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The Federal Trade Commission today issued an administrative complaint against California Pacific Medical Group, Inc., doing business as Brown & Toland, a San Francisco, California physicians' organization, for allegedly fixing the prices and terms under which its doctors would contract with payors to provide services for Preferred Provider Organization (PPO) enrollees. In filing the complaint, the FTC is seeking to prohibit Brown & Toland from unlawfully negotiating PPO contracts with health plans on behalf of its member physicians and to nullify the allegedly anticompetitive existing contracts the group has already negotiated with health plans. Brown & Toland also has organized a network of physicians to contract with Health Maintenance Organizations (HMOs), but the FTC's complaint focuses solely on allegations of price-fixing in connection with PPO contracts.
"The FTC's complaint charges Brown & Toland with orchestrating naked price fixing among its physician members to the detriment of San Francisco consumers," said Joe Simons, Director of the FTC's Bureau of Competition. "While, under certain circumstances, collective price negotiation may be necessary to achieve actual clinical or financial integration among providers, which in turn can benefit consumers, in this case Brown & Toland did not achieve such integration. Simply put, Brown & Toland fixed prices without providing any offsetting consumer benefit, a classic violation of the antitrust laws and the Federal Trade Commission Act."
Brown & Toland is a for-profit multi-specialty independent physicians' association (IPA) with more than 1,500 members providing services in San Francisco. Historically, it has provided physician services to HMO members under capitated agreements with health plans, under which the plans pay a set rate each month for each enrollee for certain services provided by the group's doctors. In 2001, with a subset of its physician members, Brown & Toland formed a PPO network and began negotiating fee-for-service reimbursement rates on behalf of its PPO network members.
This is classic FTC thinking: Physicians chose a financial model that best enables them to reap the fruits of their labors, and the FTC's non-physician staff lawyers decide that's just not acceptable. There is no law that prohibits what the physicians are doing, only the irrational opinions of some piss-ant lawyers holed up at the FTC's headquarters in Washington.
The positive news, if there is any, is that the FTC announced the filing of an administrative complaint, not a settlement. This likely means Brown & Toland declined to surrender immediately, and will for now fight the FTC's false and legally baseless accusations.
::: posted by Skip Oliva
at 12:01 AM | link
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Wednesday, July 09, 2003 :::
Foreign Policy: U.S. Needs Int'l Image Makeover
Laurence Arnold of the AP reports more on today's meeting of the National Commission on Terrorist Attacks:
Experts: U.S. Needs Int'l Image Makeover
The United States is less vulnerable to terrorism today because of heightened vigilance but must improve its international relations in order to starve terrorist groups of new recruits, experts said Wednesday.
Scholars on terrorism and al-Qaida told the independent commission studying the Sept. 11 attacks that the United States badly needs an image makeover in the eyes of the world.
"Although we are winning the war against the organization called al-Qaida, we seem to be losing the cultural war," said Mamoun Fandy, senior fellow at the United States Institute of Peace.
Fandy said leaders of other countries, particularly in the Middle East, should be expected to express public gratitude for U.S. help. "Somehow we tolerate Arab leaders telling us something in private rooms and then dealing with their public the way they want to," he said.
Dennis Ross, a peace envoy to the Middle East under former President Clinton (news - web sites), said the United States' choice of friends in the region contributed to the anger and resentment that helped al-Qaida.
"We are resented in no small part because we are seen as using democracy as a tool or weapon against those we don't like, but never against those we do like," said Ross, now director at the Washington Institute for Near East Policy. "We are seen as mouthing the words of democracy but then supporting regimes seen as repressive." He offered Saudi Arabia as one example.
Does this mean yet another makeover show on TLC?
::: posted by Nicholas Provenzo
at 10:11 PM | link
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Foreign Policy: Iranian student leaders arrested on riots anniversary after blasting regime
Three leading Iranian student activists were arrested minutes after holding a press conference to blast the Islamic regime for banning events marking the fourth anniversary of bloody student clashes with security forces.
The arrests were made after activists from the Office to Consolidate Unity (OCU) -- a pro-reform student umbrella group -- said President Mohammad Khatami had failed in his drive for reforms and alleged the hardline-controlled judiciary was trying to prevent freedom of thought.
"Since we believe that Khatami's reforms have come to an end, we wanted to stage a sit-in opposite the UN," the OCU's Reza Ameri-Nassab said moments before he was arrested, adding the gathering was postponed on the advice of supportive MPs.
