Antitrust and Consumer Law Section
From the Section Cochairs
Nadine Jones and Don Resnikoff
We have had excellent events recently, including an outstanding early evening “meet and greet” session matching experienced lawyer–mentors and less experienced mentees. Participants were enthusiastic about the conversation, collegiality, and light refreshments.
More exciting upcoming programs include:
March 30 - Don’t miss this year’s Lewis Bernstein Memorial antitrust lecture. We are honored to have the Vice President of the European Commission, Joachin Almunia, as our speaker this year. The section will cooperate with the U.S. Department of Justice again in presenting this lecture in DOJ’s Great Hall. See details below for registration information.
Ongoing projects include updating the Consumer Law chapter of the D.C. Practice Manual (coordinated by Tracy Rezvani) and the companion Antitrust chapter (coordinated by Don Resnikoff).
Other events are in the planning stage. Grace Kwon and Robert Hauberg are planning an Antitrust Nuts and Bolts program. Wendy Weinberg is planning the section’s participation in the District of Columbia Youth Law Fair program.
Also in the planning stage is a program discussing the CFTC whistleblower rules; also a program analyzing the Supreme Court decisions in ATTM v. Concepcion and Compucredit v. Greenwood.
Don also contributes an “op–ed” piece arguing for restoration of the D.C. statute providing for an Antitrust Fund to support the D.C. Attorney General’s enforcement efforts.
Upcoming Section Events:
This Brown Bag Program is sponsored by the Antitrust and Consumer Law Section, in cooperation with the American Bar Association.
The Lewis Bernstein Memorial Lecture*
Background Information About the Bernstein Lecture Speaker:
Almunia was director of the research program on “Equality and Redistribution of Income” at the Fundación Argentaria from 1991 to 1994. In 2002, he founded and was director of the progressive think tank, Laboratorio de Alternativas.
Born in Bilbao, Spain, he is married and has two children. He graduated in Law and Economics at the University of Deusto, and completed follow-up studies at the École Pratique des Hautes Études in Paris and the “Senior managers in Government” program at the Kennedy School of Government at Harvard University. He was an associate lecturer on Employment and Social Security Law at the University of Alcalá de Henares.
Remembering Lewis Bernstein(1916-1990)
He entered the U.S. Army in 1941. He graduated from Officer Candidate School in Fort Benning, Georgia, and served in North Africa, Sicily and other parts of Italy, and Germany. He was awarded the Bronze Star Medal and five Battle Campaign Stars.
The USDOJ and State AG's Settlement with Banks -- What Rights to Prosecute Remain with State AGs and the District of Columbia, and Private Litigants?
The settlement doesn’t release any private claims by individuals or any class-action claims, or release claims related to the packaging of mortgage loans into securities, according to the USDOJ-State website outlining the agreement.
The reserved claims appear to provide enforcement opportunities for the Attorneys general of all states, and the District of Columbia. Some AGs offices have been aggressive in pursuing claims of the kind that appear to be preserved, some less.
Citizens should be interested in the continuing enforcement activities of their Attorneys General concerning bad bank behavior concerning mortgages.
Don Resnikoff – February 14, 2012 ©
Killing the Goose That Laid D.C.’s Antitrust Enforcement Eggs?
The Antitrust Fund was used by the Office of the Attorney General for the statutory purpose of “payment of costs, expenses, and charges incurred in and reasonably related to the investigation, preparation, institution and maintenance of antitrust actions” under either D.C. or federal law. D.C. Code § 28–4516(b), now repealed. As of 2007–2008, the Antitrust Fund was covering the salaries of three Assistant Attorneys General devoted full time to antitrust enforcement, and associated support services.
Some may view last year’s repeal by the D.C. Council of the statutory provisions for the Antitrust Fund as consistent with continuing vigorous local antitrust enforcement. The D.C. Attorney General did announce an investigation of local gas pricing issues in 2011 (although no court prosecution or other progress has been announced as yet). Others, noting that the last Assistant Attorney General position devoted full time to antitrust enforcement was eliminated at the end of 2011, may view the scrapping of the Antitrust Fund as killing the goose that laid important antitrust enforcement eggs. Yet others may simply be hostile to antitrust enforcement, feeling that antitrust enforcement by local government is unimportant or undesirable.
