In re Natixis Funding Corp., Agreement, Feb. 18, 2016)
Plaintiff states entered into settlement agreement with Natixis Funding Corp. for fraudulent and anticompetitive conduct in municipal bond derivative transactions with state and local government entities and nonprofits across the country. Natixis will pay $29,950,000 as part of a coordinated 22-state and private class settlement. The funds will mostly be applied to restitution for municipalities, counties, government agencies, school districts and nonprofits that the states allege were harmed when they entered into municipal derivatives contracts with Natixis. In 2008, the plaintiff states, in parallel with the U.S. Department of Justice and federal regulatory agencies, began their investigation of the municipal bond derivatives market. In these markets, tax exempt entities such as municipalities, school districts, and nonprofit organizations issue municipal bonds and reinvest the proceeds until the funds are needed or enter into contracts to hedge interest rate risk. These investigations revealed anticompetitive and fraudulent conduct involving individuals at a number of large financial institutions, including Natixis, and certain brokers with whom they had worked. Certain Natixis employees and their counterparts at other institutions rigged bids, submitted noncompetitive courtesy bids and fraudulent certificates of arms-length bidding to government agencies. The misconduct led local and state governments, as well as nonprofits, to enter into municipal derivatives contracts on less advantageous terms than they would have otherwise. Natixis agreed to pay $23.4 million into a settlement fund and $1.5 million to the attorneys general as an additional payment. Natixis also agreed not to submit non-competitive bids or refrain from bidding on, or coordinate the preparation of bids for municipal derivatives and to cooperate with ongoing investigations.
In re Societe Generale S.A., Agreement
Plaintiff states entered into settlement agreement with Societe Generale for fraudulent and anticompetitive conduct in municipal bond derivative transactions with state and local government entities and nonprofits across the country. Societe Generale agreed to pay $26,750,000 as part of a coordinated 22-state and private class settlement. Pursuant to the settlement, this money will mostly be applied to restitution for municipalities, counties, government agencies, school districts and nonprofits that the states allege were harmed when they entered into municipal derivatives contracts with Societe Generale. In 2008, plaintiff states, in parallel with the U.S. Department of Justice and federal regulatory agencies, began their investigation of the municipal bond derivatives market. In these markets, tax exempt entities such as municipalities, school districts, and nonprofit organizations issue municipal bonds and reinvest the proceeds until the funds are needed or enter into contracts to hedge interest rate risk. These investigations revealed anticompetitive and fraudulent conduct involving individuals at a number of large financial institutions, including Societe Generale, and certain brokers with whom they had worked. Certain Societe Generale employees and their counterparts at other institutions rigged bids, submitted noncompetitive courtesy bids and fraudulent certificates of arms-length bidding to government agencies. The misconduct led local and state governments, as well as nonprofits, to enter into municipal derivatives contracts on less advantageous terms than they would have otherwise. Societe Generale agreed to pay $25.1 million into a settlement fund to provide restitution for injured parties and $1.4 million to the attorneys general as an additional payment. Societe Generale also agreed not to submit non-competitive bids or refrain from bidding on, or coordinate the preparation of bids for municipal derivatives and to cooperate with ongoing investigations.
People of the State of New York v. Actavis, PLC et al., No. 14-CV-7473 (RWS)(S.D.N.Y filed Dec. 10, 2014)
Plaintiff state sued pharmaceutical manufacturer Actavis plc and its New-York based subsidiary Forest Laboratories seeking an injunction to prevent them from withdrawing the Alzheimer’s drug Namenda from the market and switching patients to a once daily version, Namenda XR. Namenda’s patent will expire in July 2015 and the company thereafter faces competition from generic drug makers. According to the complaint, Actavis planned to force patients to switch unnecessarily to Namenda XR because it had a longer patent. Once patients switch to Namenda XR, it would be difficult for patients to switch drugs again once generics become available. Normally, state substitution laws allow pharmacists to dispense generics without being forced to obtain physician approval. According to the complaint, even though Namenda and Namenda XR have the same active ingredient, pharmacists will not be allowed to offer generic Namenda to patients taking Namenda XR; a doctor’s approval would be required to make that switch. This means that most Alzheimer’s patients and their families will remain on Namenda XR. The lawsuit alleges that, by forcing patients to switch to Namenda XR, Actavis is gaming the regulatory system that governs pharmaceuticals and violating antitrust laws designed to encourage competition and keep prices down for consumers. In December 2014, the district court enjoined Actavis from ceasing production of Namenda, and the injunction was affirmed by the Second Circuit in May 2015.
In re North Shore Health System and Long Island Jewish Hospital
State and two hospitals agreed that the merged hospitals would, for a period of five years, pass on $100 million of cost savings to consumers, in the form of new or incremental services, including early detection and screening, increasing services to underserved populations, improvements of health care delivery. the hospitals also agreed to freeze hospital list prices for both inpatient and outpatient services for two years. Annual reports are to be submitted to the attorney general.