"But it is not forgotten... our demands are for the immediate release of our eight fellow students from the OCU (arrested during unrest last month) as well as those spelled out in our open letter to Kofi Annan (news - web sites)," he said.
On Tuesday, the OCU wrote to the UN secretary general, denouncing what it said was a "dark chapter" in Iran's history and a "political and social apartheid" that it argued deserved UN investigation.
Ameri-Nassab also said his group had no confidence in Iran's judiciary -- controlled by religious hardliners -- because the institution "is trying to eradicate all sources of independent thought."
Article 26 [Freedom of Association] The formation of parties, societies, political or professional associations, as well as religious societies, whether Islamic or pertaining to one of the recognized religious minorities, is permitted provided they do not violate the principles of independence, freedom, national unity, the criteria of Islam, or the basis of the Islamic Republic. No one may be prevented from participating in the aforementioned groups, or be compelled to participate in them.
Article 27 [Freedom of Assembly] Public gatherings and marches may be freely held, provided arms are not carried and that they are not detrimental to the fundamental principles of Islam.
Indeed. The students seem willing to lay it all on the line to win their freedom from the principles of Islam. I hope they don't have too.
::: posted by Nicholas Provenzo
at 8:37 PM | link
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Foreign Policy: Let's start with philosophy
"To defeat and destroy our enemy, we must understand more than the crimes it already committed. We must understand what drives and motivates it, the source of its power, the resources at its command, its internal strengths and weaknesses." -- Thomas H. KEAN, chairman of the commission investigating the Sept. 11 terrorist attacks.
Yes.
::: posted by Nicholas Provenzo
at 8:06 PM | link
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Antitrust News: A Voice for Liberty?
The Village Voice is indeed a strange creature. As you may know, I'm currently pursuing an independent appeal of the Justice Department's manufactured "alternative newsweekly" antitrust case that involves Village Voice and its chief national competitor, NT Media. This week there's a report in the LA Weekly—a Voice-owned paper that was part of the antitrust dispute—on my efforts:
Remember that antitrust lawsuit?
The one in which the federal government accused the owners of News Times L.A. and the L.A. Weekly of violating antitrust laws by conspiring to divide up markets in L.A. and Cleveland? At last look, prosecutors had declared victory, while the companies admitted no guilt but paid fines. They also submitted to conditions, as part of a settlement, that paved the way for more competition in these two media markets.
In short, the feds think the case is over. So do the newspapers.
But it’s not over for S.M. “Skip” Oliva of Citizens for Voluntary Trade, a Washington, D.C.–based libertarian group. Oliva wants to reopen the case based on his claim that the judge denied adequate time for public comment. Ostensibly, Oliva is taking the side of the newspapers. His group opposes antitrust laws as an abridgment of citizens’ freedom to conduct commerce, and even as a violation of constitutional rights.
In the deal in question, NT Media agreed to shut down New Times L.A., leaving L.A. Weekly as the sole citywide alternative weekly in L.A., while Village Voice Media (the Weekly’s parent) agreed to close its publication in Cleveland, leaving that market to NT’s Cleveland Scene. New Times netted $9 million in the transactions.
When contacted about Oliva’s motion to intervene, one Voice Media executive rolled her eyes and said she expected nothing to come of it, but she quickly added that her reaction was strictly off the record.
This is a somewhat misleading description of what I'm actually doing. I'm not reopening the case, but attempting to appeal it. And I'm not arguing the judge "denied adequate time for public comment". The judge in fact allowed for exactly the amount of public comment time provided for in federal law. My allegation addresses the Justice Department's misconduct in carrying out the judgment itself before the statutory comment period expired. Obviously, this also entails an allegation that the judge abused his discretion in failing to prevent the government's actions, but the principal source of the malfeasance was the DOJ.
As for the alleged reaction of the Voice executive to my motion, if true it's hardly surprising. The Voice didn't even bother to put up a fight. NT Media made several statements proclaiming its innocence and savaging the DOJ for bringing this case, but the Voice has never uttered a word in its own defense.
It's interesting: On the same page as the Weekly's story was displayed, there was a paid advertisement for a law firm that specializes in class-action antitrust lawsuits. The page also teased the Weekly's feature story on the decline of civil liberties under John Ashcroft's Justice Department. It's fairly obvious the Weekly—and its parent company—don't consider the right to engage in economic trade free of government coercion to be a genuine civil liberty.
