Major Antitrust Lawsuits & Settlements
The following legal actions and settlements are examples of the Attorney General's enforcement of state and federal antitrust laws.
Bristol-Myers Squibb Co. (BuSpar) (2003)
The Antitrust Division filed suit against Bristol Myer Squibb, Watson Pharma, Inc. and Danbury Pharmacal, Inc. alleging these defendants prevented a generic form of BuSpar, a widely prescribed anti-anxiety drug, from coming to market. Texas was joined by 34 other states, the District of Columbia and Puerto Rico in filing this suit which resulted in a settlement with Bristol- Myers paying $100 million. The settlement also has injunctive relief which, in part, prohibits Bristol Myers from entering into agreements with generic drug manufacturers to settle patent infringement suits, if the result of such agreements would potentially adversely affect competition.
Bristol-Myers Squibb Co. (Plavix) (2008)
As part of the settlement of the BuSpar and Taxol antitrust litigations, the Attorney General along with a group of other state attorneys general obtained an injunction requiring Bristol-Myers Squibb to report on settlement agreements it enters which result in generic drugs not being brought to market. Subsequently, the states determined that Bristol had failed to disclose material information concerning one such agreement involving the brand-name prescription drug Plavix. Following an investigation, Bristol agreed that it had violated the injunction and paid the states $1.1 million.
JBS Beef, SA (2009)
In 2008, JBS Beef, the then third largest beef processor in the United States, announced that it intended to purchase rival processors, National Beef Packing Co. and Smithfield Beef Group. Although the Smithfield acquisition was allowed to proceed because it did not present significant competitive concerns, an exhaustive investigation of the proposed merger with National Beef revealed that JBS was attempting to acquire market power that would allow it to pay ranchers less for cattle while charging more for the beef it produces. The Attorney General, along with the U.S. Department of Justice and several other state attorneys general, filed suit to block the National Beef merger. On February 23, 2009, in the face of opposition from the Attorney General and his co-plaintiffs, JBS and National Beef Packing Co. abandoned their proposed merger.
Marsh & McLennan Companies, Inc. (2008)
In December 2008, insurance broker, Marsh and McClennan Companies, Inc. (Marsh), settled an investigation conducted by the Attorney General and eight other attorneys general concerning Marsh's anticompetitive conduct in the market for commercial insurance. The investigation revealed that the broker accepted undisclosed compensation from insurers in exchange for preferential treatment. The scheme lasted several years and resulted in higher premiums paid by Marsh's commercial insurance customers. Under Marsh's settlement with the multistate group, it must abide by stringent disclosure requirements that will allow customers to make informed decisions about their insurance purchases. Marsh also agreed to pay the multistate group $7,000,000, of which Texas received $1,100,000, as reimbursement for investigative costs.
Memorial Hermann (2009)
After an investigation, the Attorney General filed a lawsuit and an agreed judgment against Memorial Hermann Healthcare System. The lawsuit alleged that Memorial Hermann systematically discouraged health insurers from adding a competing hospital to their insurance coverage networks and used its leverage to punish health insurers that established contracts with that competitor. Memorial Hermann agreed to an injunction and payment of $700,000 for attorney fees and investigative costs.
Municipal Derivatives Investigation (2010)
In 2008, the Attorney General and a multistate group launched an investigation into allegations of collusion by various financial institutions to artificially increase costs for municipal derivative products. These financial vehicles are used by state and local government entities and eligible non-profits to invest bond proceeds and restructure debt obligations. Government and non-profit entities hire brokers to assist them in purchasing municipal derivatives from investment banks (also known as providers). The sales are usually transacted subject to a competitive bidding process.
