U.S. and State of Texas v. Martin Marietta Materials, Inc.
USDOJ and State of Texas challenged the acquisition of Texas Industries by Martin Marietta Materials on the grounds that the proposed merger would have likely resulted in increased prices for customers handling Texas Department of Transportation projects in parts of the Dallas metropolitan area. The
Texas Department of Transportation sets specifications for the type of aggregate approved for use in those projects. In Dallas County and parts of the surrounding area,
Martin Marietta and Texas Industries are two of the only three suppliers of Texas Department of Transportation-approved aggregate. Under the terms of the proposed consent decree, Martin Marietta must divest its North Troy aggregate quarry in Mill Creek, Oklahoma, its rail yard in Dallas, and its rail yard in Frisco, Texas. All of these assets
predominantly serve parts of the Dallas metropolitan area. Under the proposed settlement, USDOJ Antitrust Division, after consultation with Texas, must approve the buyer of the divested assets.
United States and Texas v. Cinemark Holdings et al., No. 13-727 (D.D.C. 2013)
United States and Texas challenged $220 million acquisition by Cinemark of Rave Holdings. Cinemark is the third-biggest movie chain in the U.S., with 298 theaters in 39 states. Rave Holdings owns 35 theaters in 12 states and specializes in digital and 3-D presentations, According to the complaint, the proposed acquisition would reduce competition in the Voorhees-Somerdale area of New Jersey and the eastern section of Louisville, where Cinemark and Rave are each other’s chief competitors. Cinemark and Rave operate theaters in the western region of Fort Worth. In addition, if the acquisition were to go through as originally planned, the theaters would be less likely to improve or maintain the quality of their sound systems, screens, and food and drinks. Cinemark agreed to divest Movie Tavern Inc. — a Dallas company operating 16 theaters in Fort Worth and Denton, Texas — and three additional Texas theaters to settle the suit.
Florida et al. v. Service Corporation International, No. A13CV1082LY (W.D. Texas Jan. 2, 2014)
SCI, the nation’s largest funeral home chain, sought to acquire Stewart Enterprises, another large funeral home chain. Seven states and the FTC entered into consent agreements with SCI specifying which funeral homes would be divested in 59 separate markets. In a separate consent agreement, SCI agreed to provide the state plaintiffs with the same notices, requirements for approval and compliance review as to divestitures and future acquisitions included in the FTC’s consent decree and to pay the state’s costs and attorneys’ fees..
U.S. and Plaintiff States v. US Airways Group et al., No. 1:13-CV-01236 (D.D.C. Aug. 13, 2013)
US DOJ and plaintiff states filed a complaint in federal court challenging the proposed merger between American Airlines and U.S. Airways. The complaint alleged the proposed merger would result in decreased competition, higher airfares and fees, reduced service and downgraded amenities. The dollar impact nationwide could exceed $100 million a year. The merger would make a combined U.S. Airways/American Airlines the largest worldwide carrier and reduce the number of the larger “legacy” airlines from four to three – U.S. Airways/American, United/Continental and Delta/Northwest – and the number of major airlines from five to four. If the merger were approved, the three remaining legacy airlines combined with Southwest Airlines would account for more than 80 percent of domestic travel. American Airlines is U.S. Airways’ chief competitor in the marketplace, meaning that the merger will likely only serve to increase fares and fees. Texas settled its case, entering into an agreement under which the merged airlines would maintain their operations at Texas airports, maintain DFW as a hub, and maintain its corporate headquarters in the Dallas area. DOJ and the remaining states reached settlements with the merging parties. The settlement requires US Airways and American to divest or transfer to low cost carrier purchasers approved by the department: 1) All 104 air carrier slots (i.e. slots not reserved for use only by smaller, commuter planes) at Reagan National and rights and interest in other facilities at the airport necessary to support the use of the slots; 2) Thirty-four slots at LaGuardia and rights and interest in other facilities at the airport necessary to support the use of the slots; and 3) Rights and interests to two airport gates and associated ground facilities at each of Boston Logan, Chicago O’Hare, Dallas Love Field, Los Angeles International and Miami International. The settlement reached by the states requires maintenance of existing hubs in those states, consistent with their historical operations, for three years, and continued daily service for five years to each airport in the affected states that American and US Airways serviced at the time of filing.
