Federal Judge David C. Godbey of the Northern District of Texas has green lighted a suit alleging taxicab companies conspired to monopolize by fixing prices that drivers must pay to operate a taxicab in certain counties in the Dallas-Fort Worth metropolitan area. 

The judge denied the defendants’ motion to dismiss the plaintiffs’ complaint in Association of Taxicab Operators USA v. Yellow Checker Cab Company of Dallas/Fort Worth Inc.  Defendants’ motion relied exclusively on immunity afforded under the state action doctrine.  But as Judge Godbey’s decision explained, defendants failed to make the essential showing that “a municipality expressly authorized or actively supervised their mergers or pricing.” 

Plaintiffs, led by a trade association of taxicab companies, allege that permit fees defendants charged drivers to operate in the Dallas-Fort Worth area were anticompetitive.  According to plaintiffs, through a variety of entities and agreements, two individuals control over 52 percent of the authorized taxi cabs in the area.  Their lawsuit seeks injunctive relief breaking up the defendants’ grip on the market and monetary damages. 

Both parties and the court agreed that California Retail Liquor Dealers Assoc. v. Midcal Aluminum, Inc., 445 U.S. 97, 105 (1980), sets forth the two-prong test applicable when private actors claim immunity from the antitrust laws under the state action doctrine.  “First, the challenged restraint must be one clearly articulated and affirmatively expressed as state policy; second the policy must be actively supervised by the State itself.”  Id .

Defendants argued they meet the first prong of the Midcal test, citing a Texas state law directing municipalities to “license, control, and otherwise regulate each private passenger vehicles … that provides passenger taxicab transportation services for compensation.”  The statute permits municipal regulation of (1) entry into the taxicab business by controlling the total number of persons providing the service, (2) rates charged, and (3) safety and insurance requirements.  Through this statute, defendants argued, “Texas clearly articulated and affirmatively expressed its policy to regulate taxicabs through its cities.”

But Judge Godbey was unmoved.  While the statute “shows Texas wants municipalities to regulate competition,” he wrote, it “does not authorize private taxicab companies to create monopolies or fix [] fees without municipal approval.” 

The court was equally unimpressed with defendants’ argument that they met the second Midcal prong.  To show that the price fixing challenged by plaintiffs is actively supervised by the state, and therefore immune from the antitrust laws under the state action doctrine, defendants cited ordinances giving municipalities the authority to regulate fees.  As Judge Godbey’s decision points out, “mere authorization does not satisfy the active supervision requirement.”  “Defendants,” Judge Godbey continued, “do not claim that a municipality established, reviewed, regulated or monitored the fees.”

Ruling that the complaint, on its face, does not demonstrate that defendants’ actions are shielded under the state action doctrine, Judge Godbey denied defendants’ motion to dismiss.

The European Commission is expected to unveil proposed legislation in the coming weeks designed to curb speculation in commodities trading, which has been blamed for sharp increases in energy and food prices.

A draft of the Commission’s proposed revisions to the EU’s 2004 Markets in Financial Instruments Directive (“MiFID”) obtained by some news outlets would require “that all trading venues on which commodity derivative contracts are traded adopt appropriate [position] limits or alternative arrangements to ensure the orderly functioning of the market and settlement conditions for physically delivered commodities and provide systematic, granular and standardised information on positions by different types of financial and commercial traders to regulators … and market participants ….”

The Commission is reported to be simultaneously drawing up plans for an overhaul of the Market Abuse Directive (“MAD”) enacted in 2003.  If adopted by the Council of the European Union and the European Parliament, that reform would give European regulators enhanced authority to investigate trading systems on spot commodity markets, which had thus far escaped effective oversight.

Reuters has quoted a leaked draft of the Commission’s proposal as saying that “By gaining access to spot commodity market traders’ systems, competent authorities are also able to monitor real-time data flows.”

The Commission’s proposed amendments to MiFID and MAD are expected to be made public – officially, this time – this month.

The U.S. Department of Justice has announced that Tokyo based manufacturer Bridgestone Corp. has agreed to plead guilty to rigging bids and making corrupt payments to government officials in Latin America related to the sale of marine hose and other industrial products.

As part of the plea bargain struck with the Department of Justice, Bridgestone is pleading guilty to violations of the Foreign Corrupt Practices Act and Sherman Act, and will pay a $28 million fine.

The alleged antitrust conspiracy concerns the sale of marine hose, a flexible rubber hose used to transfer oil between tankers and storage facilities.

According to the Department of Justice, Bridgestone and its co-conspirators agreed to allocate shares of the marine hose market by not competing for one another’s customers either by not submitting prices or bids, or by submitting intentionally high prices or bids to certain customers.  Bridgestone allegedly received marine hose prices for customers from an alleged “coordinator” of the conspiracy and then sold the marine hose to those customers at collusive and noncompetitive prices.  The Department of Justice claims that Bridgestone concealed the conspiracy through code names, private email accounts, and telephone numbers.

The plea agreement commends Bridgestone’s cooperation with the Department of Justice, and acknowledges Bridgestone’s “extensive remediation” efforts.