Antitrust Lawyer Blog

September 17, 2018

Recap of First Day of FTC’s 21st Century Hearings

Changes in the economy, technology, international business, and data collection have all converged to make the FTC rethink its enforcement priorities going forward. In the spirit of the 1995 Pitofsky Hearings, the FTC on September 13, 2018 kicked off the first day of hearings on Competition and Consumer Protection in the 21^st Century at Georgetown University Law Center. The public hearings are expected to open the debate up to the public and experts so the FTC can formulate a modern antitrust enforcement and consumer protection agenda.

The first day of hearings was broken into three panel discussions which broadly discussed the current landscape of antitrust law, U.S. economic competitiveness, and consumer protection and data privacy. The discussions focused on process and substance and how best to reframe FTC priorities to deal with complex 21^st century issues.

Panelists drew lines in the sand when it came to whether the FTC is successfully navigating the landscape in an era of mega-mergers. Some panelists took the “populist” view that FTC’s merger guidelines are unhealthy for the overall economy and consumer welfare. The FTC has been guided by the “consumer welfare standard” when it comes to mergers, and has accommodated mergers that increase efficiencies and provide benefits in the form of lower prices to consumers. Those in favor of the consumer welfare standard want to avoid a ‘big is bad’ mentality while keeping the interests of consumers in mind. Proper antitrust enforcement is about protecting consumers, and protecting the competitive process, not about protecting competitors. Some panelists argued, however, that the consumer welfare standard has failed to take into account important social concerns like privacy, rising social and income inequality, and decreased economic competition and dynamism. They pointed to recent studies seeming to vindicate the view that the FTC needs to reorient its enforcement procedures because the economy appears to be more concentrated and less dynamic than it used to be.

September 17, 2018

Patient Access to Affordable Medicines: How a Renegotiated NAFTA Could Keep Drug Prices High

by Doyle, Barlow & Mazard PLLC

On Friday, September 14^th, a Congressional briefing was held regarding the renegotiation of NAFTA and how certain changes under discussion could end up undermining the President’s Blueprint to lower drug prices in the United States by extending pharma monopolies. One of the provisions under discussion would increase brand-name drug exclusivity. Imposing additional brand-name drug exclusivity only keeps already high brand drug prices out of reach for patients for longer.

The panelists included representatives from Association for Accessible Medicines (Jeff Francer), Mylan (Marcie McClintic Coates), Patients for Affordable Drugs (David Mitchell), and AARP (Leigh Purvis). Watch the briefing here: https://www.youtube.com/watch?v=9K3RQHB-oTE

They explained how one of most promising areas of drug research is the creation of generic biologic medicines, or biosimilars. These drugs have great potential and often offer the best treatments for serious diseases such as cancer, multiple sclerosis, rheumatoid arthritis, and others. Yet, today, there are only four biosimilars on the market in the United States.

August 20, 2018

Pfizer’s Suit Regarding J&J’s Rebate Trap Survives

by Doyle, Barlow & Mazard PLLC

On August 10, 2018, the Eastern District of Pennsylvania denied J&J’s motion to dismiss Pfizer’s antitrust action involving infliximab products.

Background on Pfizer/J&J

In September 2017, Pfizer filed an antitrust lawsuit under Sections 1 and 2 of Sherman Act alleging J&J engaged in exclusionary anticompetitive practices to keep Pfizer out of the market for infliximab products.

August 10, 2018

FTC’s New Model Timing Agreement

by Doyle, Barlow & Mazard PLLC

On August 7, 2018, the FTC’s Bureau of Competition announced a new new Model Timing Agreement for its merger reviews. This is part of its initiatives to streamline its merger review process.

New FTC Model Timing Agreement

Merger investigations typically involve timing agreements, which provide an agreed-upon framework for the timing of certain steps in the investigation. Timing agreements provide the FTC staff with notice of when the parties plan to close the deal. Both parties and staff benefit from having such a framework established shortly after issuance of the Second Request as it allows staff and the parties to engage in substantive discussions with more certainty about the timing.

