October Antitrust Bulletin

October 1, 2015

Seventh Circuit to Hear Appeal in Robinson-Patman Suit Alleging Discrimination Based on Product Package Sizes

On September 8, the U.S. Court of Appeals for the Seventh Circuit granted a motion filed by household products manufacturer Clorox for interlocutory appeal of two decisions by the U.S. District Court for the Western District of Wisconsin. Those decisions, from February and April of this year, respectively, had allowed Woodman’s Food Market, Inc., a Wisconsin-based grocery chain, to proceed on claims that Clorox discriminated against Woodman’s by discontinuing sales of “large pack” sizes of certain products to Woodman’s while continuing to sell those sizes to warehouse club retailers. In the absence of any recent precedent, the district court’s analysis was driven primarily by decades-old administrative decisions by the Federal Trade Commission (FTC) and the FTC’s Guides for Advertising Allowances and Other Merchandising Payments and Services (commonly known as the “Fred Meyer Guides”). The district court litigation is stayed pending the outcome of the appeal.

Hedge Funds, Management Company Agree to Settle Charges of Improper Reliance on Hart-Scott-Rodino “Investment-Only” Exemption

On August 24, the FTC announced that it had reached a proposed settlement with New York-based hedge fund management company Third Point LLC and three affiliated funds (collectively, “Third Point”) in connection with a complaint filed on the same day in the U.S. District Court for the District of Columbia. The complaint alleged that, in August 2011, Third Point LLC’s acquisitions of shares of Yahoo! Inc. on behalf of three of its managed funds had triggered the Hart-Scott-Rodino Act’s (HSR Act) notification and waiting period requirements, and that the funds did not qualify for any of the exemptions from such requirements that the HSR Act provides. In particular, the complaint alleged that the filing exemption for acquisitions made “solely for the purpose of investment,” 16 C.F.R. § 801.1(i)(1), did not apply because Third Point and its agents had undertaken activities inconsistent with such a purpose, including deliberations and public statements regarding proposed changes to Yahoo! Inc.’s board of directors and communications with third parties about their interest in becoming the CEO or a board member of Yahoo! Inc. The funds subsequently filed the required notifications in mid-September 2011.

Pursuant to the stipulated final judgment, which currently is pending public comment and court approval, the Third Point funds will be prohibited from relying on the “investment-only” exemption if they are a competitor of a target or a target’s parent, and/or if they engage in any of several enumerated activities, including contacting third parties regarding joining the board of a target company or communicating with a target company about proposed candidates for the target company’s board. The final judgment also will require Third Point to implement a compliance program. In light of the unintentional and brief nature of the violation, however, the FTC decided not to seek civil monetary penalties from Third Point.

Yet Another Auto Parts Manufacturer Agrees to Plead Guilty to Antitrust Violations

On September 16, the U.S. Department of Justice Antitrust Division (DOJ) announced the latest criminal antitrust charges filed in its ongoing investigation of price-fixing and other anticompetitive conduct in the market for automotive parts. The charges, filed in the U.S. District Court for the Southern District of Ohio, allege that Kayaba Industry Co. Ltd. d/b/a KYB Corporation (KYB), a Japanese manufacturer of shock absorbers, colluded with two competitors to allocate the supply of shock absorbers and fix both prices and price adjustments to manufacturers of cars and motorcycles in the United States and abroad. KYB has agreed to plead guilty to the charges and pay a $62 million criminal fine. As of the date of the press release, the DOJ has charged 55 individuals and 37 companies in connection with its investigation, with criminal fines totaling over $2.6 billion.

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