The U.S. Court of Appeals for the Ninth Circuit has affirmed the dismissal of Colonial Medical Group Inc.’s antitrust suit against a competing health care provider and a hospital that Colonial alleged engaged in anticompetitive conduct in a prison health care market.

Colonial, a medical services provider, had claimed that its competitor, Golden Empire Management Care and Managed Care Systems LP (“GEMCare”), unfairly secured an exclusive contract with Catholic Healthcare West (d/b/a Mercy Hospital) that would allow only GEMCare to provide medical services to prisoners in secure or guarded facilities in central California. 

In affirming the district court’s decision, the panel of three judges held that Colonial failed to adequately allege a product market because it was “underinclusive.”  The complaint defined the market as medical services provided to state and federal inmates in central California.

The Ninth Circuit agreed with the trial court’s ruling that Colonial’s market definition failed to “account for ‘medical services provided to persons who, for example, are inmates of local jails or other locked facilities.’”  Nor did the complaint explain why those other services would not be interchangeable with the services included in Colonial’s flawed market definition, thus rendering the market definition too narrow. 

The panel based its ruling solely on this defect, though it noted that the lower court also found that the complaint failed to adequately plead other essential elements of a Sherman Act claim.  The lower court’s decision, which includes those findings, is available here.

GSI Technology, a producer of computer memory products, has filed an antitrust complaint charging Cypress Semiconductor with monopolizing the high-tech static random access memory (“SRAM”) market.

Cypress is one of the major players in the market for static random access memory SRAM market, while GSI is a much smaller producer. 

The complaint filed in the U.S. District Court for the Northern District of California claims that Cypress took advantage of the unique features of the SRAM market.  GSI alleges that the computer memory industry relies on standardized products based on customer insistence.  According to GSI, the customer demands that memory modules conform to the same interchangeable structure.

GSI alleges that since 1999 Cypress has violated Section 1 of the Sherman Act by monopolizing the market for SRAM.  GSI claims that Cypress entered into a collusive consortium with certain competitors, including Hitachi and Samsung, in which they shared confidential data such as design simulations and test vectors.  According to GSI, this consortium secretly developed an industry standard for SRAM, to the exclusion of other competitors.  GSI contends that this broke with the previous industry policy of an open marketplace in which competitors had access to the same information at the same time.

According to GSI, the Cypress consortium developed evolutionary product changes confidentially and then released information about these products to customers under non-disclosure agreements.  This meant that competitors could not learn about the new standards until the product was released.  GSI contends that this was a crippling blow in a market where early entry can define success or failure for up to 10 years at a time.