Friday, January 07, 2011

Federal/State Antitrust Cooperation Continued in 2010

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

In 2010, the states joined with the federal antitrust agencies to challenge anticompetitive conduct in some of the year's most high profile antitrust enforcement actions.

Restrictive Credit Card Rules

A total of 20 states have now joined the Department of Justice Antitrust Division in challenging the allegedly restrictive rules of the three largest credit and charge card transaction networks in the United States. The Department of Justice and seven states originally filed their civil antitrust suit against Visa, MasterCard and American Express in October 2010. The complaint was amended in December to add the additional states. Visa and MasterCard have entered into proposed settlements; however, American Express has announced its intention to defend itself in court.

Acquisitions and Mergers

Illinois, Michigan, and Wisconsin also joined forces with the U.S. Department of Justice in an action against Dean Foods Company—the nation’s largest dairy processor—to undo the company's 2009 acquisition of Dean Foods and Foremost Farms USA's Consumer Products Division. The case is ongoing.

In other merger news, Ohio Attorney General Richard Cordray, co-chair of the Antitrust Committee of the National Association of Attorneys General, announced in September plans to open a preliminary review of the combination of Southwest Airlines and AirTran Airlines.

Health Care

The State of Michigan and the U.S. Justice Department filed suit in October against Blue Cross Blue Shield of Michigan, the largest provider of commercial health insurance in Michigan, over its use of “most favored nation” (MFN) clauses in contracts with hospitals across the state. The suit alleges that Blue Cross’s contracting practices violated Sec. 1 of the Sherman Act and Sec. 2 of the Michigan Antitrust Reform Act.

Also in the health care area, the State of Nevada reached a settlement with Universal Health Services, one of the nation’s largest hospital management companies, over its proposed acquisition of Psychiatric Solutions, Inc. Under a final judgment resolving the state's antitrust concerns, Universal Health Services was required to divest two local psychiatric hospitals, which also had to be divested under a separate FTC consent order.

Price Fixing

In 2010, the states resolved a number of price fixing actions. In September, a $25 million multi-state settlement involving an alleged price fixing conspiracy in the vitamins industry was announced. The suit, brought in 2009, asserted that 12 vitamin manufacturers had schemed to inflate the prices of 16 vitamins, causing government health care programs to overpay for those vitamins. Resolution of a long-running price fixing action brought by 33 states was announced in June. Six of the world’s top manufacturers of dynamic random access memory (DRAM) computer chips agreed to a $173 million settlement. The proposed settlement would resolve both of these litigations, as well as lawsuits by private plaintiffs

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