By Allison F. Sheedy

Sysco Corp. announced yesterday that it is abandoning its plans to acquire food service rival US Foods Inc., following last week’s setback to the deal in federal court.

In an opinion that closely tracked the FTC/DOJ Merger Guidelines, Judge Amit Mehta of the U.S. District Court for the District of Columbia granted the Federal Trade Commission a preliminary injunction to halt the proposed merger of nation’s two largest distributors of food and related supplies to restaurants and other foodservice establishments.  Sysco’s announcement that it was abandoning its plans to acquire its rival is no surprise, given the substantial hurdle imposed on the deal by the FTC’s victory in court.

The 18-month-old proposed deal encountered regulatory scrutiny from the start.  Last February, Sysco and US Foods proposed a divestiture of 11 US Foods distribution facilities to a smaller competing foodservice company, Performance Food Group (“PFG”), as a “fix-it-first” remedy designed to allay the FTC’s concerns.  The FTC was not swayed, however, and decided to sue Sysco and Us Foods to block the deal.

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Here are some of the developments in antitrust news this past week that we found interesting and are following.

Judge Halts Sysco’s Proposed Merger With US Foods.  A federal judge has ordered a preliminary injunction to block Sysco’s proposed merger with US Foods, dealing a potentially fatal blow to what would be a union of the two biggest food distribution companies in the United States.  The injunction is a victory for the Federal Trade Commission, which sued in February to block the deal on the grounds that it would lead to higher prices and worse service for customers like restaurants and schools.

Anthem confident, but experts see antitrust hurdles to Cigna deal.  U.S. health insurer Anthem is dismissing concerns that buying smaller competitor Cigna would be considered anticompetitive, despite the view of antitrust experts that the combination would earn regulatory scrutiny.  Any merger could require asset sales and would be complicated by potential deals among other insurers.

Getty Images takes Google grievance to EU antitrust regulators.  Getty Images has become the latest company to take its grievances with Google to European Union antitrust regulators as it accused the world’s largest Internet search engine of favoring its own images service at the expense of rivals.  The complaint comes as the European Commission waits for Google to respond to charges of abusing its market power in a dozen EU countries since 2007 by distorting search results to favor its shopping service.

U.S. gov’t settles antitrust charges with three Michigan hospitals.  Although three Michigan hospital systems have settled charges by the U.S. Department of Justice that they violated antitrust law by agreeing not to advertise in each other’s areas, a fourth will fight the allegations.  Michigan’s Hillsdale Community Health Center, Community Health Center of Branch County, Michigan, and ProMedica Health System Inc, which has two hospitals in the area, are settling the charges.

By Robert S. Schwartz

Spiderman swung through the halls of the U.S. Supreme Court yesterday as Justice Elena Kagan liberally relied on the comic book superhero in the Court’s decision in Kimble v. Marvel Enterprises, Inc., reaffirming the Court’s 51-year-old rule precluding patent owners from collecting patent royalties on expired patents.

In 1964 the U.S. Supreme Court ruled in Brulotte v. Thys Co. that the statutory limit on patent terms precludes patent licensors from enforcing any contract to receive royalties for exploitation of the patent after its term had expired.  The Court accepted the Kimble case explicitly to consider whether, in light of subsequent antitrust law and economics scholarship, this precedent should be overruled.  On Monday, the Court, adhering to principles of stare decisis, declined to do so in a six to three opinion by Justice Kagan.  The majority held that, assuming that the antitrust economics criticisms of Brulotte are correct, it would be up to Congress to revise the law in order to change this long-standing interpretation of the Patent Act.

Kimble, which patented a toy that shot “webbing” like Spiderman, successfully sued Marvel for infringement in 1997.  The parties, both ignorant of Brulotte, settled the case by agreeing Marvel would purchase Kimble’s patent for a lump sum payment and a running three percent royalty on all future sales.  More than a decade later, Marvel, as Justice Kagan put it, “stumbled across Brulotte,” and filed for a declaratory judgment to release its royalty obligation.  After the district court granted the relief, the U.S. Court of Appeals for the Ninth Circuit affirmed, but, per Justice Kagan, was “none too happy about doing so.”  The Supreme Court accepted the case “to decide whether, as some courts and commentators have suggested, we should overrule Brulotte.”

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Here are some of the developments in antitrust news this past week that we found interesting and are following.

Anthem Makes $47 Billion Offer for Rival Cigna.  One of the biggest health insurers in the United States, Anthem, has revealed that it is offering to buy rival Cigna for more than $47 billion in cash and stock.  The move is the latest step toward an expected consolidation among health insurance companies.  Last month, Humana, another competing health insurer, was reported to be exploring a sale of itself.

European Regulators Lay Out Demands and Fines in Google Antitrust Case.  European Union antitrust regulators are threatening to impose significant fines on Google’s operations in Europe if the company does not give rivals greater prominence in some search results across the 28-member bloc.  The move — outlined in a statement of objections that was sent to Google in April and on Thursday to a number of companies that have balked at Google’s activities in Europe — is the latest step in the five-year antitrust case brought by European officials.

Senators reintroduce bill to protect antitrust whistleblowers.  The ranking Democrats and Republicans on the Senate Judiciary Committee have joined forces to reintroduce a bill aimed at protecting whistleblowers who aid the U.S. Department of Justice in investigating criminal antitrust cases.  A similar bill passed the Senate in late 2013, but was not taken up by the U.S. House of Representatives.

News Corp must face Dial, Heinz ad monopoly class action – judge.  U.S. District Judge William Pauley has ordered News Corp to face a class action lawsuit accusing it of monopolizing the market for in-store promotions at some 52,500 retail stores in the United States.  The federal judge in Manhattan said consumer packaged goods companies such as Dial Corp, H.J. Heinz Co and Smithfield Foods Inc may pursue their antitrust claims as a group, potentially boosting overall damages.

Here are some of the developments in antitrust news this past week that we found interesting and are following.

Apple Music and Labels Investigated in 2 States.  The attorneys general of New York and Connecticut have been investigating Apple’s negotiations with music companies for possible antitrust violations.  The attorneys general wanted to know whether Apple pressured the music labels — or whether the labels conspired with Apple and one another — to withdraw support for popular “freemium” services offered by companies like Spotify in favor of Apple’s paid music subscriptions.

Amazon’s E-Books Business Investigated by European Antitrust Regulators.  European Union antitrust regulators are investigating whether Amazon used its dominant position in the region’s e-books market to favor its own products over rivals.  The European Commission is evaluating the legality of clauses that Amazon used with European publishers, which required them to inform the e-commerce giant when they offered more favorable terms for books to other digital retailers.

U.S. Antitrust Reviews of Mergers Get Longer.  While mergers and acquisitions have accelerated sharply since the financial crisis faded, the U.S. government has slowed its pace of reviewing proposed deals.  Deal reviews conducted by the U.S. Department of Justice and the Federal Trade Commission this year have averaged more than 10 months, an increase from an average of seven months in recent years.

Gazprom has until mid-Sept to reply to EU antitrust charges.  Russian energy company Gazprom has been given until mid-September to respond to European Union antitrust charges of over-charging for gas in eastern and central Europe, and blocking competitors from entering the market.  Although the European Commission gave Gazprom 12 weeks to reply when it revealed the charges on April 22, companies typically ask for more time to marshal their legal and economic arguments when faced with complex issues.