Worldwide: GT Newsletter | Competition Currents | November 2023

In This Issue¹

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United States

A. Federal Trade Commission (FTC)

FTC approves final order to prevent interlocking directorate arrangement, anticompetitive information exchange in EQT, Quantum Energy deal.

On Oct. 10, 2023, the FTC announced it had approved a final consent order to resolve its antitrust concerns surrounding a $5.2 billion cash-and-stock deal between private equity firm Quantum Energy Partners and natural gas producer EQT Corporation. Quantum and EQT are competitors in the production and sale of natural gas in the Appalachian Basin. The proposed acquisition would have given Quantum, an investor in natural gas production in the Appalachian region, a seat on EQT's board of directors, which the FTC alleged would violate the antitrust laws and harm competition in this industry. Under the consent order, Quantum is prohibited from serving on the EQT board to prevent an interlocking directorate and must sell its EQT shares. The FTC noted that this consent decree is the FTC's first case in 40 years enforcing Section 8 of the Clayton Act (which prohibits interlocking directorates).

B. Department of Justice (DOJ)

Justice Department sues Agri Stats for operating extensive information exchanges among meat processors.

On Sept. 28, 2023, the DOJ announced that it had filed a civil antitrust suit against Agri Stats Inc. for violating Section 1 of the Sherman Act, by allegedly spearheading anticompetitive information exchanges among broiler chicken, pork, and turkey processors (with over 80-90% of each participating). According to the DOJ's complaint, Agri Stats collected competitively sensitive information related to price, cost (such as work compensation), and output, and then distributed weekly and monthly reports with the information to these competing meat processors, who in turn used the information to set prices and output levels. In response to this action, Assistant Attorney General Jonathan Kanter of the Justice Department's Antitrust Division noted: "The Justice Department is committed to addressing anticompetitive information exchanges that result in consumers paying more for chicken, pork and turkey."

C. U.S. Litigation

On Oct. 27, a Connecticut superior court refused to dismiss an antitrust case by commercial insurance customers accusing Hartford HealthCare Corp. (HHC) of forcing "all or nothing" coverage plans on insurers and using other anticompetitive business strategies. The proposed class filed its suit in February 2022, claiming HHC was using its market power over acute inpatient services in four Connecticut areas – Willimantic, Norwich, Torrington, and Meriden – to grow its share of the outpatient services market and to charge exorbitant prices. Plaintiffs also claimed that HHC uses its power in those markets to force insurance plans to include its facilities in Bridgeport and Hartford at inflated prices through an "all or nothing" strategy, and that HHC uses "anti-steering" and "anti-tiering" provisions to prevent insurance plans from offering patients incentives for using other providers and restricts how its providers can make referrals to help further grow its market shares. HHC moved to strike the plaintiffs' claims for failure to allege sufficient facts to support the asserted causes of action, or alternatively, to dismiss the plaintiffs' claims for lack of standing.

The court first addressed the motion to dismiss. HHC argued that plaintiffs lacked standing because they did not sufficiently allege (1) they are "efficient enforcers" of the antitrust laws (i.e., they are not directly impacted by the coverage contracts at issue); and (2) they have suffered antitrust injury. Instead, according to HHC, the contracts are between the health system and the insurance companies, who contract with employers to cover their employees, while the plaintiffs are individuals covered under the plans. The court concluded "the plaintiffs have sufficiently alleged antitrust injury to withstand the defendant's argument at this stage by pleading they have experienced negative economic impacts as a result of the inflated premium, deductibles and copays related to the defendant's alleged anti-competitive conduct." The court explained that while indirect purchasers are barred from bringing claims under federal antitrust laws, Connecticut's statute allows for indirect purchaser claims. Accordingly, "plaintiffs have alleged that the defendant's use of its monopoly power to stifle competition and inflate its prices has led directly to inflated insurance premiums they share responsibility for and to other inflated out-of-pocket costs" and that "[t]hese injuries are the type the antitrust laws seek to remedy."

HHC moved in the alternative to strike the allegations, arguing that even if the suit can sufficiently allege a monopoly, it fails to show it was through anticompetitive means, adding that the facilities in question already had monopoly power when HHC acquired them. The court held that "[t]he allegation that these hospitals are 'must-have' facilities for health insurers is not the equivalent of an assertion that patients do not have the choice, for example to seek inpatient care outside the relevant market" and found that "[t]he alleged anti-competitive practices are plausibly aimed at reducing or eliminating such choices." The judge also found the customers had made a sufficient showing, through market share data, to support their attempted monopolization claims and had adequately alleged a tying arrangement that induces insurance plans to cover its Bridgeport and Hartford facilities. For the claims based on the "anti-steering" and "anti-tiering" provisions, the court was not convinced they would be an illegal restraint on trade without the allegations about the "all-or-nothing" negotiation tactics, but it still allowed them to move ahead. HHC further argued the complaint is barred by the "filed rate doctrine," which blocks claims targeting rates approved by a regulatory agency. The court found this argument only targets some of the claims, since not all of the rates at issue are regulated, and also that there is no appellate authority in Connecticut adopting the doctrine to bar state claims.

On Oct. 18, U.S. District Judge George H. Wu tentatively deferred ruling on the customers' bid to stop defendants from changing certain terms of use, opting to stay the case pending defendants' appeal of the court's denial of their motion to compel arbitration. On Sept. 8, 2023, defendants moved to stay the case pursuant to the Supreme Court's decision in Coinbase, Inc. v. Bielski, 599 U.S. 736, 744 (2023), which held that a "district court must stay its proceedings while [an] interlocutory appeal on arbitrability is ongoing," pending resolution of defendants' appeal of the district court's denial of their motion to compel arbitration. The court granted the stay, agreeing with both parties that the case should be stayed in light of the Supreme Court's decision in Coinbase. However, the court deferred ruling on plaintiffs' pending motion to enjoin, explaining that although "there does not appear to be any bright-line rule preventing it from denying Plaintiffs' Motion to Enjoin without prejudice in light of the stay, . . . deferring ruling on the Motion is the appropriate course of action and complies with Coinbase's instructions." As the Supreme Court held in Coinbase, "[a]n appeal, including an interlocutory appeal, 'divests the district court of its control over those aspects of the case involved in the appeal.'" And when the order being appealed is a denial of a motion to compel arbitration, "the entire case is essentially 'involved in the appeal.'"

Footnote

1. Due to the terms of GT's retention by certain of its clients, these summaries may not include developments relating to matters involving those clients.

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