Antitrust & Claims Recovery

This year, digital media spending is expected to outstrip spending on traditional media, such as television and print. Advertisers, lured by the promise of precise targeting, better ability to measure return on investment, and changing consumer media consumption patterns, have poured money into digital at an almost exponential rate. And, while there are studies (largely by digital media agencies) documenting the effectiveness of such advertising, there remain major questions regarding the effectiveness and efficiency of such spending.

Continue Reading Ad Fraud and Programmatic Buying Are Eroding Trust in Digital Media

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On February 12, 2016, the Federal Bar Association will host a day-long Fashion Law Conference at Parsons School of Design (Starr Foundation Hall in the New School’s stunning new University Center) on the last day of New York Fashion Week!

Speakers include in-house counsel from The Estee Lauder Companies, Inc., Tiffany & Co., New York & Company, and Global Brands Group.

Topics include cover anti-counterfeiting, FTC and trademark considerations, ethical sourcing and labor issues, the regulatory framework of labeling and disclosure, mergers/acquisitions and antitrust considerations, and the current legal issues in e-commerce and mobile apps.

We are privileged to have the Honorable Claire R. Kelly from the U.S. Court of International Trade provide opening remarks, and Professor Susan Scafidi, Academic Director of the Fashion Law Institute—and one of the foremost leaders in the field of fashion law—as our luncheon keynote speaker.

Please join Crowell & Moring’s, Cheryl Falvey, Chahira Solh, Frances Hadfield and a host of other speakers and experts for our cutting-edge fashion law panels (and of course plenty of networking opportunities). We look forward to seeing you there!

Photo credit: Federal Bar Association

Simon Property Group was sued recently for using anticompetitive tactics to prevent key retailers from following through with lease agreements. Gumwood HP Shopping Partners LP alleges that Simon has a pattern of abusing its power to bully its tenants into complying with its wishes. The suit asserts Simon engaged in monopolization, attempted monopolization and restraint of trade in violation of the Sherman Act.

Continue Reading Simon Property Group Accused of Using Anticompetitive Tactics

On May 5th, Crowell & Moring’s Retail Law partnered with the Association of Corporate Counsel (ACC) to host the first webcast of a 3-part retail law series: “Recovery Opportunities for Retailers: Turning A Retail Law Department Into A Profit Center in Retail Leasing, Global Sourcing and Antitrust Litigation.” The webcast was moderated by the chair of Crowell & Moring’s Retail Law practice, Greg Call, joined by Vice President and General Counsel of Hino Motors, Sanford “Sandy” Ring, Esq., and fellow Crowell & Moring Retail Law attorneys Jen Romano, Patty Wu, John Brew, and Dan Sasse. Thank you to those of you who joined us.

At the link is the PowerPoint presentation that accompanied the webcast. We will be announcing additional webcasts on retail issues in the near future.

On Thursday, May 5th at 11am PST / 2pm EST, Crowell & Moring’s Retail Law practice will partner with the Association of Corporate Counsel (ACC) to host the first webcast of a 3-part retail law series. The topic of the first webcast isRecovery Opportunities for Retailers:  Turning A Retail Law Department Into A Profit Center in Retail Leasing, Global Sourcing and Antitrust Litigation.”  Crowell & Moring’s chair of the Retail Law practice, Greg Call, will moderate the webcast, joined by Vice President and General Counsel of Hino Motors, Sanford "Sandy" Ring, Esq. and fellow Retail Law attorneys Jen Romano, Patty Wu, John Brew, and Dan Sasse. CLE credit will be provided to select States. Registration and more event details can be found on the following link – http://webcasts.acc.com/detail.php?id=180651&go=1.

We hope you can join us on May 5th.

Two recent state enforcement actions that relied solely on state law to attack minimum resale price maintenance ("RPM") provide the latest indication that states are diverging from federal antitrust law in their increasingly strong efforts to police RPM agreements in the aftermath of the Supreme Court’s decision in Leegin Creative Leather Prods., Inc. v. PSKS, Inc., 551 U.S. 877 (2007).

Continue Reading Robust State Enforcement of Minimum Resale Price Maintenance May Require New Approaches to Pricing

The California Supreme Court has let stand an appellate court ruling that allows for broad interpretation of California state predatory pricing law. Significantly, the case holds that proof of recoupment is not required to prevail in predatory pricing cases. This broad interpretation means that it will be easier to bring predatory pricing cases against California retailers and merchants. 

Continue Reading California’s Broad Predatory Pricing Law May Make It Easier to Bring Suits Against California Retailers and Manufacturers

On November 1, a number of large U.S. retailers, including Target, Sears, Kmart, RadioShack, Newegg, and the former CompUSA, filed an antitrust lawsuit in federal court in the Northern District of California, alleging that they were injured as a result of a global price-fixing conspiracy by the major manufacturers of Liquid Crystal Display (LCD) panels. The complaint was filed on behalf of the plaintiffs by Crowell & Moring. The complaint asserts that, from January 1996 to December 2006, the LCD panel makers conspired to raise panel prices which, in turn, increased the prices U.S. retailers paid for finished goods containing such panels. 

