May Antitrust Bulletin

May 26, 2011
Arbitration Clauses in Consumer Contracts May Bar Class Actions

On April 30, 2011, the U.S. Supreme Court ruled in a 5-4 opinion in AT& T Mobility LLC v. Concepcion that California state law deeming class action waivers in arbitration agreements unenforceable in certain circumstances is preempted by the Federal Arbitration Act because it “stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress.” A class of plaintiffs had sued AT&T for charging sales tax on purportedly “free” cellular phones. The service contract between the plaintiffs and AT&T provided for arbitration of all disputes, brought in an “individual capacity, and not as a plaintiff or class member in any purported class or representative proceeding.” AT&T had moved to compel individual arbitration, but a district court ruled that the arbitration clause was unenforceable. The Supreme Court’s reversal of this decision could have a significant impact on the viability of consumer class action lawsuits.

DOJ Seeks to Unwind Sale of Chicken Processing Plant

In the latest in a series of challenges to consummated mergers by federal antitrust agencies, on May 10, 2011, the U.S. Department of Justice (DOJ) filed suit challenging George’s Inc.’s acquisition of Tyson Foods’ Harrisonburg, Va., chicken processing plant, alleging that the acquisition eliminates substantial competition between the two companies for the procurement of services of chicken growers in the Shenandoah Valley area. The transaction, which was publicly announced on March 18, 2011, was not reportable under the premerger notification requirements of the Hart-Scott-Rodino Act. However, DOJ raised antitrust concerns and sought information from the companies on the potential competitive effects of the transaction before the deal was closed on May 7, 2011.

FTC Examines Competition Issues in Collaborative Standard Setting

On June 21, 2011, the Federal Trade Commission (FTC) will hold a public workshop to address antitrust issues arising from the incorporation of patented technologies in collaborative standards, including the risk of patent “hold-up” and its effect on competition. Among the topics to be considered are patent disclosure rules of standard-setting organizations, commitments given by patent holders to license users of the standard on reasonable and non-discriminatory (RAND) terms, and the disclosure of licensing terms by patent holders before the standard is adopted. The FTC will also consider whether certain conduct by patent holders is deceptive or unfair under Section 5 of the FTC Act. Public comments may be filed until July 8, 2011.

EC Cartel Fines Offer Clear Warning of Dangers Inherent in Trade Association Activities

On April 13, 2011, the European Commission (EC) fined Procter & Gamble and Unilever a total of €315.2 million for their participation in a household laundry powder detergents cartel. The cartel began when the companies implemented an initiative through their trade association to improve the environmental performance of detergent products. This collaboration led to wider arrangements aimed at price coordination and stabilizing market positions. Additional information is available in our May 2011 EU/UK Competition Law Newsletter.

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