust law, enacted in 1994, created two conditions for a transaction to have to be notified: (i) one of the parties should have revenues, in the year before the signing of the transaction, of R$ 400 million and (ii) the transaction would result in a market share of 20%. It goes without saying that free competition and/or market dominance should be verified but, strangely enough, this condition did not mean much for most of the time.

A new law, enacted in 2011 and which came into force in 2012, when establishing the requirements for merger control, left the market share criterion aside; it was celebrated with a lot of relief because we know that we can use this definition in different ways. So, the big requirement was for (i) one of the parties to have revenues, in the year before the signing of the contract, of R$ 750 million and (ii) another party to have revenues, also in the same year, of R$ 75 million.  

The objective criterion was said to be very easy to understand and it would not oblige a big company that acquires a ma and pa business to bother with merger control. On the other hand, it would leave alone some transactions that, although dealing with low revenues, would affect local communities, like bakeries, delis, gas stations and the like. The authorities realized that some important transactions were easily – and legally – passing under the table.

Going back to the new law, it tried to define what a reportable transaction is, as if definitions of merger, acquisition (including acquisition of assets) or joint venture were needed. In the middle of it, associative contracts – and these without definition – were included. It took lawyers and bureaucrats a lot of thinking until the authority came out with a resolution trying to define the term. It just happens that, whenever a law brings definitions, new definitions will be needed to clarify the former definition.

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Connolly Cartel Capers: Canadian Cartel News–Volume 2–Tangible Benefits for Corporate Compliance Programs: Show Us the Money

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The September 24, 2014, post by James Musgrove, Jun Chao Meng and Joshua Chad of McMillan LLP. is about an important development in Canada in the treatment of corporate compliance programs.

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On Thursday, September 18, the Canadian Competition Bureau (Bureau) released a Draft Updated Corporate Compliance Bulletin. The Bureau’s Corporate Compliance Bulletin was first released in 1997 and was most recently updated in 2010. The new Draft Bulletin is available for public consultation until November 17, 2014.

While the Draft Bulletin contains a number of updates, the most significant change is the creation of an incentive program that offers reduced fines for leniency program participants who have credible and effective corporate compliance programs. In both the Draft Bulletin and in remarks by the Commissioner of Competition (Commissioner) on September 18, the Bureau made clear that the mere pre-existence of a program will not automatically garner a company favourable treatment. However, the Bureau proposes that where a company has a credible and effective corporate compliance program the Bureau will recommend to the Court and to the Public Prosecution of Canada (PPSC) that the company receive a reduced fine in connection with an application under the Bureau’s Leniency Program. This proposed approach would make the Bureau one of the few worldwide competition authorities to reward companies for having effective compliance programs, even when those programs have failed.
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Connolly Cartel Capers: Canadian Cartel News – Volume 1

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Today’s guest post is by James Musgrove and Joshua Chad.  Jim is Co-Chair, Competition and Antitrust practice at McMillan LLP, a leading Canadian law firm.  Jim and Joshua are well versed in international cartel matters and will be keeping us up to date on key developments in Canada.

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We are delighted to contribute to the “Reports from Around the World” section of the Cartel Capers Blog. We look forward to providing readers with regular updates on Canadian cartel developments.

Our first couple of posts will provide a general introduction to Canadian cartel legislation, its enforcement and related private actions. Thereafter, we expect to delve into specific points of interest and new developments as they arise. But, first things first.

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