Civil Non-Merger Highlights

March 6, 2014

FTC Announces Enforcement Efforts of Fair Debt Collection Practices Act

On March 5, 2014, the FTC announced that it has stepped up its enforcement efforts of the Fair Debt Collection Practices Act.

According to FTC’s press release, while its debt collection efforts in the past have focused on research and consumer education, the Commission has focused on law enforcement efforts in recent years, especially after the financial crisis.

In 2013, the FTC brought or resolved a total of nine debt collection cases. The FTC brought forth its first enforcement action against text-message debt collection, fined the largest third-party debt collection agency in the world the highest debt collection civil penalty, and obtained temporary restraining orders halting the unlawful conduct and freezing the assets of some defendants while the court case proceeded. For the most egregious violators, the FTC obtained orders which banned the responsible parties permanently from debt collection.

February 20, 2014

Court upheld Russian antitrust agency fine on meat product cartel member

by Doyle, Barlow & Mazard PLLC

On February 19,2014, the Federal Commercial Court of Moscow upheld the fine given by the Federal Antimonopoly Service (FAS) on the Velikolysk meat plant for its part in a cartel of large meat packers that colluded to raise prices on a government acquisition of meat products. The FAS, in a press release, have also confirmed the rejection of Velikolysk’s complaint.

The court has already confirmed the fines against many of Velikolysk’s co-conspirators, namely IKMA, Kamyshin Sansages Soloviev, and Dubki.

Twenty companies participated in this cartel. They were active in auctions held in July 2009, when Russia’s Ministry of Defense, Ministry of Internal Affairs and other security bodies spent 149.3m rubles (USD 5m) on meat products.

February 19, 2014

Judge Dismisses Hotel Price Fixing Case

by Doyle, Barlow & Mazard PLLC

On February 18, 2014, U.S. District Judge Jane J. Boyle granted a motion by U.S. hotel chains and online travel agencies to dismiss without prejudice an antitrust case alleging consumers paid inflated prices on hotel rooms booked online.

Judge Boyle believed there to be two main arguments from the plaintiffs: first, defendants conspired to restrain competition in the US market for “direct online sale of hotel room reservations” and second, the defendants’ advertisements guaranteeing the best price available online were unfair to consumers because the prices were actually the same across all online channels.

Judge Boyle rejected the plaintiff’s arguments on both counts because they were not based on sound evidence. Instead, the plaintiffs only speculated as to the motive of the defendants. For example, the plaintiffs argued that the defendants shared a common motive to eliminate price competition in the online market. However, just because the defendants’ business interests can be recast in a suspicious light does not mean the allegations suggest an actual conspiracy was formed, noted the judge.

February 19, 2014

German Sugar Cartel settles suit with BKartA, pays €280 million

by Doyle, Barlow & Mazard PLLC

On February 18, 2014, Germany’s competition authority, the Bundeskartellamt (BKartA) fined three sugar producers, Pfeifer & Langen GmbH & Co. KG Südzucker AG, and Nordzucker AG a total of €280 million over their role in a sugar cartel that fixed sugar prices, production volumes, quotas, and sales areas.

According to BKartA’s investigations, the companies have colluded long before the beginning of its investigations in 2009—some arrangements dated back to the 1990s. Under the cartel’s arrangements, no company will sell sugar outside of its designated product area, and any surpluses would be exported. The cartel’s members also kept in close contact with each other over changes in their operations that may affect the existing sales area arrangements, such as plant closures, expansion strategies, the allocation of quotas and agreements on prices for processing and industrial sugar.

The companies used the European quota system, the minimum price guarantee and the resulting high market transparency to collude and to limited competition, according to BKartA chief Andreas Mundt, who added that the case is an example of how extensive market regulation can help to restrict competition to the detriment of customers.