Investigation Concerning an Agreement Between Competing Pharmaceutical companies to Not challenge Each Other’s sole first to file Exculsivity, Assurance No. 14-034 (Feb. 19, 2014)
State challenged an agreement between two generic pharmaceutical makers under which they agreed not to challenge the exclusivity of any of the other party’s pharmaceuticals (pursuant to the Hatch-Waxman Act). The parties agreed to drop that provision and not enter into a similar provision with other generic manufacturers
Investigation by Attorney General of the State of New York, of the Proposed Combination of Seamless North America, LLC and GruHub Inc.
Seamless and GrubHub are two services that allow consumers to search for local restaurants, browse menus, and order food for delivery or takeout via their respective websites or mobile applications. The two proposed to merge. The Attorney General was concerned that exclusivity provisions in their contracts would impede entry of other competitors in the online food ordering platform market in Manhattan. In an Assurance of Discontinuance, the companies agreed to waive their exclusivity provisions, not enter into any new exclusivity arrangements with restaurants for 18 months, nor provide any incentives for exclusivity. The companies also agreed not to enter into any exclusive arrangement with the online review site Yelp for a period fo 18 months.
In the Matter of the Proposed combintion of Faxton-St. Luke’s Healthcare and St. Elizabeth Medical Center, Assurance No. 13-489 (Dec. 11, 2013))
The two acute care hospitals in the city of Utica sought to merge. Both are in a weak financial state and treat needy patients, most of whose care is covered by Medicaid or Medicare. The settlement includes provisions prohibiting the hospitals from requiring independent physicians to work exclusively at the hospitals, and from requiring health plans to reimburse competing hospitals or health care providers at the same or lower rates than the health plans reimburse the hospitals. The hospitals committed to negotiate in good faith with rate payers. If these payors believe that the hospitals are acting unfairly, the settlement gives the payors the right to continue their currently-existing relationships with the hospitals for five years at current prices, subjected to annual increases not to exceed historic levels. The settlement also provides for continued monitoring by the Attorney General to ensure that the hospitals have implemented their promised efficiencies prior to termination of the rate-protection provisions.
United States and New York v. Twin America LLC et al., No. 12CV8989 (S.D.N.Y. Dec. 11, 2012)
The state and USDOJ filed a joint complaint alleging violations of the Sherman and Clayton Acts as well as the Donnelly Act and New York Executive Law. The complaint alleged that the parties had entered into an illegal joint venture which created a monopoly in the “hop-on, hop-off” bus tours in New York City. The settlement reached by the parties requires the defendants to relinquish approximately fifty bus stops across Manhattan controlled by City Sightsand to disgorge $7.5 million in profits they obtained from the operation of their illegal joint venture, and as a result of their several year effort to forestall antitrust enforcement. The New York Attorney General and the United States determined that disgorgement was particularly appropriate on the facts of this case, a consummated merger involving an anticompetitive price increase and deliberate attempts to evade antitrust enforcement.
Texas et al. v. Penguin Group et al., No. 1:12-cv-03394-DLC (S.D.N.Y, Apr. 30, 2012)
TTexas and Connecticut led 33 state group that filed complaint charging three of the nation’s largest book publishers and Apple Inc. with colluding to fix the sales prices of electronic books. The States undertook a two-year investigation into allegations that the defendants conspired to raise e-book prices. Retailers had long sold e-books through a traditional wholesale distribution model, under which retailers, not publishers, set e-book sales prices. The states alleged that Penguin, Simon & Schuster and Macmillan conspired with other publishers and Apple to artificially raise prices by imposing a distribution model in which the publishers set the prices for bestsellers at $12.99 and $14.99. When Apple prepared to enter the e-book market, the publishers and Apple agreed to adopt an agency distribution model as a mechanism to allow them to fix prices. To enforce their price-fixing scheme, the publishers and Apple relied on contract terms that forced all e-book outlets to sell their products at the same price. Because the publishers agreed to use the same prices, retail price competition was eliminated. According to the States’ enforcement action, the coordinated agreement to fix prices resulted in e-book customers paying more than $100 million in overcharges. The States’ antitrust action seeks injunctive relief, damages for customers who paid artificially inflated prices for e-books and civil penalties. Case was filed in W.D. Tex., transferred to S.D.N.Y. as consolidated case. The States reached settlements with the five publishers, which granted E-book outlets greater freedom to reduce the prices of their E-book titles. Consumers nationwide received a total of $164 million in compensation. After entering into settlement agreement with all the Defendant publishers, DOJ and the states had a nearly 3 week trial against Apple in June 2013, during which numerous witnesses took the stand. On July 10, 2013, a decision was handed down in favor of the U.S. Department of Justice and the states against Apple. Trial of the damages phase is pending. United States et al. v. Apple, Inc., 12-CV-2826 (S.D.N.Y.).
In re DDAVP Antitrust Litigation
33 states investigated “pay for delay” allegations relating to DDAVP, a drug used to alleviate bed-wetting. States alleged that Aventis, holder of the patent for the medication, engaged in a scheme to delay the regulatory approval and sale of a generic version of DDAVP, in violation of state and federal antitrust law. States and defendants entered into a settlement under which states received $3.45 million, not as a civil penalty and defendants did not admit guilt.
