News: Antitrust and Trade Regulation Briefing

February 2013

Robert K. Taylor

Highlight

Antitrust Case to Test Class Action Waiver Clause

An antitrust case between American Express and its participating retailers will soon test how far an arbitration clause can go in limiting potential class action suits. The U.S. Supreme Court will consider this spring whether a mandatory arbitration clause and class action waiver in a contract can be enforced even if plaintiffs' costs of arbitration would be likely to greatly exceed their financial recovery. The retailer plaintiffs in American Express v. Italian Colors Restaurant want the Supreme Court to agree that if the retailers could not pursue their federal antitrust claims against American Express as a class, it would be financially impractical for them to pursue such claims, and American Express would have improperly succeeded in insulating itself from antitrust liability. The Supreme Court’s ruling may broadly affect arbitrations involving other federal laws as well.

Invitation to Collude Violates Massachusetts Unfair Trade Practice Statute

The First Circuit Court of Appeals has held that while an unsuccessful attempt to fix prices with a competitor is not a violation of section 1 of the federal Sherman Act, it may give rise to a private right of action under Massachusetts law.

In Liu v. Amerco, the plaintiff alleged, based on facts recited in a prior Federal Trade Commission consent decree, that U-Haul had deliberately communicated with Budget to urge it to follow U-Haul in raising prices for one-way truck rentals.  Budget did not follow U-Haul’s price increase, however, and U-Haul later reduced its rates back to their original level. 

The court held that while an unsuccessful attempt to fix prices would normally cause no harm to consumers, U-Haul’s alleged price fixing plan included unilateral price increases as a signal of its intentions and a target for increases by Budget.  Because U-Haul’s price increases were part of an illegal effort to conspire with Budget to raise prices, the plaintiff alleged a plausible claim for damages under Massachusetts law.

The court distinguished between U-Haul’s alleged “orchestrated illegal effort to conspire” and an innocent price increase “made by a dominant player in the hope that competitors will follow with matching increases.”  Nevertheless, at the beginning of a lawsuit, this distinction may not be of much use to a defendant.  A plaintiff who can allege even a few facts beyond a mere price increase by one alleged conspirator may be able to force expensive and time-consuming fact discovery, regardless of whether an effort to lead a price increase succeeded. 

Antitrust Claims Against Hockey, Baseball Leagues Allowed To Proceed 

In December 2012, the United States District Court for the Southern District of New York ruled that the National Hockey League and Major League Baseball could be sued over allegedly anticompetitive blackouts of live game broadcasts on television and over the Internet.  The plaintiffs claimed that the leagues, various clubs within the leagues, regional sports networks, and video programming distributors Comcast and DirectTV had entered into agreements to eliminate competition in the distribution of baseball and hockey games over the Internet and on television by dividing the live-game video presentation market into exclusive territories protected by blackouts.  According to the plaintiffs, these agreements allowed the defendants to charge monopoly prices for programming otherwise covered by the regional blackouts.  The court held that because the intellectual property at issue belongs to the individual clubs, the alleged agreements are not protected joint venture activity.  The court also held that the plaintiffs had plausibly alleged vertical agreements among the defendants to implement horizontal market restrictions, and that they had antitrust standing to sue as direct victims of the alleged harm to competition.

Federal Trade Commission Releases New Guide for Environmental Marketing Claims

Completing a five-year effort, the Federal Trade Commission (FTC) released its revised Guides for the Use of Environmental Marketing Claims (Green Guides) in October 2012.  The revised Green Guides apply to both consumer and business-to-business transactions, and contain additional guidance for marketers using such terms as “environmentally friendly,” “biodegradable,” “recyclable,” “free of,” and “non-toxic.”  The FTC also for the first time issued guidance on the use of several terms not previously covered by the Green Guides:  claims involving “carbon offsets,” "renewable energy,” or “renewable materials.”  The revised Green Guides do not address a claim that is the subject of numerous class action lawsuits:  that products or their ingredients are “natural.”  The FTC explained that the term “natural” can have many meanings depending on context, and that therefore it could not provide general guidance. 

           

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