The Federal Trade Commission staff took action earlier this week to increase compliance with the Contact Lens Rule by sellers of non-corrective, decorative/cosmetic contact lenses. In 2003, Congress enacted the Fairness to Contact Lens Consumers Act, which imposed new prescription release and verification requirements on prescribers and sellers of contact lenses. In July 2004, the Commission issued the Contact Lens Rule to implement the Act.
On June 28, the European Commission (“EC”) announced new guidelines that would increase fines for antitrust violations. This decision is part of an effort by the EC to more severely punish cartel leaders, repeat offenders, and companies whose large financial reserves made a mockery of the old antitrust fine scheme. The new guidelines, which will not take effect for several months, will fine companies up to 30 percent or based on a percentage of the company’s sales in whatever market the regulators found was illegally manipulated. Under the current EU rules, companies that are found to have serious antitrust offences are fined at least €20 million.
The Federal Trade Commission today called on social networking sites to make sure children visiting their sites can stay safe and their parents can protect them. Testifying for the FTC, Commissioner Pamela Jones Harbour told the House Committee on Energy and Commerce,Subcommittee on Oversight and Investigation that there is a “need for social networking Web sites – individually, collectively, and, most importantly, expeditiously – to develop and implement safety features to protect children who visit their sites and empower parents to protect their children when they do so.” Harbour also emphasized that, “the Federal Trade Commission is committed to helping create a safer online experience for children.”
On June 27, the U.S. Supreme Court agreed to hear arguments from Verizon Communications Inc., AT&T Inc., BellSouth Corp., and Qwest Communications International, Inc. in a case that may either help companies' efforts to fight off antitrust law suits, or promote consumers challenges to what appears to be illegal coordination of activities by competing companies in concentrated markets that keep prices high.
On June 27, the Commission authorized the filing of comments, prepared jointly with the U.S. Department of Justice’s Antitrust Division, with the New York State Assembly Committee on the Judiciary regarding proposed legislation to expand the scope of activities constituting the unauthorized practice of law.
On June 27, the Department of Justice announced that it will require The McClatchy Company and Knight Ridder Inc. to divest the St. Paul Pioneer Press in order to proceed with their proposed multi-billion dollar newspaper merger. The DOJ said that the transaction, as originally proposed, would have eliminated head-to-head competition between McClatchy and Knight Ridder and likely would have resulted in higher prices for advertisers and readers in the Minneapolis/St. Paul metropolitan area.
In 1996, Conway (then known as McLane) submitted a complaint to the Spanish Competition, the Servicio de Defencia de la Competencia (“SDC”) authorities, alleging that the former public tobacco monopoly, Tabacalera (now known as Altadis) abused its dominant position by not allowing Conway to distribute Tabacalera tobacco brands. A 2002 SDC decision found that Tabacalera had a dominant position in the tobacco manufacturing market as well as the wholesale distribution market.
Supreme Court Rejects FTC’s Petition to Overturn Schering-Plough Decision Relating to Reverse Payments to Generics
On June 26, the United States Supreme Court declined to hear the Federal Trade Commission’s (“FTC”) appeal of the Eleventh Circuit’s decision that Schering-Plough Corp. (“Schering”) legally paid two generic drug competitors to stay out of the market as part of a settlement to patent litigation. In the past, the FTC has taken a consistently aggressive approach that a money payment from a branded drug company to a generic company that delays the entry of a generic version of a branded drug is illegal.
On June 26, orthopedic device manufacturers revealed the issuance of federal subpoenas tied to potential violation of antitrust law from the Department of Justice. Zimmer Holdings Inc., Biomet Inc., Johnson & Johnson and Stryker Corp. all said they had received subpoenas from the Antitrust Division demanding documents related to the manufacture and sale of the companies' products, which include artificial hips and knees.
On June 23, the DOJ filed a petition asking the U.S. District Court for the District of Columbia to hold the American Bar Association (“ABA”) in civil contempt for violating multiple provisions of a 1996 antitrust consent decree. The consent decree prohibited the ABA from misusing the law school accreditation process. The DOJ also filed a proposed order and a stipulation in which the ABA acknowledges the violations alleged in the Division's petition and agrees to reimburse the United States $185,000 in fees and costs incurred in the Division's investigation.
