As we previously reported here, the FTC recently filed suit to challenge Staples’ $6.3 billion bid for Office Depot. In response to the FTC’s challenge, Staples offered to divest up to $1.25 billion in commercial contracts to ease concerns about reduced competition and higher prices in the market to service the office supply needs of large companies. The FTC rejected this concession without making a counteroffer. While Judge Emmet G. Sullivan, who is overseeing the case, said he was “frustrated” by the FTC’s refusal to negotiate, the parties are now inching closer to their May 10, 2016 trial date.
The Federal Trade Commission (FTC) last week challenged Staples' $6.3 billion bid for Office Depot, claiming that the proposed merger would significantly reduce competition nationwide in the market for office supplies to large companies. Large companies rely on competition between the two suppliers to hold down the cost of items such as pens, pencils, notepads, sticky notes, file folders, paper clips, and paper used for printers and copy machines, the FTC said.
Just over two months ago, the United States Department of Justice made waves when a memorandum from Deputy Attorney General Sally Quillian Yates (the “Yates Memo”) announced an increased focus on individual accountability to combat corporate misconduct. The Yates Memo explains DOJ’s view that individual accountability is important because it deters future illegal activity, incentivizes changes in corporate behavior, ensures the proper parties are held responsible for their actions, and promotes the public’s confidence in the justice system.
FTC Asserts That Its Failure to Object to a “Reverse Payment” Settlement Should Not Be Interpreted as Approval
On November 17, 2015, the FTC submitted an amicus brief to the Third Circuit Court of Appeals in In re Effexor XR Antitrust Litigation, where the district court had dismissed the plaintiffs’ claims of antitrust violations based on an alleged reverse payment under FTC v. Actavis, Inc., 133 S. Ct. 2223 (2013). In its brief, the FTC argues that its failure to object to a pharmaceutical patent settlement should play no role whatsoever in evaluating the legality of alleged reverse payments, and urged the Third Circuit to reverse the district court’s decision to the extent it relied on such considerations.
FTC Provides Guidance on State Regulatory Board Antitrust Liability Following Supreme Court Decision
Earlier this year, we covered the Supreme Court’s decision in North Carolina State Board of Dental Examiners v. FTC, which held that a state regulatory board composed of “active market participants” was not immune to federal antitrust laws unless the state “actively supervised” the board. We noted that the Court left open what level of active supervision would be required for a state board to enjoy antitrust immunity.
Drug company Turing Pharmaceuticals made headlines recently when it reportedly raised the price of Daraprim, used commonly by AIDS patients to fight life-threatening infections, from $13.50 to $750 per tablet. Amidst vociferous protest, the company agreed to reduce the price. But the attention garnered by media reports has led to some allegations that Turing may have run afoul of antitrust laws through a less-publicized aspect of its marketing of Daraprim: the elimination of certain distribution channels, including wholesalers and retailers.
In a recent speech, FTC Bureau of Competition Director Deborah Feinstein discussed the FTC’s approach to analyzing claims by merging parties that a merger will benefit consumers by creating efficiencies.
Our Antitrust practice group recently co-authored a series of articles in Inside Counsel discussing major antitrust issues facing in-house counsel today. Our articles expand on topics that we have covered in this blog, including the Actavis litigation, the change in the competition landscape across the globe and antitrust reforms in Europe and Asia, antitrust enforcement in e-commerce, the implications of the Supreme Court’s decision in North Carolina State Board of Dental Examiners on antitrust liability for professional boards, and the Department of Justice’s recent guidance on antitrust compliance programs.
The FTC’s Bureau of Competition recently issued new “Best Practices” guidance for parties involved in merger investigations. This is the Commission’s first guidance on the merger review process since the Merger Process Reforms were issued in 2006. As the Commission explains, it issued the updated guidance because parties rarely have been invoking the Merger Process Reforms and also have been relying on the “withdraw and refile” process in the initial review period of Hart-Scott-Rodino filings.
Last month, the Associated Press was the first to report that the DOJ is investigating whether American Airlines, Delta Air Lines, Southwest Airlines, and United Airlines have engaged in collusion. Since that time, there has been much speculation in the press about the DOJ’s investigation. But given that the investigation is not a public proceeding, what do we really know?
