Update (7/08): Day three and still down.  At some point this becomes embarrassing.  (Even if, as some have speculated, there was a DDoS attack. Another Update: The Washington Post reports that it is a DDoS attack and that 26 websites (including the Post) were targeted.  The FTC, however, seems to be the only website that has been down the entire time and is still down).

The FTC website is again down today.  PC World reports that “agency representatives said they don’t know what caused the problem.”

Private agreements that include reverse payments are properly evaluated under the antitrust rule of reason, which takes into account efficiency-related justifications as well as anticompetitive potential.  The anticompetitive potential of reverse payments in the Hatch-Waxman context in exchange for the alleged infringer’s agreement not to compete and to eschew any challenge to the patent is sufficiently clear that such agreements should be treated as presumptively unlawful under Section 1 of the Sherman Act.  Defendants may rebut that presumption by providing a reasonable explanation of the payment, so that there is no reason to find that the settlement does not provide a degree of competition reasonably consistent with the parties’ contemporaneous evaluations of their prospects of litigation success.

If/when I figure out how to upload a pdf file I will attach the brief (or link to it if/when DOJ posts the brief on its website).

Both the district court and the seventh circuit found that the defendants (i.e., the NFL entities) were a single entity.  AR coverage of the seventh circuit decision is here.

An interesting aspect of this case is that the Supreme Court asked the Solicitor General for her opinion and the Solicitor General recommended the Court deny cert.  Granting cert after the SG has weighed in to the contrary is extremely rare.

The Sports Law Blog has noted that the “NFL—and other professional sports leagues in the U.S.—have a tremendous amount to gain from the Supreme Court’s decision, but not much to lose.”  At the Antitrust & Competition Policy Blog, Chris Sagers has a lengthy (and passionate) post in which he speculates that “in short, there are probably four pretty solid votes for affirmance, one more (Kennedy) that seems only marginally less solid for defendants, and either of two (Breyer and Sotomayor) that might also sign on for affirmance.”

American Needle’s Cert Petition.

The NFL’s brief.

American Needle’s supplemental brief.

The Solicitor General’s brief.

Seventh Circuit opinion.

The Interim Report finds that drug prices are lower when authorized generics are marketed against a single generic drug than when they are not. With authorized generic competition during the 180-day marketing exclusivity period, retail drug prices are on average 4.2 percent lower than the pre-generic branded price, and wholesale drug prices are on average 6.5 percent lower than the pre-generic branded price.

Authorized generic entry during this time also substantially reduces the revenues of a first-filer generic firm, with declines ranging from 47 to 51 percent. As a result, because a generic can earn greater revenues if an authorized generic does not enter the market, a generic firm may be willing to agree to defer its market entry in return for a brand’s promise not to launch a competing authorized generic during the 180-day marketing exclusivity period. A review of patent settlement agreements, the Interim Report states, reveals that such agreements appear to be more common now than in the past.

(I personally wonder if a 4% decline can be accurately be termed “substantial”).

The report itself is available here.

an internal FTC analysis projects that stopping collusive “pay-for-delay” settlements between brand and generic pharmaceutical firms would save consumers $3.5 billion a year and also reap significant savings for the federal government, which pays approximately one-third of all prescription drug costs.  Chairman Leibowitz urged Congress to pass pending legislation to ban or restrict such anticompetitive patent settlements, in which manufacturers of brand-name drugs pay potential generic competitors to stay out of the market, as a way to control prescription drug costs, restore the benefits of generic competition, and help pay for health care reform.

The full text of the speech is here.

The U.S. Supreme Court rejected a lawsuit challenging Bayer AG’s (BAYRY) deal with Barr Pharmaceuticals Inc. (BRL) to delay producing a generic version of Cipro, an antibiotic drug.

…

Separate litigation on the Cipro agreements brought by drug wholesalers and retailers is still pending in a lower court. The Obama administration intends to file a brief in that case, which is in the 2nd U.S. Circuit Court of Appeals in New York.

Bayer paid $398 millionto Barr and other generic drug makers in return for an agreement that they would not market a generic version of Cipro until Bayer’s patent on the drug expired. Drug purchasers and advocacy groups challenged the agreement as anticompetitive, saying it violated federal and state antitrust laws as well as state consumer protection laws.