On June 22, the DOJ announced that the $16 billion merger between Exelon Corp. and Public Service Enterprise Group Inc. can proceed as long as they divest six electricity generating plants, which in total provide more than 5,600 megawatts of generating capacity. The DOJ is making the companies shed two generating plants in Pennsylvania and four in New Jersey.
On June 21, Federal Communications Commission chairman Kevin Martin said that the agency would likely act on the acquisition of Adelphia Communications Corp. (“Adelphia”) by Time Warner Inc. (“Time Warner”) and Comcast Corp. (“Comcast”) in mid-July. Martin indicated the mid-July action in comments to reporters following the agency’s public meeting, stating “I think the commission will try to address it by the middle of July." Time Warner and Comcast have agreed to buy bankrupt Adelphia’s 5 million cable subscribers in a $16.9 billion transaction. The Federal Trade Commission approved the deal without conditions in January. The FCC has had the merger under review for 382 days, but only since June 1 has Martin had a 3-2 Republican majority. Opponents of the deal have called on the FCC to impose a host of conditions, including access to regional sports programming owned or controlled by Time Warner and Comcast.
The American Civil Liberties Union (“ACLU”), a group of small telecommunications companies, and Sprint Nextel Corp. (“Sprint”) have joined to oppose AT&T Inc.'s (“AT&T”) bid to acquire BellSouth Corp. (“BellSouth”). In its June 5th filings with the FCC, the ACLU said it wants the commission to hold up approval of the merger until the phone companies settle allegations that they had released customer information to the National Security Agency (“NSA”). Sprint and the telecom group, meanwhile, are looking to squash the deal completely, with the group citing “irreparable harms to competition” from a combination. AT&T dismissed the claims.
A Southern California-based mortgage broker will pay $50,000 under a court order filed today on behalf of the Federal Trade Commission for allegedly calling tens of thousands of consumers who are on the National Do Not Call (DNC) Registry for telemarketers and for failing to pay the annual fee required to access the DNC Registry. In addition, the company and its officers are permanently barred from violating the DNC provisions of the Telemarketing Sales Rule (TSR) and from making illegal telemarketing calls in the future.
The Federal Trade Commission today told a meeting of the Internet Corporation for Assigned Names and Numbers that access to the Whois databases is “critical to the agency’s consumer protection laws, to other law enforcement agencies around the world, and to consumers.” Whois databases are online information directories that contain contact information about website operators. Access to the databases is in question because one of ICANN’s advisory bodies recommended limiting access to Whois data to “technical purposes only.”
Two Spanish banks entered the US banking market in June. Spain’s second-largest bank, Banco Bilbao Vizcaya Argentaria (BBVA), purchased two Texas-based banks -Texas Regional Bancshares and State Regional Bancshares- supplementing a southern-California based bank that it had previously acquired. This deal will give BBVA access to the lucrative market for remittances from Latin American workers in Texas to Latin America. Meanwhile, Spain’s largest bank, Banco Santander Central Hispano, has been steadily increasing its stake in Philadelphia-based Sovereign Bancorp, approaching 24.99% of outstanding shares. Several analysts have speculated that Santander will eventually make a bid for the bank as a way of expanding into the lucrative U.S. market.
Reports surfaced on June 19 that the Italian banking sector may be ripe for consolidation. This speculation began to emerge after Governor Mario Draghi of the Bank of Italy had signaled his intention to open up the Italian banking market to merger activity once the bank's merger veto had been transferred to Italian antitrust authorities. The Bank of Italy, however, still reserves the power to overturn mergers since it is still responsible for regulating the purchase of stakes in regional and national banks. The first domestic merger is expected to involve Banca Intesa and Capitalia; Italy's second and fifth-largest banks. There are also rumors of third-placed SanPaolo IMI and fourth-largest Banca Monte dei Paschi di Siena entering into a merger.
On June 20, the FCC approved without conditions Sprint Nextel Corp.’s (“Sprint Nextel”) acquisition of affiliate Nextel Partners, Inc., which sells Nextel services in 58 mid-sized and rural markets, in a deal worth $6.5 billion. The transaction gives Sprint Nextel the two-thirds stake in Nextel Partners it didn’t already own. It is one of seven such transactions where Sprint Nextel is acquiring affiliates. Five of the remaining transactions have closed, while the acquisition of UbiquiTel, Inc., which has already gotten DOJ clearance, is still pending.
