Wrapping up the 65th annual American Bar Association Section of Antitrust Law Spring Meeting today, Brent Snyder, Acting Assistant Attorney General in charge of the Department of Justice Antitrust Division, and Acting FTC Chairman Maureen K. Ohlhausen discussed where antitrust enforcement has focused in the last year and provided some predictions about the direction of the antitrust enforcement under the Trump Administration. Uncertainty about the Administration’s competition law approach arose as the antitrust community waited for word on a nominee for antitrust chief at the Department of Justice and a permanent chairman at 600 Pennsylvania Avenue.
Acting FTC Chairman Ohlhausen has spoken frequently on her enforcement priorities for the FTC, since taking the helm soon after President Trump's inauguration. Thus, her goals came as no surprise. However, there have been reports that Trump intends to pick a replacement to head the agency, but that possibility was not addressed today.
Meanwhile, Snyder, the Deputy Assistant Attorney General for criminal enforcement at the Antitrust Division in recent years, has taken on an expanded role and held down the fort during the transition. Snyder noted however, that, earlier this week, the White House officially announced its intention to nominate Makan Delrahim to serve as antitrust chief. Snyder described Delrahim as a member of the Antitrust Division family in light of his past experience at the agency.
Senate confirmation of the nominees to head the Antitrust Division or FTC will likely take some time. In the interim, the agencies will proceed with their enforcement efforts, including actions started in the Obama Administration.
Antitrust Division enforcement. Snyder took the opportunity to highlight the efforts of the agency’s trial lawyers, who tried and prevailed in five major matters between November and February. There was a total of 54 trial days. Snyder pointed out that the trial efforts will not let up. Nine more cases are scheduled for trial in 2017, with two merger cases, one civil trial, and six criminal trials.
Among the trial wins was a decision of the federal district court in Washington, D.C. to block Aetna Inc.’s $37 billion attempt to buy Humana Inc. Snyder jokingly suggested that this was his first victory as acting AAG, since the decision was announced just two hours after he was designated acting antitrust chief.
Another recent highlight mentioned by Snyder was the DirecTV settlement of allegations that it engaged in unlawful information exchanges with competitors while negotiating to carry the SportsNet LA "Dodgers Channel." A proposed final judgment was filed lasted week in the federal district court in Los Angeles to resolve a November 2016 complaint. The proposed final judgment would prohibit DirecTV and AT&T from illegally sharing confidential, forward-looking information with competitors.
Snyder also alluded to an acquisition challenge announced just yesterday. In that case, to preserve competition in the market for explosive trace detection (ETD) devices, Smiths Group plc agreed to divest Morpho Detection LLC and Morpho Detection International LLC’s global ETD business as part of its proposed $710 million acquisition of Morpho from Safran S.A. Snyder also noted a number of merger challenges that were resolved or transactions that were abandoned before trial over the last year.
On the premerger notification front, Snyder discussed significant penalties for violations of the reporting and waiting period requirements of the Hart-Scott-Rodino (HSR) Act. In July 2016, investment firm ValueAct agreed to pay a record $11 million in civil penalties and to be bound by injunctive relief designed to prevent future HSR violations. Another settlement noted involved Duke Energy Corporation.
With respect to criminal enforcement, Snyder tried to alleviate concerns over an announcement earlier this year regarding the Antitrust Division’s leniency program. In January, the Antitrust Division updated versions of its "Frequently Asked Questions About the Antitrust Division’s Leniency Program and Model Leniency Letters" (FAQs), as well as new model conditional leniency letters for corporations, for individuals, and for dual investigations. The prior FAQs and model letters were issued in 2008.
Snyder pointed out that the new FAQs clarified that, under the Antitrust Division’s "Type B" leniency policy—i.e., when leniency is granted after the Division has received information about a company’s illegal antitrust activity—the Antitrust Division has more discretion regarding the personnel of Type B Leniency applicants. Snyder noted that the goal of the leniency program is facilitate a race to the Antitrust Division by cartelists to identify cartels, which is considered in the Antitrust Division’s "Type A" leniency policy.
FTC accomplishments. Ohlhausen warned that antitrust enforcement in the health care sector will remain at the top of the FTC’s list of priorities. Victor J. Domen of the Tennessee Attorney General's Office, who chairs the National Association of Attorneys General Multistate Antitrust Task Force, echoed Ohlhausen’s view of the important of antitrust enforcement in the health care sector. It will continue to be a major focus for antitrust enforcers at the state level, he noted.
In her remarks, the acting FTC chairman referenced two important appellate court wins in hospital merger cases in the last year. In one of those matters, two of the leading providers of general acute care inpatient hospital services in Chicago’s northern suburbs—Advocate Health Care Network and NorthShore University HealthSystem—called off their planned merger in March after the federal district court issued a preliminary injunction on remand from the Seventh Circuit. In September 2016, the U.S. Court of Appeals in Philadelphia reversed a lower court’s finding that the FTC too narrowly defined the geographic market in its challenge to the proposed merger between Penn State Hershey Medical Center and Pinnacle Health System in central Pennsylvania. In that case, the lower court was directed to enter the preliminary injunction. The parties ultimately dropped that deal, as well.
Ohlhausen pointed out that she has been at the FTC during every merger challenge in the office supply sector. The other major merger victory at the FTC in the last year was the FTC’s successful effort to block Staples, Inc.’s proposed $6.3 billion acquisition of Office Depot. The deal fell through after the federal district court in Washington, D.C. preliminarily enjoined the transaction pending administrative review.
On the consumer protection side, Ohlhausen pointed to the Western Union case among others as examples of the agency’s efforts to challenge fraud. Pursuing consumer fraud will be a priority for the Commission under Ohlhausen going forward.
In January, Western Union settled FTC allegations that it violated the FTC Act and the Telemarketing Act. The agency alleged that for many years, "fraudsters" used Western Union’s money transfer system even though the company was aware of the problem, and that some Western Union agents were complicit in fraud.
Ohlhausen also reiterated her pledge for regulatory humility and focusing on consumer harm. In an earlier agency update with the FTC Bureau Directors, Thomas B. Paul, Acting FTC Bureau of Consumer Protection Director, warned that regulatory humility does not mean inaction. Rather, it refers to being prudent in how government power is used.
Ohlhausen also noted her recently announced Economic Liberty Task Force. In a February address, entitled "Advancing Economic Liberty," Ohlhausen expressed her plan to work on cutting back on government regulations that restrict consumer and business participation in the economy. Advocacy tools are very important in this space, according to the acting chair. The agency is looking to work with other agencies, state and federal, to limit excessive burdens placed on legitimate business and the American public.
Domen commented that NAAG has been asked to be involved in this process and that the states want to work with the FTC to promote competition. He noted, however, that it will take some work to overcome some of the hurdles that could come up from licensing boards that see the need for continued regulation.
European Competition Commission perspective. Another panelist, European Commission (EC) Competition Commissioner Margrethe Vestager discussed a number of its current priorities, including its inquiry into whether Google is excluding rivals. She also noted the EC’s decision in July 2016 to fine truck makers a record €2.9 billion for a cartel that lasted 14 years. On the merger front, Vestager discussed the growing number and complexity of the deals being reviewed. Among the mergers discussed was the recently-approved (by the EC) of the merger between U.S.-based chemical companies Dow Chemical and E.I. du Pont de Nemours, which was announced on March 27. She also noted that the EC will continue to keep working on refining its procedures.
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