In re J.P. Morgan Chase (Municipal Bond Derivatives)
Starting in 2008, the states investigated the municipal bond derivatives market, where tax exempt entities like governments and nonprofit organizations issue bonds and reinvest the proceeds until the funds are needed or enter into contracts to hedge interest rate risk on bonds.
The investigation revealed conspiratorial and fraudulent conduct involving individuals at JPMC, other financial institutions, and certain brokers with whom they had working relationships. The states alleged that certain JPMC employees and their counterparts at other institutions rigged bids, submitted noncompetitive courtesy bids and fraudulent certificates of arms-length bidding to government agencies. The misconduct led state and local entities, such as municipalities, counties, school districts and other government agencies, as well as nonprofits, to enter into municipal derivatives contracts on less advantageous terms than they would have otherwise. The $66.5 million multistate settlement is one component of a coordinated settlements (totaling $92 million) between JPMC and the U.S. Department of Justice’s Antitrust Division, the Securities and Exchange Commission (SEC), the Internal Revenue Service, the Office of the Comptroller of the Currency (OCC), as well as the states.
U.S. and Texas v. United Regional Healthcare System, No. 7:11-cv-00030 (N.D.Tex. Feb. 25, 2011)
USDOJ and Texas reached a settlement with United Regional Health Care System of Wichita Falls, Texas, that prohibits it from entering into contracts that improperly inhibit commercial health insurers from contracting with United Regional’s competitors. Plaintiffs alleged that United Regional unlawfully used these contracts to maintain its monopoly for hospital services in violation of Section 2 of the Sherman Act.
United States and Plaintiff States v. Comcast Corp., No. 1:11-cv-00106 (D.D.C., Jan. 18, 2011)
USDOJ and five states challenged the joint venture between Comcast and NBC Universal, alleging that it would harm competition in cable programming, with Comcast controlling NBC and NBCU programming. The parties reached a settlement, and the FCC also reached a separate settlement with Comcast and NBC. The settlements impose a number of restrictions and limitations on the merger to ensure that competing distributors have fair access to NBC and NBCU content. The settlements also address several areas of the joint venture’s operations. The DOJ and states’ settlement particularly focuses on requiring Comcast/NBC to make content available to online video distributors; requires NBC to relinquish all management rights in connection with Hulu.com, a popular video website; and prohibits Comcast from retaliating against content providers who sell to online distributors, entering into exclusive agreements that might limit access to programs, and slowing broadband signals when broadband customers view non-Comcast content.
U.S. and Plaintiff States v. American Express Co. et al. No. 10-4496 (E.D.N.Y. 2010)
U.S. DOJ and plaintiff states filed suit challenging rules made by American Express, MasterCard and Visa that prevent merchants from offering consumers discounts, rewards and information about card costs, ultimately resulting in consumers paying more for their purchases. Visa and MasterCard settled with the Department of Justice and the litigating states immediately after the complaint was filed. Under the terms of the settlement, the two companies will be required to allow merchants to offer discounts, incentives and information to consumers to encourage the use of payment methods that are less costly. The proposed settlement requires MasterCard and Visa to allow their merchants to: 1) offer consumers an immediate discount or rebate or a free or discounted product or service for using a particular credit card network, low-cost card within that network or other form of payment; 2) express a preference for the use of a particular credit card network, low-cost card within that network or other form of payment; 3) promote a particular credit card network, low-cost card within that network or other form of payment through posted information or other communications to consumers; 4) communicate to consumers the cost incurred by the merchant when a consumer uses a particular credit card network, type of card within that network or other form of payment.
American Express did not agree to settle,and a trial was held, in which the court found for the plaintiffs. . The trial focused on credit card “swipe fees” which generate over $50 billion annually for credit card networks. Plaintiffs argued that price competition over merchant swipe fees has been almost non-existent and for decades the credit card networks have not competed on price because of the rules imposed by each of the networks that limit merchants’ ability to take advantage of a basic tool to keep prices competitive. That tool – commonly used elsewhere in the economy – is merchants’ freedom to “steer” transactions to a network willing to lower its price. Each network has long prohibited such steering to lower-cost cards. The court held that the American Express anti-steering rules block merchants from using competition to keep credit card swipe fees down, which means higher costs to merchants’ customers. The decision means that agreements the plaintiffs reached previously with MasterCard and Visa can be fully implemented pending the conclusion of any appeals.
