Distribution, Competition, and Antitrust / IP Law

Marginal Evidence of Customer Diversion Won’t Support a Price Discrimination Claim

In Cash & Henderson Drugs, Inc v. Johnson & Johnson, Case No. 12-4689 (2nd Cir. Aug. 27, 2015), the Second Circuit upheld a summary judgment in favor of defendant pharmaceutical manufacturers accused of price discrimination.

Retail pharmacies alleged – and the defendant manufacturers conceded – that the drug companies had offered lower drug pricing to staff-model HMOs and pharmacy benefit managers. The retail pharmacies alleged that the price discounts amounted to unlawful price discrimination under the Robinson-Patman Act.

Through court-supervised discovery, the plaintiffs attempted to assemble “matching” evidence showing that customers they lost ended up purchasing from the favored purchasers. However, the evidence showed that only 1%-3% of potential lost customers in plaintiffs’ records could be identified as customers who later filled prescriptions with a favored purchaser.

The Second Circuit held that this de minimis loss of customers was insufficient to establish a competitive injury. The court held that although FTC v. Morton Salt Co., 334 U.S. 37, 50-51 (1948), also permits a discrimination claim to be predicated upon a substantial discount to a competitor over a significant period of time, after Volvo Trucks North America v. Reeder-Simco GMC, Inc., 546 U.S. 164, 180 (2006) (holding that price discrimination must affect “substantially” competition between the favored purchaser and the plaintiff), “if the loss attributable to impaired competition is de minimis, then the challenged practice cannot be said to have had a ‘substantial’ affect [sic] on competition.”

Cash & Henderson is yet further evidence of the courts’ repeated attempts to limit the reach of the Robinson-Patman Act and harmonize it with the intent to protect competition (not competitors) that animates the Sherman Act.

Are Mutual Index Funds Anti-Competitive?

They may be, according to a thought-provoking article by Harvard Law School Professor Einer Elhauge entitled “Horizontal Shareholding as an Antitrust Violation” (July 21, 2015), available here. In a nutshell, Professor Elhauge’s argument … [Continue reading]

Milk expiration dates and clever cartels

The Planet Money podcast this week has a story about the Greek economy.  According to the podcast, there is a Greek milk producer "cartel."  Of course cartels are unlawful in Europe, just as they are in the U.S.  So it seems that Greek milk producers … [Continue reading]

Price Erosion and Restricting Online Distribution Rights

A reader who works with clients who sell online asked me to address online distribution restrictions.  This is more-or-less the reverse of the question I addressed in “Can My Supplier Refuse to Sell Products to Me?”  As always, I offer general … [Continue reading]

“And the Plaintiffs Don’t Have to Sue My Competitors Because? . . . .”

One of the pet peeves of antitrust defendants is that the joint-and-several liability rule often means that plaintiffs can pick and choose which defendants to sue. (Plaintiffs will say – that’s a design feature of the antitrust laws, and not a bug.) … [Continue reading]

SCOTUS Reaffirms that in Antitrust Cases, It Gives Less Deference to Precedent

Yesterday, in Kimble v. Marvel Entertainment, LLC, the U.S. Supreme Court upheld the rule first announced in Brulotte v. Thys Co., 379 U.S. 29 (1964), that a patentee cannot collect royalties on sales made after expiration of the patent. The … [Continue reading]

Is Antitrust Relevant for Startups, Emerging, and Non-Dominant Firms?

The answer is (surprise!) “yes.” There are a number of ways in which antitrust law is relevant to emerging and non-dominant companies. Those firms may: Need to deal with the dominant firms in their markets, including by (i) responding to … [Continue reading]

Wholesale Grocery Products Case Raises Questions About How and When to Apply Per Se Rule and Rule of Reason

The Supreme Court today denied review in In re: Wholesale Grocery Products Antitrust Litigation, an action that came up from the District of Minnesota and the Eighth Circuit. Substantively, the case is a useful reminder about the potential dangers of … [Continue reading]

Do State Bar Associations Have Antitrust Risk?

It was only a matter of time after the Supreme Court's decision in North Carolina State Board of Dental Examiners v. Federal Trade Commission, 135 S. Ct. 1101 (2015) (*), that a state bar association would face an antitrust suit.  But the suit … [Continue reading]

Can Trademark Abuse Constitute Monopolization?

As far as antitrust law is concerned, trademarks are the unwanted stepchildren of intellectual property. The conventional wisdom is that trademarks – whose exclusionary effect is very attenuated, if it exists at all – do not confer market power, so … [Continue reading]

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