35 Are changes expected to the legislation or other measures that will have an impact on this area in the near future? Are there shifts of emphasis in the enforcement practice?
In June 2018, the Supreme Court decided Ohio v American Express, a case about the proper antitrust analysis of two-sided markets. The DOJ and several states sued Amex in 2015 alleging that anti-steering provisions of American Express’s contract with merchants were anticompetitive because they limited the ability of merchants to encourage customers to use non-Amex credit cards that charge lower merchant fees. The Supreme Court held that these provisions were not anticompetitive. The Supreme Court reasoned that the credit card market is a two-sided ‘transaction platform’ with the merchant on one side and the cardholder on the other. Thus, the effect on both sides of the market needed to be considered when evaluating whether the provisions violated the antitrust laws. If Amex charged a higher fee to merchants, that could benefit card holders in the form of better rewards programmes, and in turn that could benefit merchants by encouraging more spending. Although the plaintiffs argued that the merchants paid higher fees to Amex, the Supreme Court found that they failed to demonstrate that the net price charged by Amex for credit card transactions were higher when considering both the merchant fees and the rewards paid to cardholders. The Supreme Court also found that the plaintiffs failed to demonstrate that the anti-steering provisions reduced output. The dissent disagreed with including merchants and cardholders in a single market and argued that plaintiffs had demonstrated anticompetitive effects including by demonstrating that Amex had the ability to increase its merchant fees without losing market share. This case was pursued as a unreasonable restraint of trade case under Section 1 of the Sherman Act, 15 USC section 1, but it is likely to be applicable in many cases involving alleged monopolists in multi-sided markets.
The Supreme Court also heard argument in a monopolisation case brought by a proposed consumer class action against Apple. The lawsuit alleges that Apple illegally monopolised the market for apps for iPhones by forcing app developers to sell only on Apple’s app store platform, charging a percentage commission on those sales, and causing developers to raise the price of the app charged to consumers. The issue before the Supreme Court is whether the consumers have antitrust standing to sue under doctrines that typically limit the ability of indirect purchasers to bring federal antitrust lawsuits. The consumers contend they are the direct purchasers because they pay Apple for the apps, while Apple contends that the direct purchasers are app developers because they are the ones that pay the allegedly inflated commission to Apple. As of the time of writing, the Supreme Court has not yet issued a decision. However, at oral argument in November 2018, the questioning suggested that the majority could side with the consumers, which could make it easier for plaintiffs to have standing to bring antitrust lawsuits in federal court.
The FTC and DOJ did not file new monopolisation cases over the last year, but the FTC has continued to pursue several pending monopolisation cases and the DOJ has weighed in on a private case.
In January 2019, the trial concluded in the FTC’s case against Qualcomm alleging that Qualcomm used its monopoly position in baseband chips for mobile phones to impose anticompetitive licensing terms for standard-essential patents that allegedly impaired Qualcomm’s competitors in baseband chips by imposing a ‘tax’ on competing chips. A decision had not been issued at the time of writing.
The FTC has also pursued abuse of process cases involving pharmaceuticals. In June 2018, the FTC won a US$448 million judgment against AbbVie for sham litigation related to patent infringement lawsuits filed against potential generic competitors of its AndroGel product. In 2017, the court had granted summary judgment in favour of the FTC finding patent litigation was objectively baseless, and in its 2018 opinion, the court found that AbbVie had monopoly power and that the litigation was subjectively baseless. This case is among a limited number sustaining a sham litigation claim. The case is on appeal at the time of writing.
The FTC suffered a defeat in another abuse of process case. In a 2017 lawsuit, the FTC alleged that Shire ViroPharma had engaged in a campaign of serial, repetitive and unsupported filings before the US Food and Drug Administration to delay the entry of generic competitors for Vancocin capsules and sought an injunction against future FDA filings. In March 2018, a federal judge dismissed the lawsuit finding that the FTC did not have statutory authority to seek an injunction unless it has ‘reason to believe’ that the defendant ‘is violating, or is about to violate’ the law. According to the district court, that requires the FTC to show more than that a violation is ‘likely to recur’. This decision runs contrary to numerous other decisions interpreting the FTC’s authority to seek equitable relief more broadly. If this decision is upheld on appeal, it could be a significant impediment to the FTC’s ability to bring enforcement actions.
The FTC has also continued to pursue reverse payment patent settlements. In February 2019, the FTC entered into a settlement barring Teva from entering patent settlements that limited branded pharmaceutical companies from launching authorised generics (AG). This settlement expanded a prior 2012 order where Teva already agreed to disgorgement of US$1.2 billion and to not enter into patent settlements involving payments from or certain types of side deals with branded manufacturers. This settlement resolves Teva’s involvement in three pending FTC cases about patent settlements.
In May 2018, an FTC administrative judge dismissed a case against Impax where the FTC alleged that Impax agreed to delay launch of a generic version of Opana ER until January 2013 in exchange for Endo’s agreement that it would delay launch of an authorised generic and pay Impax US$40 million in an alleged side deal related to development and co-promotion of another drug. The judge found that Impax would have been unlikely to launch a generic drug ‘at risk’ prior to January 2013 because that would have been before a court decision in related patent litigation and the agreement between Endo and Impax that allowed Impax to enter in January 2013 and thus facilitated earlier entry. The FTC trial counsel has appealed this decision to the Commission. The decision was pending at the time of writing.
The DOJ does not have pending monopolisation litigation of its own, but In November 2018, it filed an amicus brief in an appeal of private litigation between Comcast and Viamedia involving refusal to deal allegations. The DOJ’s amicus brief argued that the court should hold that a refusal to deal does not constitute illegal monopolisation where there are valid business reasons for the refusal and unless the refusal would make ‘no economic sense’ but-for the elimination of competition.
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