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.
Commonwealth of Kentucky ex rel. Beshear v. Marathon Petroleum Co. LP, No. 3:15-cv-00354 (May 12, 2015)
State filed suit against Marathon, alleging Marathon engaged in anti-competitive practices that lead to higher gas prices for Kentucky consumers in violation of state and federal antitrust laws. State alleged that Marathon abused its monopoly position after its merger with Ashland Oil in 1998. The state alleged, among other actions, that Marathon requires some retailers, thought its supply agreements, to purchase 100 percent of their RFG from Marathon, with penalties if the retailers fail to do so. The agreements also prohibit unbranded retailers from challenging Marathon’s pricing. According to the complaint, Marathon further reduces competition by adding deed restrictions to some of the property parcels it sells that prohibit the purchaser of the property from selling gas or operating a convenience store. Some of the restrictions have an exception that will allow for development of a gas station if the station sells only Marathon gas. State sought injunctive relief, civil penalties of $2000 per violation, restitution to citizens and to the state and attorneys’ fees. Defendants moved to disqualify the outside counsel retained by the state on the grounds that the contingent fee arrangement was improper. The court denied Marathon’s motion to dismiss as to the federal antitrust, state antitrust and deceptive practices claims, but denied the state’s unjust enrichment claim because consumers only conferred an indirect benefit on Marathon by buying gasoline at allegedly inflated prices, not a direct benefit.
FTC and North Dakota v. Sanford Health
The FTC and the state of North Dakota filed suit seeking to block Sanford Health’s proposed acquisition of Mid Dakota Clinic, alleging that the deal would violate antitrust law by significantly reducing competition for adult primary care physician services, pediatric services, obstetrics and gynecology services, and general surgery physician services in the greater Bismarck and Mandan metropolitan area. Sanford and Mid Dakota were each other’s closest rivals in the four-county Bismarck-Mandan region of North Dakota, and the merger would create a group of physicians with at least 75 to 85 percent share in the provision of adult primary care physician services, pediatric services, obstetrics and gynecology services. The district court granted the injunction. The Eighth Circuit Court of Appeals affirmed, and the parties abandoned the transaction.
Commonwealth of Pennsyvlania v. Chesapeake Energy Corp, No. 2015IR0069 (Ct. Comm. Pleas, Bradford Cty, 2015)
State filed action in state court alleging market allocation agreement affecting leases for hydraulic fracturing on land in central Pennsylvania. The state alleged that the failure to disclose the agreement violated state consumer protection laws, and that the agreement itself violated Pennsylvania antitrust common law. After defendants argued that Pennsylvania has no state antitrust statute, the state filed an amended complaint which included claims of violations of the federal antitrust laws. Defendants sought removal.
Oregon ex rel. rosenblum v. AU Optronics Corp.
Following guilty pleas to criminal price-fixing by several LCD manufacturers, and a conviction after trial of another, Oregon 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. A number of states filed in the MDL, but Oregon filed originally in federal district court in Oregon, and was transferred, with its consent, to the MDL. Oregon reached individual settlements with many defendants, totaling $21 million (Hitachi Displays, $565,000; Chi Mai, $1,634,600; Epson, $105,000; LG Display, $6,975,000; Sharp, $1,950,000; Samsung, $4.5 million; AU Optronics, $4.25 million; Toshiba, $525,000; HannStar, $1 million)
United States and Michigan v. Hillsdale Community Health Center et al., No. 2:15-cv-12311 (E.D. Mich. June 25, 2015)
The United States and Michigan filed suit in federal court against four Michigan hospital systems, alleging that for years they unlawfully agreed to allocate territories for marketing. The complaint alleged Hillsdale, Allegiance, Branch and ProMedica’s Bixby and Herrick Hospitals, the only hospitals in their respective counties, each competed through marketing to attract patients, including advertising, direct mailings to patients, outreach to physicians and employers, conducting health fairs and offering free health screenings. The complaint alleges that Hillsdale curtailed this competition for years by entering into agreements with Allegiance, Branch and ProMedica to limit the marketing of competing healthcare services. Three of the systems, Hillsdale Community Health Center, Community Health Center of Branch County, Michigan, and ProMedica Health System Inc., agreed to settle the charges in 2015. The settlement prohibits Hillsdale, Branch and ProMedica from agreeing with other healthcare providers, including hospitals and physicians, to limit marketing or to divide any geographic market or territory, prohibits communications among the defendants about their marketing activities and requires the hospitals to implement compliance measures tailored to prevent the recurrence of these types of anticompetitive practices in the future. The parties paid $5,000 each to Michigan for costs and attorneys’ fees. W.A. Foote Memorial Hospital, doing business as Allegiance Health, settled in 2018. The Allegiance settlement expands on the terms of the previous settlements, specifically, the proposed settlement prevents Allegiance from engaging in improper communications with competing providers regarding their respective marketing activities and entering into any improper agreement to allocate customers or to limit marketing. It explicitly prevents Allegiance from continuing to carve out Hillsdale County from its marketing and business development activities. Allegiance must report any violations and must annually certify compliance with the terms of the final judgment. Allegiance must also submit to compliance inspections at the Department’s request. Allegiance must also pay $40,000 to the state and the US to reimburse costs.
