Federal Pleading Standards Clarified in Price-Fixing Case
A federal appeals court recently clarified the pleading standards established in Bell Atlantic Corp. v. Twombly and Ashcroft v. Iqbal. In In re: Text Messaging Antitrust Litigation, an amended complaint was found to contain sufficient circumstantial evidence of price fixing “to warrant allowing the plaintiffs to proceed to discovery.” The court ruled that allegations of direct evidence of an overt agreement were not required, and that allegations that the defendants had exchanged price information at trade associations, engaged in leadership councils, and increased prices in the face of steeply falling costs were sufficiently plausible.
In examining the “plausibility standard” established in Twombly and Iqbal, the court – noting that “plausibility, probability, and possibility overlap” – found “[t]he fact that the allegations undergirding a claim could be true is no longer enough to save a complaint from being dismissed; the complaint must establish a nonnegligible probability that the claim is valid; but the probability need not be as great as such terms as ‘preponderance of the evidence’ connote.” The ruling, authored by Judge Richard Posner, is significant because it affirms that circumstantial evidence can be sufficient to get past the pleading stage.
FTC and Ohio AG Challenge Consummated Hospital Acquisition
On Jan. 7, 2011, the Federal Trade Commission and the Ohio Attorney General challenged ProMedica Health System’s acquisition of rival St. Luke’s Hospital, alleging that post-acquisition ProMedica now controls nearly 60% of the general acute care inpatient hospital services market in Lucas County, Ohio, and more than 80% of the market for obstetrical services. According to the complaint, the acquisition vests ProMedica with the ability to demand higher rates for services performed at its hospitals, which would impose significant financial burdens on local employers and employees, either directly or through higher insurance premiums, co-pays and other out-of-pocket expenses. This case is yet another in a series of challenges to consummated mergers by antitrust enforcement agencies.
China Announces Pricing Practices Regulations
On Jan. 4, 2011, China’s National Development and Reform Commission published new rules, which ban price-fixing and impose restrictions on companies with dominant market positions. The regulations also address concerted practices and communication within trade associations. The “Anti-Price Monopoly Regulation” provides guidance on what will be considered unfair pricing under Chinese law and how the relevant market will be determined. The “Anti-Price Monopoly Administrative Enforcement Procedure Regulations” establish rules for the conduct of price-fixing investigations and provide for the application of leniency provisions. The new rules take effect Feb. 1, 2011.
EC Revises Horizontal Cooperation Guidelines
On Dec. 14, 2010, the European Commission published revised Guidelines for evaluating cooperation agreements between horizontal competitors. Additional information is available in our January 2011 EU/UK Competition Law Newsletter.
For more information, please contact the lawyers in the Antitrust & Trade Regulation Department at McGuireWoods.