United States Of America Central Credit LLC

United States Of America Central Credit LLC

Background

The case has its origins in a private action filed by a group of sixty investors (Credit Suisse, supra, slip op. at 3) that alleged that the defendant banks (described my Justice Breyer as "10 leading investment banks", Credit Suisse, supra, slip op. at 3) violated American antitrust law by forming syndicates to bring initial public offerings (IPOs) to market for a large number of technology-related companies. The anti-competitive elements of these syndicates were alleged to be grounded in the agreement among the syndicate participants to refrain from selling newly issued securities to a buyer unless the buyer committed a number of conditions. The most troublesome of these conditions (for the plaintiffs, at least) were the laddering provision (a promise to buy additional shares of that security later at escalating prices), a tying provision (a promise to purchase other (usually less desirable) securities from the underwriter, and a promise to pay what were described as uncommonly high commission. Credit Suisse, supra, slip op. at 2-3. On the underwriters motion to dismiss "on the ground that federal securities law impliedly precludes application of antitrust laws to the conduct in question. (The antitrust laws at issue include the commercial bribery provisions of the Robinson-Patman Act.)" (Credit Suisse, supra, slip op. at 4), the District Court dismissed the complaints. Id. (See In re Initial Public Offering Antitrust Litigation, 287 F. Supp. 2d 497, 524-525 (SDNY 2003) (IPO Antitrust).). The Second Circuit reversed (426 F. 3d 130, 170, 172 (2005)), and was in turn reversed by the Supreme Court. Justice Stevens concurred in the judgment. He suggested that there was no conflict between the securities and antitrust regimes in the case.

In my view, agreements among underwriters on how best to market IPOs, including agreements on price and other terms of sale to initial investors, should be treated as procompetitive joint ventures for purposes of antitrust analysis. In all but the rarest of cases, they cannot be conspiracies in restraint of trade within the meaning of §1 of the Sherman Act, 15 U. S. C. §1.

Credit Suisse, supra, slip op. (Stevens, J., concurring in the judgment) at 1. He strongly objected to the presumption against private actions (under the antitrust laws in this case) in the face of the regulatory power of the state. For Stevens there could be no suggestion, "as the Court did in Twombly, and as it does again today, that either the burdens of antitrust litigation or the risk “that antitrust courts are likely to make unusually serious mistakes,” ante, at 16, should play any role in the analysis of the question of law presented in a case such as this. " Credit Suisse, supra, slip op. (Stevens, J., concurring in the judgment)

Legal analysis:

Justice Thomas dissented, principally on the grounds that the federal securities statutes themselves compelled application of the antitrust laws to actions otherwise regulated under the federal securities laws which might ...