U.S. and Plaintiff States v. American Express Co. et al. No. 10-4496 (E.D.N.Y. 2010)

U.S. DOJ and plaintiff states filed suit challenging rules made by American Express, MasterCard and Visa that prevent merchants from offering consumers discounts, rewards and information about card costs, ultimately resulting in consumers paying more for their purchases. Visa and MasterCard settled with the Department of Justice and the litigating states immediately after the complaint was filed. Under the terms of the settlement, the two companies will be required to allow merchants to offer discounts, incentives and information to consumers to encourage the use of payment methods that are less costly. The proposed settlement requires MasterCard and Visa to allow their merchants to: 1) offer consumers an immediate discount or rebate or a free or discounted product or service for using a particular credit card network, low-cost card within that network or other form of payment; 2) express a preference for the use of a particular credit card network, low-cost card within that network or other form of payment; 3) promote a particular credit card network, low-cost card within that network or other form of payment through posted information or other communications to consumers; 4) communicate to consumers the cost incurred by the merchant when a consumer uses a particular credit card network, type of card within that network or other form of payment.
American Express did not agree to settle,and a trial was held, in which the court found for the plaintiffs. . The trial focused on credit card “swipe fees” which generate over $50 billion annually for credit card networks. Plaintiffs argued that price competition over merchant swipe fees has been almost non-existent and for decades the credit card networks have not competed on price because of the rules imposed by each of the networks that limit merchants’ ability to take advantage of a basic tool to keep prices competitive. That tool – commonly used elsewhere in the economy – is merchants’ freedom to “steer” transactions to a network willing to lower its price. Each network has long prohibited such steering to lower-cost cards. The court held that the American Express anti-steering rules block merchants from using competition to keep credit card swipe fees down, which means higher costs to merchants’ customers. The decision means that agreements the plaintiffs reached previously with MasterCard and Visa can be fully implemented pending the conclusion of any appeals.
After remedy submissions from the parties, the court entered an order prohibiting American Express from adopting rules or entering contracts that block merchants from encouraging their customers to use a particular credit card. Under the order, merchants must be permitted to: offer discounts for the use of particular cards; express a preference for particular cards; disclose to customers the cost merchants incur when the customer uses particular credit cards; and engage in other conduct to encourage use of favored credit cards. The order also requires American Express to: repeal any rules that block merchant steering; notify merchants of their freedom to engage in steering activities; and adopt compliance measures to ensure that its employees understand that they cannot continue to block steering by merchants that accept American Express cards.
The Second Circuit reversed the lower court decision that the restraints had an actual anticompetitive effect on interbrand competition. The Second Circuit held that plaintiffs failed to meet their burden of demonstrating an anticompetitive effect on the whole market because “without evidence of the NDPs’ net effect on both merchants and cardholders, the District Court could not have properly concluded that the NDPs unreasonably restrain trade in violation of § 1.”

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Cox ex rel. Michigan v. Home City Ice, No. 10-1080-CP (30th Jud. Dist. Ingham Cty. 2010)

After companies pleaded guilty to federal criminal price-fixing, Michigan alleged that between 2001 and 2007 Arctic Glacier and Home City Ice conspired to reduce competition between the two ice manufacturers in the southeast Michigan market. The companies allocated geographic territories and customers between themselves, lessening competition and potentially resulting in higher prices
for consumers. The companies agreed to pay $740,000 ($350,000 from Arctic Glacier and $390,000 from Home City) in the form of penalties.

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Cox ex rel. Michigan v. Arctic Glacier Int’l, No. 10-1050-CP (30th Jud. Cir. Ingham Cty. 2010)

After companies pleaded guilty to federal criminal price-fixing, Michigan alleged that between 2001 and 2007 Arctic Glacier and Home City Ice conspired to reduce competition between the two ice manufacturers in the southeast Michigan market. The companies allocated geographic territories and customers between themselves, lessening competition and potentially resulting in higher prices
for consumers. The companies agreed to pay $740,000 ($350,000 from Arctic Glacier and $390,000 from Home City) in the form of penalties.

