Articles

December 14, 2013

FTC Requires Modifications to Trade Associations’ Ethical Rules To Comply With the Antitrust Laws

On December 13, 2013, the FTC announced that both the Music Teacher’s National Association, Inc. (“MNTA”) and the California Association of Legal Support Professionals (“CALSPro”) agreed to eliminate provisions in their codes of ethics that limited competition among their members, in order to settle potential litigation brought by the FTC.

Background

According to the FTC, MNTA and CALSPro both had provisions in their codes of ethics that restricted competition. The FTC conducted an investigated and reviewed the codes of ethics of both organizations. After the review, the FTC decided to take action against the music teacher cartel. While the action sounds silly, the FTC’s action is sound because these provisions in the organizations’ codes contained language that restrains competition.

November 2, 2013

FTC Clears Office Depot/OfficeMax Merger

by Doyle, Barlow & Mazard PLLC

On November 1, 2013, the FTC commissioners unanimously voted to close a seven month investigation of the proposed Office Depot/OfficeMax merger. The Commission issued a statement regarding its decision to close the transaction without taking any action.

Background Regarding FTC’s Successful Challenge to Staples/Office Depot

In 1997, the Commission blocked the proposed combination of Staples, Inc. (“Staples”) and Office Depot after the parties proposed a settlement offer. According to the FTC at that time, Staples and Office Depot were two of the three largest office supply superstores in the country. The proposal, offered by Staples, would have required the divestiture of a total of 63 superstores to OfficeMax, the third office supply superstore.

March 12, 2013

FTC and Idaho State AG Challenge Acquisition of Idaho’s Largest Independent Physician Practice Group

by Doyle, Barlow & Mazard PLLC

On March 12, 2013, the FTC and the Idaho Attorney General jointly filed a complaint in federal district court seeking to block St. Luke's Health System, Ltd.'s acquisition of Saltzer Medical Group P.A., Idaho's largest independent, multi-specialty physician practice group. The transaction was consummated on December 31, 2012.

According to the FTC, the joint complaint alleges that the combination of St. Luke's and Saltzer would create a dominant single provider of adult primary care services with a nearly 60% share in Nampa, Idaho and surrounding areas. The complaint alleges that the acquisition has given the combined entity greater bargaining leverage over health care plans because St. Luke's/Saltzer is now an indispensible provider. The complaint further alleges that the greater bargaining leverage with health care plans would give the combined system the power to demand higher rates for health care services provided by primary care physicians in Nampa, Idaho and surrounding areas, ultimately leading to higher costs for services, which eventually will be passed on to healthcare consumers (local employers and their employees).

St Luke's issued a news release and blog post regarding the FTC's lawsuit. St Luke's believes that the FTC and Idaho do not “understand hospital-physician relationships and do not have a good understanding of accountable care.” St. Luke's also stated that it would continue operating normally, including continuing with its integration of Saltzer into the St. Luke's system.

December 3, 2012

DOJ Approves Wellpoint’s Acquisition of Amerigroup

by Doyle, Barlow & Mazard PLLC

On November 28, 2012, the DOJ announced that Amerigroup’s sale of its subsidiary, Amerigroup Virginia Inc., to Inova Health System Foundation (“Inova”) addressed the agency’s concerns with WellPoint’s proposed $4.9 billion acquisition of Amerigroup.

The DOJ said that the merger, as originally proposed, would have lessened competition substantially in the provision of Medicaid managed care plans in Northern Virginia. The deal was announced in July and the DOJ issued a Second Request to investigate the merger in August. The DOJ noted that it worked closely with the Virginia state Attorney General on its review of the acquisition. WellPoint, a licensee of the BCBSA serving more than 65 million members with 2011 revenues of $60.7 billion, and Amerigroup, serving more than 2 million members with 2011 revenue of more than $6 billion, were the only two providers of Medicaid managed care plans in Northern Virginia.

The Virginia Medicaid managed care program provides enrollees with access to preventive and coordinated care through managed care organizations, including WellPoint and Amerigroup. Congress recognized the importance of choice to Medicaid beneficiaries by generally requiring that states give beneficiaries a choice of at least two Medicaid managed care entities if the state requires beneficiaries to enroll in managed care plans.

November 16, 2012

Antitrust Division Sues eBay Over Non Solicitation Agreement

by Doyle, Barlow & Mazard PLLC

On November 16, 2012, the Antitrust Division filed a civil antitrust lawsuit against eBay Inc., alleging that it violated antitrust laws when it entered into an agreement not to recruit or hire Intuit Inc.'s employees.

The Antitrust Division's lawsuit was filed in the U.S. District Court in the Northern District of California, in San Jose. The lawsuit seeks to prevent eBay from adhering to or enforcing the agreement and from entering into any similar agreements with any other companies.

The Antitrust Division alleges that the eBay and Intuit entered into an illegal agreement restricting eBay's ability to recruit Intuit employees and Intuit's ability to recruit eBay's employees. The complaint alleges that the agreement began no later than 2006, and lasting at least until 2009. Allegedly, Meg Whitman, then eBay's CEO, and Scott Cook, Intuit's founder and executive committee chair, were responsible for forming the anticompetitive agreement.

