Friday, January 05, 2007

State Antitrust Enforcement: 2006 in Review

This posting was written by Jeffrey May, editor of CCH Trade Regulation Reporter

State antitrust investigations into the insurance industry netted significant settlements in 2006. In March, Zurich American Insurance Company agreed to settle with 13 state attorneys general and insurance regulators charges that it rigged bids and secretly paid insurance brokers hundreds of millions of dollars in exchange for steering business to Zurich.

Two separate settlement agreements, announced in March, resolved charges brought by the states of California, Connecticut, Florida, Hawaii, Illinois, Maryland, Massachusetts, New York, Oregon, Pennsylvania, Texas, Virginia, and West Virginia. St. Paul Travelers Companies, Inc., entered into a settlement agreement with the states of New York, Connecticut, and Illinois in August to resolve charges of customer steering, bid rigging, and improper finite reinsurance transactions.

In December, Prudential Insurance Company of America, the country's second largest group life insurer in the nation, reached separate settlements with the State of New York and the California Department of Insurance. Prudential allegedly engaged in deceptive and anticompetitive practices in the sale of group insurance products to employers throughout the United States. The insurer agreed to provide restitution to policyholders and to pay civil penalties to New York. The settlement with the California Insurance Department required changes to business practices.

New actions were also revealed in 2006. Acordia Inc., the fifth largest insurance brokerage firm in the nation, announced on December 19, that it would vigorously defend itself against allegations brought by the attorneys general of New York, Connecticut, and Illinois that it steered consumers to selected insurers in return for millions of dollars in secret payments.

Outside the insurance sector, a $14 million settlement agreement led to the dismissal of a multi-state antitrust enforcement action against SmithKline Beecham Corporation in March. The settlement agreement resolved allegations brought by 49 states, the District of Columbia, and the Territory of the Virgin Islands that the drug company unlawfully monopolized the market for its branded antidepressant Paxil and generic bioequivalents. In July, the state attorneys general announced lawsuits charging leading manufacturers of computer memory chips and their subsidiaries with fixing the prices of memory chips known as dynamic random access memory chips.

In merger news, Exelon Corporation and Public Service Enterprise Group Incorporated announced in September that they would terminate their merger agreement following their failure to reach an agreement with the New Jersey Board of Public Utilities.

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