On December 8, 2011, the U.S. Department of Agriculture’s Grain Inspection, Packers and Stockyards Administration (GIPSA) issued its long-awaited final rule amending regulations under the Packers and Stockyards Act (PSA). The rule making was required in part by Title XI of the Farm, Conservation and Energy Act of 2008 (2008 Farm Bill). GIPSA published proposed PSA regulations — some very controversial — on June 22, 2010, and promptly was swamped by more than 64,000 public comments. Recently Congress in the FY2012 Agriculture Appropriations billweighed-in, according to the USDA, by “prohibiting the [USDA] from moving forward” on controversial proposed regulations. Those included changes to the tournament system of payment for poultry growers, requirements to collect and post sample livestock contracts andelimination of the need to prove competitive injury in actions under sections 202(a) and (b) of the PSA. GIPSA announced in its final rule that it has “not . . . finalized” those provisions “at this time.”
On November 28, 2011, the federal district court in Milwaukee granted a Rule 12(b)(6) motion to dismiss claims against Dean Foods (Dean) for violation of the Robinson-Patman Act, 15 U.S.C. §13, and subsections (3) and (4) of the Illinois Antitrust Act, 740 ILCS 10/3. The court’s opinion is available on Comp Law360.
Plaintiff Fresh N’ Pure Distributors (FNP) alleged that it had been Foremost Farms’ (Foremost) exclusive northeast Illinois distributor, but that since Dean’s acquisition of Foremost in 2009, Dean had refused to sell Dean milk to FNP despite contrary pre-acquisition representations. FNP alleged further that Dean’s other distributors, including Dean’s subsidiary Dean Transportation, Inc. (DTI), sold Dean products to FNP’s former customers, and that Dean had prevented FNP from filling its customers’ orders by purchasing Dean products from one of these competing Dean distributors.
Robinson-Patman Act. The district court explained that refusal to supply a prospective customer, such as alleged by FNP, is not actionable under the Robinson-Patman Act, and that there was no allegation of any sale by Dean to FNP competitors at a lower price than Dean charged FNP. DTI’s alleged sales of Dean milk to FNP’s retail customer at a price lower than the price FNP would have paid Dean did not support any inference regarding Dean’s price to DTI, the court concluded. The court also questioned that a subsidiary of a supplier counts as a competing buyer for purposes of the Act.
Illinois Antitrust Act (IATA). The court deemed Dean’s motion to dismiss FNP’s IATA claim unopposed and dismissed on that basis, but explained that it would have granted the motion in any event. No claim was stated under IATA subsection (4) the court noted, since it applies only to refusals to sell except on condition of exclusivity, and no such condition was alleged. Without “substantially more,” the court stated, the alleged price discrimination and refusal to sell were insufficient to state a claim under IATA subsection (3). The alleged sales of Dean milk to FNP customers after Dean refused to supply FNP were not actionable according to the court, since there was no allegation that Dean made the sales, and no precedent for FNP’s theory that Dean was obliged to refuse to allow other distributors to make such sales.
On December 2, 2011, the Seventh Circuit Court of Appeals issued an order in Minn-Chem, Inc. v. Agrium Inc., No. 10-1712, granting the plaintiffs’ October 7, 2011 petition for rehearing en banc, and vacating the opinion and judgment issued by a Seventh Circuit panel on September 23, 2011.
The panel’s September 23, 2011 decision directed the district court to dismiss a class-action complaint that alleged a global price-fixing cartel among Canadian, Russian and Belarusian producers of potash, a mineral used primarily in agricultural fertilizer. All of the anticompetitive conduct allegedly occurred outside the U.S., but allegedly adversely affected potash prices in the U.S. The key issues before the panel were whether the complaint satisfied either of the import-related exceptions to the Foreign Trade Antitrust Improvements Act (FTAIA), 5 U.S.C. §6a — which provides in general that the Sherman Act does not apply to anticompetitive conduct affecting only foreign markets — and alternatively whether the complaint stated a claim under the standards of Twombly and Iqbal, or merely alleged non-actionable innocent parallel conduct. The panel concluded that the complaint failed to plead enough to satisfy either of the two import-related exceptions to the FTAIA, and on that ground reversed and directed the district court to dismiss the plaintiffs’ Sherman Act claim.
The plaintiffs in their petition for en banc rehearing argued among other points that the panel’s opinion conflicted with the Seventh Circuit’s decision in In re Text Messaging Antitrust Litigation, 630 F.3d 622 (7th Cir. 2010), and the Third Circuit’s decision in Animal Sci. Prods., Inc. v. China Minmetals Corp., No. 10-2288, 2011 WL 3606995 (3d Cir. Aug. 17, 2011).