Second Circuit

Introduction

In the past year, the Second Circuit and its district courts had active antitrust dockets. Courts issued opinions addressing antitrust claims in a broad array of industries ranging from financial products to dental supplies to chemical components. Following the Supreme Court’s affirmance of the Second Circuit’s decision in United States v American Express, ¹ the Second Circuit provided clear guidance on how to address the issue of two-sided markets in jury trials. And it set up a circuit split in Connecticut Fine Wine and Spirits LLC v Seagull, ² which held that Connecticut’s ‘post-and-hold’ laws for liquor and alcohol prices were not preempted by the Sherman Act – contrary to the Fourth and Ninth circuits, which found preemption when ruling on similar statutes. As home to the nation’s financial center, the Second Circuit and the courts in the Southern District of New York issued a series of antitrust opinions relating to financial products, frequently in cases involving benchmark rate-setting and debt securities. One area that received particular attention was the issue of antitrust standing, including especially the ‘efficient enforcer’ doctrine.

Second Circuit precedential decisions

Challenges to liquor control laws

Connecticut Fine Wine & Spirits LLC v Seagull

Here, the Second Circuit rejected an antitrust challenge to Connecticut’s Liquor Control Act (CLCA), holding that the CLCA did not pose an irreconcilable conflict with the Sherman Act. The appeal addressed a claim by the plaintiff wine retailer alleging that three sets of provisions of the CLCA and related regulations – (1) ‘post-and-hold’ provisions; (2) minimum retail pricing provisions; and (3) provisions prohibiting price discrimination and volume discounts – are preempted by section 1 of the Sherman Act.

Under the preemption doctrine, the inquiry is whether there is an ‘irreconcilable conflict between the federal and state regulatory schemes.’ ³ A potential or hypothetical situation in which a private actor’s compliance with the state statute may cause an antitrust violation or exert an anticompetitive effect is not enough. Thus, for a state regulation to be preempted by the Sherman Act, it must, in effect, require private actors to engage in per se unlawful conduct.

The Second Circuit held that two of the challenged provisions – the minimum retail price and the price and volume discrimination provisions – are not preempted because they are not per se violations of the Sherman Act. With regard to the post-and-hold requirement, the Second Circuit held that requiring wholesalers to post and hold the price for each product they sell for a month did not prevent competitors from making independent pricing decisions. Although the law ‘invites and facilitates conscious parallelism in pricing,’ the Court explained, nothing in Connecticut’s regime ‘requires, anticipates, or incents communication or collaboration among the competing wholesalers.’ Thus, the Court held that because the CLCA does not require concerted action by competitors, there is no irreconcilable conflict with the Sherman Act and the CLCA.

This holding conflicts with decisions addressing similar liquor control laws in the Ninth and Fourth circuits. ⁴ Despite this circuit split, the Supreme Court denied the plaintiff’s petition for certiorari.

Competition among bar exam preparation firms

LLM Bar Exam, LLC v Barbri, Inc

On 25 April 2019, the Second Circuit affirmed the US District Court for the Southern District of New York’s order dismissing an antitrust lawsuit brought by a bar preparation review firm against its competitor. ⁵ The plaintiff alleged that the defendant bar review course conspired with law schools to restrain competition in the alleged market for LLM students taking state bar examinations, by, among other things, bribery, donations and hiring law school faculty to secure the cooperation of the law schools in excluding the plaintiff. The District Court dismissed the plaintiff’s complaint, finding that ‘shorn of its internal contradictions and conclusory assertions,’ the complaint did not plausibly state a claim of conspiracy. In a brief per curiam opinion that adopted the District Court’s 76-page opinion ‘in all respects,’ the Second Circuit affirmed, agreeing that the plaintiff’s allegations fell short of the ‘plausible’ standard necessary to survive a motion to dismiss.