The lawsuit was thrown out by a U.S. trial judge in New York in 2005. Last year the U.S. Court of Appeals for the Federal Circuit affirmed the rejection, agreeing that Bayer’s patent rights gave it the ability to enter into agreements limiting generic alternatives to its antibiotic.

has launched an investigation into whether some of the nation’s largest technology companies violated antitrust laws by negotiating the recruiting and hiring of one another’s employees, according to two sources with knowledge of the review.

The review, which is said to be in its preliminary stages, is focused on the search engine giant Google; its competitor Yahoo; Apple, maker of the popular iPhone; and the biotech firm Genentech, among others, according to the sources, who spoke on condition of anonymity because the investigation is ongoing.

…

The sources said the review includes other tech companies and is “industry-wide.” By agreeing not to hire away top talent, the companies could be stifling competition and trying to maintain their market power unfairly, antitrust experts said.

Finding that exclusivity agreements between cable companies and owners of apartment buildings and other multi-unit developments have an anti-competitive effect on the cable market, the Federal Communications Commission banned such contracts. The Commission believes that these deals—which involve a cable company exchanging a valuable service like wiring a building for the exclusive right to provide service to the residents—may be regulated under section 628 of the Communications Act as cable company practices that significantly impair the ability of their competitors to deliver programming to consumers. The Commission thus forbade cable operators not only from entering into new exclusivity contracts, but also from enforcing old ones. Petitioners, associations representing cable operators and apartment building owners, argue that the Commission exceeded its statutory authority, arbitrarily departed from precedent, and otherwise violated the Administrative Procedure Act. Having carefully considered the parties’ excellent submissions, we disagree and conclude that the Commission acted well within the bounds of both section 628 and general administrative law.

Last week, the Obama administration declared a sharp break with the Bush years, vowing to toughen antitrust enforcement, especially for dominant companies. The approach is closer to that of the European Union, where regulators last week fined Intel $1.45 billion for abusing its power in the chip market.

In this new climate, the stakes appear to be highest for Google, the rising power of the Internet economy.

The new antitrust leadership, legal experts say, is likely to scrutinize networks — technology platforms that become so dominant that everyone feels the need to plug into them. The advantages to the companies that control such networks snowball as they attract more users, advertisers or software developers.

There is one small problem with going after Google via the antitrust laws as the article mentions at the very end:

In her speech last week, Christine A. Varney, head of the Justice Department’s antitrust division, said the touchstone of antitrust policy should be “the protection of consumer welfare.”

By that standard, Google seems an elusive target for antitrust enforcers, since most of its services are free. And in the new markets it is entering, including cellphone software and online alternatives to desktop programs, Google is an insurgent going up against large, well-heeled rivals, notably Microsoft.

The Federal Trade Commission has formally dismissed the complaint in the Rambus matter. “While we remain disappointed by the decision of the Court of Appeals, we of course respect the Court’s opinion and will move forward,” said Richard A. Feinstein, Director of the Bureau of Competition. “The standard-setting issues that were at the heart of this case remain important, both as a matter of antitrust policy, and in order to protect consumers, and we will remain vigilant in this area.”

That is three whole sentences for those you keeping track at home.

The order, and the other pleadings in the matter, can be found here.

The European Commission fined Intel a record €1.06 billion on Wednesday for abusing its dominance in the computer chip market to exclude its only serious rival, Advanced Micro Devices.

The European Union’s competition commissioner, Neelie Kroes, said the penalty against Intel, the equivalent of $1.45 billion, was justified because the company had skewed competition and denied consumers a choice for chips.

Ms. Kroes said Intel had “used illegal anticompetitive practices to exclude its only competitor and reduce consumers’ choice — and the whole story is about consumers. ” She said Intel’s practices had “undermined innovation.”

…

Paul Otellini, chief executive of Intel, said the company would appeal.

“We believe the decision is wrong and ignores the reality of a highly competitive microprocessor marketplace,” Mr. Otellini said. “There has been absolutely zero harm to consumers.”

Giuliano Meroni, president of A.M.D.’s operations in Europe, said the decision would “shift the power from an abusive monopolist to computer makers, retailers and above all PC consumers.”

Ms. Kroes said Intel had pursued a strategy aimed mainly at excluding A.M.D. by paying computer makers and retailers to postpone, cancel or avoid A.M.D. products entirely.

The European Commission, which is the E.U.’s executive arm, also found that Intel “went to great lengths to cover up its anticompetitive actions,” Ms. Kroes added.