After remedy submissions from the parties, the court entered an order prohibiting American Express from adopting rules or entering contracts that block merchants from encouraging their customers to use a particular credit card. Under the order, merchants must be permitted to: offer discounts for the use of particular cards; express a preference for particular cards; disclose to customers the cost merchants incur when the customer uses particular credit cards; and engage in other conduct to encourage use of favored credit cards. The order also requires American Express to: repeal any rules that block merchant steering; notify merchants of their freedom to engage in steering activities; and adopt compliance measures to ensure that its employees understand that they cannot continue to block steering by merchants that accept American Express cards.
The Second Circuit reversed the lower court decision that the restraints had an actual anticompetitive effect on interbrand competition. The Second Circuit held that plaintiffs failed to meet their burden of demonstrating an anticompetitive effect on the whole market because “without evidence of the NDPs’ net effect on both merchants and cardholders, the District Court could not have properly concluded that the NDPs unreasonably restrain trade in violation of § 1.”
Texas et al. v. Organon (Remeron), No. 04-5126 (D.N.J. 2004)
Plaintiff states settled with drug maker Organon USA, Inc. and its parent company, Akzo Nobel N.V., resolving antitrust claims involving the antidepressant drug Remeron between June 2001 and October 2004. The states’ complaint alleged that Organon unlawfully extended its monopoly by improperly listing a new “combination therapy” patent with the U.S. Federal Drug Administration. In addition, the complaint alleged that Organon delayed listing the patent with the FDA in another effort to delay the availability of lower-cost generic substitutes. The $26 million settlement resolved claims brought by state attorneys general, as well as a private class action brought on behalf of a class of end payors. Organon also agreed to make timely listings of patents and to submit accurate and truthful information to the FDA.
United States et al. v. Ticketmaster, No. 1:10-cv-00139(D.D.C. 2010)
U.S. and 17 states sued to enjoin merger of Ticketmaster, the nation’s largest ticketing services company, and Live Nation, the nation’s largest concert promoter.
According to the Complaint, the parties announced their merger shortly after Live Nation had entered the concert ticketing business as Ticketmaster’s closest competitor. The complaint alleged that consumers and major concert venues would
face higher ticket service charges as a result of the merger
The settlement requires the merging parties to license its ticketing software to Anschutz Entertainment Group (AEG). AEG is the nation’s second largest promoter and the operator of some of the largest concert venues in the country. The merging parties are further required to divest Ticketmaster’s entire Paciolan business, which provides a venue-managed platform for selling tickets through the venue’s own web site. Paciolan is to be divested to Comcast/Spectacor, a sports and entertainment company with a management relationship with a number of concert venues. Comcast also has ticketing experience through its New Era ticketing company.The settlement also prohibits the merging parties from retaliating against venue owners who contract with the merging parties’ competitors.
Texas v. Memorial Hermann Healthcare Systems, Inc., No. 2009-04609, 281st Judicial District Court, Harris County, Texas
State alleged that Memorial Hermann Healthcare System, the largest operator of hospitals in Houston, Texas, had driven a rival hospital out of business by coercing insurance plans to refuse to deal with the rival hospital. Parties reached a settlement under which Memorial Hermann would be bound for five years not to conspire or act in any way to further this type of boycott.
In re Marsh & McLennan
Plaintiff states alleged that Marsh, an insurance broker, made collusive arrangements whereby brokers entered into agreements with insurers to receive undisclosed compensation and engaged in anticompetitive conduct in the market for commercial liability insurance. March agreed to reveal all commissions paid, and to pay the states $7 million.
United States and Plaintiff States v. JBS S.A., No. 08CV5992 (N.D. Ill. 2009)
JBS, headquartered in Brazil, sought to acquire National Beef Packing, Inc., headquartered in Kansas City, Missouri. The U.S. Department of Justice and 13 states sued to block the transaction, which, according to the complaint, would substantially restructure the beef packing industry, eliminating a competitively significant packer and placing more than 80 percent of domestic fed cattle packing capacity in the hands of three firms: JBS, Tyson Foods Inc., and Cargill Inc. The complaint alleged that the acquisition would lessen competition among packers in the production and sale of USDA-graded boxed beef nationwide and would lessen competition among packers for the purchase of fed cattle ? cattle ready for slaughter ? in the High Plains, centered in Colorado, western Iowa, Kansas, Nebraska, Oklahoma and Texas, and the Southwest. In February 2009, the parties announced that they were abandoning the transaction.
U.S. and Plaintiff States v. Republic Services
Two of the three largest waste hauling companies in the U.S. sought to merge. The United States and plaintiff states reached a settlement under which the parties would divest 11 landfills, 8 waste transfer stations and numerous routes within the plaintiff states.