Standing and efficient enforcers

IQ Dental Supply, Inc v Henry Schein, Inc

In an important decision addressing antitrust standing and the efficient enforcer doctrine, ⁶ on 10 May 2019, the Second Circuit affirmed in part and vacated in part a motion to dismiss decision from the Eastern District of New York in a group boycott case. The Second Circuit upheld the District Court’s determination that the plaintiff dental supply distributor failed to plausibly allege antitrust standing to challenge the defendants’ alleged boycott of a third-party online distribution portal that the plaintiff used to distribute dental supplies, as well as the state dental associations that had partnered with that third-party portal. The Second Circuit found, however, that the plaintiff had pleaded sufficient facts to establish antitrust standing as to its claims that the defendants had orchestrated a boycott of the plaintiff’s business and sent the case back to the District Court to allow the plaintiff to pursue those claims.

The plaintiff alleged that the defendants, three competing dental supply distributors with approximately an 80 per cent market share, conspired to violate state and federal antitrust law by illegally boycotting an online distribution portal that the plaintiff used, and pressuring dental supply manufacturers not to deal with the plaintiff or with state dental associations. The plaintiff alleged that it suffered injury in the form of lost sales and lost profits. The District Court dismissed all the plaintiff’s antitrust claims for lack of standing.

On appeal, the Second Circuit began with the elements of antitrust standing: the plaintiff must plausibly allege both (1) antitrust injury and (2) its status as an ‘efficient enforcer.’ As to the first element, the Second Circuit found that the plaintiff sufficiently alleged antitrust injury to itself because the plaintiff had sufficiently alleged that it was harmed by the defendants’ distortion of the market. However, the Second Circuit concluded that the plaintiff was an efficient enforcer only for the harms that directly resulted from the defendants’ boycott of, and other conduct directed at, the plaintiff itself, not for the harm that the plaintiff allegedly suffered because of the boycott of the online portal and state dental associations. With regard to the defendants’ alleged boycott of the portal and association, the Court found that none of the elements of the four-factor efficient enforcer test supported the plaintiff’s claim to be an efficient enforcer: (1) the plaintiff’s injury was indirect, not direct, (2) the alleged direct victims would be better suited to vindicate the antitrust laws as to those claims, (3) the ‘derivative nature’ of the plaintiff’s injury rendered its damages claims ‘highly speculative,’ and (4) its claims presented difficult issues of apportionment and potential duplication. Based on this analysis, the Second Circuit remanded the case to the District Court, permitting the case to proceed only with regard to alleged direct injuries to the plaintiff.

This decision is likely to have important implications for determining efficient enforcer standing not only in the boycott context, but with regard to any claim of lost profit damages based on exclusionary conduct directed at someone other than the plaintiff. Indeed, it is also likely to be cited in antitrust cases in which the plaintiff seeks to recover overcharges resulting from the defendants’ alleged conduct, as opposed to lost profits.

Eastman Kodak Co v Henry Bath LLC

On 27 August 2019, the Second Circuit vacated a grant of summary judgment by the US District Court for the Southern District of New York, finding that the District Court erred in dismissing the plaintiff aluminum buyers’ antitrust claims on standing grounds, and that the plaintiffs had adequately pleaded antitrust injury. ⁷

The plaintiffs alleged they were all direct purchasers of ‘primary aluminum,’ a product forged by original producers (as opposed to ‘secondary aluminum’ produced from scrap), at prices that incorporated a regional benchmark price based on costs associated with the transportation, insurance, delivery and storage of primary aluminum. The defendants were financial and warehousing companies that traded, sold or stored primary aluminum in transactions that incorporated this premium in the metal’s sales price. According to the plaintiffs, the defendants conspired to cause delivery delays in the warehousing services market with the purpose and effect of raising prices of primary aluminum on the London Metal Exchange. The District Court found that the plaintiffs lacked antitrust standing because the plaintiffs’ alleged injury occurred in the primary aluminum market whereas the alleged manipulative conduct took place in the warehousing services market, and granted summary judgment on that basis.

The Second Circuit held that the District Court erred because the alleged objective of the defendants’ conduct in the warehousing services market was to increase prices in the primary aluminum market. The Second Circuit rejected the District Court’s conclusion that the plaintiffs’ claims were too far removed from the defendants’ actions to sustain an antitrust injury, and found that the plaintiffs’ alleged injuries were ‘inextricably intertwined’ with the alleged restraint. Even if the plaintiffs did not suffer injury in the warehousing market, the Court held the plaintiffs satisfied the standing requirements by pleading that the defendants restrained the market for the sale of primary aluminum.

