Shearman & Sterling is pleased to announce a victory for its client SS&C Technologies, Inc. in an antitrust case in the United States District Court for the Southern District of New York.
Judge Mary Kay Vyskocil granted Defendants’ motions to dismiss in its entirety. The ten-count complaint alleged that SS&C violated, inter alia, Sections 1 and 2 of the Sherman Act by refusing to renew a software license with one of its competitors and engaging in so-called “exclusive dealing arrangements” that allegedly foreclosed the competitor from the marketplace.
In dismissing the antitrust claims, the Court focused on the question of antitrust standing, concluding that plaintiff, Arcesium, failed to demonstrate either of the two antitrust standing requirements: that plaintiff suffered an “antitrust injury,” or that plaintiff was an “efficient enforcer” of the antitrust laws. The Court specifically rejected Arcesium’s claim that the alleged exclusion of its allegedly superior product showed market-wide harm, holding that “a plaintiff cannot simply plead that its products are superior; in order to have antitrust standing a plaintiff must plead facts that show how the quality of products in the market as a whole will decline because Defendants conduct.” The Court also rejected Arcesium’s argument that SS&C’s non-renewal and termination of the Reseller Agreement were anticompetitive, emphasizing that refusing to renew a license to copyrighted software is “precisely…the kind of business decision Defendants are permitted to make as owners of Geneva.” In so holding, the Court distinguished Arcesium’s allegations from those in Aspen Skiing Co. v. Aspen Highlands Skiing Corp., 472 U.S. 585 (1985), in which the Supreme Court recognized a “narrow exception” to the fundamental antitrust principle that there is no antitrust duty to deal with a competitor. The Court held that SS&C’s conduct did not fall within this narrow exception because SS&C engaged in renewal discussions with Arcesium and, more importantly, because the complaint established that, unlike Aspen Skiing, other firms competed in both the alleged portfolio accounting software and post-trade solutions markets. The Court similarly held that allegations that SS&C engaged in “exclusive dealing arrangements,” which allegedly prohibited customers who used Geneva from working with Arcesium or using Arcesium to manage Geneva, did not establish antitrust injury because they did not “make Arcesium's participation in the market impossible or otherwise lead to anticompetitive harm,” and did not establish substantial exclusion from the market.
The Court further concluded that the antitrust standing was not satisfied for the related but distinct reason that Arcesium was not an “efficient enforcer” of the antitrust laws. Among other things, the Court found that Arcesium’s alleged injuries with regard to at least the exclusive dealing allegations were indirect, and that its damages were both (i) “highly speculative” because they would “necessarily turn on several assumptions about what third parties would have done if the circumstances were different,” and (ii) potentially duplicative.