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By Carl W. Hittinger Special to the Legal The U.S. Supreme Court is blitzing the country’s antitrust laws. Three major antitrust opinions were decided last term, and two new cases were argued last week. The three cases last term, Volvo Trucks North America Inc. v. Reeder-Simco GMC Inc., Texaco Inc. v. Dagher and Illinois Tool Works Inc. v. Independent Ink Inc., were discussed in last month’s column. Justice Samuel A. Alito Jr., who was not confirmed until January 2006, did not participate in any of those cases. Chief Justice John G. Roberts Jr., who was sworn in September 2005, participated in the oral arguments, joining the majority in all three cases, in which no antitrust violations were found. Over a year ago, this author wrote about the current Chief Justice John Roberts’ antitrust experience and possible antitrust views in a Sept. 6, 2005, article for The Legal Intelligencer. The conclusion reached was that while Roberts has overwhelming experience before the Supreme Court, having argued 39 cases, he argued only one antitrust case before the Supreme Court and did some work on the Microsoft case. The case he argued was Atlantic Richfield v. USA Petroleum, where the Supreme Court found no actual antitrust injury because there were only lost sales to the petitioner. The court stressed that harm to a competitor was not necessarily harm to competition, which basically parroted the government’s brief authored by Roberts. As the brief further stated, and Roberts later argued to the court, “the court of appeals’ holding is also wrong because it is based on the mistaken premise that the antitrust laws were intended to provide a private remedy for any and all market ‘distortions’ whether or not they were related to the pro-consumer goal of protecting competition.” The point emphasized in the article was that Roberts appeared to stress in his own writings (not merely his advocacy), that injury to the plaintiff was paramount for standing even though antitrust conduct may be evident. Later, in a Dec. 5, 2005, article for The Legal, this author discussed then-3rd U.S. Circuit Court of Appeals judge Alito’s conservative view on antitrust issues. The article concluded that Alito had considerable expertise in deciding antitrust cases, having presided in 12 cases while on the 3rd Circuit from 1990. In those cases, he authored two antitrust opinions and joined the dissent in the en banc decision in LePage’s v. 3M, which reversed the majority panel on which he had served. Alito also worked on Cargill v. Monfort at the Solicitor General’s Office, where the Supreme Court agreed with the government that a competitor cannot sue to block a merger of other competitors unless it can show antitrust injury. The Cargill court did reject the government’s position that a per se rule should be applied to competitors trying to challenge mergers. Alito authored two antitrust opinions on the 3rd Circuit, Miller v. Indiana Hospital and Barton & Pittinos v. SmithKline. Both were unanimous decisions and both found no antitrust violations. The Miller case involved staff privileges and found no proof of active state supervision over the private privilege determination, therefore no state action immunity. In SmithKline, Alito, for the unanimous court, held that the market as defined by the plaintiff did not include the plaintiff as a competitor in the sale of the vaccine product at issue. He found the “realities of competition” revealed that pharmacists against who the plaintiff allegedly competed not only marketed the product but sold the product as well. The plaintiff did not sell the product directly. In the LePage’s case, Alito joined Judge Morton I. Greenberg in setting aside the jury’s $68 million trebled verdict against LePage’s, who had a 90 percent market share, for engaging in exclusionary conduct, including bundled rebates. Judge Dolores K. Sloviter in her dissent found the majority’s reasoning “novel” stating that it “usurps to the jury’s providence to decide facts” and predicted that the ruling [if it stood] would “weaken Section 2 of the Sherman Act to the point of impotence.” The 3rd Circuit heard the entire case en banc, reversed the majority panel, and reinstated the jury verdict. Sloviter wrote the majority’s scholarly opinion, with Alito and Greenberg dissenting. The conclusion of the article was that Alito seemed to share Roberts’ view that antitrust injury and standing were paramount and should be strictly enforced no matter how egregious the antitrust conduct presented. Subsequently, Roberts heard oral argument in Volvo, Texaco and Illinois Tool, where he posed questions that provide a sliver of insight as to his antitrust leanings. Specifically, in Volvo, the Supreme Court decided to pass on the further issue of whether price discrimination on an ongoing basis between two competing purchasers buying from the same manufacturer – but not necessarily selling to the same customer at any point in time – was a violation of the Robinson-Patman Act. At oral argument, Roberts made a comment that would tend to indicate that he might have partially agreed with the dissenting opinion of Justice John Paul Stevens, joined by Justice Clarence Thomas, which said that ongoing discrimination would be enough to show injury under the RPA. Roberts commented that even though the RPA speaks of discrimination in price between different purchasers, not different actual purchases, “It doesn’t seem it’s that much of a stretch to cover would-be purchasers, potential purchasers.” Later, in Illinois Tool, where the Supreme Court unanimously ruled that holding a patent does not necessarily create a presumption of market power, Roberts articulated a practical reason as well for that eventual holding. In discussing a defendant’s need to refute market power if a presumption was found, he stated as to such burden shifting, “This is what costs a lot of money and sifts a lot of the litigation burden on the other side