Biocad JSC v F Hoffmann-La Roche

On 5 November 2019, the Second Circuit affirmed the dismissal of a Russian pharmaceutical company’s antitrust claim based on the Foreign Trade Antitrust Improvements Act (FTAIA). ⁸ The plaintiff alleged that the defendant manufacturers of cancer treatment drugs engaged in price-fixing, illegal tying and price discrimination in Russia to interfere with the plaintiff’s ability to enter the US market for cancer treatment drugs. The District Court dismissed the plaintiff’s Sherman Act claim for failure to adequately plead an antitrust injury and as barred by the FTAIA.

The Second Circuit affirmed, holding that the conduct alleged by the plaintiff did not fall within the scope of the ‘import exclusion’ exception to the FTAIA’s general bar on extraterritorial application of the Sherman Act. The Court held that even if the defendants’ sole purpose was to delay the plaintiff’s ability to enter the US market, that purpose was insufficient to establish that the defendants’ conduct had an immediate or direct impact on import trade or commerce, including because the plaintiff admitted that it ‘had no active US business with which to interfere.’ The allegation that the defendants’ conduct ‘would diminish [the plaintiff]’s financial circumstances, and, in turn, prevent it from engaging in business in the United States when it was at some point ready to do so is too remote and speculative to plausibly affect imports to the United States with the directness necessary to invoke the import exclusion.’ The Court also found that the plaintiff had waived reliance on the ‘domestic effects’ exception to the FTAIA by arguing in the District Court that it was not relevant to the case.

Sonterra Capital Master Fund Ltd v UBS AG

On 1 April 2020, the Second Circuit reversed the Southern District of New York’s dismissal of a suit brought by a group of investment funds alleging that the defendant financial institutions conspired in violation of section 1 of the Sherman Act to fix yen LIBOR and euroyen TIBOR rates (collectively, yen LIBOR). ⁹ A unanimous panel held that the District Court erred in deciding that the plaintiffs lacked article III standing to bring conspiracy claims under the Sherman Act.

The plaintiffs alleged that yen LIBOR rates are the ‘daily reference rates intended to reflect the interest rates at which banks offer to lend unsecured funds denominated in Japanese yen to other banks’ and that they traded in yen-based financial derivatives that were ‘priced [or] benchmarked’ based on yen LIBOR, and claimed that the defendants rigged the yen LIBOR rate to ‘favor [their own] trading positions’ in a way that produced a negative impact on the defendants’ counterparties such as the plaintiffs. The District Court found that the plaintiffs’ complaint did not establish that yen LIBOR was used to price the financial products that the plaintiffs purchased, and thus, held that the plaintiffs failed ‘to articulate a concrete injury arising out of Defendants’ alleged manipulation of [yen LIBOR] sufficient to satisfy the injury-in-fact requirement for article III standing.’

The Second Circuit disagreed with the District Court’s analysis of the complaint and reversed, finding that the plaintiffs had in fact alleged ‘numerous instances when the plaintiffs entered into derivatives transactions at prices that were “artificial” due to the defendants’ price-fixing’ and paid higher prices in specific trades. Based on these allegations, the Second Circuit held that the plaintiffs had ‘plausibly pled that they suffered “monetary loss” in these transactions as a result of Defendants’ alleged manipulation of interest rates, and this is sufficient injury in fact for article III standing.’ Notably, the Second Circuit’s holding was limited to the issue of article III standing and did not address antitrust standing.

Whether one-sided versus two-sided market is a question for the court, not the jury

US Airways, Inc v Sabre Holdings Corporation

On 11 September 2019, the Second Circuit affirmed in part, reversed in part and vacated in part a jury verdict in a Sherman Act case, ¹⁰ holding in a case of first impression that the issue of whether a market is two-sided or one-sided is a question for the court, not the jury. The defendant owned and operated a global distribution system (GDS), which served as a platform for travel agents to purchase tickets from the defendant’s airline customers. Travel agents were able to access a GDS for free, and could receive payments from a GDS for meeting minimum booking thresholds. When a travel agent booked a flight on a particular airline using a GDS, the airline would pay the GDS a booking fee. As a condition for listing flights on its GDS, the defendant required airlines to agree to list all of their flights on the GDS at the same prices and terms as the airline offered on flights the airline marketed directly to customers. The plaintiff airline contended that these provisions violated sections 1 and 2 of the Sherman Act and caused it to pay supracompetitive booking fees.

