October Antitrust Bulletin

October 11, 2016

Supreme Court Will Not Hear Appeal of O’Bannon v. NCAA Decision

On Oct. 3, 2016, the U.S. Supreme Court denied petitions for a writ of certiorari from both sides of the O’Bannon v. NCAA student-athlete pay case. 

As we previously reported, in August 2014 the U.S. District Court for the Northern District of California struck down the NCAA’s rules prohibiting student athletes from receiving compensation for the use of their names, images and likenesses during their college athletic careers.  In September 2015, the Ninth Circuit ruled that student-athletes can be provided scholarships that cover the full cost of attending college (more than had been previously permitted), but that the NCAA was not obligated to pay cash licensing payments as ordered by the lower court. 

The Supreme Court’s denial of certiorari leaves the Ninth Circuit’s decree in place as to scholarships and licensing payments, as well as the holding that the NCAA’s rules on student-athlete competition were an illegal restraint of trade analogous to price-fixing in violation of the Sherman Act. 

Second Circuit Reverses DOJ Victory in AmEx Anti-Steering Suit

On Sept. 26, 2016, the U.S. Court of Appeals for the Second Circuit reversed a major victory by the Department of Justice (DOJ) in its credit card litigation based on networks’ “anti-steering” rules. 

The government had filed the suit against American Express in 2010 after Visa and MasterCard had settled similar claims.  American Express litigated the matter through a seven-week bench trial in the Eastern District of New York that resulted in the issuance of a permanent injunction in April 2015. 

The Second Circuit’s reversal turned on its assessment that the relevant anti-competitive effects of the challenged restraint (the “anti-steering” rules) must be those that impact the market as a whole — including merchants as well as cardholders.  The Second Circuit found that the District Court’s focus on merchants “discount[ed] the interests of cardholders” and “[did] not advance overall consumer satisfaction.”  The DOJ has not yet noticed an appeal to the Supreme Court. 

Opinion in Vitamins Appeal Orders Dismissal Based on International Comity

On Sept. 20, 2016, the Second Circuit issued an opinion vacating the Eastern District of New York’s $147 million judgment against two Chinese companies in a class action alleging price-fixing in the Vitamin C market.  The opinion is notable because it turned on the statement offered in court by a foreign nation.  

The Chinese Ministry of Commerce filed a statement that the conduct of the defendant companies (fixing the price and quantity of Vitamin C sold), which had been found to violate Section 1 of the Sherman Act, was done at the direction of the government of China. 

The Second Circuit’s opinion looked to principles of international comity for guidance and ultimately held that when a foreign government files a formal statement, as China did here, those principles of comity “required the district court to abstain from exercising jurisdiction in this case.”

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