August 6, 2018

DOJ Reviewing Paramount Consent Decrees

by Doyle, Barlow & Mazard PLLC

On August 2, 2018, the DOJ’s Antitrust Division announced that it would begin a review of legacy consent decrees “regulat[ing] how certain movie studios distribute films to movie theatres.” The Paramount Consent Decrees have been in place for almost 70 years. U.S. v. Paramount, 334 U.S. 131 (1948). The Supreme Court decision forced major studios to sell their theater chains. Since that ruling, the Paramount decrees, have governed the way that studios do business with exhibitors. The decrees have prohibited certain “motion picture distribution practices, including block booking (bundling multiple films into one theatre license), circuit dealing (entering into one license that covered all theatres in a theatre circuit), resale price maintenance (setting minimum prices on movie tickets), and granting overbroad clearances (exclusive film licenses for specific geographic areas).”

The DOJ has indicated its review will take into account the changes in the identity of movie theatre owners, the increased number of movie theaters in a geographic area, the increased number of screens in movie theaters, and increased number of viewing platforms available to consumers. The review is part of the Antitrust Division’s initiative to terminate long-standing antitrust judgment, including many that have no termination date.

“The Paramount Decrees have been on the books with no sunset provisions since 1949. Much has changed in the motion picture industry since that time,” Makan Delrahim, the DOJ’s antitrust chief, said in a statement. “It is high time that these and other legacy judgments are examined to determine whether they still serve to protect competition.”

July 13, 2018

Disney Uses Fast Pass Strategy to Obtain Speedy DOJ Antitrust Approval for its Acquisition of Fox Assets

by Doyle, Barlow & Mazard PLLC

On June 27, 2108, the Department of Justice’s Antitrust Division announced that The Walt Disney Company (“Disney”) agreed to divest 22 regional sports networks (“RSNs”) to resolve antitrust concerns with its approximately $71 billion acquisition of certain assets from Twenty First Century Fox (“21CF”).

Speedy Antitrust Approval

DOJ’s announcement of the settlement agreement is noteworthy because of the speed at which Disney was able to negotiate a remedy to a combination that raised a number of antitrust issues. Though the parties received second requests on March 5, 2018, and Disney had only recently entered into a new agreement with 21CF on June 20, 2018, the DOJ and Disney were able to negotiate a divestiture worth approximately $20-23 billion within 6 months of review and 4 months after issuing information requests. The dollar value of the Disney/21CF divestiture will likely double what the DOJ characterized as the largest divestiture in history in Bayer/Monsanto.

July 8, 2018

USTR Announces 301 Tariff Exclusion Process

by Doyle, Barlow & Mazard PLLC

On July 6, 2018, the Office of the U.S. Trade Representative (USTR) announced procedures for requesting product exclusions from the 25% tariff imposed on certain Chinese goods under Section 301.

The announcement of exclusion procedures coincided with the imposition of the first phase of tariffs on July 6, 2018 covering 818 tariff subheadings listed in USTR’s Federal Register notice on June 20. https://www.gpo.gov/fdsys/pkg/FR-2018-06-20/pdf/2018-13248.pdf. The tariffs were imposed following USTR’s investigation of the Chinese government related to technology transfer, intellectual property and innovation. The goods identified relate to industrial sectors that are part of China’s Made in China 2025 initiative.

Interested persons have until October 9, 2018 to request a product exclusion. Requests will be open for response within 14 days after the request is posted in USTR’s docket number USTR-2018-0025 at www.regulations.gov. Replies to responses will be due 7 days after the close of the 14-day response period.

July 1, 2018

The FTC Is Requesting Public Comments Regarding Big Tech (Google, Facebook, Amazon and More

by Doyle, Barlow & Mazard PLLC

On June 20, 2018, the Federal Trade Commission (“FTC”) announced that it will hold a series of public hearings on whether broad-based changes in the economy, evolving business practices, new technologies, or international developments might require adjustments to competition and consumer protection enforcement law, enforcement priorities, and policy. The multi-day, multi-part hearings will take place this fall and winter.