This is our fourth post on the DOJ’s expanding investigation into possible price fixing by generic drug manufacturers. Since our last update, the DOJ has subpoenaed Allergan Plc’s Actavis unit. In its August 6, 2015, 8-K, Allergan disclosed that it had received a subpoena from the DOJ “seeking information relating to the marketing and pricing of certain of the Company’s generic products and communications with competitors about such products.” As the fourth largest distributor of pharmaceuticals in the U.S., Allergan is the largest company that has been targeted by the DOJ.
Chairwoman Edith Ramirez has announced the FTC’s new policy concerning its enforcement authority under Section 5 of the Federal Trade Commission Act, in particular Section 5’s prohibition of “unfair methods of competition.”
We have been following developments in People of the State of New York v. Actavis, the New York Attorney General’s “product hopping” suit against Actavis and its subsidiary, Forest Laboratories LLC (together, “Actavis”). Now, an FTC Commissioner and a D.C. Circuit Judge have weighed in as well—and they are criticizing a key portion of the Second Circuit’s ruling.
The U.S. Department of Justice’s Antitrust Division has filed a civil suit to block the acquisition of General Electric’s appliance business by Electrolux. According to the complaint, the U.S. market for cooking appliances—specifically ovens, cooktops, and ranges—is dominated by GE, Electrolux (which manufactures the Frigidaire brand), and Whirlpool.
Together with the State of Michigan, the United States Department of Justice’s Antitrust Division has filed a civil suit against four Michigan hospital systems for allegedly agreeing to limit marketing in each other’s territories. Three of the hospital systems—Hillsdale Community Health Center, Community Health Center of Branch County, and ProMedica Health System—have agreed to settle the charges.
We have previously posted about United States v. Apple, Inc., a blockbuster trial that ended with Judge Denise Cote of the Southern District of New York concluding that Apple had conspired with five publishing companies to raise the price of e-books. At oral argument before the Second Circuit, the panel hearing Apple’s appeal seemed particularly interested in whether the district court had erred in applying the relatively lenient per se standard rather than the rule of reason, under which the plaintiffs would have had to prove that the anti-competitive injury caused by Apple outweighed any pro-competitive benefits of its conduct.
As we previously reported, the FTC sought a preliminary injunction to block a merger between Sysco and U.S. Foods pending the outcome of its administrative trial challenging the deal. Yesterday, Judge Amit Mehta of the federal district court for the District of Columbia granted the agency’s request, finding that “there is a reasonable probability that the proposed merger will substantially impair competition in the national customer and local broadline markets and that the equities weigh in favor of injunctive relief.”
Earlier today the U.S. Court of Appeals for the Second Circuit issued an order denying American Express’s motion for a stay of an injunction requiring AmEx to modify its rules prohibiting merchants from steering customers to other credit cards.
Today the United States Supreme Court denied certiorari in two cases, Motorola Mobility LLC v. AU Optronics et al. and Hsiung and AU Optronics Corp. America Inc. v. United States, declining to resolve a closely watched circuit split on the applicability of the Foreign Trade Antitrust Improvements Act (“FTAIA”) in regulating foreign conduct.
The head of the Department of Justice’s criminal antitrust unit called Monday for greater international cooperation in limiting the cost for companies to cooperate with investigators. Deputy Assistant Attorney General Brent Snyder’s remarks come on the heels of Canadian Competition Commissioner John Pecman’s speech urging development of a “longer term strategic plan” for international antitrust cooperation.
AU Optronics Corp. (“AUO”) filed a petition for a writ of certiori in Hui Hsiung, et al. v. United States of America on March 16, 2015, seeking Supreme Court review of the Ninth Circuit’s 2014 decision that upheld the convictions of AUO and its former executives for their participation in a global cartel to fix the price of liquid crystal display (“LCD”) panels. The United States Department of Justice, Antitrust Division, which had tried AUO and its former executives in the district court in San Francisco, filed its brief in opposition to the petition on May 15, 2015, and petitioners filed a reply on May 22, 2015.
Last Thursday, American Express appealed the District Court for the Eastern District of New York’s February ruling that its anti-steering rules violated Section 1 of the Sherman Act. The court entered a permanent injunction in April requiring American Express to change its anti-steering rules and allow merchants to steer customers to use other credit cards or other forms of payment.
This is the second installment in our coverage of the DOJ’s recent criminal cartel enforcement actions. Over the last six months, more than fifty individuals have pleaded guilty as a result of the DOJ’s antitrust investigations into real estate bid rigging.
