European competition authorities announced this week an investigation into Aspen Pharmacare’s recent price hikes of five cancer drugs. The European Commission said in a press release that it had “information indicating that Aspen has imposed very significant and unjustified price increases of up to several hundred percent.” The Commission is also looking into reports that the South African-based generic drug-maker withdrew or threatened to withdraw the drugs from countries that would not accept these price hikes. If the investigation demonstrates that Aspen abused its alleged dominant market position to increase prices, the Commission could order fines of up to 10 percent of the company’s yearly revenue.
In a split decision, on April 28, 2017, the Court of Appeals for the District of Columbia Circuit affirmed the district court’s decision to issue a permanent injunction blocking the merger of Anthem, Inc. and Cigna Corp., two of the nation’s largest health insurance providers. As we’ve previously written, in July 2016, the Department of Justice and attorneys general from multiple states sued to halt the merger pursuant to Section 7 of the Clayton Act, alleging that it would substantially lessen competition in the market for employers purchasing insurance for more than 5,000 employees ( “national accounts”) in multiple states and employers purchasing insurance for more than 50 employees (“large group employers”) in Richmond, Virginia. After a six-week bench trial, the district court enjoined the merger on the basis of its likely substantial anticompetitive effects in both markets.
The Antitrust Division recently issued its 2017 annual spring update.
The update emphasizes the Division’s recent litigation victories, particularly in the merger context. In his introductory remarks, Assistant Attorney General Brett Snyder noted the Division’s litigation docket is more active—on both the civil and criminal sides—than it has been in recent years.
For the third straight legislative session, the House Judiciary Committee has voted in favor of a bill—the Standard Merger and Acquisition Reviews Through Equal Rules (“SMARTER”) Act—that would amend the Clayton Act and Federal Trade Commission Act to align the standards and processes for the Federal Trade Commission’s (FTC) and Department of Justice’s (DOJ) review of proposed mergers and acquisitions. The SMARTER Act aims to eliminate the current differences in merger review that companies may face depending on whether the proposed merger is reviewed by the DOJ or the FTC.
The incentive is high to identify a Sherman Act violation in your competitor’s conduct—three times higher, to be precise, than to bring a claim for an ordinary business tort or even a false advertising claim under the Lanham Act. But as we noted in December, the Fifth Circuit recently refused to recognize a claim for attempted monopolization under Section 2 based on a defendant’s false advertising “absent a demonstration that [the] false advertisements had the potential to eliminate, or did in fact eliminate, competition.” The court relied on a prior decision in which it expressed “extreme reluctance to allow a treble damage verdict to rest upon business torts alone.” The case is Retractable Technologies, Inc. v. Becton Dickinson & Co.
Media outlets have reported that the U.S. Department of Justice raided the maritime industry’s “Box Club” meeting, which is more formally known as the meeting of the International Council of Containership Operators. Box Club meetings include the CEOs of all major container lines, and even though the meeting locations are not publicly disclosed, the DOJ managed to serve subpoenas in mid-March at the San Francisco meeting, including top executives at A.P. Moller-Maersk, Evergreen, the Orient Overseas Container Line, and Hapag Lloyd. Notably, the subpoena recipients are not U.S.-based companies—the DOJ may have used the Box Club meeting as an opportunity to exercise its subpoena power over foreign entities.
Since we last reported on the state and federal government’s generic drug pricing investigations and litigations (click here to read more), the U.S. Department of Justice (“DOJ”) has obtained its first guilty pleas. On January 9, 2017, Heritage Pharmaceutical Inc.’s former CEO and its former president (the defendants are brothers-in-law) pleaded guilty to manipulating the prices of and divvying up customers for an antibiotic, doxycycline hyclate, and a diabetes medicine, glyburide. The defendants are scheduled to be sentenced on September 28, 2017, and they face up to ten years of imprisonment. The government’s filings in other lawsuits make clear that the defendants’ sentencing was delayed until the defendants complete their cooperation with the government.
A tale of two mergers: Following their losses in DOJ merger challenges, Anthem fights on and Aetna gives up
In the past month, the DOJ and several state governments scored two trial wins in their challenges to mergers among some of the country’s largest health insurers. First, Judge Bates of the District of Columbia blocked the combination of Aetna and Humana, finding that the “proffered efficiencies do not offset the anticompetitive effects of the merger.” Weeks later, Judge Jackson of the same district scuttled a deal between Anthem and Cigna, which she found “likely to lessen competition substantially” in the relevant market.
President Donald Trump last week designated Maureen K. Ohlhausen as acting chair of the U.S. Federal Trade Commission (“FTC”). Ohlhausen is a vocal critic of government involvement in the market, suggesting the FTC under her leadership will employ a lighter touch with regard to enforcement and regulatory actions.
