March Antitrust Bulletin

March 21, 2011

DOJ and Texas AG File Section 2 Case Against Local Hospital System

On Feb. 25, 2011, the U.S. Department of Justice (DOJ) and the Texas Attorney General filed a civil antitrust lawsuit against United Regional Health Care System of Wichita Falls, Texas, alleging that the hospital had maintained its monopoly for hospital services by entering into exclusionary contracts with commercial health insurers that barred the insurers from contracting with United Regional’s competitors. At the same time, the government filed a proposed settlement that, if approved, would resolve the lawsuit by prohibiting United Regional from entering into these contracts. This is the first time since 1999 that DOJ has brought a Sherman Act Section 2 case challenging a monopolist with engaging in traditional anticompetitive unilateral conduct.

Antitrust Class Action Dismissed Despite Guilty Pleas in Parallel Criminal Case

On March 8, 2011, a district court dismissed an antitrust class action against five Iowa ready-mix concrete manufacturers, including four whose executives had pleaded guilty to participating in a conspiracy to fix prices for sales of ready-mix concrete. In In re: Iowa Ready Mix Concrete Antitrust Litigation, though the executive’s guilty pleas were proof of antitrust agreements and “enhance[d] the expectation that discovery might lead to evidence of a [broader conspiracy],” an amended complaint failed to “cross the line from possibility to plausibility” as required by Twombly. The court found that “[w]hat is missing in this case . . . is the ‘larger picture’ from which inferences of a wider conspiracy can be drawn from guilty pleas to separate bilateral conspiracies.”

Canadian Competition Bureau Will Revise Merger Guidelines

On Feb. 25, 2011, the Canadian Competition Bureau announced plans to revise its merger review guidelines to address certain discrete areas where the guidelines do not fully reflect its current practice and current economic and legal thinking. The revisions will provide additional guidance on monopsony (buyer power) issues, explain how the Bureau assesses unilateral and coordinated effects, and clarify the role of market definition in merger analysis. The Bureau will emphasize that merger review is not a linear process that must start with market definition, but is instead an iterative process in which market definition is only one factor taken into account when determining whether a merger may harm competition. A similar clarification was made in the 2010 revision of the U.S. merger review guidelines.

ECJ Considers How Illegal Agreement between Supplier and Distributor Can be Established

A recent decision by the European Court of Justice, concerning Nintendo’s system of exclusive distribution in national territories, provides a reminder of the importance of considering a supplier/distributor relationship in the round. Additional information is available in our March 2011 EU/UK Competition Law Newsletter.

For more information, please contact the lawyers in the Antitrust & Trade Regulation Department at McGuireWoods.