The United Kingdom’s Competition Appeal Tribunal is expressing serious doubts that the British government’s plan to streamline competition appeals will actually reform the process for the better.

The Tribunal expressed its doubts and criticisms in a detailed response to the government’s plan for “Streamlining Regulatory and Competition Appeals,” which was published by the Department of Business Innovation and Skills (“BIS”) in June.  In making this response, the Tribunal cited its central role in the private enforcement of competition law in the U.K.

The BIS proposal has the announced goal of simplifying and accelerating the appellate process for both government competition authorities and regulators.  The Tribunal, however, expressed doubts that the reforms would achieve these goals, and concerns that they would be inconsistent with the approaches taken by EU courts and competition policy.

According to the Tribunal, the BIS proposal “contains little, if any, analysis of the competition system; it appears not to appreciate the significance of current expectations and developments at the European level in relation to appeals in competition cases; and it threatens to undermine a key element of the government’s current reform of the competition system.”

Although the Tribunal agreed with the goal of speeding up competition appeals, it disagreed with the government’s suggestion that its current appellate rules encouraged meritless appeals or allowed the introduction of too much new evidence on appeal.  The Tribunal stated that “We do not believe that placing specific restrictions upon the admission of such ‘new’ evidence, or upon CAT timetables or other procedures is either necessary or sensible.”

The Tribunal also criticized the proposal to lower the standard of review in competition cases.  The Tribunal disagreed with the proposal’s view that a lower standard of review was justified by the EU’s General Court standard of review for antitrust decision of the European Commission.  According to the Tribunal, the proposal “fails to take account of the way in which the EU courts are developing their own appeal procedures to comply with the fundamental requirement of compliance with the [European Convention on Human Rights], in the light of widespread and growing concern about the more limited scope which has at times been attributed to the review carried out by the General Court in that context.”  The Tribunal stated that “at a time when pressure for more intense judicial scrutiny within the EU competition regime is increasing, the government appears to be contemplating the restriction of such scrutiny in the U.K. system.”

The U.S. Court of Appeals for the Seventh Circuit has rejected a broad interpretation of venue rules that would subject corporations to antitrust suit in any district court in the nation.

A three-judge panel has affirmed the dismissal of the antitrust complaint in KM Enterprises Inc. v. Global Traffic Technologies Inc. et al. on the ground that the plaintiff, Illinois-based KM Enterprises Inc., could not sue Global Traffic Technologies Inc. of Minnesota in the District of Illinois, where KM is located, because Global Traffic’s ties to Illinois are insignificant.  KM alleges that Global Traffic violated federal antitrust laws by improperly interfering with competitive bidding on public contracts for systems that allow ambulances to bypass normal traffic light patterns.

The Seventh Circuit ruled that plaintiffs must follow the federal antitrust venue rules provided in the Clayton Act, rejecting KM’s argument that the interplay of the general principles of federal personal jurisdiction and venue and the Clayton Act’s specific provisions permits federal antitrust plaintiffs to sue defendants in any U.S. district court.

Several federal courts of appeals have wrestled in recent years with how to reconcile general principles of personal jurisdiction and venue with the different standards for personal jurisdiction and venue set forth for antitrust actions in the Clayton Act.  While the existence of personal jurisdiction determines whether a court can exercise power over a defendant, federal venue rules determine in which specific district court a suit should be heard.

Unlike the more limited general federal principles of personal jurisdiction, the Clayton Act provides for nationwide personal jurisdiction of corporate antitrust defendants.  The Clayton Act’s venue provisions, however, provide for venue only in districts in which the corporation is an inhabitant, is found or transacts business.

KM argued for what the Seventh Circuit called a “mix and match” approach, relying on the Clayton Act to establish personal jurisdiction in a district of the plaintiff’s choosing, and then relying on general federal principles of venue, which provide for venue in any district court that has personal jurisdiction of the defendant.

This favorable interpretation of venue rules for antitrust plaintiffs has been adopted by the Third and Ninth Circuit Courts of Appeals.  The Second and D.C. Circuit Courts of Appeals, however, have rejected this approach and held that when the general federal principles and the Clayton Act’s provisions governing personal jurisdiction and venue are read together, it is clear that an antitrust plaintiff that relies on the Clayton Act to establish personal jurisdiction must also satisfy the Clayton Act’s venue rules.

The Seventh Circuit sided with the Second and D.C. Circuits and held that the various personal jurisdiction and venue rules must be read together, requiring antitrust plaintiffs to satisfy the Clayton Act’s venue rules.

Kansas Federal Judge Richard D. Rogers has taken a scalpel to claims of monopolization, predatory pricing and unjust enrichment in the sale of wound closure products – but given a clean bill of health to claims of tying, exclusive dealing and state-law restraint of trade – in Suture Express Inc. v. Cardinal Health Inc. et al., a $200 million antitrust suit.

Suture Express, a suture and endomechanical product distributor is suing in the U.S. District Court for the District of Kansas on claims that Cardinal Health Inc. and Owens & Minor Inc. engaged in anticompetitive conduct in the wound closure product market.  The case will go forward as a result of the court’s split ruling granting defendants’ motions to dismiss only in part.

The court found that Suture Express failed to allege sufficient facts to support its federal Sherman Act claims of per se antitrust violations, monopolization and conspiratorial agreement, and its Kansas state law claims of unjust enrichment.