My view is that failure to continue the Antitrust Fund is likely to reduce the quantity and quality of valuable local government antitrust enforcement. Attorney General Nathan may, for example, be sincerely dedicated to investigating gasoline pricing in the District of Columbia, but his investigation and possible prosecution of a case in court will lack the help of even one full time District of Columbia government attorney dedicated to antitrust enforcement. In theory the gap could be filled by private practice attorneys and law students volunteering their time, but the volunteer fire department model hardly seems practical.
In my opinion, local government antitrust enforcement, like local government consumer rights enforcement, requires paid government professionals. I believe that a dedicated Fund drawn from case–generated fees was a useful innovation that provided a good way to pay their salaries. In appropriate situations, “Special Purpose Revenue fund accounts are necessary to support a particular program or activity,” just as the District of Columbia’s Chief Financial Officer reported in 2011.
The proof of the value of local antitrust enforcement, or the lack of it, lies in the record of D.C. enforcement during the period when the Antitrust Fund was in operation, and D.C. had as many as three full time antitrust enforcement attorneys. (Disclosure: I was the lead D.C. government antitrust lawyer during much of that period.)
Over the last decade, much of the Office of the Attorney General’s antitrust enforcement work focused on preserving competition in local markets. In Atlantic Coast Airlines Holdings, Inc. v. Mesa Air Group, Inc., 295 F. Supp. 2d 75 (D.D.C. 2003), plaintiff Atlantic Coast Airlines Holdings, Inc. (Atlantic), which operated regional “feeder” flights for United Airlines, Inc., alleged a conspiracy among Mesa Air Group, Inc. (Mesa), one of Mesa’s shareholders, and United Airlines to exclude Atlantic from entering the market as an independent, low-fare airline based at Dulles International Airport.
The D.C. Attorney General, concerned about competition in the local metropolitan area, initiated an investigation that was joined by the Attorney General of Virginia. D.C. and Virginia filed an amicus curiae brief in support of Atlantic’s motion for a preliminary injunction. Id. at 87 n.5. The court’s finding that “the public interest will be best served by the entry of a preliminary injunction” was based in part on its having been asked “by the District of Columbia and the Commonwealth of Virginia to grant a preliminary injunction to give those entities an opportunity to consider these matters under local law.” Id. at 96. Federal agencies did not appear in the matter, and did not publicly indicate whether they were investigating.
Mesa appealed the District Court’s preliminary injunction order, but the Court dismissed the appeal in 2004 when Mesa abandoned its plans with respect to Atlantic, which was able to enter the market as Independence Air. Independence Air eventually left the market, but while it survived its presence increased competition and provided a price benefit to D.C. travelers.
In another matter, the Office of the Attorney General, as parens patriae, brought suit against CVS Corporation. The suit alleged that the pharmacy chain’s acquisition and closing of the only non–CVS pharmacy in the District of Columbia’s Palisades neighborhood violated the D.C. Antitrust Act. District of Columbia v. CVS Corp., Civ. No. 03-4431 (D.C. Super. Ct. filed May 13, 2003). On April 21, 2005, the parties settled, with CVS agreeing to pay $350,000 as charitable assistance to District of Columbia residents purchasing prescription drugs, OAG Settles an Antitrust Case with CVS Corporation.
In another merger-related matter of local significance, the Office of the Attorney General simultaneously filed a parens patriae complaint and consent judgment with regard to the merger of AMC Entertainment, Inc. (AMC) and Loews Cineplex Entertainment Corporation (Loews). The Attorney General acted pursuant to the D.C. Antitrust Act, D.C. Code § 28–4502, and section 7 of the Clayton Act. The Attorney General’s complaint alleged that the merger between AMC and Loews, the two largest movie theater operators in the District, was likely to lessen significantly competition in the market for theatrical exhibition of first-run mainstream films in D.C. District of Columbia v. Marquee Holdings Inc. and LCE Holdings, Inc., 05–CV–02446 (D.D.C. filed Dec. 21, 2005). The District of Columbia’s consent judgment supplemented the relief that the USDOJ negotiated after reviewing the national merger as a whole. The USDOJ’s settlement had not provided for any divestiture in the D.C. market. The District of Columbia’s stipulated final judgment provided for the merging parties to divest two specified D.C. theaters. DCs AG Challenges AMC-Loews Merger.