if you have a presumption.” Finally, in Texaco, where the court held a joint venture between competitors to be legal if it sold a single name brand and shared the risk of loss, Roberts’ questioning was fully in line with the eventual unanimous holding, saying, “If you have a lawful joint venture that’s marketing a product, the joint venture has to be able to set the price of the product.” Last week, the Bell Atlantic v. Twombly and Weyerhauser v. Ross-Simmons cases were argued to the Supreme Court. In both cases, Roberts and Alito actively participated in the questioning. Bell Atlantic was argued last Monday. The primary issue there is whether a plaintiff’s complaint should be dismissed if all that is pled as to an antitrust conspiracy is that defendants engaged in parallel conduct which was against their economic self-interest absent a conspiracy. Roberts did not appear particularly enamored with the plaintiff’s position at oral argument. He pressed plaintiff’s counsel twice during argument, asking, “Do you have any, is there an allegation of an agreement apart from the parallel conduct,” and, “you don’t think you have to prove anything more than what you’ve alleged in the complaint about the background context, the parallel conduct?” The chief justice further questioned through a hypothetical the scope, and perhaps the validity, of the economic self-interest inference of a conspiracy, asking, “Would it state an antitrust violation if you had a grocery store on one corner of the block and a pet store on the other corner of the block and you say, well, the grocery store is not selling pet supplies and they could make more money if they did, therefore that’s an antitrust violation?” Roberts then went on to strike an even stronger tone regarding the concept of economic self-interest, discussed in the Matsushita Elec. Indus. Co. v. Zenith Radio Corp. and Monsanto Co. v. Spray-Rite Service Corp. cases, “But how do you tell? I mean, companies get proposals all the time. Here’s a way you could make money. You could all enter the market in some foreign county. The people decide, I mean, life is short and they’ve got certain objectives, and they don’t have to do everything that an economist might think is in their economic self-interest. I mean, what is the limiting self interest to that?” Alito took a seemingly tough stance on pleading requirements by raising a different question: whether a court can dismiss a complaint where an “implausible inference” is evident from the face of the complaint. Alito used the example of a car accident case where all the plaintiff had pled as to the defendant was, “I was hit by a compact car with Massachusetts’ plates. The defendant owns the compact car with Massachusetts’ plates. That’s the complaint.” Is the connection logical or implausible, as Alito appears to think, for pleading purposes only? Of course, if a car you own runs a red light and it is caught on a video camera, the citation is sent by the state to you to pay as the owner of the car. Last Tuesday, Weyerhaeuser was argued. Like the day before in Bell Atlantic, Roberts and Alito were active questioners. One of the antitrust issues in Weyerhaeuser is whether the Brooke Group recoupment of losses test applies to predatory bidding (causing higher prices) as well as predatory pricing (causing lower prices). Chief Justice Roberts posited that predatory bidding didn’t have an anticompetitive effect on consumers, like predatory pricing, and asked, “Have we ever identified that [benefit to the sellers by higher prices] as a benefit that the antitrust laws try to achieve, people get higher prices for what they sell?” Counsel cited Mandeville Island Farms Inc. v. American Crystal Sugar Co. in response. Alito seemed concerned that if the court did not apply the Brooke Group test to predatory bidding, then did the jury need on remand “to decide whether Weyerhaeuser bought more logs than it needed in order to prevent its rivals from obtaining the logs that they needed at a fair price? How is a jury, a lay jury, to decide whether a company like Weyerhaeuser bought more logs than it needed, or what is the fair price?” In the same vein, Alito later asked, “What does a fair price in this, in this context mean? Does it mean the price that’s necessary in order to help an inefficient competitor in business?” On the other hand, Alito appeared equally undecided about the application of Brooke Group to the particular case hand when he stated, “But what about the recoupment prong [of Brooke Group], given that Weyerhaeuser doesn’t have market power in the selling market and that mills were entering, new mills were coming on line during this period. How would you satisfy the recoupment?” In conclusion, what insights can we garner over the past year as to where Roberts and Alito stand on antitrust issues? By their questioning at oral argument they are definitely showing an interest in the subject. This is not surprising, particularly as to Alito with his extensive antitrust background. Will Alito be the next antitrust expert on the court, along with Stevens, and will he continue to take a conservative view on antitrust issues, as he did during his tenure on the 3rd Circuit? Will Roberts’ previously stated strict views on standing and antitrust injury surface in future antitrust cases before the Supreme Court? Until either Justice authors an antitrust opinion (majority, concurring or dissenting), the answers to those important questions are still unclear. � Carl W. Hittingeris a partner in the litigation group at DLA Piper in its Philadelphia office, where he concentrates his practice in complex commercial litigation with particular emphasis on antitrust and unfair competition matters. Hittinger is also a frequent lecturer and writer on antitrust issues and has extensive experience counseling clients on all aspects of civil and criminal antitrust law. He can be reached at 215-656-2449, or [email protected]

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