Wednesday, November 26, 2008

D.C. Circuit Denies Rehearing of Whole Foods Case


Rehearing En Banc Denied - On November 21, the D.C. Circuit issued an order denying a petition for rehearing en banc of the Whole Foods decision, and issued an amended opinion, which reversed an earlier decision not to enjoin the merger between Whole Foods Markets and Wild Oats, as previously discussed here. The denial of rehearing en banc means that the full court will not reconsider the opinion of the three-judge panel that issued the D.C. Circuit opinion, and the Federal Trade Commission will proceed with hearing the case on the merits.

The Acting Director of the Bureau of Competition at the FTC, David Wales, commented, “the decision rendered by the majority of the appellate panel reaffirms that the proper role of the district court in considering whether to grant the Commission’s request for a preliminary injunction is limited to whether the case raises sufficiently serious and substantial issues so as to make them fair ground for litigation during the full trial on the merits in the administrative proceedings.” He added that “we look forward to presenting our evidence as to why this merger is unlawful and should be undone at the plenary trial in a few months.”

FTC Case to Proceed - The scheduling order in the case, available here, indicates that a hearing on the merits will be held on February 16, 2009. Because of the unusual procedural sequence of events, the merger has already been completed and the assets of the organizations combined, meaning that the putative injunction will be difficult to comply with and enforce, at least in the short term. Assuming that the FTC prevails on the merits, a significant issue in the case will be how to undo the completed merger.

Cautionary Lessons - This case will almost certainly be used as a cautionary tale by antitrust enforcers and lawyers for years to come: parties to a proposed merger will likely be advised to reconsider combining assets even if a district court decides a preliminary injunction to enjoin the merger is not warranted. In the past, parties to a proposed merger treat a preliminary injunction decision as a final decision on the merits, as one inquiry the court must address in deciding whether to enjoin a merger is assessing the likelihood that the merger will ultimately be found by a judge or jury to be anticompetitive. Parties to a proposed merger that are successful at the preliminary injunction stage have typically combined assets following the court’s decision. That is precisely what happened here. Now that the D.C. Circuit has reversed the district court’s preliminary injunction decision, Whole Foods and Wild Oats must grapple with an extraordinarily complicated exercise – undoing the steps that have been taken to combine the two organizations’ assets. Ironically (and unfortunately), this exercise will likely prove to weaken both organizations’ competitive positions, at least in the short term.

Related posts: D.C. Circuit Reverses Ruling That Allowed Whole Foods Merger with Wild Oats; Whole Foods Faces Consumer Class Action.

Wednesday, November 19, 2008

FLOORgraphics v. News America Trial Postponed Until March 2

A couple readers have e-mailed me asking about the trial in Floorgraphics v. News America Marketing, a case related to in-store floor and shelf advertising. Trial was scheduled to start on November 12, but has been postponed until March 2, 2009 because the Judge became unavailable. (Previous posts about the case are available here, here, and here).

The $1.5 billion Valassis v. News America Marketing case related to FSIs, meanwhile, is scheduled for trial in April 2009. (For prior posts click here and here).

Finally, Insignia v. News America Marketing, involving in-store price-based shelf signs, is set for May 1, 2009, as reflected in an October 31 scheduling order. (Prior posts here, here, here, here, and here).

It looks like a busy spring for News America and its attorneys, though the trial date for Insignia and/or Valassis could get pushed back.

Related posts: FLOORgraphics v. News America Trial Pushed to Nov. 12; FLOORgraphics' Suit Against News America Set for Trial October 1; Summary Judgment Motion Denied in FGI v. News America Marketing.

Tuesday, November 18, 2008

Kotchen Addresses Retailer Pricing Strategies at TPMA Conference

On November 10, Kotchen & Low LLP partner Daniel Kotchen spoke at the Trade Promotion Management Association (“TPMA”) conference in Scottsdale, Arizona on the topic of “The Convergence of Law and Business on Retailer Pricing Strategies.”

In his presentation, Mr. Kotchen addressed legal implications related to two business strategies: (1) consumer goods manufacturers’ efforts to influence/control minimum prices set by retailers and (2) manufacturers’ efforts to award discounts and allowances (i.e., “trade funds”) to retailers on the basis of profitability rather than simply on gross sales volume.

A copy of Mr. Kotchen’s presentation can be found here.

 

The Law Firm of Kotchen & Low LLP - Civil Litigation, Counseling, and Representation Before Government Agencies


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