The investigation revealed that certain brokers and providers conspired to artificially set derivatives prices. During their investigation, the state attorneys general uncovered multiple instances of improper conduct, including bid rigging, receiving and providing last looks, submitting non-competitive courtesy bids, and submitting fraudulent arms-length bidding certifications. Entities that entered into affected municipal derivatives contracts were forced to pay artificially inflated interest rates and received lower returns on their investments than they would have earned in a competitive marketplace. The result of this illegal conduct was to increase borrowing costs for affected entities and ultimately taxpayers.
In December 2010, the states reached a settlement agreement with Bank of America for its self-reported wrongdoing relating to manipulation of municipal derivative products. The states eventually reached settlements with GE Funding Capital Market Services, JP Morgan Chase, UBS, and Wachovia resulting in over $275 million in restitution returned to eligible government and nonprofit entities nationwide.
Oracle Corporation/PeopleSoft (2003)
The Antitrust Division led a multi-state investigation of the proposed hostile takeover of PeopleSoft by Oracle in 2003. At the time, Oracle and PeopleSoft were two of the nation's leading providers of human resource and financial management enterprise software applications. A lawsuit was subsequently filed by Texas, several other states and the Department of Justice to block the acquisition. After more than four weeks of trial, a federal district court in San Francisco denied the request for injunction, and the parties were allowed to finalize the transaction.
Ticketmaster/Live Nation (2010)
Ticketmaster, the nations largest ticketer, and Live Nation, the largest live music promoter, announced their intention to merge in 2009. The merger, as originally proposed, would have removed Live Nation as a potential competitor to Ticketmaster, substantially lessening competition for primary ticketing in the United States. To address concerns of the Antitrust Division, the U.S. Department of Justice and eighteen other state attorneys general, the parties agreed to a settlement which allows the proposed transaction to proceed but which puts restrictions on Ticketmaster going forward. Under the proposed settlement, Ticketmaster must license ticketing software and divest ticketing assets to two other companies allowing them to compete directly with Ticketmaster.
Title Data, Inc. (2008)
The Antitrust Division investigated complaints of abuse of monopoly power by Title Data, Inc. Title Data provided title plant services (a computerized database that compiles and indexes all public records regarding real estate) in Harris and surrounding counties. In an agreement with the state of Texas, Title Data agreed to limit the data restrictions it previously imposed on title companies using its services. It also agreed to stop publishing an online list of title companies prohibited from doing business with its customers and agreed to appoint two independent members to its Board of Directors and one independent member to its Executive Committee.
Tricor Antitrust Litigation (2009)
The Attorney General, along with other attorneys general, filed suit against Abbott Laboratories, Fournier Industrie et Sante and Laboratories Fournier, S.A., alleging that Abbott had taken steps to monopolize the market for Tricor, a drug used in the treatment of high cholesterol and triglyceride levels. The suit was settled in December 2009. As a result of the settlement, the Texas Medicaid program will be reimbursed for the overcharges it was forced to pay as a result of defendants anti-competitive practices. In addition, defendants agreed to enter into an injunction which prohibits them from engaging in similar practices involving Tricor in the future.
United Regional Health Care System (2011)
United Regional Health Care System agreed to settle a suit brought by Texas and the U.S. Department of Justice which alleged United Regional had illegally maintained monopoly power in Wichita Falls. The lawsuit claimed United Regional maintained its monopoly power for both acute care hospital services and outpatient surgical services by utilizing exclusivity provisions in its contracts with commercial health insurers that effectively prohibited the insurers from contracting with United Regionals competitors. The settlement enjoins United Regional from entering into or enforcing such contractual provisions.
Visa Inc. and MasterCard International (2010)
A joint investigation of major credit card companies by Texas, the U.S. Dept. of Justice and six other states resulted in a filed lawsuit against Visa, Mastercard and American Express. A settlement was reached with Visa and MasterCard which prohibits these companies from enforcing previously imposed merchant restraints. Merchants who accept Visa and/or MasterCard (but not American Express) are now free to expressly promote a particular credit card or alternative form of payment or identify the cost of accepting particular credit cards. The lawsuit continues against American Express.