Since we last reported on the generic pricing investigations, the investigations have expanded. Par Pharmaceutical Companies, Inc. disclosed in its March 13, 2015 Annual Report that it had received a December 5, 2014 subpoena from the DOJ’s Antitrust Division that sought “communications with competitors regarding [Par’s] authorized generic version of Covis’s Lanoxin® (digoxin) oral tablets and [Par’s] generic doxycycline products.”
Today we bring you the first part of our second biennial update on DOJ criminal actions in the cartel area. This has been a busy six months for the Antitrust Division, so we are breaking this update up into installments. Today, we look at auto parts.
Promoting competition among health care providers remains a top priority for the Federal Trade Commission and it is expected that the FTC will continue to challenge mergers in the health care industry.
In what it is calling the Antitrust Division’s “first criminal prosecution against a conspiracy specifically targeting e-commerce,” the Department of Justice has announced that an individual has agreed to plead guilty to charges that he conspired to fix the prices of wall posters sold online through Amazon Marketplace. The matter is United States v. Topkins, No. 15 Cr. 201 (N.D. Cal.).
St. Luke’s Health System and Saltzer Medical Group last week asked the full Ninth Circuit to reconsider its ruling that their merger violated federal antitrust laws.
A federal judge in Washington, DC ruled last week that the FTC must disclose the names of the individuals it relied on in its bid to block a proposed $3.5 billion merger between Sysco and US Foods. The FTC attached under seal 92 declarations and an exhibit list identifying the names and affiliations of the declarants to its motion for a preliminary injunction halting the merger.
In In re Lipitor Antitrust Litigation, No. 12 Civ. 2389 (D.N.J.), U.S. District Judge Peter G. Sheridan has confirmed his prior ruling that under the Supreme Court’s decisions in Twombly, Iqbal, and FTC v. Actavis, Inc., 133 S. Ct. 2223 (2013), plaintiffs claiming an antitrust violation based on a non-monetary settlement must allege the value of the settlement to survive dismissal of their complaint.
On Tuesday, March 10, 2015, an employee of the Japan-based Nippon Yusen Kabushiki Kaisha (NYK) pleaded guilty to a violation of the Sherman Act for conspiring to fix prices and rig bids for international ocean shipping from approximately 2004 through 2012. Susumu Tanaka, formerly a manager, deputy general manager and general manager in NYK’s car carrier division, received a 15-month prison sentence and will pay a $20,000 criminal fine.
The Supreme Court has been urged to resolve a circuit split concerning the reach of the Foreign Trade Antitrust Improvements Act (FTAIA) to foreign conduct that may affect U.S. commerce. Motorola this week filed a petition for certiorari in a Seventh Circuit case interpreting the FTAIA as barring Sherman Act claims arising out of the foreign conduct of an alleged liquid crystal display (LCD) panel cartel.
The Federal Trade Commission (FTC) went head-to-head last week with Sysco Corp. and US Foods Inc. over whether to make public the names of the declarants relied on by the FTC in its preliminary injunction to block Sysco and US Foods’ merger. Sysco and US Foods filed a motion in a Washington, D.C. federal district court on March 6 asking the judge to publicize the names, which the FTC quickly opposed.
This past Wednesday, Judge Amit Mehta of the U.S. District Court for the District of Columbia set a hearing from May 5 through May 8, with up to three additional days if necessary, to consider the FTC’s request for a preliminary injunction to block Sysco Corp. and U.S. Foods, Inc. from merging prior to the conclusion of the FTC’s administrative trial.
DOJ and FTC Announce Proactive Approach to Monitoring Post-Affordable Care Act Antitrust Compliance at Joint Workshop
On February 24 and 25, the DOJ and FTC held their second joint workshop to examine the state of health care competition in the United States. The workshop explored five main themes: (1) early observations regarding accountable care organizations; (2) alternatives to traditional fee-for-service payment models; (3) trends in provider consolidation; (4) trends in provider network and benefit design strategies; and (5) early observations regarding health insurance exchanges.
Supreme Court Finds that Regulatory Boards Composed of “Active Market Participants” are Subject to Antitrust Laws if Not Actively Supervised by the State
Yesterday, the Supreme Court issued its ruling in North Carolina State Board of Dental Examiners v. FTC, finding that North Carolina’s state board of dental examiners was subject to antitrust scrutiny under the Sherman Act and Federal Trade Commission Act. In reaching that decision, the court found that a state agency composed of “active market participants”—here, a board responsible for supervising the practice of dentistry composed primarily of practicing dentists—was not immune to federal antitrust laws as a sovereign actor unless the state “actively supervised” that agency. The Court left open, however, just what sort of active supervision might be required.