Last week, the FTC filed a complaint against Qualcomm, a manufacturer of baseband processors, which are chips included in cell phones and other products with cellular connectivity that allow the devices to connect to cell networks. Qualcomm holds patents to technologies incorporated in the standards that allow all cell phones to communicate with one another, referred to as standard-essential patents or SEPs. Qualcomm’s patents mostly relate to older, 3G-CDMA cellular technologies, which are still necessary for modern cell phones to work as consumers expect. As a condition of declaring its patents standard-essential, Qualcomm committed to the telecommunications industry’s standard-setting organizations that it would license its patents on a “fair, reasonable, and non-discriminatory” (FRAND) basis.
DOJ and State AG Investigations Into Generic Pricing Lead to Suits Against Manufacturers and Employees
As we have previously reported, (click, here, here, here, and here to read more), generic drug manufacturers have recently come under intense scrutiny from state and federal regulators for their price hikes. Last week, the Department of Justice and twenty state attorneys general instituted criminal and civil proceedings in connection with alleged generic drug price manipulation.
The trial over Aetna and Humana's $37 billion proposed merger kicked off today in a Washington, D.C. federal court.
The Department of Justice (DOJ) and the Federal Trade Commission (FTC) last week issued antitrust guidelines for human resources (HR) professionals. The guidelines highlight the most common antitrust violations, based on a review of cases in which federal antitrust agencies have taken enforcement actions against employers. There are three main takeaways from this guidance.
PinnacleHealth System and Penn State Hershey Medical Center have abandoned their merger plans following a Third Circuit defeat last month. The announcement underscores the uncertainty faced by hospitals considering consolidation as a way to keep costs down and promote a value-based system of payment.
On September 27, the U.S. Court of Appeals for the Third Circuit handed the Federal Trade Commission a big win, overturning the Middle District of Pennsylvania’s denial of an injunction to block the proposed merger of Penn State Hershey Medical Center and PinnacleHealth System, two major healthcare providers in central Pennsylvania.
Second Circuit Issues Blockbuster Ruling in Amex, Holding Anti-Steering Rules Do Not Violate Antitrust Law
Last week the U.S. Court of Appeals for the Second Circuit issued a major win for American Express in a landmark decision in United States v. American Express Co. In that case the government filed an antitrust suit against American Express challenging Amex’s nondiscriminatory provisions (“NDPs,” or “anti-steering” rules), which bar merchants from offering discounts or incentives to customers to encourage them to use non-Amex credit cards.
The Department of Justice ("DOJ") sued this week to stop Deere & Co.'s acquisition of Monsanto Co.'s Precision Planting, explaining that the deal would harm farmers. The companies make high-speed precision planting systems, which allow farmers to plant uniformly spaced crops at double the speed of conventional planters. The deal would give Deere at least 86 percent of the market for this planting technology, the DOJ said.
Package Size Is Not a “Service” Under Section 2(e) of the Robinson-Patman Act, Says Seventh Circuit in Clorox
On August 12, the Seventh Circuit issued its decision in Woodman’s Food Market v. Clorox Co., an appeal that we have been watching closely. The Seventh Circuit’s ruling, which held that product package size is not a promotional “service,” is an important clarification of the scope of price discrimination liability under Section 2(e) of the Robinson-Patman Act (RP Act).
It is probably safe to say that most voters in the 2016 presidential election do not view antitrust policy as a key campaign issue. Accordingly, the candidates’ and their parties’ views on competition policy were scarcely, if at all, mentioned during the recent party conventions. However, the parties’ official platforms suggest how the candidates, once in office, would handle competition policy.
The Department of Justice and attorneys general from multiple states last week sued to halt two health insurance mergers, each worth billions of dollars.
The challenged deals are Anthem's planned merger with Cigna and Aetna's proposed acquisition of Humana. The deals would whittle down the number of top competitors in the health insurance industry from five to just three: an Anthem-Cigna entity, an Aetna-Humana entity, and the current industry giant UnitedHealth Group. Each would have revenue of more than $100 billion a year.
The Federal Trade Commission has made clear that it considers the regulation of competition in health care markets one of its top priorities, but in recent weeks the FTC has been dealt a string of tough losses in its healthcare merger challenges. Here, we examine some of the key takeaways from the FTC’s recent defeats in this area.
On June 14, 2016, in FTC v. Advocate Health Care et al., No. 15-cv-11473, the District Court for the Northern District of Illinois denied the Federal Trade Commission’s attempt to stop the merger of Advocate Health Care Network and NorthShore University HealthSystem.
Freedom to Whiten: Teeth-Whitener’s Antitrust Suit Against Georgia Board of Dentistry Allowed to Proceed
Earlier this week, in Colindres v. Battle, et al., No. 15-CV-2843 (N.D. Ga.), the District Court for the Northern District of Georgia refused to dismiss antitrust claims brought by the owner of a teeth-whitening company against the members of Georgia’s Board of Dentistry. The plaintiffs, the owner and her company, allege that the Board has been sending agents to threaten her and her company with felony charges for unlicensed practice of dentistry, carrying a possible sentence of as much as five years in prison, though the Board has refused to take formal enforcement action or even put its complaints in writing.