People v. Pratibha Syntex Ltd., No. BC499751 (Cal. Super. Ct., LA Cty. Dec. 10, 2015)
Plaintiff state filed suits against international apparel manufacturer for gaining an unfair competitive advantage over American companies by using pirated software in the production of clothing imported and sold in California. The complaint alleged that the foreign apparel manufacturer, based in India, who did not paid software licensing fees has a significant cost advantage in the low-margin business of apparel manufacturing, shipment and sales. The company did not pay licensing fees for software products manufactured by Adobe, Microsoft, Symantec and others. Since 2010, Pratibha shipped approximately 19,000 pounds of apparel products into California. The complaint alleges that the company obtained an unfair advantage because it can redirect money saved by using pirated software to hire employees and to expand their facilities and their research and development efforts. Furthermore, American companies that are developing software, particularly software that is used in the garment industry, are discouraged from investing in new technology and products if they know their software will be used illegally. In December 2015, a settlement was reached, the first time a state has secured a legally enforceable judgment against an international company for these types of violations. The settlement requires Pratibha Syntex to pay $100,000 in restitution within 30 days. The settlement prohibits Pratibha Syntex from using unlicensed software or reproducing any part of a copyrighted software program without the permission of the legitimate copyright holder, and further requires the company to perform four complete audits of the software on their computers and fix any violations within 45 days. In addition, Pratibha Syntex must draft an information technology policy statement regarding the use of licensed software and distribute this policy to all employees
Florida et al. v. Dollar Tree, Inc., No. 1:15-cv-01052 (D.D.C. July 2, 2015)
Eighteen plaintiff states and the FTC challenged the merger of Dollar Tree, the largest chain of “dollar” stores (deep discount stores) and Family Dollar Stores, the nation’s third largest dollar store chain. The complaint claimed the proposed acquisition would substantially lessen competition in numerous markets by: (1) eliminating direct and substantial competition between Dollar Tree and Family Dollar; and (2) increasing the likelihood that Dollar Tree will unilaterally exercise market power. This, according to the complaint, would violate Section 7 of the Clayton Act and each state’s applicable antitrust and consumer protection laws. The states sought a permanent injunction to prevent the merger, along with costs and attorney fees. The parties reached a settlement under which 330 stores in the 18 states would be divested to Sycamore partners and run as a new dollar store chain, Dollar Express. The agreement also required the defendants to report future acquisitions in any of the affected markets and to pay over $865,000 to reimburse the costs and fees of the plaintiff states.
Pennsylvania v. Arclight Energy Partners Fund VI et al., No. 1:15-CV-2493 Jan. 4, 2016)
Pennsylvania filed suit, alleging the proposed merger of two of the largest gasoline and distillate terminaling services in the state, ArcLight and Gulf Oil would violate both the Clayton Act and Pennsylvania state law by lessening competition in three markets, Altoona, Harrisburg and Scranton. The state sought injunctive relief and attorneys’ fees. The state and the parties entered into a settlement in which the defendants would agree to divest their terminal assets in Pennsylvania – located in Altoona, Pittston, Mechanicsburg and Williamsport – to New York-based Arc Logistics within 20 days of the acquisition being finalized. After the divestiture, ArcLight is further bound to assist Arc Logistics by providing transitional assistance at a reasonable cost for one year, serve as a customer of the divested terminals for two years and supply ethanol and biodiesel fuels and related terminaling services for five years. The settlement also allows any ArcLight petroleum terminal customer to sever its contract with the company without penalty or charge for six months after the divestiture date, and for ArcLight to provide them with notice of the right to do so. The FTC had previously entered into a settlement with the parties.
