While doctors and medical organizations have long had to navigate antitrust concerns in their practices, antitrust regulators will now have to consider health care reform in evaluating collective action by health care providers in groups known as care accountable care organizations (“ACOs”).

ACOs are health care provider groups responsible for the cost and quality of care delivered to a group of patients cared for by the groups’ doctors.  The Affordable Care Act of 2010 seeks to foster the growth of ACOs as a way to control costs and boost quality in healthcare with a direction to the Centers for Medicare and Medicaid Services (CMS) to create a national voluntary program for accountable care organizations (ACOs) by January 2012.

As ACOs grow in number and influence during the next few years, antitrust policy will have to take into account the goals of health care reform as antitrust regulators deal with the competing concerns of competition and cost containment.

These antitrust issues are explored by Constantine Cannon partners Axel Bernabe and Ankur Kapoor in a recent article that considers the antitrust implications of ACOs under the Affordable Care Act.

Although the American version of class actions may still be viewed as an unwelcome immigrant by businesses in Europe, the European Commission appears to be reviving efforts to fashion its own kinder, gentler, European version of class actions for antitrust violations.

Recent reports indicate that the European Commission has gone back to work on an initiative to allow collective actions for damages by parties injured by violations of EU antitrust law – just a year after killing a previous proposal for such actions.

The EU College of Commissioners reportedly met on October 12, 2010, to discuss the issue of antitrust damages actions. Three Commissioners – Competition Commissioner Joaquín Almunia, Consumer Policy Commissioner John Dalli and Commissioner for Justice Viviane Reding – prepared a briefing paper for their colleagues on the topic.

The European Commission’s previous efforts to allow collective antitrust actions for damages collapsed in dramatic fashion last year.

Under the helm of then Competition Commissioner Neelie Kroes, the Commission had been crafting a Directive which was to include provisions to that effect. But in October 2009, just days before a meeting of the College of Commissioners at which it was to be discussed, the Directive was shelved sine die.

Commission President José Manuel Barroso made the decision to kill the initiative under pressure from the European Parliament. Members of the Parliament complained that the Commission had failed to involve them in the process of drawing up the Directive, and claimed that the Commission’s proposed measures would expose businesses to abusive litigation.

The European Commission has been studying the possibility of collective redress for antitrust violations for a number of years. In December 2005, the Commission issued its Green Paper on Damages Actions for Breach of the EC Antitrust Rules, in which it noted that it was impractical, if not impossible, for individual purchasers with small claims to bring damages actions. Consideration should therefore be given to collective actions as a means to better protect consumer interests, and achieve time and cost efficient redress by consolidating small claims into a single action. click here for more »

The Second Circuit Court of Appeals has upheld a district court ruling that dismissed belated claims by Wells Fargo to participate in the groundbreaking settlements of the Visa Check/MasterMoney Antitrust Litigation. 

The settlements, finalized in 2005, involved payment of $3.05 billion by defendants Visa and MasterCard to a plaintiff class of millions of U.S. merchants afflicted by the defendants’ “Honor All Cards” policies – polices that illegally tied debit cards to credit cards and forced merchants to accept debit cards at supracompetitive prices.

The deadline for filing claims to the settlement funds expired on September 15, 2008, after a three-year window for filing claims.  After the deadline passed, Wells Fargo attempted to file claims on behalf of bankrupt merchants to whom Wells Fargo had provided loans.

On November 19, 2009, Judge John Gleeson of the U. S. District Court for the Eastern District of New York rejected Wells Fargo’s attempt to file late claims, finding that Wells Fargo did not provide an adequate explanation rising to the level of “excusable neglect” for why it failed to file its purported claims before the deadline.  Judge Gleeson noted that Wells Fargo knew about the settlements as early as 2006 when it participated in the claim of another merchant.  The Second Circuit affirmed Judge Gleeson’s decision less than two weeks after hearing oral argument.

According to Jeffrey Shinder of Constantine Cannon, counsel for the plaintiff class who opposed Wells Fargo’s appeal during oral argument, Judge Gleeson’s ruling and the Second Circuit’s timely affirmance will help wind up the administration of the settlement, a process that has involved multiple distributions to merchants totaling over $2.5 billion over the past five years.  One more distribution will be made to merchants this year, possibly the last distribution in the case (more information on this process is available at the case website).

The Visa Check/MasterMoney Antitrust Litigation, which also involved injunctive relief valued as much as $80 billion, is often credited with blazing the trail for similar litigation against the credit and debit card companies.  The most recent action was filed on October 4, 2010, by the Department of Justice and seven states against Visa, MasterCard, and American Express.  While Visa and MasterCard agreed to settlements, American Express has elected to litigate the lawsuit.