The Antitrust Division recently issued its 2016 annual spring update. Taking advantage of modern technology, Bill Baer—now the Acting Associate Attorney General serving in the DOJ’s third-highest ranking position—prepared video remarks for your viewing pleasure. (Still, most of the Division’s updates were included in written commentary.) Renata B. Hesse now serves as the Principal Deputy Assistant Attorney General responsible for overseeing the Antitrust Division.
The Penn State Hershey–Pinnacle Merger: A Turning Point in FTC’s Enforcement Authority, or Just a Temporary Setback?
As we have reported previously, the Federal Trade Commission recently has taken an aggressive stance in regulating mergers in the healthcare sector. The Commission has racked up a string of victories, but last week the Middle District of Pennsylvania dealt a blow to that track record by denying the Commission’s request for a preliminary injunction to block a merger of two major healthcare providers in central Pennsylvania: Penn State Hershey Medical Center and PinnacleHealth Systems. The FTC is pursuing an emergency appeal to the Third Circuit, but this loss could signal a waning in the FTC’s enforcement authority in the healthcare sector.
After last month’s bench trial, Judge Emmet G. Sullivan has granted the FTC a preliminary injunction enjoining the merger between Staples and Office Depot. As a result, the companies have decided to end their efforts to merge. Judge Sullivan’s reasoning is not yet publicly available, but the court’s three-page order answers many of the questions that had been swirling around the trial.
A recent decision of the European Court of Justice (“ECJ”) regarding the sale of tobacco products highlights a long-standing tension between two sets of laws: antitrust/competition laws, which seek to keep products affordable and accessible to consumers, and consumer protection and public health laws, which can seek to steer consumers away from products that pose a risk to public health by making them less accessible.
The Department of Justice ("DOJ") announced this week that Hitachi Chemical Co. will plead guilty to a criminal charge for conspiring with competitors to fix the prices of electrolytic capacitors sold in the United States and elsewhere. The Tokyo-based company will pay an undisclosed fine and has agreed to cooperate with the DOJ's investigation.
In perhaps an unsurprising move, last week the U.S. Department of Justice filed a civil antitrust lawsuit challenging the merger of Halliburton and Baker Hughes, the first and third largest oilfield services companies in the United States and the world. The DOJ alleges the transaction would threaten to “eliminate competition, raise prices and reduce innovation in the oilfield services industry.”
Yesterday, Staples closed its defense in the case brought by the Federal Trade Commission (FTC) to block the Staples-Office Depot merger—without calling any witnesses. Judge Emmet Sullivan of the D.C. District Court stated that he “did not anticipate” this unusual move by Staples. The CEOs of both Staples and Office Depot were slated to testify; instead, Judge Sullivan began hearing closing arguments.
Today the FTC filed a complaint in the U.S. District Court for the Eastern District of Pennsylvania against Endo Pharmaceuticals for entering into “pay-for-delay” agreements with two different generic manufacturers that restricted generic competition for two of its patented drugs, Opana ER and Lidoderm. The FTC alleges that Endo paid Impax, a generic drug manufacturer, $40 million to keep a generic version of Opana ER off the market for over 2 years, and that Endo and its partner Teikoku gave Watson (now Allergan) Lidoderm patches worth hundreds of millions of dollars “at no cost” for Watson to sell through its distribution subsidiary in exchange for abandoning its patent challenge.
On Monday, Staples and the Federal Trade Commission began presenting arguments in the D.C. District Court on whether the FTC should be entitled to a preliminary injunction to halt a potential merger between Staples and Office Depot. We previously reported on the Staples-Office Depot merger here and here. Judge Emmet G. Sullivan, who is overseeing the bench trial, presided over a similar hearing just a few months ago related to the DOJ’s attempt to stop General Electric from selling its appliances division to Electrolux, a transaction that GE eventually abandoned.
We’ve previously written about how the Yates Memo announced an increased focus on individual accountability, and that the DOJ’s broader focus on individual accountability would likely encourage the Antitrust Division to increase its efforts to prosecute individuals for antitrust violations.
Yesterday, the Seventh Circuit heard argument in the Woodman’s Food Market v. Clorox Co. appeal. As members of our team have previously reported, this case concerns whether a plaintiff can state a claim under Section 2(e) of the Robinson Patman Act based on the size of the package offered for sale.
We will soon know whether the Supreme Court will grant Apple’s cert petition asking the Court to review and reverse its antitrust violation for conspiring with publishers to fix the prices of e-books. The Court will consider the petition at its next conference on February 19. As we previously reported here and here, a divided Second Circuit panel affirmed the district court’s findings that the per se rule applied to Apple’s conduct and that Apple violated Section 1 of the Sherman Act.
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.
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