Judge Rogers held that Suture Express’s allegations did not indicate that there was any real possibility the defendants had monopoly power in the wound closure product market, or even a dangerous probability of attaining it.  In finding that Suture Express failed to allege sufficient facts to show an anti-competitive conspiracy, the court stated that “the fact that a defendant could have chosen a different strategy does not produce an inference that the choice of a strategy similar to that of a fellow competitor is a sign of a conspiracy.”

By contrast, Judge Rogers found that Suture Express had adequately alleged its federal tying and exclusive dealing claims, as well as state-law tying, bundling and restraint of trade claims.  These claims allege that defendants required providers to buy at least 90% of their wound closure products from defendants or face higher prices across the board.

Symphony Health Solutions Corp. has filed an antitrust complaint in the U.S. District Court for the Eastern District of Pennsylvania alleging that competitor IMS Health Inc. is snuffing out competition in markets for pharmaceutical data products.

According to the complaint in Symphony Health Solutions Corp. v. IMS Health Inc., IMS, the world’s largest supplier of pharmaceutical and health care industry-related data has negotiated exclusive long-term agreements with health care providers and pharmacies that prevent competitors such as Symphony from effectively competing in the markets for pharmaceutical data products.  Symphony claims that IMS has eliminated vital competition, which has caused higher prices for customers of data related products.

Symphony alleges that IMS unreasonably restrains competition through a variety of anticompetitive tactics, including by predatory bundling of four products, “data for managed care markets, the global marketplace, anonymous patient-level data and so-called targeted and compensation data that focuses on physicians.”  Such bundling allegedly allows IMS to price below a competitive level for Symphony.

Symphony also claims that IMS’s use of most-favored nations clauses in its contracts with data suppliers has “enabled IMS to set artificially high prices for any data purchased from those suppliers by Symphony and other competitors.”

The pharmaceutical and health care industry-related data industry has consolidated significantly in the past decade, according to the complaint.  Symphony alleges that IMS has acquired its competitors in a bid to “eliminate competition and collaboration among its rivals.”  Symphony itself is the offspring of the merging of four health care analytical companies last year.

An effort to extend buyer liability for price discrimination was rejected by the U.S. Court of Appeals for the Ninth Circuit in its affirmance of the dismissal of price discrimination and vertical restraint of trade claims made by car parts dealer Gorlick Distribution Centers LLC against its competitor Allied Exhaust Systems Inc.

The appellate court affirmed summary judgment in favor of Allied on the Robinson-Patman Act and Sherman Act claims alleged by Gorlick in Gorlick Distribution Centers LLC v. Car Sound Exhaust System Inc.  Gorlick claimed that Allied got discriminatory terms from Car Sound Exhaust Systems Inc., a manufacturer of aftermarket auto parts.

Gorlick sued Allied and Car Sound in July 2007, claiming that Car Sound illegally offered Allied preferential terms, including lower prices on merchandise, volume discount pricing (even when volume requirements were not met), free shipping in the Pacific Northwest and higher year-end sales rebates.  Gorlick viewed this as illegal price discrimination, and sued under section 2(f) of the Robinson-Patman Act, claiming that Allied knew that the preferential terms were not warranted by cost differences.  Gorlick also argued that the agreement between Allied and Car Sound resulted in an unreasonable vertical restraint of trade under Section 1 of the Sherman Act.  Car Sound settled with Gorlick in 2008.

Price discrimination claims under the Robinson-Patman Act have fallen into disfavor in recent decades as a result of increasingly restrictive court interpretations of price discrimination claims and lessened government enforcement of price discrimination prohibitions.  Robinson-Patman was passed to prevent price discrimination, specifically to protect smaller buyers from the harm that dominant buyers could cause to competition by obtaining lower prices than small buyers could demand.  However, buyers are not liable if they are merely innocent recipients of discriminatory prices.  In order to hold a buyer liable for paying a discriminatory price, the plaintiff must show that the buyer knew that it was receiving a lower price than a competitor and that the seller would have “little likelihood of a defense” for offering a lower price.

The Ninth Circuit agreed with the district court that Gorlick presented insufficient evidence that Allied had such knowledge.  The court stated that although Allied was aware of the favorable pricing and terms, “Gorlick presents no evidence that Allied knew these benefits resulted from anything other than significant differences in how the two companies did business.”

The Ninth Circuit held that Gorlick could not base a price discrimination claim on the limited duty of a buyer to inquire whether it is receiving illegal discriminatory prices because there was no evidence that such a duty existed here.  Gorlick failed to produce evidence that would have given rise to a duty to inquire, such as evidence that Allied had induced Car Sound to offer the preferential pricing only to Allied.  Distinguishing Ninth Circuit precedent applying such a duty to inquire, the court stated that “[h]olding that Allied had a duty to inquire into the prices offered to its competitors would drastically expand the scope of that duty, and we decline to do so here.”

The Ninth Circuit also rejected Gorlick’s claim that the vertical restraints of trade adopted by Allied and Car Sound were unreasonable under the Sherman Act.  The court held that while such restraints may have injured Gorlick, they did not harm competition in the market given the competition that Car Sound faced from other manufacturers.  The court stated that “[s]o long as other manufacturers compete with Car Sound, which they do, and Gorlick sells those other brands, which it does, vibrant interbrand competition will act as a check on any intrabrand advantage that Allied may receive on Car Sound products.”