The prices for products freshly baked by Sara Lee can be negotiated without violating California’s Cartwright Act a state court judge has ruled, throwing out antitrust class action claims against the food company.

Distributors that buy the baked goods and sell them to stores throughout California filed Kaewsawang v. Sara Lee Corp. in 2006.  The Fourth Amended Complaint alleged that Sara Lee fixed prices and illegally divided territory through anticompetitive agreements.

Sara Lee entered into “Customer Marketing Agreements,” with retailers who agreed to sell the baked goods at certain prices, offer certain discounts, and meet display and freshness requirements. 

Because both Sara Lee and the retail stores negotiated the marketing agreements, Judge Jane Johnson of the Los Angeles County Superior Court concluded the secrecy and deception required for conspiracy under the Cartwright Act could not be met.

 “California requires a high degree of particularity in the pleading of Cartwright Act violations and therefore generalized allegation of antitrust violations are usually insufficient,” Judge Johnson wrote, citing Marsh v. Anesthesia Service Medical Group Inc.

The plaintiffs also argued Sara Lee violated antitrust laws through distribution agreements that required distributors to sell to stores located within a specified geographic area.  Distributors were unable to negotiate prices, and the agreements prohibited them from selling any competing products to the stores.

Judge Johnson ruled Sara Lee’s territorial division was not an antitrust violation because the contracts were signed in a competitive baked goods market free from monopoly.  In addition, the plaintiffs voluntarily signed the distribution agreements, giving Sara Lee the ability to assign sales areas and set prices.  Instead of citing antitrust law, the plaintiffs need to use legal remedies to revise oppressive contracts, Johnson concluded.

The complaint has now been narrowed to just one class claim for breach of the implied covenant of good faith and fair dealing and two individual claims for misclassification.

More than 120 auto dealers in 17 states are alleging in a new $50 million antitrust suit that they paid higher prices for less reliable vehicle history reports thanks to Carfax’s exclusive dealing arrangements with major players in the auto industry.

Carfax has monopolized the vehicle history reports market and raised prices by making exclusive deal agreements with car manufacturers and used car listing websites, according to the 121 plaintiffs in Hyundai Mazda NYLSI Inc. d/b/a/ Sunrise Toyota et al. v. Carfax Inc., which was filed in the United States District Court for the Southern District of New York.

Many car manufactures have incorporated vehicle history reports into their business by requiring reports for their certified pre-owned programs.  Under the programs, consumers know they are purchasing cars approved for reuse by the automakers. 

Carfax provides marketing support to the manufacturers of 37 car brands in exchange for exclusively using Carfax vehicle history reports in their certified pre-owned programs, the complaint states.  These agreements typically last three years and can be renewed multiple times.

The complaint alleges Carfax created a monopoly by entering into exclusive deals with the most popular used car listing websites: Autotrader.com and Cars.com.  Under the terms of these agreements, the websites will post vehicle history reports only from Carfax.

Plaintiffs argue the exclusivity agreements with both the manufacturers and the websites have forced them to purchase vehicle history reports from Carfax to maintain their auto dealing businesses.   According to the complaint, certified pre-owned vehicles account for 12 percent of all used car sales, and dealers are unable to make these sales if they do not purchase reports from Carfax.

In addition, if a dealer purchases a vehicle history report from a company other than Carfax, there is no weblink to the report, which allegedly causes consumers to get a false “impression” the vehicle has a blemished history and should not be purchased when shopping on a dealer’s online listings.

The plaintiffs also allege that Carfax has used its monopoly power to raise prices to supracompetitive levels.  Unlike other vehicle reporting companies, Carfax sets monthly fees based on a dealer’s entire inventory with prices ranging from $899 per month for small dealerships to $1,549 for larger dealerships.

Bosley Inc., the nation’s largest surgical hair restoration company, has agreed to a consent order settling a Federal Trade Commission (“FTC”) complaint alleging that the company exchanged competitively sensitive information with Hair Club Inc. before the two companies merged.

Bosley, a subsidiary of Aderans Co Ltd., performs hair loss treatments at 22 offices across the United States.  According to the FTC complaint, Bosley’s CEO discussed price floors and discounts, business expansions and operations, and future products with executives at Hair Club Inc. and other competitors for four years.

While the FTC did not find evidence of an explicit agreement between Bosley and Hair Club, Section 5 of the Federal Trade Commission Act authorizes the FTC to bring a complaint if it finds evidence of unfair and anticompetitive acts that could harm consumers.

“The information could facilitate coordination or endanger competition by reducing uncertainty about a rival’s product offerings, prices, and strategic plans.  For example, the information exchanges could lead a competitor to determine not to open facilities or market services in a particular location,” the FTC’s complaint analysis states.

Aderans, a Japanese company, purchased Hair Club Inc. for $163.5 million in July 2012.  The FTC found the anticompetitive communications while conducting investigations to determine whether or not to approve the acquisition.

As part of the agreement, Bosley and Aderans must immediately stop any communications of sensitive, nonpublic information with competitors.  The companies must also implement antitrust compliance programs requiring all employees to participate, including the highest level executives.  Bosley and Aderans will also submit compliance reports to the FTC when they make any corporate changes affecting competition.

The FTC will accept public comment on the consent agreement until May 8, 2013.  Members of the public can submit comments online or they can mail comments to Federal Trade Commission, Office of the Secretary, Room H-113, 600 Pennsylvania Avenue, N.W., Washington, DC 20580.