On June 20, the Federal Trade Commission and the Department of Justice’s Antitrust Division announced that they are implementing an electronic filing system that allows merging parties to submit via the Internet premerger notification filings required by the Hart-Scott-Rodino Act. Electronic filings may be submitted quickly and easily, eliminating the time and expense entailed in duplicating and delivering documents.
On June 20, the staff of the Bureau of Competition advised Alpena (Michigan) Public Schools that its proposed plan to have pharmaceuticals transferred to it for use by its employees, by the Alpena Regional Medical Center, with actual distribution of the pharmaceuticals being made by certain Alpena-area pharmacies, falls within the Non-Profit Institutions Act “NPIA”.
As the number of phone numbers on the National Do Not Call (DNC) Registry surpassed 125 million, the Federal Trade Commission today reiterated that despite the claims made in e-mails circulating on the Internet, consumers should not be concerned that their cell phone numbers will be released to telemarketers at any time in the near future. In addition, according to the agency, it is not necessary to register cell phone numbers on the DNC Registry to be protected from most telemarketing calls to cell phones.
On June 19, the FCC approved Intelsat Ltd. (“Intelsat”) and PanAmSat Holding Corp.'s (“PanAmSat”) $6.4 billion cash-and-debt deal, concluding the transaction is unlikely to have an adverse effect on Fixed Satellite Services (“FSS”) price, quantity or transponder availability for customers from broadcasters to the U.S. government. The FCC’s five commissioners approved the deal unanimously.
On June 19, the DOJ announced that it will not challenge a proposal by the Fair Factories Clearinghouse (“FFC”) to operate a database that member companies can use to collect and voluntarily share information about workplace conditions in manufacturing facilities around the globe. The DOJ's position was stated in a business review letter from Thomas O. Barnett, Assistant Attorney General in charge of the Department's Antitrust Division, to counsel for the FFC and World Monitors Incorporated.
On June 16, a U.S. appeals court affirmed the FCC’s most recent stab at spelling out local phone monopolies' obligation to lease their networks to startup competitors at discounted prices. “The FCC is pleased that the court has upheld its pro-competitive rules governing network unbundling,” an FCC spokesman said in a statement. “The court's decision provides long-awaited certainty for the telecommunications industry and consumers.” The rules required the local giants to provide transport and access to local loops at wholesale rates, except in certain big cities and business centers where sufficient competition exists. To many industry watchers, however, the June 16 decision was a case of too little, too late for the startup rivals, many of them VC-backed, known as competitive local exchange carriers (“CLECs”).
On June 14, the Nihon Keizai Shimbun reported that the Japanese Ministry of Economy, Trade and Industry (METI) had asked the Fair Trade Commission (FTC) to revise its criteria in approving corporate mergers to encourage firms to reorganize and boost their competitiveness. Under current rules, the FTC allows mergers to proceed if the domestic market share held by the firms after the deal is 35 percent or less, although market shares above this threshold are analyzed on a case-by-case basis.
On June 14, the DOJ charged Gerald Thermos, the president of a marine products company in California with conspiring to rig bids and allocate customers with respect to the sale of foam-filled marine fenders and buoys purchased by the U.S. Navy, the U.S. Coast Guard, and other public and private entities. Foam-filled marine fenders are used as a cushion between ships and fixed structures, such as docks, piers, or other ships. Foam-filled buoys are used in a variety of applications, including use as channel markers and navigational aids. Mr. Thermos agreed to plead guilty to the charge and serve an eight-month sentence, including four months in jail and four months in home detention, and to pay a criminal fine of $50,000.
On June 14, McClatchy Co. announced that the Department of Justice is extending its review of the company's sale of two California newspapers to MediaNews Group Inc. The two properties, the San Jose Mercury News and the Contra Costa Times, are part of a $1 billion three-way swap of four papers that also involves Hearst Corp. On April 26, McClatchy announced plans to sell the four papers, acquired as part of its $4.5 billion purchase of Knight Ridder Inc. McClatchy must divest the four papers and eight others to raise cash and satisfy Justice Department antitrust concerns over the larger Knight Ridder deal. The DOJ’s second request for information, could delay the MediaNews-Hearst arrangement until late summer.