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.
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 GE Funding Capital Market Services, Inc. (Municipal Bond Derivatives)
Starting in 2008, the states investigated the municipal bond derivatives market, where tax exempt entities like governments and nonprofit organizations issue bonds and reinvest the proceeds until the funds are needed or enter into contracts to hedge interest rate risk on bonds. GE Funding is the fifth financial institution to settle with the multistate working group in the ongoing municipal bond derivatives investigation following Bank of America, UBS AG, JP Morgan and Wachovia.
The investigation revealed conspiratorial and fraudulent conduct involving individuals at financial institutions and certain brokers with whom they had working relationships. The states’ investigation developed evidence that certain traders at GE Funding, in concert with certain brokers, engaged in conduct that allowed the broker to determine in advance that GE Funding would win a bid for a guaranteed investment contract. The conduct allowed GE Funding to submit a “last look’’ bid, while the broker arranged for other financial institutions to submit purposely non-winning courtesy bids. Because of the “last look,” on many occasions GE Funding was able to lower its bid to the issuer and still win the transaction.The misconduct led state and local entities, such as municipalities, counties, school districts and other government agencies, as well as nonprofits, to enter into municipal derivatives contracts on less advantageous terms than they would have otherwise.
In re J.P. Morgan Chase (Municipal Bond Derivatives)
Starting in 2008, the states investigated the municipal bond derivatives market, where tax exempt entities like governments and nonprofit organizations issue bonds and reinvest the proceeds until the funds are needed or enter into contracts to hedge interest rate risk on bonds.
The investigation revealed conspiratorial and fraudulent conduct involving individuals at JPMC, other financial institutions, and certain brokers with whom they had working relationships. The states alleged that certain JPMC 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 state and local entities, such as municipalities, counties, school districts and other government agencies, as well as nonprofits, to enter into municipal derivatives contracts on less advantageous terms than they would have otherwise. The $66.5 million multistate settlement is one component of a coordinated settlements (totaling $92 million) between JPMC and the U.S. Department of Justice’s Antitrust Division, the Securities and Exchange Commission (SEC), the Internal Revenue Service, the Office of the Comptroller of the Currency (OCC), as well as the states.
U.S. and Texas v. United Regional Healthcare System, No. 7:11-cv-00030 (N.D.Tex. Feb. 25, 2011)
USDOJ and Texas reached a settlement with United Regional Health Care System of Wichita Falls, Texas, that prohibits it from entering into contracts that improperly inhibit commercial health insurers from contracting with United Regional’s competitors. Plaintiffs alleged that United Regional unlawfully used these contracts to maintain its monopoly for hospital services in violation of Section 2 of the Sherman Act.
United States and Plaintiff States v. Comcast Corp., No. 1:11-cv-00106 (D.D.C., Jan. 18, 2011)
USDOJ and five states challenged the joint venture between Comcast and NBC Universal, alleging that it would harm competition in cable programming, with Comcast controlling NBC and NBCU programming. The parties reached a settlement, and the FCC also reached a separate settlement with Comcast and NBC. The settlements impose a number of restrictions and limitations on the merger to ensure that competing distributors have fair access to NBC and NBCU content. The settlements also address several areas of the joint venture’s operations. The DOJ and states’ settlement particularly focuses on requiring Comcast/NBC to make content available to online video distributors; requires NBC to relinquish all management rights in connection with Hulu.com, a popular video website; and prohibits Comcast from retaliating against content providers who sell to online distributors, entering into exclusive agreements that might limit access to programs, and slowing broadband signals when broadband customers view non-Comcast content.