Continue Reading U.S. Retailers File Price-Fixing Lawsuit Against LCD Makers

The issue:

Simon Property Group recently made news by bidding to make two big acquisitions. In December, it agreed to pay $2.33 billion (including debt) to acquire Prime Outlets from Lightstone Group. More recently, it bid $10 billion to acquire its biggest rival, General Growth Properties, which is currently in bankruptcy proceedings. Simon’s moves have attracted the attention of the FTC, which has already reached out to retailers for input on the potential mergers.

What you need to know:
In analyzing potential mergers, the FTC focuses on the impact of the transaction on customers; fewer competitors may mean less competition and higher prices. In the case of the potential Simon acquisitions, the FTC will be interested in the impact on tenants, including whether the proposed mergers will affect the options available to tenants and rents charged. As part of its inquiry, the FTC is likely to reach out to key retail tenants that may be affected by the mergers. In fact, the FTC has already contacted key retailers that may be affected by the Prime Outlets merger. The FTC will likely ask retailers what alternatives they have to the relevant shopping centers, whether retailers are concerned about the proposed transactions, and whether the merging parties have market power (i.e., the power to raise rents directly, or through reducing landlord support for tenant improvements).

Continue Reading Mall Mergers: When the FTC Comes Calling

Case: Leegin Creative Leather Products, Inc. v. PSKS, Inc., DBA Kay’s Kloset, No. 06-480 (U.S. Sup. Ct. 6/28/07)
The One Sentence Summary: Reversing 96 years of antitrust precedent that made minimum resale price agreements between manufacturers and retailers per se illegal, U.S. Supreme Court held in 5-4 decision that vertical price restraints are to be analyzed under “rule of reason” and not deemed unlawful per se.


What They Were Fighting About:
PSKS, Inc., operating as Kay’s Kloset a women’s apparel store in Texas, sued Leegin Creative Leather Products, Inc., which manufactures leather goods and accessories, after Leegin stopped selling to Kay’s Kloset due to its refusal to agree to a new minimum resale pricing policy. Leegin adopted the policy for its Brighton brand in order to protect the brand’s image against what it deemed harmful discounting and to give its retailers sufficient margins to provide a level of customer service that supported the brand. Kay’s Kloset had been discounting Brighton products by 20 percent, and it suffered a substantial decline in sales revenues after Leegin stopped selling it Brighton goods.

Jury trial on PSKS’s antitrust claims resulted in $3.975 million judgment for the retailer, which the Fifth Circuit affirmed. U.S. Supreme Court granted certiorari to determine whether vertical minimum resale price agreements should still be deemed unlawful per se under Dr. Miles Medical Co. v. John D. Park & Sons, Co., 220 U.S. 373 (1911).

Court Holdings:

  • Because vertical minimum resale price agreements can have procompetitive or anticompetitive effects depending on the circumstances, they should no longer be deemed illegal per se under Section 1 of the Sherman Act. Minimum resale agreements should be subject to rule of reason analysis, whereby courts balance procompetitive and anticompetitive effects of a challenged restraint in determining whether or not it violates Section 1 prohibition against unreasonable restraints of trade.
  • In reversing Dr. Miles rule that a vertical agreement between a manufacturer and its distributor is unlawful per se, Court relied on economics literature as to two procompetitive effects of minimum resale price agreements.
  • First, allowing a manufacturer and retailer to agree on a minimum resale price tends to eliminate intrabrand price competition (that is, competition among retailers selling the same brand), which can stimulate interbrand competition (that is, competition among manufacturers selling different brands of the same type of product). Vertical price restraints by a manufacturer encourage retailers to invest in customer services and promotions that enhance the manufacturer’s position relative to that of a competing manufacturer. If vertical price restraints were illegal per se, discount retailers would “free ride” on the efforts of retailers who provide such demand-enhancing services and undercut their price.
  • Second, minimum resale price agreements can increase interbrand competition by facilitating entry into the market by new manufacturers and brands.
  • Anticompetitive effects may result from minimum resale price agreements in some cases, such as enabling manufacturing cartels or retailer price fixing. Vertical agreements setting minimum resale prices to enable either type of cartel would be unlawful under the rule of reason.
  • Court’s majority, unlike the four dissenting justices, did not consider stare decisis to be a sufficient reason to continue the bright-line rule against vertical price restraints.
  • Dissenting justices believed that applying the rule of reason to minimum resale price agreement would create an unworkable legal regime, lead to higher retail prices to the detriment of consumers, and make it more difficult for small, price-cutting retailers (both online and brick-and-mortar) to compete with major retailers.