Trade Regulation Tidbits

This posting was written by Darius Sturmer, Editor of CCH Trade Regulation Reporter.

Notes on recent state enforcement actions:

 American International Group (AIG) has agreed to pay $9 million to settle a lawsuit by the State of Ohio alleging violations of the state’s antitrust laws. AIG, the world’s largest insurance company, was alleged to have conspired with insurance broker Marsh & McLennan and other insurers to eliminate competition in the commercial casualty insurance industry. The state’s complaint asserted that the insurers and Marsh agreed to provide customers with fictitious quotes creating the false impression that competitive bidding had produced the best possible price, during a period extending from 2001to 2004. As a result of the settlement, more than $3 million will be distributed to the 26 public entities, including universities, schools, cities, and counties. Approximately $4 million will be put aside in a fund that will be distributed by the court once the antitrust case has been completely resolved. In an April 7 announcement, Ohio Attorney General Richard Cordray noted that while it was “a good settlement for Ohio," the litigation had not concluded. The state is pursuing claims against Marsh & McLennan, ACE American Insurance Co., The Chubb Corporation, and Hartford Financial Services Group.

 The New York Attorney General's Office has filed litigation in state court challenging mattress maker Tempur-Pedic International, Inc.'s alleged restrictions on dealer discounting. The state contends that Tempur-Pedic prohibited its retailers from discounting its mattresses. Mattress retailers acknowledge that adhering and agreeing to the manufacturer's suggested retail prices is required to remain as a Tempur-Pedic retailer, according to the allegations. The state is seeking restitution to consumers and disgorgement under New York state law.

 Connecticut Attorney General Richard Blumenthal announced on April 1 that the La Quinta Inn hotel chain has formally agreed to cease "call-arounds"—a potentially anticompetitive practice in which competing hotels exchange current room rate and occupancy information. The state attorney general's antitrust investigation into the hotel industry, which remains ongoing, has found that the call-around practice is prevalent in the hospitality industry and raises serious antitrust concerns because the information can be manipulated to raise or stabilize rates charged for hotel rooms. According to Blumenthal, the investigation has revealed that certain competitors of La Quinta have used call-around information to raise their prices on a regular basis, violating the Connecticut Antitrust Act. La Quinta's agreement to end call-arounds covers all La Quinta Inn and La Quinta Inn & Suites hotels nationally. The prohibition does not prevent hotels from reviewing commercially available reports and information, communicating with any other hotel or motel on behalf of a specific guest seeking to relocate, or communicating with any other hotel/motel to accommodate guests in the event of a state of emergency, disaster or similar situation. Further details appears here on the Connecticut Attorney General's website.