Dykema Succeeds in Dismissing Antitrust Claim Against Saab Barracuda LLC in Antitrust Victory

Press Releases

3.08.12

DETROIT— Dykema, a leading national law firm, successfully represented Saab Barracuda LLC (Saab). Saab, a defense subsidiary of Saab AB, is located in Lillington, North Carolina and is a manufacturer of radar-scattering camouflage units. In an action filed by Saab’s competitor, GMA Cover Corp., alleging tortious interference and attempted monopolization, on February 8, a U.S. Magistrate Judge in the Eastern District of Michigan issued a report and recommendation to dismiss all claims. GMA Cover Corp. v. Saab Barracuda LLC, (E.D. Mich. No. 10-12060, February 8, 2012).

Plaintiff alleged that Saab violated Section 2 of the Sherman Act by submitting allegedly predatory bids for Ultra Lightweight Camouflage Net Systems (ULCANS) to the U.S. Army. Plaintiff also alleged that Saab made false statements to the U.S. Army investigators. GMA also included a tortuous interference claim and sought approximately $70 million in damages.

In his recommendation of dismissal, U.S. Magistrate Judge Paul Komives rejected the monopolization claim because GMA did not allege facts that plausibly demonstrated that it had a reasonable expectation that it could “recoup” its investment in predatory pricing by later raising prices to monopoly levels.

The court noted that the case presented a “unique situation,” not addressed by any cases or commentators. The court noted that, as a matter of law, there could not be a reasonable expectation of recoupment because: (1) the market is a “bilateral monopoly,” where the buyer is an end-user monopsonist; (2) the underlying contract had an established ceiling price, not alleged to be at monopoly levels; (3) the U.S. Army had significant regulatory power to prevent “buying-in” through below cost pricing; (4) it was not clear that Saab had the capacity to absorb the extra demand; and (5) GMA was not, in fact, driven out of the market. Additionally, the court, following established precedent, rejected the claim that Saab spread false information on the basis of the Noerr-Pennington doctrine, which immunizes certain petitioning activity from antitrust and other tort claims. The tortious interference claim also failed because the underlying antitrust claim failed, and the plaintiff did not otherwise allege with Rule 9 specificity, a per se wrong act.

“We are proud of this result,” said Howard B. Iwrey, lead counsel for Saab and leader of Dykema’s Antitrust and Trade Regulation practice. “This decision could have major implications, especially for government contractors. We are pleased to have worked with Saab to see this matter through to a favorable completion.”

Iwrey, along with Howard E. O’Leary, Jr. and David J. Council, both attorneys in Dykema’s national Litigation practice, handled this matter.

Dykema’s national Antitrust and Trade Regulation Practice Group was recently named to the Law360 Competition 100, a list of the 100 largest Competition practices in the U.S. Dykema also has the largest Competition practice of any firm based in Michigan.