[DOJ] plans to restore an aggressive enforcement policy against corporations that use their market dominance to elbow out competitors or to keep them from gaining market share. … Ms. Varney is expected to say that the administration rejects the impulse to go easy on antitrust enforcement during weak economic times. She will assert instead that severe recessions can provide dangerous incentives for large and dominating companies to engage in predatory behavior that harms consumers and weakens competition. The announcement is aimed at making sure that no court or party to a lawsuit can cite the Bush administration policy as the government’s official view in any pending cases. In the speeches, Ms. Varney is expected to explicitly warn judges and litigants in antitrust lawsuits not involving the government to ignore the Bush administration’s policies, which were formally outlined in a report by the Justice Department last year. The report applied legal standards that made it difficult to bring new cases involving monopoly and predatory practices.

“The report” referenced in the article is presumably the Section 2 report issued by DOJ last fall.

Update: DOJ has issued a press release announcing the formal withdrawal of the Section 2 report:

Christine A. Varney, Assistant Attorney General in charge of the Department’s Antitrust Division, today announced that the Department is withdrawing, effective immediately, a report relating to monopolization offenses under the antitrust laws that was issued in September 2008. As of today, the Section 2 report will no longer be Department of Justice policy. Consumers, businesses, courts and antitrust practitioners should not rely on it as Department of Justice antitrust enforcement policy.

Update 2: Both of her speechs are now up (one, two).

The witness statements can be found here, and Dana Milbank of the Washington Post has a humorous take here.

The revised proposed rule in the RNPRM announced today retains the anti-fraud approach of the August 2008 proposed rule. The revised proposed rule would prohibit fraudulent and deceptive conduct that could harm wholesale petroleum markets. Specific examples of prohibited conduct include false public announcements of planned pricing or output decisions, false statistical or data reporting, and wash sales intended to disguise the actual liquidity or price of a particular product or market for that product. The revised proposed rule also would prohibit material omissions from a statement that, although otherwise literally true, are misleading under the circumstances.

Specifically, the revised proposed rule would prohibit anyone, directly or indirectly, in connection with the purchase or sale of crude oil, gasoline, or petroleum distillates at wholesale, from (a) knowingly engaging in any act, practice, or course of business – including the making of any untrue statement of material fact – that operates or would operate as a fraud or deceit upon any person, or (b) intentionally failing to state a material fact that under the circumstances renders a statement made by such person misleading, provided that such omission distorts or tends to distort market conditions for any such product.

The revised proposed rule would not impose any affirmative duties, obligations, or record-keeping requirements. Anyone violating an FTC rule promulgated under EISA, such as the revised proposed rule, if adopted, may face civil penalties of up to $1 million per violation per day, in addition to any relief available to the Commission under the FTC Act.

The proposed revised rule can be found here.

There are some minor differences.  For example, the Senate bill proposes that:

‘(a) It shall be unlawful under this Act for any person, in connection with the sale of a drug product, to directly or indirectly be a party to any agreement resolving or settling a patent infringement claim in which–

The House bill is same except paragraph (2) reads “the ANDA filer agrees not to research, develop, manufacture, market, or sell, for any period of time, the drug that is to be manufactured under the ANDA involved and is the subject of the patent infringement claim.”

Another difference is that the Senate bill defines agreement as “means anything that would constitute an agreement under section 1 of the Sherman Act (15 U.S.C. 1) or section 5 of the Federal Trade Commission Act (15 U.S.C. 45).”  The House bill drops “under section 1 of the Sherman Act (15 U.S.C. 1)” from its definition.

These, and other differences, however, should not obscure the fact that the bills are substantively the same.

In its first detailed explanation of the March 18 ruling, the commerce ministry said it looked at China’s beverage market and concluded that Coca-Cola’s dominance in carbonated drinks could be used to promote sales of Huiyuan Juice Group, stifling competition and leading to higher prices.

…

“Whether Huiyuan is a national brand is not a factor that needs to be considered in an antimonopoly investigation and has nothing to do with the commerce ministry’s rejection of this acquisition,” a ministry spokesman, Yao Jian, said in statement on its Web site.

…

Coca-Cola’s “dominant position in the carbonated beverage market could be transferred to the fruit juice market,” Mr. Yao said. “This would seriously cripple or deprive other fruit juice producers of the ability to compete. It would harm competition in the fruit juice market, forcing customers to accept higher prices and fewer products.”

He said Coca-Cola might have used its carbonated beverage brands to promote Huiyuan or bundle products together for sale.

