Antitrust Law Daily Government shutdown suspends FTC administrative proceedings, but Qualcomm trial on track
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Friday, January 4, 2019

Government shutdown suspends FTC administrative proceedings, but Qualcomm trial on track

By Jody Coultas, J.D.

The FTC, which was able to continue operating using unexpended resources for about a week after the continuing resolution funding its operations and that of many other federal departments and agencies expired, closed as of December 28, 2018, suspending all non-merger related investigations.

Pending administrative matters related to Impax Laboratories, Inc.Otto Bock HealthCare North America, Inc.Benco Dental Supply Co. and Henry Schein, Inc., and Tronox Limited have all been stayed until five days after the federal government returns to business.

Despite the shutdown, a bench trial has begun in the FTC’s lawsuit against Qualcomm, Inc. alleging that the company violated federal antitrust laws by leveraging its power in the modem chips market to impose unfair patent licensing terms and hurting chip-seller competition in the federal district court in San Jose, California. In Judge Lucy H. Koh's courtroom, trials are held Mondays, Tuesdays, and Fridays. It is expected to wrap up by the end of the month.

The agency has been busy with last-minute preparations in the case. On Thursday, the FTC submitted its high priority responses and responded to Qualcomm’s high priority objections. Also, the court issued a stipulation and order concerning exclusion of fact witnesses from the courtroom. Every fact witness shall be excluded from the courtroom until after he or she testifies.

D-Link litigation. Although the Qualcomm case appears to be moving forward as planned, not all FTC court actions may share the same fate. In light of the shutdown, the FTC asked federal district court in San Francisco to put a hold on a court action against a computer networking equipment manufacturer that allegedly misrepresented the data security of its products in violation of the FTC Act. The court today ordered that a bench trial in the case against D-Link Systems, Inc. will begin on January 14, unless the government shutdown is still in place as of 12:00 p.m. California time on January 7. In the meantime, the case has been referred to a magistrate judge Jacqueline for settlement proceedings.

Hearings, do-not-call registry. Until further notice, FTC events such as its series of hearings on competition and consumer protection in the 21st century, are postponed. Neither consumers nor telemarketers will be able to use the National Do-Not-Call Registry while the agency is closed, and consumers will not be able to report identity theft through identitytheft.gov. Parties will still be able to file premerger notifications under the Hart-Scott-Rodino Act, but early termination of waiting periods will not be granted during the shutdown, the FTC said.

Attorneys: Jennifer Milici, Joseph R. Baker, Elizabeth A. Gillen, Nathaniel M. Hopkin, Daniel Matheson, and Mark J. Woodward for the Federal Trade Commission. Willard K. Tom, Richard S. Taffet, and Geoffrey T. Holtz (Morgan, Lewis & Bockius LLP), Gary A. Bornstein (Cravath, Swaine & Moore LLP), and Robert A. Van Nest, Eugene M. Paige, and Justina K. Sessions (Keker, Van Nest & Peters LLP) for Qualcomm Inc.

Companies: D-Link Systems, Inc.; Qualcomm, Inc.; Impax Laboratories, Inc.; Otto Bock HealthCare North America, Inc.; Benco Dental Supply Co.; Henry Schein, Inc.; Tronox Ltd.

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