In August of 2005 the District of Columbia’s Office of the Attorney General reached an agreement with the insurance brokerage firm Marsh & McLennan Companies, Inc. (Marsh), which had been charged with bid–rigging, including violations in the District of Columbia. The D.C. agreement allowed the D.C. Attorney General’s Office to monitor directly Marsh’s local compliance with national business reforms required by an earlier settlement with the Attorney General of New York. The District of Columbia’s settlement gave the Office of the Attorney General access to Marsh personnel and documents that would show whether the company was adhering to agreed practices in the District of Columbia. The settlement resolved investigations into whether Marsh had facilitated bid–rigging by insurance companies. DC’s AG Resolves an Antitrust Investigation of a Leading Insurance Brokerage Firm.
The Office of the Attorney General reached similar agreements with Zurich Insurance Company in 2006 and with Ace Insurance Company in 2007. The District Reaches a Settlement with a Major Insurance Firm; Attorney General Singer Settles Insurance Bid-Rigging Charges with Insurer ACE.
In addition to enforcement in local markets, the Office of the Attorney General has over the past decade actively investigated and litigated allegations of anticompetitive conduct in national markets, generally as part of a multistate investigation or prosecution by state attorneys general. On July 1, 2008, the Office of the Attorney General announced that Visa USA Inc. (Visa) had agreed to address concerns about practices that raised costs for merchants, and had revised its rules for payment cards branded both as Visa cards and non–Visa ATM debit cards. Visa stated the revisions and clarified the application of existing Visa rules by means of a public letter posted on the Office of the Attorney General’s website. District Investigation Leads to Revised Rules for Visa Debit Cards. Visa’s action followed a District of Columbia–led investigation coordinated with the states of New York and Ohio, and a parallel investigation by the USDOJ. The D.C. Attorney General’s press release explained that “Under Visa’s revised rules many merchants will have a new freedom to accept ATM debit payments through Visa’s PIN–debit network competitors, including such ATM debit card competitors as Star, MAC, NYCE, and others, without requiring customers to provide PINs. Customers will have more payment options.” Id.
There are many other similar examples, too numerous for detailed discussion here. The list includes cases brought against Microsoft by the DOJ, 20 states, and the District of Columbia, U.S. v Microsoft, 87 F. Supp. 2d at 79–80 & nn.7-10; against Mylan Laboratories, Inc. and others by the FTC, 31 states, and the District of Columbia, FTC v. Mylan Laboratories, Inc., 62 F. Supp. 2d 25 (D.D.C. ), on reconsideration in part, 99 F. Supp. 2d 1 (D.D.C. 1999); against Hoffman-LaRoche, Inc. and others by 43 states, the District of Columbia, and Puerto Rico, New York v. Hoffman–LaRoche, Inc., Civ. No. 00-2912 (D.D.C. 2000) (consent decree Dec. 19, 2000) (price–fixing of vitamins); against Barr Pharmaceutical, Warner Chilcott, and others, concerning pricing of birth control. Interim Attorney General Peter J. Nickles Announces Settlement for the Popular Birth-Control Pill Ovcon®. Also, against TriCor pharmaceutical company, Abbott Laboratories and two French companies. See Florida v. Abbott Laboratories, C.A. No. 08–155 (SLR), Stipulated Injunction and Proposed Order (D. Del. Jan 7, 2010).
It is a matter of opinion, of course, but I believe that D.C. citizens were well served by the Attorney General Office’s efforts. The matters involved little burden on D.C. taxpayers, because antitrust enforcement was paid for by the Antitrust Fund built up from independent sources, primarily case generated fees.
During the period beginning about 2001 the District of Columbia experienced a revival in enforcement by the Office of the Attorney General, not only in the antitrust area, but in consumer rights enforcement as well. (Until last year local government consumer law enforcement had the benefit of a Fund similar to the Antitrust Fund, also under a statute repealed last year that eliminated the Fund.) The benefits of that revival should not be dissipated because of supposed budget economies or considerations of political expediency. I think it is unfortunate that Antitrust Fund statute was repealed, because I think there is great merit in having non–taxpayer funding of antitrust enforcement through use of the Fund. Similar points apply to the repealed statute providing for a D.C. consumer enforcement Fund. I hope that the D.C. Council will consider new legislation restoring the Funds.
Don Resnikoff – February 14, 2012 ©
*Don Resnikoff was formerly an Assistant Attorney General with the D.C. Office of the Attorney General, specializing in antitrust matters.