February 15, 2014

FTC Announces Workshop on U.S. Health Care Competition – March 20-21

by Doyle, Barlow & Mazard PLLC

On February 14, 2014, the Federal Trade Commission announced that it will host a Public Workshop Examining U.S. Health Care Competition on March 20-21 in Washington, DC. The FTC is looking to “better understand the competitive dynamics of evolving health care product and service markets.” The workshop and corresponding request for public comments are focused on 5 key topics:

1. Professional regulation of Health Care Providers

2. Innovations in Health Care Delivery

February 11, 2014

Apple’s Fight Against its E-book Antitrust Monitor

by Doyle, Barlow & Mazard PLLC

On February 10, 2014, the Second Circuit Court of Appeals in New York dealt a blow to Apple in its efforts to have a court-appointed monitor removed from his position. The Second Circuit ruled that lawyer Michael Bromwich can continue to oversee the company’s antitrust compliance.

While Apple wanted to remove the monitor altogether for allegations he had overstepped his duties, Apple did win some small victories as the Second Circuit backed Apple by emphasizing the antitrust monitor must conduct his activities within the bounds of the powers provided by the court’s order.

Reportedly, even the Department of Justice agrees that Bromwich has limited duties and can not stretch his powers beyond the court’s order. Mr. Bromwich is not a prosecutor. Mr. Bromwich’s duties only reach so far as to hand over evidence to the DOJ of non-compliance should he come across any non-compliance with the company’s antitrust policy or antitrust compliance program.

February 6, 2014

Google settles EC antitrust lawsuit

by Doyle, Barlow & Mazard PLLC

On February 5, 2014, Google settled its long-running legal battle with the European Commission caused by its overwhelming control (+90%) of Europe’s search engine market. Under the settlement, Google will offer a number of concessions to its competitors, such as a promise to display results from at least three competitors every time it shows its own results for specialized searches to things like products, restaurants, and travel, and to give rival content providers, such as Yelp, the option to opt out of Google’s specialized searches without negatively affecting their rankings in normal Google searches. In addition, Google will remove conditions that have made it difficult for advertisers to move campaigns to rival sites, and allow sites that use Google’s search tool to show ads from other services. However, Google’s rivals were denied a key request—market test of the settlement measures to determine their effectiveness. Nevertheless, the settlement between Google and the highest antitrust authorities in Europe means the complainants have no recourse other than to take the European Commission itself to court.

Mark Ye

202-589-1834

December 14, 2013

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

by Doyle, Barlow & Mazard PLLC

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 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 14, 2012

Exelon Agrees to Pay $400,000 for Civil Contempt Violation

by Doyle, Barlow & Mazard PLLC

On November 14, the DOJ's Antitrust Division entered into a settlement agreement that requires Exelon Corporation (“Exelon”) to pay $400,000 for a civil contempt violation of a consent decree.

A consent decree is a binding agreement between the Antitrust Division and a defendant that is filed in federal district court and, upon entry, becomes a binding court order. Consent orders are the Antitrust Division's most important enforcement tool used for resolving antitrust issues that harm competition. Government antitrust litigation is at an all time low. Consent orders, on the other hand, are now the government's primary tool of antitrust enforcement and key mode for setting problematic mergers and conduct violations. Enforcement of consent orders is critically important to overall antitrust policy. Settlement negotiations take a significant amount of time and the DOJ expects merging parties to comply with its consent orders.

Exelon entered into a consent decree with the Antitrust Division regarding its acquisition of Constellation Energy (“Constellation”) in December of 2011. The consent decree resolved the Antitrust Division's concerns with the transaction by requiring the divestiture of three generating units. In connection with the settlement, the Antitrust Division also submitted a Hold Separate Stipulation and Order (“Hold Separate”), agreed to by Exelon and Constellation, which provided in part that Exelon would offer certain generating units into the PJM wholesale energy auction at or below cost from the time Exelon's acquisition of Constellation closed until the time the three generating units were sold. In other words, the Hold Separate would protect competition during the time period in which Exelon would own the combined assets of both companies.