A federal judge has dismissed claims by Sky Angel U.S. LLC, an internet-based television service, that C-SPAN violated the antitrust laws by favoring traditional cable providers.

Although Judge Rudolph Contreras of the U.S. District Court for the District of Columbia dismissed Sky Angel’s antitrust claims, he also granted the internet television service leave to replead in Sky Angel U.S. LLC v. National Cable Satellite Corporation.

In November 2012, Sky Angel filed an antitrust complaint alleging that the National Cable Satellite Corporation – doing business as the non-profit television programming provider C-SPAN – conspired to restrain trade in the “real-time multichannel video programming distribution market.”  C-SPAN had entered into an affiliation agreement in 2009 to provide programming to Sky Angel’s television service, which delivers television programs through a high-speed internet connection and set-top boxes.  C-SPAN, however, allegedly breached the agreement by terminating service after allowing programs to air on Sky Angel for just three days. 

Sky Angel asserts that C-SPAN’s pulling of its legislative programs violated antitrust laws because C-SPAN’s executive board members, who also work for the most successful for-profit television networks, conspired to keep Sky Angel from competing in the market.

Judge Rudolph Contreras of the District Court for the District of Columbia disagreed and found Sky Angel failed to state a claim because the complaint did not include the basic factual elements needed to prove that a conspiracy or monopoly existed.

Sky Angel’s conspiracy claim, for example, did not cite any board votes or scheduled meetings to show an agreement was made between the executive board members. “Merely pleading that multiple entities hold positions on a board of directors does not establish a horizontal agreement,” the court held.  

The complaint also failed to properly define relevant product and geographic markets, which were essential elements of Sky Angel’s monopoly claim.  The product market was described as “real-time, multichannel video programming distribution services.”  However, when listing product substitutes as part of the market definition, Sky Angel did not explain why online video providers such as Hulu or Netflix were not included as interchangeable products.  The court found that television service providers compete in “individual metropolitan and regional markets” that can span the United States, rather than in the nationwide market alleged by Sky Angel.

While the court dismissed the conspiracy and monopoly claims, it also found that Sky Angel did adequately allege an antitrust injury, and granted Sky Angel leave to file an amended complaint.

A group of auto parts manufacturers continues to face claims of bid rigging and price fixing in a multidistrict litigation (“MDL”) following a Michigan federal judge’s refusal to dismiss federal antitrust claims.

Direct and indirect purchasers in the putative class action of In re Automotive Parts Antitrust Litigation accuse the manufacturers of conspiring to fix the prices of wire harness systems in automobiles.  The allegations track a U.S. Department of Justice (“DOJ”) investigation into the auto industry, which has already resulted in guilty pleas involving the manipulation of wire harness pricing during secret meetings.

Judge Marianne Battani of the U.S. District Court of the Eastern District of Michigan dismissed indirect purchasers’ antitrust claims brought under the state laws of Massachusetts, Missouri, and Illinois, among others. The court, however, declined to dismiss direct purchasers’ federal antitrust claims accusing defendants of creating a global conspiracy to control pricing and manipulate bidding.

In an order separate from the order dismissing the state claims, the court concluded that the federal antitrust allegations could survive because the direct purchasers had sufficiently informed defendants of the substance of the claims, and that the allegations provide “a reasonable expectation that discovery may reveal further evidence of an illegal agreement.”  The class action complaint was sound, the court concluded, because it sufficiently identifies the products involved and the methods of communication utilized by conspiring competitors during the secret meetings.  The court also reasoned that the allegations are consistent with the guilty pleas entered in the DOJ action.    

This ruling on the wire harness portion of the MDL is only a fraction of the claims in this massive antitrust action.  Similar claims have been brought concerning alleged anticompetitive conduct in the manufacture and sale of other automotive parts, including instrument clusters, fuel senders, heater controls, and alternators.

A Louisiana federal judge has denied motions to dismiss pool owners’ indirect purchaser claims brought under state antitrust laws against Pool Corporation, the nation’s largest distributor of pool products, and pool manufacturers.

Judge Sarah Vance of the U.S. District Court for the Eastern District of Louisiana limited indirect purchasers’ state antitrust claims in In re Pool Products Distribution Market Antitrust Litigation to essentially mirror the federal claims of the direct purchaser plaintiffs.  Both groups of plaintiffs allege that Pool Corporation acquired competitors and entered into exclusive agreements with the defendant manufacturers in order to block competition from other pool distributors.

In their motions to dismiss, defendants argued that the indirect purchaser plaintiffs lack standing to bring state antitrust claims just as they lack standing to bring federal antitrust claims under the authority of Illinois Brick Co. v. Illinois, which bars indirect purchasers from suing under federal antitrust laws.

