Antitrust Suit Against Wholesale Grocers Revived by Appellate Court
On May 21, 2014, in In re: Wholesale Grocery Products Antitrust Litig., a three-judge panel of the Eighth Circuit vacated an order of summary judgment in favor of defendants SuperValu, Inc., and C&S Wholesale Grocers, Inc., two wholesale grocers who allegedly divided up geographic markets by way of reciprocal noncompetition agreements executed in the context of SuperValu’s transfer of its New England assets to C&S. The Western District of Wisconsin had granted summary judgment in favor of the nation’s two largest wholesale grocers on the grounds that the noncompetition agreement was not a per se antitrust violation because it applied only to former customers and theoretically permitted the wholesalers to compete for existing and future customers.
The Eighth Circuit disagreed and found that, while the face of the agreement did not show a naked restraint on trade, a genuine issue of material fact was created when the written agreement was considered in light of emails indicating that the basis for the asset transfer deal was that SuperValu would not compete in New England and the fact that neither wholesaler competed in the other’s territory.
Dismissal of Suit Based on Foreign Activity Affirmed
On June, 4, 2014, in Lotes Co., LTD. v. Hon Hai Precision Industry Co., Ltd. et al., the U.S. Court of Appeals for the Second Circuit affirmed dismissal of an antitrust suit arising from foreign activity where a patent owner was asserting claims related to a Chinese patent. The Second Circuit affirmed the district court’s decision that dismissal was proper because any impact on U.S. commerce from the foreign activity did not “give rise to” the antitrust claims under the Foreign Trade Antitrust Improvements Act (FTAIA).
Notably, the Second Circuit overruled a prior decision and held that FTAIA restrictions are substantive and not jurisdictional — meaning that they deal with the merits of the claim rather than the court’s power to adjudicate FTAIA claims and that FTAIA restrictions are potentially waivable. Also of note was the Second Circuit’s following of Seventh Circuit precedent holding that anticompetitive conduct can have FTAIA-required “direct, substantial, and reasonably foreseeable effect” on U.S. commerce even if the effect is not an immediate consequence of the defendant’s conduct, as long as there is a reasonably “proximate causal nexus” between the conduct and effect.
Apple Settles E-book Lawsuit
Apple has settled an e-book price-fixing class-action lawsuit brought by states and consumers. The class action, In re: Electronic Books Antitrust Litigation, comes on the heels of a 2012 lawsuit brought by the U.S. government alleging that Apple Inc. and five major publishers conspired to sell e-books under a pricing model that made e-books more expensive. The class plaintiffs claimed that Apple overcharged consumers by $280 million for e-books and sought to treble those damages to $840 million. The exact terms of the settlement have not been announced yet, but the parties are expected to file the settlement agreement with the court next month.