Credit Suisse Securities v. Billing
Billing and a class of similarly situated plaintiffs sued a group of the nation’s leading underwriting firms alleging violations of the Sherman Act, the Robinson-Patman Act, and state antitrust laws. The Plaintiffs claim that the underwriting firms entered into illegal contracts with purchasers of securities distributed in initial public offerings (IPOs), and that through these contracts, the underwriting firms grossly inflated the price of the securities after the IPOs in the so-called aftermarket. Plaintiffs contend that the firms capitalized on this artificial inflation of price, profiting at the expense of the investing public.
In the district court, the underwriters argued that, even assuming plaintiffs’ allegations are true, only securities laws–not antiturst laws–could provide a remedy. The district court agreed, holding that the securities laws impliedly repealed federal antitrust laws and preempted state antitrust laws regarding the alleged conduct. It dismissed the complaints. The Second Circuit Court of Appeals reversed, finding that the defendants did not have implied immunity from antitrust claims based on securities laws. It reasoned that the allegedly illegal behavior–tie-in agreements that would require purchasers either (1) to pay inflated commissions on trades of other securities, (2) to purchase the issuer’s shares in follow-up or secondary public offerings, (3) to purchase less attractive securities, or (4) to execute "laddering" transactions–was not authorized by the securities laws, and thus there was no implied repeal of the antitrust laws to the tie-in agreements.
Plaintiffs accuse defendants, 16 of the country’s largest underwriters and institutional investors, of a vast antitrust conspiracy to manipulate the aftermarket prices of some 900 technology stocks sold in initial public offerings. The Securities and Exchange Commission, relying on this Court’s decisions in United States v. National Ass’n of Securities Dealers, 422 U.S. 694 (1975), and Gordon v. New York Stock Exchange, 422 U.S. 659 (1975), informed the courts below that application of the antitrust laws here would conflict with and seriously disrupt its regulation of the securities offering process under the Securities Act of 1933 and Securities Exchange Act of 1934. The district court agreed with the SEC that implied antitrust immunity is required and dismissed the complaints. The court of appeals reversed, ruling that immunity is unavailable because Congress did not specifically consider and decide to immunize one practice challenged in the complaints–tie-in agreements allegedly requiring recipients of stock in an IPO to engage in other transactions.
The question presented is:
Whether, in a private damages action under the antitrust laws challenging conduct that occurs in a highly regulated securities offering, the standard for implying antitrust immunity is the potential for conflict with the securities laws or, as the Second Circuit held, a specific expression of congressional intent to immunize such conduct and a showing that the SEC has power to compel the specific practices at issue.