Judge Vance found that indirect purchasers have standing to bring state antitrust claims under the laws of California, Arizona, and Florida.  While the court found that Missouri antitrust laws follow the Illinois Brick prohibition on indirect purchaser suits, it also found that there was no such ban against the indirect purchasers’ claims for violation of the Missouri consumer protection statute, the Missouri Merchandising Practices Act (the “MMPA”).   Judge Vance noted that “the state legislature has expressed no intent to incorporate federal antitrust standing limits into the MMPA,” and that courts have previously held that indirect purchasers could bring claims under the MMPA.

While the court denied the motions to dismiss the state antitrust claims, it granted the motions to dismiss state claims based on fraud and misrepresentation, finding that plaintiffs failed to meet the heightened pleading requirements for claims of fraud.

Judge Vance previously granted motions to dismiss monopolization, group boycott, and fraud claims asserted by the direct purchaser plaintiffs, who are pool stores and maintenance companies that directly purchased supplies from Pool Corporation.  The court denied the motions to dismiss the direct purchasers’ attempted monopolization claim under Section 2 of the Sherman Act and their rule of reason claims under Section 1.

Breeders of cloned horses will get to advance their antitrust attack on a dominant horse breed registry that excludes cloned horses, following a ruling by a federal judge in Texas who denied American Quarter Horse Association’s motion for summary judgment.

District Court Judge Mary Lou Robinson of the U.S. District Court for the Northern District of Texas ruled in Abraham & Veneklasen Joint Venture et al. v. American Quarter Horse Association that plaintiffs, who breed elite horses through a cloning technique, presented enough evidence to defeat summary judgment on their claims of antitrust conspiracy and monopolization.  

Defendant, the American Quarter Horse Association, is a non-profit, membership organization that maintains a breed registry of competitive horses.  Without admission to the AQHA registry, a horse is barred from participation in the most lucrative competitions and races.

According to the complaint, members of the Stud Book Registration Committee, who are themselves breeders, created a rule banning any cloned horses from the registry.  The AQHA argued that it neither conspired nor created a monopoly with the rule.

“Even if the Board did not relegate control to the Committee on cloning matters, it did not review or question the Committee’s unanimous recommendations,” Judge Robinson stated in her opinion. “Thus, there is evidence that the AQHA is the conspiracy, because it is in fact controlled by competitors with interests to ban clones.”

In order to uphold the monopolization claim, plaintiffs needed to present evidence indicating that AQHA maintains monopoly power.  The court held that “a factfinder could determine that the AQHA has monopoly power over the economically viable Quarter Horse market because its rules control not only market participation but whether, in turn, a horse is valuable or relatively worthless.”

The court, however, did grant AQHQ summary judgment on plaintiffs’ attempted monopolization claim because plaintiffs alleged only that AQHA succeeded in obtaining monopoly power, not that it almost obtained monopoly power.

A new class action alleges that international megabanks used their monopoly power to manipulate the credit default swaps market.

Sheet Metal Workers Local No. 33 Cleveland District Pension Plan has filed a class action in Illinois federal court against 15 defendants, including Bank of America, Citibank, and JPMorgan Chase & Co.  According to the complaint, the defendants used companies they controlled, including Markit Group LTD., Intercontinental Exchange Inc., and the International Swaps and Derivatives Association, to inflate prices and block competitors from entering the credit default swaps market. 

Investors purchase a credit default swap, or CDS, to insure the money placed into a single bond or a broad portfolio of investments.  Buyers can only purchase a CDS by requesting a quote through specific dealers.  Plaintiffs, who seek to represent a class of CDS purchasers, argue that the “over-the-counter” structure of the CDS market allows for the anticompetitive behavior because the dealer defendants, rather than an open exchange, control the price.

Unlike in an exchange, real time data reporting the bid-ask spread for CDS transactions was unavailable to buyers.  The only spread data on which to base a decision was collected daily from the dealers by Markit, a company also owned by the defendants.

After the financial markets collapsed in 2008, many CDS buyers grew frustrated when making purchases without real time pricing data.  Recognizing an opportunity to provide “more robust risk management through price transparency,” Citadel spent millions of dollars building an exchange for CDS transactions. 

However, in order to start an exchange, Citadel needed to meet the membership requirements of Intercontinental Exchange Inc., and obtain a license through the International Swaps and Derivatives Association.  Plaintiffs allege that executives at the defendant companies used their positions on the ICE and ISDA boards to deny Citadel an exchange license and to block Citadel’s entry into the CDS market by setting capital requirements at an unreachable $5 billion. 

Although defendants later changed the capital requirements (after the ICE rules were investigated by the U.S. Commodities Futures Trading Commission) to require dealers to hold five percent of customer funds in excess capital, these new rules are alleged to have kept intact high barriers to entry into the market.

Plaintiffs seek treble damages and attorney fees, arguing that the $2 trillion the credit default swaps market generates in notional value each week has allowed defendants to profit significantly to the detriment of investors.

The case is Sheet Metal Workers Local No. 33 Cleveland District Pension Plan v. Bank of America Corp. et al., No. 1:13-cv-03357 (N.D. Ill.).