November 16, 2012

FTC Approves Hertz’s Acquisition of Dollar Thrifty

by Doyle, Barlow & Mazard PLLC

On November 15, 2012, the FTC approved Hertz Global Holdings, Inc.'s (“Hertz”) acquisition to acquire Dollar Thrifty Automotive Group inc. (“Dollar Thrifty”). The transaction was cleared after Hertz agreed to sell its Advantage Rent A Car (“Advantage”) business including 43 on-airport locations as well as 29 Dollar Thrifty on-airport locations to remedy alleged competitive harm at 72 on-airport locations.

Background

After an FTC investigation that was on and off again for over two years, the FTC finally allowed Hertz to buy Dollar Thrifty. In April of 2010, Hertz offered Dollar Thrifty $41 per share. Avis Budget Group, Inc. (“Avis”), which operates the Avis and Budget brands, jumped into the fray and started a bidding war. Shortly after, the FTC issued second requests to both Hertz and Avis and began investigating the anticompetitive effects of both transactions. Hertz raised its bid to over $50 per share in late September 2010, but Dollar Thrifty shareholders rejected Hertz in favor of Avis' higher bid. While Avis and Dollar Thrifty still had not inked a deal, the FTC continued to investigate the Avis/Dollar Thrifty combination. Avis and Dollar Thrifty had significant overlap in their airport businesses, but Avis would not commence an exchange offer until it could get comfortable with the antitrust review. In May of 2011, Hertz reentered the bidding for Dollar Thrifty with a bid for $72 per share. In August of 2011, the FTC issued another second request to Hertz for its new bid. In September of 2011, Avis walked away. Without a deal in place, Hertz continued to work with the FTC staff. On August 26, 2012, Hertz finally inked a deal with Dollar Thrifty for $87.50 per share along with an agreement to divest Advantage including 62 airport locations, some of which were operated by Dollar Thrifty, to Franchise Services of North America, Inc. (“FSNA”) and Macquarie Capital USA Inc. (“Macquarie”).

October 25, 2012

How Does China Conduct Antitrust Reviews of Mergers?

by Doyle, Barlow & Mazard PLLC

Increasingly, China's antitrust reviews of global transactions have resulted in long investigations delaying the closing of many deals. This article outlines the Chinese merger review process and summarizes some of China's merger decisions.

Background

China's Anti-Monopoly Law (“AML”) took effect on August 1, 2008. Three agencies enforce the AML. The Ministry of Commerce (“MOFCOM”) reviews mergers and acquisitions. Non-merger cases are split between the National Development and Reform Commission (“NDRC”) and the State Administration for Industry and Commerce (“SAIC”). The NDRC handles price-related violations and SAIC the non-price related violations.

October 15, 2012

Will the FTC Take an Enforcement Action Against a Small Transaction Consummated Years Ago?

by Doyle, Barlow & Mazard PLLC

On October 12, 2012, the FTC voted 5-0 to approve a consent order resolving competitive concerns related to Magnesium Elektron's acquisition of Revere Graphics.

In September 2007, Magnesium Elektron acquired the assets of Revere Graphics for $15 million. Magnesium Elektron and Revere Graphics produce magnesium plates for photoengraving.

The FTC was concerned the proposed merger would substantially lessen competition and create a monopoly in the market for magnesium plate production.

September 26, 2012

Democrats and Republicans Work Together – But Get Sued For Monopolizing The Presidential Debates

by Doyle, Barlow & Mazard PLLC

Believe it or not, but on September 25, 2012, the Democrats and Republicans got sued in United States District Court for the Central District of California. They are accused under the antitrust laws of monopolizing the market for televised presidential debates in the United States by controlling the field of candidates in the race for president and vice president.

Third party Libertarian presidential candidate and former Governor of New Mexico, Gary E. Johnson, and Libertarian candidate, James P. Gray, a retired judge of the Superior Court of the State of California for Orange County, sued the Democratic National Committee, the Republican National Committee and the Commission on Presidential Debates for conspiring to restrain the Libertarians from participating in the electoral process by denying them access to the presidential and vice presidential debates scheduled for October 3,11,16 and 22. Plaintiffs seek to enjoin the debates until such time that they are permitted to participate in the only televised presidential and vice presidential debates in the country.

The plaintiffs allege in their seven-page complaint that the present conspiracy was “born” in October of 1988 when the Committee on Presidential Debates was organized for the purpose of hosting the 1988 presidential and vice presidential debates. Since October 1988, this 24-year conspiracy has raged and to this day the Democrats and Republicans “continue to secretly meet and have secretly met, in Washington, D.C., and in other places throughout the country, to devise rules for the presidential and vice presidential debates” and to exclude competing candidates and rival third parties.

September 25, 2012

Failure To File HSR Notification Form Can Be Costly

by Doyle, Barlow & Mazard PLLC

On September 25, 2012, the Federal Trade Commission (“FTC”) announced that Biglari Holdings, Inc., which owns Steak 'n Shake and Western Sizzlin restaurant chains, agreed to pay $850,000 in civil penalties to resolve allegations that it failed to make a premerger notification filing in connection with its acquisition of 8.7% of the outstanding voting securities of Cracker Barrel Old Country Store, Inc. http://www.ftc.gov/opa/2012/09/biglari.shtm

Premerger Rules

The Hart-Scott-Rodino (“HSR”) Act requires that parties notify the FTC and the Department of Justice (“DOJ”) of transactions that exceed $68.2 million. After submitting the notification form, parties must observe a waiting period before closing their transaction while the two agencies determine whether the transaction may harm competition.