Heads of Antitrust Division, FTC tout enforcement records at ABA Spring Meeting
By Jeffrey May, J.D.
Bill Baer, Assistant Attorney General in charge of the Department of Justice Antitrust Division, touted the Obama Administration’s antitrust record today at the American Bar Association Section of Antitrust Law Spring Meeting’s “Enforcers Roundtable.” Baer was joined on the panel by Edith Ramirez—chairwoman of the FTC—who spoke of that agency’s “incredibly busy year,” as well as Victor J. Domen Jr., Chair of the National Association of Attorneys General Multistate Antitrust Task Force; John Pecman, Commissioner of Competition at the Canada Competition Bureau; and Margrethe Vestager, European Commission Competition Commissioner.
In the last seven years, the Department of Justice blocked—or forced parties to abandon—32 mergers. The previous administration blocked only 10, according to Baer. In light of the merger wave and the explosion of mega-deals, Baer said that the agency is more like to act where the deals are “more complex” and where “more markets are involved.”
One particular success in the merger enforcement area was the recent decision of United Airlines, after several months of litigation, to abandon its efforts to bolster its monopoly at Newark Airport through slot acquisitions. Baer did not discuss another high profile case to block Halliburton Co.’s proposed acquisition of Baker Hughes Inc. in the oil and gas sector, which was announced just this week.
On the criminal enforcement side, there has been more than $8.5 billion in criminal fines during the Obama Administration, with fines of $3.6 billion in Fiscal Year 2015. Baer noted that the high number for this past year was largely due to the foreign currency exchange price fixing investigation. The probe of some of the world’s largest banks secured record-setting criminal fines last year. Baer also pointed out that, during the Obama Administration, 144 companies and 425 individuals have been charged in criminal antitrust matters.
In the civil non-merger enforcement area, Baer noted the finality of the Apple e-books matter, with the U.S. Supreme Court’s recent denial of certiorari in that case. As a result, Apple must pay $400 million to e-book purchasers under a settlement. When combined with the $166 million previously paid by the conspiring publishers, Apple’s payment brings to $566 million the amounts repaid to e-book customers, Baer noted. The antitrust chief suggested that practitioners look to the agency’s annual update for details on these and other enforcement efforts.
Noting that his remarks “could be a last, last word,” Baer said that working with the Antitrust Division was a “privilege of a lifetime.” Baer was alluding to his likely promotion within the Justice Department. While it has not been officially announced, it is expected that Baer will move to the associate attorney general position at the Justice Department, in light of the departure of Stuart Delery.
FTC enforcement. FTC Chairwoman Edith Ramirez also talked about the agency’s active merger enforcement program. The agency is currently in the middle of four significant merger challenges, she said. In addition to actions against three hospital combinations, the FTC is seeking to block the combination of office supply sellers Staples Inc. and Office Depot, Inc.
Ramirez also offered some practical advice for practitioners in the mergers and acquisitions area. She warned that a proposed fix offered by merging parties must resolve the agency’s competition concerns. Otherwise, the FTC will “go to the mat and pursue a challenge in court.” Ramirez pointed to the proposed fix to Sysco’s proposed acquisition of its rival US Foods. The FTC was not satisfied with that proposal and successfully blocked the deal.
Another high-profile matter discussed was the landmark settlement reached on the eve of trial in an action against Cephalon, Inc. Under the $1.2 billion settlement, Cephalon and its parent company, Teva Pharmaceutical Industries Ltd., agreed to settle a long-running “pay-for-delay” action brought by the FTC over alleged efforts to block generic competition for the blockbuster sleep-disorder drug Provigil. Ramirez also highlighted a more recent reverse-payment suit against Endo Pharmaceuticals Inc. for allegedly orchestrating agreements with potential generic competitors to block lower-cost generic alternatives to its two most important branded prescription drug products—opioid Opana ER and pain-relief patch Lidoderm.
The chairwoman also pointed to the FTC’s case against pipe fittings supplier McWane, Inc., which recently ended with the Supreme Court’s denial of a petition for certiorari, as an example of the agency’s willingness to intervene if a dominant firm is engaging in exclusionary practices. Ramirez commended the agency’s recently released highlights for additional information on these and other enforcement actions.
On the consumer protection side, she cited the agency’s case against Volkswagen over its “clean diesel” advertising campaign, which is focused on obtaining consumer redress for affected consumers, as well as an action against operators of DeVry University for deceptive recruitment claims.
International enforcement. Vestager and Pecman reiterated the U.S. enforcers’ views about the impact of the increased merger activity and the benefits of international cooperation in this area.
Pecman pointed to the recently announced settlements by Australia, Canada, and the United States, resolving a challenge to Iron Mountain Inc.’s acquisition of Recall Holdings Ltd. in the records management sector, as an example of international cooperation.
Vestager noted the pick-up in merger activity in Europe in 2015. The EC has seen the highest activity since 2007. Like Ramirez, Vestager encouraged merging parties to be prepared for offering solutions to resolve competition concerns. The competition commissioner also expressed her view that this is a lasting trend. She envisioned seeing more mergers and more complex mergers in the future.
State enforcement. Tennessee Assistant Attorney General Domen offered the state enforcers’ perspective. In addition to discussing joint efforts with federal antitrust enforcers, Domen identified some enforcement actions by states that were acting alone, including a recent action against contact lens maker Johnson & Johnson Vision Care, Inc. for allegedly violating the state's antitrust law through resale price maintenance. He also mentioned New York's settlement of an antitrust lawsuit against Allergan plc (previously Actavis plc), alleging that Allergan, the distributor of Alzheimer’s drug Namenda IR, forced Alzheimer’s patients to switch medications as part of a strategy to maintain high drug prices.
In addition, Domen noted the significant activity of state enforcers in working to defend state boards and commissions when they have been sued for alleged anticompetitive conduct in the wake of the U.S. Supreme Court’s North Carolina Dental decision.
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