Shortly before trial, the Second Circuit issued its opinion in United States v American Express Co, which held that in appropriate cases involving transaction platforms (ie, ‘two-sided’ markets), a factfinder must consider the effect of a restraint on all users of the platform in determining whether the restraint is, on balance, anticompetitive. ¹¹ In such cases, the Second Circuit held, it is an error to focus only on the effect of the restraint on one set of platform users. To reflect the Second Circuit’s American Express decision, the District Court instructed the jury to examine the effect of the defendant’s restraints as if imposed in a one-sided market (that is, focusing on the effect of the restraint on the airline) and, in the alternative, the effect of the restraints as if imposed in a two-sided market (that is, focusing on the net effect of the restraints on airlines and travel agents). The jury returned a verdict of approximately $5 million based on the assumption that the market was one-sided and a verdict in an identical amount on the assumption that the market was two-sided. Both sides appealed.

While the appeal was pending, the Supreme Court affirmed the Second Circuit’s American Express decision. ¹² In the wake of that affirmance, the Second Circuit here held that it was improper for the District Court to let the jury decide whether the market was one-sided or two-sided because that determination is a question for the court, not the jury. It therefore vacated the jury’s primary verdict based on the determination that the market was one-sided. The Second Circuit found that the GDS platform was two-sided because the defendant could not sell an airline ticket without simultaneously making a sale to the other side of the platform and because the users on each side of the platform influenced use on the other side. Reviewing the jury’s alternative finding of liability under a two-sided market theory, the Second Circuit held that this alternative finding was insufficient because the jury should have been explicitly instructed to consider the effect of the restraint on both sides of the platform. Moreover, the plaintiff should not have been allowed to ‘spend considerable time at trial presenting an incorrect conception of two-sidedness.’ Despite these errors, the Court concluded that the jury had substantial evidence on which it might have determined that the challenged restraint caused anticompetitive effects in a two-sided market. The Court ordered a new trial consistent with its opinion.

Second Circuit summary orders (non-precedential decisions)

Mordy’s Appliance Repair Service LLC v Amazon Services LLC

On 28 February 2019, the Second Circuit, in a summary order, affirmed a district court’s dismissal, on standing grounds, of an appliance repair company’s lawsuit challenging Amazon.com’s allegedly anticompetitive treatment of disfavored sellers on its website. ¹³ The plaintiff alleged that it intended to sell appliance parts on the website, but decided not to do so because of the defendant’s policies toward third-party sellers. The plaintiff contended that the defendant required third-party sellers to agree to standard terms that allowed the defendant to unilaterally remove sellers from its website based on unsubstantiated complaints that the sellers were offering counterfeit products, and that this was part of an anticompetitive scheme to prop up sales of its own products and those of favored sellers. The plaintiff conceded, however, that it was free to open a store on Amazon.com, and that the defendant would have accepted it as a third-party seller if it had signed the business services agreement. Accordingly, the Court held that, even if the plaintiff’s allegations were true, its injuries were remote and speculative and it therefore lacked standing to pursue its antitrust claims.

7 West 57th Street Realty Co v Citigroup, Inc

On 30 April 2019, the Second Circuit affirmed a district court decision finding that the alleged effects of benchmark manipulation on bonds not expressly tied to the benchmark was not sufficient to confer antitrust standing. ¹⁴

The plaintiff claimed that an alleged conspiracy among the defendant financial institutions to manipulate the LIBOR benchmark affected not only the prices of LIBOR-denominated instruments, but also the price of other bonds that were not expressly tied to LIBOR. The plaintiff claimed that it therefore suffered antitrust injury based on the alleged diminution in the value of its non-LIBOR municipal bonds. The district court dismissed the original complaint for lack of standing and refused to allow a further amended complaint as futile.