The Federal Trade Commission today told a congressional subcommittee that, although the video game industry has made progress in complying with and improving its self-regulatory policies on the marketing of violent video games, more needs to be done. Lydia Parnes, Director of the Federal Trade Commission’s Bureau of Consumer Protection, told the House Committee on Energy and Commerce Subcommittee on Commerce, Trade, and Consumer Protection that despite progress in limiting ads for M-rated games in popular teen media and nearly always providing rating information in advertising, “there remain a number of concerns relating to video games and how they are marketed.”
A seller of discount health and prescription drug cards and its telemarketer will pay civil penalties of $300,000 and $50,000, respectively, to settle Federal Trade Commission charges that they have been violating the Do Not Call (DNC) provisions of the Commission’s Telemarketing Sales Rule (TSR), and will be prohibited from similar conduct in the future, the agency announced today. At the Commission’s request, the U.S. Department of Justice (DOJ) filed the complaint and proposed stipulated consent orders in Federal District Court in New York City. This is the Commission’s first case to highlight the application of DNC provisions to corporate affiliates.
On June 8, it was reported that the Chinese State Council had approved draft legislation of the so-called Antimonopoly Law. This legislation aims to provide a free and fair competitive environment to all enterprises. The new law, which is expected to be passed in March 2007, contains articles regulating monopoly agreements, abuse of dominant market status and large-scale consolidation. Furthermore, the law defines a "monopoly" as either a single operator controlling half or more of an industry's overall market share; two operators colluding to hold two-thirds; or three operators holding three-quarters.
The companies behind the popular Grand Theft Auto: San Andreas video game have agreed to settle Federal Trade Commission charges that they failed to disclose important information about the game’s content to consumers. According to the FTC, the companies, in advertising the Entertainment Software Rating Board (“ESRB”) rating for the game, did not tell consumers that the game discs contained potentially viewable nude female characters and a potentially playable sex mini-game.
The Stanley Works, a U.S. toolmaker, will pay a $205,000 civil penalty to settle Federal Trade Commission charges it falsely claimed its Zero Degree ratchets were Made in the USA. The claims allegedly violated a 1999 FTC order issued against the company to resolve earlier allegations that it had made false Made in the USA claims. The 1999 order prohibits it from, among other things, misrepresenting the extent to which any professional grade hand tools, including wrenches, ratchets, sockets, and chisels, are made in the United States.
On June 7, a federal grand jury in Portland, Oregon returned an indictment against Trevor Smith, a former Raisio Chemicals Northwest Inc. sales executive, charging him with two counts of filing false federal income tax returns in 1999 and 2000, understating his income by more than $332,000. The understated income consisted of payments he allegedly received from John R. Olsen, while employed at Raisio, relating to Raisio's purchases of dry anthraquinone, a pulping additive used to increase pulp yield. Mr. Olsen is the former general manager of Chemical Products Technologies (“CPT”), based in Cartersville, Georgia. The charges announced by the DOJ are the third to arise out of investigations in the Northern District of Georgia and the District of Oregon conducted by the Antitrust Division's Atlanta Field Office, with the assistance of the Internal Revenue Service Criminal Investigation Division.
On June 6, the Federal Trade Commission authorized the filing of a joint amicus brief with the U.S. Department of Justice in the case of Latino Quimica-Amtex S.A. v. Atofina, et al., No. 05-5754-CV (2d Cir.). The case involves an international price-fixing conspiracy by manufacturers of two chemicals, sodium monochloroacetate and monochloroacetic acid, which are used in manufacturing foods, pharmaceuticals, herbicides, and plastics.
On June 2, Euronext and the New York Stock Exchange announced a merger that would create the world’s largest stock exchange, and the first cross-Atlantic bourse. At the same time, Deutche Börse is also rumored to be seeking another partner for the merger, looking at OMX AB, the operator of Scandinavian and Baltic exchanges, or even Borsa Italiana, which is itself rumored to be a potential target for a combined NYSE-Euronext.
On June 2, the European Commission approved a €25 billion bid for Luxembourg-based steel company Arcelor by Netherlands-based Mittal, the world’s largest steelmaker, noting that a merger “would not significantly impede effective competition” in the European Union. This approval was provisional based on a divestiture of two Arcelor heavy and medium steel mills in Italy and Germany, as well as a Mittal mill in Poland, without which the combined entity would become the dominant manufacturer of heavy section beams.