Pricing: Competition

This Practice Note surveys the relevant US antitrust law and discusses current issues surrounding its application to customer loyalty programs including bundling, rebates or exclusive dealing arrangements.

In Jacobs v. Tempur-Pedic International, Inc., the Eleventh Circuit affirmed the dismissal of a class action complaint alleging resale price maintenance in violation of section 1 of the Sherman Act because the plaintiff failed to plead a relevant market and harm to competition as required under the rule of reason approach.  The Eleventh Circuit also dismissed claims that alleged that a dual distribution system constituted a horizontal price fixing conspiracy for failure to plead that Tempur-Pedic and its distributors somehow signalled each other on how and when to maintain or adjust prices.

In Southeast Missouri Hospital v C.R. Bard, Inc., the Eighth Circuit affirmed a grant of summary judgment dismissing a hospital's claims that a medical device company's contracts with group purchasing organisations violate sections 1 and 2 of the Sherman Act, section 3 of the Clayton Act and Missouri antitrust law. The Eighth Circuit, applying the attribution test articulated by the Ninth Circuit in Cascade Health Solutions v. PeaceHealth, held that Bard's bundled discounts did not unreasonably restrain trade.

On 7 January 2010, the United States Court of Appeals for the Third Circuit issued its decision in Feesers, Inc. v. Michael Foods, Inc. and Sodexho, Inc., finding that Feesers, a food distributor, could not satisfy the competitive injury requirement for price discrimination under section 2(a) of the Robinson-Patman Act.  The Third Circuit vacated the district court's judgment that Feesers had successfully proved unlawful price discrimination under section 2(a) of the Robinson-Patman Act. 

On 25 February 2009, the US Supreme Court held that a "price-squeeze" claim cannot be brought under section 2 of the Sherman Act where a vertically integrated firm with an alleged monopoly at the wholesale level has no antitrust duty to deal with its downstream retail competitors. The Court's ruling in Pacific Bell Telephone Co., D/B/A AT&T California v. linkLine Communications, Inc. reversed the decision of the U.S. Court of Appeals for the Ninth Circuit and remanded the case to the district court for further proceedings.

On 14 May 2008, a unanimous US Court of Appeals for the Fifth Circuit affirmed a 2005 decision by the U.S. Federal Trade Commission (FTC) that North Texas Specialty Physicians (NTSP), an organisation of independent physicians in the Fort Worth, Texas area, violated section 5 of the FTC Act. In upholding the decision, the Fifth Circuit agreed with the FTC that a full "rule of reason" analysis was unnecessary to condemn certain NTSP practices related to negotiating medical fees on behalf of its physician members. As a result, the FTC properly applied an abbreviated "inherently suspect" analysis to conclude that NTSP´s practices amounted to horizontal price-fixing. However, the Court found that one of the provisions of the FTC´s remedial order was overly broad and remanded the proceeding to the FTC to modify that provision.