::: posted by Skip Oliva
at 12:14 AM | link
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The AP reports that a U.S. District Court judge has ruled that the distributor of the Kazaa software for sharing songs, movies and other files online cannot pursue an antitrust lawsuit against major recording labels and movie studios.
Sharman Networks made the antitrust claims in January as part of its defense of a copyright infringement suit filed by the entertainment firms.
Sharman argued that music labels and studios conspired to keep authorized and copy-protected versions of their songs and movies off Kazaa. It essentially blamed piracy on the entertainment companies, saying they failed to work with Sharman to create a legal alternative.
U.S. District Judge Stephen V. Wilson dismissed Sharman's claims, which many copyright lawyers had considered a stretch.
In Thursday's ruling, Wilson said that even if the allegations were true, Sharman would not be entitled to damages because it distributes file-sharing software and not online entertainment.
"Sharman Networks was grasping at straws to distract the court from their own improper behavior," said Matthew Oppenheim of the Recording Industry Association of America. "We are pleased that the court recognized what we have said all along--that these claims lacked any merit."
Indeed. In fact, one has to marvel at the hubris of Sharman for filling suit in the first place.
This is a good ruling. Every time an antitrust suit fails, an angel gets its wings.
::: posted by Nicholas Provenzo
at 10:42 AM | link
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Antitrust News: Morning Roundup
As I've long maintained, antitrust is first and foremost a means of blaming others for your business failure. Case in point: Texas Commercial Energy is trying to blame their competitors' "market power" for its bankruptcy:
Plano-based Texas Commercial Energy has filed a federal antitrust lawsuit against several electric companies, including a TXU affiliate, claiming that they violated federal and state law by illegally manipulating the Texas electric market and fraudulently inflating prices.
The lawsuit was filed in the Federal District Court in the Southern District of Texas, Corpus Christi Division, where TCE filed for Chapter 11 bankruptcy protection on March 6. TCE is seeking damages in excess of $535 million.
"Texas Commercial Energy is a victim of market power abuses in an energy marketplace that is mandated by Senate Bill 7 to be a level playing field for all participants," said Mike Shirley, president of TCE.
The defendants named in the lawsuit are all participants in the Texas electric market and include affiliates of TXU, Reliant, American Electric Power and Mirant.
If Texas law mandates a "level playing field," what exactly is the point of competition? Indeed, why even have private firms in the energy market if the state knows how best to govern the market?
Chiron Corp. Monday said it settled antitrust complaints by European blood banks over the pricing of its hepatitis and HIV tests.
Chiron, the Emeryville-based biotechnology company, said the Commission of the European Communities had accepted a joint settlement proposal made by Chiron and its European licensee, F. Hoffmann-La Roche.
In October 2001, the German Red Cross Donation Service and Working Society of Physicians filed a complaint with the commission alleging that Roche's prices for its blood-screening kits were unreasonable and should be prohibited.
The complaint was eventually joined by groups from the Netherlands, the United Kingdom, Finland and Luxembourg.
Chiron said it resolved the complaints by modifying licensing agreements that allow Hoffman-La Roche to use Chiron's technology in hepatitis C and HIV-1 blood-testing kits.
Presumably the settlement decided what was a "reasonable" price. Then again, there was a time when people set a "reasonable" price through voluntary contracts, not coercive litigation.
::: posted by Skip Oliva
at 10:18 AM | link
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Monday, July 07, 2003 :::
Antitrust News: Mass. Investigating Microsoft Settlement
Ted Bridis of the AP reports that Massachusetts is investigating whether Microsoft retaliated against a computer maker for promoting a rival operating system in violation of the company's antitrust settlement with the DOJ administration and 18 other states.
Lawyers for the state told the judge in the antitrust case that they were investigating other complaints that Microsoft might have violated the settlement. Microsoft said it was complying fully with the settlement.
In a court filing made public Monday, Massachusetts said that none of the allegations had been resolved and it would "move forward on an enforcement path should its investigations identify provable violations."
Massachusetts is the only state that has not settled its antitrust claims against the software giant. Its lawyers did not specify which computer maker might have suffered retaliation for promoting Linux software. Companies promoting Linux in varying ways have included IBM, Dell Computer Corp. and Sony Corp.
Each of the allegations against Microsoft was based on a complaint or investigative tip, state lawyers wrote.
Microsoft denied it was violating the agreement.
