Friday, January 04, 2008

State Antitrust Enforcers Targeted Insurance Sector, Mergers, Microsoft in 2007

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

As in 2006, state antitrust enforcers continued to target alleged anticompetitive conduct in the insurance industry in 2007. The result was a number of multi-state settlements with insurers.

As the year came to a close, nine states and the District of Columbia reached a $6 million settlement with Travelers Companies, Inc. regarding its role in an alleged nationwide bid rigging scheme devised by insurance broker Marsh & McLennan. Earlier in the year, Hartford Financial Services Group, Inc. agreed to pay $115 million to settle allegations by Connecticut, Illinois, and New York that it faked bids and allowed illegal trading in some mutual funds.

Individual states also brought enforcement actions in the sector. Texas announced in April that a large commercial casualty insurance company agreed to pay $2.1 million to settle allegations that it conspired to avoid competition with the same companies that were its own original investors. Connecticut announced in October an antitrust lawsuit against one of the world's largest reinsurance brokers for conspiring to fix prices and manipulate markets. One month later, Louisiana filed suit against major insurance companies for violating the Louisiana Monopolies Act by using damage-estimating software programs to engage in horizontal price fixing following Hurricanes Katrina and Rita.

Mergers and Acquisitions

Concerns over competition in local private school bus markets prompted a multi-state antitrust enforcement action challenging the combination of the two largest school bus contractors in the nation. A consent decree resolved a civil suit brought by the states of 11 states (2007-2 Trade Cases ¶75,931).

In another multi-state challenge to an acquisition, Rite Aid Corporation—the nation's third largest retail drug store chain—agreed to divestitures to clear the way for its acquisition of the drug store assets of Jean Coutu Group, Inc.—the owner of Eckerd and Brooks drug stores. The FTC also reached an agreement with Rite Aid that required the sale of 23 stores.

Microsoft Final Judgments

As portions of the antitrust final judgments against Microsoft Corporation were set to expire in November 2007, ten states and the District of Columbia asked the federal district court in Washington, D.C. for an extension of the decrees, which prohibit the computer software company from abusing its monopoly in the PC operating system market. “The decree has not lived up to its goal of increasing market competition,” California Attorney General Jerry Brown said

In June, Microsoft Corporation agreed to make significant changes in the design of its desktop search feature in the Windows Vista operating system to satisfy state antitrust concerns.

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