While doctors and medical organizations have long had to navigate antitrust concerns in their practices, antitrust regulators will now have to consider health care reform in evaluating collective action by health care providers in groups known as care accountable care organizations (“ACOs”).

ACOs are health care provider groups responsible for the cost and quality of care delivered to a group of patients cared for by the groups’ doctors.  The Affordable Care Act of 2010 seeks to foster the growth of ACOs as a way to control costs and boost quality in healthcare with a direction to the Centers for Medicare and Medicaid Services (CMS) to create a national voluntary program for accountable care organizations (ACOs) by January 2012.

As ACOs grow in number and influence during the next few years, antitrust policy will have to take into account the goals of health care reform as antitrust regulators deal with the competing concerns of competition and cost containment.

These antitrust issues are explored by Constantine Cannon partners Axel Bernabe and Ankur Kapoor in a recent article that considers the antitrust implications of ACOs under the Affordable Care Act.

Although the American version of class actions may still be viewed as an unwelcome immigrant by businesses in Europe, the European Commission appears to be reviving efforts to fashion its own kinder, gentler, European version of class actions for antitrust violations.

Recent reports indicate that the European Commission has gone back to work on an initiative to allow collective actions for damages by parties injured by violations of EU antitrust law – just a year after killing a previous proposal for such actions.

The EU College of Commissioners reportedly met on October 12, 2010, to discuss the issue of antitrust damages actions. Three Commissioners – Competition Commissioner Joaquín Almunia, Consumer Policy Commissioner John Dalli and Commissioner for Justice Viviane Reding – prepared a briefing paper for their colleagues on the topic.

The European Commission’s previous efforts to allow collective antitrust actions for damages collapsed in dramatic fashion last year.

Under the helm of then Competition Commissioner Neelie Kroes, the Commission had been crafting a Directive which was to include provisions to that effect. But in October 2009, just days before a meeting of the College of Commissioners at which it was to be discussed, the Directive was shelved sine die.

Commission President José Manuel Barroso made the decision to kill the initiative under pressure from the European Parliament. Members of the Parliament complained that the Commission had failed to involve them in the process of drawing up the Directive, and claimed that the Commission’s proposed measures would expose businesses to abusive litigation.

The European Commission has been studying the possibility of collective redress for antitrust violations for a number of years. In December 2005, the Commission issued its Green Paper on Damages Actions for Breach of the EC Antitrust Rules, in which it noted that it was impractical, if not impossible, for individual purchasers with small claims to bring damages actions. Consideration should therefore be given to collective actions as a means to better protect consumer interests, and achieve time and cost efficient redress by consolidating small claims into a single action. click here for more »

The Second Circuit Court of Appeals has upheld a district court ruling that dismissed belated claims by Wells Fargo to participate in the groundbreaking settlements of the Visa Check/MasterMoney Antitrust Litigation. 

The settlements, finalized in 2005, involved payment of $3.05 billion by defendants Visa and MasterCard to a plaintiff class of millions of U.S. merchants afflicted by the defendants’ “Honor All Cards” policies – polices that illegally tied debit cards to credit cards and forced merchants to accept debit cards at supracompetitive prices.

The deadline for filing claims to the settlement funds expired on September 15, 2008, after a three-year window for filing claims.  After the deadline passed, Wells Fargo attempted to file claims on behalf of bankrupt merchants to whom Wells Fargo had provided loans.

On November 19, 2009, Judge John Gleeson of the U. S. District Court for the Eastern District of New York rejected Wells Fargo’s attempt to file late claims, finding that Wells Fargo did not provide an adequate explanation rising to the level of “excusable neglect” for why it failed to file its purported claims before the deadline.  Judge Gleeson noted that Wells Fargo knew about the settlements as early as 2006 when it participated in the claim of another merchant.  The Second Circuit affirmed Judge Gleeson’s decision less than two weeks after hearing oral argument.

According to Jeffrey Shinder of Constantine Cannon, counsel for the plaintiff class who opposed Wells Fargo’s appeal during oral argument, Judge Gleeson’s ruling and the Second Circuit’s timely affirmance will help wind up the administration of the settlement, a process that has involved multiple distributions to merchants totaling over $2.5 billion over the past five years.  One more distribution will be made to merchants this year, possibly the last distribution in the case (more information on this process is available at the case website).

The Visa Check/MasterMoney Antitrust Litigation, which also involved injunctive relief valued as much as $80 billion, is often credited with blazing the trail for similar litigation against the credit and debit card companies.  The most recent action was filed on October 4, 2010, by the Department of Justice and seven states against Visa, MasterCard, and American Express.  While Visa and MasterCard agreed to settlements, American Express has elected to litigate the lawsuit.

Despite looming antitrust hurdles, Energizer Holdings Inc. is one step closer to acquiring a bankrupt shaving products competitor after the U.S. Bankruptcy Court for the District of Delaware granted Energizer permission to bid on American Safety Razor Company.

American Safety filed for Chapter 11 bankruptcy protection on July 28, citing increased competition and the loss of customers, namely Wal-Mart Stores Inc., as the primary reason for its recent difficulties.

Judge Mary F. Walrath determined that the prior auction, won by American Safety’s first-lien lenders with a bid to forgive a claim to $244 million, too narrowly restricted the field of potential bidders.  Upon recognition of Energizer’s earlier $301 million cash bid, the court determined that a new auction must commence in order to maximize the amount paid by the victor.  Judge Walrath indicated that Energizer must be given sufficient time to engage in due diligence prior to the next auction.

American Safety Razor previously determined that Energizer’s cash bid was inadequate, particularly given the level of antitrust scrutiny that may follow.  Given the court’s current posture, the attractiveness of inviting Energizer to the auction table apparently outweighed the risk of future antitrust issues should Energizer prevail.

Energizer, the maker of Schick razors and other shaving products, currently holds a strong position in the razor market, second only to Proctor & Gamble’s powerhouse, Gillette.  American Safety Razor is one of the leading producers of razor blades and personal care products, with sales to supermarkets and other merchants under both retailer names and American Safety’s brand names.  The acquisition of New Jersey-based American Safety would allow Energizer to increase its market share substantially through strategic expansion and broaden its opportunity to reach consumers.

Regardless of whether Energizer is ultimately successful in the next auction, the ripples from this decision may be seen far from Delaware.  Given the recent financial woes of many companies, surviving competitors with the means to expand may have a stronger claim to be invited to the auction block.  Moreover, the behavior of management of a bankrupt company may be scrutinized more closely to ensure that all necessary and appropriate efforts are made to accommodate bidders, even competitors.

It is unclear who will win the next auction and what level of antitrust scrutiny will follow should Energizer succeed, but if Energizer is successful its brand presence and market share will keep growing and growing and growing ….

The U.S. Department of Justice has announced the first guilty pleas in its ongoing investigation into a price-fixing cartel in the worldwide refrigerator compressor market.

According to the DOJ, Japan-based Panasonic Corp. and Embraco North America Inc., a Brazilian subsidiary of Whirlpool Corp., agreed to pay $49.1 million and $91.8 million respectively for a price-fixing conspiracy that lasted from October 2004 until December 2007.

Both companies stake claim to significant shares of the worldwide compressor market with Panasonic occupying 13% and Embraco holding 25%.  Embraco will also pay a $56.5 million fine in Brazil for anticompetitive conduct.  The DOJ has not indicated whether other manufacturers will be entering additional guilty pleas in the near future.