Claims by retail grocers that two of the largest grocery wholesalers in the United States violated the antitrust laws by market allocation have hit a dead end in the case of In re Wholesale Grocery Products Antitrust Litigation in the U.S. District Court for the District of Minnesota.

The court has granted defendants SuperValu, Inc. and C&S Wholesaler Grocers, Inc. summary judgment on the claims of plaintiffs Deluca’s Market Corp. and D&G, Inc., two retail grocers, that defendants violated the Sherman Act by allocating territories and customers through an Asset Exchange Agreement.

In 2003 C&S purchased the grocery operations and distribution centers of Fleming Companies, a competing wholesaler that had filed for bankruptcy earlier that year.  A Vermont corporation with headquarters in Keene, New Hampshire, C&S had concentrated its business in the Northeast, and decided to sell the Flemings operations located in the Midwest to SuperValu.  In return, SuperValu, whose business operations are centered in Minnesota, gave its distribution centers and operations in the Northeast to C&S.

Plaintiffs argued the asset exchange agreement was a per se violation of antitrust laws.  As part of the agreement, the two wholesalers did not compete for customers previously serviced by Flemings.

However, Judge Ann D. Montgomery disagreed.  The court held that since the agreement did not prohibit SuperValu and C&S form competing for customers not covered by the agreement, it did not make an “exclusive market allocation,” and thus should not be treated as per se illegal.

Applying a rule of reason analysis, the court held that plaintiffs failed to produce sufficient evidence of an unreasonable restraint of trade.  Not only were there were other wholesalers competing against the defendants, but neither SuperValu nor C&S ever gained a dominant share of the market.

Deluca and D&G were the last plaintiffs remaining after class action certification was denied in July.

A federal judge has certified a class action alleging that The Hershey Company, Mars Inc., and Nestlé U.S. A., Inc. fixed chocolate prices and inflated the prices of chocolate candy starting in 2002.

The class action is being brought on behalf of 2,900 wholesalers, grocery stores, and other businesses that directly purchase chocolate from the three companies.  The alleged price-fixing conspiracy has resulted in 91 legal actions across multiple districts, consolidated for pretrial purposes as In re Chocolate Confectionary Antitrust Litigation.

According to the plaintiffs, after a decade of stability the chocolatiers made a series of price raises between 2002 and 2007.  Although the defendants claim the price increases were due to rising production costs, the plaintiffs allege that the chocolate companies had advance knowledge of each other’s price changes and had numerous opportunities to meet and agree to the price increases.

In holding that the class of direct purchasers alleged by the plaintiffs should be certified, Judge Christopher C. Conner of the U.S. District Court for the Middle District of Pennsylvania treated the testimony of the plaintiffs’ experts as crucial to the plaintiffs’ burden to prove the Federal Rule of Civil Procedure 23 requirements for class certification.  The court also found that the plaintiffs’ experts’ testimony was required to, and did, meet the Daubert standards of admissibility at the class certification stage.

According to one of the plaintiffs’ experts, the chocolate confectionary industry is more susceptible than other markets to anticompetitive manipulation due to various factors, including:  the relative inelasticity of the demand for chocolate products; high barriers to market entry and the defendants’ market power; the reasonably interchangeable nature of the products; and “the myriad of opportunities for executive discourse in formal settings.”  The court held that these opinions were sufficiently supported by record evidence.

Before granting certification, the court expressed concern whether a class action would be able to adequately address the antitrust injury each individual plaintiff experienced given that each direct purchaser paid varying prices for the chocolates.  Judge Connor concluded that common proof of antitrust injury was possible because the plaintiffs’ expert in econometrics accounted for the effects of other explanatory variables on price, including production costs, and because his analysis showed “that Direct Purchasers paid nearly identical prices – within a range of one-and-one-half cent – for each unit of a particular chocolate confectionary product.”

The Antitrust Division of the U.S. Department of Justice has filed a price-fixing complaint, settlement and proposed final judgment against the Oklahoma State Chiropractic Independent Physicians Association (OSCIPA) and its executive director, Larry Bridges, in the United States District Court for the Northern District of Oklahoma.

The Antitrust Division alleges in United States of America v. Oklahoma State Chiropractic Independent Physicians Association and Larry Bridges that the defendants fixed prices by negotiating payer contracts on behalf of OSCIPA’s member chiropractors.

Some 45 percent of practicing chiropractors in Oklahoma are members of OSCIPA, which lists “gain and maintain market share on behalf of our participating chiropractors” as one of its missions. 

The Antitrust Division alleges that the defendants caused a rise in the prices of chiropractic services and a decrease in the availability of such services in Oklahoma through a variety of actions.  Since at least1997, OSCIPA has denied its members the ability to create their own individual payment agreements with health insurance providers and other payers.  In 2004, OSCIPA went one step further and required members to cancel any existing contracts they had made with payers before the 1997 policy was implemented.

