The European Union’s antitrust regulator is setting its sights on a $200 million deal for a partial sale of an insecticide business owned by Sara Lee, the food company, to S.C. Johnson & Son, which chiefly makes home-care products.

Both companies are based in the United States, and a European Commission press release acknowledged that the transaction may not “have a Community dimension.”  Even so, the Commission continued, the deal may “affect[] trade within the EU market and threatens to significantly affect competition within” countries that requested the investigation. 

The European Commission’s procedures did not trigger an automatic investigation of the deal.  Rather, the regulator began it after receiving requests from half a dozen European countries, including France, Greece, Italy, Belgium, the Czech Republic, and Spain. 

This isn’t the first time that the Europeans have looked at Sara Lee’s dealings.  The Commission is currently looking into a proposed sale of Sara Lee’s body care unit to Unilever, and is expected to rule by the end of October.  In June, the Commission also cleared the sale of Sara Lee’s air freshener unit to Proctor Gamble.  The deals are part of Sara Lee’s plan to sell off businesses unrelated to its core food business.

The insecticide investigation could prove costly to Johnson, which at the end of August finalized its largest debt offering ever, for $550 million in bonds, which were partially slated for the purchase of Sara Lee’s insecticide business.

The Canadian Competition Bureau has announced that it will consider possible revisions to the Canadian merger enforcement guidelines.

The Bureau will hold a series of discussions on whether its merger enforcement guidelines issued in 2004 are a good reflection of current Canadian merger review practices.  The purpose of such guidelines is to evaluate the potential competitive effect of mergers.

The decision comes in the wake of the recent publication of the revised Horizontal Merger Guidelines issued in the United States, as well as recent theoretical advances in the antitrust and economics fields in analyzing mergers.  Moreover, Canada recently revised its competition law in March 2009 and changed its merger notification process so that it bore more resemblance to that of the United States.  For instance, before the passage of the Canadian antitrust overhaul last year, the country’s competition statute required companies to wait 42 days, followed by a three-year post-merger period during which the government could challenge the merger.  The new law will require a 30-day waiting period during which the government can temporarily stop the deal to ask for more information about it, followed by another 30-day waiting period.  The government can only review closed deals for one year. 

However, Canada’s merger enforcement guidelines have not yet been formally changed.  Paul Collins, Canada’s Senior Deputy Commissioner of Competition for the Mergers Branch, will coordinate the discussions.  Information will be provided at a later date regarding the times and locations of the consultations.

A federal judge has declared a defense expert the winner in a battle of the experts over class certification in a suit alleging price-fixing conspiracies in the markets for plastics additives.

Relying heavily on expert testimony, U. S. District Court Judge Legrome D. Davis for the Eastern District of Pennsylvania has denied plaintiffs’ motion to certify a class of direct purchasers of organotin heat stabilizers (“tins”) and epoxidized soybean oil (“ESBO”) –  plastics additives used in the manufacture of polyvinyl chloride (“PVC”) – in the case of In re: Plastic Additives Antitrust Litigation.

The decision is a victory for defendants Dow Chemical Co., Union Carbide Corp., Rohm & Haas Co. and Arkema Inc., who argued that their economics expert had demonstrated flaws in the plaintiffs’ case showing that the announcements of price increases bore little or no relation to the actual prices paid by the purchasers.

The legal basis for the court’s decision was that plaintiffs failed to establish that they could show impact by evidence common to the class.  The heart of the decision, however, was the court’s lambasting of the opinion of plaintiffs’ expert witness, Dr. John Beyer.

The ruling comes after the Third Circuit Court of Appeals vacated Judge Davis’ decision in 2006 granting certification of the class.  The case was remanded back to the district court for further proceedings consistent the Circuit’s 2008 decision in In re Hydrogen Peroxide Antitrust Litigation, 552 F.3d 305 (3d Cir. 2008). 

When Judge Davis granted certification to class plaintiffs in 2006, he followed what he believed to be common practice of the time:  he declined to balance the credibility of the parties’ experts on the issue of the predominance of common evidence demonstrating antitrust impact.  But the Third Circuit’s 2008 decision in Hydrogen Peroxide up-ended what Judge Davis considered “common practice.”  On remand Judge Davis relied on language from Hydrogen Peroxide, explicitly affirming a district court’s obligation to consider all relevant evidence and arguments, including expert testimony.  Id. at 307.

