New York et al. v. Cephalon, No. 2:16-cv-04234 (E.D. Pa. Aug. 4, 2016)
In May 2015, the FTC settled a “pay-for-delay” suit against Cephalon for injunctive relief and $1.2 billion, which was paid into an escrow account. The FTC settlement allowed for those escrow funds to be distributed for settlement of certain related cases and government investigations. In August 2016, forty-eight states filed suit in the Eastern District of Pennsylvania against Cephalon alleging anticompetitive conduct by Cephalon to protect the profits it earned from having a patent-protected monopoly on the sale of its landmark drug, Provigil. According to the complaint, Cephalon’s conduct delayed generic versions of Provigil from entering the market for several years. The complaint alleged that as patent and regulatory barriers that prevented generic competition to Provigil neared expiration, Cephalon intentionally defrauded the Patent and Trademark Office to secure an additional patent, which a court subsequently deemed invalid and unenforceable. Before it was declared invalid, Cephalon was able to use the patent to delay generic competition for nearly six additional years by filing patent infringement lawsuits. Cephalon settled those lawsuits by paying competitors to delay sale of their generic versions of Provigil until at least April 2012. Consumers, states, and others paid millions more for Provigil than they would have had generic versions of the drug launched by early 2006, as expected. A settlement was filed with the complaint, which includes $35 million for distribution to consumers who bought Provigil.
Massachusetts et al. v. Koninklijke Ahold N.V., No. 1:16-cv-01412 (D.D.C., July 25, 2016)
Plaintiff states and FTC filed suit challenging the merger of Ahold and Delhaize, supermarket chains operating in the United States as Stop & Shop and Hannafords. According to the complaint, supermarkets operated by Ahold and Delhaize compete closely for shoppers based on price, format, service, product offerings, promotional activity, and location. Without a remedy, the merger would eliminate direct supermarket competition to the detriment of consumers in these local markets. As a result, the merger would increase the likelihood that the combined company could unilaterally exercise market power, and that the remaining competitors could coordinate their behavior to raise prices. the parties agreed to divest 76 supermarkets in the plaintiff states. The settlement also required prior notification of future supermarket purchases and $300,000 in attorneys fees and costs.
United States et al. v. Aetna et. al., No. 1:16-cv-01494 (D.D.C. July 21, 2016)
U.S. DOJ and plaintiff states sued to block the merger of two of the country’s largest health insurers. According to the complaint, alleges that their merger would substantially reduce Medicare Advantage competition in more than 350 counties in 21 states, affecting more than 1.5 million Medicare Advantage customers in those counties. Before seeking to acquire Humana, Aetna had pursued aggressive expansion in Medicare Advantage. Aetna, the nation’s fourth-largest Medicare Advantage insurer by membership, has nearly doubled its Medicare Advantage footprint over the past four years. Humana is the nation’s second-largest Medicare Advantage insurer by membership. The lawsuit also alleges that Aetna’s purchase of Humana would substantially reduce competition to sell commercial health insurance to individuals and families on the public exchanges in 17 counties in Florida, Georgia and Missouri, affecting more than 700,000 people in those counties. The lawsuit alleges that by buying Humana, Aetna would eliminate one of its strongest and most capable competitors in these markets. The district court granted the injunction, rejecting the parties arguments that the Medicare Advantage and Medicare programs were competing products that constrained one another’s prices, and noting that Aetna’s exit from several markets, allegedly because of the Affordable Care Act, appeared to be designed to eliminate a problem with the merger, rather than being an unrelated business decision.
Alaska v. Tesoro Alaska Co. No. 3AN-16- (Ak. Super .Ct. 3d Dist.)
Tesoro agreed with Flint Hills Resources (FHR) last year to purchase most of FHR’s Alaska fuel storage assets, including FHR’s storage facility at the Port of Anchorage. Tesoro also owns two storage facilities at the Port of Anchorage. After an investigation, the state determined that Tesoro’s acquisition of FHR’s tank farm would limit the ability of competitors to import fuel through the Port of Anchorage and impair competition in markets for some fuel products, including gasoline. The state entered into a consent agreement with Tesoro Alaska Company that requires Tesoro to sell a petroleum fuel terminal at the Port of Anchorage in order to preserve competition in Alaska fuel markets. Tesoro has agreed to sell its Terminal 1 to a qualified buyer. Tesoro will have one year from the approval of the Consent Decree to sell the terminal. If it cannot find a buyer, it must lease the terminal.
United States et al. v. Anthem et al., No. 1:16-cv-01493 (D.D.C., July 21, 2016)
The US and plaintiff states sued to block the merger of two of the country’s largest health insurers. The complaint alleges that their merger would substantially reduce competition for millions of consumers who receive commercial health insurance coverage from national employers throughout the United States; from large-group employers in at least 35 metropolitan areas, including New York, Los Angeles, San Francisco, Denver and Indianapolis; and from public exchanges created by the Affordable Care Act in St. Louis and Denver. The complaint also alleges that the elimination of Cigna threatens competition among commercial insurers for the purchase of healthcare services from hospitals, physicians and other healthcare providers. According to the complaint, the merger would eliminate substantial head-to-head competition in all these markets, and it would remove the independent competitive force of Cigna, which has been a leader in the industry’s transition to value-based care. the court granted the injunction. Anthem appealed to the DC Circuit, which affirmed the district court.
In re Blue & Gold and Red & White Fleets Merger, Cal. PUC applications No. 95-12-071 (approved June 11, 1997)c
Challenge to merger of tour boats of San Francisco Bay resolved by divestiture of ships, a dock and signage.
United States and North Carolina v. Charlotte-Mecklenburg Hospital Authority d/b/a Carolinas Healthcare System
North Carolina and USDOJ filed suit alleging that Atrium Health, formerly known as Carolinas HealthCare System illegally reduced competition in the health care market in Charlotte and limited consumers’ ability to shop around for better deals on health care. Atrium is based in Charlotte and operates Carolinas Medical Center and nine other hospitals in the Charlotte area. It dominates the hospital market in the Charlotte region with a 50 percent share of the market and approximately $8.7 billion in annual revenues. The state alleged that Atrium acted unlawfully to preserve its dominance in the Charlotte health care market by using its market power to require steering restrictions in its contracts with every major insurer. These provisions have prevented insurers from, among other things, introducing health plans that encourage patients to use medical providers that offer lower priced, higher-quality services. The plaintiffs sought injunctive relief and attorneys fees. After the court denied defendants’ motion to dismiss, the parties settled. Under the terms of the settlement, Atrium is prohibited from using anticompetitive steering restrictions in contracts between commercial health insurers and its providers in the Charlotte, North Carolina metropolitan area. These steering restrictions prevented health insurers from promoting innovative health benefit plans and more cost-effective healthcare services to consumers.
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.