Since we last reported on state and federal investigations into recent generic drug price increases, the investigations have moved forward against Philadelphia-based Lannett Co. On November 20, a Senate healthcare subcommittee convened a hearing to address why the prices of certain generic drugs had skyrocketed.
Court Rules Against American Express Based on Both Direct and Indirect Evidence of Harm to Competition
On February 19, 2015, the District Court for the Eastern District of New York issued its ruling on liability in United States v. American Express. Following a seven-week trial, the Court found that American Express violated Section 1 of the Sherman Act by imposing certain restrictions on merchants that prevent the merchants from offering their customers incentives to use competing credit cards with lower retail charges.
The Ninth Circuit on Tuesday held that St. Luke’s Health System’s purchase of a physician practice group violated federal antitrust laws. In doing so, it upheld a district court’s order that the merger be dissolved.
Bill Baer, the Assistant Attorney General in charge of the DOJ Antitrust Division, spoke about the DOJ’s antitrust enforcement priorities last Friday, February 6, at a speech in Miami. AAG Baer emphasized three priorities: exercising patience with market flux due to new disruptive new industry sectors, giving meaningful guidance to the business community, and crafting structural remedies as part of their merger enforcement efforts.
On December 1, 2014, we wrote about the Seventh Circuit’s decision in Motorola Mobility LLC v. AU Optronics Corp., which affirmed dismissal of the vast majority of Motorola’s claims regarding LCD panels.
We’ve previously written about the components of effective antitrust compliance programs and the potential benefits corporations may achieve by adopting them. In drafting compliance programs, however, corporations should be aware that the attorney-client privilege may not protect a compliance policy from disclosure in litigation.
The Federal Trade Commission staff recently issued a report detailing the number of “potential pay-for-delay settlements” that took place in fiscal year 2013. The FTC is a staunch opponent of so-called “pay-for-delay”—also known as “reverse payment”—settlements.
Seventh Circuit Affirms Dismissal of 99% of Motorola’s Claims in LCD Case Based on Motorola’s Lack of Standing
On the day before Thanksgiving—less than two weeks after oral argument—the Seventh Circuit issued its ruling on Motorola’s interlocutory appeal in Motorola Mobility LLC v. AU Optronics Corp., affirming dismissal of the vast majority of Motorola’s claims regarding LCD panels.
On November 12, 2014, the parties in Motorola Mobility v. AU Optronics reargued their case to a three judge panel of the Seventh Circuit – the same panel that ruled on the case earlier this year. The United States Department of Justice (“DOJ”) also had the opportunity to argue its position in this closely-watched Foreign Trade Antitrust Improvements Act (“FTAIA”) case.
Drug manufacturers Impax Laboratories and Lannett Company have come under public scrutiny and, more recently, criminal investigation for their recent generic drug price increases. The companies disclosed in recent SEC filings that the U.S. Department of Justice has issued grand jury subpoenas to Impax and Lannett employees seeking information related to their communications with competitors concerning “the sale of generic prescription medications.”
Motorola Oral Arguments Today – Will the Seventh Circuit Revise Its Interpretation of the FTAIA, and If so, How?
Today the Seventh Circuit Court of Appeals hears oral argument from the parties and amicus curiae the United States concerning the reach of the Foreign Trade Antitrust Improvements Act (“FTAIA”), 15 U.S.C. § 6a, in Motorola Mobility LLC v. AU Optronics. Last March, as we’ve written previously, the court ruled against Motorola in an interlocutory appeal concerning the FTAIA’s application to offshore components manufacturers. The court subsequently withdrew its opinion, denied a petition for en banc review, and ordered oral argument.
This is the first in what we expect to be a series of updates on DOJ criminal actions in the cartel area. Here, we look at highlights over the last six months in the DOJ’s investigations of the auto parts industry, LIBOR, and municipal real estate auctions.
FTC Commissioner Julie Brill discussed the agency’s competition and consumer protection priorities in her keynote address last Thursday at the ABA’s Antitrust Fall Forum at the National Press Club in Washington. Brill led off with an ode to the antitrust ideals of the Progressive Era – with plenty of references to Justice Brandeis – and focused primarily on health care efforts, emphasizing that the FTC and the Affordable Care Act have the same goals of “promoting high quality and cost-effective health care.”
The plaintiffs’ antitrust claims in the New Jersey municipal tax lien auction bid-rigging class action may proceed, the federal judge presiding over the litigation has ruled.
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