In a summary order, the Second Circuit affirmed, finding that the plaintiff was not an efficient enforcer of the antitrust laws. Because the plaintiff’s bonds did not directly incorporate an interest rate directly tied to LIBOR, its injury would be indirect. Any diminution of the value of the plaintiff’s bonds, the Court found, was ‘necessarily directly caused by the independent judgments of participants in the secondary municipal bond market.’ Further, there are more direct victims, namely those with rates directly tied to LIBOR. Permitting these indirect harm claims would expand the scope of the antitrust laws and potentially lead to crippling liability, highly speculative damages, serious problems in apportioning damages, and potentially duplicative recoveries.

This decision is a straightforward application of the principles of the efficient enforcer doctrine that the Second Circuit articulated in Gelboim v Bank of America Corporation. ¹⁵ Although it is a summary order and non-precedential, it nevertheless provides helpful guidance on the limits of antitrust standing not only in benchmark cases but in other cases where alleged cartel activity has effects beyond the directly cartelized products.

Prime International Trading, Ltd v BP PLC

On 29 August 2019, the Second Circuit, in a summary order in a case involving traders in oil contracts, rejected another attempt to assert antitrust damages based on the alleged effects of collusive conduct on products not directly the subject of the collusive scheme. ¹⁶ The plaintiffs alleged that the defendants, a group of producers, refiners and sellers of Brent crude oil, manipulated the price of physical Brent crude oil traded in the North Sea. According to the plaintiffs, the manipulation of the price of physical oil affected the Dated Brent assessment, which was a benchmark that tracked the price of Brent crude oil. The plaintiffs, in turn, alleged that the Dated Brent assessment was ‘closely correlate[d]’ with the ICE Brent Index, a benchmark that was incorporated into futures and derivatives that the plaintiffs had traded. The plaintiffs alleged that the defendants’ manipulation of the physical price of oil adversely affected their futures and derivatives transactions.

The Court found that the plaintiffs had not adequately alleged antitrust injury. The Court found that the plaintiffs did not participate in the market that was directly restrained (physical oil) or incorporate the benchmark that was allegedly directly affected by the defendants’ alleged conduct (the Dated Brent assessment) into their transactions. Because they were not ‘participant[s] in the very market that is directly restrained,’ the Court held that the plaintiffs had not adequately pleaded that they suffered an antitrust injury.

Charych v Siriusware, Inc

On 4 November 2019, the Second Circuit, in a summary order, affirmed a district court’s dismissal of antitrust claims brought by plaintiffs who alleged that their innovative gate-scanning technology for ski resorts had been excluded from the marketplace by anticompetitive means. ¹⁷ The defendants’ technology consisted of two components: management software and gate-scanning products, each sold by different sets of defendants (that collectively controlled over 80 per cent of the market). The plaintiffs developed a gate-scanning product that was allegedly more accurate and less expensive than the defendants’, but was incompatible with the defendants’ existing management software. The plaintiffs asserted that the defendants violated section 1 of the Sherman Act by agreeing with one another not to create an interface with the plaintiffs’ product and section 2 by tying the purchase of gate-scanning products from one set of defendants with the purchase of management software from another set of defendants.

The Court found that the plaintiffs had not adequately alleged an agreement among defendants to refuse to create an interface. Rather, the defendants’ conduct, as alleged, merely showed that they were ‘unwilling to bear the costs of developing an interface without reimbursement,’ which is a rational business decision. The Court stated that the Sherman Act does not prevent manufacturers from exercising independent discretion in determining with whom they will deal. The Court also found that the ‘implied’ vertical agreements between the ski resorts and the management software manufacturers alleged in the complaint were insufficient to state a claim, because, without evidence of an anticompetitive intent or rationale, ‘run-of-the-mill exclusive distributorship[s] . . . are presumptively legal.’

The Court also dismissed the plaintiffs’ tying claim because the complaint failed to allege any coercive conduct by the defendants. While it was undisputed that the defendants recommended each other’s products to ski resorts, there was no allegation that any defendant refused to sell its product to a ski resort unless it also purchased the product of another defendant.