It is expected that a lot of time will be devoted to the dominant digital two sided platforms (Google, Facebook, and Amazon) as well as the associated network effects. The FTC is interested in learning more about how their conduct hinders competition and innovation or how their services actually benefit consumers and enhance competition and innovation.

The hearings and public comment process will provide opportunities for FTC staff and leadership to listen to interested persons and outside experts representing a broad and diverse range of viewpoints. Additionally, the hearings will stimulate thoughtful internal and external evaluation of the FTC’s near- and long-term law enforcement and policy agenda. The hearings may identify areas for enforcement and policy guidance, including improvements to the agency’s investigation and law enforcement processes, as well as areas that warrant additional study.

June 25, 2018

The Never Ending Tunney Act Proceeding: ABI/SABMiller

by Doyle, Barlow & Mazard PLLC

On March 15, 2018, the Department of Justice’s Antitrust Division filed a modified proposed final judgment (“MPFJ”) and responded to amici briefs filed in the Antitrust Procedures and Penalties Act (“Tunney Act”) proceedings regarding the DOJ’s settlement agreement that allowed Anheuser Busch InBev SA/NV’s (“ABI”) to acquire SABMiller. In other words, the consent decree that was signed on July 20, 2016 between the Obama DOJ and the merging parties has yet to be approved by a federal court. One would think that the DOJ would move quicker on finalizing a consent decree that allowed the largest beer merger in history proceed. But, here we are just about at the two-year mark without a finalized decree.

The DOJ permitted the merger of the two largest global brewers, which without a remedy threatened to reduce head-to-head competition between Anheuser Busch InBev SA/NV’s (“ABI”) and MillerCoors in local markets throughout the country. The DOJ alleged that the elimination of competition between ABI and MillerCoors would increase ABI’s incentive and ability to disadvantage its remaining rivals – in particular, brewers of high-end beers that serve as an important constraint on ABI’s ability to raise its beer prices – by limiting or “impeding the distribution” of their beers, likely resulting in increased prices and fewer choices for consumers. This allegation is significant because “effective distribution is important for a brewer to be competitive.”

To resolve these competitive concerns, the DOJ’s Proposed Final Judgment required the divestiture, which permanently cemented a duopoly where two suppliers exert control over approximately 85-90% of the distributors in the United States. The DOJ further acknowledged in its Competitive Impact Statement (“CIS”) that ABI and Molson Coors have business arrangements and contacts throughout the world and that the divestiture may actually facilitate coordination. Because of the increased likelihood of coordinated anticompetitive effects, the DOJ alleged that the merger “would increase ABI’s incentive and ability to disadvantage its beer rivals by impeding the distribution of its beers.” Accordingly, the DOJ sought behavioral remedies, which are designed to keep beer distribution independent and open as well as to level the playing field for ABI’s high end rivals.

June 20, 2018

No Magic Number for Wireless Competition: T-Mobile/Sprint Deal

by Doyle, Barlow & Mazard PLLC

On June 18, 2018, T-Mobile and Sprint filed initial papers with the FCC. The parties made a number of arguments on why their deal should pass regulatory muster.

First, T-Mobile and Sprint argue that they need the deal to compete with the Big Two (AT&T and Verizon) – the combined firm would be able to take advantage of efficiencies and economies of scale to bring technological innovations (5th generation (5G)) to the market faster to provide customers with better broadband services at a lower cost. Thus, customers would benefit from the merger through lower prices and investments to their network. The parties basically acknowledge that it is a four to three deal.

Second, the parties argue that the wireless market is no longer as concentrated because an abundance of competition exists or will exist in the near future as cable companies, Google, and others are increasingly entering this space. Even using current technologies, Comcast has rolled out low-cost wireless service to its cable customers that rides on Verizon’s network. So the argument goes that this isn’t a case of going from 4 to 3 wireless companies – there are now at least 7 or 8 big competitors in this converging market. There is a lot of reasons why long time staffers at the FCC and DOJ might be skeptical of this claim.