European Union competition regulators have formally blocked a proposed merger between United Parcel Service Inc. (UPS) and its Dutch competitor TNT Express NV based on potential adverse effects on competition in 15 EU countries.

The express delivery companies had already announced they were abandoning the 5.2 billion euro ($6.99 billion) deal after being informed by the European Commission that it was working on a decision to block the merger.

The Commission found that only four companies in Europe have the required international air and ground transport network necessary to provide reliable overnight and express delivery service: UPS, FedEx, DHL and TNT Express. According to the Commission’s findings on the original merger offer, shipping costs would have increased for consumers in 29 European countries.

The Commission gave UPS time to correct the anticompetitive effects of the merger by finding a buyer to purchase and maintain TNT’s operations in 17 countries where the acquisition would have most severely restricted competition.

As part of a proposed solution, UPS would have provided a potential buyer with air support declaring in a press release, “customers and consumers will benefit from a broader portfolio of services and better global access, along with lower supply-chain costs overall.”  

After on-going negotiations failed, however, Commissioner Joaquin Almunia announced that UPS’s proposed corrections did not go far enough.  “We still had serious doubts on whether the buyer that UPS was working with – the French group La Poste/DPD – would have the ability and incentive to become a strong player in express deliveries,” Almunia said.

“In the absence of suitable remedies to the competition concerns we identified, I had no other choice but to propose to the college of commissioners to issue a negative decision,” Almunia said.

This is only the third merger out of nearly 800 reviewed since Almunia began his term in 2010 that have been prohibited.

One year ago, believing it would have deterred investment at an already rocky time, Almunia blocked a merger between the New York Stock Exchange and Germany’s stock market Deutsche Boerse.  Prior to that, the Commission blocked the merger of two Greek airlines based on the effects on local competition.

Eight of the largest drywall manufacturers in the United States are facing three antitrust complaints that allege price fixing and other anticompetitive coordination have harmed homebuilders and other direct purchasers of drywall.

Defendants include CertainTeed Corp., Georgia-Pacific LLC, USG Corp., United States Gypsum Co., New NGC, Inc., LaFarge North America Inc., American Gypsum Co. LLC, TIN Inc. and PABCO Building Products, LLC.

Sierra Drywall Systems Inc. was the first to file a class action complaint in Illinois against the drywall manufacturers.  Sierra installs drywall for commercial and residential construction projects and argues it was negatively affected by two different anticompetitive actions.  Sierra’s action was moved to the U.S. District Court for the Eastern District of Pennsylvania after both Janicki Drywall of Erie Pennsylvania and New Deal Lumber & Millwork Company Inc. of Philadelphia launched two additional cases against the defendants.

According to the complaint in Sierra Drywall Systems, Inc. v. CertainTeed Corp., the eight drywall manufacturers coordinated their prices, including in September and October 2011, when they each announced they would raise prices 35 to 37 percent.  News media at the time reported that drywall makers were blaming the poor economy for price hikes.

Sierra alleges that not only did the drywall manufacturers coordinate increasing their prices, they also eliminated job quotes, the decades-long industry practice of negotiating a flat rate for all drywall needed during the duration of a construction project.  According to Sierra, job quotes guaranteed customers the best price because several companies could make competing offers.

“Any one Defendant seeking to eliminate these competitive price terms by itself would have been met with opposition and likely defections from customers.  Only through coordination was the reversal and elimination of this long-standing practice possible,” Sierra alleges in the complaint.

A second round of price increases increased the drywall prices by 25 to 35 percent for 2013.

The U. S. Court of Appeals for the Sixth Circuit has rejected, as implausible, claims that Morton Salt Inc. and Cargill Inc. engaged in sham bidding for government contracts as part of a conspiracy to divide the Northern Ohio market for rock salt.

The Sixth Circuit affirmed the dismissal of the complaint in Erie County, Ohio et al. v. Morton Salt Inc. et al., an antitrust class action in the U.S. District Court for the Northern District of Ohio brought by Erie County on behalf of 54 other Ohio counties.   The antitrust claims of market allocation and collusive bidding were brought under Ohio’s state antitrust law, the Valentine Act, which follows federal antitrust law.

