Supreme Court to Address Investment Bank and Institutional Investor Liability in Underwriting IPOs, and Per Se Rule that Resale Price Maintenance Violates Sherman Act
Linda Greenhouse of the New York Times reports that the United States Supreme Court had accepted defense petitions for writs of certiorari in “two important antitrust cases” and that the opinions should clarify areas of law “that have increasingly become unsettled.” One of the antitrust cases, Credit Suisse First Boston v. Billing, is closely watched on Wall Street: the class action named more than a dozen banks and investors that participated in underwriting Internet company IPOs in the 1990s. The district court had dismissed the class action on the grounds that the SEC expressly permitted the conduct objected to in the complaint. The Second Circuit Court of Appeals, however, reinstated the class action.
The second class action, Leegin Creative Leather Products v. PSKS, directly challenges a 1911 case that held manufacturers may not require retailers to charge minimum prices for their products without violating the Sherman Act. As Ms. Greenhouse reports, “The case asks the justices to re-evaluate the precedent in light of modern economic theory, and instead to make these arrangements subject to case-by-case analysis under which is known as the rule of reason.” In seeking review of the Fifth Circuit Leegin opinion, defense attorneys argued that “the per se rule against resale price maintenance squarely conflicts with this court’s modern antitrust jurisprudence” and “[has] no foundation in economic theory.”
Linda Greenhouse’s article, entitled “Antitrust Policy Ambiguity To Be On Justices’ Docket,” may be found in Section C. of the December 8, 2006, edition of the New York Times.