District court cases

Benchmark setting

Fire & Police Pension Association of Colorado v Bank of Montreal

On 14 March 2019, US District Judge Analisa Torres of the Southern District of New York granted the defendants’ motion to dismiss a complaint alleging that they conspired to depress the Canadian Dollar Offered Rate (CDOR), an interest rate benchmark reflecting the interest rate at which certain banks were lending Canadian dollars. ¹⁸ The plaintiff pension fund alleged that the defendant banks, many based in Canada, manipulated CDOR in violation of section 1 of the Sherman Act, the Racketeer Influenced and Corrupt Organizations Act and the Commodities Exchange Act, and were unjustly enriched.

The Court found the plaintiff’s complaint lacking on three grounds. First, the Court held that the plaintiff failed to allege facts sufficient to establish personal jurisdiction over the foreign defendants. Second, the Court held that much of the plaintiff’s lawsuit was time barred. Third, with regard to conduct not barred by the statute of limitations, the Court found that the plaintiff had not established antitrust standing because the statistical analyses that it relied on to purportedly show manipulated prices, even if accepted as true, did not show that CDOR was depressed at the time that the plaintiff transacted.

In re ICE LIBOR Antitrust Litigation

On 26 March 2020, US District Judge George B Daniels of the Southern District of New York dismissed a putative antitrust class action alleging that various banks, along with the benchmark administrator, had conspired to manipulate the ICE LIBOR benchmark interest rate because the plaintiffs failed to allege specific facts suggesting that any defendant engaged in a conspiracy. ¹⁹ In addition, the Court found that the plaintiffs’ statistical comparisons failed to plead facts that ‘provide[d] any support for [the plaintiffs’] theories about what the relationships between these factors and the ICE LIBOR rate should be.’ This decision is notable in continuing the trend of holding that statistical comparisons cannot substitute for specific allegations of collusive communications in pleading a conspiracy.

Securities and commodities trading

In re SSA Bonds Antitrust Litigation

On 4 October 2019, US District Judge Edgardo Ramos of the Southern District of New York dismissed a putative antitrust class action against certain defendants, foreign banks and individuals for lack of personal jurisdiction and improper venue. ²⁰ The plaintiffs alleged that the defendant banks conspired to fix the price of supranational, sub-sovereign and agency bonds in violation of section 1 of the Sherman Act. Several foreign defendants and four of their employees moved to dismiss for lack of personal jurisdiction and venue.

The Court ruled that the plaintiffs failed to establish that venue in New York was proper as to the foreign defendants because the complaint failed to show that the foreign defendants transacted business of a ‘substantial character’ in New York. The Court also held that personal jurisdiction over the foreign defendants was not appropriate under New York’s long-arm statute because the plaintiffs failed to provide a nexus between the defendants’ in-state business and the plaintiffs’ antitrust claims. The Court also rejected the plaintiffs’ attempt to assert ‘conspiracy jurisdiction,’ because the plaintiffs failed to demonstrate evidence of a market-wide conspiracy to form the basis of conspiracy jurisdiction.

In a later decision, the Court dismissed the claim against the remaining defendants for failure to state a claim. The Court found that the plaintiffs lacked antitrust standing because they did not plausibly plead that they suffered an injury flowing from any illegal conduct by the defendants. Further, the Court found that the conspiracy allegations did not allege specific misconduct by specific defendants and thus did not constitute the required ‘allegations that plausibly suggest that each defendant participated in the alleged conspiracy.’ Even the sole allegation as to a specific defendant, the Court found, was insufficient because the plaintiff did not participate in the trades that were the subject of those allegations or allege facts showing that the conspiracy extended beyond the specific trades alleged.

In re GSE Bonds Antitrust Litigation

On 29 August 2019, US District Judge Jed S Rakoff of the Southern District of New York granted in part and denied in part the defendants’ motion to dismiss a putative antitrust class action alleging that the defendant underwriters of government-sponsored entity (GSE) bonds agreed to fix the price of GSE bonds in the secondary market. ²¹ The plaintiffs’ complaint focused on two categories of allegations: (1) chatroom discussions among defendants in underwriting syndicates about the prices at which GSE bonds would be sold when the underwriters broke syndicate, and (2) statistical comparisons of various comparator metrics that purportedly reflected artificial inflation in the price of GSE bonds during the alleged class period. The Court denied the defendants’ motions to dismiss as to the defendants alleged to have participated in the allegedly collusive chats, and granted the motions as to the remaining defendants.