…

The company [Coca-Cola] has a 16 percent share of China’s soft drink market — which also includes fruit and vegetable juices, bottled teas and sports drinks — and adding Huiyuan would have raised that to 18 percent, according to the consulting firm Euromonitor.

In this Sherman Act suit, plaintiffs, who provide pest control services to individual customers, allege that defendants, who manufacture pesticides, illegally conspired with their distributors to set minimum resale prices of certain termiticide products. Specifically, plaintiffs claim that defendant manufacturers Bayer CropScience LP and Bayer Corp. (hereinafter collectively referred to as “Bayer”) and BASF Corp. each engaged in the practice known as “resale price maintenance” or “vertical price fixing” — Bayer with its product Premise and BASF with its product Termidor. Defendants counter that United States v. General Electric Co., 272 U.S. 476 (1926), held that a manufacturer may lawfully set minimum prices for its products when there is a genuine principal-agent relationship between the manufacturer and its distributors, and that such relationships existed here. Plaintiffs rejoin that Leegin Creative Leather Products, Inc. v. PSKS, Inc. , 127 S. Ct. 2705 (2007), implicitly overruled General Electric, and in the alternative argue that the agency relationships between defendants and their distributors were a sham. Because Leegin did not eliminate the agency defense to a claim of resale price maintenance and the agency relationships between defendants and their distributors were genuine, we find no basis for antitrust liability and thus affirm the district court’s grant of summary judgment to defendants.

… Plaintiffs insist in their briefs and at oral argument that afterLeegin the agency defense under General Electric to a claim of resale price maintenance is no longer viable. This argument fails because the two cases dealt with two separate elements of antitrust liability: General Electric addressed what types of relationships constitute agreements to set prices for purposes of the Sherman Act, while Leegin concerned whether such agreements, once proven, should be considered per se unlawful.

You can read the whole opinion here.

Fixed. Please let us know if you still see broken links.

1. The 1996 Telecommunications Act declares the antitrust laws to be applicable.
2. The claim in Trinko, which concerned non-price terms in the resale of telecomm services under a duty to deal flowing from the 1996 Act, was a novel claim that would have extended the reach of the antitrust laws (specifically §2 Sherman Act).
3. Because of the dangers of false positives inherent in antitrust enforcement, and because of the presence of an regulatory scheme designed to prevent and sanction antitrust violations, §2 should not be extended to reach the claims in Trinko, absent an antitrust duty to deal.

The Ninth Circuit, in its Linkline decision, which was overruled by the Supreme Court, used this structure of the Trinko decision to argue that Trinko should not preclude Linkline’s price-squeeze claim, since the price squeeze was not an extension of the antitrust laws (having been established since Alcoa), and because the regulatory scheme in Linkline did not (effectively) address antitrust violations.

But in the opinion of the court in Linkline, Chief Justice Roberts writes that Trinko

… makes clear that if a firm has no antitrust duty to deal with its competitors at wholesale, it certainly has no duty to deal under terms and conditions that the rivals find commercially advantageous. … The nub of the complaint in both Trinko and [Linkline] are identical—the plaintiffs alleged that the defendants (upstream monopolists) abused their power in the wholesale market to prevent rival firms from competing effectively in the retail market. Trinko holds that such claims are not cognizable under the Sherman Act in the absence of an antitrust duty to deal.

This re-interpretation extends Trinko in significant ways. First, the specific application to the telecommunications industry and its regulatory scheme is gone; Trinko á la Linkline is broadly applicable to any vertically-integrated upstream monopolist. Second, the holding is no longer confined to an extension of the antitrust laws, but reaches all of §2 (hence the possibility of a slippery slope, as Hanno pointed out). Finally, the prensence and effectiveness of a regulatory scheme, which provides a regulatory duty to deal and which may or may not address abuses of market power, has been taken out of the equation: the only thing that matters now is the absence of an antitrust duty to deal. And we know from Trinko that antitrust duties to deal probably don’t exist except perhaps under Aspen Skiing, that is in the case of prior business relationships discontinued for no good reason other than exclusion of a rival.

The ministry of commerce said Coke’s bid to acquire the China Huiyuan Juice Company was rejected on antitrust reasons. The government said the deal would allow Coke to dominate a huge segment of the beverage market. In a statement released Wednesday, the commerce ministry said it was worried that Coke would “set up some exclusive terms to restrict competition in the juice market,” drive up the consumer prices and squeeze out smaller beverage makers.

The statement is available, in Chinese, here (if/when we can find the statement in English, we will post a link to it too).

HT to Kim & Chang.