Under this framework, Judge Davis evaluated and ultimately picked apart plaintiffs’ arguments that they can demonstrate antitrust impact by evidence common to the class, rather than individual to its members, and in particular Dr. Beyer’s opinion in support of these arguments. click here for more »

A federal judge has denied General Electric Company’s request to pull the plug on Mitsubishi Heavy Limited’s potential billion-dollar case alleging GE has tried to snuff out competition in the wind turbine market.

United States District Court Judge J. Leon Holmes in Fayetteville, Arkansas, has denied GE’s motion to dismiss an attempted monopolization case brought by Mitsubishi.  Mitsubishi alleges that GE seeks to monopolize the market for variable-speed wind turbines in the United States through a pattern of “sham” patent litigation and other methods. 

However, the Judge did grant GE’s request to stay discovery in the case until the GE patent infringement claims against Mitsubishi have been resolved.  As Judge Holmes explained, “If GE prevails in any of the infringement actions, then Mitsubishi’s claims in this action will be moot because GE will have the right to exclude Mitsubishi from the market” pursuant to GE’s patent claims. 

Mitsubishi is seeking damages that could exceed $1 billion.  Mitsubishi filed its attempted monopolization claim in this case against GE on May 10, 2010.

The case is the latest in a series of acrimonious episodes between the two heavyweights over the growing U.S. market for wind turbines.  Mitsubishi is on track to build a turbine assembly plant in Fort Smith, Arkansas.  Mitsubishi has been battling GE over patent claims since 2008.

Sonia Williams, a Mitsubishi Power Systems America spokesperson, observed that “[t]he judge did decide to stay discovery for the present.  Nevertheless, we are heartened by his suggestion that he may terminate the stay if he finds appropriate circumstances.”  GE had no comment on the ruling.

The U. S. Court of Appeals for the Second Circuit denied rehearing en banc today of its recent decision in the reverse-payment case of Arkansas Carpenters Health and Welfare Fund v. Bayer AG (In re Ciprofloxacin Hydrochloride Antitrust Litigation) – despite the original three-judge appellate panel’s extraordinary invitation to the parties to submit briefs requesting rehearing by the entire court.

The case involves so-called “reverse payment” or “pay-for-delay” patent infringement settlements in which a brand-name pharmaceutical manufacturer pays the allegedly infringing generic manufacturer to settle claims that the generic product infringes the brand-name manufacturer’s patent, in exchange for which the generic agrees not to market its product.  Antitrust enforcement officials and consumer groups argue that such settlements cost consumers billions of dollars per year in the form of higher drug prices. 

The plaintiffs sued Bayer and generic manufacturers of the blockbuster antibiotic Cipro, alleging that Bayer’s payment of hundreds of millions of dollars to the generics in settlement of patent infringement litigation violated the antitrust laws.  The trial court granted summary judgment for the defendants, which a three-judge panel upheld on appeal.

The three-judge panel, however, wrote – some might say reluctantly – that its decision was bound by a prior Second Circuit panel’s opinion upholding a similar patent settlement, In re Tamoxifen Citrate Antitrust Litig., 466 F.3d 187 (2d Cir. 2006).  Tamoxifen held that patent settlements are presumptively lawful, unless the patent holder procured the patent by fraud on the Patent and Trademark Office or brought a baseless patent infringement lawsuit (e.g., because the patent holder knew that the patent was invalid or unenforceable). 

The Cipro panel described the anticompetitive effects of reverse payment settlements, and invited the parties to submit briefs to request rehearing of its decision and whether the Second Circuit sitting en banc should overrule Tamoxifen.  Today, the Second Circuit declined to do so, with only Judge Pooler dissenting, in an opinion.  Judge Pooler voted for rehearing because “the ‘enormous importance’ of the issues that this case raises is beyond dispute,” and “[i]t will be up to the Supreme Court or Congress to resolve” them. 

Legislation to ban or strictly limit these kinds of settlements remains pending in Congress in the forms of S. 369 and H.R. 1706.  Supporters of the legislation continue to try to attach it to various legislative vehicles, and it may be considered again before the end of the year. 

An article detailing the history of reverse-payment antitrust litigation is available here.