"We are complying fully with all terms of the decree and are working with the appropriate authorities to ensure that this consent decree is implemented," spokesman Jim Desler said.
Massachusetts has argued previously that the government's antitrust settlement was profoundly flawed. It has asked a federal appeals court to instruct the trial judge to impose tougher sanctions than those included in the settlement the judge approved.
The state also complained that its investigation of Microsoft has been hampered by the Justice Department (news - web sites) and some other states enforcing agreements that preclude any of the states from cooperating with Massachusetts.
"The exclusion of Massachusetts has been effective and complete," the state said.
A Justice Department spokeswoman declined to comment.
Massachusetts also told U.S. District Judge Colleen Kollar-Kotelly that it will establish a Web site to solicit complaints about Microsoft's behavior, set up a telephone hot line for complaints, contact technology industry groups and review news coverage of Microsoft to look for leads.
Indeed. Too bad there is not a website that solicits complaints from the victims of antitrust enforcers.
::: posted by Nicholas Provenzo
at 10:04 PM | link
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Free Speech: Washington Times Supports Nike Ruling, Denies Logic
I'm at a loss to explain it, but the Washington Times argues that the US Supreme Court's decision in the Nike commercial speech case was a victory for free speech. I sent them the following letter:
Contrary to The Washington Times position that the U.S. Supreme Court's ruling in the Nike commercial-free speech case was a positive decision ("Court gets it right on Nike," Editorial, yesterday), the court's decision was a setback for free speech. In an amicus brief to the court, my organization argued that allowing California anti-globalization activist Marc Kasky's lawsuit against Nike to proceed was a violation of the right of free speech of Nike's shareholders and employees.
Yet, rather than address Mr. Kasky's challenge to free speech directly, the court decided to send the Nike case back to California for trial, even as it admitted that a ruling against Nike would not likely be sustained on appeal. In a victory for anti-corporate crusaders, the court's decision to allow a trial means that at least for now, the right of a corporation to speak in its economic interest is in peril. Yet, just like political speech, which the court protects, economic speech is equally essential to the success of an individual's life. The Constitution should not be interpreted to uphold the sanctity of an individual's right to speak on issues affecting his political interests while simultaneously damning him when he speaks in order to advance his trade.
Until the Supreme Court recognizes the relationship between economic motives, individual rights and the Constitution's protection of all non-fraudulent and non-defamatory speech, whether private or commercial, the threat to free speech remains active. The court had an opportunity to set the record straight. It failed. Rather than be praised for its decision in the Nike case, the court ought to be condemned.
An antitrust lawsuit alleging price-fixing among four Maine blueberry processors could go to court as soon as October.
The attorney for blueberry grower Nathan Pease of Union has put legal notices in the state's largest newspapers notifying Maine's 500-plus blueberry growers they have until July 23 to exclude themselves from the class-action lawsuit.
Attorney Bill Robitzek of Lewiston said he expects the lawsuit -- which was originally filed three years ago -- to go to trial in Knox County Superior Court in Rockland this fall, possibly in late October or November.
The lawsuit accuses the processors of conspiring to set low field prices for the state's blueberry crop from 1996 through 1999.
The processors in the lawsuit are Jasper Wyman and Son, Cherryfield Foods, Merrill Blueberry Farms and Allen's Blueberry Freezer. They have denied the allegations.
One wonders why the blueberry growers, if they felt they were being cheated, didn't attempt to boycott the processors. Perhaps the reason is they feared an antitrust lawsuit from the processors. Antitrust can sometimes work both ways.
::: posted by Skip Oliva
at 9:47 AM | link
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Microsoft has yet to comply with a key provision of its government antitrust settlement, according to a progress report filed yesterday with the judge overseeing the landmark case.
A court order may be necessary "to account for Microsoft's delayed implementation," state and federal prosecutors said.
A Microsoft spokesman said the company is being cooperative and "working through the process."
But the company and government attorneys are haggling over how much Microsoft can charge for technology the company is required to share with competitors.
The report is the first public disclosure of the company's compliance with the November settlement, which largely ended the long-running case.
Government attorneys have already forced Microsoft to be more open when sharing technology.
Now they are trying to get Microsoft to lower the fees it charges to use Windows communication protocols.
One of two things is true: Either the settlement failed to set precise guidelines for what prices Microsoft could charge, or the Government is trying to placate Microsoft rivals who are constantly complaining. Of course, both premises could be true.
::: posted by Skip Oliva
at 9:42 AM | link
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