Tuesday, December 29, 2009

New York’s Intel Suit Was Highlight of 2009 State Antitrust Enforcement

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

In a busy year for state antitrust enforcers, the biggest news story for 2009 was New York State’s filing of a monopoly complaint against computer chip maker Intel Corporation.

On November 4, the state filed its suit, charging that “Intel violated state and federal anti-monopoly laws by engaging in a worldwide, systematic campaign of illegal conduct . . . to maintain its monopoly power and prices in the market for microprocessors.” The filing followed an investigation that was originally announced in January 2008.

A number of other state enforcement news stories from 2009 resulted from long-running investigations announced in past years.

Microsoft Settlement

The State of Mississippi and Microsoft resolved an antitrust dispute in June that was valued at up to $100 million. Mississippi was the last state to settle its antitrust allegations that sought to recover overcharges on behalf of consumers. The settlement involved the largest cash payment made to a state government by Microsoft (2009-1 Trade Cases ¶76,649).

Insurance and Reinsurance Industries

Onging investigations of the insurance and reinsurance industries netted settlements in 2009. Taking the lead in this area, Connecticut announced a $1.3 million settlement with The Hartford Financial Services Group, Inc., which the state attorney general called “the first antitrust settlement of its kind in the reinsurance industry.”

The settlement resolved claims that The Hartford participated in several anticompetitive schemes that illegally inflated insurance and reinsurance costs nationwide. The Hartford, which is no longer involved in the reinsurance market, cooperated with the state's investigation.

Litigation continues against one of the world's largest reinsurance brokers—Guy Carpenter & Company, LLC.

Earlier in the year, Marsh & McLennan Companies, Inc. agreed to pay $2.4 million in restitution to settle allegations made by the Connecticut Attorney General that the company engaged in bid rigging and price fixing.

Connecticut's settlement with Marsh—announced in March—was preceded by a settlement with nine other states announced in January 2009. Under that settlement, the states—Florida, Hawaii, Maryland, Massachusetts, Michigan, Oregon, Pennsylvania, Texas, and West Virginia—were paid $7 million by Marsh.

Medicare Reimbursement, Hospital Boycott

In May, the State of Illinois ended an antitrust action filed in 2007 against two physicians groups for conspiring to refuse to offer certain primary health care services to new Medicaid patients in the central part of the state in order to increase Medicaid reimbursement rates for such services.

On May 1, an Illinois circuit court approved a settlement between the state and Christie Clinic, P.C., resolving the dispute (2009-1 Trade Cases ¶76,608). The other named clinic, Carle Clinic Association, settled the suit in December 2008.

Texas and the largest hospital system in Houston entered into a consent decree in January prohibiting Memorial Hermann Healthcare System from agreeing with health plans to boycott competing hospitals (2009-1 Trade Cases ¶76,479).

Aftermarket Auto Filters

In other state enforcement news, Florida filed a lawsuit in April, joining a nationwide group of actions consolidated in the federal district court in Chicago, alleging that nine of the largest manufacturers of aftermarket auto filters in the United States have conspired to fix prices and allocate customers since 1999.

State Law Enactments

There were also some significant state law developments in 2009. The State of Maryland passed a law in 2009 clarifying that resale price maintenance (RPM) remains per se illegal in the state.

This was the first legislative action taken in response to the U.S. Supreme Court's ruling, in Leegin Creative Leather Products, Inc, v. PSKS, Inc. (2007-1 Trade Cases ¶75,753), that RPM should be held to a rule of reason standard rather than declared per se illegal under federal antitrust law.

Other state laws enacted in 2009 could benefit state enforcers, including legislation that increased civil penalties for antitrust violations in Connecticut and Colorado.

Effective October 2009, the Connecticut Antitrust Act was amended to increase the available civil penalty in actions instituted by the attorney general up to $100,000 for individuals and up to $1 million for other entities.

The maximum civil penalty that can now be imposed for a violation of Colorado Antitrust Act was increased from $100,000 to $250,000, under a law that took effect in August 2009.

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