A group of Wisconsin consumers is asking the U.S. District Court in the Eastern District of Wisconsin to mash the alleged “OPEC of potatoes” in a class action alleging price fixing by a purported cartel of U.S. and Canadian potato growers and their co-conspirators, including leading agricultural technologist Bayer CropScience.

This case – Rizzo, et al. v. United Potato Growers of America, Inc. et al. – is the third putative class action filed against the alleged cartel. Similar cases have also been filed in federal courts in the District of Idaho (Brigiotta’s Farmland Produce and Garden Center Inc.  v. United States Potato Growers of Idaho Inc., et al., No. 10-CV-307-BLW) and the Northern District of California (Marvilla v. United Potato Growers of Idaho, Inc. et al., No. 10-CV-3954).

Defendants in all of the cases include United Potato Growers of America, United Potato Growers of Idaho (UPGI), other regional and national organizations and their members, as well as General Mills, Dole Food and Bayer CropScience.  (General Mills is not named in the Wisconsin case, and Dole is named only in the Idaho case.)   

Plaintiffs are all purchasers of potatoes – indirect in Wisconsin and California (e.g., consumers and retailers) and direct in Idaho (e.g., wholesalers).  They claim that potatoes are “the most important vegetable in the diet of United States consumers,” and comprise a “multi-billion dollar” market.  Plaintiffs allege that defendants control 80% of that market (by acreage of production).

The Wisconsin complaint paints a picture of potato farming that is far from the potato farmers painted by Van Gogh.  Plaintiffs allege egregious conduct, including “brib[ing], threaten[ing] and coerc[ing],” “satellite imagery [and] fly-overs,” and “punish[ing] violators’ of the cartel’s directives.”  

Plaintiffs claim that the cartel attempts to shield its actions behind the Capper-Volstead Act (7 U.S.C. § 291), a 1922 federal statute that exempts certain agricultural associations from antitrust scrutiny.  However, plaintiffs say, defendants may enjoy no such exemption.  First, they are not “genuine cooperatives,” and second, their illegal acts “have stripped them of any immunity.”

All three cases may soon be in the U.S. District Court in Idaho.  The Judicial Panel on Multidistrict Litigation is considering an unopposed motion to centralize them there.  On October 6, 2010, Judge B. Lynn Winmill of the federal court in Idaho appointed an executive committee of interim class counsel including Labaton Sucharow LLP and Spector Roseman Kodroff & Willis PC, with Hausfeld LLP as its chair, although class certification has not yet been decided.

The U.S. Supreme Court has declined to review Feesers, Inc. v. Michael Foods, Inc., 591 F.3d 191 (3d Cir. 2010), cert. denied, No. 09-1499, a competitor price-discrimination action brought under the Robinson-Patman Act, after the Court of Appeals for the Third Circuit instructed the district court to enter judgment as a matter of law for the defendants.

If adopted by other circuits, the legal standard articulated by the Third Circuit for price-discrimination claims brought by allegedly disfavored competitors would greatly limit such claims and make them more difficult to prove.

Feesers claimed that Michael Foods sold egg and potato products at a discounted price to Sodexo, allegedly Feesers’s competitor in the institutional food service industry, in violation of the Robinson-Patman Act because the discounted price was not made available to Feesers.  Feesers and Sodexo competed for food service contracts by submitting bids in response to requests for proposals by potential institutions for food supply and/or service. 

The Third Circuit held that Feesers’s claim failed, as a matter of law, to satisfy the Robinson-Patman Act requirement that the plaintiff suffer a “competitive injury” as a “competing purchaser,” because Feesers and Sodexo were not “each directly after the same dollar” of institutional sales at the time the allegedly discriminatory purchases from Michaels took place.  Because the institutional food service industry is a bid market, competition between Feesers and Sodexo for customers’ business occurred when the bids were submitted and before Feesers and Sodexo purchased egg and potato products from Michaels.  The court held that “[t]he relevant market at the time of the sale of Michaels’s products will have already been narrowed to one – the company that won the [customer’s] business.”  Accordingly, Feesers was unable to establish the competitive injury requirement.

This requirement that the competing parties be “going after the same dollar” at the time of the allegedly discriminatory act requires competitors suing under the Robinson-Patman Act to establish an unbroken causal chain from the allegedly unlawful price differential to the favored purchaser’s winning a specific sale because of that differential.  

Moreover, the Third Circuit noted the Supreme Court’s trend of narrowly construing the Robinson-Patman Act, and cited testimony by Seventh Circuit Judge Posner that, in practice, broad exercise of the Robinson-Patman Act often results in “‘anticompetitive’ effects that ‘promote rather than . . . prevent monopolistic pricing practices.’”