Between 2004 and 2011 the OSCIPA negotiated contracts with seven different payers.  According to the Antitrust Division, not only did these contracts increase prices, but they also kept member physicians from offering their patients discounts, such as by waiving insurance deductibles.

Under the proposed final judgment, the defendants would be enjoined from contracting with payers on behalf of chiropractors and from facilitating joint contracting among chiropractors.  The proposed final judgment would neither affect the right of consumers to bring private antirust damage actions against the defendants, nor be given any prima facie effect in any such private lawsuit.

In accordance with the Antitrust Procedures and Penalties Act, the complaint, proposed final judgment, and competitive impact statement are being published in the Federal Register. The Antitrust Division will collect public comments for 60 days and submit them to the Court before a final decision is made.

Written comments can be submitted to: Peter J. Mucchetti Chief, Litigation I Section Antitrust Division United States Department of Justice 450 Fifth Street, NW, Suite 4100 Washington, DC 20530.

The plaintiff in a federal class action filed in the U.S. District Court for the Eastern District of Washington is accusing leading credit reporting company Dun and Bradstreet (“D&B”) and Dun and Bradstreet Credibility Corporation (“DBCC”) of conspiring to use high pressure sales tactics to create a monopoly in the small business credit reporting market.

The complaint in O&R Construction, LLC v. Dun and Bradstreet Credibility Corporation alleges that thousands of small businesses were “deceived, misled and cheated” by D&B and DBCC in a “pay to play” scam that sold credit products in exchange for favorable credit ratings.

Plaintiff O&R Construction claims D&B and DBCC misled small businesses into believing there were problems with their D&B credit reports in order to defraud them into buying DBCC’s “CreditBuilder” line of products to improve their credit ratings.  Plaintiff alleges D&B and DBCC violated antitrust laws by conspiring to make the CreditBuilder products the only products available on the market that can address D&B’s small business credit reports.

Dun and Bradstreet has been a credit reporting agency for over 150 years.  The company has used its database of business credit information to develop a product that small businesses can use to monitor and improve their credit rating.  The complaint alleges that D&B spun off DBCC to sell the credit monitoring products and gave DBCC an exclusive license to use the small business data.  O&R argues that the 2010 agreement granting DBCC an exclusive license to D&B’s credit database has prevented new companies from competing in the market.

According to the complaint, D&B and DBCC have used fraudulent sales tactics, including scaring business owners by falsely telling them they faced several credit inquiries because their ratings were low.  However, unless the small businesses purchased DBCC’s CreditBuilder to monitor their credit, they could not find out who had made the inquiries and improve their rating.  The complaint also alleges that D&B would downgrade a business’s credit rating if it cancelled its CreditBuilder service.

O&R, which provides remodeling services mostly for government contracts, relies on D&B to provide accurate credit reports so that it can work with vendors.  O&R alleges that Home Depot, for example, decreased O&R’s line of credit after D&B downgraded O&R’s credit rating, which followed O&R’s cancellation of the CreditBuilder service.

“Defendants are colluding to negligently, recklessly or intentionally falsify information in small business credit reports,” O&R alleges.

New York City tourists could see lower prices for “hop-on, hop-off” bus tours if the U.S. government and the State of New York succeed in an antitrust suit filed in the U.S. District Court for the Southern District of New York that seeks to break up a joint venture that has allegedly monopolized the market.

The U.S. Attorney General and New York State Attorney General are suing in U.S. v. Twin America LLC to obtain equitable relief against bus companies Coach USA and CitySights, and their joint venture, Twin America, LLC.

Coach and CitySights operate several tour routes in New York City that allow tourists to stop at popular attractions, like Times Square or the Empire State Building, as well as in neighborhoods, like Chinatown or Soho.  Coach and CitySights provide a flexible way for visitors to explore New York because they allow riders to get off and spend as much time as they want at an attraction before boarding the next bus driving along the route.

According to the complaint, the two companies viciously competed against each other for almost four years.  CitySights began operations in 2005, and through several public advertising campaigns, grew quickly as a business.  As CitySights expanded, Coach saw its profits and market share decrease.

After three years of matching and attempting to outdo each other’s deals, Coach allegedly approached CitySights and proposed a joint venture to provide greater “pricing flexibility” for both companies.  Without first seeking approval for the joint venture from the federal Surface Transportation Board, the companies formed Twin America in 2009.  They continued operations as two separate companies, however, so the “competition could be kept at bay.”

The complaint alleges that the joint venture is an effective merger to monopoly that controls 99 percent of the market for hop-on, hop-off bus tours in New York City.  The complaint also alleges that the joint venture has resulted in actual anticompetitive effects, including a 10 percent price increase adopted by both companies.  The most popular tour went from $49 per person to $54.