Impax Reaches Impasse As Fifth Circuit Denies Review Of FTC’s First Post-Actavis Reverse Payment Ruling
On April 13, 2021, the United States Court of Appeals for the Fifth Circuit, in an opinion authored by Judge Gregg Costa, affirmed the Federal Trade Commission’s (“FTC”) order finding a reverse payment settlement between a branded drug manufacturer and a generic drug manufacturer violated the FTC Act and the Sherman Act. Impax Laboratories, Inc. v. Federal Trade Commission, No. 19-60394 (5th Cir. 2021). The Court upheld the FTC administrative court’s finding that the settlement agreement was anticompetitive because it “replaced the ‘possibility of competition with the certainty of none.’”
FTC And State Regulators Bring Enforcement Action In Southern District Of New York Against “Pharma Bro” Martin Shkreli
On Monday, January 27, 2020, the Federal Trade Commission (“FTC” or “the Commission”) and the New York Attorney General filed suit in federal court in the Southern District of New York against Martin Shkreli and Vyera Pharmaceuticals based on allegations of market monopolization. FTC v. Vyera Pharmaceuticals, LLC, No. 1:20-cv-00706 (S.D.N.Y. filed Jan. 27, 2020). The case has been assigned to U.S. District Judge Denise L. Cote. Shkreli, commonly referred to in the media as “pharma bro,” gained notoriety for behavior that led to his federal incarceration for securities fraud in 2017. The Complaint alleges that Shkreli and others engaged in an unlawful scheme to block low-cost generic competition and maintain a monopoly on Daraprim, an essential drug used to treat the potentially fatal parasitic infection toxoplasmosis, in violation of the Sherman Act and New York state law. The case is a notable example of close collaboration between federal antitrust enforcers and a state attorney general’s office.
Reversing Prior Order, Utah District Court Holds Per Se Rule Applies To Customer Allocation Agreement
On February 21, 2019, Judge David Sam of the U.S. District Court for the District of Utah reversed course and found that a per se standard applies to a market allocation agreement among competitors in the heir location services market. Judge Sam initially found that the more lenient rule of reason standard should apply. However, following a recent Tenth Circuit ruling, Judge Sam held it is the form of the agreement—not the type of industry—that compels the appropriate standard of review. United States of America, v. Kemp & Associates, Inc. and Daniel J. Mannix, No. 2:16CR403 DS, 2019 WL 763796 (D. Utah Feb. 21, 2019).
United States Supreme Court Upholds Rejection Of The Government’s Antitrust Challenge To American Express’s Merchant Contracts
On June 25, 2018, the U.S. Supreme Court, in a 5-4 decision by Justice Thomas, held that provisions in American Express Company’s (“American Express” or “Amex”) and its operating subsidiary’s contracts with merchants that restricted the ability of these merchants to steer customers to other credit or charge cards did not violate the Sherman Act. Ohio v. Am. Express Co., 585 U.S. __, slip op. at 1 (2018). The Court held that plaintiffs—the United States Department of Justice and the Attorneys General of several states—failed to satisfy their burden of proving anticompetitive effects in the relevant market under the rule of reason. Id. at 10. The ruling has important implications for antitrust analysis, not only for the credit card industry, but for other industries that operate in two-sided markets where firms must compete simultaneously for different groups of customers whose demands are distinct but deeply interrelated.
United States District Court For The District Of Columbia Rejects DOJ Challenge To AT&T-Time Warner Merger
06/19/2018On June 12, 2018, following a six-week-long bench trial, Judge Richard J. Leon of the United States District Court for the District of Columbia ruled that AT&T’s proposed acquisition of Time Warner does not violate the antitrust laws, rejecting the United States Department of Justice’s (DOJ) challenge to the merger. United States v. AT&T Inc., Civil Case No. 17-2511 (RJL) (D.D.C. June 12, 2018). This case—the first vertical merger challenge tried by the Justice Department since 1977—demonstrates the difficulty in challenging mergers where a competitor is not eliminated by the transaction.
Utah District Court Denies Defendants’ Motion To Dismiss Complaint Alleging Restraint Of Trade In Online Lens Retail Market
On May 17, 2018, Judge Tena Campbell of the United States District Court for the District of Utah denied three leading contact lens retailer defendants’ motion to dismiss a putative class action complaint alleging violations of Section 1 of the Sherman Act. J. Thompson, et al. v. 1-800 Contacts, et al., Case No. 2:16-CV-1183-TC (D. Utah May 17, 2018). Plaintiffs, who purchased contact lenses online from defendants, alleged that they paid artificially-inflated prices for those contact lenses due to defendants’ anticompetitive trademark litigation settlement agreements. Defendants moved to dismiss the claims because the plaintiffs lacked antitrust standing, failed to properly plead a relevant product market, did not allege a single overarching conspiracy, and with respect to damages claims prior to 2012, failed to file a lawsuit within the Clayton Act’s four-year statute of limitations.
United States Federal Trade Commission Administrative Law Judge Dismisses Complaint Challenging Reverse Payment Settlement Between Pharmaceutical Manufacturers
On May 11, 2018, U.S. Federal Trade Commission (“FTC”) Administrative Law Judge D. Michael Chappell issued an initial decision ruling that a reverse payment settlement by Endo Pharmaceuticals (“Endo”) with Impax Laboratories (“Impax”) did not violate Section 5 of the FTC Act, and dismissing the FTC’s complaint. In the Matter of Impax Labs., Inc., Docket No. 9373 (Initial Decision, May 11, 2018). Judge Chappell concluded that despite the reverse payment Endo made to Impax, the anticompetitive harm arising from the settlement was “largely theoretical,” and that the settlement’s procompetitive benefits outweighed any anticompetitive effect from the agreement. The initial decision is the first administrative ruling on a reverse payment trial since the U.S. Supreme Court’s 2013 Actavis decision. The decision has been noticed for appeal to the Commission.
European Union General Court Upholds Cartel Liability Of Facilitators, But Attempts To Rein In Commission’s Approach In Settlements
On November 10, 2017, the European Union General Court (GC) handed down its judgment in Icap v Commission. Judgment of the General Court in Case T-180/15 Icap and others v Commission, 10 November 2017. This note examine three aspects of the decision: (1) the imposition of liability for cartel infringement on a “facilitator” who was not a primary participant in the cartel; (2) the Commission’s procedural obligations with regard to settlement procedures in hybrid cases; and (3) the standard for a “by object” infringement of Article 101(1) Treaty on the Functioning of the European Union (TFEU).
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