Insights

Crowell & Moring held its Transportation & Logistics workshop on Thursday, March 10, 2022 in Dana Point, California. The conference featured key developments and trends in the transportation sector and legal strategies to support supply chain resiliency in the midst of industry uncertainty, evolving regulatory regimes, and unprecedented workforce challenges. Conference participants included transportation leaders and decision-makers across retail, food & beverage, hospitality, telecommunications, healthcare, rail, automotive, aviation, surface, maritime, mobility, shipping, logistics, and beyond. Topics included:

Last week the Ninth Circuit struck a nationwide class of over 200 million cell-phone buyers in Stromberg v. Qualcomm Inc..  A nationwide consumer class can seek immense antitrust damages – here plaintiffs estimated a “lower bound” of $4.8 billion.  The Ninth Circuit’s decision not only prohibits nationwide indirect purchaser classes bringing claims under California’s antitrust law, but imperils multi-state classes similar to those certified in past cases.  Stromberg also has wider implications for nationwide antitrust class actions as other states consider expanding their antitrust laws.

On Monday, the Supreme Court dealt a unanimous blow to the NCAA in NCAA v. Alston, 594 U. S. ____ (2021).  The Court not only ruled against the NCAA on the issue of whether it can ban member schools from providing certain education-related benefits to their players, but it also invited challenges to the NCAA’s ban on other forms of athlete compensation.  The decision capped years of litigation regarding the NCAA’s rules restricting various forms of such compensation and is likely to influence the course of those rules for years to come.  As the Court’s most recent examination of the Sherman Act, however, the decision has broader implications.  It will influence antitrust litigation more generally and includes discussions that will be touted by antitrust plaintiffs and defendants alike.

On its face, last Monday’s Supreme Court decision in Apple v. Pepper does not radically change the law. Applying its existing precedent, the Supreme Court affirmed the Ninth Circuit Court of Appeal’s ruling and held that a group of iPhone owners did directly buy apps from Apple (rather than app developers) and thus could sue Apple for federal antitrust violations. But a deeper dive reveals six important takeaways for forward-looking businesses.

The Supreme Court recently heard argument in Apple v. Pepper, a case we are following that tests the long-standing prohibition on suits by “indirect purchasers” who are further down the supply chain—in the context of Internet-based platforms. Under the 1977 Supreme Court decision in Illinois Brick v. Illinois, only “direct purchasers” can bring suit under federal antitrust laws because the court believed that: (1) direct purchasers are best positioned to enforce antitrust laws and (2) it is difficult to apportion damages and prevent duplicative recovery among multiple plaintiffs. While the Illinois Brick rule has been an important shield for companies facing federal antitrust claims, most states do not have an analogous defense under state antitrust law, creating a patchwork regime of recovery and greater inefficiencies for the courts.

On February 26, 2018, California’s Office of Administrative Law approved final rules for the testing and deployment of fully autonomous vehicles. This will allow self-driving car companies to test self-driving cars—with no human driver—on California’s public roads. These final rules are effective April 2, 2018. 

The Federal Trade Commission continues to test limits in its efforts to enforce federal antitrust laws against state regulatory agencies engaged in policies that may unreasonably restrain competition. On May 31, 2017, the FTC filed a complaint alleging the Louisiana Real Estate Appraisers Board (the Board) unreasonably restrained price competition for appraisal services provided to appraisal management companies (AMCs) in Louisiana through a complex, rate-floor-setting scheme. This is the first FTC complaint against a state regulatory agency since the Supreme Court affirmed the FTC’s ability to prosecute inadequately supervised state agencies in North Carolina State Board of Dental Examiners v. FTC. Akin to North Carolina’s Dental Board, the Louisiana Board consists primarily of licensed members of Louisiana’s appraisal industry, who regulate and enforce standards for Louisiana’s appraisal industry. Also akin to its position in the North Carolina case, the FTC alleges that the Board is inadequately supervised by the State to be immune from federal antitrust laws. The FTC’s Complaint serves as a reminder to similar regulatory bodies that they too can be subject to federal antitrust scrutiny for pricing or other competition-influencing policies they may promulgate at the state level.

On Thursday this week (October 6), the European Commission (the Commission or EC) will present the results of the Preliminary Report (the “Report”) on the E-commerce Sector Inquiry released on September 15 during a public event in Brussels. The sector inquiry was launched in May 2015, under EU competition rules (Article 101 of the Treaty on the Functioning of the EU and Article 17 of Regulation 1/2003), but forms part of the EU’s Digital Single Market Strategy to develop a better understanding the competitive effects of electronic commerce of consumer goods and digital content in the EU.

In Woodman's Food Market v. Clorox Co., the Seventh Circuit has dismissed a grocery chain's claim that Clorox's refusal to sell it the same large package sizes it sold to club stores violates the Robinson-Patman Act. Chief Judge Diane Wood's concise opinion holds that section 2(e) of the Act pertains "only to promotional services or facilities" and that "package size alone is not a promotional service or facility." The decision continues a long trend of cases attempting to harmonize the Act's historical emphasis on the protection of small retailers with the broader focus of the antitrust laws on competition and "the consumer welfare norm." It provides valuable guidance to manufacturers who differentiate their offerings to different retail channels, but leaves other key issues under the Act unresolved.

Many companies sell products in varying product or packaging sizes to different retailers, but a recent challenge to that practice under the federal antitrust laws makes it prudent to re-examine current marketing and distribution policies. This is even more important given that the Federal Trade Commission's (FTC) newly revamped guidance on the Robinson-Patman Act (RPA) demonstrates that regulators' interest in the RPA endures, even though the FTC has not brought a new RPA case in years.

UPDATE NOTE: On April 16, 2013, the Kansas legislature reversed the decision discussed below, and adopted a "reasonableness" standard for analyzing vertical price agreements. 

Two recent state enforcement actions that relied solely on state law to attack minimum resale price maintenance ("RPM") provide the latest indication that states are diverging from federal antitrust law in their increasingly strong efforts to police RPM agreements in the aftermath of the Supreme Court's decision in Leegin Creative Leather Prods., Inc. v. PSKS, Inc., 551 U.S. 877 (2007). 

The California Supreme Court has let stand an appellate court ruling that allows for broad interpretation of California state predatory pricing law. Significantly, the case holds that proof of recoupment is not required to prevail in predatory pricing cases. This broad interpretation means that it will be easier to bring predatory pricing cases against California retailers and merchants.

On July 12, 2010, the California Supreme Court resolved an issue of first impression in Clayworth v. Pfizer, finding that the pass-on defense is not available under California law to defendants accused of price-fixing. In a unanimous decision, the Court held that for private antitrust litigation under California’s Cartwright Act, it is no defense that the plaintiff passed on its damages to its customers. The case has far-reaching effects for defendants in defending against antitrust claims brought under California law. 

On November 19, 2008, the California Supreme Court granted plaintiffs' petition for review of the decision of the Court of Appeal of California in Clayworth v. Pfizer, Inc. The Court will consider whether the defendant drug companies can use the "pass-on defense" and argue that the plaintiff pharmacies are not entitled to damages because they passed higher drug prices charged in the United States on to their customers.

Antitrust regulators for the European Union raided Intel Corp.'s Munich, Germany, offices, as well as the offices of several retailers selling Intel products. EU officers carried out unannounced inspections on Tuesday February 12, 2008 at Intel, German-based retailer Media Markt and Britain's DSG Group, owner of Dixons, Currys, PC City and PC World. The commission said it had reason to believe the companies “may have violated EC Treaty rules on restrictive business practices and/or abuse of a dominant market position.”