Based on the allegations of the complaint, the Court found that the chats constituted direct evidence sufficient to overcome the motion to dismiss as to the defendants involved in the chats, but neither the statistical comparisons nor the other allegations were sufficient to state a claim as to the remaining defendants. In response to the partial dismissal, the plaintiffs filed an amended complaint alleging specific chatroom discussions that involved the dismissed defendants. Based on those specific allegations, the Court denied those defendants’ renewed motion to dismiss.

In re Mexican Government Bonds Antitrust Litigation

On 30 September 2019, US District Judge J Paul Oetken of the Southern District of New York dismissed claims that the defendant financial institutions had conspired to artificially depress auction prices for Mexican government bonds and artificially inflate secondary market prices of those bonds sold in the United States, in violation of the Sherman Act. ²²

The Court dismissed the complaint because the plaintiffs failed to ‘articulate a link between their allegations and the specific defendants named in the complaint.’ Treating the defendants as a single undifferentiated bloc without offering a specific and individualized showing of anticompetitive conduct as to each defendant, the Court found, was insufficient to overcome a motion to dismiss. Similarly, the statistical data was market-wide and aggregated, and failed to account for non-defendant actions in the auction process and market. Third, the purported ‘plus factors’ failed to identify any particular defendant’s motives, opportunities to collude or alleged past violations. The Court granted the plaintiffs’ leave to amend, and motions to dismiss the amended complaint have been filed.

In re Platinum & Palladium Antitrust Litigation

On 29 March 2020, US District Judge Gregory H Woods of the Southern District of New York dismissed for lack of standing a putative class action against the defendant banks accused of a conspiracy to manipulate the benchmark price of palladium and platinum. ²³ The Court concluded that while the plaintiffs could demonstrate antitrust injury, they were not efficient enforcers of the antitrust laws and therefore lacked standing.

The complaint included plaintiffs that traded over-the-counter (OTC) and plaintiffs that traded on the New York Mercantile Exchange. The Court found that the OTC plaintiffs failed to allege that they transacted directly with the defendants, and that the Exchange plaintiffs did not sufficiently allege that the defendants dominated the relevant precious metals derivative markets. More specifically, the Court found that the plaintiffs’ allegations suggested that the defendants’ market share was at most 45 per cent of the relevant market, and it was therefore impossible to say that the plaintiffs transacted with the defendants or to tailor a proportionate remedy. As a result, the Court held, neither group of plaintiffs was an efficient enforcer of the antitrust laws.

Chemical prices

Miami Products & Chemical Co v Olin Corporation

On 27 March 2020, US District Judge Elizabeth A Wolford of the Western District of New York denied the motion to dismiss filed by most defendants alleged to have participated in a cartel to increase the price of caustic soda. ²⁴ The Court also granted one defendant’s separate motion to dismiss, without prejudice, because the complaint failed to allege specific facts showing that this defendant (the parent of another defendant) joined the conspiracy, and permitted jurisdictional discovery as to two foreign defendants.

According to the complaint, manufacturers of caustic soda conspired to cut output and increase prices by, among other things, closing plants on pretextual grounds. The Court found that the plaintiffs plausibly alleged that the defendants conspired by communicating with each other in trade association meetings and restricting the caustic soda supply with temporary plant shutdowns. The Court, citing the allegation that the defendants privately discussed raising prices, rejected the defendants’ argument that they simply responded to public information. Taking all allegations as true, the Court found that the plaintiffs had pleaded allegations sufficient to state a conspiracy to violate the antitrust laws.

* The authors wish to acknowledge their colleagues Brian Hauser, Benjamin Klebanoff, Edmund Saw and Osher Gordon for their able assistance with this chapter, and their partners Richard F Schwed, Agnès Dunogué and Grace Lee for their additional input.

Notes