The lawsuit was based on a 2011 Ohio Inspector General’s report that found Morton and Cargill sold rock salt to the Northern Ohio counties at increasingly higher prices for a decade.  The Inspector General found the companies maintained a duopoly by manipulating the “Buy Ohio” law, which awards state contracts to companies manufacturing in Ohio even if a bid providing local products is more expensive.

The plaintiffs alleged that because the rule locked other companies out of being considered for a contract, Morton and Cargill were able to manipulate the bidding process by each intentionally submitting losing bids for contracts previously won by the other company.

The district court dismissed Erie County’s complaint for failure to allege sufficient evidence of collusion.  While the Sixth Circuit found that the district court had failed to adequately distinguish between the antitrust standards applicable on summary judgment and those that apply to a motion to dismiss, the appellate court concluded that plaintiffs failed to meet even the lesser standard applicable to a motion to dismiss.

The Sixth Circuit cited the leading United States Supreme Court decision in Bell Atlantic Corporation v. Twombly, 550 U.S. 544 (2007), for the proper standard on a motion to dismiss: “Do the factual allegations point to nothing more than parallel conduct of the sort that is the product of independent action, or do they plausibly raise an inference of unlawful agreement?”

The Sixth Circuit held that the plaintiffs had failed to allege sufficient facts to raise a plausible inference of a conspiracy to restrain trade.  The court noted that “the theory of sham bidding makes sense only in a market subject to the lockout interpretation of the Buy Ohio law.”

During the appeal process, however, Erie County admitted that as municipalities, the plaintiffs were not bound by the “Buy Ohio” law, which governs purchases by the state.  The Sixth Circuit concluded that this meant that any sham bidding by the defendants would have been “an exercise in futility.”  “The conspiracy claim, in other words, would be implausible in a market that is not subject to the Buy Ohio law.”

The University of Maryland and the Maryland Attorney General have filed an antitrust complaint against the Atlantic Coast Conference (the “ACC”) in an effort to block a $52 million withdrawal fee that the ACC has imposed on the university for deciding to move to the Big Ten Conference.

In November 2012, the University of Maryland made the decision to move its athletic teams from the ACC, the collegiate athletic conference in which the school has competed in since 1953.

The ACC responded by filing a lawsuit in North Carolina state court to enforce a $52 million withdrawal penalty.  The ACC approved such withdrawal penalties in September 2012 as a way to cover lost ticket revenue if a school left the conference.

Maryland Attorney General Doug F. Gansler has now taken two legal actions on behalf of the university board.  First, the Attorney General filed a complaint in Maryland state court on behalf of the Board of Regents of the University System of Maryland and the University of Maryland, alleging that the withdrawal penalty is an illegal restraint of trade in violation of Maryland antitrust laws.  Second, the Attorney General moved to dismiss the ACC’s state court action in North Carolina, arguing that a North Carolina court has no jurisdiction over the state of Maryland and its public universities.

The Maryland Attorney General alleges in Board of Regents of the University System of Maryland et al. v. Atlantic Coast Conference, in the Circuit Court for Prince George’s County that the ACC violated Maryland antitrust laws, breached contractual obligations and tortiously interfered with the prospective economic advantage of the University of Maryland.  The action seeks an injunction against enforcement of the withdrawal penalty, a declaratory judgment finding the penalty unlawful and treble damages under the antitrust laws, along with other relief.

 The antitrust complaint alleges that the ACC has market power, citing the limited amount of viable intercollegiate athletic conferences in which universities such as Maryland can participate.  The Maryland Attorney General argues that with such market power, the ACC can use the withdrawal fee to limit universities from freely competing not only for athletes and coaches, but also for the best students and faculty.

In addition to alleging the university has suffered antitrust injury, the Maryland Attorney General also alleges that consumers would be harmed by payment of the withdrawal penalty as a result of “increases in price or other fees needed to offset the financial penalty imposed by the ACC.”