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.
Massachusetts v. McMullen et al., No. 12-512B (Comm. Ct. of Mass. Apr. 27, 2012)
State settled bid-rigging allegations with former county commissioner and pest-control company owner. According to the complaint, Plymouth County put its pest control contract for seven county buildings out for quotes and received three quotes of which Capeway Pest was not the lowest. The complaint alleges that in the days before the vote on the contract by the Board of Commissioners, Burgess spoke on multiple occasions with then Commissioner McMullen. During at least one of their phone conversations McMullen allegedly provided non-public inside information by informing Burgess that Capeway Pest did not submit the lowest quote. Using this inside information, Capeway Pest submitted a new quote that exactly matched the previous low quote. The attempt to subvert the procurement process was uncovered prior to the vote on the pest control contract, and the original low quote was accepted. McMullen and Burgess agreed to pay $5000 each in civil penalties and $2500 each in costs.
Commonwealth of Pennsylvania v. Geisinger Health System Foundation et al., No. 4:CV-12-1081 (M.D. Pa.
State alleged that the the acquisition of Bloomsburg Hospital by Geisinger Heath System Foundation may substantially lessen or eliminate competition in the region. Geisinger is a non-profit parent of four hospitals, including its flagship Geisinger Medical Center which is located only 10 miles from Bloomsburg Hospital. It also owns the Geisinger Clinic, a multi-specialty physician group practice with more than 900 primary care and specialty physicians and the Geisinger Heath Plan. Geisinger is one of the largest providers of inpatient acute-care hospital services in northeastern Pennsylvania. The state was concerned that Geisinger would be able to raise prices for hospital and physician services to Columbia County residents and their health plans. The parties reached a settlement under which Geisinger agreed to continue to operate Bloomsburg Hospital as an acute care hospital for eight years, six years longer than the term agreed to by the parties. The agreement also requires that all physicans with privileges at Bloomsburg Hospital will keep their privileges. The original merger agreement with the Bloomsburg Board only protected certain physicians. Geisinger also agreed to negotiate and contract with health plans for Bloomsburg Hospital separately from Geisinger Medical Center. Bloomsburg Hospital historically had lower rates than Geisinger Medical Center. By contracting separately, Bloomsburg’s rates will be comparable to other community hospitals, not a large tertiary hospital like Geisinger.
U.S. and Vermont v. Verizon Communications, No. 1:08-cv-993-EGS (D.D.C. June 10, 2008
Vermont and the U.S. Department of Justice filed a complaint against Verizon and Rural Cellular Corp., challenging the merger of the two companies’ cellular services. The state and DOJ settled, requiring that the merged company sell all overlapping assets in Vermont.
U.S. and Kentucky v. Dairy Farmers of America, No. 6:03-206-KSF (E.D.Ky. 2007)
DOJ and Kentucky alleged that the acquisition by Dairy Farmers of American (DFA) of Southern Belle Dairy would substantially lessen competition for the sale of milk sold to schools in one hundred school districts in eastern Kentucky and Tennessee. The District Court granted summary judgment to DFA and Southern Belle. The government appealed, and the Court of Appeals reversed the grant of summary judgment as to DFA and remanded the case for trial. The Court of Appeals affirmed the dismissal of Southern Belle, leaving DFA as the only defendant. The parties then reached a settlement requiring DFA to divest its interest in Southern Belle and use its best efforts to require its partner, the Allen Family Limited Partnership (“AFLP”), to also divest its interest in Southern Belle. to Prairie Farms Dairy, Inc.
State v. Tradition (North America)
Defendant Tradition was a broker of guaranteed investment contracts (GICs), which are used to temporarily invest the proceeds of municipal bond issues. Tradition conducted the bidding process among banks that sought to sell GICs to the Commonwealth, and certified to the State that the bidding process was competitive and that the winning bid would be the GIC that provided the highest yield. The state alleged that Tradition created a rigged and corrupt bidding process by telling favored providers what other banks were bidding and also telling the favored providers exactly what to bid in order to win the business. This resulted in bids that offered Massachusetts less interest than it would have gotten if the bidding process had really been competitive. By fixing the bids, Tradition ensured that these favored providers would get business from the Commonwealth while also shortchanging Massachusetts. The state also alleged that Tradition told favored providers who had already indicated that they intended to offer certain high interest rates that these providers should offer less money to the Commonwealth. The complaint also alleged that Tradition repeatedly deceived the Commonwealth, provided false certifications regarding the bidding process. The parties reached a settlement under Tradition will pay $250,000 to Massachusetts. The settlement also includes a provision to track an ongoing investment obtained through the tainted bidding process to determine whether Tradition owes additional money to the state.
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.
State of Nevada v. Renown Health, No. 3:12-cv-409 (D. Nev. Aug. 6, 2012)
Renown Health acquired the largest two cardiology practices in the Reno Nevada area, leaving it with 88 percent of the cardiologists in the geographic market. The settlement required Renown Health to suspend its non-compete agreements with the cardiologists until at least six cardiologists have terminated their employment by Renown. Renown will provide the Attorney General with advance notice of future acquisitions, implement a compliance program, and pay $550,000 to the AG office for fees and costs. The FTC had a parallel proceeding with similar relief.
People of the State of California v. EBay, Inc., No. CV12-5874 (N.D. Cal. Nov. 16, 2012)
State filed suit (simultaneous with USDOJ suit) alleging EBay and Intuit agreed from 2008 to 2009 not to hire one another’s employees. This agreement, allegedly enforced at the highest levels in the companies, prevented employees from seeking positions at the other companies. USDOJ filed a separate suit, but California’s seeks to enforce California laws which contain stronger protections against anti-competitive conduct than federal law. California reached a settlement with eBay for approximately $4 million in restitution to employees, damages for harm to the state’s economy, and civil penalties
Washington v. National Express Group, No. 2:12-cv-00757 (W.D. Wash. Apr. 30, 2012)
National Express, a national provider of school bus services, sought to acquire Petermann Partners. After an investigation by the U.S. Department of Justice Antitrust Division and the Washington and Texas Attorneys General, the parties agreed with USDOJ to sell eight school bus transportation contracts in the states of Texas and Washington to Student Transportation of America Inc. (STA). Under a separate consent decree with the state of Washington, the parties also agreed to notify the Attorney General of Washington before any future acquisitions for the next ten years. The parties also agreed not to take any action to impede a successful bidder on a contract from obtaining leased depot and repair facilities.