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Missouri v. AU Optronics Corp., (N.D. Cal. pending transfer to MDL 1827, 2010)

Following guilty pleas to criminal price-fixing by several LCD manufacturers, and a conviction after trial of another, plaintiff states filed suit against LCD manufacturers, alleging that top executives of several companies held numerous secret meetings from at least 1999 through at least 2006 for the purpose of exchanging information and setting prices on LCD panels. According to the complaint, companies such as Dell, Apple, and Hewlett Packard were among those targeted by the manufacturers’ price-fixing scheme. According to the lawsuit, the illegal overcharges were ultimately borne by state consumers and state government purchasers. The suit also alleges fraudulent concealment of the conspiracy. The lawsuit seeks monetary damages, civil penalties and injunctive relief under the Sherman Act and state antitrust statutes. The first settlement covered Chimei Innolux, Chimei Optoelectronics, Hannstar, Hitachi, Samsung, and Sharp and their subsidiaries. The second settlement, for $543.5 million, was with AU Optronics, Toshiba and LG Display and subsidiaries.

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United States, Wisconsin, Illinois and Michigan v. Dean Foods, Co. No. 10-C-0059 (E.D. Wisc. 2010)

States and USDOJ challenged already consummated acquisition by Dean Foods Co of Foremost Farms USA. Complaint alleged loss of competition in two markets: School milk contracts in Wisconsin and the upper peninsula of Michigan, and fluid milk sales in Illinois, Michigan and Wisconsin, because Dean and Foremost were the first and fourth largest sellers in those states. The settlement requires Dean to divest a significant milk processing plant in Waukesha, Wis., and related assets that it acquired from the Foremost Farms USA Cooperative, including the Golden Guernsey brand name. The settlement also requires that Dean notify USDOJ before it makes any future acquisition of milk processing plants for which the purchase price is more than $3 million. In addition, the attorney general for the state of Michigan filed a separate settlement which required Dean Foods to continue to bid on school milk contracts in the Upper Peninsula until 2016, and required that their bid be based either on a Cap Price which varies based on the price of raw milk, or a set price that does not vary.

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New York et al. v. Herman Miller, Inc. (

Three states alleged Herman Miller (HMH) sought to raise and maintain retail prices on its “AERON” chairs. According to the complaint, HMH responded to complaints and urging by HMH’s retailers, beginning in 2001, by establishing and announcing minimum prices, below which retailers were prohibited from advertising any HMH furniture. Under HMH’s Suggested Retail Price policy, HMH retailers had to agree with HMH not to advertise below HMH’s dictated prices for Aeron chairs in any medium where prices can be seen by consumers. HMH was enjoined from using the SRP program for two years,and from telling dealers how much to sell their chairs for. HMH paid $750,00 to the plaintiff states.

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In re Marsh & McLennan

Plaintiff states alleged that Marsh, an insurance broker, made collusive arrangements whereby brokers entered into agreements with insurers to receive undisclosed compensation and engaged in anticompetitive conduct in the market for commercial liability insurance. March agreed to reveal all commissions paid, and to pay the states $7 million.

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U.S. and Plaintiff States v. Republic Services

Two of the three largest waste hauling companies in the U.S. sought to merge. The United States and plaintiff states reached a settlement under which the parties would divest 11 landfills, 8 waste transfer stations and numerous routes within the plaintiff states.

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Oregon v. ACE Holdings, Inc.

Consent decrees filed by states in state court required $4.5 million payment and conduct relief to remedy alleged bid-rigging and false insurance quotes, as well as payment of secret “contingent commissions” to brokers.

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District of Columbia v. ACE Holdings, Inc.

Consent decrees filed by states in state court required $4.5 million payment and conduct relief to remedy alleged bid-rigging and false insurance quotes, as well as payment of secret “contingent commissions” to brokers.

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